Goldmann, Leonard and Fritz. The opinion of the court was delivered by Goldmann, P.J.A.D.
Plaintiffs appeal, by leave granted, from an order entered by Chancery Division Judge Mintz staying this litigation in its entirety pending arbitration pursuant to the New Jersey Arbitration Act, N.J.S.A. 2A:24-1 et seq. , and referring certain of the disputes to public accountants for decision.
Plaintiffs, together with William Fried and William Waldman, were the principals and employees of Wallmaster, a concern engaged mainly in the sale of aluminum siding. Wallmaster sold its business to National Distillers in 1964. In 1965 defendant Alcan Aluminum Corporation purchased Wallmaster, which became its Brixite Division.
On January 1, 1966 plaintiffs William Fried and William Waldman entered into a profit-sharing employment agreement with defendant fixing their respective annual salaries. The agreement also provided that Leon Waldman was to receive 6 1/4% of the annual increased earnings, Martin Waldman a like percentage, and J. M. Fried 12 1/2%. The calendar year 1965 was selected as the "Base Period." "Base Period Earnings" were defined as the net earnings before taxes, and "Adjusted Base Period Earnings" as the "Base Period Earnings" after making, among others, the following adjustment:
Retroactive increase to 1st January 1965 in the transfer price of bare aluminum strip to two cents per pound below the Company's [Alcan's] base list prices of such strip at the time of transfer.
Earnings for years subsequent to 1965 were to be determined by deducting from gross sales revenues: (1) all selling, sales administration, sales promotion, advertising and distribution
expenses; (2) the "standard manufacturing cost" -- carefully defined in the agreement -- of the products sold (the raw material to be used was purchased by plaintiffs from defendant), and (3) interest at the rate paid by the company on bank borrowings on accounts receivable and inventories of finished goods. "Increased earnings" was defined as the amount by which the earnings for the year concerned exceeded the adjusted base period earnings.
The agreement contained the following arbitration clause:
9. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in the City of Cleveland in accordance with the rules then obtaining of the American Arbitration Association except any disputes as to the amount of any payment under Section 2(b) hereof which shall be decided as expressly provided in Schedule A by the Company's Independent Public Accountants.
Schedule A attached to the agreement provided that
Plaintiffs' term of employment under the agreement was for a period of four years, from January 1, 1966 to December 31, 1969. Paragraph 3 provided that
On the argument of defendant's motion, plaintiffs contended that public policy dictated that the restrictive covenant issue be decided by the courts of this State and, further, that defendant's accountants were not empowered to resolve any disputes relating to the ...