Smith v. Superior Court

THE COURT.

This is an application for a writ of prohibition directed to the Superior Court for the County of Los Angeles commanding said court to refrain from proceeding with a trial on the merits in an action therein commenced until such time as petitioner’s appeal from the order denying enforcement of an arbitration agreement shall have been determined.

On April 18, 1956, Harry Smith and Sam Smith, brothers, entered into a written partnership agreement for the purpose of operating a newsstand. Paragraph 14 of the agreement provides: “Should a question of difference of opinion arise between the partners which appears incapable of determination between themselves, Louis A. Sachin, the attorney for the partners shall appoint an impartial, independent arbiter who shall render a decision which the parties hereto agree to abide by, and his decision shall be both final and conclusive on both the parties, ...”

On March 20, 1961, Harry Smith, through his attorneys, caused a letter to be written to Sam Smith, in which it is stated: “Mr. Smith [Harry] feels, taking into consideration the recent deterioration in the relationship between you and himself and the reduced profit which the business is yielding due to high rent and increased operating expenses, that it will be in the best interest of the business and of both of you to dissolve the partnership effective March 31, 1961. After

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said date, it is our understanding that unless some agreement has been reached pursuant to which you become the purchaser of Smith News Company he will, after said date, engage in the news stand business, if at all, on his own account.”

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The record reveals no further action in the matter until May 26, 1961, when Sam Smith filed a complaint in the superior court for dissolution of the partnership, for an accounting and appointment of a receiver.

On July 3, 1961, Harry Smith filed his answer, admitting the execution of the agreement on April 18, 1956, but denying all other allegations. As a first affirmative defense and counterclaim, it is alleged that plaintiff had violated the provision of the contract which provides that “[e]aeh of the partners is to give his undivided time and attention to the business, and is to use his utmost endeavors to promote the interests of the firm,” all to defendant’s damage in the sum of $10,000. As a second affirmative defense, defendant alleges his written notice of intention to dissolve the partnership, as of March 31, 1961, per letter of March 20, 1961. As a third affirmative defense, he quotes paragraph 14 of the agreement and alleges: “Plaintiff has not submitted to arbitration, the subject matter of the litigation involved herein.”