Security-First Nat. Bank of Los Angeles v. Republic Pictures Corp.

97 F. Supp. 360, 89 U.S.P.Q. (BNA) 231, 1951 U.S. Dist. LEXIS 4305
CourtDistrict Court, S.D. California
DecidedApril 26, 1951
Docket12260
StatusPublished
Cited by4 cases

This text of 97 F. Supp. 360 (Security-First Nat. Bank of Los Angeles v. Republic Pictures Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Security-First Nat. Bank of Los Angeles v. Republic Pictures Corp., 97 F. Supp. 360, 89 U.S.P.Q. (BNA) 231, 1951 U.S. Dist. LEXIS 4305 (S.D. Cal. 1951).

Opinion

YANKWICH, District Judge.

Plaintiff, a national banking association authorized to do business in California, was the mortgagee under a chattel mortgage, dated October 2, 1944, executed by Pre-Em Pictures, Inc., a California corporation, to secure the repayment of a loan of $35,-000. 00.and advances made to Pre-Em to plaintiff.

The mortgage covered, among other items of personal property, all copyrights on the story, treatment, script, continuity and manuscript composition of the motion picture photoplay, entitled “A Song For Miss Julie”, together with the right to copyright and all rights to renew and extend the copyright. The photoplay was produced by Pre-Em and distributed by the defendant, a New York corporation qualified to transact business in the State of California, and engaged in the business of distributing, leasing and licensing motion pictures and photoplays throughout the United States and the World. Pre-Em defaulted in the repayment of the loans and advances secured by the chattel mortgage. On September 20, 1948, the plaintiff instituted a foreclosure proceeding against PreEm and others in the United States District Court. On August 13, 1949, the Court rendered a decree of foreclosure in favor of the plaintiff which has become final. Under this decree, the United States Marshal for the Southern District of California sold the property at public auction, on October 5, 1949, to the plaintiff for the sum of $5000.00, and issued to the plaintiff a certificate of sale on foreclosure, which was duly recorded in the Copyright Office of the United States.

Controversy has arisen between the plaintiff and the defendant as to the rights acquired by the plaintiff under the foreclosure. It is the contention of the plaintiff that they acquired all the rights of Pre-Em in the property covered by the chattel mortgage, including the right to the copyright of the story. These contentions are asserted in an action for declaratory relief instituted on September 11, 1950. 1 The defendant, in an Answer filed on October 18, 1950, challenges the jurisdiction of this court to foreclose the chattel mortgage as to the copyright. The evidence before the court shows, without dispute, the foregoing facts, also that the jurisdictional minimum is involved in the controversy. The sole question for determination is whether the district court had jurisdiction to foreclose the copyright itself, under Section 1338(a) of Title 28 U.S.C.A.

I

Cases Arising Under Federal Law

Concededly, there is no binding precedent dealing with the problem. So the approach must consider both the nature of the jurisdiction of the federal courts and the nature of copyright. We start with the premise that federal courts are courts of limited jurisdiction. 2 And jurisdiction to entertain the foreclosure of a mortgage of a copyright, if it exists at all, must de *363 rive either from Section 1338(a), which provides, in effect, that the district court has original jurisdiction of actions arising under acts of Congress relating to patents, copyrights and trademarks 3 , or under what is known as the “federal question” statute, which provides for jurisdiction in cases, which, in addition to satisfying the jurisdictional minimum, also arise under “the Constitution, laws or treaties of the United States.” 4

The conditions which confer jurisdiction under either statute are the same, except that in cases arising “under the Constitution, laws and treaties of the United States”, the jurisdictional minimum must also be present, while in those arising under congressional acts relating to patents, copyrights and trademarks, the jurisdictional minimum need not be present. But as to both, the criterion by which it is determined whether they arise under the particular law so as to give the federal courts jurisdiction is the same.

Indeed, the language in which the courts have couched the principle has remained unchanged through the years. 5 It is substantially this: A cause is said to arise under the Constitution and laws of the United States when its correct determination depends upon the construction of the Constitution or laws of the United States, or when the right of a party may be sustained by one construction or defeated by another.

Cases decided in recent years have given more accurate criteria for determining the nature and source of rights which give jurisdiction. For the purpose of the present controversy, two statements may furnish the distinguishing marks for determining the matter. The first is by Mr. Justice Stone: “Federal jurisdiction may be invoked to vindicate a right or privilege claimed under a federal statute. It may not be invoked where the right asserted is non-federal, merely because the plaintiff’s right to sue is derived from federal law, or because the property involved was obtained under federal statute. The federal nature of the right to be established is decisive — not the source of the authority to establish it.” 6 (Emphasis added).

The other is by Mr. Justice Cardozo: “To bring a case within the statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff’s cause of action. Starin v. New York, 115 U.S. 248, 257, 6 S.Ct. 28, 29 L.Ed. 388; First National Bank [of Canton, Pa.] v. Williams, 252 U.S. 504, 512, 40 S.Ct. 372, 374, 64 L.Ed. 690. The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another.” 7

The case just cited is a good illustration of the distinction which the courts have in mind. The question before the court was whether an action brought by a state-taxing authority against a national bank could be removed to the federal court. It was argued that the authority of the state to tax the shares of national banks, being derived from a federal statute, the right to remove existed. But the Court held that the right to tax the shares of the national bank was a state right, and that the permissive nature of the federal law allowing the tax did not change the right. Recurring to the test laid down in Puerto Rico *364 v. Russell & Co., 8 , the Court said: “Here the right to be established is one created by the state. If that is so, it is unimportant that federal consent is the source of state authority. To reach the underlying law we do not travel back so far. By unimpeachable authority, a suit brought upon a' state statute does not arise under an act of Congress or the Constitution of the United States because prohibited thereby. Louisville & Nashville R. Co. v.

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Bluebook (online)
97 F. Supp. 360, 89 U.S.P.Q. (BNA) 231, 1951 U.S. Dist. LEXIS 4305, Counsel Stack Legal Research, https://law.counselstack.com/opinion/security-first-nat-bank-of-los-angeles-v-republic-pictures-corp-casd-1951.