Withers-Busby Group v. Surety Industries, Inc., WITHERS-BUSBY
| Decision Date | 27 May 1976 |
| Docket Number | No. 18932,WITHERS-BUSBY,18932 |
| Citation | 538 S.W.2d 198 |
| Parties | GROUP, Appellant, v. SURETY INDUSTRIES, INC., Appellee. |
| Court | Texas Court of Appeals |
James E. Fordham, Jr., Sidney McClain, Dallas, for appellant.
R. L. McSpedden, Collie, McSpedden & Roberts, Dallas, for appellee.
The question on this appeal is the validity of a provision in a joint venture agreement requiring arbitration of disputes arising in the future. We hold that the agreement is not within the terms of the federal statute and that the provision for arbitration is not valid under the Texas statute because it does not bear the signatures of counsel. Accordingly, we affirm the order of the trial court issuing a temporary injunction restraining arbitration.
Appellant Withers-Busby Group, defendant in the trial court, concedes that an agreement to arbitrate disputes to arise in the future is unenforceable under the common law. Consequently, appellant relies on statutory law.
Enforceability of the agreement under the Federal Arbitration Act, 9 U.S.C. § 2 et seq. (1970) turns on the question of whether it involves 'commerce between the states,' as provided in that Act. The agreement was signed by appellant Withers-Busby Group and Surety Leasing Company, Inc., both residents of Texas. It is styled 'Agreement to Form a Joint Venture.' It recites that the parties desire to enter into this agreement before actual execution of a joint venture agreement in order to facilitate certain business transactions then pending between the parties. The pending transactions are not described, and the purpose of the proposed venture is specified only as 'leasing and financing transactions.' The principal place of business of the venture is specified as Dallas, Texas. The provision for arbitration is as follows:
Any dispute arising out of, in connection with, or in relation to this Agreement, or any breach thereof, shall be determined and settled by arbitration in Dallas, Texas, pursuant to the rules then obtaining of the American Arbitration Association.
There was testimony that the parties contemplated extensive business in the future on a nationwide scale, but no evidence that such business ever materialized. The dispute of which appellant demanded arbitration concerned financing of certain lease contracts between General Computer Systems, Inc., a Texas-based corporation, and various lessees, some of which may have been located in other states. Appellee Surety Leasing Company had purchased the right to receive payments under several of these contracts, and this purchase had been financed by certain banks located in Texas. The dispute concerned whether this transaction was within the terms of the proposed joint venture. Appellant concedes that a fact issue is raised as to whether the contract involved 'commerce between the states.' Since the trial court issued the temporary injunction restraining arbitration, we must presume in support of the judgment that the court found that the contract did not involve 'commerce between the states.' In view of this presumed fact finding, we cannot say that the trial court abused its...
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