Ainger v. Michigan General Corp.
Decision Date | 28 August 1979 |
Docket Number | No. 75 Civ. 2027 (JMC).,75 Civ. 2027 (JMC). |
Citation | 476 F. Supp. 1209 |
Parties | Arthur W. AINGER, George B. Davis, David Zentner, Walter Weidenbaum, Edward Silvey and Samuel J. Campbell, Plaintiffs, v. MICHIGAN GENERAL CORPORATION, Defendant. |
Court | U.S. District Court — Southern District of New York |
Shea, Gould, Climenko & Casey, New York City (Ralph L. Ellis, Robert C. Biegen, New York City, of counsel); John A. Hoyt, Jr., New York City, for plaintiffs.
Burns, Jackson, Miller, Summit & Jacoby, New York City (John L. Amabile, Laura Effel, New York City, of counsel), for defendant.
After a bench trial, the Court finds defendant liable to plaintiffs on their complaint for breach of contract, and plaintiffs liable to defendant on its counterclaims for breach of warranty and fraud.
This lawsuit, between the sellers and the purchaser of a paperback book publishing company, actually centers on a controversy between the publisher and the author of a series of paperback books. The events giving rise to liability occurred between January 1972 and November 1973, but the history of the relationship between the author and the publisher is necessary to an understanding of the significance of those events. The facts are largely undisputed, reflected in the numerous documents introduced at the trial. Facts pertinent only to damages are incorporated into the discussion of that issue. Jurisdiction is based on diversity of citizenship.
In 1965, plaintiff David Zentner was the publisher of a "sophisticated" men's magazine which was distributed by the Kable News Company "Kable". In the summer of that year Zentner entered into an agreement with the co-plaintiffs Samuel Campbell, George Davis, Arthur Ainger, Edward Silvey, and Walter Weidenbaum who were then stockholders, officers, or employees of Kable.1 Under the agreement, the plaintiffs became the sole stockholders of Bee-Line Books, Inc. "Bee-Line", a corporation formed to publish erotic paperback books. Zentner was the president and chief operating officer of Bee-Line. The other plaintiffs were, for the most part, "silent partners" in the business, and Weidenbaum, an attorney, functioned as the liaison between Zentner and the other stockholders. Kable distributed the books published by Bee-Line, and its promotion likely contributed to Bee-Line's early success. Among the authors writing for Bee-Line was Donald Pendleton, who wrote six or seven erotic books which were published by Bee-Line in 1966 and 1967.2
By 1968, Bee-Line had published, in addition to its erotic books, a number of titles directed to a wider audience. In the early summer of that year, Zentner and Weidenbaum were exploring the possibility of Bee-Line's entering the "mass market" paperback business. To this end, they had several meetings in May and June with Lyle Engel, another publisher, who had had great success with "series" paperbacks. (Although there are other types of series, for purposes of this case, a series may be defined as a number of books with a common main character; examples include Tarzan, Fu Manchu, and, more recently, James Bond.) Zentner and Weidenbaum were not particularly inspired by any of Engel's suggestions for a series, and they believed that they could develop a better concept themselves.
According to Zentner and Weidenbaum, they were walking on Third Avenue in mid-town Manhattan, after a luncheon meeting with Engel, when the following conversation took place:
In further discussion, Weidenbaum and Zentner named their character "Matt Bolan," and decided to approach Don Pendleton to see if he would be willing to write the books.
During a telephone conversation in mid-July 1968, Zentner outlined the Executioner concept to Pendleton.4 On or about August 19, 1968, Pendleton submitted a synopsis of the proposed book to Zentner,5 and in October, Pendleton signed a contract to write the book.6 The Executioner books, along with other mass market paperbacks, were published under the "Pinnacle" imprint or trade name, to avoid the taint of Bee-Line's reputation.
Pendleton's version of the inception of the series differs. Pendleton testified, at his deposition, that, during the July telephone conversation, Zentner said that he was interested in manuscripts suitable for mass market publication. Pendleton acknowledged that Zentner had suggested the name "The Executioner" as an anti-hero protagonist at war with the underworld.7 Pendleton testified, however, that he told Zentner during the telephone conversation that he had "been developing a theme for over a year regarding a Viet Nam trained soldier who returns to this country and declares a holy war on organized crime."8 This was a result of a series of conversations that Pendleton had with third parties over a year before his conversation with Zentner. Additionally, Pendleton drew on his own military experience in developing this idea. Pendleton also claimed to have developed the name "Mack Bolan."9
In any event, Pendleton began writing the series and it became a great success. Bee-Line published the first two books in 1969, two more in 1970, and five in 1971.10 By January 1972 more than four million copies of these nine books were in print.
Zentner believed there was more money to be made if a way could be found to get Pendleton to produce more manuscripts, perhaps as many as nine each year. Following a conversation with Andrew Ettinger, who had been editing the series, Zentner decided to invite Pendleton to New York to discuss the situation. Pendleton arrived in mid-January 1972 for a three-day visit. This was the first face-to-face meeting between Pendleton and Zentner and it marks the beginning of the dispute that is the gravamen of this lawsuit.
On the last day of Pendleton's visit, just before he was to depart for the airport, he met with Zentner and Ettinger in Zentner's office. At that time, Zentner told Pendleton that the series could be an even greater success than it already was if Pendleton would write more books each year. Pendleton did not believe this was possible. Zentner then suggested the possibility of Bee-Line's hiring other writers to assist Pendleton in the preparation of manuscripts. Pendleton stated he did not think that other writers would be able to maintain the artistic quality of the series. Zentner then stated that his suggestion was not entirely up to Pendleton because the series belonged to the publisher which could assign authors to write the books as it saw fit. This infuriated Pendleton, who proclaimed "Nobody else is going to write my books." After further heated discussion along these lines, Pendleton stormed out of the Bee-Line offices, into a waiting taxicab.
Upon Pendleton's return home, he wrote a letter to Zentner, dated January 21, 1972, reading in part:
On receipt of this letter, Zentner convened a meeting of his staff, sending them a memorandum dated January 24, 1972, reading in part:
Zentner, Ettinger and Weidenbaum met in late January or early February to discuss the Pendleton situation. After Zentner and Weidenbaum recounted their version of the creation of the series, Weidenbaum suggested that a letter be sent to Pendleton. He prepared a handwritten draft of a letter for Zentner's signature that set out the development of the series and the position that the publisher was taking, namely, that the publisher created and owned the series and that while Bee-Line would be most pleased to have Pendleton continue to write, it would make other arrangements if necessary. After further discussion, it was decided that the letter might provoke Pendleton and could delay the receipt...
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