Court Opinion

ID: 5353771
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:51:53.454739+00
Date Added: 2024-06-11T08:29:46.136993
License: Public Domain

Cohn, J.
(dissenting). I am unable to agree with the majority view that the procedure outlined in the provisions of subdivision 2 of section 1458 of the Civil Practice Act is exclusive. Nowhere does it appear in the statute that the remedy of a party who claims never to have made a contract must be confined within the arbitration proceeding itself. It is merely permissive. If it were the intention of the Legislature to limit the issue of the non-existence of a contract solely to the arbitration proceeding, it would have been a simple matter to have so stated in the law. It is entirely unreasonable to assume that in enacting the amendments to article 84 of the Civil Practice Act the Legislature intended that a party who had never made a contract either to buy merchandise or to arbitrate any dispute and who has declined or omitted to take steps to upset the arbitration proceedings within ten days after service upon him of a notice of intention to arbitrate, is to have forced upon him by operation of law a contract which he never made. Indeed, the statute itself expressly preserves the right to institute this independent action in equity to determine questions such as are involved here. (Civ. Prac. Act, § 1469.)
Upon an appeal from an order dismissing a complaint for insufficiency under rule 106 of the Rules of Civil Practice, we must accept as true each allegation of the complaint. (National City Bank of N. Y. v. Waggoner, 230 App. Div. 88, 89; affd., 255 N. Y. 527.) Here plaintiff states that it never entered into a contract for the sale of merchandise with defendant and that it at no time agreed *223to arbitrate any disputes. The following letter, it is alleged, was delivered to plaintiff:
“ Irving D. Lipkowitz,
Attorney at Law
“270 Broadway,
New York City.
“ December 8th, 1987.
“ SCHAFRAN & FlNKEL, INC.,
No. 283-5-7 Grand Street,
New York City.
“ Dear Sirs : Please be advised that the undersigned, M. Lowenstein & Sons, Inc., of Nos. 37-45 Leonard Street, New York City, hereby demands, pursuant to the provisions of the written agreement between said M. Lowenstein & Sons, Inc., and yourselves, dated June 29, 1937, that you submit to arbitration before the General Arbitration Council of the Textile Industry of No. 320 Broadway, New York City, the controversy arising out of your failure and refusal to accept the goods called for by said agreement.
“ Upon said arbitration M. Lowenstein & Sons, Inc., will request that you be directed to pay to it the sum of $1,500 with interest thereon, representing the difference between the contract price and the market price of said goods at the time of your refusal to accept the same.
“ You are hereby notified that it is the intention of M. Lowenstein & Sons, Inc., to conduct such arbitration pursuant to the provisions of the said agreement dated June 29, 1937. To that end a copy of said agreement and this notice and demand will be filed with the General Arbitration Council of the Textile Industry, with the request that it proceed to put its rules into effect.
“Very truly yours,
“ M. LOWENSTEIN & SONS, INC. “By Irving D. Lipkowitz (Sgd)
“ Attorney.”
The complaint then alleges that defendant proceeded to arbitration and that award was made against plaintiff, although plaintiff in no wise participated, and that a proceeding is pending in the Supreme Court to confirm the award. The pleading then states that plaintiff is without remedy at law and that the confirmation procedure will deprive it of its day in court and of property in violation of the Federal and of the State Constitution. The judgment demanded is for the necessary injunctive relief and a declaratory judgment proclaiming that no contract exists between the parties.
*224The notice contained in the letter literally complied with the requirements of the statute (Civ. Frac. Act, § 1458, subd. 2), for it was a notice “ of an intention to conduct the arbitration pursuant to the provisions of a contract or submission specified ” in the notice. However, the notice provided for by statute is wholly inadequate and insufficient. That is best illustrated by the facts set forth in this complaint. Here plaintiff, a merchant, was, it may be assumed arguendo, personally served with a lawyer’s letter demanding that it submit to arbitration a controversy arising out of a contract which plaintiff never had made. The notice did not sufficiently inform plaintiff of the claim to be asserted; it gave not the slightest intimation that if plaintiff ignored the letter it would afterwards be obligated by a court order to pay the sum of $1,500 to defendant. No reference is found in the letter to any statutory provision under which it is claimed that plaintiff would forfeit its rights if it did not proceed as required within the ten days prescribed by statute. The communication was not a process of the court; it did not specify a time when or a place where the party served was required to appear and defend itself, nor did it set forth any penalty for plaintiff’s default upon failure to appear.
Plaintiff’s omission to move for a stay of the arbitration proceeding within ten days after receipt of such a letter from a lawyer furnishes no sound basis in law for debarring it of a fair opportunity to prove that it had never made any contract with defendant and that it had never made any agreement to submit to arbitration any controversy with defendant.
The statute, in faffing to make provision for a reasonable notice which fairly apprises a party of what proceeding is being taken against him and which does not afford the party a fair opportunity to defend, is repugnant to the due process provisions of our State and Federal Constitutions. (U. S. Const. 14th Amendt.; N. Y. State Const, art. 1, § 6; 2 Cooley’s Constitutional Limitations [8th ed.], p. 757; Coe v. Armour Fertilizer Works, 237 U. S. 413, 422, 423; Finsilver, Still & Moss v. Goldberg, M. & Co., 253 N. Y. 382.)
The complaint here sets forth all necessary facts in support of its demand for injunctive relief to stay defendant from entering any judgment pursuant to the award and for a declaratory judgment that no valid contract exists between the parties. The pleading states a good cause of action and it should not have been dismissed. In the circumstances, the court has jurisdiction to enjoin the prosecution of the arbitration proceeding. (Colson v. Pelgram, 259 N. Y. 370, 375.) “ Practically any facts which show it to be against conscience to enforce the award, or the judgment on it, *225and which could not have been taken advantage of at law, will authorize equitable interference.” (6 C. J. S., Arbitration and Award, § 109, p. 256.)
The order denying the motion for a temporary injunction should be reversed and the motion granted; the order granting the cross-motion to dismiss the complaint and the judgment thereon should be reversed, and the motion to dismiss the complaint should be denied.
Order and judgment affirmed, with costs.