Windsor Mills, Inc. v. Collins & Aikman Corp.

• Decision Date: 30 May 1972
• Citation: 25 Cal.App.3d 987,101 Cal.Rptr. 347
• Court: California Court of Appeals Court of Appeals
• Parties: , 10 UCC Rep.Serv. 1020 WINDSOR MILLS, INC., Plaintiff, Cross-Respondent and Respondent, v. COLLINS & AIKMAN CORPORATION, Defendant, Cross-Petitioner and Appellant. Civ. 38653.

Page 347

101 Cal.Rptr. 347

25 Cal.App.3d 987, 10 UCC Rep.Serv. 1020

WINDSOR MILLS, INC., Plaintiff, Cross-Respondent and Respondent, v. COLLINS & AIKMAN CORPORATION, Defendant, Cross-Petitioner and Appellant.

Civ. 38653.

Court of Appeal, Second District, Division 4, California.

May 30, 1972.

Loeb & Loeb and Howard I. Friedman, Los Angeles, for defendant, cross-petitioner and appellant.

Harvey Fierstein, Los Angeles, for plaintiff, cross-respondent and respondent.

DUNN, Associate Justice.

Defendant Collins & Aikman Corporation appeals from an order granting a preliminary injunction enjoining defendant from prosecuting arbitration proceedings during the pendency of plaintiff's action, and from a judgment denying defendant's cross-petition to compel arbitration.

Windsor Mills, Inc. filed a suit in 6 causes of action against Collins & Aikman Corporation and others. The first 5 causes of action sought damages for alleged defects in yarn; the sixth sought preliminary and permanent injunctions against defendants Collins & Aikman Corporation and the American Arbitration Association, enjoining arbitration proceedings previously initiated by Collins & Aikman in New York. ¹ The court issued an order to show cause why a preliminary injunction should not issue. (Code Civ.Proc. § 527.) Defendant Collins & Aikman filed an answer denying material allegations in plaintiff's complaint together with a counterclaim seeking payment for yarn sold, at the same time filing a cross-petition for an order to arbitrate. (Code Civ.Proc. § 1281.2.) It alleged the existence of a written arbitration agreement and plaintiff's refusal to arbitrate. Defendant also moved for an order staying proceedings pending determination of its cross-petition. (Code Civ.Proc. § 1281.4.) Plaintiff filed an answer to the cross-petition denying the existence of any arbitration agreement.

A hearing was had at which the verified pleadings and various declarations were received in evidence. These showed: plaintiff is a California corporation engaged in the business of manufacturing carpets; defendant Collins & Aikman is a Delaware corporation authorized to transact and transacting business in California; on several occasions between January and March 1970 Lawrence Petal, plaintiff's president, ordered in Los Angeles a total of 55,000 pounds of yarn from Toli Simos, west coast sales representative of Collins & Aikman; all of the orders were placed orally, but at least one was evidenced by a written purchase order from plaintiff to defendant; each of the orders was transmitted to defendant in New York for approval.

As each order was received, defendant completed a printed form entitled 'Acknowledgment of Order' and sent a copy to plaintiff; typed in appropriate boxes on the front of each form was the date of the order, defendant's order number, shipping instructions, a description of the yarn ordered and the quantity and price thereof. Near the bottom of the form the following appeared in fine print: 'this order is given subject to all of the terms and conditions on the face and reverse sides hereof including the provisions for arbitration and the exclusion of warranties all of which are accepted by buyer supersede buyer's order form if any and constitute the entire contract between buyer and seller this order shall become a contract as to the entire quantity specified either (A) when signed and delivered by buyer to seller and accepted in writing by seller or (B) when buyer has received and retained this order for ten days without objection or (C) when buyer has accepted delivery of any part of the merchandise specified herein or has furnished to seller specifications or assortments delivery dates shipping instructions or instructions to bill and hold or when buyer has otherwise indicated acceptance of the terms hereof (.)' ² Beneath this provision were spaces for the signatures of buyer and seller; none of the forms was signed.

On the reverse side of the form, under the heading 'Terms of Contract Sale,' there appeared in small print the following provision, among many others:

'15. ARBITRATION: Any controversy arising out of or relating to this contract shall be settled by arbitration in the City of New York in accordance with the Rules then obtaining of the American Arbitration Association or the General Arbitration Council of the Textile Industry, whichever shall be first selected by the party instituting said arbitration. . . . The parties consent to the jurisdiction of the Supreme Court of the State of New York, and of the United States District Court for the Southern District of New York, whichever is first selected by the party moving to confirm said award. The parties further consent that any process or notice of motion or other application in either of said Courts or a Judge thereof, may be served outside the State of (sic) Southern District of New York by certified mail or by personal service provided a reasonable time for appearance is allowed, or in such other manner as may be permissible under the Rules of said Court.'

Of the yarn ordered, 30,000 pounds were shipped to and received by plaintiff; plaintiff complained of the quality of the yarn and instructed defendant not to ship the remaining 25,000 pounds; plaintiff did not pay for any of the yarn ordered; on October 5, 1970, pursuant to the arbitration clause in the Acknowledgment of Order forms, defendant filed in New York a demand for arbitration with the American Arbitration Association; a copy of the demand was sent to plaintiff who thereafter commenced the instant action for damages and for an injunction staying the arbitration proceedings.

In his declaration, Toli Simos stated that when each of the orders was placed he informed lawrence Petal that 'New York had to clear him, particularly as to credit,' and that he then would receive 'appropriate contractual instruments' from New York. In his opposing declaration, Petal agreed he was told his orders were subject to credit approval but denied anything was stated about 'appropriate contractual instruments'; he also stated that, although the Acknowledgment of Order forms were received by plaintiff, they were not brought to his attention nor did he see them at all until after arbitration proceedings had been initiated by Collins & Aikman. Another declaration, reciting the substance of testimony given by Simos at a deposition, asserted that Simos admitted he had copies of the forms when Petal was ordering the yarn but he did not show the forms to Petal or discuss with him the arbitration provision or any of the other provisions printed on the form.

Findings of fact and conclusions of law were signed and filed. The court found as facts, among others, that: plaintiff was not informed the Acknowledgment of Order forms contained reference to arbitration of disputes; such provisions were in small print and were inconspicuous; plaintiff signed none of the forms and had no actual knowledge of the provision until it received Collins & Aikman's demand for arbitration; to the extent that the forms provided for arbitration, they effected a material alteration of the original orders placed by plaintiff and constituted a counteroffer which never was accepted by plaintiff; at no time did plaintiff agree to arbitrate any disputes with defendant.

Court orders were made denying Collins & Aikman's motion for a stay of proceedings and granting to plaintiff a preliminary injunction enjoining defendant and the American Arbitration Association ³ from prosecuting arbitration proceedings; judgment was entered against defendant on its cross-petition for an order to arbitrate.

Defendant appeals from the order granting the preliminary injunction (Code Civ.Proc. § 904.1(f); Monterey Club v. Superior Court, 44 Cal.App.2d 351, 353, 112 P.2d 321 (1941)) and from the judgment on its cross-petition. (Code Civ.Proc. § 1294(a); Berman v. Renart Sportswear Corp., 222 Cal.App.2d 385, 387, 35 Cal.Rptr. 218 (1963).)

Code of Civ.Proc. § 1281 provides: 'A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.' Section 1281.2 provides in part: 'On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy If it determines that an agreement to arbitrate the controversy exists . . .' (Emphasis added.)

Defendant contends the trial court erred in its finding that there was no written arbitration agreement between the parties, arguing the findings are unsupported by substantial evidence. Specifically, defendant contends: '. . . the only contracts which could have come into being with respect to the transactions between respondent and appellant had to be' the Acknowledgment of Order forms. The contention is based upon the argument that there was no evidence the oral orders placed by plaintiff contained any of the specific terms of sale, such as price and delivery, necessary to create a valid offer which could be accepted so as to form a binding contract; therefore, the Acknowledgment of Order forms did not constitute a counter-offer which varied the terms of plaintiff's orders (offers) by including arbitration provisions; rather, the forms were offers by defendant to sell; plaintiff accepted these offers by its conduct in retaining the forms without objection and by accepting the yarn, and therefore became bound by the arbitration clause contained in the forms.

We need not decide whether the forms were offers or counteroffers, for in either event plaintiff's consent to, or acceptance of, the arbitration provision was necessary to create an agreement to arbitrate. (See: Civ.Code §§ 1550, 1585; American...