Caldwell-Clements, Inc. v. McGraw-Hill Publishing Co.

197 Misc. 691, 93 N.Y.S.2d 482, 1949 N.Y. Misc. LEXIS 2969
CourtNew York Supreme Court
DecidedDecember 8, 1949
StatusPublished
Cited by2 cases

This text of 197 Misc. 691 (Caldwell-Clements, Inc. v. McGraw-Hill Publishing Co.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Caldwell-Clements, Inc. v. McGraw-Hill Publishing Co., 197 Misc. 691, 93 N.Y.S.2d 482, 1949 N.Y. Misc. LEXIS 2969 (N.Y. Super. Ct. 1949).

Opinion

Dickstein, J.

Plaintiff has brought-this action for judgment restraining defendant from publishing in any of its publications, editorials or feature articles or soliciting or publishing advertising relating to the field of merchandising and distribution of radio and television sets, their parts and accessories in excess of the quantity to be found in its nonradio or non-television publications of February, 1948, from issuance of statements that its publications are preferred trade papers in such field and serve the complete needs of radio and television dealers as well as household appliance dealers, and finally from causing surveys to be made showing that any of its publications is preferred or occupies a superior position, and from using such surveys in the solicitation of business. The complaint asks damage already suffered by reason of violation of the agreement basing the action.

The complaint alleges plaintiff is engaged in the publication of two industry magazines, one of which is devoted primarily to the indicated field, while defendant publishes twenty-six industrial magazines, none of which is devoted primarily to such field. In December, 1941, plaintiff’s Radio & Television Today was merged with defendant’s Radio and Television Retailing. The combined magazine thereafter was continued • as Radio Retailing Today by plaintiff, in which defendant acquired a stock interest and had one of its directors on plaintiff’s board.

On February 16, 1948, plaintiff purchased defendant’s stock interest. The contract of purchase provided for time payments and that ‘ ‘ until such time as all of the aforesaid notes have been paid in full, or until such time as the remainder of the six notes guaranteed by either one of the aforesaid Guarantors shall have become due and payable, pursuant to the provisions of paragraph 2 hereof, whichever is earlier, the Seller will not purchase, start, operate or interest itself directly or indirectly in publishing any publication primarily in the field of distribution of radio and television sets, parts and accessories, and the Purchaser will not purchase, start, operate or interest itself directly or indirectly in publishing a publication primarily in the field of merchandising of electrical appliances, parts-and accessories except, however, that nothing herein contained shall preclude the parties hereto from continuing their present publishing ventures.” Defendant continued publication of Electrical Merchandising, a magazine devoted to the field of electrical appliances, but included as before some matter in the field of radio and television. It is alleged further that defendant announced in its August, 1949, issue its intention to devote [694]*694the October, 1949, issue of that magazine primarily to radio and television, which it is claimed is a violation of the agreement which equity should restrain.

The advertised announcement claimed for the issue “ the clearest, biggest TV picture ever seen! the biggest, most complete, up-to-the-minute section ever presented on television,” editors and field correspondents are contacting dealers, distributors and manufacturers in all sections of the country ”, this issue presents a unique opportunity to Tv and allied manufacturers to tell their product story to an interested audience that will read this issue, cover to cover, and keep it for future reference “ inasmuch as the merchandising channels for appliances are the same for Tv — what better way is there to reach them than through the pages of the number one trade publication in their field. ’ ’

The trial developed a rather stormy history of competition and conflict between the parties. The two who guide the destinies of plaintiff were formerly employed by defendant. There was a series of controversies and settlements composing problems. One such settlement occurred on February 16, 1948, when the agreement in suit was made. Its obvious purpose was to give to plaintiff the exclusive ownership and control of the magazine Radio & Television Retailing. The covenant on its face defines and delimits the range of activity of the respective parties pending payment of the notes and restricts competition. It is the meaning and intent of this restrictive covenant that is here involved.

The controversy arises now because, as plaintiff claims, the October, 1949, issue of Electrical Merchandising is primarily in the radio and television field and thus violates the covenant. Defendant urges that the highly specialized issue of October, 1949, devoted as it is to the story of a single item, does not transform the original character of the magazine or render it a publication devoted primarily to radio and television in violation of the agreement. No pretense is made that it is not a television issue. It was so prepared, published and presented by the editor, publisher and advertiser.

It may be stated at the outset that there was no proof that the restrictive covenant interfered with the paramount interests of the public. Consequently it gave a measure of protection to plaintiff’s interests which must be enforced by injunction if the conduct of defendant withdraws that protection (Diamond Match Co. v. Roeber, 106 N. Y. 473; Wirth & Hamid Fair Booking, Inc., v. Wirth, 240 App. Div. 413). There can be no doubt [695]*695of the general purpose' and intent of the agreement. Doubt, if any exists, extends more particularly to the question whether the October, 1949, issue amounts to a dishonor of that purpose. Whether defendant has undertaken a project primarily devoted to radio and television in violation of the agreement depends upon the purpose to be achieved by the agreement and its spirit more than upon the strict translation of its words into their commonly accepted meanings. If the October, 1949, issue seriously affects and restricts the intended protection, then the agreement must be so construed as to give effect to the purpose and to strike down such action as defeats it (Utica City Nat. Bank v. Gunn, 222 N. Y. 204).

In its brief defendant asserts that the contract was signed in the light of its background. That consists of the prior agreements and practice of the parties. Whatever conclusion may be reached of the meaning of the agreement by examination alone of its contents may not prevail here if it is shown to be contrary to the objectives sought in the light of that background. It is clear from the testimony the motivating purpose of the covenant was the adjustment of competition. Defendant indeed inquires whether it would sell its freedom of competition at so small a price. In fact, it did so and if it has invaded the restricted area, plaintiff must prevail. In this instance, as in the Gunn case (supra, p. 208-209). “ To take the primary or strict meaning is to make the whole transaction futile. To take the secondary or loose meaning, is to give it efficacy and purpose. In such a situation, the genesis and aim of the transaction may rightly guide our choice * * *.

“ It is easier to give a new shade of meaning to a word than to give no meaning to a whole transaction. ’ ’ So, in Baumann & Co. v. Manwit Corp. (213 App. Div. 300, 302) the contract was construed in the light of the apparent object to prevent proximate competition in connection with any of the articles in which it dealt.”

The proof has established the statistical position of the magazines involved at the time of agreement and for some years prior to action.

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Related

Caldwell-Clements, Inc. v. McGraw-Hill Pub. Co.
12 F.R.D. 403 (S.D. New York, 1952)
Caldwell-Clements, Inc. v. McGraw-Hill Publishing Co.
277 A.D.2d 767 (Appellate Division of the Supreme Court of New York, 1950)

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Bluebook (online)
197 Misc. 691, 93 N.Y.S.2d 482, 1949 N.Y. Misc. LEXIS 2969, Counsel Stack Legal Research, https://law.counselstack.com/opinion/caldwell-clements-inc-v-mcgraw-hill-publishing-co-nysupct-1949.