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Kincar Franchise v. Estate of Late Harold Carey

Decided: February 28, 1972.

KINCAR FRANCHISE INC., A CORPORATION OF THE STATE OF NEW YORK, PLAINTIFF,
v.
ESTATE OF THE LATE HAROLD CAREY, JACOB COHEN AND LOUIS DREZIN, EXECUTORS OF THE ESTATE OF THE LATE HAROLD CAREY, MILDRED CAREY, CAREY CHEVROLET, INC., A CORPORATION OF THE STATE OF NEW JERSEY, AND CAREY SYSTEMS, DEFENDANTS



Milmed, J.s.c.

Milmed

Cross-motions are before the court in this action, one by defendant Mildred Carey seeking to enjoin plaintiff from proceeding with arbitration of the dispute which is the subject of the litigation, and the other by plaintiff seeking to stay this action pending completion of the arbitration proceedings.

The facts are not in dispute. By its complaint filed May 7, 1971 plaintiff Kincar Franchise Inc., a New York corporation, successor to Kinney Car Corporation (Kinney), also a New York corporation, sought to recover from defendants the sum of $64,745.83 allegedly due for charges in connection with motor vehicles leased under a "License Agreement" of April 16, 1963 between Kinney and defendant Carey Chevrolet, with interest, costs and legal fees. The agreement, among other things, provided for Carey Chevrolet to be a licensee of Kinney in regard to the leasing of motor vehicles in an area of Hudson County designated in the agreement, the motor vehicles to be leased by Kinney to Carey Chevrolet at fixed monthly rentals.

The agreement, which by its terms is to be construed "in accordance with the Laws of the State of New York," sets forth in paragraph 31 the following:

Any controversy or dispute between the parties arising out of this Agreement or related thereto or to the breach or alleged breach thereof which cannot be settled amicably, shall be settled by arbitration in New York under the rules then obtaining of the American Arbitration Association, and such judgment shall be binding upon the parties hereto. Judgment may be entered upon the award made in such arbitration in any court of the State of New York having jurisdiction. The costs of such arbitration shall be borne equally by the parties.

By separate instruments designated "Guaranty," also dated April 16, 1963, defendant Mildred Carey and the late Harold Carey each guaranteed to Kinney punctual payment

by Carey Chevrolet of all sums due to Kinney under the license agreement and undertook to pay Kinney on demand any sum as to which Carey Chevrolet might be in default to Kinney under the terms of the license agreement, without requiring Kinney to first proceed against Carey Chevrolet or against any security Kinney might hold for the payment of such indebtedness. In and by the same respective instruments, each, as guarantor, further agreed that if Carey Chevrolet "shall at any time default in the performance of any terms or conditions contained in such Agreement, Guarantor will well and truly perform same, or pay any or all damages that may arise in consequence of the non-performance thereof, without requiring any proceedings to be taken against" Carey Chevrolet.

Defendants, other than Mildred Carey, have answered the complaint asserting, among other things, as a separate defense, that plaintiff is limited to arbitration in accordance with the terms of the agreement. Defendant Mildred Carey has not answered the complaint but applied for and obtained an order requiring plaintiff to furnish her with a more definite statement of its claim set forth in the complaint. Plaintiff, in partial response to the order, furnished defendant Mildred Carey with a statement of an accounting relating back to February 1, 1969 and has also filed in the cause a certificate by one of its former officers, in part indicating that records of Kinney Car Corp. have been misplaced. Plaintiff thereafter filed its demand, dated September 1, 1971 and amended October 5, 1971, for arbitration of the dispute which is the subject matter of this litigation. Defendant Mildred Carey seeks to enjoin arbitration, contending that plaintiff has elected its remedy by instituting this action and accordingly has waived its right to proceed with arbitration; that in any event she, Mrs. Carey, as guarantor under a separate instrument, is not a party to the license agreement and is not bound by the arbitration requirement therein, and, referring to the provisions of N.J.S.A. 2A:24-3, that she is entitled to a jury trial.

I find no merit in any of these contentions. The pertinent provisions of the New Jersey, New York and Federal Arbitration Acts are substantially similar. Cf. N.J.S.A. 2A:24-3 and 2A:24-4; New York Civil Practice Law and Rules (CPLR) § 7503 and the Practice Commentary thereunder in 7B McKinney's Consolidated Laws of New York Annotated, Civil Practice Law and Rules , at 488; and 9 U.S.C.A. §§ 3 and 4; and see, Sonotone Corporation v. Hayes , 4 N.J. Super. 326 (App. Div. 1949), and Battle v. General Cellulose Co. , 23 N.J. 538, 542-543 (1957).

N.J.S.A. 2A:24-3, referred to by the defendant Mildred Carey, provides that

Where a party is aggrieved by the failure, neglect or refusal of another to perform under a written agreement providing for arbitration, the superior court, or the county court of the county where either party resides, may in a summary action direct that the arbitration proceed in the manner provided for in the agreement. The party alleged to be in default may demand a jury trial as to the issue that there has been no ...


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