220 A.D. 293 | N.Y. App. Div. | 1927
The following is the opinion of the Special Term:
The question in dispute in the proceeding herein has been before this court on three prior occasions, but in different forms. There have been three opinions written by the Appellate Division in this department, all of which deal with different phases of this controversy, and after reading the said decisions I have concluded that every question, involved in this controversy has been passed upon with the exception of the one question of fact which' is now before me, to wit, whether under this form of contract of sale the obligation to arbitrate was generally recognized within the association. The petitioner was a member of the Silk Association of America, but was not a member of the Raw Silk Division. It appears that the parent body had established certain machinery for the arbitration of disputes arising between the members, but, as has been held and defined by the Appellate Division in this department, it was entirely voluntary. The rules, however, of the Raw Silk Division would seem to be compulsory as to arbitration. However, these rules affected only the members of the Raw Silk Division of the association, of which the petitioner was not a member. Furthermore, it has been decided that the clause in the contract of sale that “ sales are governed by Raw Silk Rules adopted by the Silk Association of America ” could not be interpreted as meaning that the parties to this contract were obliged to arbitrate any differences arising, in the absence of evidence that the minds of
“ Whereas, the Gerseta Corporation having entered into certain contracts for the purchase of silk, which contracts were by the terms thereof to be governed by the Raw Silk Rules of The Silk Association of America, including provisions for arbitration, and Whereas, a dispute growing out of said contracts having subsequently arisen between the parties, and the Gerseta Corporation having refused to submit the dispute to arbitration as provided for in the Raw Silk Rules of The Silk Association of America, and Whereas, a complaint was subsequently filed against the Gerseta Corporation on account of its refusal to arbitrate said dispute in accordance with the terms of said contract, and said dispute having been brought on for hearing, after due notice, before this committee, it is hereby
“Resolved, that the Committee recommends that the Gerseta Corporation be expelled from The Silk Association of America.”
The evidence presented to the board of managers on which it founded its suspension order does not contain a word as to any prevailing custom in the association or among its members requiring arbitration. It does not appear from the transcript of the evidence that the board even considered the question whether a custom existed, or based its decision upon its knowledge of such a custom. The only reference to a custom to be found in the said minutes is the statement of Mr. Goldsmith in his colloquy with Mr. Steckler, which appears on page 4 of Exhibit 45, as follows: “ We feel that possibly there was á moral obligation to comply with the custom of the trade such as other members had been accustomed to do; and why they had refused to arbitrate when they had agreed to a
“ Whereas, it appears after due hearing and investigation by the Committee on Complaints and the Board of Managers of the Silk Association of America that the Gerseta Corporation, a member of this association, has violated the rules of this association and its word; and agreement, refusing to arbitrate certain differences with the General Silk Importing Company, Inc., a member of this association, and has been guilty of conduct prejudicial to the best interests of the association; Resolved that said Gerseta Corporation be, and hereby is, suspended from membership in this association until such time as it submits the differences in question to arbitration in accordance with such agreement and the rules of this association.”
It is quite clear that on September 21, 1921, the date when the suspension resolution was adopted, the board of managers knew of the decision of the Special Term' and Appellate Division, and, in fact, the association, through its counsel, had filed a brief on the appeal as amicus curice in an attempt to obtain a reversal of the decision of the Special Term. The president of the association testified that counsel had advised the board that, irrespective of the decision of the Supreme Court, if, in its opinion, sufficient evidence had been adduced to show that the petitioner acted in violation of its agreement and contrary to the rules of the association, the board could proceed with its determination. No fault can be found with that advice, and it is only referred to for the purpose of showing knowledge on the part of the board of the court’s decision. In the two applications by the General Silk Importing Company to the Special Term to compel arbitration under this contract there was no mention of the existence of a custom. Moreover, the letters which passed between the parties to the contract in which the request for arbitration was made indicate that
Submit findings on notice.