Amazon Cotton Mills Co. v. Duplan Corp.

96 S.E.2d 267 (1957)

245 N.C. 496

AMAZON COTTON MILLS COMPANY v. The DUPLAN CORPORATION.

No. 378.

Supreme Court of North Carolina.

February 1, 1957.

Rehearing Dismissed April 10, 1957.

*269 Ratcliff, Vaughn, Hudson, Ferrell & Carter, by R. M. Stockton, Jr., Winston-Salem, for defendant, appellant.

James L. Rankin, Chester, Pa., E. T. Bost, Jr., Concord, W. H. Beckerdite, Kannapolis, Walser & Brinkley, Lexington, by Don A. Walser, Lexington, for plaintiff, appellee.

HIGGINS, Justice.

The questions involved in this appeal are altogether procedural. As stated in its brief, "the plaintiff institutes this action in the Superior Court of Davidson County, North Carolina, primarily to restrain the defendant from proceeding with arbitration in New York; and secondarily for the purpose of having all matters pertaining to the controversy decided by the duly constituted courts of North Carolina."

The parties entered into five written contracts, the first on December 16, 1954, and the fifth on April 20, 1955, under the terms of which the plaintiff sold and delivered, and the defendant purchased and received 38, 400 pounds amafleece cotton yarn at the agreed price of $1.89 per pound. The plaintiff admits it has been paid in full. It, therefore, seeks to assert no claim against the defendant. The defendant, on the other hand, contends it purchased the yarn under plaintiff's warranty that it was pure cotton, whereas in fact it was part rayon; that by reason of the breach of warranty, the defendant was greatly damaged. The plaintiff denied the breach of warranty; thus a controversy arose.

All the contracts between the parties contain the following provision: "This contract is subject to the provisions of the Cotton Yarn Rules as revised, but if such rules provide any conditions or procedure inconsistent with this contract, then the provisions of this contract shall control." The Cotton Yarn Rules provide for arbitration of controversies * * * "by proceeding under rules of the General Arbitration Council of the Textile Industry," which in turn provide * * * "If the parties are unable to agree on time, place, method, or rules of arbitration, then such arbitration shall be held in the City of New York in accordance with the laws of the State of New York."

After the controversy arose, the defendant instituted arbitration proceedings in New York City. The plaintiff's brief contains the following statement: "The plaintiff says that it has not contracted, agreed, or consented to arbitrate. The defendant says otherwise." If, as it contends, the plaintiff has not contracted, agreed, or consented to arbitrate, the arbitration proceeding *270 in New York will not be binding on it. Agreement to arbitrate is the foundation on which arbitration must rest. In its absence the award will not be binding. Equity is not available until injury is threatened. "A well established rule of this Court is that injunctive relief will be granted only when irreparable injury is both real and immediate." Hudson v. Atlantic Coast Line R. Co., 242 N.C. 650, 89 S.E.2d 441, 454; Wilcher v. Sharpe, 236 N.C. 308, 72 S.E.2d 662. "It was incumbent upon the plaintiff to make out a prima facie case of irreparable injury entitling him to equitable relief by injunction." Teer v. Jordan, 232 N.C. 48, 59 S.E.2d 359, 363. "Arbitration proceedings, under an agreement for arbitration, may be enjoined where proper grounds therefor are present. Such proceedings, however, ordinarily will not be enjoined, unless the conduct of the arbitrators or of the parties is manifestly unlawful. They will not be enjoined on the ground that some of the matters presented by one of the parties for determination are not within the contract of submission, or because one of the things that the arbitrators will decide is, whether the case is one of which they should take cognizance." 43 C.J.S., Injunctions, § 43, p. 495. "Matters that will constitute a defense of which complainant may avail himself in an action pending or threatened against him cannot be made the ground of an injunction to restrain proceedings in such action, unless he alleges and proves special circumstances showing that he may suffer irreparable injury if he is denied the preventive remedy." 43 C.J.S., Injunctions, § 40, p. 481.

On the other hand, if the defendant's contention is correct, and the parties have contracted to arbitrate, then certainly a court of equity cannot be enlisted to aid in breaching the contract. In either event, therefore, the primary purpose of restraining arbitration fails for want of an equitable showing. Can the secondary purpose of forcing the defendant to litigate in North Carolina be accomplished by injunction?

The plaintiff has been paid in full for its goods. It asserts no claim, except that the Court should stop the arbitration and require the defendant to come into the Superior Court of Davidson County and litigate its claim for damages for the alleged breach of warranty. The defendant is the party who asserts the claim, and the only party claiming damage. The defendant alone has the right to elect whether to bring suit. The right to sue involves the right to select the time, the place, and the tribunal. If suit is brought in the wrong jurisdiction, the remedy is a motion to dismiss; if in the wrong venue, a motion to remove. If the suit is brought in the proper jurisdiction and in the correct venue, the plaintiff will have ample time and opportunity to appear, answer, and defend. Courts will not grant the equitable relief of injunction when there is an adequate remedy at law. Arey v. Lemons, 232 N.C. 531, 61 S.E.2d 596; Town of Clinton v. Ross, 226 N.C. 682, 40 S.E.2d 593; Newton v. Chason, 225 N.C. 204, 34 S.E.2d 70.

The defendant's motion to dissolve the restraining order and dismiss the action should have been allowed. The order appealed from is

Reversed.

JOHNSON, J., not sitting.