Defendant Collins & Aikman Corporation appeals from an order granting a preliminary injunction enjoining defendant from prosecuting arbitration proceedings during the pendency of plaintiff's action, and from a judgment denying defendant's cross-petition to compel arbitration.
Windsor Mills, Inc. filed a suit in six causes of action against Collins & Aikman Corporation and others. The first five causes of action sought damages for alleged defects in yarn; the sixth sought preliminary and permanent injunctions against defendants Collins & Aikman Corporation and the American Arbitration Association, enjoining arbitration proceedings previously initiated by Collins & Aikman in New York.
A hearing was had at which the verified pleadings and various declarations were received in evidence. These showed: plaintiff is a California corporation engaged in the business of manufacturing carpets; defendant Collins & Aikman is a Delaware corporation authorized to transact and transacting business in California; on several occasions between January and March 1970 Lawrence Petal, plaintiff's president, ordered in Los Angeles a total of 55,000 pounds of yarn from Toli Simos, west coast sales representative of Collins & Aikman; all of the orders were placed orally, but at least one was evidenced by a written purchase order from plaintiff to defendant; each of the orders was transmitted to defendant in New York for approval.
As each order was received, defendant completed a printed form entitled "Acknowledgment of Order" and sent a copy to plaintiff; typed in appropriate boxes on the front of each form was the date of the order, defendant's order number, shipping instructions, a description of the yarn
On the reverse side of the form, under the heading "Terms of Contract Sale," there appeared in small print the following provision, among many others: "15. ARBITRATION: Any controversy arising out of or relating to this contract shall be settled by arbitration in the City of New York in accordance with the Rules then obtaining of the American Arbitration Association or the General Arbitration Council of the Textile Industry, whichever shall be first selected by the party instituting said arbitration.... The parties consent to the jurisdiction of the Supreme Court of the State of New York, and of the United States District Court for the Southern District of New York, whichever is first selected by the party moving to confirm said award. The parties further consent that any process or notice of motion or other application in either of said Courts or a Judge thereof, may be served outside the State of [sic] Southern District of New York by certified mail or by personal service provided a reasonable time for appearance is allowed, or in such other manner as may be permissible under the Rules of said Court."
Of the yarn ordered, 30,000 pounds were shipped to and received by plaintiff; plaintiff complained of the quality of the yarn and instructed defendant not to ship the remaining 25,000 pounds; plaintiff did not pay for any of the yarn ordered; on October 5, 1970, pursuant to the arbitration clause in the Acknowledgment of Order forms, defendant filed in New York a demand for arbitration with the American Arbitration Association; a copy of the demand was sent to plaintiff who thereafter commenced
In his declaration, Toli Simos stated that when each of the orders was placed he informed Lawrence Petal that "New York had to clear him, particularly as to credit," and that he then would receive "appropriate contractual instruments" from New York. In his opposing declaration, Petal agreed he was told his orders were subject to credit approval but denied anything was stated about "appropriate contractual instruments"; he also stated that, although the Acknowledgment of Order forms were received by plaintiff, they were not brought to his attention nor did he see them at all until after arbitration proceedings had been initiated by Collins & Aikman. Another declaration, reciting the substance of testimony given by Simos at a deposition, asserted that Simos admitted he had copies of the forms when Petal was ordering the yarn but he did not show the forms to Petal or discuss with him the arbitration provision or any of the other provisions printed on the form.
Findings of fact and conclusions of law were signed and filed. The court found as facts, among others, that: plaintiff was not informed the Acknowledgment of Order forms contained reference to arbitration of disputes; such provisions were in small print and were inconspicuous; plaintiff signed none of the forms and had no actual knowledge of the provision until it received Collins & Aikman's demand for arbitration; to the extent that the forms provided for arbitration, they effected a material alteration of the original orders placed by plaintiff and constituted a counteroffer which never was accepted by plaintiff; at no time did plaintiff agree to arbitrate any disputes with defendant.
Court orders were made denying Collins & Aikman's motion for a stay of proceedings and granting to plaintiff a preliminary injunction enjoining defendant and the American Arbitration Association
Defendant appeals from the order granting the preliminary injunction (Code Civ. Proc., § 904.1, subd. (f); Monterey Club v. Superior Court (1941) 44 Cal.App.2d 351, 353 [112 P.2d 321]) and from the judgment on its cross-petition. (Code Civ. Proc., § 1294, subd. (a); Berman v. Renart Sportswear Corp. (1963) 222 Cal.App.2d 385, 387 [35 Cal.Rptr. 218].)
Code of Civil Procedure section 1281 provides: "A written agreement to submit to arbitration an existing controversy or a controversy thereafter
Defendant contends the trial court erred in its finding that there was no written arbitration agreement between the parties, arguing the findings are unsupported by substantial evidence. Specifically, defendant contends: "... the only contracts which could have come into being with respect to the transactions between respondent and appellant had to be" the Acknowledgment of Order forms. The contention is based upon the argument that there was no evidence the oral orders placed by plaintiff contained any of the specific terms of sale, such as price and delivery, necessary to create a valid offer which could be accepted so as to form a binding contract; therefore, the Acknowledgment of Order forms did not constitute a counteroffer which varied the terms of plaintiff's orders (offers) by including arbitration provisions; rather, the forms were offers by defendant to sell; plaintiff accepted these offers by its conduct in retaining the forms without objection and by accepting the yarn, and therefore became bound by the arbitration clause contained in the forms.
We need not decide whether the forms were offers or counteroffers, for in either event plaintiff's consent to, or acceptance of, the arbitration provision was necessary to create an agreement to arbitrate. (See Civ. Code, §§ 1550, 1585; American Building Maintenance Co. v. Indemnity Ins. Co. (1932) 214 Cal. 608, 615 [7 P.2d 305]; Four Oil Co. v. United Oil Producers (1904) 145 Cal. 623, 624-625 [79 P. 366]; Kahn v. Lischner (1954) 128 Cal.App.2d 480, 486 [275 P.2d 539]; Bullock v. McKeon (1930) 104 Cal.App. 72, 79 [285 P. 392].)
Defendant argues this conclusion cannot stand in view of Commercial Code sections 2201 and 2207. Section 2201 provides in part: "(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable ... unless ... (2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirement of subdivision (1) [the statute of frauds] against such party unless written notice of objection to its contents is given within 10 days after it is received." Section 2207 provides in part: "(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. (2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless ... (b) They materially alter it...."
Assuming both parties were "merchants" as that term is defined in Commercial Code section 2104,
Section 2201, subdivision (2) merely defines some formal requirements necessary to satisfy the statute of frauds in transactions between merchants. (See: Uniform Com. Code Comment No. 3 to § 2201.) The issue here is not compliance with the statute of frauds; it is whether the arbitration provision constituted an "agreement to arbitrate" within the meaning of Code of Civil Procedure sections 1281 and 1281.2.
Section 2207 likewise fails to support defendant's position, for it is clear that a provision for arbitration inserted in the acceptance or confirmation of an offer to purchase goods "materially alters"
Finally, defendant contends that under the law of New York
The pertinent question is: was there an agreement to arbitrate? A written agreement to arbitrate is required by Code of Civil Procedure sections 1281 and 1281.2. The evidence supports the trial court. Thus, arbitration was not discussed by the parties; although defendant's sales representative had copies of the Acknowledgment of Order forms when the orders were placed, he did not show the forms to plaintiff, much less point out the arbitration provision therein; the forms were not contractual in form and the provision was inconspicuous; plaintiff did not learn of the provision until after defendant had demanded arbitration. Under these circumstances, the trial court was justified in finding the parties did not reach an agreement to arbitrate.
The order and the judgment are affirmed.
Jefferson, Acting P.J., and Kingsley, J., concurred.
A petition for a rehearing was denied June 21, 1972, and appellant's petition for a hearing by the Supreme Court was denied August 16, 1972. Peters, J., and Mosk, J., were of the opinion that the petition should be granted. Pages 997 - 1000