General Overseas Corp. v. Republic Pictures Int. Corp.

• Decision Date: 19 November 1947
• Citation: 74 F. Supp. 698
• Parties: GENERAL OVERSEAS CORPORATION v. REPUBLIC PICTURES INTERNATIONAL CORPORATION.
• Court: U.S. District Court — Southern District of New York

74 F. Supp. 698

GENERAL OVERSEAS CORPORATION v. REPUBLIC PICTURES INTERNATIONAL CORPORATION.

District Court, S. D. New York.

November 19, 1947.

Phillips, Nizer, Benjamin & Krim, of New York City (Walter S. Beck and Leon Alexandroff, both of New York City, of counsel), for plaintiff.

Meyer H. Lavenstein, of New York City (John F. Caskey and Bertram H. Lebeis, both of New York City, of counsel), for defendant.

RIFKIND, District Judge.

This is an action by General Overseas Corporation against Republic Pictures International Corporation for breach of an oral contract whereby plaintiff was licensed to distribute some of defendant's motion pictures. The action, commenced in the New York Supreme Court, was removed to this Court on diversity grounds and has been tried without a jury.

Robert Haggiag, president of the plaintiff, had begun his business dealings with defendant in 1941, and by February, 1945, had successfully completed several contracts with the defendant. Among these was one for the distribution of certain motion pictures in French North Africa. Generally, the negotiations had been conducted between Haggiag and Morris Goodman, who was president and general foreign sales manager of defendant until July of 1945.

The plaintiff's version of the transaction in dispute is as follows:

Haggiag wished to arrange a deal for the distribution in France, Belgium and Luxembourg of certain motion pictures he already had under contract for North Africa. Part of the motivation was Haggiag's desire to make further use of films whose superimposed French titles he had paid for in connection with the North African deal.

Some days prior to February 21, 1945, Haggiag approached Goodman. After some negotiations, an agreement was reached on February 21, 1945. The main terms of this agreement provided that plaintiff was to have the exclusive right, for a period of five years, to distribute, exhibit and sub-license others to distribute and exhibit in the territories of France, Belgium, Luxembourg, and the city of Djibouti, thirty-two specified copyrighted motion pictures theretofore released by Republic Pictures Corporation (of which the defendant is a wholly-owned subsidiary). Some of the pictures were to be distributed also in the islands of Martinique and Guadeloupe.

The plaintiff agreed to pay for this license the sum of $70,000, payment to be made by depositing within 60 days, 3,500,000 francs in an account to be opened in defendant's name in the Paris branch of an American bank.

No mention was made at this meeting of indemnity in the event of the devaluation of the franc, nor of a personal guarantee by Haggiag. A memorandum, dated February 23, 1945, prepared and initialed by Goodman, and sent to defendant's legal department for preparation of a formal contract, accurately reflected the entire agreement, except that the license period was inaccurately stated to be four years instead of five. A few days after the main agreement was reached, Goodman called Haggiag to his office. At this meeting Goodman said that since the French Government forbade conversion of francs to dollars and remittance of the dollars to the United States, he thought he should be protected against a possible devaluation of the franc before conversion was permitted. Haggiag, because he thought the request reasonable, and because he wished to continue the profitable business association, agreed to grant Goodman a partial indemnity. After some bickering it was agreed that in case the value of the franc dropped, plaintiff, and Haggiag personally, were to indemnify defendant for the difference between the value of 3,500,000 francs and $70,000 in francs, and in no case was this indemnity to exceed 1,750,000 francs. It was also agreed that Haggiag was to guarantee payment.

After this meeting, Haggiag did not see Goodman until July, 1945, when Goodman had already left defendant's employ.

Haggiag left New York City about March 9, 1945. It was not until early April, upon his return, that he saw mail that had arrived on March 9th, the day of his departure — four copies of a contract, dated February 23, which had been prepared from Goodman's memorandum of the agreement, and four copies of a separate contract, dated February 26, which purported to embody the franc fluctuation agreement, accompanied by a transmittal letter dated March 8. In accordance with Haggiag's practice, he signed the contracts, nearly all the copies, without reading them. Haggiag then glanced at the contract dated February 23, noted that the term was incorrectly stated to be four years, put the papers down without reading them further, and telephoned defendant's office, notifying one of the officials of the error. He did not consult the papers again until after the error was rectified.

Defendant sent plaintiff four signed copies of an amendment dated April 5, 1945, changing the term from four to five years, along with a transmittal letter dated April 16, 1945. The first paragraph of the transmittal letter reads:

"Referring to contract of February 23, 1945, we attach hereto four copies of amendment dated April 5, 1945 changing the license period from four years to five years from date of contract."

The first paragraph of the enclosed April 5 amendment reads:

"Your signature under the words `Agreed To' below will constitute the following an agreement between us amending that certain agreement between us dated February 23, 1945, as amended by letter agreement dated February 26, 1945, as follows:"

Haggiag signed the April 5 amendment shortly after its receipt, then finally read the February 23rd and February 26th contracts. After perusal he discovered that the February 26th contract which granted the defendant the option of requiring, as an indemnity against franc fluctuation, payment up to 1,750,000 francs in France or $35,000 in New York, did not accord with his understanding of the indemnity agreement, and that the personal guarantee of payment in the February 23rd agreement seemed broader than the agreement itself. Accordingly he tore off his signatures on some copies, obliterated it on others, of the February 26th agreement and the February 23rd guarantee.

On May 1, 1945, Edward L. Becker, Goodman's assistant, wrote the following letter to Haggiag:

"Re: France and Belgium

"Dear Mr. Haggiag:

"We are waiting for the return of the signed contract and amendment granting distribution rights in the above territory.

"You recently advised us the signed agreement was being sent through but up to this time we have not received it."

This was followed by several telephone calls between Becker and Haggiag in which Haggiag informed defendant of his views on the fluctuation agreement. On May 15 the following letter was sent by Becker to Haggiag:

"Re: France and Belgium

"Dear Mr. Haggiag:

"Referring to contract of February 23rd and amendment of February 26th, which you state you are unable to sign because the amendment is not in accordance with your understanding or agreement, please note that I have put this up to Mr. Goodman who cables me that the memorandum to our legal department on which the amendment is based was the result of his conversation and understanding with you, and that you agreed to the stipulation contained therein.

"Mr. Goodman requests that you sign the contract and amendment as they are both in accordance with understanding arrived at between him and you.

"Please let us hear from you on this promptly."

There were more telephone calls, and on May 24th a letter was sent from plaintiff to defendant containing, in part, the following:

"With reference to your signed copies of the agreement sent us, we ask you to note that the guarantee contained therein does not conform to our agreement and definite understanding. The sole purpose of the guarantee was to assure you, in the event of a fluctuating currency, that you should be paid an additional amount up to 1,750,000 French francs, and it was agreed that Mr. Robert Haggiag would personally guarantee payment of such additional sum, in French francs. Mr. Haggiag is, and at all times, has been willing to sign such a guarantee when it is presented to him.

"As far as your letter of February 26th, 1945 is concerned, we shall again repeat that the sole purpose of the additional amendment was to protect you, in the event of fluctuation, to the extent of 1,750,000 French francs. At no time did we discuss any payment of dollars, and it was at all times understood that payment, in the event of fluctuation, would be made in French francs, in France, and limited to the outside sum of 1,750,000 francs.

"We hope that you will see the fairness and justice of our position, since the same is exactly as was agreed upon in our preliminary negotiations. We are ready to proceed with the contract as agreed and will sign any papers which conform to our agreement."

On June 1, 1945, the defendant sent the plaintiff a letter terminating all negotiations, naming as one of the reasons plaintiff's refusal to recognize and sign the contract and its amendments.

From April 9th, when an agent of Haggiag sent a check for 3,500,000 francs to the Paris branch of the Chase Bank, until June 1 when defendant cancelled its authorization to accept the deposit, negotiations for the deposit had been progressing, and, if not for the cancellation, in the opinion of Haggiag, would have culminated successfully.

Plaintiff founds his action on the oral contract. For compliance with the Statute of Frauds it relies on defendant's inter-office memorandum dated February 23, and the letter of transmittal, dated April 16. These writings contain no reference to currency-fluctuation.

Assuming the truth of plaintiff's version, as stated, plaintiff cannot recover.

In reaching this conclusion I do not rely on the failure of the parties to sign a formal contract. Previous agreements between the parties were eventually reduced to formal writings, and it was...