Capitol Records, Inc. v. Vee Jay Records, Inc.

197 N.E.2d 503, 47 Ill. App. 2d 468, 1964 Ill. App. LEXIS 692

Opinions

MR. JUSTICE BRYANT

delivered the opinion of the court:

This is an interlocutory appeal from an order entered on January 15, 1964, granting a temporary injunction “restraining and enjoining until further order of the court, the defendant, Vee Jay Records, Inc., its agents, attorneys and servants from manufacturing, selling, distributing or otherwise disposing of or advertising the sale by it, its agents, attorneys and servants of any and all recordings by the vocal group commonly referred to as the ‘Beatles’”; and from an order entered on January 30, 1964, denying the petition of defendant. Vee Jay Records, Inc., to dissolve the temporary injunction issued on January 15, 1964. Subsequent to the last mentioned order this court entered an order on February 5, 1964, staying the force and effect of the injunction pending argument of the appeal from the denial of the motion to dissolve.

Before proceeding further, we will indicate the disposition of this appeal. We believe that the order granting the temporary injunction was properly issued and should be affirmed. We believe that the order denying the motion to dissolve the injunction should be reversed and is now left undisposed of. We are also vacating our own order staying the force and effect of the injunction.

Before reasoning the above conclusions, a chronological background of the procedure is in order. On January 13, 1964, Capitol Records, plaintiff herein, presented its verified complaint for injunction followed on January 14 by a motion to the court for a temporary injunction. The defendant, Vee Jay Records, for various reasons, was given until January 15th to file an answer. On January 15th, defendant appeared with a motion entitled “motion to strike” which alleged a valid existing contract between Vee Jay Records and defendant, Transglobal Music Co., Inc., and which motion incorporated by reference the complaint in a certain cause of action filed in the Supreme Court of New York, entitled Vee Jay Records, Inc. v. Capitol Records, Inc., Swan Records, Inc. and Transglobal Music Co., Inc. This complaint was accompanied by an affidavit of Jay Lasker, Vice-President of Vee Jay Records, which may or may not have been verified. On January 15, upon petition of plaintiff, Transglobal Music Co., Inc. was added as a party defendant. On that same day Transglobal filed its answer admitting all the allegations in the plaintiff’s complaint except that which pertained to the financial condition of defendant, Vee Jay Records.

Footnotes

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On January 15, the court ordered: (1) that the “motion to strike filed by Vee Jay Records, Inc., defendant, is overruled and denied, and said defendant is ordered to answer said plaintiff’s complaint within thirty days”; and (2) that Vee Jay Records be enjoined until further order of the court.

On January 23, defendant petitioned for a substitution of attorneys and the court so ordered. On the same day a verified answer was filed for Vee Jay Records controverting the allegations in Capitol’s original complaint. Along with this, a petition to dissolve the injunction was presented alleging that the original verification on behalf of Capitol Records was faulty inasmuch as the person verifying “could not have knowledge of the facts alleged therein, particularly those facts regarding the relationship between defendants, Vee Jay Records, Inc. and Transglobal Music Co., Inc.”

On January 30, the court ordered that the petition of Vee Jay Records to dissolve the temporary injunction be denied without holding a hearing on the motion. This appeal followed and we granted a stay because no hearing had been held prior to ruling on the motion to dissolve the temporary injunction, although the question was referred to a master on a general referral.

The questions which we are presented with, again in chronological order are: (1) whether the complaint of Capitol Records was properly verified; (2) whether the motion made by Yee Jay, entitled “Motion to Strike” should be considered a motion to strike or an answer; (3) whether the temporary injunction was properly issued; (4) whether the motion to dissolve was properly denied.

Although to date there has never been any kind of hearing as to the merits it is important to note that both Capitol Records and Yee Jay Records claim that each has a superior right to manufacture and sell “Beatles” records in the United States. Although prior to this suit there was only one duplication in recordings between the parties, each party alleges that it has expended considerable funds to promote the “Beatles” in the United States and that the other party is unfairly reaping the benefits of these expenditures.

The rights of Vee Jay Becords stem from a contract entered into in January, 1963, allowing it an exclusive license to manufacture and sell “Beatles” recordings in the United States under certain conditions for five years. This contract was entered into with Transglobal which in turn secured its rights from EMI. There are allegations that the Vee Jay contract was terminated because of failure to make statements of sales and failure to pay royalties. There are certain rights to four recordings which Vee Jay may possess following termination, but there are allegations that these rights, if they exist, do not extend to thirteen other songs which presently appear on an LP being marketed by Vee Jay.* Capitol, on the other hand, secured its rights directly from EMI following the alleged termination of Vee Jay’s contract rights.

The status quo to be maintained prior to these proceedings is difficult to ascertain in the absence of any proceedings going to the merits. For the purpose of this appeal, however, the situation as set forth in Capitol’s verified complaint must be accepted. This status quo contemplates a situation where the Yee Jay rights have been terminated with no rights to the four recordings overlapping and Capitol Records alone having the right to manufacture and sell “Beatles” recordings in the United States.

The first point raised by Yee Jay is that the complaint of Capitol Records is not verified because the affidavit of Robert E. Carp, secretary of Capitol, although stated to be within his own knowledge, is actually a verification on information and belief.

Mr. Carp’s verification went to the relationship between Transglobal and Yee Jay. "We believe that there is no basis to this objection. The motion entitled “Motion to Strike” made no mention of this and, indeed, stated just the opposite that: “Capitol Records, Inc. and Transglobal Music Co., Inc. are owned by Electrical and Musical Industries, Ltd., and as such, had full knowledge of the existing contract between Transglobal and defendant and all information pertinent thereto.” The rule applicable in this situation was stated in City of Chicago v. Larson, 31 Ill App2d 450, 453, 176 NE2d 675 (1961):

“. . . where the facts are of necessity within the defendant’s knowledge and not within the plaintiff’s knowledge, but are stated by the plaintiff to be true, a complaint is not perforce defective. 21 ILP Injunctions, sec 162.”

In Weingart v. Weingart, 23 Ill App2d 154, 164-165, 161 NE2d 714 (1959) and Callahan v. Holsman, 351 Ill App 1, 4, 113 NE2d 483 (1953) the requirement was pointed out to be “a highly technical principle” and a “snare and pitfall for the unwary member of the profession.” Both cases relied upon Mr. Justice Bristow in Karlock v. New York Cent. R. Co., 333 Ill App 655, 78 NE2d 122 (1948) in which he quoted Mr. Justice Cardozo:

“The law has outgrown its primitive state of formalism when the precise word was the sovereign talisman, and every slip was fatal.”

We believe, absent any evidence to the contrary, that Mr. Carp knew of the facts sworn to and that his affidavit was properly verified.

Vee Jay has taken the position that the motion entitled “Motion to Strike” should be treated as an answer since it controverts facts presented in the complaint. There is no doubt that this motion was in peculiar form. It was entitled “Motion to Strike” but the body of the motion began in the form of an answer. There was an allegation that Vee Jay had an existing contract right and the New York complaint and affidavit were incorporated by reference. There was no verification of the motion.

Vee Jay’s position is difficult to maintain since its former attorney clearly intended his motion to be a motion to strike. Moreover he argued only on points of law in support of his motion to strike:

“Mr. Strayhorn: Just one further step, your Honor. Counsel made reference to the fact that I, as attorney, was procrastinating, using dilatory tactics, and that my motion to strike was in that nature. I would only point out to the court that my motion to strike merely asserts the position that I took the first time I appeared in this court, which was two days ago, attacking the right of Capitol to be here as a party plaintiff in this action. I have merely made note of that in my motion to strike.

“Now, on the question of the motion to strike, the court must rule on that motion to strike. If the court rules in my favor or in our favor, then it is of no necessity for us to answer the complaint.

“Now, if the court rules against us, then of course, we must — because there are issues of fact that have not been reached here by the pleadings and by the statement of counsel to this court. . . .”

Although present counsel might not have made a motion to strike at the time Mr. Strayhorn presented his, he is bound by prior counsel’s actions, as he himself knew he was when he filed an answer on January 23.

Taking another viewpoint, the complaint in the instant case was verified. Section 35 of the Civil Practice Act (Ill Rev Stats c 110, § 35) requires that if any pleading is verified every subsequent pleading must also be verified unless verification is excused. Here, Capitol’s complaint was verified, but, Vee Jay’s motion to strike was not, even if it could otherwise be considered an answer. For this reason it would have to be disregarded as an answer.

Clearly the motion to strike contains matters extraneous to that motion and to a certain extent controverting the allegations of the complaint. The law of Illinois is clear, however, that the court could not consider those elements in the motion to strike which were inconsistent with that motion. The motion to strike objecting to a pleading and asking for a dismissal (Ill Rev Stats c 110, § 45) presents a question of law. The court in Dunne v. County of Rock Island, 273 Ill 53, 57, 112 NE 342 (1916) set down the rule:

“. . . For the same reason that affidavits are not received on motion to dissolve an injunction before answering or pleading to the bill, we hold that they should not be filed or considered on a motion for a preliminary injunction in any case. It is the office of an answer to deny the allegations of a bill in equity or to set up some affirmative matter as a defense, and it is the office of a demurrer to test the sufficiency of a hill upon its face. Issues of fact should he made up before any evidence is heard, and if only questions of law are to be raised, the bill should be taken as true as to all facts well pleaded and as stating the whole case for the court’s consideration until the facts are denied by answer or further facts are pleaded by the defendant as matters of defense to the bill.”

and on page 58 :

“. . . In such cases, however, only the matters stated in the bill and all matters that are offered or that might be offered by amendment to the bill to make a good bill of complaint are to be considered in deciding the case against the complainant, and affidavits of matters extraneous to the hill or in denial of the facts stated in the hill can not he considered by the trial court or the reviewing court. Evidence should be heard on the final disposition of the case only when the issues of fact are made by answer or plea.

“It follows from what has already been said in this opinion that the court erred in considering the affidavits and plans filed by appellee in determining the question, in the first instance, whether or not a temporary injunction should issue, in the absence of any plea or answer filed by appellee. The court also erred in dismissing appellant’s bill and in considering appellee’s affidavits and plans on motion to dismiss the bill. Appellee not having filed any answer or plea, the question whether or not a temporary injunction should have issued should have been determined solely upon the sufficiency of the bill of complaint, . . .”

See also H. K. H. Development Corp. v. Metropolitan Sanitary Dist., 47 Ill App2d 46, 196 NE2d 494; Goldblatt Bros. v. Sixty-Third & Halsted Realty Co., 338 Ill App 543, 545, 88 NE2d 100 (1949).

We believe that here the lower court properly considered the motion a “motion to strike,” properly disregarded any fact controversion set up in the body of the motion and the incorporated New York complaint, properly disregarded the affidavit of Jay Lasker, and properly entered the temporary injunction.

An applicant for a temporary injunction is not required to make out a case which will entitle him at all events to ultimate relief, but need only raise a fair question of the existence of the right he claims. Weingart v. Weingart (supra at 158); Nestor Johnson Mfg. Co. v. Goldblatt, 371 Ill 570, 574, 21 NE2d 723 (1939); Baird v. Community High School Dist. No. 168, 304 Ill 526, 529, 126 NE 671 (1922); McDougall Co. v. Woods, 247 Ill App 170, 174 (1928). In considering the motion to strike, the allegations of fact in the complaint had to be taken as true. The court has a large discretion in the granting of a temporary injunction and unless that discretion has been abused the injunction will not be disturbed. Aurora v. Warner Bros. Pictures Distributing Corp., 16 Ill App2d 273, 285, 147 NE2d 694 (1958); Weingart v. Weingart (supra at 158); Bowman Shoe Co. v. Bowman, 21 Ill App2d 423, 440, 158 NE2d 112 (1959). The record before us does not show an abuse of discretion by the chancellor. The defendant was given an opportunity to file an answer. It chose instead to file a motion to strike. We think that the temporary injunction maintained the last actual peaceable, uncontested, status quo which preceded the controversy as contemplated by Capitol Records’ corn-plaint. We must hold this absent any kind of hearing establishing another status quo. Quinn v. Fountain Inn, 218 Ill App 260 (1920); Deisenroth v. Dodge, 350 Ill App 20, Ill NE2d 575 (1953); Baldassano v. Accettura, 336 Ill App 445, 84 NE2d 336 (1949).

The last point on which it is alleged that the temporary injunction was improperly granted, and the basis for the motion to strike, is that Capitol Records’ rights to the “Beatles” stem from its contract with EMI that contract or a copy thereof must be attached to its complaint for injunction. Capitol states that it is not suing upon its contract with EMI, but is seeking to protect the rights it has in the “Beatles” which Vee Jay has violated. The agreement of Capitol with EMI is a matter of evidence only to justify the rights which Capitol seeks to protect. Section 36 of the Civil Practice Act (Ill Rev Stats c 110, § 36) requires that if a claim is founded upon a written instrument, a copy thereof, must be attached to the pleading. The case of Simpkins v. Maras, 17 Ill App2d 238, 149 NE2d 430 (1958), where a similar charge was made in reference to a lease of mineral rights, made the distinction urged by Capitol Records. The court there said at 244-245:

“. . . The rights of the plaintiff and the rights of the defendants as to ownership are evidentiary in character, and while each must be established, the basis of the suit is the refusal of the defendants to permit the drilling for oil and access on and over the surface of the land to do such drilling.”

We do not believe that the complaint of Capitol Records was founded upon its contract with EMI within the provisions of section 36, so that a copy must necessarily have been attached.

The’most substantial point presented upon this appeal concerns the action of the court in denying the motion to dissolve the temporary injunction on January 30, without holding a hearing on the motion. Section 16 of the Injunction Act (Ill Rev Stats c 69, §16) provides:

“Upon a motion to dissolve an injunction after answer, the court shall not be bound to take the answer as absolutely true, but shall decide the motion upon the weight of the testimony.”

On January 23, Vee Jay submitted its answer and its motion to dissolve the temporary injunction to the court. A study of the proceedings show that the court was familiar with section 16, realized that the answer of Vee Jay presented controverted questions of fact and sought to set a hearing on the motion. Counsel for Vee Jay took the position that the court must rule on the motion to dissolve as a matter of law. His position was that his answer presented questions of fact and that as soon as these were presented the court must dissolve the injunction pending hearing. For this proposition he relied upon McFetridge v. First Commercial Bank, 28 Ill App2d 512, 171 NE2d 791 (1961). That case does not support counsel’s view. What counsel overlooked in his argument on the law is that contrary to the McFetridge case the temporary injunction had already properly been issued. Unlike the McFetridge case counsel here had ample opportunity to answer the complaint but chose instead to make a motion to strike, and in the McFetridge case a hearing was held prior to the time the motion to dissolve was ruled on but the defendant declined to present any evidence. In this situation section 16 requires that the injunction remain in force until following the hearing on the motion to dissolve.

Capitol Records alleged that they demanded a hearing upon that day prior to a ruling on the motion to dissolve, but their protestations became weaker when the court denied the motion to dissolve and referred the matter to a master on a general reference. This order had the effect of denying both parties their right to a preliminary hearing under section 16. When this court then allowed a stay of the force and effect of the injunction because a preliminary hearing under section 16 had not been given, it was the plaintiff, Capitol Records, who suffered.

Perhaps, this points up the difficulty with this case: time is of extreme importance. The “Beatles” are a transitory factor. At all times in this case when the injunction has been in effect, Capitol has been content to take a leisurely approach to proceedings, of course, while the injunction has been stayed Yee Jay has been plagued by sickness and trips out of town. The court in these cases should not refer a hearing on a motion to dissolve to a master. The law only requires a preliminary hearing and the interests of both parties demand an immediate hearing by the court. A bond is of little protection in a case such as this. The damages are completely speculative and incalculable. Here, these companies are not producing the same recordings at all. If Yee Jay should win on the merits of this proceeding how could they ascertain damages from Capitol for selling recordings which were produced on masters that Yee Jay might never have secured even though they might be the sole licensee. We believe that the court should hold these preliminary proceedings immediately without reference.

The court here was induced to commit error in dissolving the injunction without a hearing by the erroneous position of Yee Jay that it rule as a matter of law. We adhere to our position that the court erred on this ruling and the order of January 30, denying the motion to dissolve, is reversed, leaving the motion undisposed of before the lower court. Our order of February 5, granting Yee Jay’s motion to stay the force and effect of the injunction is vacated.

Order of January 15, affirmed, order of January 30, reversed, order of February 5, vacated.

BURKE, P. J., concurs.

It is no secret that both Transglobal and Capitol are owned by EMI (Electric Mnsical Industries, Ltd.) which in turn exclusively controlled the “Beatles.” It is, thus, not surprising that Transglobal might so quickly respond.

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The four recordings to which. Vee Jay Records may have a right to continue producing after termination until February, 1964, at least without having had a construction of the contract, are: “Please, Please Me,” “Ask Me Why,” “From Me to You,” and “Thank You, Girl.” The main controversy centers around Vee Jay’s LP, “Introducing the Beatles” which Capitol alleges was not produced at all until just prior to the present action and which appears to be selling in competition with or as substitution for Capitol’s LP “Meet the Beatles.”