Kornblum Metals Co. v. Intsel Corp., 38 N.Y.2d 376 (1975)
An arbitration clause included in a written purchase order can be enforced when the evidence supports a finding that the oral contract between the parties included an agreement to arbitrate.
Summary
Kornblum Metals Co. (seller) sought to stay arbitration demanded by Intsel Corp. (purchaser) regarding a zinc sales agreement. The dispute arose after the seller failed to deliver the zinc. The purchaser claimed the oral agreement included an arbitration clause detailed in a purchase order. The New York Court of Appeals held that there was sufficient evidence for the jury to find that the oral contract included the arbitration provision, emphasizing the parties’ prior dealings, industry custom, and the seller’s acknowledgment of the purchase order with the arbitration clause when requesting a payment modification. The court affirmed the denial of the stay of arbitration.
Facts
The seller and purchaser had a 15-year business relationship. On September 21, 1973, they orally agreed to the sale of 250 tons of zinc at 32 cents per pound. The purchaser sent a purchase order containing an arbitration clause to the seller. On September 24, the parties reaffirmed the agreement, and the seller requested a modification to the payment terms but made no objection to the arbitration provision. The seller later failed to deliver the zinc as agreed, leading the purchaser to initiate arbitration proceedings.
Procedural History
The seller initiated a proceeding in Supreme Court to stay arbitration and vacate the demand for arbitration. The Supreme Court ordered a trial on all issues. A jury found for the purchaser, denying the stay of arbitration. The Appellate Division affirmed the Supreme Court’s judgment. The seller then appealed to the New York Court of Appeals.
Issue(s)
Whether there was sufficient evidence to support the jury’s finding that the oral contract between the seller and purchaser included an agreement to submit disputes to arbitration.
Holding
Yes, because there was sufficient evidence for the jury to conclude that the arbitration provision in the purchase order was a term of the oral contract made by the parties.
Court’s Reasoning
The court held that the jury was entitled to find that the oral contract, confirmed on September 24, included the arbitration clause set forth in the purchase order. The court emphasized the parties’ prior course of dealing, where similar purchase orders containing arbitration provisions had been used. The seller’s confirmation of the agreement while having the purchase order, including the arbitration clause, in front of him, and only requesting a modification as to payment terms, suggested an acceptance of all other terms, including arbitration. The court stated, “This is not an instance in which it was sought, subsequent to the completion of the contract, to add an arbitration provision as an additional term to a pre-existing contract. The jury was certainly entitled on this record to conclude that the arbitration provision was one of the terms of the contract when initially made by the parties.” The court further noted that the seller’s requested jury instruction, that mere receipt of a purchase order with an arbitration clause is insufficient to establish an agreement to arbitrate, was an inaccurate analysis of the legal issues presented in this case, as it failed to account for the specific evidence and circumstances. Therefore, the court affirmed the order denying the stay of arbitration.