[D9239AAH1], Letter from Sherburne Blake Eaton to Automatic Phonograph Exhibition Co, Felix Gottschalk, June 27th, 1892


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[D9239AAH1], Letter from Sherburne Blake Eaton to Automatic Phonograph Exhibition Co, Felix Gottschalk, June 27th, 1892




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Thomas A. Edison Papers, School of Arts and Sciences, Rutgers University


June 27th., 1892
Automatic Phonograph Exhibition Company,
Felix Gottschalk, Esq., President,
Dear Sir: -
New York Co. vs. Automatic Phonograph Exhibition Co.
Replying to your favor of the 24th. Inst. With regard to the proposed arbitration as to certain of the differences between the N.Y. Co. and the Aut. Phono. Ex. Co., I beg to say: -
Does the contract provide for arbitration?
Referring to the contract of Jan. 7th., 1892, between the parties, there is no provision for arbitration in the contract. An arbitration would have to be a matter of purely voluntary arrangement between the parties and could take any form upon which the parties would agree.
Is any arbitration desirable? On the whole, I am inclined to think that arbitration in some form is desirable, in this case, but it should be arbitration which includes not only the claim of the N.Y. Co. against the A.P. Ex. Co., but the claim of the A.P.EX. Co. against the N.Y. Co. with reference to advertising machines. The question as to whether or not arbitration is desirable at all from our standpoint, is to be determined by contrasting our position under some form of arbitration with our position, if the matter was brought into Court.
Our own position is: - The New York Co. violated the implied terms of their contract by starting the advertising machine business. This is not a violation of any express provision of the contract of Jan. 7th., 1892, but of the implied provision arising from the rule of law that one partner cannot carry on the business in competition with the business of a partnership. It is not absolutely clear that this provision applies in this case: - firstly, because it is not clear that the parties are really partners; secondly, because the sixth clause of the contact providing for the case of a sale of phonographs in the territory. Etc., makes the penalty for such sale, etc., a revocation of the guaranty in favor of the N.Y. Co., but leaves substantially untouched the other provisions of the contract. While the exact action in connection with advertising machines by the N.Y. Co. is not within the express terms of any provision of this sixth clause, yet, the clause contains an implication for unfortunate bearing for us. In other words, our position is not so strong that we can afford to say that our right is clear, successful in Court upon it. In this state of affairs, we think an arbitration covering all the points in controversy is desirable.
What form of arbitration would be advisable?
It is hard to say whether in an arbitration which included all the points in controversy, as has been said, it would be best to have the matter referred to a lawyer, substantially as Referee, or that the reference should be had to two or more business men who would decide the matter upon commonsense principles, without much reference to the law. We think, however, on the whole, that it would be most advantageous to have it referred to businessmen as arbitrators, as we have perhaps, a stronger case upon moral than upon legal grounds.
In a word, the thing to do is see the N.Y. Co. officers and to arrange with them for a reference to say, three business men as arbitrators, one to be selected by each party, and those two to select a third; but it should be distinctly understood that each and all the questions between the parties are to be referred in such arbitration.
Very truly yours,
S.B. Eaton
Misc. C.
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