Scottish Court of Session Decisions

In 1878 D. J. Cunningham, Professor of Anatomy, Trinity College, Dublin, wrote a medical text-booK entitled, “The Dissector's Guide,” and made an arrangement for its publication with Maclachlan & Stewart, booksellers and publishers, Edinburgh, in these terms:—“1. We agree to relieve you of all risk attending the expense of paper, printing, engraving, woodcuts, and advertising, the drawings for the woodcuts to be furnished by you free of all expense. 2. The preceding expenses being paid by us, they are to be charged against the book, and the proceeds of sales in the first instance are to be placed to the credit of the aforesaid charges until liquidated, the surplus thereafter to be divided between the author and the publisher in equal proportions. 3. Paper, printing, and engraving are to be charged at the invoiced prices. 4. Statements of sales to be made up annually, and all copies sold are to be accounted for at the usual trade sale price, 25 copies to be reckoned as 24. 5. The edition to consist of 1000 copies.”

The book was published in three parts, and as the first edition of the first part was exhausted, the parties entered into another agreement in 1888 for the publication of a new edition. This agreement was similar to the first, with this addition:—“1. That Maclachlan & Stewart were to receive a publisher's commission of 10 per cent.; and 2. That a sum of £20 was to be paid by them to the pursuer's assistant for work done by him in connection with the work.” This edition was printed and was in the hands of Maclachlan & Stewart in October 1889. In the following month, when very few copies had been sold, Maclachlan & Stewart became bankrupt. Richard Brown, C.A., Edinburgh, was appointed trustee on their sequestrated estate, and in the negotiations which took place between him and Dr Cunningham, he wrote on 26th March 1890 to Mr Lindsay Mackersy, Dr Cunningham's agent:—“I am unable to formulate any further proposal consistent with the equitable rights of parties; and in order to obviate any possible misunderstanding in the future, I here repeat the various proposals I have made with a view to settlement, and intimate that I shall found upon these in any future proceedings which may take place. 1st, I offer Mr James Thin, bookseller and publisher, Edinburgh, to take the place of Maclachlan & Stewart under the said agreements, leaving Professor Cunningham precisely in the same position with him as he was with Maclachlan & Stewart. If required, Mr Thin will find security; and if Dr Cunningham has any reasonable objection to Mr Thin, I shall endeavour to find another publisher to suit him. 2nd, I offer to hand over the whole stock of books to Dr Cunningham on receiving payment from him of the value which may be placed, by any practical valuator or valuators mutually chosen, upon the publishers' interest therein, as defined by the agreements and the course of dealing. 3rd, I offer by the hands of Mr Thin to purchase Dr Cunningham's interest at a similar valuation, the only condition I attach to this offer being that Dr Cunningham shall not, in consequence of his interest in the future sale of the book being bought up, be thereby left free to bring out any subsequent edition or any work calculated to damage the sale of any of the parts of the book published by Maclachlan & Stewart until the copies of that part have been sold, or the sale thereof in the ordinary course of trade has practically ceased.” Mr Lindsay Mackersy replied—“I offered to give you £100 for any interest you may have in the surplus stock; this offer you declined. I offered to take £100 for any interest Professor Cunningham may have in the surplus stock; this offer also you declined. I offered also to divide the surplus stock, leaving each party free to do what they please with their share; this offer you also declined, except upon conditions which Dr Cunningham could not think of agreeing to.” Upon 10th June 1890 the trustee wrote—“As my efforts to make an arrangement with Dr Cunningham have failed, and as you have intimated that it is unnecessary to make any other proposal unless on the lines formerly indicated by him, I have now sold the remaining copies of the book to Mr James Thin, and will account to Dr Cunningham for his interest in the proceeds in due course.” The trustee on 12th July rendered an account, and sent a cheque for the balance in Dr Cunningham's favour of £17, 1s., representing half the profits actually realised less certain debts due by Dr Cunningham to the publishers. The cheque was returned, and Dr Cunningham raised this action of accounting against Mr Brown,

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The pursuer pleaded—“(3) The said books sold by the defender being the property of the pursuer, or otherwise of the pursuer and the bankrupts jointly, the pursuer is entitled to decree as concluded for.”

The defender pleaded—“(1) The pursuer's statements are irrelevant and insufficient to support his pleas. (2) The right of publication of the book in question having been sold by the pursuer to the bankrupts, his claims ought to be remitted to be adjudicated on in the sequestration. (3) The right of publication of the book in question having been sold by the pursuer to the bankrupts under the agreements libelled, and the pursuer having been paid the remuneration therein stipulated for, the defender is entitled to absolvitor, with expenses.”

Upon 25th November 1890 the Lord Ordinary ( Trayner) sustained the defender's first and second pleas-in-law and dismissed the action.

“ Opinion.—The question in this case is, whether the agreements entered into between the pursuer and Messrs Maclachlan & Stewart are contracts of sale or contracts of joint-adventure? As the two agreements are practically the same in their terms, I take the one earliest in date as showing what was agreed on between the parties. That agreement bears to be one ‘regarding the publication of a “Guide to the Dissecting-room,’” of which the pursuer is the author, and its import may be shortly stated. The pursuer undertook to provide the work and drawings for the woodcuts by which it was to be illustrated. This is his only obligation. On the other hand, the publishers agreed to relieve the pursuer of all risk attending the expense of paper, printing, engraving woodcuts, and advertising, the expense connected with which was to be charged against the book, and discharged out of the proceeds of sales in the first instance; the balance or surplus of such proceeds, after payment of expenses, was to be divided equally between the author and publishers; the edition was to consist of one thousand copies. In a sentence, the contract was the familiar one by which the publishers took all the risk of the publication, paying the author half the profits if the publication was successful.

The parties are at one in saying that the agreement does not involve any question about the copyright of the work; that right remains with the author. But as regards the particular edition, the pursuer maintains that the contract was one of joint-adventure, while the defender (the trustee on the publishers' sequestrated estates) contends that it was a sale. The question thus raised appears to me to be one of considerable nicety. Looked at from one point of view, the agreement in question presents many of the features of a joint-adventure. The author contributes his work in manuscript, and the publisher contributes the necessary cash for paper, printing, binding, &c., so as to put that work upon the market. The whole expense incurred by the publisher is charged against the proceeds of the joint-adventure; the profits of the joint-adventure, after all expenses have been paid, are divided between the two contracting parties. Both parties, in the event of the joint-adventure being successful, are equal gainers. They each get back their contributed capital, and each get half of the profits earned. On the other hand, the agreement is quite as suggestive of sale as joint-adventure. The author sells one edition of his work, or the privilege of publishing one edition of his work, for a certain or at all events an ascertainable price. He makes no contribution of capital to a partnership; he incurs no outlay or liability for outlay in connection with the publication; he bears no share of the loss if loss is incurred. The publisher has the uncontrolled power of determining the kind of paper, printing, binding, &c., which are to be adopted; he fixes the price at which the book is to be sold. The author's only obligation is to furnish the MS. and drawings for woodcuts; his only right is to payment of one-half of the profits, if profits ensue from the publication, as the price of the privilege he has granted.

“I have come to be of opinion that the contract was one of sale—(1) The pursuer cannot be said to contribute any capital as to a joint-adventure. He lends his MS., but the work itself—the copyright—is not contributed. Whether the publication is successful or not he loses no capital; he has adventured none. (2) If the author, instead of accepting what are called ‘halfprofits” for the privilege of publication, had stipulated for payment of a fixed sum—say £100 — the character of the transaction would have been, I think, clearly a sale. But a sum that is ascertainable by a fixed or agreed-on standard is not less a price than a fixed sum. (3) It strengthens the view that the publisher purchased the right to publish that he is left with the uncontrolled right to determine the character and size of the book, so far as these are affected by paper, printing, binding, &c., and to fix the price at which the book shall be offered for sale.

“In Venables v. Wood, 1 D. 659, a contract in no material respect distinguishable from the agreement in the present case was held to be a contract of sale, and not a contract of joint-adventure. It is said that the soundness of that decision has been doubted by Mr Ross. But that fact does not entitle me to disregard the decision as an authority. The doubt, however, I think is balanced by the ‘query’ of Mr Justice Lindley, who appears to me to approve of the decision. See also Coppinger on Copyright (2nd ed.), 605.”

The pursuer reclaimed, and argued—This transaction was either agency or joint-adventure. The pursuer regarded it as joint-adventure. In the first place, the pursuer contributed his manuscript to the joint-agreement, and the right to publish an edition of it. This was of the nature of a limited copyright. As regarded the price, no doubt a sum that could be ascertained might suggest a sale, but where it was doubtful whether the transaction was a joint-adventure or a sale, such

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an arrangement as here stipulated for tended to show that it was a joint adventure and not a sale. It was not the case that the publisher had the sole voice in the choosing of paper, binding, &c., and the pursuer was prepared to prove that he took a large share in the choosing of those matters. In the case of Venables v. Wood the transaction was held to be sale, but from the opinions it was plain that even if the Court had been of opinion that the transaction was a joint-adventure, they would not have found Wood liable to the pursuer for the price of the goods which was sued for. Assuming that this was a joint-adventure, it was legal for one party to contribute an asset which might remain his property, and for which the other parties to the adventure might not be liable— Lockhart v. Moodie, June 8, 1877, 4 R. 859. It had been settled in England that a trustee on a publisher's bankrupt estate was not entitled to dispose of a book which was the joint-property of the author and the publisher to the detriment of the author— Stevens v. Benning, December 7, 1854, 1 Kay & Johnstone, 168— aff. 60 J. M'Naughton & Gordon, 223. There was a delectus personce in the choice of a publisher, and that selection was not carried to a trustee, but there must be a new arrangement and a new publisher selected— Reade v. Bentley, March 5, 1857, 3 Kay & Johnstone, 271. An arrangement like this held joint-adventure— Reade v. Bentley, January 26, 1858, 4 Kay & Johnstone, 656.

The respondent argued — The trustee found this book in printed volumes as part of the bankrupt estate; he was bound to take it and make the best use of it for the estate and for the interest of the creditors. With the view of doing the best he could for all parties he made various most reasonable suggestions to Dr Cunningham, but they were all rejected; he therefore did the best thing he could, and sold the whole concern to Mr Thin. All that he was bound to account for was the author's share of what was actually received from the sale, because the trustee had never accepted the contract to publish and sell the pursuer's book as the bankrupts would have done if they had continued solvent. The amount realised had been offered, but he had refused it. The trustee was willing to pay that sum to him now. It did not matter whether the transaction was called a sale or a joint-adventure—the same result happened in either case—but it really was a sale by the author of the right to publish an edition of his work. That had been decided in Venables v. Wood, in which the agreement was in much the same terms as the one here, and no other result could be reached without overturning that case. The exception to the ruling was reported in Venables v. Wood, March 23, 1838, Macfarlane's Reps. 44–50; Lindley on Partnership, 14. The English cases quoted by the pursuer were not in point, as the point had never been directly decided in England. Even in the case of a joint-adventure it might be that the property of the asset might be in one partner, although another might have a claim upon any profits. In that case if the partner whose property the asset was became bankrupt, all that the other partner could claim was a ranking upon the bankrupt estate for his share of the profits. In this case Dr Cunningham was not really asking for his share of the profits, but for damages against the trustee calculated on the amount that he would have gained if the trustee had taken over the book and worked it as under the contract. But the trustee never accepted the contract— Warren v. Routledge, June 12, 1874, 18 L.R., Eq. 497.

At advising—