West Point-Pepperell, Inc. v. Multi-Line Industries, Inc.

• Citation: 201 S.E.2d 452,231 Ga. 329
• Decision Date: 25 October 1973
• Docket Number: No. 28135,INC,MULTI-LINE,POINT-PEPPEREL,28135
• Parties: WESTv.INDUSTRIES, INC.
• Court: Supreme Court of Georgia

Page 452

201 S.E.2d 452

231 Ga. 329

WEST POINT-PEPPERELL, INC. v. MULTI-LINE INDUSTRIES, INC.

No. 28135.

Supreme Court of Georgia.

Oct. 25, 1973.

Rehearing Denied Nov. 8, 1973.

Lovejoy, Mayer, Allen & Quillian, Charles J. Willis, H. T. Quillian, Jr., LaGrange, for appellant.

Millard C. Farmer, Jr., Newnan, for appellee.

Syllabus Opinion by the Court

JORDAN, Justice.

This is an appeal from an order of Troup Superior Court restraining the appellant from any further attempt to compel the arbitration of a dispute between appellant and appellee in the State of New York.

Both the appellant, West Point-Pepperell, Inc., and the appellee, Multi-Line Industries are Georgia corporations. The appellant corporation, in addition to its general office and several plants in Georgia, has plants in several other states and sales offices in New York City, Dallas, Texas, and other cities. The appellee, Multi-Line Industries, placed several orders in the early part of 1972 for knit piece-goods with the appellant corporation, the orders being processed and finalized through the appellant's sales office in New York City. The orders were forwarded for manufacture to appellant's plant located in North Carolina and then delivered by truck to Multi-Line's place of business in Carroll County, Georgia.

A dispute arose between the parties in connection with certain alleged defects in the goods and the appellant, in accordance with the provisions of paragraph 17 printed on the back of each of such orders, gave notice on March 26, 1973, by certified mail of its demand for arbitration and notice of intention to arbitrate under the provisions of that paragraph. Appellant then filed a petition in the Supreme Court of the State of New York on April 6, 1973, seeking to compel arbitration. A show cause order and temporary restraining order issued thereon and was served upon counsel for Multi-Line on April 9, 1973, said order having set a hearing to be held on April 16, 1973, in New York City to determine whether Multi-Line should be compelled and directed to appear in the arbitration proceedings.

On April 6, 1973, Multi-Line filed its petition for a stay of arbitration and complaint against West Point-Pepperell in the Superior Court of Troup County, Georgia, which was served upon the appellant on April 13, 1973, and contained an order of said court dated April 12, 1973, ordering the appellant to appear before the court on April 19, 1973, to show cause why an order should not be entered granting the motion to stay the arbitration.

On April 16, 1973, Multi-Line having made no appearance in the Supreme Court of New York, an order was issued directing Multi-Line to appear in the arbitration proceedings and restraining and enjoining Multi-Line from commencing or continuing any action in any court to stay the pending arbitration proceedings.

On April 19, 1973, after a hearing which included oral testimony and a duly authenticated copy of the proceedings of the Supreme Court of New York, the trial court issued its order in part as follows: 'Ordered and adjudged, that the attempt by West Point-Pepperell, Inc., to compel Multi-Line Industries, Inc., to arbitrate the existing dispute between them is so far contrary to the public policy of this state as an attempt to oust the courts of this state from jurisdiction as to render said attempt void. Therefore, West Point-Pepperell, Inc., is hereby restrained from any further attempt to compel the arbitration of the aforesaid dispute until such time as a final adjudication of this matter can be made by the courts of this state.' This order was reduced to writing on May 3, 1973, from which the appellant, with a certificate for immediate review, appeals. Held:

1. We hold first of all that the five orders for the manufacture and purchase of these goods was a transaction which involved interstate commerce even though both appellant and appellee are Georgia corporations. The evidence is without dispute that the orders were received and finalized at the office of the appellant in New York City, forwarded to one of its plants in North Carolina for manufacture, and then shipped to the appellee by truck to its plant in Georgia. Where such a transaction involves commerce, within the meaning of the Federal Arbitration Statute, the state law and policy with respect thereto must yield to the paramount federal law. American Airlines, Inc. v. Louisville & Jefferson County Airport, 269 F.2d 811. Section 2 of Title 9 U.S.C. provides: 'A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'

The judgment of the trial court here under review is based solely on the case of Parsons v. Ambos, 121 Ga. 98(1), 48 S.E 696, which reads as follows: 'Agreements whereby the validity, and effect of a contract, or the rights of the parties, are submitted to arbitration, may operate to oust the courts of jurisdiction, and are so far contrary to public policy that the submission may be revoked at any time before the award.' This case is not applicable to the facts in the present case where the transaction involves interstate commerce. The United States Arbitration Act was intended to avoid the common law rule that an agreement between parties to a contract to settle any dispute between them by arbitration was void and against public policy as and effort to oust the courts of their jurisdiction. See Standard Magnesium Corp. v. Fuchs, 251 F.2d 455.

Further, the rule in Parsons v. Ambos, supra, is applicable only when there is an agreement to...