Case Name: In the Matter of the Arbitration between Spectrum Fabrics Corporation, Appellant, and Main Street Fashions, Inc., Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1955-04-12
Citations: 285 A.D. 710
Docket Number: 
Parties: In the Matter of the Arbitration between Spectrum Fabrics Corporation, Appellant, and Main Street Fashions, Inc., Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 285
Pages: 710–718

Head Matter:
In the Matter of the Arbitration between Spectrum Fabrics Corporation, Appellant, and Main Street Fashions, Inc., Respondent.
First Department,
April 12, 1955.
Bernard A. Saslow of counsel (Harold A. Axel with him on the brief; Lynton & Saslow, attorneys), for appellant.
Robert W. Adler of counsel (Ruben Schwartz, attorney), for respondent.

Opinion:
Rabin, J.
The petitioner agreed to sell to respondent and respondent agreed to buy 5,000 yards of fabric of a pattern designated as " Scottie ". Most of the goods ordered were delivered. A dispute has arisen between the parties, the buyer claiming that the seller failed to restrict that pattern to it exclusively as, it alleges, the seller was bound to do under its agreement. The seller denies that under the contract between the parties it was under any obligation to do so. It is that dispute which the buyer seeks to arbitrate under the arbitration clause that both parties agree is contained in the contract. The seller resists arbitration, asserting that there is no arbitrable dispute between the parties for the contract is clear and unambiguous and does not contain any such exclusive privilege claimed by the buyer. Accordingly, the seller petitioned Special Term to stay the proposed arbitration. From the refusal of Special Term to grant such relief, the petitioner appeals.
The first writing to be considered is the one dated April 15, 1954, on the printed form of the seller. It is the original order of the buyer and contains the following clause: " Confined to coat and Rainwear. Cloth is released only if no further orders received by June 30."
It is upon this clause that the buyer rests his claim. This order form is signed by the president of the buyer and also by the representative or salesman of the seller. However, on its face there is printed the following legend: " This order is subject to the acceptance of Spectrum Fabrics Corporation and to the conditions appearing on the face and reverse side hereof." On the reverse side, we find printed the following: " 10. Acceptance. This instrument shall become a contract when signed by Buyer and Accepted by Seller."
The second writing to be considered is likewise one on the printed form of the seller and is dated the day following the signing of the order, i.e., April 16, 1954. It is entitled " contract " and printed on the face thereof is the following provision: " The order, the subject of this contract, has been accepted and recorded by the seller at its office in New York. This contract, (the provisions on both this and the reverse side of this sheet) supersedes the buyer's own form of manifold or order, if any, and constitutes the only contract between buyer and seller covering this transaction. There are no oral understandings, representations or agreements relative to this contract that are not fully expressed herein, and this contract shall not be modified or amended except in writing."
The seller claims that this document constitutes the sole contract between the parties, is silent as to any exclusive privilege and, in the light of the above provision, one may not read into it the confinement clause found in the order of April 15th. Therefore, urges the seller, it appears clearly that there is no obligation on the part of the seller to confine the Scottie fabric to the buyer and thus no arbitrable issue exists between the parties. Is that position sound? Is it so clear, beyond real dispute, that the second document replaces and removes the first from consideration, as seller contends, rather than incorporates it by reference, as buyer contends, that a court can say there is no issue, no room for dispute, hence nothing for arbitrators to resolve?
True, the paper of April 16th would expressly supersede any order on the buyer's own form. But the order of April 15th is not on the buyer's form but rather on the form of the seller. True, under the April 16th agreement there may not be any " oral understandings " and " agreements ". But the order of April 15th is in writing. Can it be said that it is clear and beyond question that the intention and effect of the contract of the parties is to be gleaned only from the later document?
The last-quoted clause of that document makes the reverse side of the document part of the contract and gives it the same force as though it were printed on its face. In paragraph 7 printed on the reverse side, we find the following: " If Seller agrees to confine any of the goods sold herewith, it shall be responsible only for ordinary and reasonable care in confining such goods to the specified purpose. ' '
The instrument must be considered as a whole and every part of it must be given a meaning. We can get some help in determining whether the seller agreed " to confine any of the goods sold herewith " by reading it with the following appearing on the face of the document: " The order, the subject of this contract, has been accepted and recorded by the seller at its office in New York."
Why does this clause recite acceptance of the order and why does it recite that the order has been recorded in the seller's office? The answer to that question may appear in clause 10 on the reverse side of the order of April 15th, which is as follows: ' 10. Acceptance: This instrument shall become a contract when signed by Buyer and Accepted by Seller."
For us to say that no arbitrable dispute exists here would require a finding that the position of the buyer is " clearly contrary to the plain meaning of the words ' ' and ' beyond dispute ' ' (Matter of International Assn, of Machinists [Cutler-Hammer, Inc.], 271 App. Div. 917, 918, affd. 297 N. Y. 519), and it must likewise be found that there has been no default " under the unambiguous terms of an agreement calling for arbitration " (Matter of General Elec. Co. [United Elec. Radio & Mach. Workers of Amer., C. I.O.], 300 N. Y. 262, 264). No such finding can be made here.
Clearly there is presented a real dispute. As a court, determining the issue of construction, we might readily agree with the seller. But the question before us is not how we would decide the issue but whether there is any issue to decide. If there be an issue to decide, and we should hold that there is, then the arbitrators must decide it.
It is contended, however, that because the determination of the question raised requires an adjudication as to what constitutes the contract of the parties, that determination must be left to the courts. Understandably, where there is a controversy as to whether a contract exists requiring* the parties to arbitrate their differences that issue must be decided by the court. There can be no arbitration unless it is first found that the parties have agreed to arbitrate. But here we have such an agreement and there is a real dispute under it. That dispute, particularly under the circumstances of this case should be determined by the arbitrators and not by the courts. Not only does each document contain a broad arbitration clause but by the contract of April 16th, which makes specific reference to the order of April 15th, the parties agree to arbitrate not only any controversy arising under the contract but any controversy in relation thereto. Both questions of fact and law are for the arbitrators (Matter of Lipman [Haeuser Shellac Co.], 289 N. Y. 76).
When parties agree to arbitrate, they agree to waive the rules of evidence and the inexorable application of substantive rules as well. This may not always be wise, but it is within the powers of the contracting parties, and it is the import and essence of an arbitration agreement. It distorts the purpose of arbitration for courts to censor the issues that arbitrators may consider before the courts will permit an arbitration to proceed. The statute is clear in confining the court's function to determining (1) the existence of an agreement or submission to arbitrate, and (2) the existence of an issue referable to the agreement (Civ. Prac. Act, § 1450,1458). Surely, the parties in this case could have executed a submission to arbitrate the question whether the accepted order form was embraced in the more formal agreement signed the next day. If they could do that, they could also sign an agreement to arbitrate a similar dispute should it arise in the future. The fact is that an agreement to arbitrate, as authorized by statute, is a contractual method for settling disputes in which the parties create their own forums, pick their own judges, waive all but limited rights of review or appeal, dispense with the rules of evidence, and leave the issues to be determined in accordance with the sense of justice and equity that they may believe reposes in the breasts and minds of their self-chosen judges. All this they choose for themselves, subject only to the statutory grounds for vacatur of the award, as set forth in section 1462 of the Civil Practice Act. This violates no policy. The statute authorizes it. Its wisdom is not for the courts to dispute.
The order appealed from should be affirmed.