Court Opinion

ID: 5758847
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:10:59.897704+00
Date Added: 2024-06-11T08:41:28.897387
License: Public Domain

Steuer, J. (dissenting).
Two groups of investors owned some eight properties. For the purpose of easy understanding of the complex plan they evolved, one group will be designated as the D group, and the other as the E group. They desired to terminate their relationship, but without resort to an action for partition or public sale. To effectuate their desires they agreed to pair the properties into four couples of two each—pairing the properties bearing the greatest resemblance to each other. Then the E group was to put a value on each property. The D group would then select one property from each pair. If the property so selected had a higher valuation (as designated by the E group), the D group was to pay the difference to the E group; if the property had a lower valuation, it would receive the difference from the E group. This was the basic plan as embodied in the main agreement, and it would have been complete had each group had an equal share in the venture. But they did not. The D group owned 45% and the E group owned 55%. So instead of the actual differences in valuation being the measure of the D group’s right or obligation, a sum reflecting the 10% difference in ownership would be required. This caused the following difficulty. If the ownership was equal and if the values fixed by the E group were too low, the D group could protect itself by taking the more expensive properties; and conversely, if they were too high, they could take the lower valued properties. But with the E group getting a 10% increase, that *448group, by consistently overvaluing the properties, would obtain an advantage.1
To take care of this inequity, a supplemental agreement was entered into. This provided for the selection of an appraiser who would value all the properties. His valuation would, however, only apply to the 10% differential in ownership. The E group in valuing the properties could use his appraisals or disregard them. But in calculating the additional sums to be paid or received, when the 10% differential was calculated, the values fixed by the appraiser were to be used.2
The main agreement contains an arbitration clause. We are in agreement that this clause also applies to the supplemental agreement. The arbitration agreement is broad and directs the arbitrators to see that the agreement is specifically performed. In that connection it gives the arbitrators the power to put a value on the properties in the event that the E group fails to do so.
The parties selected an appraiser. He has appraised the properties. The E group is not satisfied with his appraisals and has demanded arbitration. Special Term has directed an arbitration on this score. This conclusion was reached on a misreading of the contract. The contract states that the valuations of the appraiser are not to be binding on the E group, but there was a failure to recognize that this exemption extended only to the fixing of their own values by the E group and does not refer to the values fixed for the purpose of equalizing the disparity in investment.
The majority reaches the conclusion on the ground that whether or not the appraiser’s values are conclusive is a matter of interpretation which is arbitrable. It is not disputable that under a broad and general arbitration clause the intent of the parties as disclosed by the agreement is a matter for the arbitrators to interpret. Ñor, I take it, is it disputable that whether the parties agreed to arbitrate and what they agreed to arbitrate is a matter for the courts. The semantic maze engendered by these apparently conflicting propositions is not real. When rea*449sonable minds could not differ as to the expressed intent, the court must determine what was to be submitted to ai’bitration. Where there is room for reasonable disagreement, the question, like any other arising under the contract, is for the arbitrators.
Applying these elementary principles to the matter in suit, it could not be disputed that if the contract said in hcec verba that the valuations of the appraiser were not subject to arbitration and were final and binding, that would not be subject to interpretation by the arbitrators and they would have no power to effect any change. It is submitted that when these contracts are read and understood, this is exactly what was meant, and any differing interpretation would be unreasonable. The contracts cannot be read without concluding that the primary object of the contracting parties was to divide their interests in the properties they owned, and to do this on the basis of a carefully worked out mathematical formula without the intervention of any tribunal. It was only in the event that one party or the other sought to deviate from the formula set out that arbitration could be invoked to compel him to adhere to it. The provision for appraisal was an inherent part of the formula. It cannot be maintained that it was intended that the arbitrators were to sit as a court of review of the appraiser’s valuations. By the same meticulous, if somewhat involved, methods that characterize the other procedures called for by the contracts, the appraiser was selected from a list supposed to represent the best qualified individuals in the field. The arbitrators were not chosen on this basis. To find that it was intended that they could annul the appraiser’s findings would necessarily require a finding that the appraiser was merely to be advisory to the arbitrators, which, it is submitted, is entirely contrary to the meaning of the agreements.
It is believed that the agreements leave no room for any interpretation that the parties’ expressed intent was to subject the appraiser’s findings to any review. As the matter sought to be arbitrated is not arbitrable, the motion to stay arbitration should have been granted.
Rabin, Stevens and Capozzoli, JJ., concur with Breitel., J. P.; Steuer, J., dissents in opinion.
Order, entered on August 10,1966, affirmed with $30 costs and disbursements to the respondent.

 For example, suppose the two properties in a pair were worth, respectively, $1,000,000 and $1,500,000. The D group could take their choice and if they took the former it would cost them $550,000 and if they took the latter they would receive $450,000. But if the same properties were valued at $2,000,000 and $3,000,000, it would cost $1,100,000 or they would receive $900,000. By increasing the valuation, the differential is correspondingly increased.

 So, in the suppositious instance used, if the appraiser and the E group fixed the values at $1,000,000 and $1,500,000, there would naturally be the same differentials—$450,000 and $550,000. But if the E group fixed the $2,000,000 and $3,000,000 values, the differentials would be $1,050,000 and $950,000.