Behannesey v. Paton

SEAWELL, J.

This appeal is taken from a judgment entered against appellant on account of its obligations arising from the production of a motion picture. Judgment by default went against H. C. Maynard and Stuart Patón Pictures Company of Los Angeles. The appeal is prosecuted alone by Cinema Finance Corporation.

Stuart Patón Pictures Company of Los Angeles was an association of individuals consisting of Stuart Patón, H. C. Maynard, and W. G. Taylor. Cinema Finance Corporation was incorporated under the laws of the state of Delaware, engaged, apparently, in the business of distributing motion pictures to the trade. Prior to the execution of any of the contracts herein mentioned, Stuart Patón Pictures Company had entered into a contract with the Associated Exhibitors, Inc., the terms of which are not important, by which said Stuart Patón Company agreed to manufacture and deliver said motion picture for distribution. This contract, how

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ever, was reckoned with by the Stuart Baton Pictures Company and Cinema Finance Corporation in the contract entered into by them on May 14, 1925, which contract is of paramount importance in determining the rights of the parties to this appeal. All of the parties herein were engaged one way or another in the motion picture industry. Cinema Finance Corporation seems not to have been limited merely to furnishing financial assistance to producers of pictures and promoters of enterprises, but, according to a term selected by itself and inserted in its contract, it lent its “co-operation” as well as its financial assistance to the producers and manufacturers of motion pictures to whom it furnished money to accomplish or complete picture enterprises. The contract made by it indicates very clearly that it was more than a mere financial concern and that it entered into joint enterprises or ventures with producers, reserving unto itself almost absolute power in directing, supervising, and controlling the production and manufacture of pictures which it undertook to finance.

The estimate cost of producing the picture which forms the basis of this controversy was $60,000. Of this sum the Cinema Finance Corporation was “willing to advance $26,500” and the Stuart Baton Bictures Company was “willing to furnish the sum of $33,500,” said sums to be advanced by both parties during the course of production as the ratio of each party’s total advance bore to the total cost of production. As security for the repayment of all sums advanced by said Cinema Finance Corporation, together with interest thereon, it was agreed that said Stuart Baton Bictures Company assigned, transferred, mortgaged, and pledged unto said Cinema Finance Corporation all right, title and interest in and to all negatives and positive prints of every kind that might be made of said motion pictures, together with the right of possession. Every possible right or privilege that may have accrued to Stuart Baton Bictures Company by reason of its part in the production of said picture or its interest therein was covered by said assignment and mortgage. It was also provided in said contract that all contracts made or which might be made thereafter by said Stuart Baton Bictures Company “with actors, actresses and members of their staff in the production of