Tothill v. Richey Ins. Agency, Inc.

• Decision Date: 31 May 1977
• Docket Number: No. 7618,7618
• Citation: 374 A.2d 656,117 N.H. 449
• Parties: , 98 A.L.R.3d 761 William R. TOTHILL v. RICHEY INSURANCE AGENCY, INC. RICHEY INSURANCE AGENCY, INC. v. William R. TOTHILL.
• Court: New Hampshire Supreme Court

Page 656

374 A.2d 656

117 N.H. 449, 98 A.L.R.3d 761

William R. TOTHILL v. RICHEY INSURANCE AGENCY, INC.

RICHEY INSURANCE AGENCY, INC. v. William R. TOTHILL.

No. 7618.

Supreme Court of New Hampshire.

May 31, 1977.

Paul A. Rinden, Concord, and Jay M. Niederman, Manchester, for plaintiff William R. Tothill.

Frederick T. Greenhalge, Concord, by brief and orally, for defendant Richey Ins. Agency, Inc.

KENISON, Chief Justice.

These are consolidated actions arising out of an employment contract between the parties. In October 1974, the plaintiff, William Tothill agreed to work for the defendant for one year as vice-president and general manager. The employment contract provided that either party could terminate the relationship "(w)ith cause." Additionally, paragraph 10 provided that all disputes shall be settled by arbitration in the following manner: "Either party may serve upon the other party by registered mail a written demand that the dispute, specifying the nature thereof, shall be submitted to arbitration. Within (5) days after the service of such demand, the parties may mutually designate in writing a single arbitrator and the decision of such arbitrator made in writing and under oath shall be final and binding upon the parties hereto. If within this five day period the parties have not mutually designated a single arbitrator, then within five (5) days thereafter each of the parties hereto shall appoint an arbitrator and serve written notice by registered mail of such appointment upon the other party. If either party fails within the specified time to appoint such arbitrator and to serve notice in writing of such appointment, the other party shall be entitled to appoint both arbitrators. The decision of the two arbitrators made in writing and under oath shall be final and binding upon the parties hereto."

In December 1974, the defendant discharged the plaintiff. A letter dated January 6, 1975, informed plaintiff that the cause of his termination was mismanagement. In this letter the defendant requested that the dispute be submitted to arbitration pursuant to the contract. However, neither party took any steps, as outlined in the arbitration paragraph, to begin arbitration. Instead, on March 17, 1975, the plaintiff filed a suit for damages for wrongful termination and attempted to attach defendant's property. About nine days later the defendant filed a motion to dismiss on the ground that the dispute required arbitration. Before the superior court decided the question, however, the defendant filed its own suit seeking damages for the plaintiff's allegedly negligent performance of his employment duties and for his refusal to arbitrate. On February 12, 1976, after participating in some pretrial procedures, including discovery, the defendant renewed its motion to dismiss, which Master Leonard C. Hardwick granted. Batchelder, J., approved the master's recommendation and reserved and transferred the plaintiff's exception to this court. The merits of the termination of plaintiff's services are not now before us, only the question of whether plaintiff's suit was properly dismissed because of the arbitration clause.

The plaintiff argues that the defendant terminated his employment without prior resort to arbitration on the issue of "cause," that such action constituted a repudiation of the whole contract and that the defendant should therefore be precluded from relying upon the arbitration provision contained therein as a basis for dismissing the plaintiff's suit. He relies upon Bertero v. Superior Court, 216 Cal.App.2d 213, 30 Cal.Rptr. 719 (1963), in which an employer sought dismissal of the employee's suit for wrongful discharge on the ground that the employment contract required arbitration of such disputes. In its letter discharging the employee, the employer totally and unequivocally repudiated the entire contract. The court held that where the employer "(declared) its independence (of the contract) without qualification or reservation," id. at 220, 30 Cal.Rptr. at 724, it waived its right to compel arbitration under the contract's arbitration provisions. Bertero is distinguishable, however, because the defendant in this case discharged the plaintiff pursuant to paragraph 6, the contract's termination provision. See 6A A. Corbin, Contracts § 1443, at 433-34 (1962). The defendant neither denied the validity of the contract nor repudiated any part of it.

Even if the defendant's method of discharge did constitute a partial repudiation, there is substantial authority holding that the repudiator may still invoke the arbitration clause as a "defense" to a lawsuit arising out of the repudiation. Annot., Breach or Repudiation of Contract as Affecting Right to Enforce Arbitration Clause Therein, 32 A.L.R.3d 377, 382 (1970). In other words, the right to compel arbitration survives the termination of the contract. Nolde Bros. Inc. v. Local No. 358, --- U.S. ----, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977).

The plaintiff next contends that the defendant waived its right to compel arbitration. It is clear that the right may be waived. M. Domke, Commercial Arbitration § 19.01, at 179 (1968). " 'Any conduct of the parties inconsistent with the notion that they treated the arbitration provision as in effect, or any conduct that might be reasonably construed as showing that they did not intend to avail themselves of such a provision, may amount to a waiver thereof." Second Congregational Society v. Stubbins and Assocs., 108 N.H. 446, 447-48, 237 A.2d 673, 674 (1968).

Plaintiff takes the position that the defendant's failure to select arbitrators in accordance with the contract timetable constitutes waiver. Under the contract terms, the defendant could have chosen two arbitrators upon the plaintiff's default in selecting his own. However, nothing in the contract required the defendant to do so. Nor does the contract suggest that the absence of...