Matter of Cross & Brown Co. (Nelson)

In Matter of Cross & Brown Co. (Nelson) (4 A.D.2d 501, 167 N.Y.S.2d 573 [1957]) an arbitration clause that allowed the board of directors of one of the disputants to arbitrate a dispute between itself and an employee was held invalid. Citing the "well recognized principle of 'natural justice' . . . that a man may not be a judge in his own cause," it was held that the board of directors of the corporate party to the contract could not serve as arbitrators, since "no party to a contract, or someone so identified with the party as to be in fact, even though not in name, the party, can be designated as an arbitrator to decide disputes under it." (Id. at 502-503) The Court (at 502) "brushed aside any metaphysical subtleties about corporate personality" and viewed the clause as allowing one party to arbitrate its own cause. Since the board of directors had complete control of the corporation which it represents, the board was treated as the equivalent of the corporate disputant.