LC Page & Co. v. Fox Film Corporation

• Decision Date: 06 April 1936
• Docket Number: No. 339.,339.
• Parties: L. C. PAGE & CO., Inc., et al. v. FOX FILM CORPORATION et al.
• Court: U.S. Court of Appeals — Second Circuit

83 F.2d 196 (1936)

L. C. PAGE & CO., Inc., et al. v. FOX FILM CORPORATION et al.

No. 339.

Circuit Court of Appeals, Second Circuit.

April 6, 1936.

Spence, Hopkins, Walser & Hotchkiss, of New York City (Kenneth M. Spence, of New York City, Robert Hale, of Portland, Me., and Paul Van Anda, of New York City, of counsel), for appellant.

Edwin P. Kilroe, of New York City (Julian T. Abeles, of New York City, of counsel; Leopold Bleich, of New York City, on the brief), for appellees.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

SWAN, Circuit Judge.

This is an appeal from an order denying an injunction pendente lite in a suit for infringement of copyright. The suit was brought by L. C. Page & Co., which claims to have acquired in 1923 the exclusive motion picture rights in a novel entitled "Captain January," the copyright to which stands in the name of the author, Laura E. Richards, a resident of Maine. Mrs. Richards was joined as a nominal party plaintiff, as was proper and necessary. Independent Wireless Tel. Co. v. Radio Corp., 269 U.S. 459, 46 S.Ct. 166, 70 L.Ed. 357; Buck v. Jewell-La Salle Realty Co., 283 U.S. 191, 51 S.Ct. 410, 75 L.Ed. 971, 76 A.L.R. 1266; Stephens v. Howells Sales Co., 16 F.(2d) 805 (D.C.S.D.N.Y.). She has not appealed, and severance has been made as to her. Hereafter L. C. Page & Co. will be referred to as the plaintiff. The defendants are Fox Film Corporation (now known as Twentieth Century Fox Film Corporation) and its subsidiary, Rural Pictures Corporation, both New York corporations. They are threatening to produce a talking motion picture version of the novel Captain January without having obtained the consent of the plaintiff. Its bill prays for an injunction, temporary until final hearing, and permanent thereafter.

The dispute concerns the plaintiff's title to talking motion picture rights in the copyrighted novel, as distinguished from a motion picture version unaccompanied by spoken words. The novel was copyrighted in the name of Mrs. Richards' publishers in 1890. In 1897 Mrs. Richards granted to her publishers, predecessors of the plaintiff, "the exclusive right to publish" the novel during the full term of the copyright and any renewals thereof. Such right of publication was transferred to the plaintiff, with Mrs. Richards' written assent, in March, 1914. About a year later some question apparently arose as to whether it included motion picture rights. Mrs. Richards and the plaintiff agreed by an exchange of letters that any moneys received as royalties or otherwise "from moving picture rights" were to be divided in the proportion of one-third to the plaintiff and two-thirds to Mrs. Richards. It was also agreed that "all business parts of the transaction shall be done through" the plaintiff, which was to use its best efforts to bring about satisfactory results. In 1917 the copyright to the novel Captain January was renewed in the name of the author. Six years later the parties executed a formal agreement, dated October 8, 1923, and delivered about a month later, upon which the plaintiff grounds its claim. This agreement, after reciting the existence of various contracts respecting publication by the plaintiff of books written by Mrs. Richards, which contracts either failed to specify any arrangement regarding the moving picture rights, as such, to said books, or else did not "state the terms with sufficient clarity," provided that L. C. Page & Co. "shall have the exclusive moving picture rights to all books by Laura E. Richards published by them," and that they shall pay her 45 per cent. of the net cash received by them "through the sale or lease of any or all motion picture rights above mentioned." Shortly thereafter, by an agreement dated December 1, 1923, the plaintiff granted to Principal Pictures Corporation all motion picture rights in the novel Captain January; but it was expressly agreed that "the rights so granted do not include the right to use in connection with said motion picture versions any spoken words, or words produced by sound of any kind"; also that "the rights granted do not include any dramatic rights, by which is meant rights to produce a spoken drama based on the aforesaid story or literary composition, but that all dramatic rights shall remain the exclusive property of the Owner" (L. C. Page & Co.). Forty-five per cent. of the sum ($5,000) received by the plaintiff from Principal Pictures Corporation was paid over to Mrs. Richards.

In May, 1935, the defendant Fox Film Corporation offered the plaintiff $20,000 for "a clear title" to "motion pictures and talking rights" in Captain January. The plaintiff replied that it accepted the offer, that one-third of the price was to be paid to the owners of "the silent rights," i. e. Principal Pictures Corporation, and that "this acceptance" was subject to the details of the contract to be executed being satisfactory to the plaintiff. No contract with the plaintiff was ever concluded. Fox Film Corporation purchased the silent rights from Principal Pictures Corporation for $6,666.67, but becoming dissatisfied with the plaintiff's title to "talking rights," it obtained, through its subsidiary, Rural Pictures Corporation, a quitclaim conveyance from Mrs. Richards, for which it paid her $13,333.33. Thus the plaintiff's rights were ignored by the defendants, although they had full knowledge of the agreement of October 8, 1923, and were warned by the plaintiff that it would assert its rights by litigation. After obtaining Mrs. Richards' quitclaim deed dated August 28, 1935, the defendants began the production of a talking motion picture based on the novel, and are intending to release it for exhibition. This bill was filed October 23, 1935. A motion for preliminary injunction was denied upon the ground that, since the plaintiff had been willing to accept $7,333.33 for its rights and the defendants had ample financial responsibility and would sustain a large loss if production of the motion picture were enjoined, the balance of convenience justified refusal of a preliminary injunction.

Whatever the plaintiff's rights under the letters of 1915, it is clear that by the agreement dated October 8, 1923, the plaintiff obtained from Mrs. Richards "the exclusive moving picture rights" in the story Captain January in exchange for an agreement to pay her 45 per cent. of the net cash received from any sale or lease of such rights. The defendants' contention that this was a mere contract to act as the author's agent, upon a percentage basis, in disposing of her motion picture rights, cannot prevail over the terms of the written document. It is immaterial whether the plaintiff's rights be considered to be merely contractual or to involve the grant of a proprietary interest in the copyright; in either case the defendants had full notice of them before they began to produce the moving picture, and the plaintiff as exclusive licensee for selling or leasing could compel the copyright proprietor, as a trustee, to sue for an infringement, even if no "interest" was transferred to the plaintiff. Independent Wireless Tel. Co. v. Radio Corp., 269 U.S. 459, 469, 46 S.Ct. 166, 70 L.Ed. 357. So the issue is whether the 1923 agreement included "talking" as well as "silent" motion pictures.

"Talkies" were not commercially known in 1923, but inventors had been experimenting with the idea for some years, and plainly the plaintiff contemplated the possibility of the commercial development of sound with motion pictures, for almost contemporaneously with obtaining the license from Mrs. Richards, it granted Principal Pictures Corporation the exclusive right to produce or sell or license motion picture...