Hyperlawhypertext legal databasebeta In re the Arbitration between R. H. Macy & Co. & National Sleep Products, Inc. 39 N.Y.2d 268

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In re the Arbitration between R. H. Macy & Co. & National Sleep Products, Inc.

39 N.Y.2d 268 Court N.Y. Decision date 1976-04-06 English

Delivered by Gabrielli, J.

Contents

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p. 268
In the Matter of the Arbitration Between R. H. Macy & Co., Inc., Appellant, and National Sleep Products, Inc., Respondent.
Argued February 10, 1976;
decided April 6, 1976
Murray Gartner and Nathan Leventhal for appellant.
I. Under the limited arbitration clause of the 1949 agreement, the court below correctly ruled that the issue of whether the agreement had been abandoned was for the court and not the arbitrator. (Mutter of Rosenbaum [American Sur. Co. of N. Y.], 11 NY2d 310 ; Matter of Riverdale Fabrics Corp. [Tillinghast-Stiles Co.] 306 NY 288 ; Matter of Lehman v Ostrovsky, 264 NY 130 ; Matter of Marchant v Mead-Morrison Mfg. Co., 252 NY 284 , 282 US 808 ; Matter of Raisler Corp. [New York City Housing Auth.] 32 NY2d 274 ; Steelworkers v American Mfg. Co., 363 US 564 ; Instructional Tel. Corp. v National Broadcasting Co., 45 AD2d 1004 ; Tanbro Fabrics Corp. v Deering Mil-
p. 269
liken, 35 AD2d 469 , 29 NY2d 690 ; Matter of American Silk Mills Corp. [Delaware][Meinhard-Commercial Corp.] 35 AD2d 197 , 38 AD2d 695 , 31 NY2d 777 ; Matter of Dana Realty Corp. [Consolidated Elec. Constr. Co.] 21 AD2d 769 .) II. The contention that, despite the express terms of the contract, Macy’s was obligated to buy a minimum of 35,000 mattresses is a question of interpretation not performance, and under the limited arbitration clause is not for the arbitrator. (Steelworkers v American Mfg. Co., 363 US 564 ; Matter of Steinberg [Steinberg] 38 AD2d 57 , 32 NY2d 671 ; Matter of Methodist Church of Babylon [Glen-Rich Constr. Corp] 29 AD2d 773 ; Madison Hill Corp. v Continental Baking Co., 21 AD2d 538 ; Matter of Uddo [Taormina] 21 AD2d 402 ; Matter of International Assn, of Machinists, Dist. No. 15, Local No. 402 [Cutler-Hammer, Inc.] 297 NY 519 ; Alpert v Admiration Knitwear Co., 304 NY 1 ; Matter of Lipman, 289 NY 76 .)
Jacob E. Heller and Joseph Heller for respondent.
I. Concurring opinion of the two Justices did not state that either of the courts below has a right or duty to decide the threshold issue of abandonment of contract on a petition for a stay of arbitration. II. The arbitration clause in the case at bar is not "narrow”; it is not restrictive and permits of the determination of all issues. (Matter of Kahn [National City Bank] 284 NY 515 ; Matter of Kramer & Uchitelle, 288 NY 467 ; Matter of Lipman [Haeuser Shellac Co.] 289 NY 76 ; Matter of Wrap-Vertiser Corp. [Plotnick] 3 NY2d 17 ; Matter of Exercycle Corp. [Maratta] 9 NY2d 329 ; Matter of Weinrott [Carp] 32 NY2d 190 ; Matter of Marchant v Mead-Morrison Mfg. Co., 252 NY 284 .) III. The petition for a stay at Special Term was a nullity, raising no issues, it not having been verified by an officer having personal knowledge. IV. Macy voluntarily engaged in the arbitration proceeding filed in the American Arbitration Association barring an application for a stay. The application for a stay was not timely made. (Matter of National Cash Register Co. [Wilson] 8 NY2d 377 ; Matter of Boston Old Colony Ins. Co. [Martin] 34 AD2d 776 ; Mid-Atlantic Constr. Corp. v Guido, 30 AD2d 232 ; Milton L. Ehrlich, Inc. v Swiss Constr. Corp., 11 AD2d 644 ; Aetna Life & Cas. Co. v Stekardis, 34 NY2d 182 .)

On this appeal, we must decide whether an arbitration clause providing for the submission to arbitration of any dispute pertaining to the performance of a contract is

p. 270
sufficiently broad to encompass a claim that the parties have abandoned the contract and, also, the question of the extent of a party’s obligation under the contract.

Petitioner and respondent entered into an agreement in 1949 which provided that respondent was to manufacture mattresses bearing the Macy’s label and petitioner was obligated to purchase its mattress requirements for sale in its New York stores up to "700 Mattresses per week before [it ordered] Mattresses from any other person”. In 1972, respondent informed petitioner by letter that the latter had failed "[d]uring the past several years” to order the minimum number of mattresses provided by the contract. Efforts to resolve this matter through negotiation proved fruitless and respondent sought arbitration pursuant to an arbitration clause in the 1949 agreement which provided that "[i]n the event of any dispute as to the performance of any provision of this agreement, same shall be submitted to arbitration”. Petitioner moved to stay arbitration at Special Term on the ground that the contract had been abandoned in 1953, at which time, according to petitioner, the parties entered into a new arrangement for the manufacture of box springs and mattresses.

Special Term held that the arbitration clause was narrow and did not include within its scope the issue of abandonment which was, therefore, reserved for resolution in the courts. Finding that the issue could not be resolved on the basis of the papers before it, the court directed a reference on that question. The Appellate Division reversed, stating that the arbitration clause was of sufficient breadth to cover the dispute as to abandonment, which essentially concerned the obligation to perform. Two Justices concurred, reaching the merits and finding that the contract had not been abandoned.

It is settled that a party may not be required to submit to arbitration matters which he has not agreed to arbitrate (Matter of Rosenbaum [American Sur. Co. of N. Y.], 11 NY2d 310 ; Matter of Lehman v Ostrovsky, 264 NY 130 ; Matter of Marchant v Mead-Morrison Mfg. Co., 252 NY 284 ), and that disputes involving acts of the parties subsequent to the making of a contract are properly embraced by a broad arbitration clause (Matter of Riccardi [Modern Silver Linen Supply Co.], 45 AD2d 191 , affd 36 NY2d 945 , 946; Matter of Lipman [Haeuser Shellac Co.], 289 NY 76 ; Matter of Kahn [National City Bank], 284 NY 515 ). We agree with the Appellate Division that the arbitration clause in this case is not a narrow

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one, but neither is it a broad clause such as those in Matter of Riccardi (supra) and Matter of Lipman (supra), which were directed toward any or all controversies arising out of a contract. Ultimately, the labels "broad” and "narrow” are not controlling but, more importantly, "[t]he language of the agreement to arbitrate * * * must be sufficiently broad so as to permit of the application of the general principle that all issues subsequent to the making of the contract are not for the court but for the arbitrators” (Matter of Lipman, supra, p 80).

We conclude that the arbitration clause utilized in this case, while restricted to disputes concerning performance, is sufficiently broad to include the issue of abandonment. "Performance” may be defined as "[t]he fulfillment or accomplishment of a promise, contract or other obligation according to its terms” (Black’s Law Dictionary [4th ed]). The claim that the parties have decided to abandon their contract is a question intimately related to performance because, a fortiori, it is premised on the nonfulfillment of contractual obligations and the failure to accomplish the terms of the agreement. The additional issue raised by petitioner, the interpretation of its obligations under the contract, also relates to the performance of a provision of the contract. Macy claims that it was not required, by the contract, to purchase a minimum number of mattresses per week from respondent. It is apodictic that this issue concerns the nature and extent of the performance due pursuant to the contract, and, hence, is within the import of the arbitration clause.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Breitel and Judges Jasen, Jones, Wachtler, Fuchsberg and Cooke concur.

Order affirmed.

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