David Belasco Co. v. Klaw

These two cases were, by arrangement between counsel, tried together, upon the theory that the court would, by pursuing such a course, become informed fully of the facts involved in the entire controversy between the parties, and might be enabled more satisfactorily and within a briefer time to dispose of the issues, than the same results could be accomplished by separate trials. Both actions are founded upon articles of copartnership, and the relief prayed for in each is a dissolution and .an accounting. Those .written articles are subscribed by Joseph Brooks and David Belasco, and contain, among other things, the following recitals:

“Whereas, the parties hereto have agreed to become copartners exclusively and only for the special purpose, to wit, of organizing a theatrical company to manage the said Warfield and exploit him in plays that may be written for him. * * * Fourth. The company to be organized is to be advertised under the management of the party of the first part, and the bookings of the same shall be' attended to by the second party.”

In brief, Belasco was to advertise and manage the company to exploit Warfield in plays written for him and the bookings for the performances were to be attended to by Brooks. In action No. 1, Belasco, as plaintiff, seeks to hold defendants Klaw & Erlanger (third parties not mentioned in the written contract) as Brooks’ principals. So that we are confronted at the outset with the proposition, can parol evidence be considered to vary or contradict the written agreement? It is unquestionably the law that an agreement in writing, made by an agent in his own name, on behalf of an undisclosed principal, may, upon discovery, be enforced against the latter; and that parol evidence is competent to establish who the principal is. Briggs v. Partridge, 64 N. Y. 357 , 21 Am. Rep, 617 . The principál under such circumstances is held upon the maxim “respondeat superior.” This is, however, at the election of the other contracting party; for, otherwise, the agent may be held liable upon the writing. Higgins v. Senior, 8 M. & W. 834; Byington v. Simpson, 134 Mass. 169 , 45 Am. Rep. 314 ; Chandler v. Coe, 54 N. H. 561 ; Gates v. Brower, 9 N. Y. 205 , 59 Am. Dec. 530 . The reasons for this exception to the general rule of evidence rest upon grounds of public policy, for the encouragement of fair

“(1) The writing must not appear upon inspection to be a complete contract, embracing all the particulars necessary to make a perfect agreement and. designed to express the whole arrangement between the parties, for in such a case-it is conclusively presumed to embrace the entire contract. (2) The parol evidence must be consistent with and not contradictory of the written instrument.’,’

An examination of the cases relied upon to support the theory of the admissibility of parol evidénce to the issue at bar, satisfies me that they are all clearly distinguishable. In Coleman v. First Nat. Bank of Elmira, 53 N. Y. 388 , a depositor dealing at a bank was handed a.certificate of deposit by one of its officials, which paper the president of the bank, with whom the depositor was personally unacquainted, had signed in his individual instead of his official capacity; and this paper

In the second action (Brooks v. Belasco), it follows from my previous reasoning that it must be held that there was a copartnership; and, upon reading the written agreement, we find its object set forth: “To organize a theatrical company to manage Warfield and to exploit him in plays that may be written for him.” A contract theretofore entered into between, Belasco and Warfield (an actor) was assigned by the former to the new firm, and that copartnership assumed all the liabilities, and became entitled to all the profits, which might result from the common venture of organizing a theatrical company to manage and exploit the artist. “The profits and. losses to be equally divided.” In other words, each of the parties was entitled to receive 50 per cent, of the net profits. Royalties payable to authors, of plays were properly chargeable as an item of general expenses. Part of those royalties so charged, it is admitted, were retained by Belasco, individually; and he seeks to justify this retention by claiming that he was a collaborator in the literary work of the play entitled “The Auctioneer.” The evidence upon this point is far from satisfactory; and it would be-difficult to hold that he acquired, by a secret agreement with otfiers, an independent property right never openly asserted. While a person, as an individual, may, of course, deal with the partnership, still, for the reason of the conflicting interests of the partner so dealing, good faith, requires that it should be with knowledge and approval of his copartnership. “The relation between the partners is fiduciary, and the strictest good faith is required in their dealings with each other or. with the partnership interests.” Spears v. Willis, 151 N. Y. 452 , 45 N. E. 852 . “It is a violation of good faith for any partner, in conducting the partnership business, to stipulate clandestinely, with a third person for any private and selfish advantage and benefit to himself, exclusive of the partnership; for all partnership property and partnership contracts should be managed for. the equal benefit of all partners, according to their, respective interests and shares therein. If, therefore, any one partner should, so stipulate, clandestinely, for any private advantage or benefit to himself, to the

For. the reasons stated, judgment must be given for the defendants in action No. 1 and for the plaintiff in action No. 2. Settle decisions and judgments upon five days’ notice.

Judgment accordingly.