Petitioner's action against respondent in a Vermont state court,
for damages for the discharge of petitioner under an employment
contract, was removed to the Federal District Court on grounds of
diversity of citizenship. The contract had been made in New York,
where both parties resided at the time, and provided that the
parties would submit any dispute to arbitration under New York law,
but petitioner had later become a resident of Vermont, where he was
to perform his duties. Respondent's motion for a stay of the
proceedings so that the controversy could go to arbitration in New
York was denied by the District Court, which ruled that the
arbitration provision of the contract was governed by Vermont law
and that, under Vermont law, the agreement to arbitrate was
revocable any time before an award was actually made. The Court of
Appeals reversed.
Held: the judgment of the Court of Appeals is reversed,
and the cause is remanded to the District Court. Pp.
350 U. S.
199-205.
1. The provision of § 3 of the United States Arbitration Act for
stay of the trial of an action until arbitration has been had does
not apply to all arbitration agreements, but only to those covered
by §§ 1 and 2 of the Act (those relating to maritime transactions
and those involving interstate or foreign commerce), and there is
no showing that the contract here involved is in either of those
classes. Pp.
350 U. S.
200-202.
2. The differences between arbitration and judicial
determination of a controversy substantially affect the cause of
action arising under state law, and make the doctrine of
Erie
R. Co. v. Tompkins, 304 U. S. 64,
applicable. Pp.
350 U. S.
202-204.
3. If, in this case, arbitration could not be compelled in the
Vermont state courts, it should not be compelled in the Federal
District Court. Pp.
350 U. S.
204-205.
4. In the circumstances of this case, there is no reason to
remand the case to the Court of Appeals to pass on the question of
local law. P.
350 U. S.
205.
5. On remand of the cause to the District Court, there will be
open for consideration the question whether New York
arbitration
Page 350 U. S. 199
law should be applied to the enforcement of the contract -- a
question of conflict of laws governed by Vermont law and on which
it is not clear that the District Court ruled. P.
350 U. S.
205.
21 F.2d 948 reversed and remanded.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This suit, removed from a Vermont court to the District Court on
grounds of diversity of citizenship, was brought for damages for
the discharge of petitioner under an employment contract. At the
time the contract was made, petitioner was a resident of New York.
Respondent is a New York corporation. The contract was made in New
York. Petitioner later became a resident of Vermont, where he was
to perform his duties under the contract, and asserts his rights
there.
The contract contains a provision that, in case of any dispute,
the parties will submit the matter to arbitration under New York
law by the American Arbitration Association, whose determination
"shall be final and absolute." After the case had been removed to
the District Court, respondent moved for a stay of the proceedings
so that the controversy could go to arbitration in New York. The
motion alleged that the law of New York governs the question
whether the arbitration provision of the contract is binding.
The District Court ruled that, under
Erie R. Co. v.
Tompkins, 304 U. S. 64, the
arbitration provision of the contract was governed by Vermont law,
and that the law of Vermont makes revocable an agreement to
arbitrate
Page 350 U. S. 200
at any time before an award is actually made. The District Court
therefore denied the stay,
122 F.
Supp. 733. The Court of Appeals reversed, 218 F.2d 948. The
case is here on a petition for certiorari which we granted, 349
U.S. 943, because of the doubtful application by the Court of
Appeals of
Erie R. Co. v. Tompkins, supra.
A question under the United States Arbitration Act, 43 Stat.
883, as amended, 61 Stat. 669, 9 U.S.C. §§ 1-3, lies at the
threshold of the case. Section 2 of that Act makes "valid,
irrevocable, and enforceable" provisions for arbitration in certain
classes of contracts, [
Footnote
1] and § 3 provides for a stay of actions in the federal courts
of issues referable to arbitration under those contracts. [
Footnote 2] Section 2 makes "valid,
irrevocable, and enforceable" only two types of contracts: those
relating to a maritime transaction and those involving commerce. No
maritime transaction is involved here. Nor does this contract
evidence "a transaction involving commerce" within the meaning of §
2 of the Act. There is no showing that petitioner
Page 350 U. S. 201
while performing his duties under the employment contract was
working "in" commerce, was producing goods for commerce, or was
engaging in activity that affected commerce within the meaning of
our decisions. [
Footnote 3]
The Court of Appeals went on to hold that, in any event, § 3 of
the Act stands on its own footing. It concluded that, while § 2
makes enforceable arbitration agreements in maritime transactions
and in transactions involving commerce, § 3 covers all arbitration
agreements even though they do not involve maritime transactions or
transactions in commerce. We disagree with that reading of the Act.
Sections 1, 2, and 3 are integral parts of a whole. To be sure, § 3
does not repeat the words "maritime transaction" or "transaction
involving commerce," used in §§ 1 and 2. But §§ 1 and 2 define the
field in which Congress was legislating. Since § 3 is a part of the
regulatory scheme, we can only assume that the "agreement in
writing" for arbitration referred to in § 3 is the kind of
agreement which §§ 1 and 2 have brought under federal regulation.
There is no intimation or suggestion in the Committee Reports that
§§ 1 and 2 cover a narrower field than § 3. On the contrary, S.Rep.
No. 536, 68th Cong., 1st Sess., p. 2, states that § 1 defines the
contracts to which "the bill will be applicable." And H.R. Rep. No.
96, 68th Cong., 1st
Page 350 U. S. 202
Sess., p. 1, states that one foundation of the new regulating
measure is "the Federal control over interstate commerce and over
admiralty." If respondent's contention is correct, a constitutional
question might be presented.
Erie R. Co. v. Tompkins
indicated that Congress does not have the constitutional authority
to make the law that is applicable to controversies in diversity of
citizenship cases.
Shanferoke Coal & Supply Corp. v.
Westchester Service Corp., 293 U. S. 449,
applied the Federal Act in a diversity case. But that decision
antedated
Erie R. Co. v. Tompkins, and the Court did not
consider the larger question presented here -- that is, whether
arbitration touched on substantive rights, which
Erie R. Co. v.
Tompkins held were governed by local law, or was a mere form
of procedure within the power of the federal courts or Congress to
prescribe. Our view, as will be developed, is that § 3, so read,
would invade the local law field. We therefore read § 3 narrowly to
avoid that issue.
Federal Trade Commission v. American Tobacco
Co., 264 U. S. 298,
264 U. S. 307.
We conclude that the stay provided in § 3 reaches only those
contracts covered by §§ 1 and 2.
The question remains whether, apart from the Federal Act, a
provision of a contract providing for arbitration is enforceable in
a diversity case.
The Court of Appeals, in disagreeing with the District Court as
to the effect of an arbitration agreement under
Erie R. Co. v.
Tompkins, followed its earlier decision of
Murray Oil
Products Co. v. Mitsui & Co., 146 F.2d 381, 383, which
held that
"Arbitration is merely a form of trial, to be adopted in the
action itself, in place of the trial at common law: it is like a
reference to a master, or an 'advisory trial' under Federal Rules
of Civil Procedure. . . ."
We disagree with that conclusion. We deal here with a right to
recover that owes its existence to one of the States, not to the
United States. The federal court enforces
Page 350 U. S. 203
the state-created right by rules of procedure which it has
acquired from the Federal Government and which therefore are not
identical with those of the state courts. Yet, in spite of that
difference in procedure, the federal court enforcing a
state-created right in a diversity case is, as we said in
Guaranty Trust Co. v. York, 326 U. S.
99,
326 U. S. 108,
in substance "only another court of the State." The federal court
therefore may not "substantially affect the enforcement of the
right as given by the State."
Id., 326 U. S. 109.
If the federal court allows arbitration where the state court would
disallow it, the outcome of litigation might depend on the
courthouse where suit is brought. For the remedy by arbitration,
whatever its merits or shortcomings, substantially affects the
cause of action created by the State. The nature of the tribunal
where suits are tried is an important part of the parcel of rights
behind a cause of action. The change from a court of law to an
arbitration panel may make a radical difference in ultimate result.
Arbitration carries no right to trial by jury that is guaranteed
both by the Seventh Amendment and by Ch. 1, Art. 12th, of the
Vermont Constitution. Arbitrators do not have the benefit of
judicial instruction on the law; they need not give their reasons
for their results; the record of their proceedings is not as
complete as it is in a court trial; and judicial review of an award
is more limited than judicial review of a trial -- all as discussed
in
Wilko v. Swan, 346 U. S. 427,
346 U. S.
435-438. [
Footnote
4] We said in the
Page 350 U. S. 204
York case that
"The nub of the policy that underlies
Erie R. Co. v.
Tompkins is that for the same transaction the accident of a
suit by a nonresident litigant in a federal court instead of in a
State court a block away should not lead to a substantially
different result."
326 U.S. at
326 U. S. 109.
There would in our judgment be a resultant discrimination if the
parties suing on a Vermont cause of action in the federal court
were remitted to arbitration, while those suing in the Vermont
court could not be.
The District Court found that, if the parties were in a Vermont
court, the agreement to submit to arbitration would not be binding,
and could be revoked at any time before an award was made. He gave
as his authority
Mead's Adm'x v. Owen, 83 Vt. 132, 135, 74
A. 1058, and
Sartwell v. Sowles, 72 Vt. 270, 277, 48 A.
11, decided by the Supreme Court of Vermont. In the
Owen
case, the court, in speaking of an agreement to arbitrate, held
that " . . . either party may revoke the submission at any time
before the publication of an award." 83 Vt. at 135, 74 A. at 1059.
That case was decided in 1910. But it was agreed on oral argument
that there is no later authority from the Vermont courts, that no
fracture in the rules announced in those cases has appeared in
subsequent rulings or dicta, and that no legislative movement is
under way in Vermont to change the result of those cases. Since the
federal judge making those findings is from the Vermont bar, we
give special weight to his statement of what the Vermont law is.
See
Page 350 U. S. 205
MacGregor v. State Mutual Life Assur. Co., 315 U.
S. 280;
Hillsborough v. Cromwell, 326 U.
S. 620,
326 U. S. 630;
Steele v. General Mills, 329 U. S. 433,
329 U. S. 439.
We agree with him that, if arbitration could not be compelled in
the Vermont courts, it should not be compelled in the Federal
District Court. Were the question in doubt or deserving further
canvass, we would, of course, remand the case to the Court of
Appeals to pass on this question of Vermont law. But, as we have
indicated, there appears to be no confusion in the Vermont
decisions, no developing line of authorities that casts a shadow
over the established ones, no dicta, doubts, or ambiguities in the
opinions of Vermont judges on the question, no legislative
development that promises to undermine the judicial rule. We see no
reason, therefore, to remand the case to the Court of Appeals to
pass on this question of local law.
Respondent argues that, since the contract was made in New York
and the parties contracted for arbitration under New York law, New
York arbitration law should be applied to the enforcement of the
contract. A question of conflict of laws is tendered, a question
that is also governed by Vermont law.
See Klaxon Co. v. Stentor
Electric Mfg. Co., 313 U. S. 487. It
is not clear to some of us that the District Court ruled on that
question. We mention it explicitly so that it will be open for
consideration on remand of the cause to the District Court.
The judgment of the Court of Appeals is reversed, and the cause
is remanded to the District Court for proceedings in conformity
with this opinion.
Reversed and remanded.
[
Footnote 1]
Section 2 provides:
"A written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such contract
or transaction, or the refusal to perform the whole or any part
thereof, or an agreement in writing to submit to arbitration an
existing controversy arising out of such a contract, transaction,
or refusal, shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
contract."
[
Footnote 2]
Section 3 provides:
"If any suit or proceeding be brought in any of the courts of
the United States upon any issue referable to arbitration under an
agreement in writing for such arbitration, the court in which such
suit is pending, upon being satisfied that the issue involved in
such suit or proceeding is referable to arbitration under such an
agreement, shall, on application of one of the parties, stay the
trial of the action until such arbitration has been had in
accordance with the terms of the agreement, providing the applicant
for the stay is not in default in proceeding with such
arbitration."
[
Footnote 3]
Section 1 defines "commerce" as:
". . . commerce among the several States or with foreign
nations, or in any Territory of the United States or in the
District of Columbia, or between any such Territory and another, or
between any such Territory and any State or foreign nation, or
between the District of Columbia and any State or Territory or
foreign nation, but nothing herein contained shall apply to
contracts of employment of seamen, railroad employees, or any other
class of workers engaged in foreign or interstate commerce."
Since no transaction involving commerce appears to be involved
here, we do not reach the further question whether, in any event,
petitioner would be included in "any other class of workers" within
the exceptions of § 1 of the Act.
[
Footnote 4]
Whether the arbitrators misconstrued a contract is not open to
judicial review.
The Hartbridge, 62 F.2d 72;
Mutual
Benefit Health & Accident Assn. v. United Cas. Co., 142
F.2d 390. Questions of fault or neglect are solely for the
arbitrators' consideration.
James Richardson & Sons v. W.
E. Hedger Transportation Corp., 98 F.2d 55. Arbitrators are
not bound by the rules of evidence.
Burchell
v. Marsh, 17 How. 344;
Springs Cotton Mills v.
Buster Boy Suit Co., 275 App.Div. 196, 200, 88 N.Y.S.2d 295,
298,
aff'd, 300 N.Y. 586, 89 N.E.2d 877. They may draw on
their personal knowledge in making an award.
American Almond
Products Co. v. Consolidated Pecan Sales Co., 144 F.2d 448;
The Guldborg, 1 F. Supp. 380;
Springs Cotton Mills v.
Buster Boy Suit Co., supra. Absent agreement of the parties, a
written transcript of the proceedings is unnecessary.
A. O.
Andersen Trading Co. v. Brimberg, 119 Misc. 784, 197 N.Y.S.
289;
Application of Shapiro, 197 Misc. 241, 97 N.Y.S.2d
644,
modified, Shapiro v. Gordon, 277 App.Div. 927, 98
N.Y.S.2d 451. Swearing of witnesses may not be required.
Application of Shapiro, supra. And the arbitrators need
not disclose the facts or reasons behind their award.
Shirley
Silk Co. v. American Silk Mills, Inc., 257 App.Div. 375, 377,
13 N.Y.S.2d 309, 311.
MR. JUSTICE FRANKFURTER, concurring.
It is my view that the judgment of the Court of Appeals should
be reversed, and the case remanded to that court, and not to the
District Court.
This action was brought in the Bennington County Court of the
State of Vermont by petitioner, a citizen of
Page 350 U. S. 206
Vermont, against respondent, a corporation of the State of New
York. Respondent removed the case to the United States District
Court for the District of Vermont. The subject matter of the
litigation is a contract made between the parties in New York, and
the sole basis of the jurisdiction of the District Court is
diversity of citizenship. Not only was the contract made in New
York, but the parties agreed to the following provision in it:
"Fourteenth: The parties hereto do hereby stipulate and agree
that it is their intention and covenant that this agreement and
performance hereunder and all suits and special proceedings
hereunder be construed in accordance with and under and pursuant to
the laws of the State of New York, and that, in any action special
proceeding or other proceeding that may be brought arising out of,
in connection with, or by reason of this agreement, the laws of the
State of New York shall be applicable, and shall govern to the
exclusion of the law of any other forum, without regard to the
jurisdiction in which any action or special proceeding may be
instituted."
Respondent invoked another provision of the contract whereby
disputes under the agreement were to be submitted to arbitration
subject to the regulations of the American Arbitration Association
and the pertinent provisions of the New York Arbitration Act, Civil
Practice Act, § 1468
et seq. It did so by a motion to stay
the proceeding in the District Court pending arbitration.
The District Court denied the stay because, on its reading of
the Vermont cases, Vermont law, while recognizing the binding force
of such an agreement by way of a suit for damages, does not allow
specific performance or a stay pending arbitration. It rested on a
decision rendered by the Supreme Court of Vermont in a bill for an
accounting
Page 350 U. S. 207
evidently between two Vermonters and relating wholly to a
Vermont transaction,
i.e., a controversy about personal
property on a Vermont farm.
Mead's Adm'x v. Owen, 83 Vt.
132, 74 A. 1058. [
Footnote 2/1]
This case was decided in 1910, and, in turn, relied on
Aspinwall v. Tousey, 2 Tyler, Vt., 328, decided in 1803,
authorizing revocation of a submission to arbitration at any time
before the publication of an award.
The Court of Appeals found it unnecessary to consider what the
Vermont law was today, for it held that the arbitration provision
did not concern a matter of "substantive" law for which, in this
diversity case, Vermont law would be controlling on the United
States District Court sitting in Vermont. It held that the
arbitration provision fell within the law of "procedure" governing
an action in the federal court, whatever the source of the
jurisdiction. So holding, the Court of Appeals found § 3 of the
United States Arbitration Act, 9 U.S.C. § 3, applicable and,
accordingly, directed the District Court to heed that Act and allow
the matter to go to arbitration. 218 F.2d 948.
This Court explained, in
Guaranty Trust Co. v. York,
326 U. S. 99, why
the categories of "substance" and "procedure" are, in relation to
the application of the doctrine of
Erie R. Co. v.
Tompkins, 304 U. S. 64, less
than self-defining. They are delusive. The intrinsic content of
what is thought to be conveyed by those terms in the particular
context of a particular litigation becomes the essential inquiry.
This mode of approaching the problem has had several applications
since the
York decision. I agree with the Court's opinion
that the differences between arbitral and judicial determination of
a controversy under a contract sufficiently go to the merits of
the
Page 350 U. S. 208
outcome, and not merely because of the contingencies of
different individuals passing on the same question, to make the
matter one of "substance" in the sense relevant for
Erie R. Co.
v. Tompkins. In view of the ground that was taken in that case
for its decision, it would raise a serious question of
constitutional law whether Congress could subject to arbitration
litigation in the federal courts which is there solely because it
is "between Citizens of different States," U.S.Const. Art. III, §
2, in disregard of the law of the State in which a federal court is
sitting. Since the United States Arbitration Act of 1925 does not
obviously apply to diversity cases, in the light of its terms and
the relevant interpretive materials, avoidance of the
constitutional question is for me sufficiently compelling to lead
to a construction of the Act as not applicable to diversity cases.
[
Footnote 2/2] Of course, this
implies no opinion on the constitutional question that would be
presented were Congress specifically to make the Arbitration Act
applicable in such cases. Furthermore, because the Act is not here
applicable, I abstain from any consideration of the scope of its
provisions in cases which are in federal courts on a jurisdictional
basis other than diversity of citizenship.
Vermont law regarding such an arbitration agreement as the one
before us therefore becomes decisive of the litigation. But what is
Vermont law? One of the difficulties, of course, resulting from
Erie R. Co. v. Tompkins is that it is not always easy, and
sometimes difficult, to ascertain what the governing state law is.
The essence of the doctrine of that case is that the difficulties
of ascertaining state law are fraught with less mischief than
disregard of the basic nature of diversity jurisdiction, namely,
the enforcement of state-created rights and state
Page 350 U. S. 209
policies going to the heart of those rights. If Judge Gibson's
statement of what is the contemporary Vermont law relevant to the
arbitration provision now before him were determinative, that would
be that. But the defendant is entitled to have the view of the
Court of Appeals on Vermont law, and cannot, under the Act of
Congress, be foreclosed by the District Court's interpretation.
As long as there is diversity jurisdiction, "estimates" are
necessarily often all that federal courts can make in ascertaining
what the state court would rule to be its law. [
Footnote 2/3]
See Pomerantz v.
Clark, 101 F.
Supp. 341. This Court ought not to bypass the Court of Appeals
on an issue which, if the Court of Appeals had made a different
estimate from the District Court's of contemporaneous Vermont law
regarding such a contract as the one before us, this Court, one can
confidently say, would not have set its view of Vermont law against
that of the Court of Appeals. For the mere fact that Vermont, in
1910, restated its old law against denying equitable relief for
breach of a promise to arbitrate a contract made under such Vermont
law is hardly a conclusive ground for attributing to the Vermont
Supreme Court application of this equitable doctrine in 1956 to a
contract made in New York with explicit agreement by the parties
that the law of New York which allows such a stay as was here
sought, New York Civil Practice Act, § 1451, should govern.
Cf.
Brown v. Perry, 104 Vt. 66, 156 A. 910. Law does change with
times and circumstances, and not merely through legislative
reforms. [
Footnote 2/4] It is also
to be noted that
Page 350 U. S. 210
law is not restricted to what is found in Law Reports or
otherwise written.
See Nashville, C. & St. L. R. Co. v.
Browning, 310 U. S. 362,
310 U. S. 369
The Supreme Court of Vermont last spoke on this matter in 1910. The
doctrine that it referred to was not a peculiar indigenous Vermont
rule. The attitude reflected by that decision nearly half a century
ago was the current traditional judicial hostility against ousting
courts, as the phrase ran, of their jurisdiction.
See the
adverse comments of Judge Hough in
United States Asphalt
Refining Co. v. Trinidad Lake Petroleum Co., 222 F. 1006,
against what he assumed to be the law in the federal courts,
and compare with the shift in judicial attitude reflected
by the reservation of this
Page 350 U. S. 211
question in Mr. Justice Brandeis' opinion for the Court in
Red Cross Line v. Atlantic Fruit Co., 264 U.
S. 109. [
Footnote 2/5]
To be sure, a vigorous legislative movement got under way in the
1920's expressive of a broadened outlook of view on this subject.
But courts do not always wait for legislation to find a judicial
doctrine outmoded. Only last Term, although we had no statute
governing an adjudication, we found significance in a relevant body
of enactments elsewhere: "A steady legislative trend, presumably
manifesting a strong social policy, properly makes demands on the
judicial process."
National City Bank of New York v. Republic
of China, 348 U. S. 356,
348 U. S.
360.
Surely, in the light of all that has happened since 1910 in the
general field of the law of arbitration, it is not for us to assume
that the Court of Appeals, if it had that question for
consideration, could not have found that the law of Vermont today
does not require disregard of a provision
Page 350 U. S. 212
of a contract made in New York, with a purposeful desire to have
the law of New York govern, to accomplish a result that today may
be deemed to be a general doctrine of the law. Of course, if the
Court of Appeals, versed in the general jurisprudence of Vermont
and having among its members a Vermont lawyer, should find that the
Vermont court would, despite the New York incidents of the
contract, apply Vermont law, and that it is the habit of the
Vermont court to adhere to its precedents and to leave changes to
the legislature, it would not be for the federal court to gainsay
that policy. I am not suggesting what the Court of Appeals' answer
to these questions would be, still less what it should be. I do
maintain that the defendant does have the right to have the
judgment of the Court of Appeals on that question, and that it is
not for us to deny him that right.
I would remand the case to the Court of Appeals for its
determination of Vermont law on matters which the basis of its
decision heretofore rendered it needless to consider.
[
Footnote 2/1]
The court also cited
Sartwell v. Sowles, 72 Vt. 270, 48
A. 11.
[
Footnote 2/2]
Shanferoke Coal & Supply Corp. v. Westchester Service
Corp., 293 U. S. 449, was
a diversity case wherein § 3 of the Arbitration Act was applied.
But the case was pre-
Erie, and the Court's attention was
not directed toward the question.
[
Footnote 2/3]
It is peculiarly true of the problem before us that law is a
prophecy "of what the courts will do in fact." Holmes, The Path of
the Law, in Collected Legal Papers, p. 173.
[
Footnote 2/4]
That the Vermont Supreme Court does not obstinately adhere to
its past decisions, that, for it, too, law is living, is
illustrated by the following instances:
Capello's Administrator
v. Aero Mayflower Transit Co., 116 Vt. 64, 68 A.2d 913,
overruling Ronan v. J. G. Turnbull Co., 99 Vt. 280,
287-288, 131 A. 788, 791-792 (proof that an automobile involved in
an accident was owned by the defendant at the time of the accident
does not make a
prima facie case that the operator of the
automobile was engaged in the defendant's service);
Bartlett v.
Bonazzi, 91 Vt. 192, 99 A. 886,
overruling Fisher v.
Brown, 1 Tyler, Vt., 387 (action for deceit will not lie for
seller's fraudulent misrepresentations concerning his financial
position which induced buyer to extend credit);
State v.
Pianfetti, 79 Vt. 236, 65 A. 84,
overruling State v.
Kittle, 2 Tyler, Vt., 471 (jury verdict of guilty on one of
four counts in an indictment operated as an acquittal on the other
three counts);
Perry v. Shumway, 73 Vt. 191, 50 A. 1069,
overruling Town of Hartland v. Hackett, 57 Vt. 92 (the
issuing of an extent against a delinquent tax collector constitutes
an election of remedies which bars an action on the collector's
bond);
State v. Burpee, 65 Vt. 1, 25 A. 964,
overruling State v. Croteau, 23 Vt. 14 (in a criminal
trial, all questions of law, as well as fact, are for the jury);
Woodrow v. O'Conner, 28 Vt. 776, and
Bagley v.
Wiswall, Brayton 23,
overruling Drake v. Collins, 1
Tyler 79 (an arbitration note is void for want of consideration).
See also Grenier v. Alta Crest Farms, Inc., 115 Vt. 324,
58 A.2d 884, deciding that the character of the employee right
created by the Vermont Workmen's Compensation Act is not the same
as the character of the right which existed at common law. The
opinion draws upon the recorded attitude of other jurisdictions to
justify its departure from the contrary theory which it had set
forth in
Kelley v. Hoosac Lumber Co., 96 Vt. 153, 118 A.
520.
[
Footnote 2/5]
Judge Hough, in 1915, stated:
"It has never been denied that the hostility of English-speaking
courts to arbitration contracts probably originated (as Lord
Campbell said in
Scott v. Avery, 4 H.L.Cas. 811)"
"in the contests of the courts of ancient times for extension of
jurisdiction -- all of them being opposed to anything that would
altogether deprive every one of them of jurisdiction."
"A more unworthy genesis cannot be imagined. Since (at the
latest) the time of Lord Kenyon, it has been customary to stand
rather upon the antiquity of the rule than upon its excellence or
reason. . . ."
222 F. at 1007.
"I think the decisions cited show beyond question that the
Supreme Court has laid down the rule that such a complete ouster of
jurisdiction as is shown by the clause quoted [the arbitration
clause] . . . is void in a federal forum."
222 F. at 1012.
On the other hand, in 1924, this Court observed in
Red Cross
Line:
"we have no occasion to consider whether the unwillingness of
the federal courts to give full effect to executory agreements for
arbitration can be justified."
264 U.S. at
264 U. S.
125.
MR. JUSTICE HARLAN, concurring.
I concur in the opinion of the Court except insofar as it
undertakes to review and affirm the District Court's interpretation
of Vermont law. I agree with MR. JUSTICE FRANKFURTER that the
review of questions of state law should ordinarily be left to the
Courts of Appeals, and would remand the case to the Court of
Appeals for that purpose.
MR. JUSTICE BURTON, dissenting.
Whether or not § 3 of the Federal Arbitration Act is applicable
to this contract, the judgment of the Court of Appeals should be
affirmed.
Assuming the validity of the arbitration clause in the New York
contract here involved, I regard the procedure
Page 350 U. S. 213
which it prescribes as a permissible "form of trial."
See
Murray Oil Products Co. v. Mitsui & Co., 146 F.2d 381.
Accordingly, the United States District Court for the District of
Vermont may stay its own proceedings to await completion of the
arbitration proceedings, although a state court of Vermont would
not do likewise. I do not interpret
Erie R. Co. v.
Tompkins, 304 U. S. 64, or
Guaranty Trust Co. v. York, 326 U. S.
99, as requiring the contrary.