Page:Bourne v. Walt Disney (2d Cir. 1995).pdf/7

 whether Disney has a license for the musical compositions from Snow White. Bourne bases this argument on its contentions that (1) Snow White clearly falls outside the scope of the 1933 Shorts Agreement, and (2) the 1937 Assignment Agreement, by which the copyrights in musical compositions from Snow White were assigned to Bourne, did not contain a provision granting rights back to Disney. Accordingly, Bourne argues that the district court erred in failing to enter judgment as a matter of law in its favor with regard to Snow White.

As to Bourne’s first contention, we agree that the musical compositions from Snow White clearly fall outside the scope of the 1933 Shorts Agreement. In arguing that the agreement was ambiguous, Disney points to the broad language of the preamble of the 1933 Agreement, which states: “[Bourne] desires to acquire the copyrights for the musical compositions written for and used in connection with the synchronized motion picture comic cartoons of [Disney].” Disney reasons that, since Snow White is a “motion picture comic cartoon,” the agreement could be read to include the Snow White compositions. We disagree.

Disney’s construction of the preamble is belied by paragraph nine of the agreement, which provides: "[T]he motion picture comic cartoons contemplated herein shall be the remaining twenty-six (26) motion picture cartoons to be produced for the motion picture season of 1933–34, plus the following motion picture comic cartoons comprised within the series produced for the motion picture season of 1932–33: [listing titles of seven cartoons]."

Snow White’s compositions clearly fall outside the scope of paragraph nine. Reading the contract as a whole, as we must, see Kinek v. Paramount Communications, Inc., 22 F.3d 503, 509 (2d Cir.1994), we conclude that Disney’s reliance on the preamble is misplaced. Moreover, Disney’s construction of the agreement is contradicted by the parties’ subsequent agreements in 1935, 1936, and 1939, in which the parties enlarged “the subject matter” of the 1933 Shorts Agreement by adding certain motion picture comic cartoons “in addition to those set forth in paragraph ‘9’ of the [prior] contract.” Accordingly, we conclude that the Snow White compositions fall outside the scope of the 1933 Shorts Agreement.

However, our examination of the 1937 Assignment Agreement persuades us that it was not intended to be a complete integration of the mutual promises between Disney and Bourne, and, therefore, that extrinsic evidence of the implied grant of a license to Disney properly was admitted. Under New York law, where, as here, the written agreement does not contain a merger clause, the court must determine whether the agreement is integrated “by reading the writing in the light of surrounding circumstances, and by determining whether or not the agreement was one which the parties would ordinarily be expected to embody in the writing.” Braten v. Bankers Trust Co., 60 N.Y.2d 155, 468 N.Y.S.2d 861, 864, 456 N.E.2d 802, 804 (1983) (quoting Ball v. Grady, 267 N.Y. 470, 472, 196 N.E. 402 (1935)). The “[d]ecision in each case must, of course, turn upon the type of transaction involved, the scope of the written contract” and the content of any other agreements asserted. ''Fogelson v. Rackfay Constr. Co.'', 300 N.Y. 334, 338, 90 N.E.2d 881 (1950).

We believe that the circumstances surrounding the 1937 Assignment Agreement compel the conclusion that the agreement was not intended to be an integration. If, as Bourne contends, the 1937 Assignment Agreement was intended to constitute the entire agreement concerning the musical compositions from Snow White, then Disney would have been left with no right to use the compositions in the original release of the motion picture in 1937 or in any of the subsequent releases. That Disney would relinquish, on the eve of Snow White’s theatrical release, all rights in the compositions that it composed specifically for use in the motion picture is highly implausible.

Other factors also weigh against finding that the agreement was intended to be an integration. First, for Disney not to have received a grant-back from Bourne would have marked a considerable departure from