Hoffman et al. v. Harry Greenberg Co., Inc. — Appellate Term, First Department (November 1919)

Factual and Procedural Background

After issue had been joined and oral pleadings amplified by bills of particulars furnished by each side, the parties agreed to submit their controversy to an arbitrator under the Municipal Court rules. The complaint and plaintiff's bill of particulars alleged a cause of action for work, labor and services and claimed damages because the defendant refused to furnish plaintiffs with sufficient material and trimming to complete certain garments delivered to them for manufacture. The defendant's answer was a general denial and included a counterclaim for overcharges and the value of garments which plaintiff failed to deliver, claiming $1,000.

The consent to arbitrate designated an arbitrator to hear the "controversy existing between us, namely; as per bills of particulars and pleadings filed in an action." The arbitrator filed an award stating that "I have heard the parties to said controversy and the evidence submitted by them and find and decide that the plaintiff ... are entitled to receive from the defendant ... the sum of $457.60." The award was filed July 24, 1919, and judgment was entered thereon in the Municipal Court on July 29, 1919.

The defendant moved to vacate the judgment on the ground that the award showed on its face that the arbitrator failed to decide the issues submitted to him because it made no disposition of the defendant's counterclaim. The motion was denied; the defendant appealed. The opinion below is by Delehanty, J., with GUY and BIJUR, JJ., concurring.

Legal Issues Presented

Whether an arbitration award that is silent as to a counterclaim included in the submission satisfies the statutory requirement that an award be "a mutual, final, and definite award, upon the subject-matter submitted" (Code Civ. Pro. § 2374, subd. 4).
Whether the language of the arbitrator's award and the consent to arbitrate allow a court to infer that the arbitrator passed upon the counterclaim when no record of the arbitration proceedings is available.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Rosenberg v. Aldhaus, 132 N.Y.S. 369	Example of a situation where a record allowed a court to fairly infer that the arbitrator had passed upon the issues submitted.	The court distinguished the present case from Rosenberg: because there is no record here from which it can be fairly inferred that the arbitrator passed upon the counterclaim, Rosenberg's situation does not apply and the award must be considered defective for silence as to the counterclaim.

Court's Reasoning and Analysis

The court began by describing the purpose of arbitration under the Municipal Court rules: to enable parties to submit all differences so there may be an equitable disposition and a final determination that prevents future litigation. The court emphasized that the award must be definite and certain so as to preclude further litigation on the same matters.

The court noted procedural features of Municipal Court arbitration: an arbitrator is appointed, the arbitrator need not follow formal rules of evidence, and no record of proceedings is kept. It then cited the statutory requirement (Code Civ. Pro. § 2374, subd. 4) that an award be "a mutual, final, and definite award, upon the subject-matter submitted."

Applying those principles to the facts, the court concluded that the award was defective because it was silent as to the defendant's counterclaim, which formed part of the subject matter submitted. The court explained that the language of the award does not permit a determination that the entire controversy was passed upon; consequently, the award would afford no protection against a later action on the same matter asserted in the counterclaim. The court rejected the argument that the term "controversy" in the consent or award necessarily implies that every element of the controversy (including the counterclaim) was considered, observing that the existence of a general denial could suffice to create a "controversy" and there is no indication the arbitrator addressed the counterclaim.

The court distinguished Rosenberg v. Aldhaus as a case in which a court could fairly infer from the record that the arbitrator had passed upon the issues; because no such record exists here, that reasoning could not be applied.

Holding and Implications

Holding: The judgment entered upon the arbitrator's award was reversed and a new trial was ordered. Costs of thirty dollars were awarded to the appellant to abide the event.

Implications: The direct effect of the decision is to set aside the Municipal Court judgment based on the arbitration award and to require further proceedings (a new trial). The opinion does not announce or rely upon a broader new precedent beyond applying the statutory requirement that awards be mutual, final, and definite; it is focused on the insufficiency of an award that is silent as to a counterclaim included in the submission.

Show full summary ...

NATHAN HOFFMAN et al., Respondents, v. HARRY GREENBERG CO., INC., Appellant.

DELEHANTY, J.

After issue had been joined in this action, the oral pleadings having been amplified by bills of particulars furnished by each side, the parties signed an agreement to submit their controversy to an arbitrator. The complaint and plaintiff's bill of particulars set forth a cause of action for work, labor and services, and also claimed damages by reason of defendant's refusal to furnish plaintiffs with sufficient material and trimming to complete a certain number of garments delivered to them for manufacture for the defendants.

The defense was a general denial and a counterclaim for overcharges made by plaintiff and the value of garments which plaintiff failed to deliver to defendant and claimed a judgment for $1,000. The arbitration was agreed to under the rules of the Municipal Court which provide that when a consent to arbitrate shall have been signed by the parties and filed with the clerk of the court an arbitrator shall be appointed by the justice. These rules also provide that the arbitrator shall not be bound by the rules of evidence, but may receive such testimony as shall seem to him just and proper and that no record of the proceedings shall be kept. When the award is made it shall be filed with the clerk who shall enter judgment thereon, provided the award is filed within thirty days after submission, unless both parties file a request in writing not to enter judgment. The consent of the parties herein recites that the parties designate ____ as arbitrator to hear and determine the following "controversy existing between us, namely; as per bills of particulars and pleadings filed in an action," etc. The arbitrator filed an award in which he states that "I have heard the parties to said controversy and the evidence submitted by them and find and decide that the plaintiff * * * are entitled to receive from the defendant, * * * the sum of $457.60."

This award was filed on July 24, 1919, and on July 29, 1919, judgment was duly entered thereon in the Municipal Court. The defendant then moved to vacate such judgment, upon the ground that the award shows upon its face that the arbitrator failed to decide the issues submitted to him "in that he failed to make any disposition of the counterclaim interposed by the defendant herein."

This motion was denied and from the judgment the defendant appeals, bringing up for review the abovementioned order. I think this judgment should be reversed. The arbitration provided for by the Municipal Court Rules contemplates a submission by the parties of all their differences, to the end that there may be an equitable disposition thereof and a final determination of the same and future litigation prevented. The award should be so definite and certain as to preclude any future litigation by either party involving the same matters. This method of disposing of disputes practically prevents appeals from any judgment entered thereon, as no rules are observed and no record being kept no appeal could be successfully sustained. The statute now applicable to the Municipal Court (Code Civ. Pro. § 2374, subd. 4) provides that that award must be "a mutual, final, and definite award, upon the subject-matter submitted." Clearly, the award in the instant case is defective, in that it is silent as to the counterclaim which was a part of the subject matter submitted. Whether or not the entire "controversy" was passed upon by the arbitrator cannot be determined by a recourse to the language of the award. The award would afford no protection to the plaintiff in an action that might be hereafter brought for the same cause of action set up in the counterclaim. It is idle to argue that the word "controversy" as used in the award implies that the counterclaim was considered and passed upon. There would be a controversy if only a general denial had been interposed, and for all that appears that portion of the controversy is all that was heard by the arbitrator. If there was a record before this court from which it could be "fairly inferred" that the arbitrator had "passed upon the issues" as was the case in Rosenberg v. Aldhaus, 132 N.Y.S. 369, another situation would present itself. But there is none, and the plain language of the statute should not be disregarded and an uncertain construction of the language used in the award be substituted therefor.

GUY and BIJUR, JJ., concur.

Judgment reversed and new trial ordered, with thirty dollars costs to appellant to abide event.

HOFFMAN v. GREENBERG CO., INC