Axelrod v. CBS Publications

• Citation: 185 N.J.Super. 359,448 A.2d 1023
• Parties: Dr. Herbert R. AXELROD, Plaintiff-Appellant, v. CBS PUBLICATIONS, the Consumer Publishing Division of CBS, Inc., et als., Defendants-Respondents.
• Decision Date: 27 May 1982
• Court: New Jersey Superior Court – Appellate Division

Page 359

185 N.J.Super. 359

448 A.2d 1023

Dr. Herbert R. AXELROD, Plaintiff-Appellant, v. CBS PUBLICATIONS, the Consumer Publishing Division of CBS Inc., et als., Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued May 10, 1982.

Decided May 27, 1982.

Douglas M. Calhoun, Neptune, for plaintiff-appellant (Carton, Nary, Witt & Arvanitis, Neptune, attorneys; Douglas M. Calhoun on the brief).

Marc S. Klein, Morristown, for defendant-respondent CBS Inc. (Pitney, Hardin, Kipp & Szuch, Morristown, attorneys; Clyde A. Szuch, Morristown, and Marc S. Klein on the brief; Anthony C. Caterino and Eric Jacobson of counsel).

Morton L. Ginsberg, Hackensack, for defendant-respondent Arco Publishing Co., Inc. (Morton L. Ginsberg on the brief).

Before Judges BISCHOFF, KING and POLOW.

The opinion of the court was delivered by

POLOW, J. A. D.

Plaintiff Dr. Herbert R. Axelrod, an author, appeals from dismissal of his claim for punitive damages for fraud allegedly committed by his publishers and from dismissal of all of his asserted claims against other defendants associated with publication of his work but with whom he had no direct contractual relationship.

Defendant Fawcett Publications, Inc. (Fawcett) printed and published a "How-To" series of books designed as aids in the pursuit of a variety of avocations. The "How-To" books are characteristically graphically illustrated with expanded captions for ease of reading. Defendant CBS Publications (CBS) has assumed all rights and obligations previously enjoyed or incurred by Fawcett.

Pursuant to a contract dated July 27, 1964, Fawcett agreed to publish a "How-To" book on tropical fish to be authored by Axelrod. It provided for payment to Axelrod of an advance royalty of $2,750 for the first 125,000 softcover copies sold and for percentage royalties on additional paperback sales. Fawcett was given exclusive rights to "publish or license" the book in the English language. Paragraph 5 of the contract is the core of the present controversy. It provides Should the publisher cause the book to be placed on sale in hardcover form, the Author will receive 50 per cent of all licensing or royalty fees when received by the Publisher. [Emphasis supplied]

Axelrod contends that at the time the contract was signed the primary interest was in paperback distribution. According to his testimony, Fawcett represented that even should it be published in hardcover, only a "few thousand [copies would be] put into a library binding" and he would then receive half of the anticipated 10% royalties. A library edition is prepared with a special hardcover to withstand repeated use of the book.

Axelrod alleges that he was never advised of a 1956 agreement between Fawcett and defendant Arco Publishing, Inc. (Arco), which permitted Arco to elect to print certain "How-To" books for sale in hardcover. A number of the "How-To" titles were eventually published in both soft and hardcover editions. The Arco-Fawcett contract required Arco to pay Fawcett an author's royalty fee plus a "usage charge" on each copy sold in hardcover. The usage charge reflected Arco's election to print its own books rather than buy "signatures" ¹ from Fawcett. The usage fee compensated Fawcett for the use of its "negatives and cellophanes." ²

In February 1965 Axelrod's tropical fish book was added to the list of "How-To" volumes to be published by Arco in hardcover. Arco paid Fawcett 14cents in royalties and 9cents in usage fees, for a total of 23cents per book sold, in addition to a flat fee of $300 when the book was first printed. Thereafter, Axelrod received hardcover royalties from Fawcett in the following amounts:

                October  1965     $203.00
                October  1966      117.74
                April    1967       72.52
                October  1967       33.88
                April    1968       67.83
                October  1968       67.76
                April    1969       67.83
                October  1969       30.38
                April    1979       34.58
                October  1970       20.23
                April    1971       11.76
                October  1971       22.40
                April    1972       30.94
                October  1972       33.32
                April    1973       27.02
                October  1973       42.49
                April    1974      118.72
                October  1974       35.14
                April    1975        7.63
                October  1975       27.30
                April    1976       29.47
                October  1976       27.93
                April    1977       14.91
                -------------------------
                         TOTAL  $1,144.78
                

Five or six years after the book was first published Axelrod became "annoyed at receiving very small checks" without sufficient explanation to permit him to "ascertain how many books were sold ...." He alleges that upon his inquiry Fawcett assured him that only 2,000 copies of the book were being hardbound. Frank Bowers, a representative of Fawcett who had handled Axelrod's royalties, testified that the royalty statements sent out periodically contained adequate information for Axelrod to compute the number of books sold. However, he did not remember whether he advised Axelrod of the precise number of sales. As of April 30, 1977, 16,354 hardcover copies had been sold and Arco had paid Fawcett $3,761.42, representing royalties of $2,289.56 and usage fees of $1,471.86. Axelrod had received a total of $1,144.78, a sum equal to half the total payments for "royalties" received by Fawcett from Arco for sales of the hardcover tropical fish book. The usage fees collected by Fawcett from Arco were neither reported to nor shared with Axelrod.

Axelrod felt he was being cheated. Although he disclaims any knowledge of the Arco-Fawcett arrangement when he originally contracted with Fawcett, a photocopy of the book cover in evidence reveals Arco's name imprinted thereon. Still, he insists that Fawcett initially represented to him that only 2,000 hardcover books would be printed and that when the contract with him was executed in 1964 Fawcett failed to reveal its 1956 arrangement with Arco. He views the "usage charge" as a sham to defraud him of his royalties. Furthermore, he claims that an inordinate number of books were damaged or given away in promotions and that more books were sold than represented by Arco. Although he concedes that based upon the limited anticipated hardcover sales he expected to realize only about $200 in resulting royalties, he nevertheless insists that he would never have entered into the contract with Fawcett had he known of its relationship with Arco.

Axelrod started suit on November 13, 1978, alleging breach of contract and fraud. There was considerable disagreement over the scope of discovery. Axelrod sought to obtain the names and addresses of other "How-To" authors in order to prove a massive conspiracy to defraud them all. His blanket request was denied but he was permitted to review all correspondence between defendants and six "How-To" authors.

Apparently, the authors of two volumes, including a husband and wife team, had filed and settled lawsuits against the publisher. Two others had expressed dissatisfaction with the amount of royalties received. There was no correspondence concerning another and the sixth was not mentioned. Although Axelrod was then permitted to contact all six authors, the result essentially verified the foregoing information.

Trial by jury commenced March 30, 1981, with plaintiff's case consuming six trial days. At the close of plaintiff's case defendants made various motions. Plaintiff's claim for compensatory damages based upon fraud in the annual royalty payments was held sufficient to go to the jury. However, the claims for fraudulent inducement to enter into the contract and for punitive damages were dismissed.

Thereupon, the remaining issue, compensatory damages against Fawcett and CBS, its successor in interest, was settled with prejudice. It was stipulated that plaintiff may proceed with his appeal of the issues on which the trial judge had ruled against him.

The substantive rulings were based upon New York law, and its applicability is not challenged on appeal. We thus assume the correctness of that uncontested determination although there is inadequate factual information in the appellate record for a definitive resolution thereof by this court.

The contract between Fawcett and Axelrod was signed in July 1964; the suit was instituted in November 1978. The parties agree that the applicable statute of limitations is that explained in Triangle Underwriters, Inc. v. Honeywell, Inc., 604 F.2d 737, (2 Cir. 1979).

We turn now to Triangle's claims which sound in fraud. The applicable statute of limitations under New York law is six years from commission of the fraud or two years from discovery whichever is longer. ³ [at 746]

Axelrod argues that the statute of limitations issue should have been decided by the jury, not the judge, and that in any event, suit was brought within two years of his "discovery" of the fraud. We reject both contentions.

In applying the law of a foreign jurisdiction to resolve an issue in this State, we are controlled by the law of the other state for substantive determinations only. For procedure, the law of this, the forum state, still controls.

Sound sense and practical reasons dictate that a suit on a foreign cause of action should be processed and tried according to the procedural rules of the forum state. It would be an impossible task for the court of such a state to conform to procedural methods and diversities of the state whose substantive law is to be applied. The determination of that law is a difficult enough burden to impose upon a foreign tribunal. [Heavner v. Uniroyal, Inc., 63 N.J. 130, 136, 305 A.2d 412 (1973) ]

See, also, Marshall v. Geo. M. Brewster & Son, Inc., 37 N.J. 176, 180, 180 A.2d 129 (1962); Light v. Granatell, 171 N.J.Super. 557, 563, 410 A.2d 266 (App.Div.1979).

Procedurally, applicability vel non of the statute of limitations is resolved in New Jersey by the judge rather than the jury. Heavner v. Uniroyal, Inc., supra at 135, 305 A.2d 412; Lopez v. Swyer, 62 N.J. 267, 300 A.2d 563 (1973).

We now hold that whenever a...