In Re the Arbitration Between Morris White Fashions, Inc. & Susquehanna Mills, Inc. , 295 N.Y. 450 ( 1946 )

We must first say whether we have jurisdiction of this appeal.

The controversy had its source in a written contract for the sale of goods. The buyer claimed that deliveries made by the seller fell short of the contract specifications and on that ground demanded damages of $9,909.99. On the seller's denial of liability, the dispute was submitted to arbitration in accordance with a provision for that procedure contained in the contract. The award of the arbitrators called upon the seller to pay the sum of $1,500 to the buyer in full settlement of the transaction between them, but charged to the buyer the total amount of the arbitration expenses — $230.

The buyer then petitioned Special Term for invalidation of the award or for modification and correction thereof, with the result that the item of damages assessed against the seller ($1,500) was increased to the sum of $9,909.99 for which judgment was entered in the buyer's favor. On appeal by the seller to the Appellate Division, the Special Term was reversed "upon questions of law" and the motion of the buyer was in all respects denied by a unanimous vote. Thereupon the buyer brought the case here through an appeal taken as of right. A motion by the seller to dismiss the appeal followed and now confronts us.

In the estimation of the seller, the effect of the reversal by the Appellate Division was a confirmation of the award and thus the equivalent of a unanimous judgment of affirmance which is not appealable of right. For that conception, Matter of Pine StreetRealty Co. v. Coutroulas (258 N.Y. 609) is cited. In that case, the court at Special Term denied a motion to confirm an award and granted a motion to vacate it and to appoint another arbitrator; then on appeal to the Appellate Division the order was reversed, the award reinstated and judgment entered thereon. Such a reversal was taken by us to be tantamount to a judgment of affirmance as in a case where the Appellate Division reverses an order setting aside a verdict and reinstates the finding of the jury (Markiewicz v. Thompson, 246 N.Y. 235).

The situation here presented is altogether different. In the present proceeding, the court at Special Term did not vacate the award and order a new hearing. On the contrary, the court modified and corrected the award by increasing the amount thereof from $1,500 to $9,909.99, and ordered judgment to be entered accordingly. Upon the reversal of the judgment so directed, the Appellate Division did not reinstate the award made by the arbitrators, nor was any judgment ever entered on the award; indeed no judgment could have been so entered, for no application for confirmation of the award was made by either party. From no viewpoint, then, was the present order of the Appellate Division the equivalent of a judgment of affirmance, but was merely an order of reversal — even under the test laid down in Markiewicz v. Thompson (supra).

For that reason, we do not reach the question whether the rule of the Markiewicz case has survived the counteractive legislative construction of section 7 of article VI of our State Constitution which was introduced into Civil Practice Act, section 588, subdivision 1, paragraph (c) by chapter 297 of the Laws of 1942. (See the Seventh Annual Report of the Judicial Council, pp. 503-504; and its Eighth Annual Report, p. 423. Cf.Bencoe v. McDonnell, 261 N.Y. 694; Matter of Horowitz,247 N.Y. 578; Matter of Friedheim [International Paper Co.],292 N.Y. 664.)

The seller propounds one other question of practice, namely: Does the order of the Appellate Division have the degree of finality that is requisite for the purposes of review by this court? In this State, arbitration proceedings are governed by article 84 of the Civil Practice Act. Section 1467 thereof says that "an appeal may be taken from an order made in a proceeding under this article, or from a judgment entered upon an award." In the present case, as we have said, there was no basis for the entry of a judgment upon the award and the Appellate Division's order of reversal merely denied the buyer's motion that the award be vacated or modified and corrected. (See Civ. Prac. Act, §§ 1462, 1462-a.) Such an order was plainly one that determined a special proceeding within the meaning of our State Constitution. (Matter of Bond, 290 N.Y. 739, 901. Cf. Matter of Huxley,294 N.Y. 146, 148.) The seller cites Matter of Arcadu v. Levinson (250 N.Y. 355) as authority the other way. But the statutory phrase which dictated that decision was deleted by an amendment of Civil Practice Act, section 1467, made by chapter 210 of the Laws of 1942. (See Eighth Annual Report of the Judicial Council, p. 440.) No constitutional question is suggested at this point, for the lack of finality that defeated the appeal to this court in the Arcadu case was owing entirely to words of a statute. (See 250 N.Y. at p. 357.)

On this first branch of the case, then, our conclusion is that the appeal taken by the buyer to this court is rightly here. Accordingly the seller's motion for dismissal thereof is denied, and we pass to a consideration of the merits.

The stipulation for arbitration was in this form: "All controversies arising out of or relating to the contract, or any modification thereof, shall be settled by arbitration in accordance with the Arbitration Rules of The National Federation of Textiles, Inc., or its successors." The rules of that Federation made these provisions: "The award may * * * declare a contract breached in whole or in part; and/or award money damages in the alternative or otherwise; but the foregoing shall not limit the power of the arbitrators to grant any other remedy or relief which they deem just and equitable." Thus the authority of the arbitrators was not limited (as the buyer claimed) to an adjudication of a breach of the contract by the seller; it empowered them to assess the damages as well. (Matter ofMarchant v. Mead-Morrison Mfg. Co., 252 N.Y. 284.) Nor is there any substantial ground for the buyer's assertion of an "evident miscalculation of figures" such as would justify a modification of the award pursuant to Civil Practice Act, section 1462-a, subdivision 1. The amount of the buyer's damages was unliquidated and was disputed before the arbitrators. There was no error of computation unrelated to any exercise of judgment or discretion. The fairness of the arbitrators is not questioned. The award, as we believe, did not fail to give effect to their intent. In these circumstances, it is not for us to sit in judgment upon their settlement of the controversy.

The order should be affirmed, with costs.

LEWIS, CONWAY, DESMOND, THACHER and FULD, JJ., concur; DYE, J., taking no part.

Order affirmed.