Appeal from order of Court of Common Pleas of Erie County, Feb. T., 1964, No. 395, in case of Mary B. Moran v. Paine, Webber, Jackson & Curtis.
James D. McDonald, Jr., with him Curtze, Gent & McCullough, for appellant.
John F. Potter, with him Gifford, Graham, MacDonald & Illig, for appellee.
Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones.
On March 15, 1960, Mary B. Moran executed a written agreement with the brokerage firm of Paine, Webber, Jackson & Curtis, which provided for the maintenance of a margin account by Mrs. Moran with that firm. Paragraph 15 of that agreement specifically stated: "If any controversy arises out of this contract it shall be determined by arbitration."
Mrs. Moran alleged that on March 17, 1960, the brokerage firm induced her consent to purchase 1,000 shares of Carrier Corporation stock by misrepresentations and misleading statements and that the brokerage firm made an unauthorized purchase of 1,000 shares of American Cable and Radio stock on September 1, 1960. In consequence of the alleged mishandling of her brokerage account, Mrs. Moran claimed losses in excess of $14,000 incurred chiefly in the purchase and resale of the stocks mentioned above.
By November 1962, Mrs. Moran had decided to seek redress for the losses allegedly suffered by her. After making written inquiries to the New York Stock Exchange and to the Securities and Exchange Commission concerning what remedies were available, Mrs. Moran
entered into a submission agreement in August 1963 with the brokerage firm providing for the dispute to be arbitrated by five persons acting under the rules of the New York Stock Exchange. After a hearing, the arbitrators entered an award for Mrs. Moran on October 30, 1963, in the amount of $1,564.05, plus $240 for costs.
Dissatisfied with this result, Mrs. Moran then filed a petition for modification and/or vacation of the arbitration award on January 27, 1964, in the Court of Common Pleas of Erie County. After having permitted Mrs. Moran to amend her original petition four times, the trial court sustained with prejudice the brokerage firm's preliminary objections to the petition. From that order of November 8, 1965, dismissing her petition, Mrs. Moran has appealed to this Court.
Mrs. Moran's main contentions can be summarized as follows: (1) the 1960 margin agreement is void and unenforceable insofar as it requires that all stock disputes to arise in the future be resolved by arbitration; (2) the 1963 agreement of submission to arbitration [submission agreement] is also void and unenforceable because (a) it constitutes an illegal waiver of the remedial advantages of the Securities and Exchange Acts of 1933 and 1934 and (b) arbitration is not the proper judicial forum to decide any disputes between investors and their brokers and (3) Mrs. Moran cannot be said to have elected to submit her claims to arbitration because she was only complying with the express mandate of the void margin agreement and had no knowledge of her right to avail herself of remedies in a court of law.
Taking these arguments in order, we agree with Mrs. Moran that the arbitration provisions in the 1960 margin agreement are unenforceable. In Wilko v. Swan, 346 U.S. 427, 74 S. Ct. 182 (1953), the United States Supreme Court held that agreements for ...