In re the Arbitration between Gallagher & Esso Standard Oil Co.

Valerte, J. In May, 1959, appellant Union demanded arbitration pursuant to a provision of a collective bargaining agreement, dated May 15,1956, between the union and Esso Standard Oil Company (herein called the “ Company ”) which provided for arbitration of “Any question as to the interpretation of this Agreement or any question of fact arising out of an alleged violation of the terms of this agreement ’ ’. The dispute tendered for arbitration embraced the wages and working conditions of unlicensed seamen employed aboard the Company’s tied-up or inactive vessels. While the Union relies upon an interpretation of the 1956 agreement to resolve its claimed dispute, the Company urges that the question of the wages and working conditions of the seamen in tied-up ships specifically is governed by a September 16, 1957 agreement, which supplemented the May 15, 1956 contract. However, the Union challenges the validity of the 1957 instrument, and contends it is a nullity since it purports to amend a July 2, 1957 agreement — looking to the extension of the 1956 agreement — which was never ratified by the Union. The Company, on the other hand, contends that although the July 2, 1957 agreement failed of ratification by the members, the Union and the Company have treated the September 16, 1957 agreement as a supplement to the May 15,1956 contract. Thus, we are met at the outset with a dispute between the parties as to the existence and validity of the September, 1957 agreement. If it is a valid contract supplementing the 1956 agreement, there is no bona fide arbitrable issue between the Union and the Company as to the wages payable to personnel of tied-up ships because they are being paid in accordance with the provisions of the September, 1957 agreement. And in the absence of an arbitrable dispute, the Union may not compel arbitration (Matter of General Elec. Co. [United Elec. Radio & Mach. Workers of America], 300 N. Y. 262; Matter of Essenson [Upper Queens Med. Group], 307 N. Y. 68; Matter of International Assn. of Machinists [Cutler-Hammer], 271 App. Div. 917, affd. 297 N. Y. 519). Conversely, if the 1957 agreement be invalid — as contended by the Union — a proper arbitrable question is presented by the Union’s demand. [24] We are called upon to decide who is to determine the validity of the 1957 agreement, the court or the arbitrators. In reaching that determination, we must keep in mind that the issue is one of the existence and validity of the supplemental 1957 agreement and not one arising under the composite 1956 agreement as supplemented by the 1957 arrangement. We have concluded that the question of the validity of the 1957 agreement is one for the court, and not for the arbitrators. The Union’s challenge to the September, 1957 agreement rests on the contention that it was not executed by the full governing body of the Union, was not submitted to the members for acceptance or rejection and, on its face, is a nullity in that it purports to amend the nonexisting agreement of July 2,1957 which failed of ratification by the members. But the Company has averred that the parties recognized the September 16,1957 contract, and acted under it for two years without the Union ever raising any questions as to its validity and binding effect. It must be obvious that this dispute, as to the validity of the September 16, 1957 contract, is not, under the terms of the arbitration clause of the 1956 agreement, one involving an interpretation of the 1956 contract or any question of fact arising out of the alleged violation of that agreement. Since the dispute does not fall within the ambit of the arbitration clause of the 1956 agreement, there cannot, for this additional reason, be any arbitration of the validity and binding effect of the September 16, 1957 contract. In summary, there is a preliminary issue to be determined as to the existence of the contract between the parties. If the agreement of September 16, 1957 never came into existence, the Union is entitled to arbitrate the claimed dispute. On the other hand, if the agreement of September 16, 1957 is a binding commitment, there is no arbitrable issue. Whether the contract came into existence is one for the court initially to decide, and not for arbitrators. The order denying the motion to compel arbitration should be modified to the extent of remanding the motion to Special Term for a trial on the issue of the existence and validity of the September 16, 1957 contract, and as so modified, affirmed, without costs. Disposition of the motion to compel arbitration is to be held in abeyance pending trial of that issue and then determined in accordance with the views expressed in this opinion.