Robert Engel, Foster S. Goldman, Jr., Berkman, Ruslander, Pohl, Lieber & Engel, Pittsburgh, for appellants.
James D. Morton, Clayton A. Sweeney, Charles G. Knox, Buchanan, Ingersoll, Rodewald, Kyle & Buerger, Pittsburgh, for appellee.
Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy and Nix, JJ. Manderino, J., did not participate in the consideration or decision of this case.
This case arises out of the dissolution of a security brokerage partnership of which appellee Marshall Waddell
was one of fifteen members and the subsequent formation of a new partnership by his former partners from which he was excluded. Appellants contend that the trial court erred by failing to stay the court proceedings pending arbitration and by appointing a receiver. We agree and therefore reverse.
On September 24, 1974, thirteen of the fifteen partners of appellant Babbitt, Meyers, & Waddell elected to dissolve the partnership. Under the partnership agreement, dissolution could be affected at the instance of any partner. A committee comprised of appellants Shriber, Rainier, and Naft was named to direct the liquidation of the dissolved partnership. Although appellee attended this meeting, he abstained from the decision to dissolve the partnership upon the advice of counsel.
The following day, appellee's former partners formed a new partnership, appellant B.M.W. & Co. The liquidation committee of the dissolved partnership concluded that liquidation could be accomplished by allowing each of the former partners other than appellee to contribute his share of the dissolved partnership's assets to B.M.W. & Co. and by tendering to appellee his proportional share of the assets of the dissolved partnership in cash. The committee, with the aid of a certified public accountant retained by the dissolved partnership, calculated appellee's share and offered it to him. Appellee, however, rejected the amount offered as inadequate.
On October 2, 1974, appellants, pursuant to a provision in their agreement as allied members of the New York Stock Exchange (NYSE), submitted the resulting dispute to the Board of Arbitration of the NYSE which accepted jurisdiction and which sent appropriate notice to appellee.
Four weeks later, appellee commenced this action in equity. He sought (1) an injunction restraining the individual appellants and B.M.W. & Co. from access to the
assets of the dissolved partnership, and (2) the appointment of a receiver to administer the assets of both the dissolved partnership and B.M.W. & Co. and to supervise the liquidation of the dissolved partnership. A hearing in the Court of Common Pleas of Allegheny County was held on November 8, 1974.
At the beginning of the hearing, appellants moved the court to stay the action filed by appellee until the matter had been resolved by arbitration. After argument, the court denied the motion because it concluded that the arbitration agreement did not cover the dispute. Without hearing testimony, the court concluded that a receiver should be appointed for the dissolved partnership.
Three days later, on November 11, appellants filed this appeal and a petition for supersedeas. Appellee responded by moving that the appeal be quashed. On December 4, we granted the supersedeas, and, the following day, we denied appellee's motion to quash the appeal.
Two questions are presented: (1) whether the trial court correctly denied appellants' motion to stay proceedings pending completion of arbitration; and (2) whether the court erred in appointing a receiver.*fn1
In several recent cases, we have emphasized that "[s]ettlement of disputes by arbitration [is] no longer deemed contrary to public policy. In fact, our statutes encourage arbitration and with our dockets crowded and in some jurisdictions congested arbitration is ...