Tractor-Trailer Supply Co. v. NCR Corp.

• Decision Date: 05 April 1994
• Docket Number: TRACTOR-TRAILER,No. 64257,64257
• Citation: 873 S.W.2d 627
• Parties: SUPPLY CO., et al., Plaintiffs/Respondents, v. NCR CORP., et al., Defendants/Appellants.
• Court: Missouri Court of Appeals

Page 627

873 S.W.2d 627

TRACTOR-TRAILER SUPPLY CO., et al., Plaintiffs/Respondents, v. NCR CORP., et al., Defendants/Appellants.

No. 64257.

Missouri Court of Appeals,

Eastern District,

Division Four.

April 5, 1994.

Thomas B. Weaver, St. Louis, Todd B. Carver, Dayton, OH, for defendants-appellants.

Gary A. Growe, Clayton, Ramon J. Morganstern, St. Louis, for plaintiffs-respondents.

GRIMM, Presiding Judge.

Plaintiffs sued defendants seeking damages in connection with the purchase of a computer system. Their claims were based on fraud, negligent misrepresentation, and breach of warranty. In response, defendants filed a motion seeking to compel arbitration and stay court proceedings as to all claims.

The trial court overruled this motion. Defendants appeal; we reverse and remand. We direct the trial court to enter an order compelling plaintiffs to arbitrate all claims.

I. Background

Plaintiffs consist of four corporations and a general partnership. The corporations are Tractor-Trailer, Precision Rebuilders, Midway Wheel, and Cape Tractor-Trailer. H.P. Bley, Jr. and five others do business as Executive Investments, a general partnership.

The petition and attached exhibits disclose the following. H.P. Bley, Jr. is the president of Executive Investments and Tractor-Trailer. In 1986, plaintiffs' representatives and NCR's representatives had extensive discussions concerning the "purchase of a 'turn-key' computer system." The "Computer System would be required to serve the integrated computer needs of all of the plaintiffs." These meetings occurred at Tractor-Trailer's office and at NCR's St. Louis office.

During these discussions, plaintiffs' representatives advised NCR that Executive was affiliated with each of the other plaintiffs. Executive, a leasing company, acquires and leases various assets required by the corporations. Among other things, NCR represented that the "five-year cost of ownership would be virtually the same as for the [four corporations'] existing computer system."

On December 2, 1986, H.P. Bley, Jr., in his capacity as president, signed four documents.

1. Product and Services Sale Order Record. This order was for computer equipment with a net price of $178,476.00. This document reflects that the items were sold and billed to Executive, 2525 Natural Bridge Road, but were to be shipped to Tractor-Trailer, 2525 Natural Bridge Road. It provides that the "furnishing of equipment, programs, and/or services specified herein shall be pursuant to the terms of the Universal Agreement entered into by NCR and Customer."

2. Universal Agreement. This agreement was also titled "Continuing Agreement for Equipment and Services." It reflects that the customer is Executive. Paragraph 19 of this document provides for arbitration of all disputes.

3. Product and Services Sale Order Record. This order is identical to the one described in paragraph 1, with one exception.

This document reflects that the items were sold and billed to Tractor-Trailer, as well as shipped to Tractor-Trailer, all at the 2525 Natural Bridge address.

4. Universal Agreement. This agreement is virtually identical to the one identified in paragraph 2. It reflects the customer is Tractor-Trailer. An NCR representative signed this document on January 21, 1987.

Each Universal Agreement stated that its "provisions are intended to state all of the rights and responsibilities between NCR and Customer." Also, each provided:

19. DISPUTES--Any controversy or claim, including any claim of misrepresentation, arising out of or related to this Agreement and/or any contract hereafter entered into between NCR and Customer, or the breach thereof, or the furnishing of any equipment or service by NCR to Customer, shall be settled by arbitration.

None of the other three plaintiffs--Precision Rebuilders, Midway Wheel, or Cape Tractor-Trailer--signed any document that is before us. Nevertheless, the computer system was installed, beginning in the fall of 1987. It "generally failed to operate as an integrated network system" for plaintiffs. Plaintiffs could not and did not discover the "fraud" until September, 1989; they filed their petition on February 9, 1993.

As indicated, defendants moved for an order to compel arbitration and stay court proceedings. The trial court denied this motion; defendants appealed. Plaintiffs now concede that defendants are entitled to compel Tractor-Trailer to arbitrate its dispute. Thus, they acknowledge that the trial court's order "should be reversed--only on that limited ground."

II. Scope of Agreement to Arbitrate Claims

The issue here is one of law and is limited to the question of who is bound by the arbitration clause in the Universal Agreements. Before reaching that issue, we note that defendants contend the Universal Agreements evidence a transaction involving interstate commerce. Plaintiffs do not dispute this contention. As a result, our review of arbitrability is governed by federal law under the Federal Arbitration Act, 9 U.S.C. §§ 1-14 (1988). See Lee v. Chica, 983 F.2d 883, 886 (8th Cir.1993); Boogher v. Stifel, Nicolaus & Co., Inc., 825 S.W.2d 27, 29 (Mo.App.E.D.1992) (citing Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765, 785 (1983)).

However, the question of which parties are bound by an arbitration agreement concerning interstate commerce "involves the 'general law' of contracts and agency." Flink v. Carlson, 856 F.2d 44, 46 n. 2 (8th Cir.1988) (citation omitted). Thus, the courts "apply general state law principles, giving due regard to the federal policy favoring arbitration." Recold, S.A. DE C.V. v. Monfort of Colorado, Inc., 893 F.2d 195, 197 n. 6 (8th Cir.1990); see also Flink, 856 F.2d at 46 n. 2. "Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Boogher, 825 S.W.2d at 30.

A. Executive's Agreement

As indicated, Bley signed two Universal Agreements, one as president of Executive, the other as president of Tractor-Trailer. The Universal Agreements contained a clause stating, "This agreement shall be effective only when executed by both parties."

However, NCR did not sign the Universal Agreement with Executive. In the absence of NCR's execution, we decline to bind Executive to arbitration pursuant to the Universal Agreement. However, as stated hereafter, Executive is bound by the other Universal Agreement.

We acknowledge the numerous cases which defendants cite where various non-signatories of arbitration agreements were bound under ordinary contract and agency principles. None are factually similar, and they are not persuasive.

B. Tractor-Trailer's Agreement

The Universal Agreement with Tractor-Trailer was signed by Bley and an NCR representative. Tractor-Trailer acknowledges that it is bound to submit its claim to arbitration.

However, the other plaintiffs contend that they need not submit their claims to arbitration. They point out that they did not sign a binding Universal Agreement and, therefore, do not have to submit their claims to arbitration.

We first note that the pleadings, briefs, and oral argument all disclose that the discussions and contract pertain to only one computer system. For example, plaintiffs' petition refers to it as "the 'Computer System.' "

Next, we observe that the Universal Agreement provides, "Unless the context otherwise requires, the term 'Customer' shall mean the Customer listed above." Plaintiffs contend that because only Tractor-Trailer is listed as customer, no other plaintiff is bound.

However, this argument overlooks the plain language of the arbitration clause. This clause specifically provides, in part:

Any controversy or claim, including any claim of misrepresentation, arising out of or related to this Agreement and/or any contract hereafter entered into...