record, I disclosed practically what I have said now to the arbitrators and to Mr. Fanto. I indicated that I was an advocate, and it was suggested that I request Mr. Fanto, under the circumstances, to resign or disqualify himself. And he said he saw no reason to do so, and did not do so. This only multiplies my concern. * * *'
* * * * * *
'Would you (, Mr. Fanto,) care to answer my request that I made before, that since you know that my people feel uncomfortable, and since you are working without compensation, I felt that -- I certainly wouldn't want to sit there. I feel that most people would feel the same way. A resignation or withdrawal on your part at this time would in no wise be a reflection on your qualifications. The fact that you are sitting there multiplies my concern.' (Record, pp. 171, 172, 177)
Mr. Fanto declined to resign, and was defended in his action by Mr. Handler, the chairman of the arbitration board.
In the light of all the attendant circumstances -- having seen the Tribunal Clerk and Mr. Eastman and having directly taken the matter to the arbitration board -- further seeking of remedies within the Association (if, indeed, such remedies existed), could reasonably be viewed as a needless pursuit into futility. Moreover, Mr. Eastman's affidavit relative to the Association's interpretation of Section 18 of the Rules amply demonstrates this very fact.
The contention of Schering that Hexagon should have had recourse to Section 19 of the Rules seems devoid of merit. It provides that vacancies shall be filled in accordance with 'the applicable provisions of this Rule * * *.' It should be read together with Section 18 which it in no wise modifies, and it is not an administrative remedy for failure to comply with it, as Schering suggests.
In San Carlo Opera Co. v. Conley, D.C.S.D.N.Y.1946, 72 F.Supp. 825, 833 one of the parties to an arbitration petitioned the court for an order to remove two arbitrators on the grounds of disqualification during a pending arbitration. The court denied the motion saying:
'* * * Conley has made timely objection before the arbitrators and before the Administrator under the rule of the American Arbitration Association. Since such objection has been overruled, in my view of the matter, he should proceed with the arbitration pursuant to the terms of his contract. He thus will exhaust his remedies within the rules of the Association and he will not be precluded from reasserting his objection, if necessary, when the confirmation of the award of the arbitrators comes before the proper judicial tribunal.'
The language of the court in setting aside an arbitration award in American Guaranty Co. v. Caldwell, 9 Cir., 72 F.2d 209, 212, appears pertinent. It said:
'The holding of the District Court that the appointment of R. E. Laley as arbitrator was irregular and illegal and that the award of said arbitrator was evidently partial, but not corrupt or fraudulent, was fully justified. The method of appointment as provided in the agreement was not followed, and the arbitrator appointed had a business relationship with one of the parties. These facts, taken together, warranted the setting aside of an award made by such an arbitrator as inherently partial, even though not corrupt or fraudulent.'
I am constrained to hold that the appointment of Mr. Fanto as an arbitrator was irregular and illegal and that the award was evidently partial although not corrupt, within the meaning of Section 10(b) of the Federal Arbitration Act. 9 U.S.C.A. § 10(b).
Hexagon's motion to vacate the award is based on all four grounds of said Section 10.
Since this finding alone is sufficient to vacate the award, Hexagon's other grounds for such action need not be passed upon here.
The motion of Schering to confirm the award will be denied and the counter-motion of Hexagon to vacate the award will be granted.
An order should be submitted by Hexagon with consent as to form by Schering but reserving its objections to substance, or it should be noticed for settlement on the first motion day at Newark in September.