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Denker v. Twentieth Century-Fox Film Corp.

10 N.Y.2d 339 Court N.Y. Decision date 1961-11-30 English

Delivered by Fuld, J.

Contents

Majority

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Henry Denker, Appellant, v. Twentieth Century-Fox Film Corporation et al., Respondents.
Argued October 16, 1961;
decided November 30, 1961.
Harold J. Sherman for appellant.
I. Plaintiff’s first cause of action for rescissional and other equitable relief is sufficient in law. Plaintiff’s basic prima facie rights to rescissional and other equitable relief arise from the flagrant contractual breaches of defendant Fox, in wholly failing and deliberately and intentionally refusing in utter bad faith, in a period of more than five years, to exercise and make productive the film and other copyrighted rights granted to it in the basic contract at bar. (Wood v. Duff-Gordon, 222 N. Y, 88 ; Broadcast Music v. Taylor, 10 Misc 2d 9 ; Schisgall v. Fairchild Pubs., 207 Misc. 224 ; Reback v. Story Prods., 15 Misc 2d 681 , 9 AD 2d 880 ; Madison Pictures v. Pictorial Films, 6 Misc 2d 302 ; Martin v. Peyton, 246 N. Y. 213 ; Rubenstein v. Small, 273 App. Div. 102 ; Haley v.
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Commissioner of Internal Revenue, 203 F. 2d 815 .) II. Under governing canons of construction, and in the light of the entire basic contract and its purposes, the term “ contemplates ”, and the “ control ” language, as used in article “ Twelfth ”, are, as a matter of law, equitable with a definite intention and obligation of Fox to produce a motion picture with reasonable promptitude during the prescribed five-year period. (Becker v. Frasse & Co., 255 N. Y. 10 ; Halsted v. Globe Ind. Co., 258 N. Y. 176 ; Collins v. Central Trust Co., 133 Misc. 93 , 229 App. Div. 747 , 255 N Y. 590 ; Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519 ; Fleischman v. Furgueson, 223 N. Y. 235 ; Wigand v. Bachmann-Bechtel Brewing Co., 222 N. Y. 272 ; Du Pont de Nemours & Co. v. Claiborne-Reno Co., 64 F. 2d 224 .) III. As a matter of law, time of the essence permeates the motion picture producing and distributing obligations of defendant Fox. (Cheney v. Libby, 134 U. S. 68 ; Waterman v. Banks, 144 U. S. 394 ; Trainor Co. v. Amsinck & Co., 236 N. Y. 392 ; Mercantile Nat. Bank of N. Y. v. Heinze, 75 Misc. 551 ; Reback v. Story Prods., 15 Misc 2d 681 , 9 A D 2d 880 ; Mechanical Ice Tray Corp. v. General Motors Corp., 144 F. 2d 720 , 324 U. S. 844 .) IV. At the very least, upon the undisputed facts at bar, whether time is of the essence is determinable as an issue of fact by the trial court. (Trainor Co. v. Amsinck & Co., 236 N. Y. 392 ; Merrick v. New York Subways Adv. Co., 14 Misc 2d 456 ; Taylor v. Goelet, 208 N. Y. 253 ; Cleminger v. Baden Gas Co., 159 Pa. 16 .) V. As one of three co-owners, with each severally and independently holding the incorporeal rights in the literary works involved in the basic contract at bar, plaintiff, Denker, prima facie, in his representative capacity, as well as individually, has the right to maintain the first cause of action for rescissional and other equitable relief without the consent of his two co-owners, the Charles Oursler Estate and the Grace Oursler Estate. (Maurel v. Smith, 220 F. 195 ; Klein v. Beach, 232 F. 240 ; Nillson v. Lawrence, 148 App. Div. 678 ; Carter v. Bailey, 64 Me. 458 ; Marks Music Corp. v. Vogel Music Co., 42 F. Supp. 859 ; Vogel Music Co. v. Miller Music, 272 App. Div. 571 ; Marks Music Corp. v. Vogel Music Co., 140 F. 2d 266 ; Piantadosi v. Loew’s, Inc., 137 F. 2d 534 ; Matter of Robinson v. Hayes, 207 App. Div. 718 , 239 N. Y. 512 ; Dolman v. United States Trust Co. of N. Y., 2 N Y 2d 110 ; Callanan v. Keeseville, A. C. & L. C. R. R. Co., 199 N. Y.
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268 . ) VI. Important characteristics of rights in copyrights and literary properties, as distinguished from those in lands, support the maintenance of plaintiff’s action without the consent of the Oursler Estates. (Stevens v. Cady, 14 How. [55 U. S.] 528; Stevens v. Gladding, 17 How. [58 U. S.] 447; Carter v. Bailey, 64 Me. 458 .) VII. Paramount public interest and constitutional considerations favor the granting of rescissional and other equitable relief herein. (United States v. Associated Press, 52 F. Supp. 362 , 326 U. S. 1 ; Lovell v. Griffin, 303 U. S. 444 ; Martin v. Struthers, 319 U. S. 141 ; National Broadcasting Co. v. United States, 319 U. S. 190 ; White Bear Theatre Corf. v. State Theatre Corf., 129 F. 2d 600 ; United States v. Paramount Pictures, 334 U. S. 131 ; Burstyn, Inc., v. Wilson, 343 U. S. 495 .) VIII. The so-called “ indivisible covenant ” doctrine cases invoked by Fox and the Oursler Estates are distinguishable and inapplicable to the sui generis situation at bar. (Sun Oil Co. v. Oswell, 258 Ala. 326 ; Merriman v. Norman, 56 Tenn. 269 . ) IX. Assuming, arguendo, the refusal of the Oursler Estates to join as coplaintiffs in suing Fox for rescissional and other relief precludes maintenance of plaintiff’s first cause of action, in whole or in part, such refusal, substantively, is entirely defensive. Its establishment by proof showing that it is not motivated by bad faith or fraud, collusion and conspiracy with Fox or that it is not otherwise unreasonable, must await plenary trial. (Driver-Harris Co. v. Industrial Furnace Corp., 12 F. Supp. 918 ; Cahen v. Continental Life Ins. Co., 69 N. Y. 300 ; Williams v. Tilt, 36 N. Y. 319 ; Pomercmce v. Pomerance, 301 N. Y. 254 ; Andretto Bank v. Goodbody & Co., 20 Misc 2d 392 , 10 A D 2d 696 ; Maxwell v. County of Monroe, 264 App. Div. 820 .) X. Ulterior motive and mala fides underlie the refusal of the Oursler Estates to join with plaintiff in maintaining this action. (Oursler v. Armstrong, 8 A D 2d 194 , 6 N Y 2d 998 .) XI. Since plaintiff’s first cause of action for rescissional and other relief is founded solely on substantial contractual breaches of defendant Fox, going to the very root of the contract, plaintiff is not obliged to tender in his complaint the return of the monetary considerations received from defendant Fox. Tender at trial would suffice or it may be dispensed with altogether when, from the damages awarded to plaintiff, the moneys received from defendant Fox may be deducted. (De Mille Co.
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v. Casey, 121 Misc. 78 ; United States v. Blair, 193 F. 2d 557 ; Silverman v. Sunrise Pictures Corp., 273 F. 909 ; E. T. C. Corp. v. Title Guar. & Trust Co., 271 N. Y. 124 ; Kamerman v. Curtis, 285 N. Y. 221 ; Langdon v. Loup Riv. Pub. Power Dist., 139 Neb. 296 .)
Leo P. Larkin, Jr., Caesar L. Pitassy and Donald A. Krenz for Twentieth Century-Fox Film Corporation, respondent, and Woodson D. Scott and Edward P. Rogers for Albert L. Cole, executor of the estate of Charles F. Oursler, deceased, and April Oursler Armstrong and Charles Fulton Oursler, Jr., executors of the estate of Grace P. Oursler, deceased, respondents.
I. The allegations of Denker’s complaint respecting the provisions of the contract, to the extent that they vary from the contract itself, must be disregarded in determining this appeal, because the contract is properly before this court. (Mack, Miller Candle Co. v. Macmillan, Co., 239 App. Div. 738 , 266 N. Y. 489 ; Pletman v. Goldsoll, 264 App. Div. 393 .) II. Twentieth Century-Fox cannot have breached any fiduciary relationship with Denker since no such relationship exists. (Salter v. Ham, 31 N. Y. 321 ; Lese v. Lamprecht, 196 N. Y. 32 ; Matter of Loew's Buffalo Theatres, 233 N. Y. 495 ; Colonial Operating Corp. v. Hannan Sales & Serv., 265 App. Div. 411 ; Martin v. Peyton, 246 N. Y. 213 .) III. The first cause of action for rescission was properly dismissed by the Appellate Division on the ground that it is fatally defective on its face because the Ourslers oppose rescission and have not joined Denker in seeking such relief. (Piantadosi v. Loew’s, Inc., 137 F. 2d 534 ; Klein v. Beach, 232 F. 240 , 239 F. 108 ; Nillson v. Lawrence, 148 App. Div. 678 ; Sun Oil Co. v. Oswell, 258 Ala. 326 ; Union Gas & Oil Co. v. Gillem, 212 Ky. 293 ; La Fargue v. La Fargue, 210 Ark. 97 ; Silverman v. Sunrise Pictures Corp., 273 F. 909 ; Carter v. Bailey, 64 Me. 458 ; Howard v. Manning, 79 Okla. 165 ; Calvert v. Bradley, 57 U. S. 580 ; Fritz v. City Trust Co., 72 App. Div. 532 , 173 N. Y. 622 ; Matter of Campbell, 171 Misc. 750 , 261 App. Div. 899 ; Busse v. Schenck, 12 Daly 12 ; Russell v. Allen, 13 N. Y. 173 ; Davis v, Lottich, 46 N. Y. 393 ; Agricultural Credit Co. v. O’Rourke, 65 Mont. 517 ; Wright v. Bennett, 3 Barb. 451 ; Merriman v. Norman, 56 Tenn. 269 .) IV. The first cause of action of Denker’s complaint was properly dismissed because it is defee
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tive on its face for failure to allege tender or a willingness or ability to tender all or any part of the minimum royalty payment made by Twentieth Century-Fox to Denker and the Ourslers. (Kamerman v. Curtis, 285 N. Y. 221 ; Joslyn v. Empire State Degree of Honor, 145 App. Div. 14 , 204 N. Y. 621 ; Jaffe v. Jaffe, 283 App. Div. 738 ; Johnson v. Metropolitan Cas. Ins. Co. of N. Y., 258 App. Div. 775 .) V. Dismissal of Denker’s first cause of action should be affirmed since it is clear, as a matter of law, that Twentieth Century-Fox has not breached its contract with Denker and the Ourslers and since Denker does not properly allege the supposed breach. (Wright v. Fuel Oil Co., 342 Mo. 173 ; Read v. Fox, 119 App. Div. 366 ; Pink v. American Sur. Co., 283 N. Y. 290 ; Hopper v. Sage, 112 N. Y. 530 ; Walls v. Bailey, 49 N. Y. 464 ; Heller & Henretig v. 3620-168th St., 302 N. Y. 326 ; Friedman v. Handelman, 300 N. Y. 188 .) VI. Allegations of fraud, conspiracy and collusion made for the first time in appellant’s brief and not pleaded in the complaint must be disregarded by this court. (Crossways Apts. Corp. v. Amante, 213 App. Div. 430 ; Pocono Forestry Corp. v. Price, 273 App. Div. 812 ; Stevenson v. News Syndicate Co., 302 N. Y. 81 .) VII. Denker’s reference to Oursler v. Armstrong is inappropriate, improper and must be disregarded. (Oursler v. Armstrong, 8 A D 2d 194 , 6 N Y 2d 998 .)

Charles Fulton Oursler wrote ‘ ‘ The Greatest Story Ever Told” and copyrighted the work. Upon his death in 1952, the copyright passed to his estate. Henry Denker collaborated with Oursler and, after the latter’s death, with his widow in the writing of certain radio and television scripts, stage plays and motion pictures, all involving the same subject matter and bearing the same title as the original work. Some of the copyrights were owned jointly by Denker and Fulton Oursler, and others by Denker and Mrs. Oursler.

In June of 1954, Denker, Mrs. Oursler (who has since died) and Fulton Oursler’s Estate entered into an agreement with Twentieth Century-Fox, pursuant to which they granted the latter exclusive motion picture and other rights in and to the above-mentioned properties. In return, Fox agreed that Denker and the Ourslers (Mrs. Oursler and the Estate of Fulton Oursler) were to receive 11% of the net profits derived from

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the picture. In addition, the agreement called for advance payments of $110,000 over a three-year period, and that amount has been paid by Fox.

Although the contract did not in so many words provide that Fox should finish or produce the picture by any particular date, it did contain, in its “ Twelfth” paragraph, the following language : ‘1 Purchaser contemplates that pre-production work on a motion picture based on the Property should be commenced within one (1) year after the date hereof and that photography of such motion picture should be completed within five (5) years from the date hereof. It is expressly understood, however, that Purchaser shall have sole and complete control over the exercise of all rights acquired by Purchaser under this agreement * * * and all matters and things in connection therewith shall be determined by or with the authority of Purchaser in its absolute and sole discretion.” In September, 1959, Denker, claiming that Fox had materially breached the contract by not producing the picture within five years, brought the present suit. The complaint contains two causes of action, one for rescission and the other for damages. The Oursler Estates are joined as defendants on the ground that they refused the plaintiff’s request to associate themselves with him in bringing suit.

After answers had been served, Fox moved, pursuant to rules 106 and 112 of the Rules of Civil Practice, for dismissal of both causes of action and the executors of the Oursler Estates joined in such application.

The court at Special Term denied the motion in its entirety; the Appellate Division modified the resulting order and directed dismissal of the first cause of action, the one for rescission. Since it is the plaintiff alone who appeals from the Appellate Division’s disposition, we are not, of course, concerned with the cause of action for damages.

There is no doubt that the plaintiff and the Oursler Estates are co-owners of copyrighted material and, as such, are to be considered tenants in common. (See Noble v. Van Nostrand Co., 128 U S P Q 100 , 103 et seq.; see, also, Amdur, Copyright Law and Practice [1936], p. 616.) Either Denker or one óf the Ourslers had the power, acting alone, to grant nonexclusive motion picture rights to third persons (see Nillson v. Lawrence, 148 App. Div. 678 ; Klein v. Beach, 232 F. 240 ,

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247, affd. 239 F. 108 [2d Cir.]; see, also, Kupferman, Copyright— Co-Owners, 19 St. Johns L. Rev. 95, 100-101), but it is clear that exclusive rights to a copyright may be effected only by a grant in which all of the co-owners join. (Cf. Taubman, Joint Authorship and Co-Ownership in American Copyright Law, 31 N. Y. U. L. Rev. 1246 ,1258.)

In the present case, as already remarked, all three co-owners joined in granting exclusive rights to Fox. Even assuming, therefore, that the agreement obligated the latter to produce the motion picture within a specified time and that it had breached its obligation, the plaintiff alone would not be able to procure a rescission of the contract. The applicable rule has been well stated by Black in his work on Rescission: “ where several persons are arrayed on the same side of a transaction— as joint contractors, joint purchasers, or joint vendors * * * one of them alone cannot repudiate or terminate the contract, or obtain its rescission, without the consent or against the objections of the others. Thus one joint and several obligor cannot rescind an agreement whereby both are discharged from liability on the obligation, and thereby bind his co-obligor, if the latter does not consent to the rescission.” (3 Black, Rescission and Cancellation [2d ed., 1929], p. 1362; see, also, Sun Oil Co. v. Oswell, 258 Ala. 326 ; La Fargue v. La Fargue, 210 Ark. 97 ; Union Gas & Oil Co. v. Gillem, 212 Ky. 293 , 298; Merriman v. Norman, 56 Tenn. 269 , 274-275.)

Nor may the plaintiff succeed in defeating the motion to dismiss the complaint on the theory that he is entitled to a rescission as to his interest alone. If he were permitted to have a partial rescission, he would reacquire (what he had before the contract was executed) a right to grant a nonexclusive license to produce the picture. This would mean that Fox would have, in place of the exclusive license granted by Denker and the Ourslers, only a nonexclusive license. Quite obviously, if this were to be allowed, the position of both Fox and the Ourslers would be significantly altered. In the production of motion pictures, novelty of approach and presentation are of vital importance. Since “ The Greatest Story Ever Told” is based on the Bible, its factual content is in the public domain and the primary commercial value of the film rights lies in the treatment of the biblical material and in the title of the copy

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righted work. It is reasonable to assume that Fox would not have made the substantial investment necessary to produce and promote such a picture if another producer could lawfully release a picture dealing with the same subject and bearing an identical title.

In sum, then, since it required the joint action of Denker and the Ourslers to effect a grant of the exclusive motion picture rights, it would require similiar joint action to undo what was done and obtain rescission of the contract.

One further point deserves mention. In his brief, the plaintiff charges that the Ourslers are guilty of bad faith in refusing to join with him in bringing this action and that, even if he would not ordinarily be permitted to obtain rescission without the assent of the other co-owners of the copyrights, their refusal justifies his proceeding alone. The presence of fraud or bad faith may well enlarge the right of one of several co-parties to a contract to act alone and procure a rescission. However, we need not now concern ourselves with this problem in view of the fact that the complaint before us simply alleges that the Ourslers “ refused ” to accede to the plaintiff’s request that they join with him in bringing the suit. There is no word or suggestion in the complaint of wrongdoing or bad faith on the part of the Ourslers. Since, at the very least, such conduct is a prerequisite to the maintenance of this suit by Denker individually, he necessarily has the burden of pleading and proving it. • (See, e.g., Lent v. New York & Mass. Ry. Co., 130 N. Y. 504 , 510; Crossways Apts. Corp. v. Amante, 213 App. Div. 430 , 436-438.)

In the view we have taken, it is unnecessary to consider the other arguments advanced by the defendants.

The judgment appealed from should be affirmed, with costs.

Chief Judge Desmond and Judges Dye, Froessel, Van Voorhis, Burke and Foster concur.

Judgment affirmed.

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