Gruen Watch Co. v. Artists Alliance

• Decision Date: 12 September 1951
• Docket Number: No. 12528.,12528.
• Citation: 191 F.2d 700
• Parties: GRUEN WATCH CO. v. ARTISTS ALLIANCE, Inc. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

191 F.2d 700 (1951)

GRUEN WATCH CO. v. ARTISTS ALLIANCE, Inc. et al.

No. 12528.

United States Court of Appeals Ninth Circuit.

September 12, 1951.

Taft, Stettinius & Hollister, Cincinnati, Ohio, Gibson, Dunn & Crutcher, Henry F. Prince, Frederic H. Sturdy and Richard E. Davis, Los Angles, Cal., for appellant.

Mitchell, Silberberg & Knupp and Leonard A. Kaufman, Los Angeles, Cal., for appellees.

Before BIGGS, HEALY and BONE, Circuit Judges.

BIGGS, Circuit Judge.

The appeal at bar is from a final judgment entered on March 8, 1950, dismissing the plaintiff's (Gruen's) second amended and supplemental complaint on the ground that it failed to state a claim on which relief could be granted and from an order made concurrently striking portions of the complaint on motion of the producer defendants who will be referred to usually hereinafter as Cowan. Jurisdiction in the instant case is based on diversity and judisdictional amount, Gruen being an Ohio corporation and the defendants variously being either citizens of California or of New York.¹ Bulova Watch Company, Inc. (Bulova) has been also named as a party.

The second amended and supplemental complaint alleges the following: In May of 1948, Kline, a "public relations" man and an agent for Gruen, at Cowan's instance and request obtained an agreement from four advertisers represented by him for the use of displays and signs in a forthcoming motion picture, "Love Happy", to be produced by Cowan. Gruen was one of the four advertisers. Kline's letter of June 22, 1948, attached to the complaint as "Exhibit A", the terms of which were accepted by the producers, formed the basis of the contract. Most of the letter is pertinent and we quote it in its entirety:

"Walter E. Kline "Public Relations "Lester Cowan Productions "Gentlemen:

"In confirmation of our present understanding it is hereby agreed as follows:

"1. You have advised me of your plans and intentions to produce a feature length sound and talking motion picture presently entitled `Hearts and Diamonds subsequently named "Love Happy"' in which the Marx Brothers will be co-starred. You have further advised me that certain scenes and sequences in the picture will be devoted to the activities of one or more of the Marx Brothers in connection with various advertisings and displays.

"2. Pursuant to your request therefor I have obtained from the hereinafter specified advertisers agreements in connection with your use of their respective signs and displays. Such advertisers and their signs and displays are as follows:

"a. The General Petroleum Corporation whose advertising sign displays the `Flying Red Horse' in connection with its sale of Mobilgas.

"b. The Fisk Tire Company whose advertising sign displays a boy and a candle bearing the slogan `Time to Retire.'

"c. The Brown and Williamson Tobacco Corporation (Kool Cigarettes), Ted Bates Agency.

"d. The Gruen Watch Company.

"e. One or more other companies using advertising signs or displays which may hereafter be included in the terms of this agreement by our mutual written statement to that effect.

"3. You understand that some expense will be incurred by me or my principals in preparing for your use the above specified advertisements or displays. On behalf of my respective principals I am privileged to state that the cost of constructing such signs and displays which sic will be borne by my respective principals provided that their respective advertising signs and displays are included in the final version of your picture as released to the general public; and further provided that such picture is actually released to the general public not later than January 1, 1950.

"4. It is therefor sic understood and agreed that you will bear the cost incurred in connection with the construction and erection of any or all of such signs or displays which are not actually included in the picture substantially in the manner presently represented to you; it being further understood that you will bear the cost of all of such signs and displays if the said picture is not released to the general public prior to January 1, 1950. At your request, of course, we shall furnish you with an itemized statement of all costs so incurred.

"If the above is in accordance with your understanding of our agreement, please indicate the same by signing in the space provided therefor below.

"Very truly yours "(s) Walter E. Kline. "Approved and Accepted "Lester Cowan Productions (An Artist Alliance, Incorporated Production by Lester Cowan.) "By (s) Lester Cowan."

The second amended and supplemental complaint alleges that pursuant to the letter Gruen constructed a specially designed advertising display consisting of a very large neon-illuminated clock with the words, "Gruen Watch Time," at the top. The clock had a huge swinging pendulum and Harpo Marx swung from this in a Hollywood "chase" sequence; that Gruen's display was used by Cowan in filming the picture in August 1948; that in September and October 1948, Armstrong, Cowan's publicity director wrote Gruen sending it photographs of the action of the Gruen watch sign in the film and suggested that Gruen might desire to send watches to be displayed in connection with advertising the picture. The complaint alleges also that shortly thereafter and before the film was completed, Gruen gave permission to Cowan for the publication of an article entitled "Hairbreadth Harpo" with accompanying photographs in the February 7, 1949, issue of Life Magazine; that at about the same time Gruen released publicity material based on the film to jewelers' trade papers; that thereafter, on a date not set forth in the complaint, Cowan demanded that Gruen pay $25,000 to Cowan for the purpose of jointly advertising the motion picture and Gruen's watches; and that Gruen was advised by Cowan that unless the money was paid Cowan would remove the shots of Gruen's display from the film and substitute a sequence advertising the product of one of Gruen's competitors. The complaint goes on to allege that Gruen refused to comply and that Cowan, without authority from Gruen, altered the plaintiff's display by removing the name "Gruen" therefrom and substituting the name "Bulova" in its place, and that the motion picture was released to the public with the name "Bulova" substituted on the display in place of "Gruen". It is also alleged that Bulova consciously and maliciously interfered with and damaged Gruen's contract rights.

The complaint prays that Cowan be ordered to delete the name "Bulova" from the motion picture and to restore the name "Gruen" and that Cowan be enjoined permanently from including in the motion picture any shot of any display advertising in any way the product of Bulova, or of any other competitor of Gruen; that Bulova and its agents be enjoined permanently from advertising their products jointly with the motion picture and from using Gruen's display in the picture. Gruen also seeks both general and exemplary or punitive damages. Cowan and Bulova moved to dismiss the complaint and the court below, not being able to see any foundation for liability against either Cowan or Bulova, granted the motion. D.C., 89 F.Supp. 564. The appeal at bar followed.

The trial court construed paragraphs 3 and 4 of the letter agreement of June 22, 1948 as providing that Kline's principal, Gruen, would bear the cost of construction of the display, if it was included in the "final version" of the picture, but if the display was not included in the final version of the picture then Cowan should bear the cost of the construction of the display. According to the view of the court below, since Gruen's display was not included in the final version, Cowan's liability was limited to the reimbursement of Gruen for money expended by the latter in preparing the display. In short, the court below adhered very strictly to the terms of the letter of June 22, treating it as constituting the whole agreement between the parties and not subject to any variation or enlargement by parole evidence.

It appears from the allegations of the...