Appeal from the District Court of the United States for the Southern District of New York.
Before AUGUSTUS N. HAND, CLARK, and FRANK, Circuit Judges.
We are presented with a question of statutory construction which has apparently never arisen before, though the general statutory provision has existed for over a hundred years. Simply stated, the problem is whether or not a copyright holder may assign his expectancy of the renewal right which arises under 17 U.S.C.A. § 23 at the expiration of the original twenty-eight year copyright grant. The district court upheld the validity of the assignment. 38 F.Supp. 72. This was in accordance with a strong dictum of this court in the case of Tobani v. Carl fischer, Inc., 2 Cir., 98 F.2d 57, 60, certiorari denied 305 U.S. 650, 59 S. Ct. 243, 83 L. Ed. 420. We think it interpreted the law correctly.
The question arose in connection with the renewal of the copyright on the song "When Irish Eyes Are Smiling." One of the dlefendants, George Graff, Jr., collaborated in the writing of this song in 1912, at which time he was acting under a general agreement to assign all copyrights to the plaintiff, M. Witmark & Sons, with a reservation of royalties. Five years later, Graff has stated, he was in financial difficulties; at any rate he then entered into a second agreement with the plaintiff by which for the consideration of $1,600 he released all his royalties on some sixtynine songs, including "When Irish Eyes Are Smiling," and also made a further assignment of the renewal rights. This further assignment purported to bind Graff and his "heirs, executors, administrators and next of kin," and granted an irrevocable power of attorney to plaintiff to execute in Graff's name or that of his heirs, etc., all documents necessary to secure the renewal of the copyright and all rights therein for the term of the renewal. That is, the assignment was supported by the traditional power of attorney to enforce its terms, which has historically been the bridge whereby assignments anciently not recognized "at law" were actually made effective according to the intent of the parties. Cook, The Alienability of Choses in Action, 29 Harv.L.Rev. 816, 822, 824; Ames, Lectures on Legal History, 213, 214; 34 Yale L.J. 409; In re Barnett, 2 Cir., 124 F.2d 1005, 1008. This agreement, dated May 19, 1917, was duly recorded in the Copyright Office on November 19, 1935.
On August 12, 1939, the first day of the twenty-eighth year of the copyright in question - renewals must be applied for within that year - plaintiff entered an application for renewal in Graff's name, registered the renewal in Graff's name, assigned the renewal copyright to itself, and recorded the assignment. Eleven days later Graff applied for his renewal and assigned this renewal to defendant Fred Fisher Music Co.*fn1 When Fisher threatened to publish the song, the plaintiff instituted this action asking for an injunction, accounting, and damages, and moved for an injunction pendente lite. On the grounds that the assignment was valid, the motion was granted below and this appeal followed.
We start with the statute. It says that "the author * * * if still living, or the widow, widower, or children of the author, if the author be not living, or if such author, widow, widower, or children be not living, then the author's executors, or in the absence of a will, his next of kin shall be entitled to a renewal and extension of the copyright * * * for a further term of twentyh-eight years when application for such renewal and extension shall have been made * * * within one year prior to the expiration of the original term of copyright." 17 U.S.C.A. § 23. It is conceded by all concerned that this creates only an expectancy, and that in any event the author must be alive on the first day of the twenty-eighth year in order to obtain a renewal. An assignment of this expectancy likewise must rest also on survival. It is also apparent that the assignment here would not have cut off the rights of renewal extended to the widow, children, executors, or next of kin, in the event of Graff's death prior to the renewal period. See Fox Film Corp. v. Knowles, 261 U.S. 326, 43 S. Ct. 365, 67 L. Ed. 680. The only contested point is whether or not the statute absolutely forbids assignment. Certainly the passage does not say it does. There are no words that an assignment "shall be void and of no effect," as, for example, in 38 U.S.C.A. § 129, dealing with the pleldge or transfer of a pension. If we had no more than the words of the statute to go on, we could hardly find in that a restraint on freedom of Assignment.
Reliance is had, however, upon the statutory history. The Copyright Act of 1790 said that the "exclusive right shall be continued to [the author] * * * executors, administrators or assigns." 1 Stat. 124. In 1831, the Act was amended; and in changing the renewal provision to approximately its present form, the words "executors, administrators or assigns" dropped out.4 Stat. 436. This, we are told, indicates that assignments are not tolerated.*fn2 But it may just as well be argued that the statute sought only to prevent an assignment that would cut off the widow's and children's rights in case the author died; or that congress intended only the author and his family to be able to get a renewal, and thus "executors, administrators" went out along with "or assigns"; or, as said in White-Smith Music Pub. Co. v. Goff, 1 Cir., 187 F. 247, 250, that Congress enacted "an entirely new policy, completely dissevering the title, breaking up the continuance in a proper sense of the word, whatever terms might be used, and vesting an absolutely new title eo nomine in the persons designated." All that this says, however, is that assignment of copyright is not assignment of renewal; that renewal is an expectancy, not a present right. It does not express a public policy against disposal of the possibility of renewal. We cannot find a policy of "void and of no effect" in this change. Nor do the Goff case and others like it express such a policy. At most they indicate that an assignment would have to be like the one in this case to be effective. And since the issue was not present in those cases, it was not passed upon. See Fox Film Corp. v. Knowles, supra; Silverman v. Sunrise Pictures Corp., 2 Cir., 273 F. 909 ,19 A.L.R. 289, certiorari denied 262 U.S. 758, 43 S. Ct. 705, 67 L. Ed. 1219.
More to the point is the Congressional Report on the Act of March 4, 1909, which is the present statute, 17 U.S.C.A. § 23 - except for a slight textual change of 1940, here immaterial. The committee was supporting the decision to extend the right of renewal another fourteen years to make a total renewal period of twenty-eight years, and it stated its preference for this arrangement, rather than a single and longer term as for life or fifty years. So it said:
"Your committee, after full consideration, decided that it was distinctly to the advantage of the author to preserve the renewal period.It not infrequently happens that the author sells his copyright outright to a publisher for a comparatively small sum.If the work proves to be a great success and lives beyond the term of twenty-eight years, your committee felt that it should be the exclusive right of the author to take the renewal term, and the law should be framed as is the existing law, so that he could not be deprived of that right.
"The present term of twentyh-eight years, with the right of renewal for fourteen years, in many cases is insufficient. The terms, taken together, ought to be long enough to give the author the exclusive right to his work for such a period that there would be no probability of its being taken away from him in his old age, when, perhaps, he needs it the most." H.R. Rep. No. 2220, 60th Cong., 2d Sess., p. 14. The House Report was adopted by the Senate Committee on Patents as its own. Sen. Rep. No. 1108, 60th Cong., 2d Sess.
We think it fair to say that defendants' case substantially depends on this quotation, as expressing a clear intent as to the statutory meaning and one to which we should give effect. But several observations must be made about it, for it contains its own ambiguities. Its direct purpose was clearly to explain the continuance of a renewal term as against the substitution of a single long term. In other words, it argued for an existing arrangement - "the existing law" - and so not necessarily or clearly for an absolute prohibition. If the committee had really meant the latter, they could easily have so drafted the statute. And they could easily ahve stated their purpose in unambiguous words in their report. As it is, their own words are almost as ambiguous as the statute itself.They said the author "could not be deprived of" the right to renew. Does this mean he could not be deprived of it if he "sells his copyright outright to a publisher"?*fn3 If so, we agree. Or did they mean that a court was to strike down the author's attempt specifically to dispose of his expectancy? If so, "deprive" was a poor word to use, for the result is that he is "deprived" of his privilege to alienate his renewal right, nor saved from "deprivation" of the right itself. As for the statement about the "probability of its being taken away from him in his old age," this is no more than a repetition of the same thought, and suffers from the same ambiguity.
If we could find that the statute had been interpreted - in the light of the committee's report - to forbid such assignments as we find here, we might well be inclined to give the committee the benefit of any doubts as to the language they had chosen. Meaning is frequently obscure, and courts may well be sympathetic to clear Congressional statements of what they think they are doing. United States v. Diskerson, 310 U.S. 554, 60 S. Ct. 1034, 84 L. Ed. 1356; Hamilton and Braden, The Special competence of the Supreme Court, 50 Yale L.J. 1319, 1357-1367; cf. Radin, Statutory Interpretation, 43 Harv.L.Rev. 863. But we do not find such interpretation; so far as we can ascertain, the general view has been to the contrary. Soon after passage of the Act, Assistant Attorney General Flowler observed that "no doubt it [the renewal] may be the subject of a valid contract before renewal, which would carry the equitable, if not the legal, title thereto when renewed." 28 Op.Atty.Gen. 162, 169. Such also appears to have been the attitude of the people affected by copyright law as manifested in the treatieses on the subject. Four treatises published before 1909 are definite in stating that an author may validly assign his expectancy of renewal,*fn4 and none that we have found deny it. After 1909, it is true that some of the experts tended to hedge. Four treatises published after the new act went into effect state that probably an assignment can be enforced;*fn5 but three others are fairly definite about it.*fn6 Only one of those we have found seems to deny assignability.*fn7 Of particular interest is Wittenberg's treatise on Literary Property cited in the footnote. He purports to set out model contracts to be used by authors and publishers, and by authors and motion picture producers for movie rights. In the publishing contract, he admonishes the author to retain the copyright in his own name and grant only an exclusive right. But Wittenberg also insists that a provision be included whereby an author agrees to obtain a renewal and to assign the exclusive right under the renewal. This, he says, is because "the right to renew copyright * * * rests with the author, and he should agree to renew for the joint protection of himself and the publisher." Wittenberg, 195, 196. A similar clause is contained in the model movie rights contract. Id. 261.
Here, then, is a substantial number of writers on the subject all tending to say the same thing: that only an author can renew, but that he can make binding agreements to renew for someone's benefit. It seems not unreasonable to concluse from this that such a belief doubtless exists throughout the trade. Naturally, neither this belief, if it exists, nor the authorities themselves in any way bind us. Yet some weight may be attached to the fact that an ambiguous statutory provision has faairly uniformly been interpreted one way, and presumably acted upon.
Perhaps even more persuasive is the history of further attempts to amend the copyright laws. The attempts were aimed at general revision, usually including a change in the duration of the copyright; but for our purposes only the provisions relative to the preservation of the status of copyrights existing at what would be the time of enactment of these bills are of interest.
In two bills we find this passage: "Provided, taht where the author has * * * agreed to part therewith for the renewal term under said act" [with terms following to make the renewal contract fit the time periods of the proposed act]. H.R. 6990, 71st Cong., 2d Sess.; H.R. 10434, 69th Cong., 1st Sess. And in two others this provision appears: "where * * * the author has agreed to renew the copyright for the renewal term for the benefit of the assignee or licensee" [with similar terms following]. H.R. 11948, 72d Cong., 1st Sess; H.R. 10976, 72d Cong., 1st Sess. Still a fifth bill, which passed the Houses, says much the same thing in only slightly different words. H.R. 12549, 71st Cong., 3d Sess.*fn8 This, we conceive, constitutes a recognition, on the part of the drafters at least, of the validity under the 1909 Act of assignment of expectancies.*fn9 A somewhat more direct acknowledgment of the validity of assignments is found in three other bills. These provide that the continuation of the copyright beyond twenty-eight years shall vest "in the person or persons * * * who would have been entitled to the renewal term * * * subject to any agreement valid in law or equity, which may have been made for the disposal of the renewal term prior to the date when this section, as amended, takes effect." H.R. 926, 76th Cong., 1st Sess.; H.R. 5275, 75th Cong., 1st Sess.; S. 2240, 75th Cong., 1st Sees.*fn10 All told, those Congressmen interested in copyright law seem to have taken it for granted that an author could agree to assign the renewal to someone. If they went that far, undoubtedly they would agree that an author could authorize someone to act in his name when the renewal period arrived.
Notwithstanding this history, we might well be moved by a demonstration that only by holding al assignments void could we further the policy of the act. But even this seems to us quite doubtful. True, it would be nice for an author to look forward to more money when the renewal time comes. But he can do that by not assigning. What we would be saying is that all authors who have already assigned can eat their cake and have it too. Only in the future would such a ruling be fair all around. Furthermore, it is not clear that authors wish to be deprived of the privilege of obtaining more money now, or that a widow whose husband dies penniless wishes to be deprived of the privilege of anticipating on her statutory renewal right. We are, in effect, asked to impose force saving on authors and widows by requiring them to forego for twenty-eight years whatever additional money they could obtain by assignment of their expectancies. It should require more than an ambiguous committee report on an ambiguous statutory provision to produce such a drastic restriction on free assignability.
This conclusion is reinforced by the history of judicial disapproval of restraints on assignability. Thus lawyers discovered a way around the archaic rule against assignment of choses in action, courts of equity supported them directly, and courts of law winked at the result. Cook, op. cit. supra. Equally familiar are the general rules against restraints on alienation of propery.*fn11 There may be mentioned, also, the unsuccessful attempts of employers to prevent wage assignments, and the consequent specific legislation forbidding or regulating such assignments. One such statute was even declared unconstitutional. Massie v. Cessna, 239 Ill. 352, 88 N.E. 152, 28 L.R.A., N.S., 1108, 130 Am.St.Rep. 234; see, generally, Fortas, Wage Assignments in Chicago, 42 Yale L. J. 526. And there is the unusual case of an unenforceable assignment of an interest under a spendthrift trust being enforced by the pleasant fiction of calling it a "contract to assign," with the amount assigned as the measure of damages. Kelly v. Kelly, 1u Cal.2d 356, 79 P.2d 1059, 1064, 119 A.L.R. 71; 48 Yale L.J. 666. Further, there is our own recent holding that an assignment of an expectancy under a will is valid, In re Barnett, supra; 3 Restatement, Property, § 316; and so generally of contingent interests in modern law, 2 Restatement, Property, § 162. Our society still rests on the theory that men can ordinarily make free disposition of their property rights. We are perfectly willing to uphold a Congressional declaration taht public policy forbids assignment of a copyright renewal; but we expect something more than ambiguous inferences drawn from a committee report explicitly arguing only for continuance of an existing statutory scheme with a new renewal period. If property rights are to be rendered immediately untranslatable into money or money's worth, in order to protect remote and contingent future gains, that result should be accomplished by legislative declaration, not by judicial fiat.
We are limiting our discussion, as did the parties before us, to the question of statutory interpretation. On this interlocutory issue we ought not to foreclose other contentions which the parties may wish and be entitled to raise on the merits, including possibly claims of inadequacy of consideration in 1917, so gross as to prevent negative enforcement of the assignment, with which go would the question of adequacy of damages as a remedy for breach. 2 Restatement, Contracts, §§ 358, 363, 367 380. But we think we should say that the record contains no evidence which casts doubts on the consideration; certainly defendant Graff's statement that royalties on the songs covered by the assignment had amounted to as much as $5,000 annually (i.e., as a maximum) does not do so, particularly in view of the well-known ephemeral nature of popular song hits. Indeed, defendants base their assertion of the song's present value on the new developments of radio, electrical transcription, and sound motion pictures. And their advertising adds that sung by Olcott "for a ...