Court Opinion

ID: 5775850
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:40:53.666348+00
Date Added: 2024-06-11T08:41:53.101786
License: Public Domain

McGivern, J. (dissenting).
In my view there is an impress of arbitration in the dealings between these parties. (Matter of Blum Folding Paper Box Co. [Friedlander], 27 N Y 2d 35; Trafalgar Sq. v. Reeves Bros., 35 A D 2d 194; Matter of National Equip. Rental [Amer. Pecco Corp.], 35 A D 2d 132; Braten Apparel Corp. v. Butger Fabrics Corp., 35 A D 2d 921; Matter of Exercycle Corp. [Maratta], 9 N Y 2d 329; Merrill Lynch, Pierce, Fenner & Smith v. Griesenbeck, 28 A D 2d 99, affd. 21 N Y 2d 688.) All of their interrelating contracts had arbitration clauses. Tanbro permitted Milliken, as the known supplier, to retain the goods for the credit of Mill; and the suit of Tanbro against Mill has already been stayed and arbitration directed. Milliken need only demand arbitration against Mill *473to justify a clear right to consolidation of the respective arbitrable claims of the parties. (See Vigo S.S. Corp. [Marship Corp. of Monrovia], 26 N Y 2d 157.)
A reiteration of the rule that there must be an explicit agreement to arbitrate and that one may not be drawn into arbitration by implication establishes no magic barrier precluding the relief requested by Milliken under the circumstances here prevailing^ The true test is whether or not the party objecting to arbitration is being ‘1 unwittingly ’ ’ relegated to an arbitral forum. (Matter of ITT Avis v. Tuttle, 27 N Y 2d 571.) I find it difficult to conclude that Tanbro never contemplated that, a controversy would be relegated to arbitration. As Judge Desmond said in Matter of Helen Whiting, Inc. (Trojan Textile Corp.) (307 N. Y. 360, 367): “ From our own experience, we can almost take judicial notice that arbitration clauses ..are commonly used in the textile industry ”.
Here, it is clear tbat Tanbro was aware that in accordance with practice Milliken’s.,contract ‘with..Mill, contained the customary arbitration, clause for thé settlement of controversies. Tanbro conceded this fact. The affidavit of its vice-president, Tananbaum, states: “ Concededly, Tanbro had made, .other purchases from Milliken, a major source of supply in the textile industry, under contracts containing arbitration clauses, in the same manner that Tanbro had purchased textiles from every other leading mill in the industry.”
Thus, it is difficult to avoid the conclusion that Tanbro assented to arbitrate the.controversy here involved; and as was stated in Matter of Helen W.hiting, Inc. (supra, p. 368) “ while a contract to arbitrate future controversies must be in writing,' it need not be signed so long- as there is other proof that the parties' actually, agreed on it”. (See, also, Trafalgar Sq. [Reeves Bros.], supra.) Here, the required assent.finds its.gene-, sis in both custom and a course of dealing.in contracts containing provision for arbitration. . ....., .
Compelling. Tanbro to arbitrate does, not alter the framework of the obligations assumed by the parties nor result in any valid claim of prejudice by .Tanbro, ; . No prejudice is. to. be- found, because both the arbitration agreements between the parties herein provide. that the. arbitral forum is to be the General Arbitration Council o.f the Textile Industry.*
*474Even if there were validity to Tanbro’s position ‘ ‘ we cannot approve of concurrent proceedings ” possibly leading to inconsistent awards. (Matter of Stewart Tenants Corp. [Diesel Constr. Co.], 16 A D 2d 895, 896.)
In any event, it is clear that Tanbro was not an innocent purchaser “ unwittingly ” involved in Milliken’s claims on the goods and Milliken’s claim of right to compel arbitration as between Tanbro and Milliken. There was nothing secret about Milliken’s continued holding, over a period of eight months, of the goods for the account of Mill Fabrics.
The contract between Tanbro and Mill Fabrics was made on May 16, 1969. In November of 1969 Milliken was requested by Mill Fabrics to deliver 57,000 yards of goods to Tanbro. Nor is there anything to indicate that at that time Tanbro had any interest in the remaining 203,000 yards of goods still in Mil-liken’s possession. It was not until January, 1970, after Mills got into financial difficulties, that Tanbro claimed ownership of the goods and demanded delivery from Milliken. The failure to disclose Tanbro’s interest in the remaining goods spells out' Tanbro’s assent to Milliken’s continued possession with its incident attributes.
Without presuming to pass on the ultimate merits of the controversy, it is clear on this record that such title as Tanbro had to the. goods was subject to the burden of Milliken’s security interest. The position of Tanbro may not be equated with that of an innocent buyer in the ordinary course of business purchasing from a seller’s inventory in possession, and who is protected from hidden property interests. (Uniform Commercial Code, § 2-403, subds. [1] and [2], Official Comments, McKinney’s Cons. Laws of N. Y., Book 62%, pp. 395-396; Embassy Men’s Apparel v. Lyman Print. & Finishing Co., 247 S. C. 471; Rothstein Corp. v. Kerr S. S. Co., 21 A D 2d 463, 468.) Although we here deal, not with an assignment, but with a sale of goods, particularly applicable is the rationale underlying Judge Pound’s statement in Matter of Hosiery Mfrs. Corp. v. Goldston (238 N. Y. 22, 28) wherein he said: “ The further claim is made that Goldston, the plaintiff in actions Nos. 1, 2, 3 and 4, was not a party to the arbitration contract and was not bound thereby. But Goldston took the assignment of acceptance and the account for goods sold and delivered subject to the rights of the petitioner. Arbitration contracts would be of no value if either party thereto could escape the effect of such a clause by assigning a claim subject to arbitration between the original parties to a third party. (Matter of Lowenthal, 199 App. Div. 39; affd., 233 N. Y. 621.) ” (Italics supplied.)
*475To give validity to Tanbro’s position would allow a possible deprivation of Milliken’s security interest in the goods, which security interest was apparently never relinquished. I cannot accept the contention that because Mill “ sold ” its interest in the goods it could, "by so doing, defeat Milliken’s security interest and right to have determined by arbitration a controversy concerning that security interest. The obligation to arbitrate may not so readily be eluded. (See Glasser v. Price, 35 A D 2d 98,101.)
In sum, better reason suggests that this court should not strain to find an absence of agreement to arbitrate when there is ample ground for finding that assent which justifies relegating the antagonists to a common arbitral forum freely and independently found acceptable by them for the settlement of their controversies.
I would, therefore, reverse the order appealed from, stay the action against Milliken, and compel Tanbro to arbitrate its dispute with Milliken.
Eager, J. P., and Timer, J., concur with Maceen, J.; McGivern, J., dissents in an opinion.
Order, Supreme Court, New York County entered on June 3, 1970, affirmed. Respondent shall recover of appellant $30 costs and disbursements of this appeal.

 The Milliken-Mill contract provides: for arbitration'“in accordance with, the rules then obtaining of."the American Arbitration Association or the' General Arbitration. Council' of-' the Textile Industry/’ whichever shall, be first-selected: by the party instituting said arbitration.