Paramount Film Distributing Corp. v. State

• Decision Date: 27 July 1971
• Docket Number: No. 45976,45976
• Citation: 324 N.Y.S.2d 363,37 A.D.2d 226
• Parties: PARAMOUNT FILM DISTRIBUTING CORP., Appellant-Respondent, v. STATE of New York, Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 363

324 N.Y.S.2d 363

37 A.D.2d 226

PARAMOUNT FILM DISTRIBUTING CORP., Appellant-Respondent, v. STATE of New York, Respondent-Appellant.

Claim No. 45976.

Supreme Court, Appellate Division, Third Department.

July 27, 1971.

E. Compton Timberlake, New York City (John R. Davison, Albany, of counsel), for appellant-respondent.

Louis J. Lefkowitz, Atty. Gen., Albany (Ruth Kessler Toch and Grace K. Banoff, Albany, of counsel), for respondent-appellant.

Before HERLIHY, P.J., and REYNOLDS, STALEY, SWEENEY and SIMONS, JJ.

REYNOLDS, Justice.

This is an appeal and cross appeal from a judgment of the Court of Claims in favor of appellant-respondent and an appeal by the State from an order of the Court of Claims, entered December 18, 1967, which vacated a subpoena Duces tecum.

Previously this court affirmed the denial of a motion to dismiss the instant claim for failure to state a cause of action and lateness (27 A.D.2d 420, 279 N.Y.S.2d 781). The dissenting members of this court would now reverse the judgment and dismiss the claim on the basis that the Court of Appeals' declaration of the unconstitutionality of the movie licensing provisions of the Education Law ( § 120, et seq.) in Matter of Trans-Lux Distr. Corp. v. Board of Regents of Univ. of State of N.Y., 16 N.Y.2d 710, 261 N.Y.S.2d 903, 209 N.E.2d 558, was not retroactive so that the license fees paid by the appellant-respondent were not illegally or wrongfully collected and are thus not now refundable. However, implicit in our former decision upholding the cause of action was a determination that the decision in Trans-Lux was to be applied retroactively. In our majority opinion upholding the cause of action we stated:

'It was only as an incidental happening when the entire statute was struck down that the fee payments also were voided. (27 A.D.2d at 424, 279 N.Y.S.2d at 784.)

and:

'To hold otherwise in a case such as the instant one would render a claimant's vindication of a constitutional right in substantial part a Pyrrhic victory.' (27 A.D.2d at 424, 279 N.Y.S.2d at 785.)

In fact the dissenting opinion in the prior appeal recognized that such a determination was implicit in our upholding of the cause of action (27 A.D.2d at 426, 279 N.Y.S.2d at 786) and attempted as here to refute it. Accordingly, we adhere to our prior determination and expressly hold that the decision of the Trans-Lux case should as a matter of policy upon the facts of this particular case be applied retroactively to permit a recovery by appellant-respondent. The cases cited by the dissent on this appeal are inapposite and not controlling here.

The trial court, however, awarded appellant-respondent only $29,297 of the total of $128,322.50 in fees paid because the appellant-respondent and its parent corporation, Paramount Pictures, ignored a clause in their contract that all licenses be issued in appellant's-respondent's name and instead took out a vast majority of the licenses in the name of Paramount Pictures. It is evident, however, that while separate corporate entities are involved, $128,322.50 in total fees were paid by appellant-respondent alone and that despite which corporation was issued the license, contractually all licenses were supposed to be exclusively in appellant's-respondent's name. Accordingly, we do not feel that a full recovery should on the instant record be denied on the basis solely of whether the licenses were granted in the name of the parent or appellant-respondent, its wholly owned subsidiary.

Finally, we find no merit in the State's argument that the subpoena Duces tecum was not properly vacated.

The judgment should be modified, on the law and the facts, so as to increase the award from $29,297 to $128,322.50, plus appropriate interest, and, as so modified, affirmed.

Judgment modified, on the law and the facts, so as to increase the award from $29,297 to $128,322.50, plus appropriate interest, and, as so modified, affirmed; order affirmed, with one bill of costs.

STALEY and SIMONS, JJ., concur.

HERLIHY, P.J., and SWEENEY, J., dissent, and vote to reverse and dismiss the claim, in an opinion per HERLIHY, P.J.

HERLIHY, Presiding Justice (dissenting).

This case was previously before this court upon an appeal from an order of the Court of Claims denying a motion by the State to dismiss the claim for failure to state a cause of action and reference should be made thereto for the history of the proceeding and the issues then raised. (See Paramount Film Distr. Corp. v. State of New York, 27 A.D.2d 420, 279 N.Y.S.2d 781.) Upon the prior appeal the issues concerned whether or not the payment of license fees without protest precluded recovery (cf. Mercury Mach. Importing Corp. v. City of New York, 3 N.Y.2d 418, 165 N.Y.S.2d 517, 144 N.E.2d 400; Adrico Realty Corp. v. City of New York, 250 N.Y. 29, 164 N.E. 732) and whether or not there had been a timely filing of the claim (cf. Guaranty Trust Co. of N.Y. v. State of New York, 299 N.Y. 295, 86 N.E.2d 754). In reaching the prior determination, the question of whether or not the declaration of unconstitutionality by the Court of Appeals, in a memorandum decision, (Matter of Trans-Lux Distr. Corp. v. Board of Regents of Univ. of State of N.Y., 16 N.Y.2d 710, 261 N.Y.S.2d 903, 209 N.E.2d 558) was retroactive so that the license fees paid by the claimant were illegally or wrongfully collected was not directly placed in issue or decided, although the matter was mentioned in the dissenting opinion (Paramount Film Distr. Corp. v. State of New York, Supra, 27 A.D.2d p. 426, 279 N.Y.S.2d p. 786.)

To put the matter in proper perspective on this appeal, I re-affirm my dissent as to the two issues that were argued and decided. I would further observe that as to the issue of the Statute of Limitations, and more particularly the availability of a forum, for Paramount to institute a proceeding, following enactment of the statute in 1921 or upon payment of any subsequent fee for a license, in addition to the authorities previously cited a recent decision of the Court of Appeals appears to further support the theory of the dissent (see Parrino et ano v. John V. Lindsay and others, 29 N.Y.2d 30, 323 N.Y.S.2d 689, 272 N.E.2d 67 (1971)). In our prior decision the majority stated 'the claimant alleges while theoretically a possibility (a proceeding in Supreme Court), as a practical matter (it) would not provide relief in most instances'. To accept such fallacious reasoning as a basis for excusing failure to commence an action is, in itself, legal error and establishes a precedent for which there is neither rhyme nor reason. The additional contention with reference to the time limitations to institute the filing of the claim within the Court of Claims must fall with the rest of the argument.

The State further contends that the determination of unconstitutionality by the Court of Appeals is not retroactive so as to permit the recovery of the license fees.

In the case of Great Northern Ry. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 364, 53 S.Ct. 145, 148, 77 L.Ed. 360, Justice Cardozo held:

'A state in defining the limits of adherence to precedent may make a choice for itself between the principle of a forward operation and that of relation backward. It may say that decisions of its highest court, though later overruled, are law none the less for intermediate transactions.'

In Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374, 60 S.Ct. 317, 318, 84 L.Ed. 329 the court stated:

'The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442, 6 S.Ct. 1121, 1125, 30 L.Ed. 178; Chicago, Indianapolis & Louisville Rwy. Co. v. Hackett, 228 U.S. 559, 566, 33 S.Ct. 581, 584, 57 L.Ed. 966. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects,--with respect to particular relations, individual and corporate, and particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among...