DOUBLEDAY and CURTIS appeal from a judgment of the United States District court for the Southern District of New York (Sweet, Judge) dismissing Doubleday's complaint and Curtis's counterclaims for breach of contract. Affirmed in part, reversed in part and remanded.
Kaufman and Van Graafeiland, Circuit Judges, and Lasker, District Judge.*fn*
IRVING R. KAUFMAN, Circuit Judge:
Mindful of the limited function of the judiciary in the private contractual realm, and aware of the dangers arising from judicial interference with the editorial process, we are today required to interpret an agreement entered into by an author and his publisher.
This dispute arose when, pursuant to the terms of a standard publishing agreement, Doubleday & Co. rejected as unsatisfactory a manuscript submitted by Tony Curtis. Each party then sued for breach of contract; Doubleday brought an action for recovery of the advance it remitted Curtis, and Curtis counterclaimed for anticipated earnings.
After a nonjury trial, the district court dismissed both actions. Judge Sweet rejected Curtis's claim, finding that Doubleday's unfavorable evaluation of the manuscript had been made in good faith and, assuming the publisher had a duty under the contract to provide editorial assistance to Curtis, this obligation had been fulfilled. Doubleday's complaint was dismissed on the basis that the company had waived its right to demand return of its advance. For the reasons set forth below, we affirm the dismissal of Curtis's counterclaims, but reverse the dismissal of Doubleday's claim.
Before discussing the relevant legal principles, we believe they will come into sharper focus if we set forth the underlying facts and procedural history of this dispute.
In the early 1970s, Tony Curtis, a respected dramatic and comedic actor, sought to enrich his career by becoming a novelist. He prepared a manuscript-later titled Kid Andrew Cody and Julie Sparrow ("Kid Cody") - and enlisted the aid of Irving Paul ("Swifty") Lazar, a well-known literary agent. Doubleday & Co., the venerable New York publishing house, foresaw within Curtis the potential for great commercial success and entered into a two-book contract with him in the winter of 1976.
As part of their arrangement, Doubleday promised to pay Curtis royalties on hardcover sales, and a share of the proceeds from the sale of subsidiary rights (e.g. paperback rights), provided Curtis could deliver-within a specified period of time-final manuscripts, "satisfactory to Publisher in content and form." The agreement was a standard industry form, and did not elaborate on the meaning of the penultimate condition-"satisfactory to Publisher in content and form."
Amid much fanfare, Kid Cody was accepted for publication. The final draft was generally acknowledged to have been a joint effort of Curtis and Larry Jordan, a Doubleday editor. Through a series of face-to-face meetings in New York, the experienced Jordan was able to assist the novice Curtis in the successful completion of his first novel.
Inspired by Curtis's literary debut and somewhat intrigued by an eight-page outline for his next novel, Doubleday agreed to renegotiate the contract governing publication of the second book. On September 7, 1977, the parties executed the document that spawned this litigation. Curtis was to receive one hundred thousand dollars as an advance to be charged against future royalties. One-half of the advance was paid upon the signing of the contract, with the balance due on "acceptance of complete satisfactory manuscript." In addition, Curtis was to receive fifty percent of any proceeds Doubleday might earn from the sale of reprint rights. Doubleday's performance was again contingent upon Curtis's ability to produce a "satisfactory" manuscript by a date no later than October 1, 1978. This deadline, as well as the conditions relating to acceptable "form" and "content," were expressly stated to be "of the essence of the Agreement." The document further stated that failure to comply with the satisfaction clause granted the publisher the right to terminate the contract, and require Curtis to return any sums advanced. As with the Kid Cody contract, this agreement did not speak to the methods and standards by which the publisher would determine whether a manuscript was "satisfactory." Indeed the contract omitted any reference to the plot, subject, title, length or tone of the proposed novel.
If Doubleday's arrangement with Curtis appeared to favor the publishing house, the company's subsequent reprint agreement with New American Library ("NAL") epitomized the firm's bargaining acumen. NAL promised to pay Doubleday $200,000 merely for the right to publish Curtis's second novel in paperback, in the event it was accepted for publication by Doubleday. NAL's position was thus wholly dependent upon Doubleday's opinion of the manuscript. Indeed, no matter how inferior or unsaleable the novel might prove to be, if Doubleday published the work before December 31, 1980, NAL was bound by the terms of the contract and Doubleday was ensured a handsome profit.
The great expectations that surrounded the project never materialized. it was not until April 1980 that Curtis delivered even a partial first draft of his would-be second novel, Starstruck, a rags-to-riches story of a lascivious Hollywood starlet. Doubleday appeared unperturbed, however, and blithely ignored the October 1978 deadline. Equally generous was NAL, which willingly extended its own deadline one year to December 31, 1981.
Those portions of Starstruck that Curtis had forwarded to Doubleday were routed from one editor's desk to another, finally coming to rest in August 1980 with Adrian Zackheim, then a stranger to Curtis. Zackheim's review of the first half of Starstruck was slow but painstakingly thorough. After four months of intermittent reading-totaling perhaps fifty hours-he sent Curtis a seven-page letter. In it, Zackheim criticized the numerous inconsistencies and inherent contradictions that pervaded the manuscript and exhorted Curtis to tighten the plot. Yet, sprinkled among this criticism was praise for the author's story-telling ability. To this end, Zackheim ...