Universal Film Exchanges, Inc. v. Benbar Cinema Corp.

Irving H. Saypol, J.

Motion to confirm the report of a referee is consolidated for decision with motion numbered 99 of November 13, 1974 to reject the report.

The court directed the reference to hear and report as to the credibility of the defendant’s claim of inability to locate the records required to be produced by the plaintiffs’ notice and by order of this court.

This action was commenced to recover license fees in excess of those reported" and paid by the defendants due from the defendants for the leasing by them of the plaintiffs’ film for exhibition to the public. The documents which were not produced are the documents which prove actual attendance and box office receipts needed definitively to determine the fees due the plaintiffs.

The license agreements on which this action is based all provide that the plaintiffs shall have the right to examine these records and to audit the defendants’ admission and box office receipts. In 1972, prior to the commencement of this action, the plaintiffs requested such examination and audit. It was after the defendants’ refusal that this action was brought. The defendants’ chief executive officer has admitted that he saw the records requested in January of 1973, after the preaction audit demand, and that they were stored in a room on the defendants’ premises.

For this reason and based on the testimony adduced before the referee, the court is constrained to agree with the referee who heard the testimony. The defendants have wholly failed to explain or justify in any credible manner their failure to produce the records required by the agreement, the notice to produce and the order of this court. In these circumstances to permit the defendants so to frustrate the plaintiffs’ rights would frustrate too any opportunity for the plaintiffs ever to ensure that they get an "honest count” from their licensees.

The plaintiffs’ motion to confirm the referee’s report is granted and the cross motion to reject denied.

For failure to produce the records required the answers will be stricken and an inquest directed to determine the damages to be assessed.