Music Research, Inc. v. Vanguard Recording Soc., Inc., 67
| Decision Date | 30 December 1976 |
| Docket Number | No. 67,D,67 |
| Citation | 547 F.2d 192 |
| Parties | MUSIC RESEARCH, INC., and Adelphi Records, Inc., Plaintiffs-Appellees- Appellants, v. VANGUARD RECORDING SOCIETY, INC., Defendant and Third-Party Plaintiff- Appellant-Appellee, v. Herb GART, d/b/a Herb Gart Management, Inc., Third-Party Defendant. ocket 76-7160. |
| Court | U.S. Court of Appeals — Second Circuit |
Robert B. Davidson, New York City (Baker & McKenzie, Lawrence W. Newman, New York City, and William J. Powell, Washington, D.C., of counsel), for plaintiffs-appellees-appellants.
Bruno Schachner, New York City (Kurtz & Vassallo, John A. Vassallo, New York City, of counsel), for defendant and third party plaintiff-appellant-appellee.
Before KAUFMAN, Chief Judge, and SMITH and TIMBERS, Circuit Judges.
Vanguard Recording Society, Inc. ("Vanguard"), appeals from a $275,000 award of damages to Music Research, Inc. ("Music Research"), after jury trial before Charles L. Brieant, Jr., Judge, in the United States District Court for the Southern District of New York. We affirm.
This case reaches us after a prolonged dispute between two record companies, Music Research and Vanguard, over the right to record and release the music of John Hurt, a Mississippi blues singer whose talents were rediscovered in 1963 when he was seventy-one years old, living as a share cropper in Avalon, Mississippi. It is undisputed that Thomas Hoskins, officer and shareholder of Music Research, was instrumental in bringing John Hurt's talents to public attention.
In March, 1963 Music Research signed a renewable five-year management contract with Hurt which gave Music Research the exclusive right to record Hurt's music or to contract with others to record it. Music Research was a new record company. In 1965, in order to obtain wider exposure for Hurt's music, Music Research authorized Herb Gart as its agent to negotiate a contract with an established record company for the release of some of Hurt's music. Music Research, which also released two Hurt recordings under its own Piedmont label, anticipated that its inventory of Hurt tapes would be more marketable on subsequent release if Hurt recordings were first distributed on a well-known label.
This action arises out of a dispute over a contract entered into in 1965 between Music Research and Vanguard for the right to release Hurt's music. Music Research admits that it authorized Gart, as agent, to negotiate a contract with Vanguard. It claims however that Vanguard's president, Solomon, although aware that Gart's authority had been limited to negotiating a two-record contract, had negotiated a contract covering the release of all of Hurt's recordings, and had deliberately withheld information about the contract signed by Gart from Hoskins. Music Research introduced expert testimony concerning the potential value of its tape library of Hurt music and the loss incurred by Music Research as a result of Vanguard's release of Hurt music without Hoskins' knowledge or authorization.
This suit was commenced in January, 1973. 1 Music Research sought injunctive relief and damages arising out of Vanguard's wrongful use and appropriation of its literary property in a diversity action based on common law fraud, tortious interference with contractual rights, unfair competition and unjust enrichment. A three-day trial was held in October, 1975. At the close of plaintiff-appellee's case, Vanguard moved to dismiss all claims against it pursuant to Fed.R.Civ.P. 50. Judge Brieant granted the motion as to claims sounding in unfair competition, unjust enrichment, and tortious interference with contractual rights. He denied Vanguard's motion as to the fraud claim, and submitted that claim to the jury. In the face of an adequate remedy at law, he denied injunctive relief. The jury returned a verdict of $275,000 in favor of Music Research. Vanguard's motion for a new trial and its motion to set aside the verdict as against the weight of the evidence under Fed.R.Civ.P. 59 were both denied.
Vanguard appeals from judgment on the verdict and from Judge Brieant's denial of its Rule 59 motions and of its subsequent motion under Fed.R.Civ.P. 60(b)(2) and (3) for a new trial on the basis of newly discovered evidence and fraud. 2
Vanguard argues that the fraud claim was barred by the statute of limitations as a matter of law. No objection was raised by Vanguard when the trial court charged, There was conflicting evidence in the record as to when the appellee discovered or should have discovered the fraud by the exercise of due diligence. This was an issue of fact properly left to the jury. Erbe v. Lincoln Rochester Trust Co. 3 N.Y.2d 321, 165 N.Y.S.2d 107, 111, 144 N.E.2d 48 (1957); N.Y.Civ.Prac. Law and Rules § 213(8), § 203(f) (McKinney 1975). 3
When Judge Brieant dismissed the contractual claims at the end of plaintiff-appellee's case he did so because he held that Gart had apparent authority to contract, and that a valid contract existed between Music Research and Vanguard before any of the acts complained of took place. Based on the dismissal of the contract claims, Vanguard now argues that the evidence does not support a finding of reliance on the part of Music Research on the misrepresentations by Solomon, and that damages, if any, incurred by Music Research flowed from the terms of the contract rather than from reliance by Music Research on the misrepresentations by appellant. Vanguard, however, raised no objections to the jury charge set out below. 4
The trial court further told the jury that it could find that Gart was the authorized agent of Music Research. If such an agency were found, then Gart's knowledge would be imputed to Music Research and would vitiate a claim of reliance on the misrepresentations. The jury was free to find that no such agency existed. Vanguard, having raised no objections to the charge as given, cannot now claim that as a matter of law there could not have been reliance by Music Research. The issue was properly left to the jury. 5
Vanguard next argues that its Rule 59 motion should have been granted because there was insufficient evidence to support the damage award. The trial court has broad discretion in ruling on the sufficiency of the evidence and we will not set aside a verdict unless there has been an abuse of discretion. Dagnello v. Long Island R. R., 289 F.2d 797, 806 (2d Cir. 1961); 11 Wright & Miller, Federal Practice and Procedure, § 2818 at 118-20, § 2820 (1973 ed.). Music Research obtained testimony of three experts to establish the market value of its inventory of Hurt tapes. One expert testified that the value of the tapes in 1970 had been $250,000 and that following Vanguard's releases it was at most $10,000. He also testified that five L.P. records could be produced from the tapes with projected sales of 35,000 for each record. At a profit of $1.41 per record he estimated a total profit of $246,750, which together with projected foreign leasing revenues of $42,525 brings the total potential profit to $289,275. A second expert projected sales up to 50,000 for each of five records at a profit margin of $1.50 per record. Using these figures the value of the tapes without adding foreign licensing revenues was $375,000. 6 Vanguard introduced no evidence to counter this testimony.
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