Court Opinion

ID: 5752923
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:00:18.889319+00
Date Added: 2024-06-11T08:41:20.107193
License: Public Domain

Eager, J.
(dissenting). I would reverse and vacate the judgment entered upon the award and remand the issues for determination before new arbitrators. The arbitrators have “ so imperfectly executed” their powers “ that a final and definite award upon the subject matter submitted was not made”. (See CPLB 7511, subd. [b], par. 1, cl. [iii].)
*249“ The arbitrator’s award must be a complete determination of the issues presented.” (Matter of Ritchie Bldg. Co. [Rosenthal], 9 A D 2d 880; see, also, Matter of Schwartz Silk Co. [Granowitz], 224 App. Div. 705.) Furthermore, it is clear that arbitrators are bound by the clear and unambiguous terms of the submission and may not dispose of the controversies submitted to them by disregarding them and rendering an award which is neither authorized by the terms nor by the contract of the parties.
The agreement between the parties, as stockholders of a closely held corporation, provided that no action should be taken by them or the directors except upon a unanimous vote and it contained a broad arbitration clause for reference to arbitration of “ any dispute * * * between any one or more of the parties hereto with respect to his or their rights, obligations, duties and requirements under and by virtue of the provisions of this agreement”. The demand for arbitration, served by a majority group of stockholders upon a minority group, demanded the arbitration of disputes concerning management, and no one questions but that the disputes sought to be arbitrated were within the scope of the arbitration clause.- The relief sought was “ [t]o compel the said minority to act in conformity with the plans and suggestions of the majority ” in certain detailed respects, including “ (2) A figure be established, fair and equitable to all, at which either group can buy or sell their stock and property interest, as they choose.” The minority group served a counterdemand or counterclaim for arbitration, listing several matters in dispute with respect to the management of the corporation and requested certain relief.
The arbitrators’ award, however, except for the fixing of the rental to be paid by a certain tenant of the corporation, does not on its face purport to determine any of the controversies submitted in management matters. Instead, without any provision in the contract for a compulsory sale of the stock or the real property interests of a stockholder within his lifetime, and beyond the scope of the submission, the award in effect provides for certain stock options, including a provision whereby one of the majority group of stockholders shall purchase the stock of the petitioner, Colletti, one of the minority stockholders.
Furthermore, the parties proceeded to arbitrate the disputes with respect to management within the framework of a demand for arbitration which stated that the arbitrators could establish “ [a] figure * * * fair and equitable to all, at which either group can buy or sell their stock and property interest, as they choose.” Not only does the award fail to fix a figure purporting *250to be “ fair and equitable to all, at which either group can buy or sell their stock and property interest ”, but instead fixes two figures — providing in effect that Schwartz, one of the minority stockholders, shall receive $1,400 a share for Ms stock, in the event he does not buy out the majority stockholders, and then provides that one of the majority stockholders shall purchase the stock of the petitioner, Colletti, the other minority stockholder, and his property interest, at the price of $70() per share of stock.
Finally, the arbitrators have not set a figure at which the members of either group may “ choose ” to buy or sell their stock and property interest; this is contrary to the submission in that, under the plain terms of the demand, a choice to buy or sell at the figure to be fixed by the arbitrators was to be left to “ either group ”.
This is a case where the arbitrators ‘ ‘ gave a completely irrational construction ” to the plain terms of the submission. (Matter of National Cash Register Co. [Wilson], 8 N Y 2d 377, 383.) Instead of making “a final and definite award upon the subject matter submitted ” (CPLB 7511, subd. [b]), within the framework of the agreement of the parties and the controversies described in the demand and counterdemand, the arbitrators have failed to determine the disputes between the stockholders that were submitted to them and, instead, have provided for an unauthorized purchase and sale of stockholders’ interests.
The award should be vacated because it is not only imperfect but, in effect, it has made a new contract between the parties, and this is not permitted.
Breitel, J. P., Babin, Valente and Steuer, JJ., concur in Per Curiam opinion; Eager, J., dissents in opinion.
Judgment affirmed, with $50 costs to respondents.