IN THE MATTER OF AMERICAN RELEASING CORPORATION, BANKRUPT.

U. S. District Court, Southern District of New York, April, 1924.

No. 35296.

TITLE TO PROPERTY-WHAT PROPERTY PASSES TO TRUSTEE-PERSONAL CONTRACTS-DISPOSITION OF FUND REPRESENTING PRODUCER'S SHARE OF DISTRIBUTION PROCEEDS OF A MOVING PICTURE FILM GIVEN TO BANKRUPT FOR DISTRIBUTION.

Where a motion picture film owned by petitioner is given to the bankrupt for distribution under contract providing for revocation effective by written notice in case of bankruptcy of distributor, or improper distribution, and notice of breach is duly given, the film was properly returned to its owner the petitioner and he is entitled to certain moneys representing the "producer's" share of the proceeds of the distribution of the film.

Where the contract states that the agreement is to be deemed a personal one in regard to each of the parties, an assignment by the distributor breaches the contract.

It seems that an executory contract for the distribution of a moving picture film would be non-assignable, whether so specified in the contract or not.

(See Collier, 13th Ed., p. 1688; Am. B. R. Digest, § 357.)

Motion to expunge claim of bankrupt against petitioner and to extinguish counterclaim against petitioner, and for other relief. Motion granted.

Joseph M. Herzberg, for petitioner, Chester Bennett.

Samuel Weinberger and Julius O. Foote, for trustee.

DAVIS, Referee:

This is a motion on the part of Chester Bennett, as stated in the notice of motion, to expunge the claim of the bankrupt against the petitioner and to extinguish the counterclaim of the petitioner against the bankrupt, and for a finding that the petitioner is entitled to receive from a certain fund $1,263.18. The notice of motion and the petition also pray for such further relief as may be proper.

Upon the hearing it developed that the petitioner was the owner of a film known as "The Belle of Alaska," and that the same had been given to the bankrupt to distribute under a contract between the parties dated February 4, 1922.

The bankrupt was adjudicated August 28, 1923.

Upon the first hearing it was agreed that the Selznick Distributing Corporation, to which the picture "Belle of Alaska" had been assigned by the bankrupt, should be authorized to turn over the said picture to the petitioner. Such order was accordingly made and delivery of the picture in question to the petitioner has been made.

This disposition left the further question as to who was entitled to certain moneys representing the producer's share of the distribution of the picture mentioned. This money referred to in the petition as in amount $1,263.18, but stated in the memoranda of counsel to be $1,801.53, has been turned over by the Selznick Corporation to the trustee to await the determination of this application.

Edmund J. McIvor, representative of the petitioner holding his power of attorney, testified that a notice of cancellation of the contract between Mr. Bennett and the bankrupt was given to the bankrupt May 13, 1923, some time before the adjudication which, as above stated, was August 28, 1923.

On February 4, 1922, the bankrupt, a Delaware corporation, and Chester Bennett, of Los Angeles, Cal., doing business under the name of Chester Bennett Productions, entered into a contract for the distribution by the bankrupt of the picture known as "Belle of Alaska" owned by Chester Bennett. This contract provides in the 16th paragraph that if the distributor, meaning the bankrupt, shall fail to pay to the producer his share of the income, or shall fail to make statements and settlements or "to perform any other term, covenant, or condition of this contract as herein set forth, or should the distributor file. a petition in bankruptcy, or be adjudged a bankrupt, or make an assignment for the benefit of its creditors, then upon the happening of any or all said events the producer, if he desires to terminate this contract for said reason or reasons, shall give a notice in writing to the distributor declaring his

intention to terminate," etc. As above stated, the petitioner did give such notice May 13, 1923. The reason for the notice is outlined in testimony of Mr. McIvor and to the effect that the picture was not properly distributed and that statements were not rendered. The testimony is not denied.

In addition to the means of terminating the contract under the notice which was given, as above stated, the contract as quoted, by its terms provided that bankruptcy should work extermination. Also as above stated, the bankrupt some time prior to its bankruptcy assigned its contract and the picture in question to Selznick Corporation. The petitioner claims that this assignment also brought about a termination of the contract.

The contract by its terms provides (Paragraph XVII): "This agreement is declared to be personal with respect to each of the parties hereto." The petitioner claims that this provision prevented the bankrupt from assigning the contract.

"Parties may stipulate that a contract shall not be assignable." Elliott on Contracts, Vol. II, Sec. 1347.

As a matter of law all executory contracts are not assignable. This is particularly true of executory contracts for the performance of a particular work. A contract of this nature would seem particularly to come within that provision of law. In the work of promoting, in a successful way, the production of motion pictures a high degree of skill and experience is required and the producer, it seems to me, has the right to demand that his work shall be marketed by one whom he has chosen as being skilled for the work in question, and that a party so chosen should not have the authority to choose another to perform it without the approval of the distributor. The distributor, Mr. Bennett, seems to have provided for this in setting out that his contract is personal. If this provision were not in the contract, it seems to me that a contract of this sort would be so regarded.

New York Phonograph Co. v. Devega (N. Y. Sup. Ct.), 127 App. Div. 222, 111 N. Y. Supp. 363, held that an inventor's contract to exploit his inventions was not assignable.

"The injustice of permitting the assignment of a contract for personal services, for the painting of a picture, for a partnership, is obvious. A

contract for the sale of goods to be manufactured stands on similar grounds where the vendee relies upon the skill and experience of the manufacturer, as well as upon the implied warranty of quality. No man who has employed a tailor to make a suit of clothes ought to be compelled to accept a suit made by a tailor's assignee." Schlessinger v. Forest Products Co., 78 N. J. L. 637, 30 L. R. A. (N. S.) 347, 76 Atl. 1024.

It is intimated that the bankrupt has a claim against the petitioner for the distribution of the picture prior to its assignment. The contract provides that the expenses of distribution. shall be obtained from the proceeds of the picture. The bankrupt having disposed of the picture, thereby, it seems to me, removed the possibility of its being reimbursed for what the picture had cost it to distribute.

It also appeared that the petitioner had a claim for damages against the bankrupt for failure properly to distribute the picture. That element, however, the petitioner waives on its motion to expunge the counterclaim. The moneys in question are moneys the picture has earned while in the possession of the Selznick Corporation and the same have been turned over to the

trustee.

Under the law and the facts here involved, the petitioner is entitled to the money in question and the same should be paid over to him by the trustee, the trustee, however, taking a general release from the petitioner for all of his claims against the bankrupt and the successor trustee.

The exact amount to be paid over can be stated in the order which should also recite the giving of the release mentioned.

SAMUEL SCHONFELD, PLAINTIFF IN ERROR V. UNITED STATES, DEFENDANT IN ERROR.*

U. S. Circuit Court of Appeals, Second Circuit, December, 1921.

No. 56.

CRIMES AND OFFENSES-EVIDENCE-AS TO CONCEALMENT OF PROPERTY OR FALSE OATH-USE OF EVIDENCE OBTAINED ON EXAMINATION BEFORE REFEREE.

While the testimony of the bankrupt before the referee in bankruptcy is not admissible on an indictment for concealing assets, where the bankrupt is brought to trial on that count and a count of false oath, such evidence being admissible on the count of false oath, it was not error to permit the admission of such testimony.

(See Collier, 13th Ed., pp. 375, 903; Am. B. R. Digest, §§ 63, 1195.) SAME-EVIDENCE-AS TO FALSE OATH AND ACCOUNTS SCHEDULES ADMISSIBLE IN PROSECUTION FOR FALSE OATH.

On the trial an indictment for giving false testimony by the bankrupt to the effect that he was robbed of most of his assets shortly before the bankruptcy, the admission in evidence of the schedules in bankruptcy filed by the bankrupt is proper.

(See Collier, 13th Ed., pp. 360, 905; Am. B. R. Digest, §§ 253, 1195.) SAME-EVIDENCE-AS TO FALSE OATH AND ACCOUNTS-SufficienCY OF EVIDENCE TO PROVE FALSE OATH.

False swearing in bankruptcy is not equal in enormity to the crime of perjury denounced by the general statute, and the government in a prosecution for false oath is bound only to prove beyond a reasonable doubt the guilt of the bankrupt of false swearing; the testimony of two witnesses to contradict the defendant is not necessary.

(See Collier, 13th Ed., p. 905; Am. B. R. Digest, § 1195.)

Samuel Schonfeld was convicted in the District Court of the United States for the Southern District of New York of fraudulently concealing property from his trustee in bankrupt, contrary to Bankruptcy Act, § 29b (Comp. St. § 9613), and falsely testifying before the referee in bankruptcy, contrary to Criminal Code, § 125 (Comp. St. § 10295), and he brings error. Affirmed.

Elijah N. Zoline, for plaintiff in error.

277 Fed. 964.