Contractors filed their complaint November 20, 1954. In Counts One and Two of the complaint Contractors seek an order compelling Subcontractors and their surety to proceed with arbitration in accordance with the terms of the subcontract. In Counts Three and Four, as separate and distinct claims, Contractors request in the event that it finally be determined that Contractors are not entitled to arbitration with respect to the dispute set forth in Counts One and Two, and having in mind the time limitations in the bond in relation to the liability of the surety, that judgment be entered against Subcontractors and surety as therein prayed.
The complaint clearly indicated their first consideration was to preserve their rights to arbitration but at the same time, and in the alternative, to reserve their right to proceed to judgment against Subcontractors and their surety, in accordance with the terms of the bond, in the event it finally be determined they were not entitled to arbitration. To constitute a 'waiver' there must be an intentional relinquishment of a right with both knowledge of its existence and intention to relinquish it. American Locomotive Co. v. Chemical Research Corp., 1948, 6 Cir., 171 F.2d 115; see also Wilson & Co., Inc., v. Fremont Cake & Meal Co., 1948, D.C.Neb., 77 F.Supp. 364, 380. Contractors did not waive the contract provisions for arbitration.
Finally, Subcontractors contend that Contractors' motion for an order directing arbitration must be denied in view of the fact that Section 4 of the Federal Arbitration Act, 9 U.S.C. § 1 et seq., is limited to maritime transactions or interstate commerce 'neither of which is involved in this purely local contract and transaction.'
In Tenney Engineering, Inc., v. United Electrical Radio & Machine Workers of America, (U.E.) Local 437, 1953, 3 Cir., 207 F.2d 450, 453, the Court in speaking with reference to this statute said, inter alia:
'* * * For it is settled that Section 3, being a purely procedural section, applies to all contracts for arbitration which may be involved in suits properly brought in the federal courts and not merely to those maritime transactions or contracts evidencing transactions involving interstate, foreign or territorial commerce the arbitration clauses of which are made valid and enforceable by the substantive provisions of Section 2 of title 9. * * *'
I am of the opinion that the procedures of stay of trial, Section 3, order to proceed with arbitration, Section 4, and the Court appointment of arbitrators, Section 5, are in pari materia, each supplementary to the other in the order named and together affording a complete remedy under the Act.
In International Union United Furniture Workers of America v. Colonial Hardwood Flooring Co., Inc., 4 Cir., 1948, 168 F.2d 33, 37, the Court (Parker) said, inter alia:
'* * * No change was made, however, in the language of sections 3 and 4, which dealt with procedure in the courts, over which Congress had plenary jurisdiction.
'We have heretofore held that section 3 of the act should not be interpreted as limited by the provisions of section 2. Agostini Bros. Bldg. Corp. v. United States, 4 Cir., 142 F.2d 854. The reasoning of that decision would apply equally to section 4 and the succeeding sections. * * *' (Emphasis supplied.)
In Donahue v. Susquehanna Collieries Co., 3 Cir., 1943, 138 F.2d 3, 4, 149 A.L.R. 271, the Court posed the question thus
'The second question is whether 3 of the Act, which provides for a stay of proceedings in a lawsuit until arbitration proceedings have been had, is limited to the contracts and transactions described in § 2.'
The Court then gives its appraisal of the Act as follows:
'Then in § 3 the statute deals with the conduct of suits in federal courts, again a subject matter of congressional power. The language becomes general: 'any suit or proceeding', upon 'any issue referable to arbitration under an agreement in writing for such arbitration' are the words. Congress is not limited, in legislating as to law suits in federal courts, to those suits involving matters where the substantive rights of the parties may be controlled by federal legislation. The generality of the language used in the statute does not suggest any self-imposed limitation. Nor do we think that the 'congressional approval of arbitration' should be so limited by implication, by a grudging type of construction carried down from the days of judicial hostility to all arbitration agreements. We think it clear that the provisions of § 3 are not to be limited to the specific instances dealt with in § 2.
'* * * As indicated above, we think the Act is entitled to a construction which will accomplish its purpose, and should not be hedged about with imagined limitations, as has been done in some instances.
'Here again we should not choke the arbitration process which has been given congressional approval by the fetters of earlier judicial conceptions.'
I am clearly of the opinion that a stay should be granted and that Subcontractors, Strayer & Rife, should be directed to proceed to arbitration in accordance with the provisions of Article XXI of the subcontract dated April 2, 1952.
What has been said here on the matter of fraud and misrepresentation is predicated on such uncontradicted facts as were before the Court at this initial stage in the proceedings and has relation only to the question of what bearing it might have on the issue of compelling, in the first instance, compliance with the arbitration clause. It naturally should not be considered as res adjudicata or binding upon the arbitrators on any issue which they may properly consider in arriving at their final determination after a full hearing of all the evidence presented to them by all the parties.
An order may be submitted.