Court Opinion

ID: 5800955
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:27:51.888063+00
Date Added: 2024-06-11T08:42:34.702951
License: Public Domain

I would reverse the determination below and hold the matter in abeyance pending a hearing on the factual issues in dispute. The sole issue raised in this proceeding is whether appellant is, or should be deemed to be, the purchaser of certain specialized textile goods. Appellant is a publicly owned company primarily engaged, with its subsidiaries, in the business of manufacturing and marketing knitted textile fabrics. In 1973 it formed a new venture with one Charles Edison (who was also the principal of his own company, International Fabrics Corp.), then called Frontier Urethane Corp., to engage in the urethane and vinyl artificial leather business. Appellant acquired 80% of Frontier’s stock for $280,000. Edison, who became Frontier’s president and chief operating officer, acquired the other 20% of Frontier’s stock for $70,000. After appellant refused to guarantee Frontier’s purchases, respondent sold Frontier quantities of urethane under contracts containing a broad arbitration provision. Payments for the goods were made by appellant, using its own checks, but with a remittance attached to each bearing a code number and a legend indicating the particular subsidiary or division being charged or for whose account the payment was being made. Additionally, the record before us discloses that respondent’s contracts were typically made out to "Fab. Ind. Inc./International Fab. Corp.”, mailed to Frontier in Boston (appellant had no office there) and executed by the recipient in a manner clearly disclosing that Frontier was the purchaser. On essentially these disclosed facts, Special Term granted petitioner’s motion to compel appellant to arbitrate its claim of nonpayment of several such contracts, reasoning that appellant had, by its course of conduct and failure to object to its designation as the buyer therein (and in others previously paid) "ratified” them (relying on Uniform Commercial Code, §2-201, subd [2]; § 2-207, and this court’s decision in Matter of Levin-Townsend Computer Corp. v Holland, 29 AD2d 925). In my view such reliance, in the present posture of the proceeding, is misplaced; and begs the issue. If, as appellant contends, it was not a party to any contract with respondent, it had no obligation to object to the written confirmations or contracts. In light of appellant’s refusal to guarantee Frontier’s obligations when requested by respondent to do so, the listing of Edison’s company as a copurchaser, the manner in which the contracts were signed and the indication on each prior payment that appellant’s check was for the accommodation of Frontier, appellant is entitled, at the very least, to an evidentiary hearing to ascertain the true identity of the purchaser herein. In short, a finding that appellant is bound by the agreements in issue, as a matter of law, must rest on a firmer foundation than the submissions contained in the instant record. Accordingly, the order and judgment (one paper) appealed from should be reversed and the applications held in abeyance pending a trial of the .disputed factual issues raised.