On appeal from the Union County Court, Law Division.
For reversal -- Justices Oliphant, Burling, Jacobs and Weintraub. For affirmance -- Chief Justice Vanderbilt, and Justices Heher and Wachenfeld. The opinion of the court was delivered by Weintraub, J.
Plaintiff obtained an arbitration award against defendant in New York City and a judgment thereon in the Supreme Court of New York. He then sued here upon the New York judgment and prevailed on a motion for summary judgment. Defendant appealed to the Appellate Division and we certified on our own motion.
The controversy arose out of an agreement of employment. Plaintiff commenced work on November 2, 1952, as defendant's vice-president and general manager. The terms of employment had not yet been fixed and discussions continued for some period. On January 8, 1953 defendant sent to plaintiff its letter of that date outlining the terms of employment for a year beginning November 1, 1952.
Defendant discharged plaintiff on July 10, 1953. Plaintiff instituted the arbitration proceedings under the following provision of the letter of January 8, 1953:
"Any controversy or claim arising out of or relating to this agreement or breach thereof, shall be settled by arbitration according to the rules of the American Arbitration Association."
The employment was contracted in New Jersey and was to be performed here. Plaintiff lived in this State when he was employed and continued to live here until after his discharge when he moved to Indiana, and was a resident of that State when he instituted the arbitration proceedings. Defendant is a corporation of the State of New Jersey and was not subject to service of process within the State of New York.
Defendant declined to participate in the arbitration proceedings or to respond to notice by mail of the application to enter judgment upon the award. In fact, defendant denied the existence of the contract and advised the American Arbitration Association at once that it disputed its authority to proceed with arbitration until the existence of the alleged contract was first determined in judicial proceedings in New Jersey. Neither party sought to litigate that question before arbitration. Plaintiff acted on his thesis that he was entitled
to proceed under the rules of the Association, while defendant rested on its conviction that the award and judgment would be nullities.
Defendant claims a triable issue of fact was raised with respect to the existence of the contract. With this we agree for reasons set forth in II below. But defendant contends further that even if there was a contract to arbitrate, yet (a) the award was a nullity because the arbitration proceeded in the face of defendant's denial of an agreement to arbitrate and without a prior judicial determination that there was such an agreement, and (b) the New York judgment is not entitled to full faith and credit because the New York court lacked jurisdiction of the person. Upon the hypothesis that the contract in question was made, neither contention is valid.
The rules of the American Arbitration Association, by which on the stated hypothesis the parties agreed to abide, provide complete machinery for the designation of arbitrators and the place of arbitration if the parties fail to express their preferences. Defendant having declined to participate, the arbitrators were selected and the Administrator of the Association designated New York City as the place for the arbitration. The rules provide for notice by mail with respect to all steps from commencement of the proceeding through the award, and the record establishes clearly that defendant received the prescribed notices.
Defendant contends that under the law of New Jersey arbitration may not be had if the existence of the contract is denied, unless there is a judicial determination that the arbitration proceed. We need not consider whether the law of New Jersey or of New York controls (see Sonotone Corporation v. Hayes, 4 N.J. Super. ...