327 F2d 287 Four Star Comics Corporation v. Kable News Company Ajax Publications Inc

327 F.2d 287

KABLE NEWS COMPANY, Defendant-Appellee.
AJAX PUBLICATIONS, INC., Plaintiff-Appellant,
KABLE NEWS COMPANY, Defendant-Appellee.

No. 146.

No. 147.

Docket 28126.

Docket 28127.

United States Court of Appeals Second Circuit.

Argued November 7, 1963.

Decided December 30, 1963.

White & Case, New York City (John M. Johnston and Charles F. G. Raikes, New York City, of counsel), for plaintiffs-appellants.

Hays, St. John, Abramson & Heilbron, New York City (Osmond K. Fraenkel, James R. Cherry and Elias Messing, New York City, of counsel), for defendant-appellee.

Before WATERMAN, MOORE and SMITH, Circuit Judges.


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On a previous appeal we disagreed with the original trial court's interpretation of magazine distribution contracts between publishers (Four Star and Ajax) and the distributor (Kable) to the effect that the distributor was entitled to a deduction for all magazines returned to the distributor. We held that the contract in issue contemplated a scheme of distribution along the following steps:


1. Shipment by publisher to Kable's wholesaler; then


2. Debit of Kable's account of 5¢ per magazine shipped; then


3. (a) Either sale by wholesaler to retailer to public, in which case Kable's duty to pay 5¢ per magazine becomes absolute,


(b) Or failure to sell within contractual period followed by return to Kable by wholesaler,


(c) Or return to Kable within contractual period and reshipment to second wholesaler, in which case step 3 begins again.


If the event delineated in 3(b) occurs, then

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4. (a) Either return by Kable to publisher, in which case Kable's right to a credit becomes absolute, (b) Or destruction by Kable when permitted by the contract as a substitute for return, in which case Kable's right to a credit becomes absolute. 289 F.2d 632, 636 (2 Cir. 1961).


We also held that Kable's accounts were not conclusive and that "the publishers, in spite of their prior tacit assent, may attack the accounts by evidence of errors therein, but have the burden of showing in what manner the accounts are incorrect." 289 F.2d 632. Accordingly, we remanded the cases for a new trial to give the parties an opportunity to present their proof in the light of our opinion.


On the second trial the trial court has taken and carefully analyzed the evidence relating to the transactions in issue in accordance with our views of the distribution scheme contemplated by the contracts.1


Separating the various statements into two groups, those covering the period prior to February 1, 1958, and those thereafter, the trial court found as to the pre-February 1, 1958 statements that the unsold magazines had been destroyed or disposed of as contemplated by the contracts and that "The plaintiffs have wholly failed to carry their burden of showing that any final statement submitted prior to February 1, 1958, was false or erroneous in any respect." This conclusion was reached after meticulous consideration of the testimony of many witnesses and an appraisal of their credibility.


As to the period subsequent to February 1, 1958, embracing some thirty-four statements, the trial court held that no proper objection had been made to these statements and that "there is not a shred of evidence that Four Star was misled by anything in the final statements submitted after February 1, 1958." The conclusion that "Four Star is bound by the accounts" is fully justified.


For a complete exposition of the facts upon which the district court decision and judgment are based, reference is made to the trial court's well-reasoned opinion reported in 224 F.Supp. 108 (S.D.N.Y.1963). The amounts of the counterclaims against Four Star and Ajax are not in dispute.


Judgments affirmed.



Both Four Star and Ajax filed notices of appeal. However, plaintiffs-appellants' brief states that it is "limited to the Four Star action because there was noadmitted error in the Ajax accounts, since Ajax had authorized the destruction by Kable of all of its returns."