Short v. National Sport Fashions, Inc.

Callahan, J. The contract of the parties had a provision affording either of them the right to demand arbitration concerning any dispute arising with respect to the provisions of the agreement. Plaintiff sued at law claiming a breach of contract. Defendants appeared by an attorney and obtained a stipulation extending their time to answer. The affidavit states that at the time this stipulation was obtained there was some discussion with' respect [285] to defendants’ right to demand arbitration. However, the stipulation did not expressly reserve such right. At the end of the stipulated period, defendants served an answer which consisted solely of a general denial. Within the time that defendants might amend their answer as of course, they served a new answer asserting the right of arbitration under the contract. If defendants had demanded the right of arbitration in their original answer, there would have been no waiver of that right. (Matter of Haupt v. Rose, 265 N. Y. 108.) Accordingly, procuring an extension of time to answer would not seem to constitute a waiver. Thus, the narrow question is presented as to whether, because in their original answer (which they had a right to amend as matter of course) defendants failed to claim the right to arbitrate, this constituted an intentional waiver of that right. The precise point does not seem to have been decided in any of the numerous cases concerning what constitutes a waiver of the right of arbitration. Applying the general rules applicable in determining whether a waiver was intended, we find no such unequivocal act by the' defendants as to constitute an election and waiver. When defendants served the original answer, they knew that they might amend it as of course. Defendants’ attorney asserts that his original answer was served hurriedly on the eve of his departure on a business trip. The action at law was still in the pleading stage. There was no such delay in acting with respect to the right to demand arbitration as had occurred in Matter of Zimmerman v. Cohen (236 N. Y. 15). There the defendant participated in the litigation brought by plaintiff by taking numerous steps in the litigation after the joinder of issue. He waited two years after institution of the action before demanding arbitration. Such circumstances were held to indicate a waiver or abandonment of the right to arbitrate. While it has been held that the question of abandonment of the right to arbitrate does not necessarily depend on the number of steps which have been taken and that such abandonment may be evidenced by the first step, if it clearly indicates an intent to go that way (Matter of Young v. Crescent Development Co., 240 N. Y. 244), here the first step taken was one subject to change at 1 defendants’ will. Under the circumstances, we find that it did not constitute a final election. The order should be reversed, with twenty dollars costs and disbursements, and the motion to compel arbitration and for a stay granted. [286] Martin, P. J., Townley and Glennon, JJ., concur; Cohn, J., dissents and votes to affirm.