Artists Rights v. Smith

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 95-31091
Summary Calendar
_______________________
ARTISTS RIGHTS ENFORCEMENT CORPORATION,
Plaintiff-Counter Defendant - Appellee,
versus
HUEY P. SMITH,
Defendant,
MARGRETTE R. JAMES,
Defendant-Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Middle District of Louisiana
(92-CV-1073-A-M2)
_________________________________________________________________
June 28, 1996
Before JOLLY, JONES and STEWART, Circuit Judges.
PER CURIAM:*
Margrette James appeals the decision of the district
court annulling the transfer to her of rights to four songs written
by Huey “Piano” Smith. Finding no reversible error, we AFFIRM.
FACTS
*
Pursuant to Local Rule 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited circumstances
set forth in Local Rule 47.5.4.
The facts underlying this appeal have a long and detailed
history. Huey Smith has been a songwriter for many years. Four of
his most popular songs were released in the 1950's. These songs
are: “High Blood Pressure”, “Don’t You Just Know It”, “Rockin’
Pneumonia and Boogey Woogey Flu”, and “Sea Cruise” (“the Songs”).
In 1982, Artists Rights Enforcement Corporation (AREC)
contacted Smith informing him that AREC had located several sources
from which he was entitled to collect royalties. AREC offered its
services to collect those royalties. In March 1982, Smith and AREC
entered into an agreement wherein Smith agreed to pay AREC fifty
percent of all sums realized as a result of AREC’s collection
efforts on his behalf.
AREC then successfully procured royalties belonging to
Smith. Smith, however, eventually became dissatisfied with the
collection arrangement, and in May 1984, unilaterally terminated
the arrangement with AREC and instructed Cotillion Music, Inc., the
payor of royalties, to pay him directly. Cotillion Music complied
with Smith’s request, and AREC thereafter did not receive its share
of royalty payments.
AREC subsequently brought suit seeking payment. In March
1992, the district court found AREC entitled to
fifty percent (50%) of all songwriter royalties paid, and
which may become due and payable in the future, from all
present and future owners and holders of the copyrights
to the songs entitled “High Blood Pressure”, “Don’t You
Just Know It”, “Rockin’ Pneumonia and Boogey Woogey Flu”,
and “Sea Cruise” (“the Songs”), since the last payment of
songwriter royalties for the Songs to AREC.
2
Artists Rights Enforcement Corp. v. Smith, No. 89-723-A (M.D. La.
March 6, 1992). In an unpublished opinion, this court affirmed,
finding the terms of the Smith/AREC agreement clear, and that Smith
could not unilaterally terminate the agreement. Artists Rights
Enforcement Corp. v. Smith, No. 92-3307 (5th Cir. 1992).
Subsequently, the district court entered a supplemental money
judgment for AREC against Smith for the sum of $233,191.74.
Prior to the district court’s decision in March 1992, two
significant events occurred. First, in May 1990, Smith filed for
relief under Chapter 13 of the Bankruptcy Code.1 Second, on
December 21, 1991, Smith transferred and assigned to James, his
wife, all his rights to the Songs for the sum of $2,000.00. As a
result of this transfer, James received payment of Smith’s
royalties from Cotillion Music, the owner of the copyrights.
On December 14, 1992, AREC filed suit against James and
Smith seeking a judgment revoking the transfer and assignment made
by Smith to James. Smith and James answered the complaint and
asserted counterclaims. Following trial, for reasons assigned
orally, the district court rendered judgment for AREC annulling the
transfer and dismissing the counterclaims. James appeals.
DISCUSSION
Louisiana law provides that creditors are entitled to
annul particular acts of their obligors which cause or increase the
1
The bankruptcy proceeding was ultimately dismissed.
3
obligor’s insolvency. Article 2036 of the Louisiana Civil Code
provides:
An obligee has a right to annul an act of the obligor, or
the result of a failure to act of the obligor, made or
effected after the right of the obligee arose, that
causes or increases the obligor’s insolvency.
An obligor is determined to be insolvent “when the total of his
liabilities exceeds the total of his fairly appraised assets.” La.
Civ. Code Ann. art. 2037.
AREC was an obligee of Smith. La. Civ. Code Ann. art.
2036 comment (f)(“An obligee’s claim does not have to be liquidated
to judgment to be considered an anterior debt.”); see also Le
Premier Processors, Inc. v. United States, 775 F. Supp. 897, 907
(E.D. La. 1990)(obligee’s right need not be liquidated at time of
transfer); Thomassie v. Savoie, 581 So.2d 1031, 1035 (La. Ct. App.
1991)(judgment not required to bar finding that creditor injured);
Le Blanc v. American Employers Ins. Co., 364 So.2d 263, 266 (La.
Ct. App. 1978)(creditor as of date of accident, not suit). The
evidence at trial established that the assignment to James caused
or increased Smith’s insolvency. The district court correctly found
that AREC is entitled to annul the transfer from Smith to James.2
2
The counterclaim asserted against AREC sought to recover amounts
already received by AREC for its services on behalf of Smith. This court
previously concluded that pursuant to the Smith/AREC agreement, AREC was entitled
to half the sum realized as a result of its collection activities. Artists
Rights Enforcement Corp. v. Smith, No. 92-3307 (5th Cir. 1992). Res judicata
therefore bars this claim. Matter of Howe, 913 F.2d 1138, 1143-44 (5th Cir.
1990). The district court properly dismissed the counterclaim.
4
To the extent e understand James’s other complaints
against the verdict, they are meritless. She may not collaterally
attack the previous judgment in favor of AREC, and her observation
that Smith attempted to transfer “ownership of copyrights,” not
“right to royalties” seems to state a truism. That transfer was
properly annulled by the district court. The judgment in this case
is not intended, however, to decide the separate questions raised
by the pending interpleader action in New York.
CONCLUSION
For the foregoing reasons, the judgment of the district
court is AFFIRMED.
5