Court Opinion

ID: 5353865
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:52:14.77951+00
Date Added: 2024-06-11T08:29:46.345133
License: Public Domain

Callahan, J.
(dissenting). The petition for arbitration presented to Special Term herein set forth that three agreements for the sale of textiles were entered into, copies of which were annexed to the petition. The copies annexed show that the documents were signed only by petitioner (the seller). They contain a provision for arbitration of any controversy arising thereunder.
Respondent’s answer denies the material allegations of the petition. As a separate defense he alleges in the answer that the agreements which petitioner sought to enforce were void and unenforcible by reason of the provisions of the Statute of Frauds. *499He alleges that the agreements were for the sale of goods of more than fifty dollars in value, and no memorandum thereof was signed by the person sought to be charged therewith. Upon these pleadings there was, at least, an issue presented as to whether an agreement to arbitrate existed, which issue was required to be tried pursuant to section 1450 of the Civil Practice Act. However, the court below received from petitioner a number of affidavits, labeled “ reply affidavits,” which purported to set forth facts showing that the respondent retained the unsigned contracts for a long period of time. It argues from the facts set forth in these affidavits (as if not controverted) that the Statute of Frauds is not available to the respondent.
Special Term treated the issue as one of law and decided that the Statute of Frauds applied, and denied the petition for arbitration on the ground that any such arbitration would be academic.
The majority opinion of this court continues to treat the issue as one of law, and concludes that the petitioner’s motion should have been granted.
It seems to me that, under the circumstances, the proper procedure was to remit the issues raised on the petition and answer for trial. (Civ. Prac. Act, § 1450.) Affidavits were improperly received, and should not have been considered. If such affidavits are disregarded, there were issues both of fact and law raised by the denials and defenses which were substantial.
For the foregoing reasons I concur in reversal, but vote to order a trial by jury, pursuant to section 1450 of the Civil Practice Act, respondent having demanded a jury.
I dissent, however, from so much of the decision of this court as grants the motion to compel arbitration. I do so, not only upon the procedural grounds above stated, but because I disagree with the view expressed by the majority concerning the application of the Statute of Frauds.
The writings attached to the petition were unenforcible by action, by reason of the provisions of the Statute of Frauds (Pers. Prop. Law, § 85). That they contain a provision for arbitration should not make them enforcible in a proceeding for such relief. The retention of an unsigned contract does not overcome the defense of the Statute of Frauds. (1 Williston on Contracts [Rev. ed.], § 90A.)
The Arbitration Law was not intended to change the fundamental law with respect to contracts. Such law should be as applicable to an arbitration clause as to any other portion of' a contract. (Matter of Zimmerman v. Cohen, 236 N. Y. 15.) The Arbitration Law did not attach a new obligation to a sale already made. It *500merely indicated a new method to enforce an existing obligation. (Matter of Berkovitz v. Arbib & Houlberg, 230 N. Y. 261.)
We should not separate the provisions for arbitration from the remainder of the contract but consider the agreement as a whole in determining whether the Statute of Frauds applies.
Russell in his recent work on Arbitration and Award ([13th ed. by Edmund Cave and Ernest Wetton], pp. 301, 302), in construing the English Arbitration Act, said: “ The agreement * * * if it is within the Statute of Frauds, must be not only in writing, but also signed by the party to be charged therewith * * * otherwise it is not enforceable by action, and if not so enforceable, a clause in it providing for the reference of disputes to arbitration, or an award on such a reference would seem to be equally unenforceable. (See Walters v. Morgan, [1792], 2 Cox Ch. Cas. 369.) ”
It is interesting to note that the English statute required only that the agreement of submission be a “ written ” one; nevertheless, it was the view of the text writers above mentioned that the submission must be signed by the party to be charged if the contract is one which a Statute of Frauds required to be so signed.
A similar view is expressed in Sturges on Commercial Arbitrations and Awards, section 71.
To say that our Legislature, in adopting section 1449 of the Civil Practice Act, intended to provide a new and sole Statute .of Frauds for arbitration agreements, is to assume the legislative intention to repeal all other Statutes of Frauds that might be applicable to contracts containing arbitration provisions. This assumption does not appear to me to be warranted. Section 1449 relates to future and existing controversies. A provision to arbitrate a future controversy is, of course, usually found only in connection with other contract provisions. The language of the section recognizes this. It, therefore, requires that any provision to arbitrate made in connection with such a contract must be in writing. In other words, it excludes oral proof of agreements for arbitration. It does not declare, nor should it be construed to mean, that the requirements of the Statute of Frauds found in other statutes, for a memorandum'signed by the party to be charged, are repealed, if otherwise applicable to the contract. To imply such repealer is to disregard the rule of statutory construction that statutes should be read together, when possible.
The second provision in section 1449, with respect to arbitration of existing controversies, refers to the form that an agreement of submission must take. That the language of section 1449, with respect to such submission provides for a note or memorandum thereof in writing, signed by the party to be charged, merely means *501that the Legislature adopted the language usually found in Statutes of Frauds, in defining the nature of the written evidence required to establish such agreements. To say that, because such language is used concerning the form of submission of existing controversies, an intention is indicated to replace the Statute of Frauds as to contracts containing clauses for arbitration of future controversies, is entirely conjectural and unwarranted.
Section 1448 of the Civil Practice Act should be construed to mean that, where an objection to the right of arbitration is asserted because the agreement containing the provision for arbitration is unenforcible under the Statute of Frauds, such objection should be determined pursuant to the provisions of section 1450 of the Civil Practice Act, and, if upheld, the arbitration should not proceed. A defense of the Statute of Frauds should be construed as one affording ground for the “ revocation ” of a contract within the meaning of that term as used in section 1448. Any other construction would permit arbitrators to enforce as a valid contract a writing which a court of law would have no power to enforce if the defense of the Statute of Frauds was asserted against it. As construed by the majority opinion, the arbitration statutes are not merely laws affording new procedural remedies, but become statutes which eliminate substantial defenses that have been available for centuries. The intention to repeal such ancient statutes should not be lightly implied.
The decision in Crane v. Powell (139 N. Y. 379) is to the effect that the defense of the Statute of Frauds was one that might be waived. There was no such waiver here. The unenforcibility of the contract was asserted as soon as arbitration was sought.
I vote to reverse the order appealed from and remit the issue raised by the answer for trial by jury.
Order reversed, with twenty dollars costs and disbursements, a trial of preliminary issues to be fixed in the order to be entered hereon, the determination of the motion to compel arbitration to be held in abeyance until the coming in of the verdict on such issues, to be decided by the justice then presiding at the Special Term.
Settle order on notice.