Manfred W. Ehrich, Jr.: -- as a matter of the power -- the law of the specific States should govern and --
Stanley Reed: Before you -- before you -- may I interrupt this to --
Manfred W. Ehrich, Jr.: Yes, sir.
Stanley Reed: -- ask you questions, please. It -- does it show whether or not the petitioner withdrew from his agreement to arbitrate?
Manfred W. Ehrich, Jr.: Well --
Stanley Reed: The record show?
Manfred W. Ehrich, Jr.: Does what show?
Stanley Reed: Does the record show?
Manfred W. Ehrich, Jr.: Well, the record shows all the facts and as far as the withdrawal is concerned, there was no formal withdrawal but the bringing of an action amounts to withdrawal from --
Stanley Reed: Do you take that that's a withdraw?
Manfred W. Ehrich, Jr.: Yes, Your Honor. It's --
Stanley Reed: Would it be necessary for them to withdraw to raise the question for this case?
Manfred W. Ehrich, Jr.: Well, perhaps we should use the word revoke rather than withdrawal because the action was begun prior to the commencement of arbitration. In other words, we sued in Vermont, and then the other side would move to the federal court and substantially at the same time, began arbitration in New York and then moved to stay, pending the conclusion of the arbitration.
Stanley Reed: It began arbitration?
Manfred W. Ehrich, Jr.: The --
Stanley Reed: In your time that is here.
Manfred W. Ehrich, Jr.: That's right, Your Honor. So that --
Stanley Reed: If arbitration took place -- it would take place in New York?
Manfred W. Ehrich, Jr.: Well, it would take place before the American Arbitration Board, and they have an office in New York and -- and one in Boston, and they have provisions in their --
Stanley Reed: But not in Vermont?
Manfred W. Ehrich, Jr.: No, but they have provisions in their rules for sending arbitrators out to wherever it might be. And I assume under that that we could have the arbitration in Vermont which would be more convenient for both parties.
Stanley Reed: Well, do we have to decide in this case what state law controls?
Manfred W. Ehrich, Jr.: What state law controls? Oh, I think so, Your Honor. Our position is that Vermont state law definitely does control and as a matter of fact, our authorities for that, principally New York cases.
Felix Frankfurter: And do we have to decide what was -- assuming you're right, do we have to decide what Vermont law is, having no -- no light or have light shed on it from any of the courts below?
Manfred W. Ehrich, Jr.: As --
Felix Frankfurter: But we have to decide the question I put to you before noon? Do we have to decide if -- if the stay become relevant, what New York is with reference to a contract executed in New York but the legal forum is Vermont without any light from the lower courts?
Manfred W. Ehrich, Jr.: My view is, Your Honor, that on the -- that what you really have to decide is whether this case comes under the Erie doctrine. And if it comes under the Erie doctrine then Vermont law applies and the -- the only way to get to that -- to the New York --
Felix Frankfurter: I think it's -- is that necessary to this panel? The Erie doctrine merely means that relevant state law and not some concoction of the federal court as to what is the general law, applies. But that doesn't tell me what the relevant state law is.
Manfred W. Ehrich, Jr.: Well, isn't that question what the Vermont -- what law the Vermont courts would apply?
Felix Frankfurter: Well, that may -- they may not be but assuming it is, have we determined -- do we know, the answer eventually does or an adequate certainty what Vermont law is on this subject? All -- all we know is that Vermont law, that it rules out arbitration.
Manfred W. Ehrich, Jr.: You mean on the matter of conflicts, Your Honor?
Felix Frankfurter: Yes. This is -- this -- this is a New York -- all these went to that. I mean hardly stay open in my mind, it couldn't be more open.
Manfred W. Ehrich, Jr.: Well --
Felix Frankfurter: But if New York -- if this is a New York conflict. In the first place, it maybe a question of New York law as to whether or not the law raise the performance of it. In the second place, I do not know, why should I know what Vermont law is as to a contract to be executed in Vermont but -- to be performed in Vermont but executed in New York. On the Vermont we have -- have a law different for what governing body as to a conflict of contracts which is made and is formed in Vermont. In relation to a contract tat exists is made in New York with complete performance in Vermont and New York that has a law as to contracts made in New York to be performed in New York with different problems from contracts made in New York to be performed in Vermont. Any one of those possibilities seem to me relevant, rationally speaking, aren't they?
Manfred W. Ehrich, Jr.: Well, I think they are.
Felix Frankfurter: Well then, therefore -- and therefore, the question is where do I get the answers to those.
Manfred W. Ehrich, Jr.: Well --
Felix Frankfurter: That is one of the Vermont (Inaudible) to go through -- then go through Vermont cases to find out? One would get lost to that.
Manfred W. Ehrich, Jr.: Well, I don't -- I think, Your Honor, that we can help you sum on that. As far as the actual conflicts question goes, there is virtually no Vermont law order but --
Felix Frankfurter: Therefore, we have to prophesize to what Vermont law would be if it came before the Vermont Supreme Court, is that right?
Manfred W. Ehrich, Jr.: Well, Vermont has always been a common law state and I think that the -- that the conflicts rule as far as common law goes on what Vermont should do on a contract that was executed in New York to be performed anywhere, provided the case as tried in Vermont, I think that conflict rule is decided by the New York cases of the Mitcham against the Railroad, of matter of Gant, of matter of (Inaudible), and matter of Berkowitz. And those cases all hold that arbitration is a matter of remedy, and --
Felix Frankfurter: But --
Manfred W. Ehrich, Jr.: And --
Felix Frankfurter: (Inaudible)
Manfred W. Ehrich, Jr.: No.
Felix Frankfurter: If you prophesize that too much because it's a matter of remedy, you are next going to argue that it is a matter of remedy once it gets into the federal courts.
Manfred W. Ehrich, Jr.: Well, Your Honor, I think the distinction there is the distinction drawn in the Guaranty Trust case that what you're talking about is whether it substantially affects the result.
Felix Frankfurter: Very well. In those New York cases, to call this remedy doesn't help too much.
Manfred W. Ehrich, Jr.: Well, it helps in the sense that it means that Vermont law rather than New York law governs.
Felix Frankfurter: But why. We thought --
Manfred W. Ehrich, Jr.: Well --
Felix Frankfurter: It would just -- If I understand that, if I understand myself whether it's remedy or the substance with certain aspect is irrelevant to the question of enforcing, giving counsels in a case we move to the federal courts.
Manfred W. Ehrich, Jr.: That's --
Felix Frankfurter: You go after the different things.Namely, what -- what cloak we are speaking, substantially makes a difference.
Manfred W. Ehrich, Jr.: Yes, Your Honor.
Felix Frankfurter: Is that right?
Manfred W. Ehrich, Jr.: Well, that' right. That's as to one phase. That is as to whether the state law or federal law applies.
Felix Frankfurter: Yes.
Manfred W. Ehrich, Jr.: Then once you've decided that state law applies, the question is, what is the state law? And in Vermont, you're pretty much thrown back to -- well, the state law is the common law. And then the next question is, what is the common law? And that's where the Mitcham case and the cases that follow it establish what the common law rule is that would be enforced in Vermont. And it's rather interesting when you talk about possible conflict between Vermont law and New York law, that even where New York, if this case was reversed as to locations, New York I suppose would enforce this arbitration agreement under the New York statute. But the reason that they would apply that statute is exactly the same reason that we're relying on here for not applying it in Vermont. In other words, they would apply it because the case was in New York and because it was a matter of remedy. That was held in every one of the cases that either side have cited it from New York even -- even in the cases where the contract call for application of New York -- of New York law, the basis of the decision was that both parties were voluntarily before the New York court, and that New York would apply its own law as to this matter of remedy.
Felix Frankfurter: You say this according to Vermont law the question of remedy, is it? Well, the common law would make it remedy --
Manfred W. Ehrich, Jr.: Yes, Your Honor.
Felix Frankfurter: -- and the common law you derive from the New York cases would have gone back when, is that right?
Manfred W. Ehrich, Jr.: That's right and they --
Felix Frankfurter: Now, you think if it's remedy in Vermont law, it isn't true under the Guaranty Trust Company to every question of remedy. It means the opposite issues that every question of remedy of the State is enforced by the federal court, I mean that doesn't answer the problem, does it?
Manfred W. Ehrich, Jr.: No, it doesn't but in the very Guaranty case itself, the statute involved was the statute of limitations. And that as you said in your decision in that case has been held to be a matter of procedure.
Felix Frankfurter: For certain purposes --
Manfred W. Ehrich, Jr.: That's right.
Felix Frankfurter: -- not for purposes of implementing the Erie doctrine.
Manfred W. Ehrich, Jr.: That's right and I say the same thing about remedy in this case.
Felix Frankfurter: All right. So -- all I'm suggesting is that -- that remedy is the most treacherous concept to be using in this particular problem because you have to say, "Yes, remedy for service purposes would not without that."
Manfred W. Ehrich, Jr.: Well, that's right, Your Honor, but we haven't found any way to get around the -- around the use of the term remedy.
Felix Frankfurter: But I thought the New York -- the Guarantee Trust Company tried to indicate that it gets you nowhere in those (Inaudible)
Manfred W. Ehrich, Jr.: Well, Your Honor, that's right for the Erie purposes but you were --
Felix Frankfurter: That's what we've got here. We've got an Erie purpose here, haven't we?
Manfred W. Ehrich, Jr.: Yes, but you also have the question of whether Vermont and New York law applies. And that -- that's --
Felix Frankfurter: That's a different question and --
Manfred W. Ehrich, Jr.: That's right.
Felix Frankfurter: -- from that -- on that belief conflict --
Manfred W. Ehrich, Jr.: Yes.
Felix Frankfurter: -- will be to call the state courts to say I couldn't get any by going to the Vermont cases, and sending to the New York cases because New York and Vermont, both the common law jurisdiction and the common law is that the New York Court of Appeals said it was, isn't that right?
Manfred W. Ehrich, Jr.: Well, I'm not relying solely on New York. We have the Shafer case from Ohio, and then there are quite a number of other cases involving some decisions of this Court which followed that same principle.
Felix Frankfurter: Well now, I assume -- assuming you're right -- assuming -- don't worry about the conflict problems, so called, and that a situation where Vermont says, "This kind of -- this question Vermont thought wouldn't deal remedy," we can't have this remedy in the sort of jury non-proper prejudice. And we come to our federal problem. Namely, is this the kind of thing by which the substantive law is enforced to take that remedy and therefore, the federal court on its own, (Inaudible) or resource to the remedy or must have take over from the State?
Manfred W. Ehrich, Jr.: Now --
Felix Frankfurter: (Inaudible)
Manfred W. Ehrich, Jr.: We think that the Wilco cases, the primary answer to that, that it certainly does substantially affect the result. And I'd like to read just a few lines from the opinion. This Court there said, “In unrestricted submission such as the present margin agreements envisage, the interpretations of the law by the arbitrators in contrast to manifest disregard are not subject in federal courts to judicial review for error and interpretation." And then a little later, they went on and referring to the Boyd case, they said, “We said in that case that the right to select the forum even after the creation of a liability as a substantial right and that the agreement restricting the choice would forth the expressed purpose of that statute.” Now, in other words, I interpret that as meaning that in a situation which is rather similar, this right to choose a forum, and in that case it was a right to choose between a court of law and arbitrators, there's a substantial right in the Guaranty Trust sense. And for that reason, the Court in that case refused to enforce arbitration. Now, in your dissent there, as I understand it, you drew an analogy between the speedy trial of these people that contracted for and the tortuous conduct of cases in the State of New York where the dockets are crowded. And in Vermont, I don't want to belabor the term policy, but in Vermont let us say there isn't any economic necessity for substituting this arbitration which gives you sort of half a loaf, but faster for regular trial by court and jury with all the rules of evidence that assure a correct answer but take longer. Actually, in Vermont, it wouldn't take any longer.
Felix Frankfurter: Let me put this to you in view of that consideration of yours. For purposes of argument, suppose the question had come up in the reverse, so as Vermont having arbitration law allows them and the New York didn't. Now, this was removed to the New York, to the Southern District of New York where the calendar has been what denotes to them as you have been in -- in some considerable extent of what it is. Would -- would the consideration that you advance the opposite of which that they have prevailed irrelevant to be -- in this matter to be determined by state of the calendar for one thing, is that relevant continuation?
Manfred W. Ehrich, Jr.: Well --
Felix Frankfurter: And I mean -- my question doesn't mean to decline an answer. I question (Inaudible)
Manfred W. Ehrich, Jr.: I was really simply trying to distinguish this situation from -- from your dissent in that case. I'm afraid I'd go along with the majority.
Felix Frankfurter: Well, I -- I do too. It's been decided as the (Inaudible) clause by which dissent from court opinions are all the same, not one of which every quarter.
Manfred W. Ehrich, Jr.: Well, I thought perhaps I could satisfy you that the reasons for your dissent in the Wilco case don't apply here.
Felix Frankfurter: The best way to satisfy me in your coherent theory to be something that certifies --
Stanley Reed: What -- what would happen, Mr. Ehrich, if this Court affirmed this. You would then go before the New York arbitration, I suppose.
Manfred W. Ehrich, Jr.: Well, I believe we'd have to, Your Honor.
Stanley Reed: And there, you would have the right to withdraw from the arbitration under your theory?
Manfred W. Ehrich, Jr.: Well, not after this Court decided we didn't.
Stanley Reed: No, no. They didn't merely decide that in accordance with Article -- paragraph 3, isn't it? Article III, that there'd be a stay and that you would have to undertake the arbitration (Voice Overlap) --
Manfred W. Ehrich, Jr.: Well, the -- the only reason that we would have to go before the Arbitration Board is that in the District Court, the company which is quite normal, have put in a counterclaim for exactly the same amount as our client. And before the Arbitration Board, that counterclaim is the -- the only matter at issue at this point, unless we go in and present our side.
Stanley Reed: Well, you --
Manfred W. Ehrich, Jr.: Now, the result would be if we ignore it that under the New York --
Stanley Reed: Well, I didn't say ignore it. I said if we affirm this, you would have to appear before the New York Arbitration Commission.
Manfred W. Ehrich, Jr.: Well, either that or have a default judgment against us --
Stanley Reed: Yes. (Voice Overlap) --
Manfred W. Ehrich, Jr.: -- which would then be enforceable in the New York courts.
Stanley Reed: So if you appear there, then wouldn't you have the right to raise every question in regard to the -- to the law of Vermont that you now or before the law has -- had a right to withdraw from the arbitration since they didn't know the decision?
Manfred W. Ehrich, Jr.: Well, I don't think so, Your Honor. By analogy to these New York cases, I think if we appeared before the Arbitration Commission, we'd be in the same position as if both parties had voluntarily appeared before the New York court. And in other words, we'd be submitting ourselves to the jurisdiction of New York and -- and so then the law --
Stanley Reed: Well, even though your (Voice Overlap) have said in -- in answer to this claim for arbitration, we announce that we have withdrawn from the arbitration agreement in accordance to the law of Vermont.
Manfred W. Ehrich, Jr.: Well -- well, I'm not sure but I think we'd be stuck with it. The -- the contract provided for the jurisdiction of the New York courts. And whether that would carry over to the Arbitration Board or not, I don't know. But the -- it didn't provide the exclusive jurisdiction.
Stanley Reed: Well, that -- that's the very question you have before the District Court, isn't it?
Manfred W. Ehrich, Jr.: No, I don't think so because it didn't provide for the exclusive jurisdiction of the New York courts. And as I understand that provision, it simply means that if either party goes before the New York court, the other party will be bound by the decision. But in this case, both parties went into the Vermont court and that question hasn't arisen.
Felix Frankfurter: Mr. Ehrich, may I -- (Inaudible) case that that was a surprise about that decision. The statute -- the statute changed that decision, didn't it?
Manfred W. Ehrich, Jr.: Well, it did --
Felix Frankfurter: Well, that seems to me the old and the perfectly (Inaudible) but I don't think it has written that opinion. But I don't see that -- I get any light on that from -- for our problem.
Manfred W. Ehrich, Jr.: I --
Felix Frankfurter: Because I talk in saying that arbitration relates to remedy. Well, the point of that case is that New York disregarded a -- wouldn't enforce a provision we challenge to the court. That -- that's the heart of that case which -- which to me is a little medieval.
Manfred W. Ehrich, Jr.: Well, I think Your Honor that you really have to read a string of cases there. After the Mitcham case, there was Berkowitz case where they had a very interesting situation of two contracts providing for arbitration. Both contracts made before the statute was enacted and an action on one of them was begun before the statute was enacted, and the other was begun after the statute was enacted. And in that case, Cardozo held that this thing being a matter of remedy, that they would enforce arbitration in the second case because the lawsuit was begun after the action, after the statute was passed, but they would not enforce it in their first case.
Felix Frankfurter: But why -- what -- what is the significance? What's the importance of calling it a matter of remedy? I don't understand it. Suppose it was called only to substantive law as in Mitcham and reach the same result, wouldn't they? Party said by agreements to decide by what substantive law contract it governed, it -- it -- wouldn't that undo it for purposes to decide and other rights should be enforced?
Manfred W. Ehrich, Jr.: Well, my understanding is that in the Mitcham case, the substantive law of Ohio where the contract was drawn -- I think the contract was drawn in Ohio for performance and --
Felix Frankfurter: I don't -- (Voice Overlap) the corporation as to what --
Manfred W. Ehrich, Jr.: Both parties were Pennsylvania parties and performance was to be in Pennsylvania. And well, they wanted to enforce the Pennsylvania statute at any rate. As I understand that, his theory was that since this was a matter of -- of remedy, the law of the forum applied. And if it had been a matter of -- of substance, then the law either at the place of performance or of contracting would apply. I'm not sure which.
Felix Frankfurter: But that's the New York -- derives that, is that the New York law? Am I just supposing that that's the New York law that it's -- and probably more important to decide whether, although the contract was made in New York, it looks the performance in Vermont and therefore, we've got a conflict problem.
Manfred W. Ehrich, Jr.: Well, I don't think you get to the conflict between performance and where the contract was made because I think that the rule that governs here is where the lawsuit is brought. And that this is a matter of --
Felix Frankfurter: Where the lawsuit is brought? The answer to what the Court does where the lawsuit is brought, the public attorney on what side of his rights and remedies and liabilities to be enforced.
Manfred W. Ehrich, Jr.: Well, and I think there's a distinction, Your Honor, between remedial matters and substantive matters. And I think that that's the generally accepted common law, and I think that this Mitcham case is one of the leading cases on the question of -- of that rule as applied to arbitration.
Felix Frankfurter: What's the whole point -- one of the advantages -- what is -- what -- what are the advantages of one of the intellectual games of the Erie doctrine is that this calls for reexamination of these -- these categories that has been thrown around until they solve problems.
Manfred W. Ehrich, Jr.: Well, I think that's true, and I think that I like the Erie doctrine for that reason. And the -- under the Erie doctrine, I feel quite confident that the federal court must apply the law of the State in which it sets. And --
Felix Frankfurter: It's not as to a lot of things. It doesn't have to apply the law of Vermont as for the time that enactment is to be filed? (Voice Overlap) --
Manfred W. Ehrich, Jr.: Well, that's -- that's the conduct of its own business --
Felix Frankfurter: All right.
Manfred W. Ehrich, Jr.: -- and that's under the -- is it the Cohen case? I'm sorry if you got a little confused.
Stanley Reed: Well, the Cohen case said that we didn't have to apply the law of New Jersey, one of suit, the stockholders liability as I recall it.
Manfred W. Ehrich, Jr.: I had said they did have to. In the Cohen case, the Court said what the Erie Railroad Company v. Tompkins, and its progeny have brought a far reaching change in the relation of state and federal court in the application of state law in the latter whereby in diversity cases, the federal court administers the state system of law in all except details relating to its own conduct of business. And they held in that case that the state law requiring the stockholders to file a bond would be enforced.
Stanley Reed: That's the one of the federal court.
Felix Frankfurter: Mr. Ehrich, suppose -- I hope my questions really indicate to beat the puzzling problems as to one like this.
Manfred W. Ehrich, Jr.: Well, the --
Felix Frankfurter: Suppose -- suppose this litigation, both are reversed. It is -- the state law allowed arbitration and even, it would enforce arbitration. Suppose the case had arisen before this Court decided that arbitration agreement was valid or the red start to limit the red light. And arbitration agreement were deemed throughout the court jurisdiction and not enforced. The state law allows the arbitration. Cases removed to the federal court. Federal court as a matter of substance, as a matter of law of limitation, there is no arbitration. We cannot give arbitration, that's against the law for anybody who's far ahead as this case had (Inaudible) what about that one?
Manfred W. Ehrich, Jr.: Well, that's a tough proposition. The --
Felix Frankfurter: (Inaudible)
Manfred W. Ehrich, Jr.: The only case -- the only federal case that really has to do with arbitration is Titus against (Inaudible) where they enforced Texas law to the exclusion of the Federal Arbitration Act and that's in the Fifth Circuit.
Felix Frankfurter: (Inaudible)
Manfred W. Ehrich, Jr.: I believe so.
Felix Frankfurter: What I'm -- the case I thought that where the federal court couldn't (Inaudible) the state court did. And you say it makes a substantive difference in the result whether you have arbitration or not, is that right?Rather than --
Manfred W. Ehrich, Jr.: Yes.
Felix Frankfurter: -- it's only -- have conducting business. I'm suggesting that in that case, the federal court would have to say, “We have to -- the case is properly here, the Court has jurisdiction.” It must adjudicate. As a provision for arbitration, we can't enforce that. Therefore, withdraw about enforcing it as the way we do business the same way before a jury.
Manfred W. Ehrich, Jr.: No --
Felix Frankfurter: That's the way of conducting its business.
Manfred W. Ehrich, Jr.: I think --
Felix Frankfurter: (Voice Overlap) --
Manfred W. Ehrich, Jr.: I think that once they reach the point where they -- where it makes a substantial difference, where it -- in other words, where it's a matter of -- of policy in the federal courts, as I understand that that's what you set out that it's a matter of policy in the federal courts that they will not enforce arbitration. I believe that under the Guaranty case, clearly, they would have to grant a stay and enforce the state law because it would substantially affect the outcome.
Felix Frankfurter: They would have to grant a stay?
Manfred W. Ehrich, Jr.: Yes, Your Honor.
Felix Frankfurter: And allow arbitration?
Manfred W. Ehrich, Jr.: Yes, Your Honor.
Felix Frankfurter: Although a federal court held that arbitration by -- later that we courts held?
Manfred W. Ehrich, Jr.: Well, this is a case where jurisdiction is based solely on diversity, and the theory is that the choice of forum, if you like, determines what law shall apply on these matters. And I think that they definitely would, under the Guaranty case, enforce arbitration.
Sherman Minton: Why shouldn't Vermont apply the -- enforce the New York law set out in the contracts unless that law is suspended or is the public policies of their own states?
Manfred W. Ehrich, Jr.: Well, I don't think this is a matter of -- of full faith and credit. The -- the Shafer case, which is the only case we found directly on it, held that a provision on a contract that the law of New York, and it did involve the New York Arbitration Act, would apply, had no more weight than if the people involved in the contract had provided that this arbitration agreement shall be irrevocable and enforceable.
Felix Frankfurter: May I as you why you don't shortly or briefly answer Justice Minton's question by saying it is offensive to Vermont?
Manfred W. Ehrich, Jr.: Well --
Felix Frankfurter: As I understand it that's the policy of Vermont, isn't it?
Manfred W. Ehrich, Jr.: I think it -- well, I --
Felix Frankfurter: Well, if it isn't then there's no problem.
Manfred W. Ehrich, Jr.: It is, Your Honor.
Sherman Minton: (Inaudible)
Manfred W. Ehrich, Jr.: Well, I think there is but I don't think that you have to go to the length of -- of offensive. What Vermont does is they leave the parties in this situation. They make an agreement to arbitrate. If both parties want to arbitrate, and the award is granted, then they will enforce the award, but they will not enforce an unwilling party to give up the right to the protection of the legal rules. And then it's in --
Felix Frankfurter: Well, what -- Vermont says we gave it against the public interest to deny a man in ordering a hearing of the Court if that's what he want.
Manfred W. Ehrich, Jr.: That's correct.
Felix Frankfurter: Well, that's what I mean by offensive to its policy. You allow arbitration willingly. By offensive, it doesn't mean immoral, it doesn't mean as a point of --
Manfred W. Ehrich, Jr.: Well --
Felix Frankfurter: -- stock.
Manfred W. Ehrich, Jr.: In that sense I think you're entirely right, Your Honor.
Felix Frankfurter: That's a policy of -- of protecting rights as utilized in courts and so on.
Hugo L. Black: Is there any policy to the contrary in Vermont?
Manfred W. Ehrich, Jr.: No, Your Honor.
Stanley Reed: Well, as I understand what your answer to Justice Frankfurter, Vermont would be able to say no agreement of another State would be enforced in Vermont.
Manfred W. Ehrich, Jr.: Would say what, Your Honor?
Stanley Reed: No agreements made in another State would be enforced in Vermont.
Manfred W. Ehrich, Jr.: Oh, no. No, we're talking only about arbitration agreements.
Stanley Reed: Only arbitration?
Manfred W. Ehrich, Jr.: Yes, Your Honor.
Stanley Reed: Well, I think you say that about an arbitration agreement, why not about any agreement?
Manfred W. Ehrich, Jr.: Well, because --
Stanley Reed: Isn't it -- isn't it a question of whether it's so violative in the policy of Vermont that is a matter almost (Inaudible)
Manfred W. Ehrich, Jr.: Well, in Vermont we feel that you're entitled to a jury trial. That you're entitled to the regular court procedures, and we do not have any situation such as you do in New York where people are justified in casting aside those protections in order to get a somewhat less reliable answer faster.
Stanley Reed: I understand that.
Manfred W. Ehrich, Jr.: So that --
Hugo L. Black: The policy seems to be that -- in Vermont a man who wants a court trial and a jury decided to get unless he waives it.
Manfred W. Ehrich, Jr.: Yes, Your Honor.
Stanley Reed: So even if he waives it --
Manfred W. Ehrich, Jr.: Well --
Stanley Reed: Even if he waives it and then changes his mind.
Manfred W. Ehrich, Jr.: That's right.
Stanley Reed: So no matter what he contracts to do, he could still get his jury if he wants to.
Manfred W. Ehrich, Jr.: Well, I suppose so.
Felix Frankfurter: Well if it's hardly so reluctant about that. That has been the law of the English speaking word (Inaudible) deal before our legislation, all over the place could change that.
Manfred W. Ehrich, Jr.: That's correct and because it can be changed by a legislation as the necessity comes up in each state and has been.
Earl Warren: Mr. McNamara.
Joseph A. McNamara: Your Honors, may it please the Court. We feel that the contract itself here is very important in determining whether or not we have a right to a stay with the Circuit Court in this manner ordered. Now as has been stated, both parties to this contract were residents of the State in New York at the time the contract was drawn and executed. It contemplated and the contract was drawn in New York as well. The contract contemplated that the petitioner here would go to Vermont on at least some has served since the major part of it probably. The contract is executed on August 1st, 1952 and about that day, the petitioner did remove to Vermont. His employment continued only until the end of October -- towards the end of October when he was dismissed or the relation of his duties as he claim. That was in 1952, and in February of this year, the petitioner started his breach of contract action in the county court in Bennington County, and was removed by us to the federal court by reason of diversity. We filed our answer indicating that we denied his rights to recover on the breach and set up a counterclaim showing damage to the respondent here of substantially the same and surmount as is was claimed by the petitioner. At about that same date, we proceeded under the contract provisions to institute arbitration proceedings in New York through respondent's New York counsel, that was instituted and service made upon the petitioner here. Following that --
Stanley Reed: No dispute about service?
Joseph A. McNamara: There is no dispute about service.
Stanley Reed: You served in New York?
Joseph A. McNamara: We are -- yes. And the -- we served under the New York statute which prevent -- permits service by registered mail. And that was done and proper bond, filed it under standards, no question for proper arbitration proceedings were instituted in New York. Very shortly there afterwards, the day or two later, we moved for a stay in the District Court to permit us to continue with the arbitration. That matter was heard and the Court denied it, not our motion for stay on the ground, the Court held that Erie-Tompkins did control here, and we filed our appeal which was heard by the Second Circuit. And that Circuit in the unanimous opinion ruled that we were entitled for the stay. Certiorari was then allowed here and that brings us to this present point. Now, I think unimportant to call the Court's attention, I think this may as we conceive it be decisible, this whole issue. And that is that when the contract is drawn and executed, there was inserted therein paragraph 11, “The parties hereto -- hereto do here agree that any differences claimed, no matter a dispute arise between them out of this agreement or connected herewith shall be submitted by them to arbitration by the American Arbitration Society or its successor. And that the determination of said American Arbitration Association or its successors or any arbitrators appointed -- designated by the said association on such matters shall be final and absolute.” And then it goes on to say that the arbitration shall be conducted under the pertinent sections of the New York Civil Practice Act relating to arbitration. But a further provision that we consider very important is paragraph 14 of the contract, and that is as follows. "In short the parties hereto do hereby stipulate and agree, that is their intention and covenant that this agreement forums hereunder. And all suits and special proceedings hereunder, be construed in accordance with and under and pursuant to the laws of the State of New York. And that many special -- any actions, special proceeding, or other proceeding that may be brought arising out of or in connection with over reasons of agreement, the laws of the State of New York shall be applicable and shall govern to the exclusion of the law of any other forum without regard to the jurisdiction in which any action or special proceeding may be instituted. Those two sections appear on page 9 of our brief. Now, I understood my brother to say that --
Hugo L. Black: Do you think that's valid?
Joseph A. McNamara: I beg your pardon?
Hugo L. Black: Do you think that's valid on all the States?
Joseph A. McNamara: We think it is.
Hugo L. Black: Both the Equitable Life Insurance Company would have put that provision and all its policies. Would that be binding in all the States?
Joseph A. McNamara: I consider that they -- that this Court has so held in -- in the -- it wasn't exactly that -- that provision, I don't want to indicate --
Hugo L. Black: But I -- I meant --
Joseph A. McNamara: -- in the Commercial Travelers.
Hugo L. Black: I meant for the whole provision with reference to the right to sue and so forth.
Joseph A. McNamara: Well --
Hugo L. Black: The right to arbitrate instead of sue.
Joseph A. McNamara: Yes, I think that would be valid and I think this Court has so indicted that a provision in a contract such as that had to be given full faith and credit in the federal courts or by the courts in the State in which the matter came before them for adjudication in the order of Commercial Travelers against Wolfe in 331 U.S. That was a question of the stay in --
Hugo L. Black: As I -- as I recall it because that was limited to contact of a certain type made by a certain kind of association where they kind of bound together in a invisible bond of brotherly love and (Voice Overlap) --
Joseph A. McNamara: Well, that was in the case. Yes, that was all in there. But the -- this Court held that the very short term limitations in the contract which was also had been adopted by the statute of Ohio, the parent whole office of the plaintiff company, that that was applicable in Iowa, I believe, where the case was tried rather than the Iowa statute. And I --
Hugo L. Black: And the contract made by fraternal order.
Joseph A. McNamara: Yes, that was a fraternal order, yes. And there was a Bill --
Hugo L. Black: And that would emphasize what the statute --
Joseph A. McNamara: Yes, there was great emphasis put on that time.
Hugo L. Black: -- as I recalled it.
Joseph A. McNamara: Yes, and there was quite a vigorous dissent as I recall.
Hugo L. Black: I think I remember that.
Joseph A. McNamara: Yes. But we say that -- that those two clauses of the contract are very pertinent here. Now, the -- my brothers have been asked by Justice Frankfurter and others as to whether or not we had any lower court rulings determining how matters of this nature would be handled. In the first case to come before the New York courts on this was the Marchant against Mead-Morrison Company and decided by the New York Court of Appeals in 1929 after the determination after the passing of the arbitration statute in New York. Now, that was a case in which a main corporation contracted to sell and deliver tractors to a New York corporation. The contract is executed in Massachusetts. The tractors were to be manufactured and delivered to Massachusetts, and the contract contained an arbitration clause. It doesn't set up in the arbitration clause that it was the arbitrations to be under the New York state law. Now, that was brought -- arbitration was sought in that case in the courts of New York and the Court of Appeals had the following question, “Did the Supreme Court or judge there power -- have power under Section 4 of the New York law to appoint a third arbitrator? It appears that their arbitration agreement called for each party to appoint an arbitrator, and those two were to appoint a third. But each party did appoint an arbitrator and they couldn't agree upon the third, and they appealed to the Court of New York to have the third one appointed. And the Court did appoint the third arbitrator, and objection was made there to the seller, the one who didn't want the arbitration in New York, attack the legality of the order on two grounds. On the first point, argues that the arbitration provision as quoted above provided for arbitration in Massachusetts and nowhere else. And therefore, New York had no power to act under Section 4 of the New York Arbitration Act. Judge Cardozo wrote the opinion in that case, and if I may quote from the latter part of one paragraph. Judge Cardozo said, "This remedy may lawfully be extended to contracts of manufacture made in Massachusetts and there to be performed unless it is one of the terms of arbitration clause implied if not expressed that the arbitration shall proceed in a -- in a particular locality.” Express restriction there is none in the contract now before us, whether one as to be implied is the question of intention to determine in the light of the context annotation. This is what was done. The Court discharged of its judicial function was called upon to declare the implications of the promise. We do not say at this time the determination is free from error and not for the present purposes that is not to be ignored as void. In other words, and in that case, the constitutionality of the New York Arbitration Act was gone into and rather determined by Judge Cardozo. Now, there, serious case where case where the only connection that any of the parties or any of the agreement had to New York in the actual contract is a fact that one of the parties was a New York corporation. We have the next case in the matter of Gant and the situation of parties in the terms of arbitration or as follows that both parties were at all times none resident of New York. The arbitration provision called for arbitration in New York. That was the -- one of the parties was a resident in North Carolina and the other was in Nicaraguan company, and a disagreement arose and the Nicaraguan company sought arbitration in New York. The Gant didn't reply but petition for a stay of the arbitration in New York, that's the North Carolina party. He argued the law on that -- of -- under the law of North Carolina, arbitration provision was void and therefore the New York courts could not force him to arbitrate. The trial court and the Court of Appeals found that the arbitration was not void, it was merely voidable in North Carolina, and his petition for a stay of the arbitration proceedings was denied and the arbitration was carried out. Now, the Court of Appeals in its decision used this language, “The place of performance of the arbitration section, though not other parts of the September agreement was to be in New York.” New York statute, that's the Civil Practice Act in Section -- paragraph 84, provides complete compulsion and full enforcement as to such promises to arbitrate future-arising disputes. And apparently on the strength of that, that was the nub of their decision in that case. And further they said, some of the parties solemnly promise to arbitrate their controversies in New York. And by a case in statute law of New York then was and now is that such an agreement is a consent of the parties thereto to the jurisdiction of the Supreme Court of this State to enforce such contract for such submission. Now, that of course is less strong than the case before the Court here. Then there's one other case that is reported without opinion in which there were two New York corporations, also is in New York, entered a commercial contract in New York and had a -- an arbitration provision in their contract. Later, both parties moved to Connecticut, dispute arose, one party petitioned for arbitration in New York and the other party moved for a stay of the arbitration proceedings because a civil case had been commenced in Connecticut. The Court denied that motion, ordered arbitration to proceed and said that even though the case was pending in Connecticut, there was nothing inconsistent in there allowing arbitration since that was the sense of the contract and the agreement made by the party. The judge said in so rolling, called the contract in 1936 was made this day by New York corporations therefore has consent to the jurisdiction of this Court to enforce the contract.” Now briefly, your -- that covers our situation to their brief, some other matters here but here we have two New York parties contracting to arbitrate under the laws of the State of New York, and that all the laws of the State of New York would apply to their contract regardless of whatever the law might be of any other forum. We say that by reason of that, the District Court of Vermont should have and was required to allow our petition and grant our motion because the Court in Vermont should be, as the New York case have held, bound by the contract into which the parties entered. And if the -- the -- since the arbitration had been commenced that we were entitled to the stay to permit completion of the arbitration.
Felix Frankfurter: May I ask, Mr. McNamara, what was in the court of proceeding if the litigation has been allowed to stay, litigation has been made in -- in Vermont court?
Joseph A. McNamara: You mean if we had -- had not --
Felix Frankfurter: Removed.
Joseph A. McNamara: Had not removed.
Felix Frankfurter: Yes.
Joseph A. McNamara: We think that with a contract of this nature as strong as this was, and with the defense of our answer that we were bound by the laws of the State of New York, it's our sound opinion, though we have no strong case to that effect that Vermont would have enforced the New York contract.
Felix Frankfurter: Well, if you are right about it or if the matter is in doubt so we don't know until the Vermont place to have speech then the present problem doesn't arise.Because if Vermont would enforce this, certainly --
Joseph A. McNamara: Oh, that's very true.
Felix Frankfurter: Now, how can we find that out?
Joseph A. McNamara: Well, we have given in our brief here, I haven't gone into it and my brother intends to argue the question of conflicts of law, the contracts conflicts of law doctrine as we see it applied here. But as we see it, the Vermont law on the matter of arbitration is so sketchy. In the first place, there had been no decision in 40 years. The last decision was 40 years ago.
Felix Frankfurter: That has happened in the Court.
Joseph A. McNamara: Yes, I know that. But what has happened has been a trend towards our type of action --
Felix Frankfurter: That is what I meant to inquire.
Joseph A. McNamara: -- very decidedly. I beg your pardon?
Felix Frankfurter: That is what I meant to inquire.
Felix Frankfurter: Yes. And the -- the Board of Commissioners of uniform state laws may not know but in their last meeting, they have drafted the statute now for submission to all States for arbitration. That had been a very strongly debated matter before that Commission for many years, but I understand they have now done that, but the tendency is that way. Now, the language --
Stanley Reed: Now, wait a minute. May I ask right there if it wouldn't interrupt you. It was suggested by your opponent that the Vermont law on arbitration was clear that one might withdraw anytime that he please from an arbitration agreement.
Joseph A. McNamara: I think that it is fair to say that, though the question of enforceability or non-enforceability of an arbitration agreement has never been argued in an opinion. The opinion has never gone into the reasoning for that doctrine.
Felix Frankfurter: What is the basis --
Joseph A. McNamara: They (Inaudible) --
Felix Frankfurter: What is the basis -- what decisions are there that both of you agreed on by Vermont Supreme Court, which no matter how long ago, merely express the common law trend that you cannot vow the cause of action because of the prior agreement to submit to arbitration.
Joseph A. McNamara: Well, now --
Felix Frankfurter: Or that was the law of -- of the federal courts until relatively recently, whatever it is. What (Voice Overlap) --
Joseph A. McNamara: We don't feel that any case has quite exactly said that. Now, they have passed upon the doctrine in Vermont as merely accepting the common law doctrine that it is thus and so and we will follow it. They have never reasoned out.
Felix Frankfurter: I don't care about reasoning but there have been --
Joseph A. McNamara: Oh, yes, the --
Felix Frankfurter: -- has been denied. Have -- have there been -- what is the latest case in the Vermont Supreme Court in which they refused to give --
Joseph A. McNamara: Putting forth Harry against Brown.
Felix Frankfurter: -- respect to an agreement that no cause of action was examined to (Inaudible) or determine --
Joseph A. McNamara: Yes, sir.
Felix Frankfurter: -- until the award was made by an arbitrator.
Joseph A. McNamara: Well, the last case was in 83 Vermont 132, Mead's Administrator against Owen.
Felix Frankfurter: What was the date of that?
Joseph A. McNamara: That was in 1910.
Felix Frankfurter: 1910.
Joseph A. McNamara: That is the last case.
Felix Frankfurter: All this law is about sense --
Joseph A. McNamara: Yes.
Felix Frankfurter: -- not all of it. But --
Joseph A. McNamara: Substantially.
Felix Frankfurter: But the recognition, the yielding body of courts either by as a matter of extradition or the -- the red line case or by a statute and now cited the body of statutes, has all been within -- long after (Inaudible)
Joseph A. McNamara: Yes, and 1920 was really -- 1920 when it really started, the trend became active. But we -- we follow that if the Court please.
Felix Frankfurter: And we need to go through members of the Vermont law and enjoy being in this lawsuit, State denotes to deal about going on in this case. Has -- has the bar generally and in the courts, could we say this, the bar generally and the Court (Inaudible) It would bar this casual -- even the State of New York is also -- doesn't mean -- it doesn't need to. Has there been a general acquiesces regarding the law of Vermont, arbitration agreement shall go?
Joseph A. McNamara: I would say yes frankly, among the bar that they are not enforceable. They are recognized and we have them.
Felix Frankfurter: Yes, I understand.
Joseph A. McNamara: But they -- as to compelling a person to submit to arbitration, I would say --
Felix Frankfurter: If you were asked for a professional opinion, you would say --
Joseph A. McNamara: I would say --
Felix Frankfurter: (Voice Overlap) --
Joseph A. McNamara: You cannot be forced into arbitration.
Felix Frankfurter: Well --
Joseph A. McNamara: I would say.
Felix Frankfurter: -- that is -- so I may understand.
Joseph A. McNamara: Yes.
Hugo L. Black: Is the argument that you've been making as part of that here a moment ago, pointed in the direction of -- of the belief that the law of New York with reference to this contract has to be followed by Vermont whether it wishes or not?
Joseph A. McNamara: Yes.
Hugo L. Black: That was the -- the position that you were making a while ago --
Joseph A. McNamara: Yes.
Hugo L. Black: -- as I understood.
Joseph A. McNamara: We say that Vermont is required under the federal -- under the Article IV of the Federal Constitution to recognize this because it is a substantial body of law both by statute and decision in New York State, which the parties incorporated into that contract and should be and must be recognized by Vermont in acting on this contract.
Hugo L. Black: Even if you concede -- if it be conceded that the law of Vermont does govern and that the law of Vermont is against arbitration, is it your position that the District Court could ignore that fact and submit -- require that matter to be submitted to arbitration?
Joseph A. McNamara: We say yes in this case.
Hugo L. Black: What -- what would -- what do you say in that connection to this statement in Guaranty Trust Company versus New York? Because it -- it gets down to the issue that I have in mind. De novo the policies that underlies Erie verus Tompkins is that for the same transaction, the accident of a suit by a non-resident litigant in the federal court instead of in a state court to block away, should not lead to a substantially different result.
Joseph A. McNamara: Well --
Hugo L. Black: Why would not this leave to a substantially different result?
Joseph A. McNamara: It might -- it might but it doesn't -- I -- I still say that the courts of Vermont would have to recognize the law of New York here.
Hugo L. Black: Are you saying that because they would be compelled to do it or --
Joseph A. McNamara: I think they'd be compelled under Article IV of the Constitution.
Hugo L. Black: Well, oh that's how -- well, forgetting that for the moment and saying that the Erie and Tompkins doctrine governs. And that the law of the -- the Court can undoubtedly enforce its own policy there if it's in a state court, that in a state court. Do you claim that the federal court under the Erie and Tompkins doctrine would not be required to follow that same court?
Joseph A. McNamara: I think -- well, I'm saying that because I feel that our state court in a case such as this with a contract between the authors executed in New York and specifically drawing into the contract the law of the State of New York would be enforced by our state court.
Hugo L. Black: Well, do I -- and I understand that. I understand that argument, but now let's assume that it would not be imported by the state court. Do you have any argument to say that this wouldn't be within the category of the type of --
Joseph A. McNamara: Well, as it said in one of those --
Hugo L. Black: (Voice Overlap) After that latter, the federal court would have to follow the state court --
Joseph A. McNamara: Either in the --
Hugo L. Black: -- and deny arbitration?
Joseph A. McNamara: There was language in either the Commercial Travellers case or the John Hancock Mutual Life case --
Hugo L. Black: That the John Hancock Mutual is before you encompass?
Joseph A. McNamara: Yes.
Hugo L. Black: And the other didn't -- didn't confer Erie and Tompkins did it? What -- it wasn't based on Erie and Tompkins doctrine that you're talking about?
Joseph A. McNamara: No, the -- but the Erie and Tompkins doctrine was treated in the Commercial Travelers case.
Hugo L. Black: Yes.
Joseph A. McNamara: And in there it stated that Erie-Tompkins does not have apply in all cases where a diversity is involved. But if there is a statute or if there is an agreement as to some matter, as to what the forums will shall be or something like that, that Erie-Tompkins can give way to the agreement of the parties. Such as in this -- in the -- the Commercial Travelers case, there was a statute which was contrary to the statute in -- in Iowa, and had they been applied -- had the Erie-Tompkins been applied there, the statute of Iowa would have to be applied.
Hugo L. Black: But if it --
Joseph A. McNamara: But they said no, if -- if the fact gave way where the parties had contracted to something different.
Hugo L. Black: If it deals something --
Joseph A. McNamara: Now, here they have.
Hugo L. Black: -- that it cast our criteria and it's -- is what I have just read to you that the federal court must follow the procedure of the state court, where failure to do so would lead to a substantially different result. Would it be your position that this wouldn't lead to a substantially different result?
Joseph A. McNamara: Well, I -- I agree it might lead to a substantially different result.
Felix Frankfurter: Mr. McNamara -- McNamara, may I see if I understand the --the nub of the(Inaudible) the view of my Brother Black. As I understand you, you say where I may say so with commendable candid, that the professional while you haven't got a case later than 1810 -- 1910.
Joseph A. McNamara: 1910.
Felix Frankfurter: As might as well the 1810 --
Joseph A. McNamara: [Laughs] Yes.
Felix Frankfurter: -- supporting cases, 1910.
Joseph A. McNamara: Century (Voice Overlap) --
Felix Frankfurter: That you would say the law that everybody assumes to be the law of Vermont, the professional opinion is that that is still the law with reference to agreement made in Vermont by Vermont --
Joseph A. McNamara: It can, yes.
Felix Frankfurter: -- by Vermont --
Joseph A. McNamara: Yes.
Felix Frankfurter: -- code for execution in Vermont.
Joseph A. McNamara: Yes. I would like to limit it that way. I didn't limit it that way before but I would like to limit it if I can.
Felix Frankfurter: But secondly, you say however that a contract made in New York or any other State looking to enforce it, any other State having an arbitration existing provision, lawful in that state and the New York law is after the arbitration statute made in New York or any other State such as scheme of law. Looking to enforcement in Vermont, you say the proposition as you've indicated wouldn't govern that situation and that a contract made in New York with a lawful system of arbitration draw them to itself into Vermont with respect for the Vermont court of those -- that condition in the contract, is that right?
Joseph A. McNamara: They say so, yes.
Felix Frankfurter: Now, thirdly, you said, that isn't true in any even. This doesn't come in -- wouldn't be requiring of Erie and Tompkins. Those are the three propositions --
Joseph A. McNamara: No.
Felix Frankfurter: -- of that order. Have I been (Voice Overlap) --
Joseph A. McNamara: Yes, sir. I think so.
Felix Frankfurter: And I hope that Mr. Clark tends to require -- better to tell the particulars of the second problem.
Joseph A. McNamara: Thank you.
Guy M. Page, Jr.: I have been -- been listening to this last colloquy between Mr. McNamara and the Court. Now, I think we ought to -- we ought to get it clear that we're dealing with -- with the two different kinds of situations here. When we went into federal court, we went in, in reliance upon the construction of Section 3 which the Second Circuit had announced. It's a construction of some 20 years of standing. And the construction clearly made Section 3 applicable to our case and that was so under that construction without regard to whether we got in under Section 2 so that we would have had Section 4 remedies.
Felix Frankfurter: You mean the opinion by Judge Hand? When you say the Court of Appeals and the Second Circuit, what do you imply?
Guy M. Page, Jr.: We had in mind the -- the --
William O. Douglas: It was very good.
Guy M. Page, Jr.: And that's -- and hardly say now.
Felix Frankfurter: (Inaudible)
Guy M. Page, Jr.: I think it was Judge Hand in the Shanferoke case that started the ball rolling on the -- the disassociation of Section 3 from the rest of the Act. That was picked up by Judge Goodrich, who -- who expressly held that Section 3 was disassociated and I believe there's another opinion in there. But that did seem to be and as we studied those cases on, we felt and we apparently were vindicated in that feeling that the Second Circuit would make that construction of the Act. Now, assuming that that is the construction which stands, that Section 3 is broadened up to touch this case or that this case would fit into Section 3 on any construction then we're faced to a one kind of problem of how much state law we're going to absorb under the Erie rule. Now, somewhere, there's a limit to the amount of state law which gets absorbed into the federal court and we think that that limit certainly is reached where Congress has enacted a specific method of the federal courts doing their business as they have in the Arbitration Act. Now, that's one situation.
Felix Frankfurter: Well, they must be careful about that because have -- so many justices found that opinion in the Erie case over on the ground and why all the -- why your swift -- why swift enticing was declared illegal and unconstitutional, although it's been there for nearly 100 years, was because even Congress couldn't even follow.
Guy M. Page, Jr.: Well, yes, I --
Felix Frankfurter: (Voice Overlap) jurisdiction apply non-state law.
Guy M. Page, Jr.: We appreciate that it's a constitutional problem, and undoubtedly, there is some restriction from the power of Commerce for Congress to legislate a procedure for the federal courts. We just don't think it's reached with the Federal Arbitration Act.
Felix Frankfurter: It may -- rather than to be said, it may not be only clear that Congress even acted to that constitutional problem that such would be by directing that it should be applied to diversity cases.
Guy M. Page, Jr.: By directing that --
Felix Frankfurter: That the Arbitration Act should govern diversity cases in cases where the State could be -- which is this situation on the first problem.
Guy M. Page, Jr.: So you put that in as a rule of construction?
Felix Frankfurter: That's right, quite. I'm saying you have to answer that before you come to the constitutional problem that you've given an answer and that's properly enough.
Guy M. Page, Jr.: Well --
Felix Frankfurter: But the first question is whether Congress in the Arbitration Act didn't pass that in the statute and we have ample scope for litigation or arguing under federal rights. So the Red Line cases, the case is foreign that we have for admiralty matters.
Guy M. Page, Jr.: I wonder if that isn't a case about admiralty law and not a case about -- about arbitration. But the emphasis --
Felix Frankfurter: But even though it required vast decision to allow arbitration even in the hypothetic cases because of the general doctrine against ousting jurisdiction, isn't that right?
Guy M. Page, Jr.: Well, let's see. I understand that admiralty case, that Red Cross case. That the New York Court of Appeals doubted its own power to invade the federal domain to the extent of giving this remedy, this machinery for enforcing federally created rights or rights that originated in the federal domain.
Felix Frankfurter: And the reason why it was that it -- it would be -- is the common law reason against ousting courts in a case.
Guy M. Page, Jr.: I'm just not familiar with the reasoning of the Court of Appeals on that. I only know the result and I know that this Court didn't go along with that.
Felix Frankfurter: That's right.
Guy M. Page, Jr.: They said that -- well, the State of New York has got some -- something to do in admiralty fields and this one of the things they could do. But I don't think that that is really germane to the issue we're dealing with here. The language is -- worries us of course. But the point I was making now is we've got one problem when we're dealing with an act of Congress which has something to say about the way the federal courts are run, that is arbitration or not. And we have quite a different situation if that act of Congress, for some reason, doesn't apply on this case, and there, we suspect that the amount of state law that's going to be absorbed is quite a good deal or more. We think that's the -- that's the teaching of the York case that you've got to come up with a substantial result. And if there's one thing that all four counsel agree with here, it's that -- that arbitration is -- does substantially affect the result within the meaning of the York case. Now, I want to go back again to just what this New York --
Felix Frankfurter: (Inaudible) can't agree on that.
Guy M. Page, Jr.: Well, I -- I haven't heard anybody say no otherwise --
Felix Frankfurter: All right.
Guy M. Page, Jr.: We think so.
Felix Frankfurter: All right.
Guy M. Page, Jr.: Now, I want to go back to just what this agreement is that we're dealing with. We -- we feel that this -- this contract that's here being -- being construed, this breach of contract question as before the Court has got nothing to do with these old Vermont cases. These were all domestic submissions. They were -- they were matters which were submitted to arbitration for some reason or other. There was a revocation which apparently satisfied the counsel that it had been an effective revocation. And so, the -- the submission was a dead letter as far as affecting the resolution of the differences in court. And that's all in the world those cases have anything to do with, they aren't our case. This would be a case of first impression in Vermont. As a matter of fact, we think it's a case of first impression here in this Court too. So we think the Vermont cases such as they are have nothing to do with it. Now, if I were under Vermont subject, I think I have heard in Mr. Justice Frankfurter's questions a suggestion that perhaps there is some burning local issue here which ought to be adjudicated for the first time in the Vermont court. I don't think there is. I think if you stop 9 out of 10 lawyers on the streets of Burlington and asked them what they thought about arbitration, they wouldn't have an opinion. They wouldn't care much. I've seen it once or twice in the local agreements but as far as whether the states barred or against it, and whether our courts work fast enough without the assistance of this extraordinary forum, I never heard the matter discussed except in connection with this particular case that we've been engaged in.
Felix Frankfurter: We have so -- we have so many other practice up there that this wouldn't be a verdict problem.
Guy M. Page, Jr.: I don't think you could get the legislature excited about this at all.
Felix Frankfurter: Let me ask you this, Mr. Page, have you out of the category judgment law office?
Guy M. Page, Jr.: Yes, sir, we do.
Felix Frankfurter: How quickly could one get a determination by the Vermont Supreme Court on the judgment? I should ask you, I don't think (Voice Overlap) --
Guy M. Page, Jr.: Well, Mr. McNamara has been around the courts more than I have. He just said a year and I suppose --
Felix Frankfurter: A year, that speed in that place where you have such -- we just heard what an ideally conditioned (Inaudible)
Guy M. Page, Jr.: Well, that's down in Bennington County. [Laughs]
Guy M. Page, Jr.: We're a little more rushed up in Chedington.
Felix Frankfurter: (Inaudible)
Guy M. Page, Jr.: I think it would take quite a long time. I don't believe that the federal court opted staying from deciding this case on the ground that it's Vermont's business. We really think it's a question which -- and we suspect the granting of certiorari here suggest that this Court feels that it affects a lot people -- a lot of people other than the ones involved in this case. And if I had to make a guess, I would say people on -- in Vermont whereas little affected by it as -- as almost any people I could think of in the United States.
Stanley Reed: Well, if we left the whole problem of arbitration for a moment and thought of what the law in Vermont was as to the interpretation and enforceability of contracts made in another States, governed by the law of the other States according to the language of contract, then were drawn in Vermont. Have we any light on that?
Guy M. Page, Jr.: Yes, sir. I think there is a little bit. Certainly, our basic proposition up there is the lex loci governance, and that's nothing unique to our State. There is more or less by happens stands one case here as in years ago where our court found occasion to remark the -- the law in governing an arbitration bond. I think there, the matter had gone through to award and it was an action on the bond. And they made some remark to the effect that the matter governing this arbitration business was -- was the law of Canada.
Stanley Reed: But the -- the lex loci is there -- there, the law ordinarily enforced in Vermont?
Guy M. Page, Jr.: I don't think there's any question about it. There's no special gimmicks on the Vermont law there, they are few cases involving it. There are some -- some language in the cases which say that the parties -- which suggest the parties --
Stanley Reed: Have you -- have you discussed that question?
Guy M. Page, Jr.: We have not perhaps discussed to it as extensively as we should have. I've got here on page 37 of -- of the respondent's brief. We mentioned three cases there. This Woodrow v. O'Conner is that old arbitration bond case. And then there were a couple of cases more recent which suggests the parties can -- can have something to say about the applicable law. By the way, they write their contract. I did put in that Brown v. Perry case on this business of public policy. I have a suspicion that some of the inquiries made by the Court on that are -- are whimsical in part as to whether or not we have a strong animus against arbitration. If we have, I've never heard of it. Here in this Brown v. Perry case, the Court laid down its rule, the rule for guidance when it's dealing with a statue of another State. And I think it's worthy of quotation, ”A Court should not -- this is a Vermont Court speaking, “In otherwise proper cases refuse to apply the law of a foreign State, however unlike it's own, unless it is contrary to pure morals or abstract justice or unless the enforcement would be an evil example and harmful to its own people.” The statute of another state is not contrary to public policy merely because it's materially different from our own or because we have no statute on the subject. Now, if there's any question of pure morals or abstract justice involved here, I suspect our court would take a view that a fellow ought not to have it made easy for him to welch on an agreement. But we think that's -- if there is any moral question involved then it's along those lines rather than this -- this ousting the court of jurisdiction. There's a case back -- this fits in the old general law category back in 1918. As a matter of fact, it's the principle authority for the quotation was Biehl. There's a case that a man named Hough wrote -- wrote the opinion in the Southern District of New York.
Felix Frankfurter: Can you spell it, Mr. Page?
Guy M. Page, Jr.: H-O-U-G-H. Yes, sir. I know nothing about him --
Felix Frankfurter: (Voice Overlap) He's a very great man.
Guy M. Page, Jr.: It's a -- it's a fine opinion, [Laughs] that's all I know. That he there said that -- that he had to follow the United States Supreme Court because he was a federal judge, and he would follow this old revocability cases which are matters of general law. He said that in the last paragraph.But before saying that, he took 8 or 10 pages to excoriate this revocability rule, and we'd -- we'd cite that to the Vermont court if we had had -- we were put to it on this business of the pure morals and abstract justice and that sort of thing.
Felix Frankfurter: You -- do you claim hard if -- if your (Inaudible) follows the lines in view of your associate, Mr. McNamara, is that all this question of whether Erie-Tompkins absorbs this agony of pressure or doesn't, doesn't matter because in your case, you asked for enforcement of the New York contract.
Guy M. Page, Jr.: That's our position. We think --
Felix Frankfurter: That's your position that if you --
Guy M. Page, Jr.: This is a New York agreement.
Felix Frankfurter: Persuade the Court of Appeals to that position.
Guy M. Page, Jr.: No, sir that's -- well, I think perhaps I should explain why we did not. We went into Federal District Court and we had some briefing done on that. It isn't as thorough as we've gotten into later because of the time limitations. And I got about partway through it and that the Court told me he didn't take much of my ideas. So then we switched over --
Felix Frankfurter: Did he say that just like that?
Guy M. Page, Jr.: Well, I can't remember his exact words, but he made it --
Felix Frankfurter: More gentle, I suppose.
Guy M. Page, Jr.: Well, pretty much along those lines. So at any rate, I thought I'd better switch over into the federal statute into that. And we thought we're on pretty good ground on that federal statute, and the Court of Appeals thought we were. But we don't -- the granting of certiorari here, we thought we better go back to some of these matters which are -- are independent of the statute. And that's why our brief reads the way it does in this Court. This -- I want to go back again on this business of exactly what the contract is we're dealing with because I think that's how you get -- that's the answer to these cases in that particular contract that was made. Now, Mr. McNamara started to read that up, so it's a pretty good idea that we're construing an agreement to have the agreement here before us. "The parties hereto do agree that any differences, claim, or matter in dispute arising between them out of this agreement or connected herewith shall be submitted by them to arbitration, by the American Arbitration Association or its successor. And that the determination of the American Arbitration Association or its successors or any arbitrators designated by said association on such matters shall be final and absolute. The said arbitrator shall be governed by the duly promulgated rules and regulations, the American Arbitration Association or its successor and the pertinent provisions of the Civil Practice Act for the State of New York relating to arbitrations. The decision of the arbitrator may be entered as a judgment in any court of the State of New York or elsewhere." And in this fourteenth article, they expressly incorporate this New York law in the agreement. So this contract embodied this New York doctrine as a part of it. And these provisions, Section 1450, of course we have the basic provision in Section 1448 which says that these agreements shall hereafter be valid, enforceable, and irrevocable. Now, the legislature conceivably could have put a period to the statute right there and that would have been the end of it. That I guess, everyone would say that sounds pretty substantive and we might not be arguing this remedy business. Well, they didn't do that in order to implement this declaration that it was valid, enforceable, and irrevocable. They went ahead and provided that when you make an agreement in New York, you consent in advance to the jurisdiction of the New York -- the courts over your person, so that you can't defeat the agreement by leaving the State. They provided for a stay in Section 1451, not exactly the same stay we're asking for but a stay under their statutes. In 1452, they gave the power to name an arbitrator and that stops all this chicanery of writings for scratching every name off the list that's submitted to you so that you can put it off indefinitely. 1461, they said that this award could become a judgment. In 1466, they said it will have the same force and effect as a judgement. The cases which have come up under the statute amply are a fruition of these provisions. There is the -- the Marsh case, a Massachusetts contract made in Massachusetts. Performance of the container contracts certainly at Massachusetts. Nothing said about the place of performance of the arbitration clause and main in New York parties. The New York Court of Appeals had no difficulty in saying that this thing should be enforced according to its terms, and they presented a moving party with a judgement which was entitled the full faith and credit in other States. But there has incidentally been since the Shafer v. Metro-Goldwyn-Mayer, so far as I know, there has been no -- no quarrel about the effect of these ex parte awards.
Hugo L. Black: Perhaps in New York, has there ever been a case in Vermont since the beginning of its history in which it has sustained an agreement made in that State between parties which ousted the jurisdiction of this Court to any extent to federal controversies by lawsuits?
Guy M. Page, Jr.: I don't think there's been anything said one way or the other. I don't think there's anything about ousting the Court's jurisdiction in Vermont cases.
Hugo L. Black: Has there -- has there ever been any contract sustained in Vermont which where the parties agreed to change the rules of evidence in the court of law?
Guy M. Page, Jr.: (Voice Overlap) I don't --
Hugo L. Black: Or the burden of proof. The burden of proof or anything like that.
Guy M. Page, Jr.: I can't offhand think of anything of that sort. We looked a little bit along those lines for something -- of course, we weren't going to find anything on point of something peripheral.
Hugo L. Black: Yes, I just wondered if you --
Guy M. Page, Jr.: I don't recall finding anything. Now, the lawyers being what they are, sometimes, they find something they don't like and forget about it. But I -- but I don't remember anything of that sort. And I don't -- there was nothing very discouraging if I didn't do it.
Hugo L. Black: And did judge -- and Judge Gibson held, did he, that they could not do that?
Guy M. Page, Jr.: Well, he --
Hugo L. Black: (Voice Overlap) --
Guy M. Page, Jr.: -- done if I know just what he did he hold. He -- I know he licked us.
Hugo L. Black: [Laughs]
Guy M. Page, Jr.: He -- he went ahead and said that if we convinced him they showed him the need, he'd enjoin us from proceeding that arbitration in New York. But as just what he held on this Erie v. Tompkins rule --
Hugo L. Black: I'm not talking about Erie v. Tompkins. I'm -- I'm talking about -- you said that Vermont has believed in keeping a contract which I think is great. But do they believe in keeping contacts there made between parties which oust the court of a jurisdiction to try their lawsuit once the controversy arises?
Guy M. Page, Jr.: I don't believe that question has ever been presented in that fashion to the Vermont Supreme Court. And I don't -- unless memory is playing me tricks here, I don't think there's any such discussion of that in the old Vermont cases.
Hugo L. Black: Well, that's the basis they admit on which they declined to recognize arbitration.
Guy M. Page, Jr.: Well --
Hugo L. Black: The Vermont agreement --
Guy M. Page, Jr.: I guess that's one of the things that these old cases used to say. I think they have some other (Voice Overlap) --
Hugo L. Black: You've based on the argument they had a right to have a trial in this Court according to the rules of evidence and by jury, wasn't it?
Guy M. Page, Jr.: Well, the judge --
Hugo L. Black: I -- I'm not talking --
Guy M. Page, Jr.: Yes, sir. I think probably that is one of the -- one of the explanations which was given.
Hugo L. Black: What does your Constitution provide about trials by jury? Does it make any provision on this?
Guy M. Page, Jr.: Yes, there is something in the Constitution about a jury trial. We don't --
Hugo L. Black: I'm just thinking about the policy of the State, isn't it? That's a --
Guy M. Page, Jr.: Say, I have something a little bit on our Vermont arbitration years and years ago. It's not than I have ever seen in the modern day and age and it's washed out of our rule book now. But years ago, there used to be a submission by rule of court. And once there have been a submission by rule of court, I think there's -- some of these cases in the federal reporter or not the federal reporter but way, way back. Once that had been submitted by rule of court, they discontinued the main action, and those parties were bound by their submitting there. Now of course, they had to go in -- they had to have the consent to get into that situation.
Hugo L. Black: And have on whose consent?
Guy M. Page, Jr.: They had to have the consent of the parties at the time the submission was made.
Hugo L. Black: Yes.
Guy M. Page, Jr.: But once a fellow had submitted, then the gavel had come down, he couldn't get up and revoke later on. He was bound just as surely as a fellow was bound in New York State today.
Felix Frankfurter: Can they come back and -- was the award made a matter of the record in the Court in that action? I should suppose so.
Guy M. Page, Jr.: I think so. Although, there is some language also about the action -- the main action being discontinued.
Felix Frankfurter: Might of vagueness, this is -- this is --
Guy M. Page, Jr.: Or -- or possibly suspended but there are three or four of those -- those cases.
Hugo L. Black: Well, that's what I understood from both of you, which probably the rule today with reference to arbitration. Namely, as the parties came into court and agreed to arbitrate, they could arbitrate --
Guy M. Page, Jr.: Yes.
Hugo L. Black: -- at that time after the lawsuit is filed.
Guy M. Page, Jr.: Yes.
Hugo L. Black: But that they couldn't make the agreement in advance.
Guy M. Page, Jr.: Oh, I suppose the -- of course I don't know. Maybe our court would depart from those old cases.
Hugo L. Black: Oh, yes, I understand it fine.
Guy M. Page, Jr.: Yes, I would think if -- purely domestic arbitration agreement is made in Vermont today that there's nothing to stop one fellow from -- from revoking or backing out of it.
Hugo L. Black: But he couldn't do it, could he, if he agrees after the lawsuit starts and go into the judges. I -- am I wrong in thinking that --
Guy M. Page, Jr.: I think once he's told the superior judge and the superior judge has made an order that they go ahead and submit this to arbitration, I think if he walks in the next day and said judge I -- I've changed my mind on that. The judge would have a -- would be correct in saying that he couldn't change his mind, and that award would -- would settle his rights whether he attended that hearing or not. He couldn't get out of it then under Vermont law. But that's -- that's rule of the court stuff.
Felix Frankfurter: Mr. Page -- Mr. Page, suppose you and your senior pre-contradicted if this case arises. If this question -- if the question was argued today before the Vermont Supreme Court, were the contracts entered in good faith on the verdict in New York for execution in Vermont carries with it, it does not illegalize or render nugatory of provision in the contract for arbitration, doing that is the normal thing to do in a New York contract. Both of you are pretty confident by assertions, one for it. Does that -- Vermont Supreme Court -- is that properly argued, meaning they're argued by you. (Inaudible) is that fair to get to your argument?
Guy M. Page, Jr.: Well, we think this Court could give him some guidance to get through this -- this remedy confusion business.
Felix Frankfurter: I mean isn't that fair? As far as Vermont law is concerned, you're pretty confident that they wouldn't say, “Oh, 19 of dissents he rendered the decision, there's a man who did there and we're going to stick to that.”
Guy M. Page, Jr.: Certainly, I hope there wasn't. I don't know. I -- I --
Felix Frankfurter: The prophecy that they would. Otherwise -- and if that isn't so, that's your chief reliance, isn't it? That Vermont law --
Guy M. Page, Jr.: Oh, yes. I think we have to take that -- that position here if your question means, do he want to back and try that on a --
Felix Frankfurter: (Voice Overlap) --
Guy M. Page, Jr.: -- declaratory judgment. I don't want to do it. We can help him.
Felix Frankfurter: Naturally, you came here. I'm not saying that you want to exerting the (Inaudible) but I'm suggesting that might (Voice Overlap) --
Guy M. Page, Jr.: Yes, sir. I think --
Felix Frankfurter: -- starting off with Vermont law isn't for you and me to guess about.
Guy M. Page, Jr.: Well now, I have one other thought that may -- that may -- that might change your thinking on that.
Felix Frankfurter: All right.
Guy M. Page, Jr.: I -- somewhere in our brief here toward the end, we have taken the position that there isn't any more federal general law of arbitration. That stuff is all gone with Erie. And when this -- these things --
Felix Frankfurter: (Inaudible)
Guy M. Page, Jr.: Well, that they --
Felix Frankfurter: There isn't a general law of it.
Guy M. Page, Jr.: There isn't any general law doctrine such as Judge Hough applied in the Trinidad case that the old Supreme Court cases are no longer authority because there isn't any federal common law anymore. All of the cases which have come in thus far into federal courts since the Erie case, I think all of them have involved the Arbitration Act. And this expansion of Section 3 has really displaced the -- the ordinary diversity case in the federal court. They -- they do the same thing that they did in our case as we ask them to. They apply the Federal Acts so you don't at least get -- they haven't really gotten into this Erie stuff. Now, what happens when you get a -- and it's bound to come up sooner or later, particularly the uniformed commissioners enact this law, are successful in getting it enacted in more states. What happens when you have these cases coming into the federal courts and into the state courts in the conflict of law situations? Brother Ehrich is not too far wrong when he says about the only authority on it are things like Biehl. And incidentally, Mr. Biehl doesn't think much of the rule. He refers to it as a lot of chicanery I think. And cases like the Shafer-Metro-Goldwyn-Mayer which is as dead as the dodo bird in its own state just as the Mitcham case, it's dead as the dodo bird in New York State. That's all the law there is on this subject or just about all the law. This 153 case in Pennsylvania where for some reason, they couldn't qualify under the Pennsylvania Act and with that opinion. I can't understand what they said, but I know what they did. They went ahead and stayed the action. But more or less by analogy to what they would have done if their own Act applied and by analogy to what the New York State would have done. But we think if this Court and I don't know how much attention people would pay to the Vermont Supreme Court if it made this distinction, but we think if this Court identifies the New York agreement embodying as it does in this statute as suspending the rights of the parties to a common law determination, to a determination of the common law courts and substituting their perspective arbitration award as their right. We think that if that identification of the contract was made, then all these conflict of jurisdiction stuff will earn itself out. Everyone can then think in terms of lex loci and lex fori and -- if there's no more trouble.
Hugo L. Black: Those are very clear on this.
Guy M. Page, Jr.: Pardon me, sir?
Hugo L. Black: Those are very clear always, you think, easy to find out.
Guy M. Page, Jr.: The lex loci?
Hugo L. Black: If --
Guy M. Page, Jr.: Well, if this Court says that the New York statute means what it says that these things are enforceable and valid and revocable, I'd -- I think the Vermont Supreme Court would have less trouble and it would gone in on a declaratory judgement. Now, of course we --
Felix Frankfurter: We -- if this Court would say that the New York statute where the contracts made in New York, is made in the context of the New York statute and the full faith and credit law requires that to be irrespective throughout the country that has to reach?
Guy M. Page, Jr.: Well, yes. We think it would -- if you go far enough to make -- as if you identify the thing strongly enough to make it work in the contract of law -- in the conflict of law context, unaided by any constitutional requirements.
Felix Frankfurter: Well, but this Court -- if this Court makes pronouncement and conflicts of law unaided or unrelated to the requirement of the full faith and credit law?
Guy M. Page, Jr.: Well, it might --
Felix Frankfurter: With that power.
Guy M. Page, Jr.: It might have to --
Felix Frankfurter: It might be a good (Inaudible) -- I -- I know there's already in that jurisdiction all over the United States but I didn't know we did.
Guy M. Page, Jr.: As far as -- as -- I think this Court would have the power to ascertain Vermont law for purposes of deciding this case.
Felix Frankfurter: Yes, it would, certainly.
Guy M. Page, Jr.: And --
Felix Frankfurter: Whether to decide whether -- whether that kind of premise, if the federal court would enforce Vermont law. Otherwise, the Vermont law --
Guy M. Page, Jr.: Oh, yes.
Felix Frankfurter: -- would be relevant.
Guy M. Page, Jr.: If the statute looks after everything then of course I --
Stanley Reed: Was the Vermont law presented to the Court of Appeals?
Guy M. Page, Jr.: I -- Mr. McNamara argued that, I didn't. Fred Ehrich have presented something along those lines, but we took the position that the statute was all --
Stanley Reed: Or you needed the rights of the federal statute?
Guy M. Page, Jr.: That was the position we took there. We think this -- but just to close here, we think that this stay that we are asking for is not the New York contract stay. It's a plea in the nature of a plea to suspend the operation of the petitioner's lawsuit until such time as his rights are fully matured by obtaining the arbitration award. We think that's the thing he really has to sue on, is the arbitration award when and if he gets it. And that our plea for a stay is -- is merely to get that award. There is a couple of Vermont cases where they say that the proper thing for a court to do is to stay a pending action or is to stay the -- the reported action when there is another pending action that's going to get rid of all the problems. It's going to make everything res judicata or collateral estoppel. They simply stopped that second action and awaiting until the first one is finished and they do that by a stay procedure. So --
Harold Burton: Mr. Page.
Guy M. Page, Jr.: Yes, sir?
Harold Burton: Would you state in closing which one of these several periods you've been arguing to place your main reliance upon?
Guy M. Page, Jr.: We -- we feel exactly the same way here we did about Section 3 in the Circuit. Putting aside Section 3, we think this thing ought to be entitled a full faith and credit. We say that the public acts of New York are so much an integral part of the contract that the -- that the contract itself is entitled a full faith and credit in Vermont. We think once this is done then all these monkey business will be over right there and that's -- that's the end of the matter right there and no more problems. So that is our main position.
Earl Warren: Mr. Clark.
Eugene V. Clark: If the Court please. I don't know as I can remember each of the individual questions asked in this discussion of this nutty problem and I hope that if there is anything that I forget to address myself in the way of questions that -- has already been put by members of the Court that they will please address the questions again because I will -- I would be delighted to try to answer them if I can remember them all. I might say in regard to the Vermont law that in the first place --
Stanley Reed: The Vermont law was before the District Court was it?
Eugene V. Clark: Yes. The Vermont law as to what -- as to the enforceability of arbitration agreement was specifically decided by Judge Gibson. In fact, he was so certain of the law himself that he asked counsel if they would be willing to concede that Vermont law was as we said it was and they did. And so we did not argue that question orally other than a few preliminary statements before he made a statement. Judge Gibson, a federal judge, a Vermont lawyer sitting in Vermont, made an express finding on that matter of Vermont law.
Hugo L. Black: Where is it?
Eugene V. Clark: That question was not disturbed by the Circuit Court of Appeals. In fact, it was again conceded in oral argument by counsel, Mr. McNamara, so that we did not again address ourselves orally to that problem.
Stanley Reed: But that was on the question, was is not, of -- of whether -- whether Vermont law --
Eugene V. Clark: That is correct.
Stanley Reed: -- was related to arbitration --
Eugene V. Clark: That is --
Stanley Reed: -- and not whether Vermont law on the contract.
Eugene V. Clark: That is correct. The matters of the conflicts problems which you are asking about now were briefed by both parties extensively at the District Court level. And they were argued by Mr. Page and by ourselves at the District Court level. Now, the District Court, perhaps unfortunately because the problem that's now raised here didn't expressly rule on the conflicts argument. He seemed to dispose of the whole thing in a -- in a package statement with reference to the Erie doctrine. The question was argued and briefed for him.
Felix Frankfurter: If they can't (Inaudible)
Eugene V. Clark: Now --
William O. Douglas: But not -- not before the Court of Appeals.
Eugene V. Clark: Not before the Court of Appeals because their appeal was based solely on what they interpret to be his -- Judge Gibson's mistake on the Federal Arbitration Act, Section 3.
Felix Frankfurter: Mr. Clark --
Eugene V. Clark: Yes, sir.
Felix Frankfurter: -- it's more than a conflict argument that is made by the particular --
Eugene V. Clark: The full faith and credit.
Felix Frankfurter: The full faith and credit argument.
Eugene V. Clark: Now, let me say something about that if the Court please.
Felix Frankfurter: You mean the conflicts argument --
Eugene V. Clark: As you had --
Felix Frankfurter: -- we don't know -- we don't simply as a court pronounce in conflicts of law for the -- for the country at large.
Eugene V. Clark: Well, if the Court please.
Felix Frankfurter: I know that's a very inviting field to enter but that is in the -- within our confidence.
Eugene V. Clark: This case does have three --
Stanley Reed: Your conflict argument going to be --
Eugene V. Clark: Pardon?
Stanley Reed: Won't the conflict argument be the determining factor in this case?
Eugene V. Clark: Yes. It's this -- this case really in my view has three aspects or at least all of which are crucial. We say that the question of the Vermont law of enforceability was settled at the District Court level. I don't think that you could pick a court more unlikely to reverse itself on a question that it has pronounced in -- in several judicial opinions, however ancient than the Vermont Supreme Court --
Felix Frankfurter: But Mr. Clark --
Eugene V. Clark: -- without benefit of a statutory amendment.
Felix Frankfurter: Mr. Clark --
Eugene V. Clark: Yes, sir.
Felix Frankfurter: -- isn't that to make distinction between an agreement made in Vermont --
Eugene V. Clark: I do.
Felix Frankfurter: -- to rub on both for execution in Vermont and an agreement made in New York right into Vermont --
Eugene V. Clark: I do.
Felix Frankfurter: -- for execution there.
Eugene V. Clark: I do.
Felix Frankfurter: And -- and --
Eugene V. Clark: If the Court please, as I said, there are three aspects. I'm trying to dispose of the first one first because I think that that's the most easily disposed off. That's the question of what is the Vermont law on arbitration agreements, not the conflicts question which you raise nor the full faith and credit question which can be discussed following that if I may. The Vermont law is settled. Now, Vermont courts aren't given the (Inaudible) They made no statement that arbitration was a horrendous thing. They merely stated the law as they found it at that time. I take that to mean a statement of policy. There might be very many factors that might have determined what the policy would be at that time. It has been accepted by -- as the counsel for the other side is as the Vermont law all these years by Vermont lawyers. And Judge Gibson thought it was so well settled that he didn't even ask for argument on the question. We feel that this policy question has some relation to the full faith and credit issue however, and we do feel that it is important that this Court not try to remake the law for Vermont under the guise of full faith and credit merely because it doesn't find a shattered statement in the Vermont Supreme Court as to why they rule the way they do on arbitration agreement. Now, in the very case which they have cited at length with regard to the view of Vermont case of conflicting policies, the Brown against Perry case, I should point out that in that case, it involves an application of the Hew Hampshire wrongful death action, if I remember rightly, in Vermont courts. Now, Vermont had a wrong -- wrongful death statute at the same time. There was no conflict of policy there as such but in fact, the people who won in that case won a pyrrhic victory in a way because the reason they wanted the New Hampshire statute was because the measure of damages was much broader. It include pain and suffering of the decedent. And at that time, all Vermont permitted was loss to the next of keen, pecuniarily loss to the next of keen. And it is a striking fact that the Court in that Brown against Perry case decided that, "Yes, we apply the Vermont -- the New Hampshire statue in Vermont as to wrongful death. But the measure of damages being a matter of remedy, we apply." So that people that won that appeal were nothing because in fact, the measure of damages is probably what they were concerned for.
Felix Frankfurter: Was that decided by Vermont on Vermont conflicts law in full faith and --
Eugene V. Clark: That was decided by Vermont. They didn't mention the Full Faith and Credit Clause I might say.
Felix Frankfurter: They didn't or did?
Eugene V. Clark: They did not.
Felix Frankfurter: Did not?
Eugene V. Clark: Did not. But if --
Felix Frankfurter: Because you got Vermont conflicts law, is it?
Eugene V. Clark: But it was a conflicts decision obviously and it did state that this a matter of remedy, the measure of damages. Now, whether the measure of damages is every -- in view of everybody, I don't know. I think that -- that remedy is --
Felix Frankfurter: I suppose --
Eugene V. Clark: -- a useful distinction under some circumstances but it obviously is a fighting word in many cases.
Felix Frankfurter: Mr. -- Mr. Clark, I suppose if you had a Vermont statute which for certain, (Inaudible) is double damages and the suit was then further moved to the federal court. I should think anybody would have a hard time arguing with the measure of damages as a matter of remedy. And therefore, the federal court would apply the old remedy and therefore the Government and its provisions, the Vermont statute doesn't apply.
Eugene V. Clark: That's right. There you have --
Felix Frankfurter: So that would be a dollar and cent establishment of substantiality.
Eugene V. Clark: That -- that is correct and that's where the Erie and Tompkins case comes in of course.
Hugo L. Black: Did Judge Gibson, as I read his opinion, he squarely decided that this particular contract which was made in New York --
Eugene V. Clark: Yes.
Hugo L. Black: -- by these parties --
Eugene V. Clark: Yes.
Hugo L. Black: -- was not enforceable under Vermont law?
Eugene V. Clark: He did said that Vermont law did not permit the enforcement of arbitration agreements. That the contract was then --
Hugo L. Black: But what agreement was he talking about?
Eugene V. Clark: This very one we're --
Hugo L. Black: Made in New York?
Eugene V. Clark: -- talking about here. Yes.
Hugo L. Black: And are they --
Eugene V. Clark: But, he did not mention in his position -- in his opinion New York law. That was all presented to him in argument in the courts.
Hugo L. Black: Certainly, he didn't mention it in is his opinion but when he held on page 17 that there was no statutory law governing arbitration, common law must apply. The common law is an agreement to submit an issue of arbitration is not binding, it is not revocable at anytime and then enforce this. He was enforcing this particular contract made in New York.
Eugene V. Clark: That's correct. That is correct. I think that the conflicts rule is implicit because it was necessary to his decision in the first place.
Hugo L. Black: Well, he had to do that because he gave his second question -- he is deciding upon it of that and be contracted to a just contracted dispute by arbitration and then you said they haven't.
Eugene V. Clark: If he had expressly said I also decide the conflicts issue and then made a ruling on that and then applied the Erie to it with facts and against the dissenter and all that --
Stanley Reed: Well, he goes through. I -- I suppose the Court of Appeals went the other way.
Eugene V. Clark: The Court of Appeals apparently went on the Murray against -- Murray against Mitsui case.
Stanley Reed: Yes, if -- if it is necessary to decide the Vermont law in order to keep this from being arbitrated in Vermont, it was necessary for the Court of Appeals to decide it contrary as to Vermont law for it to go to stay in New York law.
Eugene V. Clark: No, they decided the -- entirely on the basis of federal statute, saying merely a form of trial something which is within federal jurisdiction and subject to the power of the federal courts -- of the Congress to control through their control of procedure in federal court.
Hugo L. Black: They held that the Erie and Tompkins doctrine didn't apply?
Eugene V. Clark: That is right. That's exactly what they decided, and we of course disagree very strenuously for -- with that. But on the other hand, I gather that counsel have already agreed possibly in view of the Wilco case that this is a type of -- of situation which would substantially affect the result. And perhaps the Court isn't willing to let it go on concession of counsel. I'd be willing to address myself to that further if you feel that that's necessary.
Earl Warren: I think your time has expired Mr. Clark.
Eugene V. Clark: Oh, there --
Earl Warren: [Laughs]
Felix Frankfurter: That is to bring another case as equal to this case so we could have some more discussion to the matter before us.
Eugene V. Clark: But could I make one closing statement, if the Court please.
Earl Warren: Yes, if it will -- if it's just a statement, it won't take time.
Eugene V. Clark: In this matter of Gant decision which they also rely on in New York's Court of Appeals. The New York case said specifically, "We treat this matter of enforceability as a matter of remedy, and they expressly rejected order of Travelers against Wolfe as being applicable and is requiring full faith and credit. They said we, however, do not think that that decision wipes out the old rule that remedies including arbitration are regulated by the law of the forum. Now in summary, I think that this case has to --
Earl Warren: Now, I -- I think your time has expired. You made your statement, Mr. Clark.
Eugene V. Clark: I'm sorry.