filed: May 21, 1982.
COURIER TIMES, INC., CALKINS NEWSPAPERS, INCORPORATED AND BURLINGTON TIMES, INC.,
UNITED FEATURE SYNDICATE, INC., APPELLANT IN NO. 501, AND PHILADELPHIA NEWSPAPERS, INC., APPELLANTS IN NO. 523 AND EUGENE L. ROBERTS, JR.
Nos. 501 & 523 Philadelphia, 1982, Appeal from the Order of the Court of Common Pleas of Bucks County, No. 82-0956-09-5.
Phillip A. Proger, Washington, D. C., and Stephen Wales Armstrong, Philadelphia, for appellant (at No. 501) and for appellee (at No. 523).
Gregory M. Harvey, Philadelphia, for Courier, et al., appellees.
Samuel E. Klein, Philadelphia, for Philadelphia Newspapers, appellant (at No. 523) and for appellee (at No. 501).
Wickersham, Cirillo and Lipez, JJ.
[ 300 Pa. Super. Page 42]
This appeal is from an order granting a preliminary injunction,*fn1 which decrees that, pending the outcome of the three plaintiff newspapers' request for a permanent injunction, defendant United Feature Syndicate, Inc. (United) must specifically perform an alleged one-year oral contract permitting the plaintiff newspapers to publish the popular comic strip, "Peanuts." Separate appeals were filed by United and by defendant Philadelphia Newspapers, Inc. (the Inquirer),*fn2 which claimed it had exclusive rights to "Peanuts" on the basis of a written contract with United. The
[ 300 Pa. Super. Page 43]
two appeals were consolidated,*fn3 and expedited argument*fn4 was held before this panel on March 10, 1982.*fn5 We affirm.
The findings of the chancellor, Judge William Hart Rufe, III, provide an excellent summary of the pertinent facts:
1. Plaintiff, Courier Times, Inc. is a daily and Sunday newspaper with a daily circulation as of January 27, 1982 of approximately 65,000 located primarily in the area of lower Bucks County.
2. Plaintiff, Calkins Newspapers, Incorporated, publishes the Doylestown Daily Intelligencer, a daily and Sunday newspaper with a daily circulation as of January 27, 1982 of approximately 28,000 located primarily in the area of central Bucks County.
3. Plaintiff, Burlington Times, Inc. is a daily and Sunday newspaper with a daily circulation as of January 27, 1982 of approximately 42,000 located primarily in the area of Willingboro and Burlington County, New Jersey.
4. John J. Carroll is the "Senior Vice President-Sales" for United, having been employed by United for over forty years. He worked as a salesman for United until 1972, when he became Sales Manager, which position he retained until 1979 when he was elevated to Senior Vice President-Sales. Only the president of United, one Robert Metz, is higher in the corporate structure of United than Mr. Carroll. There are also two Vice Presidents of United: David Hendin, Vice President-Editorial Director; and Sid Goldberg, Vice President-Managing Editor and Comics Editor.
5. As Senior Vice President-Sales, Mr. Carroll's duties included calling on major newspapers across the country, such as the two Philadelphia papers, the Inquirer and Bulletin, the Chicago Tribune, the Chicago Sun Times, The San Francisco Chronicle, the San Francisco Examiner and the San Jose Mercury. In October, 1981 his territory was reduced to the states of New Jersey and Pennsylvania. No
[ 300 Pa. Super. Page 44]
reason was given for this reduction, but we note Mr. Carroll lives in Edison, New Jersey, and he is approximately 64 years of age.
6. As Senior Vice President-Sales for United, Mr. Carroll also represented United at many trade shows and industry conventions across the country and served as United's representative to the Comics Council, a national organization of syndicate representatives and editors responsible for comics. We accept as completely credible, and find as fact, Mr. Carroll's own self-assessment that he is one of the most experienced persons in this line of work in the entire United States.
7. As Sales Manager and as Senior Vice President-Sales, Mr. Carroll signed many contracts on behalf of United. Exhibits P-16 through P-23. Mr. Carroll testified that he does not presently have authority to sign contracts for United. However, he also testified that Mr. Metz instructed him on January 29, 1982 not to participate any further in the sale of "Peanuts" in the Philadelphia market. There is no other evidence whatsoever of any limitation on Mr. Carroll's authority representing United. Therefore, we find as fact that Mr. Carroll did have actual authority to represent and contractually bind United as of January 27, 1982 and any limitation on that authority, if any, did not exist prior to January 29, 1982.
8. No notice of any kind, written or otherwise, was ever transmitted or communicated to any of the clients or customers of United giving notice of any limitation in Mr. Carroll's authority. Mr. Carroll, in his forty years with United, never made a contract or agreement with a client or customer of United that was not accepted, approved and honored by United. Mr. Carroll knew and dealt with Mr. Sandy Oppenheimer, editor of the Courier, for twenty years, made agreements for publishing United features and comics in the Courier, and signed contracts confirming such agreements during that period. No notice of any limitation of Mr. Carroll's authority to act on behalf of United was ever transmitted or communicated to Mr. Oppenheimer. We find
[ 300 Pa. Super. Page 45]
that Mr. Carroll had apparent authority, as well as actual authority to represent and contractually bind United on January 27, 1982.
9. Mr. Carroll and Mr. David Hendin, Vice President-Editorial Director for United, both testified to the procedure by which agreements are made between United and a newspaper publisher. When a United salesman and the newspaper publisher agree on the terms of the sale of a feature or comic the salesman calls New York immediately for approval. Assuming immediate approval, which apparently is the usual situation, the clerical staff is instructed to prepare written contracts forthwith, and if the salesman has the reproduction proofs with him as samples, he may leave them with the editor at that time. The editorial department of United immediately initiates the forwarding of continuing reproduction proofs to the newspaper. The written contracts are then forwarded to the newspaper for execution, and upon return are executed by United, whereupon one copy thereof is returned to the newspaper. This contract signing process may take a number of weeks during which time the newspaper will continue publishing the contracted for feature, invoices will be sent out by United, and payment made thereon, all based on the initial oral agreement. Occasionally, a newspaper will fail to return the executed contract, whereupon United eventually discontinues sending the reproduction proofs, and submits bills for all proofs previously sent but unpaid. Neither United employee testified to a single instance in which United failed to complete an executed contract returned to it by a newspaper, prior to the present case. Mr. Gary Andrews, managing editor of the Quakertown Free Press, another United customer, confirmed this procedure and testified that his newspaper was presently carrying four United features, one pursuant to a written contract and the other three pursuant to the initial oral agreement, although he anticipated receiving the written contracts for his execution eventually. We find as fact that contracts for the sale of features, cartoons and comics by United are initiated as oral contracts subsequently confirmed by written contracts.
[ 300 Pa. Super. Page 4610]
. The written form of agreement used by United contains eight numbered paragraphs. The first three, entitled "1. Service", "2. Rate", and "3. Term", all embody the provisions agreed upon by the newspaper and the United representative at the time of the initial oral agreement, and are the only provisions binding United beneficially to the newspaper. The remaining five paragraphs, entitled, "4. Use", "5. Performance", "6. Assignment", "7. Default", and "8. Miscellaneous", all relate to protections for United and limitations on the newspapers use of the features, and all bind the newspaper beneficially to United.
11. Paragraph 8 of the written agreement provides as follows:
"8. Miscellaneous: Time as to notice of termination under Paragraph 3 and as to payments is of the essence. Oral representations or agreements not embodied in this Agreement are not binding, and this Agreement cannot be changed or terminated orally. A waiver of any breach of, or right under, this Agreement shall not be construed as a waiver of any future breach or right. This Agreement shall not be effective until accepted by UFS at New York, New York, and shall bind each party's successors and assigns." (emphasis added)
We find as fact that the written form of agreement confirms, ratifies, and acknowledges prior oral agreements consistent with the terms contained in the written agreement.
12. The effectiveness of the agreement as set forth in the last sentence of Paragraph 8, quoted above, is contingent upon acceptance by United in New York. However, as both Mr. Carroll and Mr. Hendin testified, the oral provisions of the contract as to Service, Rate and Term, the only terms binding United beneficially to the newspaper, are approved and accepted in New York before the written contract is even prepared and forwarded to the newspaper, and before the reproduction proofs are delivered. We find as fact that the act of forwarding the written agreement to the newspaper for execution, and the delivery of the reproduction proofs for publication, is in and of itself acceptance by
[ 300 Pa. Super. Page 47]
United of the oral provisions of the agreement, thus binding United to those terms, whether or not United subsequently executes the written agreement, which only has the effect thereafter of binding the newspaper.
13. David Hendin, Vice President-Editorial Director for United testified to the reason for urgency in initiating publication of features in a newspaper. A cartoonist or comic artist prepares a unique and separate cartoon or strip for each and every day. If United has not contracted for the sale of that cartoon or strip with a newspaper for that particular day, the income receipts for that particular cartoon or strip, and the consequent royalties to the artist, are virtually lost forever. Hence, United moves with dispatch, on the basis of the oral agreement only, to get the cartoon or the strip to the newspaper as quickly as possible, in order to initiate billing therefore on the earliest possible daily cartoon or strip. Of course, if the newspaper subsequently fails to execute the written agreement, which includes the copyright requirements, limits on United's liability, default for non-payment, and United's right to assign the agreement, United eventually discontinues honoring the oral agreement.
14. The cartoon strip "Peanuts", created by Charles Schulz, is the most popular comic strip that United now offers, and the most valuable licensing property that United owns. It is considered the most popular comic strip in the United States in that it appears in more newspapers nationally than any other comic strip. "Peanuts" characters such as Snoopy, Charlie Brown, Lucy and Linus are featured in dolls, toys, posters, television specials and generally have a very high identification factor. Mr. Oppenheimer testified that many readers read newspapers for the features only and therefore it is a great advantage to have good features. "Peanuts" is regarded as the most popular feature of all.
15. For approximately thirty years "Peanuts" appeared exclusively in the Philadelphia Bulletin, that newspaper having contracted with United for exclusivity in the complete Philadelphia area market which encompasses the circulation of all three plaintiffs.
[ 300 Pa. Super. Page 4816]
. On Wednesday, January 27, 1982 the Philadelphia Bulletin announced that it would cease publication after its final edition on Friday, January 29, 1982.
17. The cessation of publication of the Philadelphia Bulletin threw several hundred thousand subscribers onto the open market for remaining newspapers, including many thousands located in the overlapping circulation area of the plaintiffs and the defendant, Inquirer. A unique atmosphere of competition for those Bulletin subscribers was thus created, and quite obviously the ability or inability to continue a former Bulletin feature, particularly "Peanuts", the most popular feature of all, would weigh heavily in that competition.
18. On Wednesday, January 27, 1982, very shortly after learning of the scheduled demise of the Philadelphia Bulletin, John J. Carroll, Vice President-Sales for United called Sandy Oppenheimer, editor of the Courier and quoted "premium" specific terms of Service, Rate and Term for the non-exclusive sale of "Peanuts" to the Courier. The terms were accepted and agreed upon by Mr. Oppenheimer for the Courier.
19. On Wednesday, January 27, 1982 Mr. Carroll similarly called Sandra Bauers, Associate Editor of the Intelligencer, and similarly quoted the specific terms of Service, Rate and Term for the non-exclusive sale of "Peanuts" to the Intelligencer. The terms were accepted and agreed upon by Ms. Bauers for the Intelligencer.
20. On Wednesday, January 27, 1982 Mr. Carroll also similarly called Jean West, Features Editor of the Times and again, similarly quoted the specific terms of Service, Rate and Term for the non-exclusive sale of "Peanuts" to the Times. The terms were accepted and agreed upon by Mrs. West for the Times.
21. On Wednesday, January 27, 1982, immediately after the phone calls were completed and the contract terms agreed upon, Mr. Carroll dictated "sales forms" P-1, P-2 and P-4, directing the clerical staff in New York to prepare
[ 300 Pa. Super. Page 49]
and send contracts and process the sale of "Peanuts" to each of the three plaintiff newspapers. "Process the sale" is a direction to the staff to forward the reproduction proofs to the newspapers.
22. On Thursday morning, January 28, 1982, Mr. Carroll and Mr. Hendin met with Mr. Greenberg, the person in charge of purchasing features for the Inquirer. Mr. Greenberg, on behalf of the Inquirer, made a specific offer to purchase "Peanuts" on an exclusive basis. Mr. Carroll informed Mr. Greenberg that he had already sold "Peanuts" to the Calkins papers, which Mr. Greenberg considered to be a "glitch" to their desire for exclusive rights. Mr. Greenberg, Mr. Carroll and Mr. Hendin did not conclude any agreement at that time, as Mr. Greenberg said he would have to "take the situation upstairs, to higher authority."
23. On Friday, January 29, 1982, the clerical staff of United in New York prepared the contracts for the sale of "Peanuts" to each of the three plaintiff newspapers, and forwarded them with cover letters to the particular editors with whom Mr. Carroll had contracted. Also on Friday, January 29, 1982, the reproduction proofs for publication were delivered to the Times, which does the Sunday comics printing for all three Calkins newspapers.
24. Sometime on Friday, January 29, 1982, (the time was not specified), Mr. Carroll called Mr. Metz, the president of United, and informed him that he had sold "Peanuts" to the Calkins newspapers. Mr. Metz then told Mr. Carroll not to participate any further in the sale of "Peanuts" in the Philadelphia market.
25. On Saturday afternoon, January 30, 1982, Mr. Metz called Mr. Oppenheimer at this home and advised him that a mistake had been made, that United would not be able to honor the agreement made by Mr. Carroll, and that the Inquirer was going to get "Peanuts", not the Calkins' newspapers.
26. On Monday morning, February 1, 1982, all three contracts for the sale of "Peanuts" together with their cover
[ 300 Pa. Super. Page 50]
letters arrived on the desks of the editors with whom Mr. Carroll had contracted. Mr. Oppenheimer, on behalf of the Courier, and Charles P. Smith, publisher of the Intelligencer, on behalf of that paper, both executed and returned the contracts to United immediately. Mrs. West, on behalf of the Times, was out of her office on Monday and Tuesday, February 1 and 2, 1982, but signed and returned the contract to United upon her return Wednesday, February 3, 1982. The reproduction proofs also arrived at the Times on Monday morning, February 1, 1982.
27. On Monday afternoon, February 1, 1982, after the executed contracts had been sent back to United, Mr. Metz called Sandra Bauers and informed her that the Intelligencer would not be getting "Peanuts" because there had been "simultaneous negotiations", that he was sorry, but would try to make it up. However, he did not explain further.
28. On Wednesday, February 3, 1982, when Jean West returned to her office she had a memo to return a call to Mr. Metz. She returned the call, and a secretary at United took her name and phone number and said she would have Mr. Metz call back. However, he never did.
29. On February 8, 1982, United and the Inquirer completed a written agreement for the exclusive right to publish "Peanuts" in the Philadelphia area market, which for the purposes of this case, specifically included Bucks County, Pennsylvania, and Burlington County, New Jersey. Exhibit P-26. The agreement was to begin February 1, 1982 and run for five years. The amounts of the contract were withheld from the record by agreement of counsel as proprietary information, but the prior contract between United and the Philadelphia Bulletin (Exhibit P-16) for "Peanuts" was in a weekly amount more than eight times the aggregate weekly amount of the combined Calkins' newspapers contracts.
30. On February 9, 1982, plaintiffs brought this action for a preliminary injunction to require United to specifically
[ 300 Pa. Super. Page 51]
perform its agreements with the three plaintiff newspapers to publish "Peanuts".
(Footnotes omitted; emphasis in original.)
All parties agree "that on an appeal from the grant or denial of a preliminary injunction, we do not inquire into the merits of the controversy, but only examine the record to determine if there were any apparently reasonable grounds for the action of the court below. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the Chancellor." Roberts v. Board of Directors of School District of City of Scranton, 462 Pa. 464, 469, 341 A.2d 475, 478 (1975) (citations omitted).*fn6
All parties also agree with Judge Rufe that the criteria he was to follow are those which have been repeatedly stated by our Supreme Court:
[T]he essential prerequisites for the issuance of a preliminary injunction are: first, that it is necessary to prevent immediate and irreparable harm which could not be compensated by damages; second, that greater injury would result by refusing it than by granting it; and third, that it properly restores the parties to their status as it existed immediately prior to the alleged wrongful conduct. Alabama Binder & Chemical Corp. v. Pennsylvania Industrial Chemical Corp., [410 Pa. 214, 189 A.2d 180 (1963)]. Even more essential, however, is the determination that the activity sought to be restrained is actionable, and that the
[ 300 Pa. Super. Page 52]
injunction issued is reasonably suited to abate such activity. And unless the plaintiff's right is clear and the wrong is manifest, a preliminary injunction will not generally be awarded: Keystone Guild, Inc. v. Pappas, 399 Pa. 46, 159 A.2d 681 (1960), and Herman v. Dixon, 393 Pa. 33, 141 A.2d 576 (1958)."
John G. Bryant Co., Inc. v. Sling Testing & Repair, Inc., 471 Pa. 1, 7, 369 A.2d 1164, 1167 (1977), quoting Albee Homes, Inc. v. Caddie Homes, Inc., 417 Pa. 177, 181, 207 A.2d 768, 770 (1965); accord, e.g., Commonwealth v. Coward, 489 Pa. 327, 340-41, 414 A.2d 91, 98 (1980).
Judge Rufe's opinion recasts these requirements in what he considers their order of importance*fn7 as follows:
1. The plaintiff's right is clear and the wrong is manifest, and the injunction is reasonably suited to abate the wrong;
2. The injunction is necessary to prevent immediate and irreparable harm which could not be compensated by damages;
3. That greater injury would result by refusing it than by granting it;
4. That the injunction properly restores the parties to their status as it existed immediately prior to the alleged wrongful conduct.
The briefs for both United and the Inquirer contend that Judge Rufe erred in each of these four determinations, which we shall discuss in the same order as Judge Rufe.
[ 300 Pa. Super. Page 53]
We think there is no question that the plaintiff newspapers met the "clear right"*fn8 requirement. Judge Rufe's
[ 300 Pa. Super. Page 54]
findings 4 through 13 and 18 through 20 overwhelmingly establish the formation of oral contracts between United and the plaintiffs on January 27, 1982.
To be enforceable, a contract must represent a meeting of the parties' minds on the essential elements of their agreement. Yellow Run Coal Company v. Alma-Elly-YV Mines, Ltd., 285 Pa. Super.Ct. 84, 88, 426 A.2d 1152, 1154 (1981). This happened here on January 27, when Mr. Carroll and plaintiffs' representatives agreed on service ("Peanuts"), rate ($17.50 per week), and duration of the contract (one year). As demonstrated in Judge Rufe's finding 9, United itself recognized that agreement on these terms was sufficient to form a contract, because its uniform practice was to begin immediate performance at that point.
United and the Inquirer characterize the oral agreement of January 27 as mere "preliminary negotiations," because they did not include discussions of the terms in paragraphs 4 through 8 of United's written contract forms, described in Judge Rufe's finding 10. However, so long as the parties agree on essential terms which they intend to be binding, a contract is formed even though they intend to adopt a formal document with additional terms at a later
[ 300 Pa. Super. Page 55]
date. Field v. Golden Triangle Broadcasting, Inc., 451 Pa. 410, 418, 305 A.2d 689, 693 (1973); Goldman v. McShain, 432 Pa. 61, 69, 247 A.2d 455, 459 (1968);*fn9 Restatement of Contracts, 2d, § 27. The contention of United and the Inquirer that a contract cannot exist until the signed forms are accepted by United at its home office*fn10 is belied not only by the overwhelming evidence of the uniform practice as described in Judge Rufe's finding 9, but also by the fact that the Inquirer itself was running "Peanuts" by oral agreement with United before the written contract purporting to give the Inquirer exclusive rights was signed on February 8, 1982.*fn11
[ 300 Pa. Super. Page 56]
It is also clear that the three plaintiff newspapers would suffer irreparable injury by being deprived of an extremely popular feature, hampering their effort to compete with the Inquirer for former Bulletin subscribers. The lengthy arguments of United and the Inquirer on this issue can be broken down into two parts: (1) there was no adequate showing that the plaintiff newspapers would have any losses from being deprived of "Peanuts," and (2) assuming losses should occur, they will be compensable in readily ascertainable damages. The testimony of Mr. Oppenheimer, which Judge Rufe found credible and summarized in finding 14, plainly demonstrated the superior value of "Peanuts" in the competition for former Bulletin subscribers. It is difficult to understand the Inquirer's contention that this testimony was inadequate because Mr. Oppenheimer conceded that the plaintiff newspapers would not cease to exist if deprived of "Peanuts." Plaintiffs are required to show irreparable harm, not annihilation.
Moreover, just as appellants' claim that there is never an oral contract in the newspaper features industry was contradicted by the Inquirer's own printing of "Peanuts" under an oral contract, the claim that "Peanuts" is not a uniquely valuable property in competing for former Bulletin subscribers is contradicted by the fact that the Inquirer placed "Peanuts" in its list of special features above the masthead
[ 300 Pa. Super. Page 57]
for four consecutive days during the period shortly after the Bulletin's demise. All features listed for those days are comic strips. "Peanuts" is the only one listed on all days, and it is listed first every day.*fn12
Thus the Inquirer itself viewed "Peanuts" as the most valuable of the newly added features in attracting readership during this period. While "Peanuts" was demonstrably the most valuable, however, the other features have value too. Since all newspapers involved here are adding a number of features at the same time, it will be impossible to attribute particular increases in circulation to any one feature. This is especially true because, as appellants themselves assert, the drawing power of "Peanuts" does not stand on its own, but only in combination with other features.*fn13
Greater injury will result from denying the preliminary injunction than from granting it. United can have no
[ 300 Pa. Super. Page 58]
irreparable injury,*fn14 and so it is only the Inquirer's potential for injury which must be weighed against that of the plaintiffs. As Judge Rufe's opinion points out, denial of the injunction would completely deprive the plaintiff newspapers of "Peanuts," while the Inquirer will still be able to publish it whether the injunction is granted or denied. The grant of the injunction will deprive the Inquirer only of the exclusive character of its publication, and even this effect will be limited to a small part of its circulation area.
Finally, Judge Rufe's order restored the "status quo"*fn15 which existed when the alleged wrong occurred. The wrong here occurred on January 29, 1982, when United repudiated the oral contracts and refused to perform further. The preliminary injunction restored the conditions existing just before United's repudiation. Judge Rufe thus had reasonable grounds for finding all requirements for a mandatory preliminary injunction were met.