Terry Fashions, Ltd. v. Ultracashmere House, Ltd.

• Decision Date: 25 April 1984
• Docket Number: No. 4-383A86,4-383A86
• Citation: Terry Fashions, Ltd. v. Ultracashmere House, Ltd., 462 N.E.2d 252 (Ind. App. 1984)
• Parties: TERRY FASHIONS, LTD. and Terry Curry, Appellants, (Defendant Below), v. ULTRACASHMERE HOUSE, LTD., Appellee, (Plaintiff Below).
• Court: Indiana Appellate Court

Page 252

462 N.E.2d 252

TERRY FASHIONS, LTD. and Terry Curry, Appellants, (Defendant Below), v. ULTRACASHMERE HOUSE, LTD., Appellee, (Plaintiff Below).

No. 4-383A86.

Court of Appeals of Indiana Fourth District.

April 25, 1984.

Alan H. Lobley, Ice Miller, Donadio & Ryan, Indianapolis, for appellants.

Robert Delano Jones, Susan Lacava, Rogers, McDonald & Jones, Bloomington, for appellee.

YOUNG, Judge.

Terry Fashions, Ltd. and Terry Curry (hereinafter referred to collectively as Curry), defendants below, appeal from the grant of a summary judgment in favor of Ultracashmere House, Ltd. (Ultracashmere), plaintiff below, upon a suit to enforce a New York judgment. Although Curry presents four issues on appeal, ¹ the ultimate issue is whether the New York courts had personal jurisdiction over Curry.

Curry, an Indiana resident, signed an order form provided by Ultracashmere, a New York resident, at a trade show in Chicago in April 1979. Curry, a Bloomington retailer, was to purchase fabric from Ultracashmere. Immediately below Curry's signature, the order form contained the following language:

Notwithstanding anything herein to the contrary, the rights and obligations of Buyer and Seller hereunder are defined by, and shall be subject to, the Basic Trade Provisions now approved and promulgated as of January 15, 1948, by the National Retail Dry Goods Association and the Apparel Industries Inter-Association Committee, including the provision that all disputes or differences arising between the parties shall be settled by arbitration which may be initiated and conducted and any award therein confirmed in the manner described in such provisions and on service of process, accordingly.

One of the Basic Trade Provisions referred to in the arbitration clause provides:

For any purpose relating to this arbitration clause of any award rendered hereunder, the Purchaser and Seller consent to the jurisdiction of the Courts of the State in which the Seller has his principal place of business, and any legal process or paper may be served out side of such State by registered mail, or by personal service, provided that a reasonable time for appearance is allowed. Purchaser and Seller further consent that service in accordance herewith shall be sufficient to confer upon the Court jurisdiction in personam over the Purchaser and Seller.

In May and June 1979 a dispute arose between Curry and Ultracashmere concerning their rights, duties and obligations with respect to the order form and sale of the goods. Ultracashmere initiated arbitration proceedings against Curry in New York resulting in an award in favor of Ultracashmere. The award was confirmed by the Supreme Court of New York for the County of New York, and judgment was entered in March 1981 for $8,547.37. Curry was sent notice of all the New York proceedings but did not appear before the arbitrator or state court.

Ultracashmere filed suit on the New York judgment in Bloomington, Indiana, in March 1982. Curry, in her answer, raised the issue of the New York court's exercise of jurisdiction over her person. Ultracashmere filed a motion for summary judgment, and Curry filed a cross-motion for summary judgment. The court found for Ultracashmere and against Curry. Curry has appealed the summary judgment claiming the New York judgment was not entitled to enforcement in Indiana for lack of jurisdiction.

Foreign judgments are open to collateral attack in Indiana for lack of jurisdiction. Condos v. Sun State Painting, Inc., (1983) Ind.App., 450 N.E.2d 86; County of Ventura v. Neice, (1982) Ind.App., 434 N.E.2d 907; Podgorny v. Great Central Insurance Co., (1974) 160 Ind.App. 244, 311 N.E.2d 640. In assessing such attacks, Indiana courts apply the law of the sister state. Condos, supra; Cox v. First National Bank of Woodlawn, (1981) Ind.App., 426 N.E.2d 426; Podgorny, supra. Choice of law, however, is not dispositive of jurisdiction. See Agrashell, Inc. v. Hammons Products Co., (2d Cir.1965) 344 F.2d 583. The party attacking jurisdiction in Indiana has the burden of proof of rebutting the presumption of the original judgment's validity and of showing that the sister state lacked jurisdiction. Condos, supra; Neice, supra; Cox, supra.

Ultracashmere's jurisdictional claim is based on a written agreement to arbitrate. Under New York law, consent to arbitrate also constitutes a consent to jurisdiction. E.g., Gantt v. Felipe Carlos Hurtado & CIA, (1948) 297 N.Y. 433, 79 N.E.2d 815. In applying this rule, New York courts have enforced foreign judgments against New York residents, Prosperity Co. v. American Laundry Machinery Co., (1947) 297 N.Y. 486, 74 N.E.2d 188; Gilbert v. Burnstine, (1931) 255 N.Y. 348, 174 N.E. 706, and have enforced agreements requiring New York residents to arbitrate in foreign countries. Amtorg Trading Corp. v. Camden Fibre Mills, Inc., (1952) 304 N.Y. 519, 109 N.E.2d 606. More frequently, New York courts have interpreted the rule to require nonresidents to arbitrate in New York or to confirm New York arbitration awards. E.g., Gantt, supra; Samincorp South American Minerals and Merchandising Corp. v. Tikvah Mining Co., (1964) 43 Misc.2d 27, 250 N.Y.S.2d 151.

The Second Circuit of the United States Court of Appeals underscored the strength of the New York policy when it said that a party who agrees to arbitrate in New York "makes himself as amenable to suit as if he were physically present in New York." Farr & Co. v. CIA Intercontinental de Navegacion, (2d Cir.1957) 243 F.2d 342, 347. New York courts have even interpreted clauses which did not specify the site of arbitration but incorporated rules placing the arbitration in New York as conferring jurisdiction on New York courts. American-British T.V. Movies, Inc. v. KOPR-TV, Copper Broadcasting Co., (1955) Sup., 144 N.Y.S.2d 548; Bradford Woolen Corp. v. Freedman, (1947) 189 Misc. 242, 71 N.Y.S.2d 257. ²

Thus, if the arbitration clause on the order form signed by Curry is binding and valid under New York law, she consented to jurisdiction of the New York courts when she manifested her agreement to arbitrate by signing the form.

I.

Curry contends that no enforceable arbitration agreement exists because Ultracashmere never signed the order form on which the arbitration clause appears nor accepted the order in writing. Curry argues that, without such an acceptance, Uniform Commercial Code statute of frauds requirements would not be met and the agreement would not be enforceable against Ultracashmere. Because New York law requires that both parties be bound by an arbitration agreement if it is to be binding on either, Curry contends the agreement is unenforceable.

New York law requires arbitration agreements to be mutually binding to be enforceable. Hull Dye & Print Works, Inc. v. Riegel Textile Corp., (1971) 37 A.D.2d 946, 325 N.Y.S.2d 782; Kaye Knitting Mills v. Prime Yarn Co., (1971) 37 A.D.2d 951, 326 N.Y.S.2d 361. In those cases, agreements that gave one party an option between litigation and arbitration were described as not mutually binding and were held to be unenforceable. The agreement between Curry and Ultracashmere, however, contained no such option.

Arbitration agreements in New York are subject to a special statute of fraud requirement which, unlike the U.C.C. requirements, does not demand the signature of the party to be bound. Compare N.Y.Civ.Prac.Law Sec. 7501 (McKinney 1980) (arbitration) with N.Y.U.C.C. Sec. 2-201 (McKinney 1964) (sale of goods). New York requires that arbitration agreements be in writing, Riverdale Fabrics Corp. v. Tillinghast-Stiles Co., (1954) 306 N.Y. 288, 118 N.E.2d 104, but does not require that the writing be signed by the parties to be binding. E.g., Helen Whiting, Inc. v. Trojan Textile Corp., (1954) 307 N.Y. 360, 121 N.E.2d 367; Copen Associates Inc. v. Dan River Inc., 18 U.C.C.Rep.Serv. 62 (Callaghan 1975); In re Les Belles Enterprises, Inc., 17 U.C.C.Rep.Serv. 909 (Callaghan 1975); American-British, supra; Samuel Kaplan & Sons Inc. v. Fascinator Blouse Co., (1947) Sup., 70 N.Y.S.2d 8. Thus the arbitration agreement was binding on Ultracashmere though Ultracashmere had not signed it. The arbitration agreement could not be considered unenforceable as not mutually binding.

II.

Curry then argues that the arbitration clause is invalid and does not confer jurisdiction on the New York courts because Curry neither noticed the clause nor was provided with the trade association rules placing the arbitration in New York state. Curry suggests this combination constitutes a deceitful and wrongful device to obtain jurisdiction.

Under New York law a party is not relieved of a contractual obligation by her failure to read a contract. The New York Court of Appeals has twice stated as...