Television Arts Production, Inc. v. Jerry Fairbanks, Inc.

SHINN, P. J.

This is an action brought by Television Productions, Inc., against Jerry Fairbanks, Inc., National Broadcasting Company, Inc., corporations, and Consolidated Television Sales, a copartnership, composed of Hallett Manufacturing Company and KTTV, Inc., a corporation. The complaint prays for declaratory relief and for an accounting as to all the defendants and as against Jerry Fairbanks, Inc., for damages for breach of contract. Certain contracts are involved, all of which create rights and obligations as between the respective contracting parties in and to the ownership and use of certain motion picture films and a distribution of the proceeds from the exploitation and distribution of the same. The question on the appeal is whether the court was in error in striking out portions of a cross-complaint of National Broadcasting Company upon motion of defendants and

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cross-defendants, KTTV, Inc., and Hallett Manufacturing Company. The ground upon which the portions were stricken was that the matter therein alleged was not a proper subject of a cross-complaint. It will be developed in our discussion that the claims for reliéf asserted in the causes of action that were stricken were directly related to the transaction which is the subject matter of the action and that they should not have been stricken.

Although the several contracts to be examined employ the customary verbosity, a greatly abbreviated digest of the same will serve the purposes of this opinion. The names of the parties will likewise be abbreviated. Television made and sold to Fairbanks 65 short motion pictures, agreed to make 65 more, and sell the same to Fairbanks, and gave to the latter an option over a five-year period to call for and acquire additional pictures of the same kind, which it made to a total number of 195. Fairbanks agreed to advance certain sums of money, to exploit the pictures and, after deducting from the returns certain items of reimbursement, to hold in trust for Television and to pay over 50 per cent of the balance remaining. Fairbanks agreed that in contracting with any third party with respect to the films it would incorporate in its agreements the provisions of its agreement with Television that were designed to establish and protect the latter's rights, and it was agreed that no contract would be effective which did not contain such protective provisions. Television-Fairbanks contract provided that any contract made by Fairbanks with third parties under which he would retain a perpetual right to share in profits, would not operate as a sale, license or other disposition of the films and that all receipts thereunder should be accounted for by Fairbanks in accordance with its agreement with Television. It was alleged that Fairbanks entered into an agreement with National by which it purported to sell, transfer and assign to National all its right, title and interest in and to said television programs, which then numbered 195, but that the agreement contained no provision preserving the rights of Television under its contract nor any provision to hold any of the profits in trust for it; at the same time Fairbanks gave National an agreement of chattel mortgage-pledge and assignment which likewise contained no provision for the protection of plaintiff’s rights; National foreclosed the mortgage, purchased 195 filmed programs at foreclosure sale and