United Artists Corp. v. Strand Productions, 13631.
| Decision Date | 15 October 1954 |
| Docket Number | No. 13631.,13631. |
| Citation | 216 F.2d 305 |
| Parties | UNITED ARTISTS CORPORATION, Appellant, v. STRAND PRODUCTIONS, Inc., and Ressan Incorporated, Debtors, Appellees. STRAND PRODUCTIONS, Inc., and Ressan Incorporated, Debtors, Appellants, v. UNITED ARTISTS CORPORATION, Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Wright, Wright, Green & Wright, Loyd Wright and Charles A. Loring, Los Angeles, Cal., for appellant United Artists.
Reynolds, Painter & Cherniss, Louis Miller, Los Angeles, Cal., for appellant Strand Productions.
Before STEPHENS and CHAMBERS, Circuit Judges, and WALSH, District Judge.
The questions here arise out of two motion picture contracts bearing dates of March 18, 1948, and June 9, 1948, wherein United Artists Corporation, a Delaware company, is the distributor. Under one, James Nasser Productions, Inc., is the producer and under the other James Nasser individually is the producer.
Strand Productions, Inc., and Ressan, Incorporated, debtors, have succeeded to the Nasser interests. In all respects material to this cause, the substance of the contracts is identical.
Throughout this opinion, United Artists Corporation will be referred to as "United" or "the distributor." For discussion purposes, the original producers will be referred to as "Nasser" or "the producer." The debtors in bankruptcy (Chapter XI) will also be referred to as "the producer," "the debtor" and as "Strand." "Strand" will encompass both Strand Productions, Inc., and Ressan, Incorporated.
Each contract contains 39 printed pages plus several addenda pages. By the terms of the contracts, Nasser undertook to make four feature motion pictures and United agreed to distribute them. Apparently, United is a major distributor, but not a major producer. It restricts its business to distribution of pictures made by others. It is not doing violence to the contentions of either side to say that, at least by volume of content, the contracts concern themselves primarily with distribution of pictures for exhibition in motion picture theatres, containing a great mass of clauses concerning such distribution, evidently worked out and accumulated through the years. The television clauses of the contract are relatively short, but in them is the source of this litigation.
A table of pictures showing (a) the original contract name and (b) the name under which the picture was released, together with the release date, is as follows:
Name of Picture Date Released
1. a. Innocent Affair
b. Don't Trust Your
Husband October 15, 1948
2. a. Some Rain Must
Fall
b. Cover Up March 11, 1949
3. a. Joe Macbeth
b. Without Honor October 21, 1949
4. a. Caesar the Great
b. A Kiss for
Corliss November 29, 1949
A better understanding of the case may be gained if at the outset it is stated that at the time of the trial of the facts below it appears that the major motion picture producers, since the development of the television industry, have adopted a policy of not releasing to television their films originally or currently made for theatre exhibition, although about all have produced new films for television alone.
It seems that United, as a distributor, has attempted to follow, with a few exceptions, the practices of the major producers who ordinarily do their own distributing.1 Therefore, the television industry has been largely dependent, for film stories, upon old films not in the hands of United and the major producers, or upon new films produced exclusively for television.
It is evident that if the debtor Strand can get its four pictures free from the United contract, quick cash can be had from television exhibitors for its creditors.
Identical portions of the contract upon which this controversy turns are as follows:
The contract has bankruptcy clauses which need not be quoted for the reason that the distributor, United, is not bankrupt, and so far as the producer is concerned the clauses address themselves only to the situation of bankruptcy prior to the release of the film; that is, they are concerned with bankruptcy of the producer while he is producing the film.
The Strand-Ressan (herein called Strand) proceedings are under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq. Therefore, no trustee has been appointed.
Successive petitions in behalf of the debtor were filed before the referee in bankruptcy wherein relief was sought as against United. By the first petition, Strand sought a determination that the television rights (the right to sell the films to television broadcasters) were free and clear of the distribution contract and that United had no interest in the television rights. Under the second petition, Strand, upon the alternative assumption that the television rights were under the contract, sought to have United's rights for such distribution of the films terminated as wholly executory and as a severable portion of the contract. United opposed both petitions.
A hearing was held before the referee and a considerable volume of evidence, oral and documentary, received. The referee upheld the contentions of Strand upon both petitions. The district court at first reversed the referee on both petitions, holding for United. Upon reconsideration, the district court upheld the referee on the first petition, ruling that the bankrupt debtor was free to sell the films in the television market. However, the district court continued in force its ruling reversing the referee on the second petition, holding that the debtor was not entitled to treat the television provisions as separate, severable and terminable in bankruptcy proceedings as executory. Of course, the debtor did not need to succeed on both petitions to get the films on the television market. Success on one is enough.
United has appealed the district court's order on the first petition. Strand has cross-appealed the order against it on the second petition....
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