before Stirling J., October 30 1896
Contract - Author and Publisher - Agreement by Limited Company to Publish - Copyright - Debenture-holder's Action against Company - Assignability of Agreement by Receiver
The rule that a publishing agreement between an author and an individual publisher or firm of individuals is of a personal nature, and that the benefit of the same cannot without the consent of the author be assigned, extends to such an agreement between an author and a limited company.
Consequently, where a publishing company became insolvent the Court restrained the receiver in a debenture-holder's action against the company from assigning the benefit of a publishing agreement without the consent of the author.
Motion for an injunction to restrain the defendants from selling or assigning or purporting to sell or assign, without the consent of the plaintiff, the benefits, rights, or interests alleged by the defendants to be vested in them, or one of them, in or under three several agreements in writing made between the plaintiff and the defendant company, the first of which agreements was contained in letters dated July 3, 1893, with reference to the printing and publication of a novel called "The Angel of the Revolution"; the second of which was dated August 8, 1894, with reference to the printing and publication of a novel called "Olga Romanoff; or the Syren of the Skies"; and the third of which was dated January 17, 1895, with reference to the printing and publication of a novel called "The Outlaws of the Air." The plaintiff was the author of the novels, which had appeared in serial form in Pearson's Weekly. By the agreements in question the defendant company undertook the publication of the respective novels upon equal sharing terms, the company to find the money, take all risk, and only charge actual out-of-pocket costs of printing and advertising, and to divide the profits with the plaintiff. The copyright in the works was to remain with Mr. Pearson and the plaintiff, but the defendant company were to have the sole right of producing the works in volume form subject to the agreements. The plaintiff had been induced to enter into the agreements by reason of the attractive style in which the defendant company had published a certain work, and also by the favourable impression made upon the plaintiff by the manager of the defendant company as being a man of business. For some time the defendant company published the novels under the terms of the agreements, and the books sold well until the defendant company became insolvent.
The defendant H. A. Moncrieff, who was on June 12, 1896, appointed receiver in a debenture-holder's action brought against the defendant company, intimated to the plaintiff that it was his intention to sell the whole of the assets of the defendant company in relation to his books, and claimed the right to do so on the ground that the benefits of the agreements had been assigned under the debentures.
Millar, Q.C., and T. B. Napier, for the plaintiff. - These agreements are of a personal nature, and the benefit of them cannot be assigned without the consent of the plaintiff - Hole v. Bradbury [1879] 48 L.J. Ch. 673; 12 Ch. D. 886, Stevens v. Benning [1855] 24 L.J. Ch. 153; 6 De G. M. & G. 223, and Reade v. Bentley [1858] 27 L.J. Ch.254; 4 K. & J. 656. [STIRLING, J. - Can the personal confidence reposed in a firm or an individual exist in the case of a company?] Yes; for the company may have a reputation to maintain, and its officers may inspire confidence. The defendant company did not appear. Graham Hastings, Q.C., and E. Ford, for the defendant Moncrieff. - The doctrine of the non-assignability of publishing agreements between individuals, as decided in the cited cases, cannot be applied to a limited company whose constitution may be altered, and whose officers may be removed or changed at any time. But even assuming that the agreements are not assignable, an injunction will be useless, as no right will pass by the assignment. Millar, Q.C., replied
STIRLING, J., after referring to the terms of the agreement as contained in the letters of July 3 and July 11, 1893, under which the Tower Company were to publish the first-mentioned novel, continued: That, I need not say, is a work which involves a discretion on the part of those who undertake it. Now, if this agreement, instead of being made with a limited company, had been entered into with a single individual or a partnership consisting of individuals, the cases are quite clear that the contract is of a personal nature, and on that ground is not assignable.
There were three authorities referred to in the course of the argument - Stevens v. Benning [1855] 24 L.J. Ch. 153; 6 De G. M. & G. 223, Reade v. Bentley [1858] 27 L.J. Ch.254; 4 K. & J. 656 and Hole v. Bradbury [1879] 48 L.J. Ch. 673; 12 Ch. D. 886. I do not go through them, but they seem to make it perfectly clear that agreements of this kind are not assignable. I would mention with reference to one point - namely, that the copyright was to remain with the plaintiff and Mr. Pearson subject to the rights of the company to produce the novels in volumes under the agreement - that seems at first sight to give something in the nature of copyright in the right of production in the volume works. That, however, simply amounts to a licence to produce the work for the purposes of the agreement. Similar agreements were entered into with reference to the other two novels. Unfortunately the Tower Company has become insolvent. It is unable to perform the agreements, and a receiver has been appointed. It is suggested that there is a difference between a company contractor and an individual contractor. It is said that although a contract of this nature entered into between an author and a publisher who is an individual or publishers who are a firm consisting of individuals, may not be assignable, yet a contract entered into with a limited company is assignable. I certainly should hesitate long before laying down any such law as that. If the contract is assignable, then it is not merely assignable in the case of a winding-up or liquidation, but must be assignable at any moment; and I think it would be startling to authors who have entered into agreements with publishers in the City of London who have recently been converted into limited companies, to be told that although the agreements they entered into were not to be assignable by the old firms who converted themselves into companies, yet they were assignable by the companies.
But in truth it seems to me that it would be pushing too far the doctrine as to the non-assignability of such agreements to say that it rests on the personal confidence placed in individuals. I cannot hold that the non-assignability of such agreements as this rests on the view that the contract is entered into with persons in whom the author has confidence. The author may have confidence in a limited company just as much as in a private individual. A limited company may have a reputation for producing books in a good style and form and in a mode to attract the attention of the public, and the author selecting such a company as publishers may very naturally do so in the reasonable expectation that the company, although its members and its officers may fluctuate, may nevertheless consider themselves under an obligation to maintain the reputation which they have acquired. In the present case what attracted the plaintiff to this company was the fact that they had published a novel in a form and style of which he approved. No doubt part of the inducement was that the company had a very efficient manager. It is said that the company might have discharged him the next day without giving the plaintiff cause for complaint. The observation is very well founded. They might have discharged the manager the next day, and new officers of the company might at any time be appointed; but I repeat that the plaintiff might well act on the presumption that the Tower Company, and those under its direction, would select a manager who would maintain the reputation of the company. It seems to me that I should be doing wrong if I drew any distinction in law in respect of an agreement made between an author and a private individual or firm on the one hand, and an agreement made between an author and an incorporated company on the other. If the former class of agreements are, as is well established, non-assignable, it seems to me that the latter class - those entered into with a limited company - are also non-assignable.
I therefore think that as regards this motion an injunction must go. It is quite true that the assignment might be ineffective, but nevertheless it might give rise to conflicts between the plaintiff and other persons who might become innocent assignees of the defendants, and so lead to further litigation.
Solicitors - Harrison & Davies, for the plaintiff; McKenna & Co., for the defendant Moncrieff.
Reported by W. A. G. Woods Esq., Barrister-at-Law.
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