November 18, 1948.
Robbins Robbins for plaintiffs.
Lindau, Robbins, Buttenwieser Backer for defendants.
Motion is made for a temporary injunction staying arbitration proceedings initiated by defendant corporation pending determination of plaintiffs' action for rescission of the contract containing the arbitration provision. Rescission is sought upon the ground of misrepresentations alleged to have been made to induce plaintiff to enter into the contract.
Defendant urges that the motion for an injunction must be denied because plaintiffs have an adequate remedy to stay the arbitration under the provisions of sections 1450 and 1458 of article 84 of the Civil Practice Act (dealing with arbitration). While I agree that plaintiffs could have proceeded under section 1458 of the Civil Practice Act to obtain a stay of the arbitration proceeding, nevertheless such a remedy is not exclusive and does not deprive the court of its power to grant injunctions in actions. No reported decision has been brought to the court's attention ruling upon this precise point. There is language in Matter of Kahn ( National City Bank) ( 284 N.Y. 515) and in Matter of Pacoby ( 33 N.Y.S.2d 621) which supports plaintiffs' contentions. Section 1469 of the Civil Practice Act provides with respect to the arbitration article: "This article does not affect any right of action in affirmance, disaffirmance, or for the modification of a submission or contract".
Clearly, here, plaintiffs should not be compelled to arbitrate before the determination of their claim for rescission. Since a court would have the power to stay an action in some other court, it certainly has the power to stay an arbitration proceeding between the same parties involved in a pending action. It would be sure formalism to hold that a necessary stay could be obtained solely under section 1458 of the Civil Practice Act. Plaintiff has pursued a proper alternative remedy.
Upon the affidavits I find that plaintiffs are entitled to the injunctive relief sought. The motion is granted. Settle order.