H. M. Hamilton & Co. v. American Home Assurance Co.

Botein, P. J. These companion actions are concerned with agreements by which appellants, a numerous group of insurance companies transacting business in New York, authorized respondent to bind and write reinsurance on their behalf. The agreements were terminable on 90 days’ notice and were terminated by appellants as of December 31, 1963. By that time differences had arisen concerning the balance of accounts under the agreements, and the extent of appellants’ right to examine respondent’s books and records was also in dispute. Although each agreement required arbitration in New York City of any dispute or difference of opinion arising ‘ ‘ with reference to the interpretation of this Agreement or the rights with respect to any transaction involved ”, appellants on Janu [502] ary 27, 1964 instituted actions against respondent and its president in the Superior Court of Fulton County, Georgia— in which State respondent has its principal place of business — to enforce access to respondent’s books and records and for an accounting. On February 3 respondent gave notice to appellants of intention to arbitrate and on February 5 commenced these actions to compel arbitration and to restrain appellants from pursuing the Georgia suits; and it also moved for orders granting such relief. On February 6, the date on which respondent was required to show cause in the Georgia court why the relief there sought should not be granted, respondent served answers in the Georgia suits and pleaded the arbitration provisions as a bar to their maintenance. Thereafter Special Term enjoined appellants from proceeding against respondent in the Georgia suits, held that appellants were required to arbitrate, and directed that the selection of arbitrators proceed. Special Term correctly found authority for its disposition in Matter of Wolff Co. (Tulkoff) (9 N Y 2d 356, 361-362). While that case involved a stay of extra-State administrative proceedings, its rationale is applicable to extra-State judicial proceedings, as the following extract from the opinion makes clear: ‘ ‘ The purpose of a stay is to enforce a contractual obligation to arbitrate by preventing other actions or proceedings inconsistent with that obligation. If our courts may only prevent inconsistent actions or proceedings in the courts or administrative agencies of this State, they will only be providing partial enforcement of the promise to arbitrate; if the court’s power to stay were thus limited, the obligation of the contract could easily be frustrated by the prosecution of actions or proceedings in another jurisdiction.” (See, also, Matter of Demchick [Amer. Alloys Co.], 22 Misc 2d 920, aifd. 11 A D 2d 771.) The CPLR has not limited the doctrine of the decision (6 Weinstein-Korn-Miller, N, Y. Civ, Prac., If 7503.22; Thornton, Practice Commentary to CPLR 7501; McKinney’s Cons. Laws of N. Y., Book 7B). It is the public policy of this State that “ those who agree to arbitrate should be made to keep their solemn, written promises ” (Matter of Grayson-Robinson Stores, 8 N Y 2d 133, 138). It would further frustrate the policy which Matter of Wolff Co. (Tulkoff) (supra) sought to promote if we accept appellants’ argument based on the circumstance that the Georgia litigation antedated the New York litigation. For an action instituted in contravention of an arbitration agreement of course precedes an attempt to stay it, and if the action is brought [503] in a foreign jurisdiction it is always open to the party seeking the stay to plead the arbitration agreement as a bar, for whatever the plea may be worth (cf. Pena Copper Mines Ltd. v. Rio Tinto Co., 105 L. T. R. 846, 850, 851). That the Court of Appeals in Matter of Wolff Co. (Tulhoff) was well aware of the considerations of comity appellants advance is emphasized by its reference at page 362 to Arpels v. Arpels (8 N Y 2d 339, 341), Respondent did not prejudice its position by answering the Georgia pleadings. A right to arbitration is not waived by an answer which asserts it, if enforcement of the right is seasonably undertaken (Matter of Haupt v. Rose, 265 N. Y. 108, 111; Nagy v. Areas Brass & Iron Co., 242 N. Y. 97; Matter of Hosiery Mfrs. Corp. v. Goldston, 238 N. Y. 22, 27; Short v. National Sport Fashions, 264 App. Div. 284). Nor can we agree that answers insisting on the right to arbitration were intended in the present context as an election that Georgia determine whether the right existed. Respondent was protecting the right as best it could where it could. “ The only election made * * * was to proceed by arbitration ” (Matter of Haupt v. Rose, supra, p. 111). We do not find in the remarks of respondent’s Georgia counsel on February 6 any indication that New York jurisdiction was being abandoned. Each of the agreements sets forth a formula for the calculation of profits and losses, requires that respondent furnish appellants with accountings, and grants appellants access to respondent’s books and records. Whether respondent has submitted complete and accurate statements, whether appellants are entitled to the inspection of books and records which they demanded—the issues in the Georgia suits—are so clearly within the scope of the arbitration clause, as are the other disputes specified in the notice of intention to arbitrate, that remand to determine arbitrability would serve no purpose. ‘ ‘ It is settled that under a broad provision for arbitration, such as we have here, arbitration may be had as to all issues arising subsequent to the making of the contract. [Cases cited.] The so-called ‘ termination ’ or ‘ cancellation, ’ relied upon by Winkler to defeat the arbitral process, was nothing more or less than a ‘ termination ’ of a contract for an alleged breach or nonperformance of its terms, That does not put an end to the right to arbitrate claims accruing prior thereto, for, if it did, an arbitration clause could rarely, if ever, be carried out ” (Matter of Terminal Auxiliar Maritima [Winkler Credit Corp.], 6 N Y 2d 294, 298). We are also of opinion that service was validly effected on appellant Union Reinsurance Company of Zurich. [504] The orders and judgments appealed from should be affirmed, with costs.