Opinion
5-18-1956
SUNSET SECURITIES COMPANY, a corporation, Plaintiff, Cross-Defendant and Appellant, v. COWARD McCANN, Inc., a corporation, Defendant, Cross-Complainant and Respondent.* Civ. 21254.
Samuel B. Stewart, San Francisco, Hugo A. Steinmeyer, W. H. Taylor, Jr., and Walter S. Peake, Los Angeles, for appellant. Sheppard, Mullin, Richter, Balthis & Hampton, and Frank Simpson, III, Los Angeles, for respondent.
SUNSET SECURITIES COMPANY, a corporation, Plaintiff, Cross-Defendant and Appellant,
v.
COWARD McCANN, Inc., a corporation, Defendant, Cross-Complainant and Respondent.*
May 18, 1956.
Rehearing Denied June 18, 1956.
Hearing Granted July 11, 1956.
Samuel B. Stewart, San Francisco, Hugo A. Steinmeyer, W. H. Taylor, Jr., and Walter S. Peake, Los Angeles, for appellant.
Sheppard, Mullin, Richter, Balthis & Hampton, and Frank Simpson, III, Los Angeles, for respondent.
SHINN, Presiding Justice.
This is an appeal from a judgment granting defendant's motion for summary judgment and denying a corresponding motion by plaintiff. Code Civ.Proc. § 437c. The judgment, inter alia, quiets defendant's title to the motion picture rights in and to a certain book published by defendant, subject to certain limited rights owned by plaintiff.
The facts, set forth in affidavits, which gave rise to the present controversy are as follows: In 1944, one Stoddart, author of a novel entitled Prelude to Night, assigned all his rights in the novel to defendant publishing company. This assignment included the right to sell the motion picture rights to Prelude to Night, subject to Stoddart's written consent, as well as the right to obtain a copyright of the book. The book was copyrighted by defendant in 1945. On February ruary 21, 1946, and with Stoddart's consent, defendant gave an option to American-International Picture Corporation to purchase the motion picture rights to the book upon the terms and conditions of an agreement whose crucial provisions will be next set forth: 'First: The owner does hereby give, grant, convey and assign unto the Purchaser, its successors, licensees and assigns, for a term of ten (10) years from and after the date hereof, the following rights in and to the property:
'(a) The sole and exclusive motion picture rights and motion picture copyright throughout the world in and to said Property. * * * * * *
'(c) The sole and exclusive right to make, produce, adapt, sell, lease, rent, exhibit, perform and generally deal in and with and to copyright motion picture, and televised motion picture adaptations or versions of said Property * * * and to register and obtain copyright therein, throughout the world.
'Eighth: In full consideration of the rights herein assigned and granted to the Purchaser by Owner, the Purchaser agrees to pay to the Owner the total sum of $10,000 upon the execution hereof, receipt of which sum is hereby acknowledged by the Owner. It is expressly agreed that upon the expiration of ten (10) years from and after the date of this agreement, all of the rights in and to the Property herein granted to Purchaser shall automatically revert to Owner unless Purchaser shall elect to pay to Owner on or before the expiration of said period of ten years, an additional sum of $25,000, in which event Purchaser shall acquire, absolutely and in perpetuity, all rights in and to the Property herein granted. It is within the contemplation of this agreement that the rights herein granted to Purchaser shall be for a limited term of ten (10) years and that Purchaser, at its option, shall have the right to acquire said rights forever upon the payment of said additional consideration to Owner for the expiration of said designated period.
'Ninth: This agreement shall bind and inure to the benefit of the parties hereto, their respective successors and assigns and the rights herein granted may be freely assigned in whole or in part by the Purchaser, its successors and assigns.'
American-International exercised its option on April 23, 1946 and purchased the above-mentioned rights according to the terms of the agreement. The sum of $25,000, however, has never been paid by anybody. A short-form assignment of these rights from defendant to American-International was executed on May 2, 1946 and recorded in the Copyright Office in August, 1947. Meanwhile, on August 1, 1946, American-International, by quitclaim assignment, assigned to Producing Artists, Inc., all of its right, title and interest in and to Prelude to Night and the various above-mentioned assignments and agreement. This quitclaim assignment was likewise recorded in August, 1947.
Between August 27 and October 29, 1947, the Bank of America loaned to Producing Artists, Inc., the sum of $810,000 for the production of a motion picture to be based on Prelude to Night. As security for its promissory note Producing Artists, Inc., gave the Bank a chattel mortgage, pledge and assignment of the motion picture and its rights thereto, which included a warranty by the mortgagor that it 'owns and will own the full, complete, and unimpaired title in and to the Picture, free and clear of any claims, rights, liens, or charges thereon * * *.' This mortgage was recorded.
Producing Artists, Inc., produced a film based on Prelude to Night, and copyrighted it in 1948 under the name Ruthless at a cost of $1,366,000. Unfortunately, public approval fell lamentably short of expectations. In December 1949, a supplemental chattel mortgage of the film's copyright was executed to the Bank, Producing Artists, Inc. defaulted on its loan; the Bank foreclosed its lien on the motion picture, the motion picture rights and the copyright of the film, and purchased the mortgaged property itself at a foreclosure sale in February, 1951. The Bank then assigned Ruthless and the bank's rights thereto to plaintiff the following month. Plaintiff had no knowledge of the assignments from Stoddart to defendant or of the agreement between defendant and American-International prior to the assignment from the Bank.
Plaintiff filed its action to quiet title to Ruthless, the copyright of Ruthless, the right to exploit Ruthless and all revenues, etc., to be obtained from the release, exhibition, distribution and exploitation of the film. Defendant cross-complained, seeking a declaration that defendant 'is the owner of the motion picture, television motion picture, publication, and incidental rights * * * in and to said literary composition' (i. e., Prelude to Night), subject only to the original agreement between defendant and American-International. The court refused to quiet plaintiff's title to Ruthless, but quieted defendant's title to 'the motion picture, television motion picture, publication, and incidental rights, including radio rights, throughout the world, in and to that certain literary composition entitled 'Prelude to Night' * * *' subject to the rights granted by defendant to American-International under the 1946 agreement, which rights are to terminate on May 2, 1956 (ten years from the date of the agreement) unless plaintiff pay the sum of $25,000 to defendant.
Since this appeal involves summary judgment procedure, it would be well, at the outset, to set forth some of the principles of law applicable thereto. 'The issue to be determined by the trial court in considering a motion for a summary judgment is whether plaintiff or defendant has presented any facts which give rise to a triable issue or defense, and not to pass upon or determine the issue itself. [Citing cases.] * * * An affidavit does not raise a triable issue of fact unless it states 'facts showing that the party has a good and substantial defense to the plaintiff's action * * * or that a good cause of action exists upon the merits.'' Schulze v. Schulze, 121 Cal.App.2d 75, 81, 262 P.2d 646, 649. The moving party's affidavits are to be strictly construed, and those of the opposing party are to be liberally construed, and the facts alleged in the affidavits of the party opposing the motion must be accepted as true. United States Fidelity & Guar. Co. v. Sullivan, 93 Cal.App.2d 559, 561, 209 P.2d 429. However, issue 'finding' rather than 'determination' of issues is 'the pivot upon which the summary judgment law turns.' Walsh v. Walsh, 18 Cal.2d 439, 441, 116 P.2d 62, 64, and cases therein cited. The only question which can arise on appeal from an order granting summary judgment is whether the court abused its discretion in so doing. Bank of America, etc., v. Oil Well Supply Co., 12 Cal.App.2d 265, 270, 55 P.2d 885. There is, however, no dispute as to the material facts involved in the instant appeal. Neither party raises the question whether the affidavits present a triable issue of fact. The determining issue is the proper construction to be placed on the agreement between defendant and American-International.
Defendant contends that the agreement (whose operative language we have already quoted) is effective as a contract of conditional sale of the motion picture rights to Prelude to Night, reserving title to the same in defendant until all the conditions of sale have been met: to-wit, the payment of $25,000 within the ten-year period therein specified. Defendant's theory is that it never parted with title to anything and, further, that absent payment of the added $25,000, all motion picture rights to Prelude to Night belong to defendant at the expiration of ten years, including the film and the right to exhibit the same, and that it is entitled to possession of the film as a concomitant to its right of exploitation.
We do not reach the question whether that portion of the judgment which quiets defendant's title to the motion picture rights to Prelude to Night is also sufficient to quiet defendant's title to the film Ruthless. . It may be noted that defendant sought to quiet title to motion picture 'rights' in the literary composition 'Prelude to Night' and that the judgment was in accord with this demand. That demand is now enlarged to include the film itself in the following manner: At the expiration of the 10-year period the motion picture rights will be restored to defendant, it may make and distribute motion pictures based upon 'Prelude to Night' and plaintiff may not; therefore defendant will have the exclusive right to exhibit 'Ruthless' and plaintiff will have no such right and, as a necessary sequence, the film, in a practical sense, will belong to defendant. We have concluded that defendant's interpretation of the agreement with American-International is not tenable and that plaintiff has good title to the film. In the first place, a conditional sale contract contemplates that possession of the property will be delivered to the purchaser while title to the property will be retained by the owner. Defendant's agreement conveyed to the latter certain intangible rights, viz., the right to make, exhibit, sell and copyright a motion picture, to American-International. It would strain common sense to maintain that the agreement transferred the right to make and copyright a motion picture, as it certainly did, and at the same time reserved the 'title' to the right to make and copyright the picture in defendant. In the second place, the film Ruthless was actually made and copyrighted within the ten-year period. The film is a separate entity from Prelude to Night. It may be separately copyrighted. 17 U.S.C.A. § 5(l). The agreement conveyed to American-International the right to copyright the film. As a copyright endures for twenty-eight years, exclusive of extensions, 17 U.S.C.A. § 24, defendant's contention that the copyright taken out on Ruthless would revert to defendant at the end of ten years is implausible. Furthermore, 'the copyright is distinct from the property in the material object copyrighted, and the sale or conveyance, by gift or otherwise, of the material object shall not of itself constitute a transfer of the copyright, nor shall the assignment of the copyright constitute a transfer of the title to the material object * * *.' 17 U.S.C.A. § 27. Therefore any claims which defendant might assert to the copyright of Ruthless would not embrace title to the film. In the third place, assuming that there was a reversion to defendant of the right to make a film from Prelude to Night after ten years, defendant would not be entitled to possession of the film made under the agreement. Only those rights could properly revert to defendant which were granted to American-International under the agreement. The agreement granted to the latter the motion picture rights and motion picture copyright to the novel, the right to reproduce the text of the novel in connection with a film based on the novel, the right to make, exhibit, deal in and copyright a film based on the novel, to make television adaptations of the novel, to use a musical score and songs in connection with the movie version, and to use part of the film or novel for advertising purposes. Not only did defendant not sell a film to American-International but nothing in the agreement suggests that the parties intended defendant to have any right, title or interest in and to any film made pursuant to the agreement. The film was actually made by the assignee of American-International. Any other interpretation of the agreement would result in a forfeiture to defendant, by third parties, of property which defendant did not sell and never owned.
It is clear, on the other hand, from a reading of the agreement, that the parties thereto intended to create a license, i. e., that American-International (or its successors) would have the right, for a period of ten years only, to make, sell, exhibit and copyright a film based on Prelude to Night, in return for the payment of $10,000; that unless a film were made, sold, exhibited and copyrighted within that ten-year period, the right so to do would revert to defendant unless such right were made perpetual by the payment of a further $25,000. As plaintiff concedes in his brief, the right to make additional films based on the novel reverts to defendant at the expiration of ten years. But since defendant originally conveyed only the right to make, copyright and exploit a film based on Prelude to Night, the rights in and to the film itself, together with the copyright to Ruthless and the right to exploit Ruthless remains in American-International and its successors without limitation as to time.
Plaintiff is entitled to a judgment quieting its title to the film Ruthless, to the copyright of Ruthless, and to all rights of exploitation of Ruthless.
The judgment is reversed, and the court is instructed to enter judgment in accordance with the views herein expressed.
VALLEE, J., concurs.
PARKER WOOD, J., did not participate. --------------- * Opinion vacated 306 P.2d 777.