Mallory v. Mackaye, 71

• Decision Date: 01 March 1899
• Docket Number: 72.,71
• Citation: 92 F. 749
• Parties: MALLORY v. MACKAYE et al. MACKAYE et al. v. MALLORY.
• Court: U.S. Court of Appeals — Second Circuit

92 F. 749

MALLORY v. MACKAYE et al.

MACKAYE et al. v. MALLORY.

Nos. 71, 72.

United States Court of Appeals, Second Circuit.

March 1, 1899

Lewis Cass Ledyard, for complainant.

E. W Tyler, for defendant.

Before WALLACE, LACOMBE and SHIPMAN, Circuit Judges.

WALLACE Circuit Judge.

By the decree appealed from, it was adjudged that Mallory, the appellant, was liable to account, and was indebted in a considerable sum, to the administratrix of Mackaye, under the sixth clause of the contract entered into between Mallory and Mackaye July 1, 1879. 86 F. 122.

By the contract, which was in writing and under seal, it was covenanted that Mackaye should devote the whole of his time and services, as author, manager, actor, and director, and in any other capacity having any connection with theatrical labor, to the employment of Mallory, and that the entire product of his intellectual and physical labor, together with all copyrights and patents which he might obtain, should belong absolutely to Mallory, and be his exclusive property. In consideration of the foregoing covenants, Mallory covenanted to pay to Mackaye, as full compensation for the services, copyrights, and inventions, an annual salary of $5,000, payable in equal monthly installments, and further covenanted that if, at any time, the profits resulting from the enterprises in which he should employ Mackaye should equal twice the amount, with interest, expended by Mallory he would at that time increase the annual salary of Mackaye by a sum which would be equal to one-fourth part of the net profits thereafter.

By the fifth clause of the contract the duration of the agreement was fixed for a period of 10 years from July 1, 1879, and it was provided that Mallory at the termination of any year during the continuance of the contract should have the privilege of terminating it. By the sixth clause Mallory covenanted that if the agreement should be terminated 'as herein provided for' after the total earnings from the enterprises should have amounted to a sum equal to the amount of money, with interest, expended in them by said Mallory and there should be any cash earnings or profits in excess of such expenditures, then Mallory would pay to Mackaye, for the termination of the agreement and the cessation of his salary under it, a sum equal to one-fourth part of the said surplus.

Acting under this contract, Mallory took a lease for the term of five years, with the privilege of another five years, of the Madison Square Theater, expended about $90,000 in improving and fitting up the building, and equipped and maintained a theatrical company to perform there, and a traveling company to perform in other cities and places; and Mackaye rewrote and copyrighted a play, perfected and patented an invention for a double stage, assigned the copyright and the patent to Mallory, and entered upon the management of the theatrical enterprises which the parties undertook. These theatrical ventures were at the outset unprofitable, and subjected Mallory to a loss of over $16,000. Then they became remunerative. Mackaye became dissatisfied, however; and in January, 1881, claiming that Mallory refused to exhibit accounts and had violated the contract, abandoned the employment of Mallory and, as he alleged in his cross bill, 'elected to treat the said contract as rescinded and abandoned, and as no longer obligatory upon him, and he so notified the said Mallory. ' Thereafter, on July 1, 1881, Mallory served upon Mackaye the following notice:

'Without prejudice to any rights I may have arising from any violation by you of any provision of the agreement hereinafter mentioned, I hereby notify you that I terminate the agreement between us dated July 1, 1879; the termination to take effect at the expiration of this day of the second year of the said agreement.'

By the decree of the court below it was adjudged that 'Mackaye had no right to rescind or attempt to rescind the contract, and his alleged rescission was without operation or effect as such. ' The decree also adjudged that by the notice served by Mallory on Mackaye July 1, 1881, the contract was terminated pursuant to its terms, that the rights of the parties thereunder became fixed pursuant to the sixth clause, and that Mackaye became entitled to receive from Mallory one-fourth of the cash earnings of the enterprises above the amount expended therein by Mallory.

The amount adjudged recoverable of Mallory was arrived at by deducting from the receipts of the theatrical enterprises the expenditures of Mallory, and charging him with the value of the theater lease, as an asset in his hands.

As this decree proceeded upon a cross bill, it is of no consequence that the controversy introduced by the cross bill was not of equitable...