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ANCO Products Corp. v. T V Products Corp.

Decided: November 13, 1952.


McGeehan, Bigelow and Smalley. The opinion of the court was delivered by Smalley, J.s.c. (temporarily assigned).


This is an appeal by the defendant-appellant from a judgment of the Superior Court, Law Division, Passaic County, entered upon an award of arbitrators pursuant to R.S. 2 A:24, which award was confirmed by order of the court and judgment entered in favor of the plaintiff and against the defendant in the sum of $6,478.26.

The award of the arbitrators having been filed, the plaintiff moved to confirm. The defendant by counter-motion sought to modify the award.

Defendant now argues that the award of the arbitrators must be set aside because a mistake in law appears on the face of the award, and, secondly, the net profits should have been calculated over the 3 year period and not on the profit month basis.

On January 30, 1950 the parties entered into an agreement whereby plaintiff was engaged as technical production consultant until January 31, 1953.

The contract provided that plaintiff was to receive as compensation 25% of the net profits to the defendants and to be paid by the defendant as follows: "Such compensation shall be paid by T V to Anco in monthly installments not later than the 15th day of each month. Each such monthly payments shall be predicated upon the net profits as disclosed by the financial statement for the month next preceding the respective payments, * * *"; then follows provisions for accountants, and examination of the defendant's books. The contract further limits the defendant's liability to $75,000 for the period of plaintiff's services as set forth in the agreement.

The contract further states:

"T V has concurrently herewith paid to Anco the sum of Twenty-five thousand ($25,000) Dollars as an advance on said compensation fee, which sum shall be applied against the obligation and liability of T V in the manner following: From the monthly payments to be made by T V to Anco under the provisions hereof there shall be deducted ten (10%) per cent of such net profits (being 40% of such payments) which amount so deducted shall be credited against the Twenty-five Thousand ($25,000) Dollars advanced as aforesaid and such deductions shall be made each month consecutively until the said advance has been fully repaid and cancelled."

It is not disputed that during the period from February to May 1950 defendant paid various amounts amounting to $5,075.71. It then ceased making any further payments.

On April 23, 1951 plaintiff started an action to recover these monthly payments.

Defendant filed an answer and counterclaim denying that

any sums were due as installment payments and claimed that certain storage charges and rent were due from plaintiff.

Defendant moved at the pretrial conference, in accordance with the agreement between the parties, that the matter should be submitted to arbitration and that the suit pending be stayed. Thereafter a consent order was entered submitting the matter at issue to arbitration providing for the manner, method and terms of submission. The pertinent part of the order is as follows:

"6. There shall be submitted to the arbitrators all demands, claims, issues and matters in dispute between the parties arising out of the said contract of January 30, 1950, a bill of sale dated January 30, 1950, and agreement dated January 30, 1950, between the parties, and a letter dated January 30, 1950, addressed to T V Products Corporation by Anco Products Corporation, the claims of defendant for storage by plaintiff of certain merchandise at 709-23rd Street, Paterson, and defendant's claim with respect to certain reflection yokes and other evidence which is relevant and material to the end that it may be determined what amount, if any, may be due and owing from one party to the other as to all dealings between the parties.

7. In reaching said determination, among other things, the arbitrators shall:

A. make an interpretation of the contract between the parties with respect to the share of profits, if any of T V to be paid to Anco, and particularly with respect to whether profit and loss months should be offset in determining the share to be paid to Anco, or whether Anco would be entitled to a share of the profits in the profits months, disregarding any loss months involved;

B. determine the amount due to either party for the entire three year period beginning February 1, 1950, and ending January 31, 1953.

(1) In measuring the amount due either party for the part of said three year period following March 31, 1952, the arbitrators will calculate the same upon the basis of the average monthly profit or loss months of the preceding period as will in their opinion and under all the circumstances provide reasonable satisfaction for the amount to be paid plaintiff or offset by defendant.

C. direct that an inventory be made by the parties of defendant's business on April 30, 1952, and at which taking, both parties or their representatives shall be present, and which inventory of defendant's business shall be considered by the arbitrators in fixing their award to be paid or ascertained under the provisions of the contract together with an audit which plaintiff may, if it chooses, require of the books and records of the defendants for the entire period from January 30, 1950, to date of arbitration at plaintiff's expense."

It is conceded that hearings consuming five days were held before the arbitrators and the pertinent part of the majority report is as follows:

"5. Under the terms of said order, in our determination we made an interpretation as provided in said order ...

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