Uproar Co. v. National Broadcasting Co.

• Decision Date: 07 January 1936
• Docket Number: No. 3050.,3050.
• Citation: 81 F.2d 373
• Parties: UPROAR CO. v. NATIONAL BROADCASTING CO. et al.
• Court: U.S. Court of Appeals — First Circuit

81 F.2d 373 (1936)

UPROAR CO. v. NATIONAL BROADCASTING CO. et al.^*

No. 3050.

Circuit Court of Appeals, First Circuit.

January 7, 1936.

Israel Gorovitz, of Boston, Mass. (Arthur Berenson and Bernard Berenson, both of Boston, Mass., on the brief), for appellant.

Stuart C. Rand, of Boston, Mass. (Warren B. Manhard, of Boston, Mass., and A. L. Ashby and E. Stuart Sprague, both of New York City, on the brief), for National Broadcasting Co.

Melville F. Weston, of Boston, Mass. (Leland Powers and Powers & Hall, all of Boston, Mass., on the brief), for Texas Co.

Before MORTON, Circuit Judge, and MORRIS and McLELLAN, District Judges.

MORTON, Circuit Judge.

This is an action at law to recover damages for an alleged conspiracy between the defendants (1) to interfere maliciously with contracts made by the plaintiff with certain broadcasting concerns to advertise its pamphlets and books; (2) to prevent the printing and distribution of such pamphlets and books; and (3) to prevent the advertising of them over the radio. The alleged purpose of the conspiracy was to prevent the plaintiff from carrying out arrangements made between it, Ed Wynn, and Keenan Products, Inc., a corporation owning certain rights transferred to it by Wynn, for the advertising and selling of certain literary productions of Wynn. There is a second count alleging a conspiracy under the federal anti-trust laws to interfere with interstate communications.

The defendants pleaded equitable defenses. That of the Texas Company alleged, in substance, that the plaintiff had no such property rights in the productions of Wynn incorporated in the pamphlets and books as enabled it to maintain the action, and that its attempted advertising and sale of them was in violation of the defendants' rights. The prayer was for an injunction against any attempt on the part of the plaintiff to publish, advertise, or sell the literary productions in question. The answer of the National Broadcasting Company further alleged that the pamphlets and books published by the plaintiff made use of the name "Graham McNamee," in which the Broadcasting Company had exclusive rights. It prayed that such use might be enjoined. In the court below the equitable defenses were sustained, and the plaintiff has appealed.

The first question is whether any ground of equitable defense is pleaded; i. e., whether the defenses stated ought not to have been made in the action at law. Inasmuch as the plaintiff's conduct is alleged in the answers to have been illegal and tortious and an interference with the defendants' property rights, and as it is of such character as, by the settled practice in equity, will, if illegal, be enjoined, and as injunctions were prayed for, i. e., an affirmative relief not obtainable in the action at law, we think that the equitable defenses were properly pleaded and were properly heard in advance of the trial of the action at law. There is no question but what they related to the subject-matter of the plaintiff's action; indeed they go to the root of it. It is the practice in cases in which equitable defenses are properly pleaded in an action at law for the trial court first to determine the equitable issues, and, "Once having assumed jurisdiction, it the equity court will determine all rights, legal or equitable, which are necessary to settle the equitable issues." Wilson, J., People of Porto Rico v. Livingston, 47 F.(2d) 712, at page 721 (C.C.A.1). See, too, 28 U.S.C.A. § 398, Equity Rule 23, 28 U.S.C.A. following section 723, and Liberty Oil Co. v. Condon National Bank, 260 U.S. 235, 43 L.Ed. 118, 67 L.Ed. 232.

We come, therefore, to the merits of the controversy between the parties. The basic facts are not in dispute. The Texas Company is a large dealer in gasoline and related products. It made contracts with Ed Wynn, a well-known actor and comedian, to give a series of radio broadcasts in advertisement of its goods. The broadcasts were to be given weekly, and under the first contract Wynn was to be paid $5,000 for each one if he furnished the program for it, $3,500 if he did not. By other contracts the Texas Company arranged with the National Broadcasting Company for the use of its system for these broadcasts and for the services of Graham McNamee, a well-known speaker over the radio, who was under contract with the Broadcasting Company, whereby it was solely entitled to his services in broadcasting and to all public uses of his name. The arrangements between the various parties involved many details which were covered by the agreements, but which it is unnecessary to go into. The original contract between Wynn and the Texas Company was for thirteen performances; but by additional contracts and options, which were exercised, over fifty additional performances were arranged for on substantially the same terms, except that the later contracts did not contain the provision for reduction in compensation if Wynn did not furnish the programs. For the entire series Wynn received, if he furnished the programs, over $350,000. The script which Wynn prepared required a second speaker. McNamee took this role. The total expense to the Texas Company for each performance appears to have been about $13,000.

The performances were highly successful; Wynn's jokes and witticisms made a great hit with the public. He or his associates apparently conceived the idea that it would be profitable to realize on this good will by publishing his programs in pamphlet form immediately after they had been delivered over the radio. The plaintiff corporation, under arrangements with Wynn and with Keenan Products, Inc., and one Leavitt, who were interested in the copyrights or other phases of the matter, undertook to do this by a weekly pamphlet entitled "Uproar," which was sold for 10 cents per copy. The Uproar Company attempted to advertise this pamphlet over the radio shortly after the conclusion of the performance for the Texas Company, which was contained in the pamphlet, had been given.

The Texas Company objected to this on the ground that it owned the subject-matter of Wynn's broadcast for it and on the further ground that the publication of the pamphlets would injure the advertising value of the broadcasts. The National Broadcasting Company objected on the ground that the pamphlets used Graham McNamee's name, under the abbreviation "Graham," in violation of its rights. There is no doubt that the word "Graham" was used in the pamphlets, nor that it was there intended to refer to Graham McNamee, and was so understood by the public. As has been said, McNamee took part in the broadcasts.

The first question on the merits is whether the Texas Company acquired exclusive rights in the personal script prepared by Wynn for use in the broadcasts or whether that right remained in him. The District Judge was of opinion that these rights belonged to the Texas Company. As was said in a somewhat similar case, "It is a question of fact to be derived from all the circumstances of the case what is the nature of the contract entered into between the parties." Halsbury, L. C., in Lawrence & Bullen v. Aflalo, L.R., 1904 A.C. 17, at page 20.

The contracts, which are all in writing, make no explicit provision on this point. Under them, the Texas Company "hereby agrees to and hereby does employ the party of the second part (Wynn) as the principal featured star of a radio broadcast to be given for ____ consecutive weeks once a week for one-half hour beginning (date named) at a salary of ($5,000) per week for each and every week," etc. Wynn's obligation was "to render service as an artist," and to supply the necessary personal scripts for broadcasting over the radio, etc. "* * * He agrees to render such service to the best of his ability," and, in the later contracts, "in the manner as heretofore rendered." The first contract further provided: "6. It shall be the right of election of the party of the second part (Wynn) however to determine whether or not he will perform in full the services of supplying the program and arranging the same, subject to the supervision and approval of the party of the first part, which is a part of the duties the party of second part (Wynn) agrees to perform during the first thirteen weeks for same. * * *" "If he shall elect not to perform such services of supplying the program as herein recited, because of the fact that he shall be actively engaged in playing upon the speaking stage, then he shall receive the sum of $3,500 per week for each and every week that he shall broadcast in the optional period of said fifty-two weeks herein mentioned, but in that event he shall be known as the star and high-spot...