Court Opinion

ID: 5861421
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:19:59.588196+00
Date Added: 2024-06-11T08:44:26.708164
License: Public Domain

Kassal, J. (dissenting).
I am in accord with the conclusion reached at Special Term denying the petition and granting the cross motion to compel the parties to proceed to arbitration (CPLR 7503, subd [a]), albeit not for the reasons stated. I agree with the majority that the finding that respondent was a division of M.I.F. Securities Co. (M.I.F.) is insufficient to confer upon it the status of a quasi partner, as held by Special Term. However, the arbitration provision contained in section 1 of article VIII of the American Stock Exchange (Amex) constitution is sufficiently broad to compel arbitration under the circumstances of this case. The Amex constitution provides: “Members, member firms, partners of member firms, member corporations and officers of member corporations shall arbitrate all controversies arising in connection with their business between or among themselves or between them and their customers as required by any customer’s agreement or, in the absence of a written agreement, if the customer chooses to arbitrate” (emphasis added).
I recognize that the arbitration provision is not as broad as that provided under the rules of the New York Stock Exchange, which require arbitration of “any controversy between a non-member and a member” (NY Stock Exch Const, art VIII, §§ 1, 2). However, I disagree with the majority in its limited interpretation of the relevant portions of the U-4 registration application. This form had been executed by all of the parties comprising the respondent, namely, the two partners, Robert Stamm and Janet Goldberg and the only employee of the partnership, Kath*218leen Nolan. Each of the three U-4 applications provides in clear and unmistakable language: “I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitution, or by-laws of the organization with' which I registered as indicated in Question 8” (emphasis added).
Each applicant, in completing the U-4 application, was registered with Amex and it is noteworthy that the applications were all submitted at the direction and under the sponsorship of appellant. They were all signed by petitioner and, subsequently, they were approved by Amex. As a result, both partners and the sole employee of respondent were accorded status as registered representatives of M.I.F. The clear import of the arbitration provision, contained in each U-4 application, included an agreement by each applicant to arbitrate any dispute, claim or controversy “between me and my firm”, which would be not only the individual partners and employee of R. C. Stamm & Co., but also by the Stamm partnership, and the term “my firm” connotes the petitioner.
The majority overlooks that a partnership is not a legal entity and has no status separate and apart from the individuals who comprise the firm (Partnership Law, § 10; Caplan v Caplan, 268 NY 445; Chemical Bank of Rochester v Ashenburg, 94 Misc 2d 64). Unlike a corporation, which is an artificial “person” created by law and existing independently of the persons who control it, a partnership cannot be considered as separate from the persons comprising it and has no independent legal rights.
The scope of petitioner’s obligation to arbitrate under its agreement with Amex is broad. In terms of the parties bound to arbitration, as set forth in the Amex constitution, the provision encompasses “members”, “member firms” and “partners of member firms”, which clearly includes petitioner. As to the subject matter covered, that, too, includes this dispute, which pertains to a division of commissions and is embraced in the language “in connection with their business”. As to the extent of the other parties similarly bound, as set forth in the language “between or among themselves”, it is clearly the intent of this very *219comprehensive provision to require that members of Amex arbitrate all disputes involving themselves, their employees, other members and customers, whether or not there is any other agreement to arbitrate. This would also include all internal disputes involving the business of the members, such as here.
Accordingly, since the intention is to bind member firms and since the respondent, by its two individual members and only employee in their filed U-4 registration applications, have similarly agreed to be bound, the nexus between the two parties hereto is that both have agreed with Amex to arbitrate disputes or controversies.
Ruzicka v Rager (305 NY 191) and Kirschbaum v Merchants Bank of N. Y. (272 App Div 336), relied upon by the majority, have no bearing upon the issue before us on this appeal. In Ruzicka, the court was referring to the principle that, for purposes of pleading, where an action on a partnership claim was brought, the action could be commenced either in the firm name or in the name of the individual members as copartners. Kirschbaum stands for the similar principle that where an action is brought to recover on a partnership debt owing from a third party, the action must be brought on behalf of and for the benefit of the partnership and not by the individual partner, since the cause of action belongs to the partnership and not to one of its members.
This is essentially different from the issue before us in this case. Here, we have a situation where the only two partners and its only employee agreed to submit to binding arbitration “any dispute, claim or controversy that may arise” and included within the scope of arbitration, not only the individual signatory to the application, but also the partnership. Such an agreement, where all of the partners agreed to submit to arbitration a partnership claim or liability is authorized and binding upon the partnership (Partnership Law, § 20, subd 3). Inasmuch as each of the partners agreed to submit to binding arbitration any dispute or controversy that might arise, there is sufficient in the record to conclude that there existed an agreement for arbitration under the circumstances of this case. This is particularly so in the face of the broad and general arbitra*220tion clause so that the function of the court, upon an application to stay arbitration, is limited to “perform the initial screening process designed to determine in general terms whether the parties have agreed that the subject matter under dispute should be submitted to arbitration.” (Matter of Nationwide Gen. Ins. Co. v Investors Ins. Co. of Amer., 37 NY2d 91, 96; see, also, Matter of Weinrott [Carp], 32 NY2d 190, 198; Matter of Prinze [Jonas], 38 NY2d 570, 576-577.)
Accordingly, the order, Supreme Court, New York County (David B. Saxe, J.), entered December 3, 1982, denying petitioners’ application to stay arbitration and granting respondent’s cross motion to compel arbitration, should be affirmed.
Ross and Milonas, JJ., concur with Sullivan, J. P.; Fein and Kassal, JJ., each dissent in separate opinions.
Order and judgment, Supreme Court, New York County, entered on December 3, 1982, reversed, on the law, the judgment vacated, the petition to stay arbitration granted and the cross motion to compel arbitration denied. Appellants shall recover of respondent $50 costs and disbursements of this appeal.