In re the Arbitration between American Rail & Steel Co. & India Supply Mission

Dye, J. The issue here is whether a contract for the purchase and sale of a quantity of used steel rails and angle bars bound the parties to settle disputes arising therefrom exclusively by arbitration. Whether it did or not depends on purchase order language providing viz.: ‘‘ This Contract is placed in accordance with the conditions of contract Form ISM 826 Bev. Copy attached and can be modified or supplemented only in writing and signed by both parties hereto.” Paragraph 25 of the afore-mentioned form provided: ‘ ‘ Arbitration: All questions and controversies arising in connection with this contract shall be submitted to arbitration in New York, N. Y., in accordance with the rules of arbitration of the American Arbitration Association.” When a dispute arose as to whether the used rails delivered corresponded in quantity and quality to those called for in the purchase order, the purchaser demanded that it be settled by arbitration. The seller then made the within motion for a stay claiming that arbitration was not called for by the contract documents since the purchase order did not mention it and that Form ISM 826 Rev., on which the purchaser relies, was not attached or that its contents were otherwise brought to the seller’s attention, While respondent attempts to deny this assertion by saying that it was their practice to attach said form, it, nonetheless, takes the position that its omission “ does not change the situation ”. The motion for stay was denied in Special Term on authority of Matter of Level Export Corp. (Wolz, Aiken & Co.) (305 N. Y. 82, revg. 280 App. Div. 211). Upon appeal, such denial was unanimously affirmed in the Appellate Division, First Department, and the parties were directed to proceed to arbitration. We granted leave in order that the controversy might be examined in light of our subsequent decision in Matter of Riverdale Fabrics Corp. (Tillinghast-Stiles Co.) (306 N. Y. 288). That case dealt with a salesnote for cotton yarn containing a clause reading “ This contract is also subject to the Cotton Yarn Buies of 1938 as amended ”. Buie 31 of those rules contained an arbitration clause. We deemed such reference was ineffective “ to render arbitration the exclusive remedy ’ ’, because the intention to do so was not clearly expressed. This distinguished the holding in the Level case (supra) for there the verbatim reference in the main contract to [580] the salesnote provision did not, as a matter of law, raise any substantial issue as to the making of the agreement to arbitrate (Civ. Prac. Act, § 1458, subd. 2). In our view this case more closely resembles Biverdale (supra) than Level and, accordingly, a court cannot say that the intent to arbitrate was so clearly expressed as to warrant a direction that parties proceed to settle their dispute by arbitration. The order should be reversed and the motion to stay arbitration granted, with costs. The order of the Appellate Division and that of Special Term should be reversed, with costs in all courts, and the matter remitted to Special Term for further proceedings in accordance with the opinion herein. Conway, Ch. J., Desmond, Fuld, Froessel, Van Voorhis and Burke, JJ., concur. Orders reversed, etc.