Quader-Kino A.G. v. Nebenzal

• Decision Date: 02 May 1950
• Docket Number: QUADER-KINO
• Citation: 217 P.2d 650,35 Cal.2d 287
• Court: California Supreme Court
• Parties: , 85 U.S.P.Q. 320 A. G. v. NEBENZAL et al. L. A. 20897.

Page 650

217 P.2d 650

35 Cal.2d 287, 85 U.S.P.Q. 320

QUADER-KINO A. G. v. NEBENZAL et al.

L. A. 20897.

Supreme Court of California, in Bank.

May 2, 1950.

Herzbrun & Chantry and David Mellinkoff, Beverly Hills, for appellant.

Fred Horowitz, Los Angeles, for respondents.

SCHAUER, Justice.

In 1946 defendants began suit in a French court to prevent plaintiff from further exhibiting the French language motion picture 'Mayerling.' Plaintiff thereupon instituted this suit for an injunction against interference with exhibition of the picture and against prosecution of the French suit, and for damages; and from an adverse judgment has taken this appeal. We have concluded that the decision of the trial court (sitting without a jury) that plaintiff's right to exhibit the picture expired in October, 1945, and that plaintiff is entitled to no recovery in this suit, must be upheld.

Resolution of the controversy turns upon the interpretation, with the aid of parol evidence, of two written contracts entered into between the parties hereto in 1944. In the discussion which follows the evidence is viewed in the light most favorable to defendants (respondents), as is required on appeal.

Plaintiff is a corporation formed under the laws of Switzerland. Defendants are Seymour Nebenzal and Nero Films, Inc., a California corporation of which Nebenzal is a stockholder, a director, and the president; unless otherwise indicated, however, the desigation 'defendant' will hereinafter refer to Nebenzal only. Also, unless otherwise stated 'Mayerling' will refer to the French language picture involved in this litigation.

Nebenzal has been in the motion picture business in Germany, France and the United States for some twenty-five years. In 1935 he produced Mayerling in France for the Concordia Company, the stock of which was owned by Nebenzal, Emile Natan, and Chiel Weissman. The picture in the French language stars Charles Boyer Danielle Darrieux, and is 'the story of Crown Prince Rudolph of Austria who in 1889 committed suicide.' It is based approximately 95% upon historical matter in the public domain and upon 'certain features original to the script expressly written for the picture,' and 5% upon original material (hereinafter termed the 'Anet material') taken from a novel also entitled Mayerling, authored by the late Claude Anet. The Anet material was used pursuant to a five-year license (hereinafter termed the 'Anet rights'), due to expire in October, 1940, purchased from the author or his heirs. The picture was released in 1935 or 1936.

Thereafter Nebenzal disposed of his interest in the Concordia company, the company was liquidated, and plaintiff became the owner of Mayerling. In 1940 Natan secured an extension of the Anet rights for a five-year period expiring October 8, 1945; lacking those rights the picture could not be shown unless Anet material was eliminated. In 1942 Natan transferred his Anet rights to plaintiff.

In 1943 Nebenzal, then in America, inquired by mail of William M. Gruess, who was plaintiff's attorney-in-fact in New York, concerning possible acquisition of remake rights of Mayerling. After extended correspondence Gruess wrote Nebenzal in January, 1944, that he was authorized to sell the English language remake rights for $20,000, that the Anet rights were extended to October, 1945, and that plaintiff would agree to do its best to secure a further extension at Nebenzal's expense. In March, 1944, Gruess wrote Nebenzal that (because of the war) it was impossible to cable plaintiff in Switzerland or to have plaintiff contact the Anet heirs, as the territory was then occupied by the enemy. Because of the uncertainty as to 'when France would be liberated' and contact established with the Anet heirs Nebenzal informed Gruess that he wished to 'separate myself from' the Anet rights and would eliminate Anet material from the intended remake of Mayerling, thereby freeing himself from the necessity of securing an extension of the Anet rights in order to show the picture after October 1945, and that the new picture would be based solely on historical material and on material original to the script of the French Mayerling.

Thereafter by two contracts ¹ (hereinafter termed the 'main contract' and the 'option agreement') dated July 25, 1944, but not delivered or effective until September, 1944, when the cash price of $20,000 was paid, plaintiff (acting through Gruess) sold to Nebenzal all of plaintiff's rights to Mayerling, including remake rights in English, but excepting the Anet material and excepting plaintiff's right to exploit the French Mayerling; and also granted Nebenzal an option to purchase prior to July 8, 1945, plaintiff's Anet rights, and agreed to Nebenzal in obtaining at his own expense an extension of the Anet rights beyond their expiration date of October 8, 1945. These are the two contracts differing interpretations of which give rise to this litigation.

Nebenzal, who was not then seeking the Anet rights, did not request the option agreement and when it was presented to him personally by Gruess in New York on July 26 or 27, 1944, he pointed out to Gruess that 'I was not interested, for very good reasons, that is why I had them (Anet rights) eliminated from the main contract, in which he was willing to give them to me and I said I didn't want them. And he said '* * * it doesn't cost you anything, you might as well take them and if you want to take up the option you can take it up; if you don't have to, you don't have to.' * * * I said '* * * I have no intention of using the Claude Anet rights in the remake of the picture.' He insisted, however, it might be useful, so I signed it in view of the fact it was an option, it didn't mean anything to me. I had no intentions of picking up the option * * * (A)s it was an option, which I felt I could pick up or not pick up, I accepted * * *.' Nebenzal did not exercise the option and did not request plaintiff to secure an extension of the Anet rights. Subsequently Nebenzal contributed an additional sum of $7500 to obtain a release to himself of Mayerling from the United States office of Alien Property, which agency was then claiming title to the picture.

In September, 1944, one Marcel Hellman, of London, who was a friend of Nebenzal and of Natan, arrived in New York, where he learned of Nebenzal's intention to remake Mayerling. Hellman then proceeded to Hollywood, where in October, 1944, he and Nebenzal discussed Mayerling and the Anet rights. Nebenzal told Hellman of Nebenzal's acquisition from plaintiff of the remake rights to Mayerling and showed Hellman certain recitals set forth in the main agreement between plaintiff and Nebenzal stating that the Anet rights had been transferred to plaintiff for the period expiring October 8, 1945; and Hellman stated that he had negotiated through his lawyer in Paris for an option to himself acquire motion picture rights in the Anet material for a five or seven year term beyond October, 1945, as he also intended to remake Mayerling; Hellman's proposed option had no connection with the Anet rights formerly held by Natan, which expired in October, 1945. While Hellman was still in Los Angeles he promised to assign to Nebenzal without profit to himself, Hellman (i. e., at Hellman's cost price of between $1000 and $2000), the license for Anet rights beyond October, 1945, but stated that he wanted Nebenzal to pay an additional sum of money therefor to Natan, who 'was coming back from the wars'; after further discussion Nebenzal agreed to pay Hellman's costs and to give Natan $2000. Subsequently, while in New York en route to London, Hellman promised Nebenzal's lawyer to make the assignment of his Anet rights to Nebenzal 'without any benefit or profit' to Hellman as soon as Hellman reached London and 'received the documents.'

Hellman returned to Europe, learned that the Anet heirs had declined to grant the option he sought but instead wished to sell outright a license to use the Anet material for a fixed term. He and Natan thereupon purchased in Hellman's name, from the Anet heirs, for between $1500 and $3000, a license to use the Anet material for a period of ten years (to October 8, 1955), and (in about March, 1945) decided to ask Nebenzal $10,000 therefor. After some delay and objections to the price Nebenzal paid the $10,000 to Hellman's attorney in New York and on or about October 31, 1945, the assignment (dated July 9, 1945) of the Anet rights from Hellman to Nebenzal was consummated. Nebenzal, who had believed that he had acquired the Anet rights from Hellman in the fall of 1944, had informed plaintiff's agent Gruess of the fact as he believed it in the early spring of 1945.

In the spring of 1946 defendants 'heard' that Mayerling was being shown in France or Alsace Lorraine, and in the fall of that year they instituted suit in France to stop exhibition of the picture, on the theory that inasmuch as plaintiff's Anet license had expired and that all Anet rights to use such material in any motion picture for the ten year period had been independently acquired by defendants, plaintiff could no longer exhibit or 'exploit' the French language Mayerling. In July, 1947, plaintiffs filed this suit, the purpose of which is, as stated hereinabove, to enjoin defendants from interfering with exhibition of the French picture and from further prosecuting the suit in France, and to recover damages.

Plaintiff contends that under the provisions of paragraph numbered Fifth of the main agreement and that numbered Third in the option agreement it had the right, as against Nebenzal, to continue exploiting Mayerling. Plaintiff asserts in this connection that the option agreement describes 'the only manner in which the defendant Nebenzal might acquire the Anet rights,' and alleges that Nebenzal 'and his agents, servants, and employees * * * secretly, maliciously and fraudulently' acquired the Anet license without telling plaint...