Webster's Red Seal Publications, Inc. v. Gilberton World-Wide Publications, Inc. , 415 N.Y.S.2d 229 ( 1979 )

Fein, J.

(dissenting in part). I agree with the majority in concluding that plaintiff is entitled under the May 1, 1963 letter-agreement to payment of $200 per issue for publications after June, 1973, when defendants discontinued payments to plaintiff. I am also in agreement that the judgment should be modified so as to dismiss the complaint as against the individual defendants, William E. Kanter and Penelope Kanter. However, I construe the agreements under the facts presented as entitling plaintiff to an accounting to recover 5 cents per copy for every copy in excess of 70,000 copies sold each month from the time defendants changed the cover price in 1970 to a price above 35 cents.

I concur with the majority that the two agreements are poorly drawn and ambiguous and hence there is a need to resort to extrinsic evidence to the extent necessary to construe the agreements properly so as to give effect to the intention of the parties. However, I disagree with the majority which gives effect only to the May 1, 1963 modification agreement and disregards entirely the prior April 6, 1962 agreement. Rather, a more practical construction, in my judgment, would,require giving effect to both agreements to the extent possible, by construing them together in order to determine the respective rights and obligations of the parties.

Implicit in the majority’s "practical construction” of the intention of the parties is that the later agreement terminated the earlier agreement, and that the 1962 agreement, which by its terms was to remain in effect for only five years, ended after that period of time. However, the actions of the parties acknowledge that the original licensing arrangement, although initially for a five-year term, was to extend beyond that initial period.

Moreover, the majority’s conclusion that plaintiff is only entitled to $200 per issue pursuant to paragraph 4 of the May 1, 1963 modification, the first $30,000 having been paid, completely ignores the testimony relating to defendant’s letter to plaintiff, dated March 7, 1963, proposing modification of the April 6, 1962 agreement. That proposal would have accomplished the result which the majority now holds the parties agreed upon in the May 1, 1963 modification. However, the testimony of Mr. Hill on behalf of the plaintiff and Mr. Kanter on behalf of the defendant is plainly to the effect that plaintiff refused to agree to the March 7, 1963 proposed modification. I am at a loss to see how any "practical construction” can find an agreement between the parties on the one thing they say they did not agree to. The May 1, 1963 modification was drawn and agreed to in order to overcome the plaintiff’s objection to defendant’s proposed limitation of $200 per issue after the $30,000 had been paid. This is the significance of paragraphs 2 and 3 of the May 1, 1963 modification which read as follows:

"(Par. 2): Further providing that the cover price remains 35ff the additional payment of 5# per copy for all copies in excess of 70,000 copies sold as set forth in said Paragraph 2 is cancelled.

"(Par. 3): If, however, the cover price of Webster’s Illustrated Crosswords is increased from 35^ the original terms set forth in the agreement of April 6,1962 shall be reinstated.”

On the face of the modification agreement and in the light of the testimony, the meaning of these sentences can only be that the provision of the April 6, 1962 agreement for payment of 5 cents per copy for all copies in excess of 70,000 copies was not to apply as long as the cover price remained 35 cents, but that the obligation to pay was to be reinstated if the cover price increased above 35 cents.

The record is clear that in 1970 the cover price was increased above 35 cents per copy. The majority holds that because the plaintiff failed to take any steps to obtain payment for the excess copies it waived or consented to the surrender of any rights to such payments. Although it may be difficult to believe that the plaintiff did not know of the price increase, there is no evidence that it knew or was ever furnished with an accounting as to the number of copies sold after the price increase. The suggestion that there was mutual acquiescence also overlooks the fact that it was not until March 26, 1974 that the defendant in writing took the position that its unilateral increase of the price above 35 cents reinstated the original agreement of April 6, 1962 in toto. It is plain that plaintiff never agreed to this. Moreover, both parties concurred in their testimony that the conclusion which the majority now reaches was not the agreement of the parties. In the face of the testimony and the agreements it is difficult to accept the notion that plaintiff agreed that defendant could terminate plaintiff’s right to the additional payment of 5 cents per copy by unilaterally increasing the price per copy.

Had the parties intended to relate the "additional” 5 cents per excess copy payment to the schedule of payments per issue under paragraph 1 of the 1963 agreement, they could have easily done so. Moreover, although the $1,000 and $500 per issue payments, provided for under paragraph 1 of the 1963 agreement, were only to be made until the sum of $30,000 had been paid, thereafter to be reduced to $200 per issue (pars 1 and 4 of the May 1, 1963 agreement), the 5 cents per excess copy provision is not similarly limited. There is no express provision terminating the 5 cents per excess copy payments required under paragraph 2, upon payment of the sum of $30,000 under paragraph 1. The only restriction which appears to have been imposed is to cancel such 5 cents per excess copy payment as long as the cover price of the magazine remained at 35 cents.

Accordingly, the judgment, Supreme Court, New York County (Sutton, J.), entered February 9, 1978, should be modified to the extent of directing that defendants pay to plaintiff $200 per issue for publications after June, 1973, rather than 1970 as provided for in the judgment, dismissing the complaint as against the individual defendants, William E. Kanter and Penelope Kanter, and otherwise affirmed.

Birns, J. P., and Sullivan, J., concur with Silverman, J.; Fein, J., dissents, in part, in an opinion.

Judgment, Supreme Court, New York County, entered February 9, 1978, modified, on the law and the facts, so as (a) to dismiss the complaint as against the individual defendants William E. Kanter and Penelope Kanter; (b) to strike the provision of the judgment for an accounting and for a payment to plaintiff of a royalty of 5 cents per copy; (c) to provide that plaintiff is entitled to a payment from defendant corporations of $200 per issue of the magazine published after June, 1973 rather than from 1970, as provided in the judgment with interest; and (d) the matter remanded to the Supreme Court, New York County, for assessment of the amount owed by the corporate defendants to plaintiff pursuant to (c) above (unless the parties can agree what that amount equals on the basis specified in [c] above, in which event, the amount may be stated in the order to be settled hereon); findings of fact inconsistent herewith are reversed and new findings made as indicated in the opinion; and the judgment otherwise affirmed, without costs and without disbursements on appeal, but costs of reproduction of the record are to be borne one half by the plaintiff and one half by the defendant corporations.

Settle order.