Frances Hosiery Mills, Inc. v. Burlington Indus., Inc.

200 S.E.2d 668 (1973)

19 N.C. App. 678

FRANCES HOSIERY MILLS, INC. v. BURLINGTON INDUSTRIES, INC.

No. 7315SC727.

Court of Appeals of North Carolina.

November 14, 1973.

*670 Latham, Pickard, Cooper & Ennis by Thomas D. Cooper, Jr., Burlington, for plaintiff appellee.

Sanders, Holt & Spencer by W. Clary Holt, James C. Spencer, Jr., and Frank A. Longest, Jr., Burlington, for defendant appellant.

HEDRICK, Judge.

The crux of this appeal is the effect to be given the judgment of the Supreme Court of New York affirming the arbitration award entered in favor of defendant. Defendant has offered this judgment as a plea in bar to the proceedings instituted by plaintiff and asserts that defendant's New York judgment is entitled to full faith and credit as provided in Article IV, Section 1, of the Constitution of the United States. In order for this contention to prevail, it is a necessary prerequisite that the defendant establish proper jurisdiction of the New York court over the controversy.

"Jurisdiction is the power of the court to decide a case on its merits and presupposes the existence of a duly constituted court with control over the subject matter and the parties." 2 Strong, N.C.Index 2d, Courts, § 2, p. 429. Assuming arguendo that the State of New York could successfully claim jurisdiction over the person of plaintiff, subject matter jurisdiction must still exist before the judgment of the Supreme Court of New York will be afforded res judicata effect. Defendant's claim of New York's jurisdiction over this subject matter is dependent upon the arbitration clause which appears in the written matter designated "yarn contract" (defendant's Exhibits A, B, C, and D). Dissecting the transactions between plaintiff and defendant, the determination is made that *671 the arbitration clause was not a part of the original contract between plaintiff and defendant but rather was an additional term "proposed" by defendant. The impact of such an additional term is governed by G. S. § 25-2-207(2) (b) of the Uniform Commercial Code which provides:

"The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless they materially alter it."

The course taken by the trial court in submitting to the jury the matter of whether the arbitration clause (contained in the "yarn contract") was a material alteration of the terms of the contract was proper, and we are bound by the jury's determination that the clause did materially alter the terms of the contract and thus did not become a part of the agreement between the parties. Therefore, since jurisdiction of the State of New York is bottomed upon the applicability of the arbitration clause, the judgment of the Supreme Court of New York is not a bar to plaintiff's cause of action.

Next, defendant contends by assignments of error 8, 9, 10, 11, 13, and 15, based upon exceptions duly noted to the charge, that the trial court committed error in its instructions to the jury. This argument is in part repetitive of defendant's first assertion which we have already discussed; nevertheless, we deem it necessary to comment on defendant's reliance upon G.S. § 25-2-201(2) (the Statute of Frauds provision) of the Uniform Commercial Code. G.S. § 25-2-201(2) reads as follows:

"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 requirements of subsection (1) against such party unless written notice of objection to its contents is given within ten days after it is received."

Even though defendant satisfies most of the requirements of G.S. § 25-2-201(2), it fails to meet the criterion of "confirmation of the contract". Defendant's "yarn contracts" serve not only to confirm the oral telephone contracts between the parties but also attempt to attach additional terms to the agreement. To allow these additional terms under the guise of "confirmation of the contract" would render G.S. § 25-2-207(2) of the Uniform Commercial Code meaningless. See, White and Summers, Uniform Commercial Code, Section 2-3, pp. 46-48; Davenport, How To Handle Sale Of Goods: The Problem of Conflicting Purchase Orders and Acceptances and New Concepts in Contract Law, 19 Bus. Law 75, 82 (1963-64). Thus, this contention is overruled.

Defendant also assigns as error both the trial court's definition of "material" and the failure of the court to define "merchant". Whatever inaccuracy might have been present in the particular definition of "material" which defendant assigns as error was certainly corrected by the court's extensive discussion of the meaning of the word "material". Furthermore, a definition of "merchant" was unnecessary as the parties had stipulated that they were both merchants, and the trial court instructed the jury in its charge that the plaintiff and defendant were merchants. Explanation of the term "merchant" would have been mere surplusage.

We have carefully reviewed defendant's other assignments of error including those relating to the admission and exclusion of testimony and find them to be without merit. In the trial of the issues in the Superior Court we find no prejudicial error.

No Error.

BRITT and MORRIS, JJ., concur.