In Re the Estate of Miller

THE MATTER OF THE ESTATE OF ALTON IN MILLER, DECEASED. GLENN Decided July Argued January 1982. Eisenberg argued Jerome C. appellant, the cause for David Jr., & Mackay, (Clapp Eisenberg, attorneys; Jerome C. Eisen-

berg, Singer, Pachman, Susan S. Stuart L. and Terence P. O’Reilly, Bar, member of the brief). New York on the R. Orlovsky argued John the cause respondent for Stephen (Orlovsky, Orlovsky, Miller Grasso & attorneys; P.A. R. John Orlovsky, Ronald E. Hoffman brief). and Martin J. Arbus on the argued D. respondent

Bruce Shoulson the cause for Jonnie (Lowenstein, Sandler, Brochin, Soper Kohl, Fisher Boylan, & attorneys; brief). Bruce D. Shoulson on the opinion Court was delivered by

CLIFFORD, J. appeal decision, questions This a trial court affirmed by Appellate Division, that an interest in terminated aon specific date. interpretation The issue turns on of the contract granting that The Chancery interest. Division determined that (Glenn transfer Alton Glenn Miller) widow father, appellant’s deceased, Mackay, David now of a one- royalties accruing from the sale of interest in certain

third terminated on March recordings of the Glenn Miller Orchestra substantially affirmed for the Appellate 1967. The Division expressed by granted Mackay’s the trial court. We reasons certification, (1981), 87 N.J. 407 and now affirm. petition for

I upon holding principally Because our is based inferences surrounding parties’ dealings from the circumstances drawn other, complicated each a recitation of the somewhat facts with necessary. Beginning in 1939 David served as attor- is disappearance Miller. Until Miller’s ney and advisor Glenn military flight, Mackay performed legal on a various 1944 while negotiation for Miller and assisted him in the services performance recording and contracts. Mil- execution of several paid Mackay Department ler for these services. After the War officially declared Miller dead in served as attor- will, for Miller’s estate. Under Miller’s which was ney admitted Bergen the probate County in Probate Division of Court (Miller wife, having domiciliary Jersey), died a of New Miller’s Miller, was named the sole beneficiary Helen D. and executrix. executrix, Although Helen Miller was handled all the income, principally finances of the estate. The estate’s from by (RCA) Victor of recordings from the sale RCA made death, by the Miller Orchestra before Miller’s was sent to Glenn deposited the Mackay, Mackay prepar- who it in estate account. ed written on the estate account and mailed them to checks signature. During years Miller for her the immediately Mrs. the the following recording Miller’s death income from RCA $54,000 steadily, approximately from royalties declined in 1948 $14,500 in 1951. slightly less than response to this decline discussed with Mrs. Miller project increase the proposal for estate’s earn- ings. proposal possible recordings This involved the use of of performances of the Miller radio broadcast Glenn Orchestra. recordings, library Thesé known as recordings reference or “air checks,” directly were made the from broadcasts and were by solely intended Miller to be used to evaluate the broadcasts improve performance. and to the orchestra’s The sound quality poor, recordings owing of these both static and noise attendant to the radio broadcasts and to low level of recording technology process. Mackay preserved had these air checks after Miller’s death. Mackay suggested

In 1951 to Helen Miller that perhaps RCA something do up” could with air checks to “clean them quality recordings make commercial from them. When Mrs. agreed to proposal, Mackay catalogued the air checks recording—a and later monitored their task characterized an expert job.” witness “a monumental determined that it RCA was feasible to make quality recordings commercial from air checks. Miller,

As a result Helen as executrix Glenn Miller estate, entered into a contract with RCA August dated 1951. provided contract that RCA would release one a year album years, for three each eight album to contain selections recorded among air from checks. RCA percent sales, estate a six royalty percent 91½ of all to be paid semi-annually. gave The contract the perpetual right to manufacture and release records the selections made under the contract. contract, day signed 14,

On the same that she August RCA document, signed Mrs. Miller a handwritten by Mackay, legal effect of which is the issue in this appeal. The document stated: undersigned assigns, For value received the hereby sells, transfers and sets over David a

unto sum to one-third of the equivalent accrue to undersigned agreement August from the of 1951 entered into simulta- undersigned herewith between the and Radio America neously Corporation covering recordings releasing phonograph and records to made from recordings. Glenn radio broadcast reference library recordings pursuant The released to the 1951 contract met with greater any parties anticipa- success than had commercial ted, parties agreement wherefore the entered into a new in 1954. Significantly, agreement, agreements and all later discussed below, the distinctive feature of the did not contain 1951 con- gave perpetual right to manufacture tract RCA and Indeed, recordings. Mackay acknowledged air check at release had been “superseded” trial that the earlier contract and that agreement.” the “controlling the 1954 document became agreement provided that the estate would turn over to Orchestra, form, recordings all of the Glenn RCA Miller. agreed been released. previously that had not RCA that be- tween 1954 and 1959 it would re-record and release a minimum performances recordings of 80 from these and would pay the percent six of 90 of all sales. The percent agreement estate new payment, apparently also modified the method of to create a tax advantage pay $50,000 to the estate. RCA estate year Any exceeding from 1955 to 1959. income that amount against would be retained RCA as a reserve fund future $250,000, the reserve payments. Whenever fund exceeded how- ever, the estate the excess semi-annually earned. signed contract,

When she the 1954 RCA Mrs. Miller also executed, request, a nearly at document identical in wording granted to the 1951 document that Mackay a one-third interest in monies accrued under the 1951 RCA contract. This gave Mackay new document a one-third interest in monies accruing exception, under the 1954 RCA contract with the however, percentage computed that his would be paid only $15,000 year. after the estate received the first each The reason change for this was that Mrs. Miller believed that since the $15,000 earning per year estate was about in royalties before arranged checks, for had releases based on the air Mackay was not entitled to receive one-third of that amount.

The RCA releases continued to meet with commercial success. again In 1955 the entered into a new contract. RCA

215 now to release a minimum in period of 120 selections $50,000 per year between 1954 and 1962. The pay- minimum continued, ment was ceiling but the reserve fund was increased $400,000. respects to other all the 1955 contract with RCA continued the terms of the 1954 again Mackay contract. Once requested that Mrs. Miller execute entitling a document to him proceeds, $15,000 one-third of the after the first per year, accruing contract, under the 1955 but this time Mrs. Miller balked. The record contains several by Mackay letters written requests in 1955 wherein he that Mrs. Miller execute a such Miller, document. There is also letter Mackay a from Mrs. to 1958, April 15, dated wherein he to her refers wish that rather having contract, than a assignment blanket related to each RCA prefer grant she would Mackay his interest a one-third year-to-year her, however, basis. told such plan have an adverse tax effect on the For estate. whatever reason, 15, April 1958, sometime after Mrs. signed transferring document one-third of the income accru- ing under the 1955 RCA contract.

Meanwhile, 1958, January in RCA and Mrs. Miller had again their agreement. amended Other an adjustment than in the sales, rate for royalty only changes record club were that the payments 1964, were yearly through extended the annual mini- $100,000, mum was increased and the reserve fund $700,000. ceiling was prodding increased After some in the 15, previously April discussed Mackay, letter from Mrs. Miller executed giving Mackay right a document to one-third proceeds January of the 1958 amendment to the 1955 RCA contract. subsequent

There were three amendments to the 1955 RCA 1962, 1960, each, contract: and 1963. In the annual minimum 1965, 1966, through were extended 1967 respec- tively. ceiling The reserve in modified the 1960 and 1962 contract, respects amendments. In all other as amend- ed in remained effect. As to the transfer of one-third proceeds signed Mrs. Miller a docu- already discussed, ment that was identical to those save in one important aspect. This document stated that Mackay was to receive one-third of the monies to accrue under the 1955 RCA any contract Mackay “and amendments thereof.” subsequently position language took that this additional obviated the need for similar documents in connection with the 1962 and 1963 amendments.

None of the documents in which Mackay given was one-third of the royalties made mention of how long he would continue to collect that amount. He continued to collect one- royalties up third of the through to and the time of Helen 2, Miller’s death on June 1966. will,

In her Mrs. Miller left her entire estate in two testamen- trusts, tary children, one for each of her Steven Miller and Soper, Jonnie respondents in these proceedings. Mrs. Mil- appointed ler’s will David as executor of the estate and trustee of the trusts. received executor’s fees under addition, appointment. under Glenn Miller’s will named, along with one Chalmers MacGregor, as successor MacGregor co-executor. When decided not to serve as co-execu- (in response tor assurances that Glenn Miller’s estate was completely almost settled MacGregor was not needed), Mackay became sole successor executor under Glenn began Miller’s will and to take executor’s commissions. As above, Mackay indicated was also still receiving one third of the royalties that accrued under the 1963 schedule on the contract, which was due expire 15, on March 1967.

In letters to Miller Soper, Steven and Jonnie dated June 1968, Mackay explained arrangements that he had with Mrs. concerning receipt Miller his of one-third of royalties, the RCA $15,000 after the year. exclusion each He explained also that he receiving $5,000 had been annual fees of from the Glenn legal estate for services. Mackay proposed that in the future $15,000 eliminated, exclusion be thereby entitling him to royalties, $5,000 one-third of all and also that legal services fee be eliminated. Although it would appear that this would make no difference in Mackay’s income unless the royalties fell $15,000 any below year, in which case Mackay would earn less before, than he had it is worth observing that if Mackay had closed the Glenn Miller 31,1967, estate December as the trial have, court found that he should he longer would no have $5,000 received the annual legal for fees to the estate.1 As it was, Soper both Miller and agreed to Mackay’s proposal, and Mackay continued to receive one-third of thereaft er.

Sometime in disagreement after a between respondents Mackay, respondents and initiated an investigation into Mack- ay’s dealings in relation estate. As a result of that investigation respondents brought an action for an accounting and to surcharge Mackay for certain monies they alleged he wrongfully trial, took. After a fourteen day the trial court issued an opinion containing findings. several

The court Mackay found that had improperly computed cer- tain find, executor’s commissions. It however, refused to Mackay had improperly charged attorney’s fees to the Glenn Miller estate. Although these findings were the subject of appeal cross-appeal and Appellate Division, in the the parties do not raise them before us.

The sole issue that we face is whether there is sufficient support credible evidence to the trial court’s conclusion that the by documents executed Mrs. Miller did not entitle Mackay to

receive one-third of the income of the RCA after 15, Johnson, March 1967.2 146, See v. State 42 N.J. (1964). 162 1In Mackay’s letter, he seems to assume that he was entitled to continue to agreement receive one-third of the RCA after the last expired. Whether he believed this at the time or whether he did not but wanted Miller assume, so to we Soper cannot say. agreeing 2The trial court held that in to the terms as stated by 20, letter, June 1968 to allow respondents continue to

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II their face granted On the documents that Mackay proceeds one-third interest in the of the RCA royalties do not give, any long indication of how was to continue to receive that interest. The trial court’s task then was to resolve ambiguity as to the duration Mackay’s interest exam ining parties the intent of the in the context of well-settled principles Perpetual of law. performance contractual is not favored in the law and is to be avoided unless there is a clear manifestation that intended it. West v. Caldwell Caldwell, (1958); 26 Koch, N.J. 29 Koch v. N.J.Super. 95 (App.Div.1967); 550 1 Williston on (3d 1957); Contracts ed. § Corbin, (1960). Contracts The documents § themselves contain no words that would indicate such intent. The trial court was any unable find clear manifestation in the record give that Mrs. Miller intended to Mackay an interest that would perpetuity, last in nor did Mackay testify ever that Mrs. Miller acknowledged at time that he had such an interest. conduct, parties’ fact, could reasonably be inter preted opposite. to indicate the Each time the payment sched extended, Mackay ule was insisted that Mrs. execute a If, appellant new document. as argues, now original trans gave fers an interest in royalties accrued, as they it would not have necessary modify been those merely transfers because the schedule was impor- modified. Also of receive a third of the RCA royalties. court determined, however, agreement was as the result of procured undue influence over and was therefore void. respondents does not attack the court’s finding argues gave influence, of undue but rather that because Mrs. Miller him interest in the permanent RCA royalties, respondents’ permission receiving not for him to continue required his one-third share. Mackay characterizes the June 1968 letter as a mere for modification of request the terms of Since admits payment. that the did not, respondents by grant their assent the terms in the letter, in Mackay any interest the RCA we need not address royalties, of whether that assent was question undue procured by influence.

219. expressed tance is the fact that Mrs. Miller a desire give Mackay an royalties interest in the on a year-to-year basis. Only when Mackay convinced her that arrangement such an would have an sign adverse tax did she effect the transfers as by written Her Mackay. attempt Mackay yearly is a strong indication that Mrs. Miller never intended Mackay’s interest to be perpetual. short, canvassing record, after the entire we conclude that support

there is sufficient for the trial court’s finding that Mrs. not did intend to continue to receive a one-third interest in the RCA for as long they as continued to Johnson, accrue. supra, See State v. 42 N.J. at 162.

The trial court next found that “the parties intended that Mackay’sright participate in the only run as period guaranteed payment for the royalties in the underlying contracts between RCA and the Glenn Miller estate.” guaranteed Those 15, 1967, and, ended on March therefore, so Mackay’s did interest.

In its effort to arrive at the termination date the trial again court was faced with the determining task of parties’ Ordinarily, intent. if a contract contains express no terms as to duration, its it is terminable at will or after a reasonable time. Esslinger's Alachnowitz, v. N.J.Super. 68 (App.Div.1961); 339 E., Detroit, Inc., see & Inc. v. P.S. Selastomer 470 F.2d 128 (7th 1972); Cir. 1 (1957); Williston on Contracts Corbin, 1 § (1967). Contracts pointed As is in § out the Restatement of Contracts, when to a contract have not respect in of a term that is essential to a rights determination of their duties, a term that is reasonable supplied circumstances is (Second) the court. Restatement (1981). Contracts § meaning

Both the of the words used and the that a term probability particular would have been used if the had been raised be factors question may determining what term is reasonable in the circumstances. But where there is agreement, in fact no the court should a term which with supply comports standards of fairness and community rather than policy analyze hypothetical bargaining model of the (emphasis supplied).] process. comment d [Id., 220

Considering the effort that Mackay expended in connection with recording the RCA contracts and the return that he received for (more $400,000 1967), that effort than between 1952and there is adequate buttressing evidence the trial finding court’s 15, March 1967 was a reasonable termination date for royalties. interest in

Moreover, period if a definite of time can be inferred parties from conduct of the and the surrounding circum stances, period govern then that time should duration agreement. Ricke, 1115, 1120, Ricke v. 83 Ill.App.3d 39 Ill.Dec. 598, 603, 351, (1980); 405 Medders, N.E.2d 356 Medders v. 681, 685, N.C.App. 44, (1979). S.E.2d Several facts support the inference that Mrs. Miller intended that Mackay’s 15, interest greatest would end on March 1967. Of importance is the close link between the royalty contracts and the transferring documents an interest those Mackay. contracts, The 1954 and 1955 RCA and the subsequent amend latter, periods ments to the contained fixed during guar which anteed were to be made. Each time the payment extended, schedule was modified and asked Mrs. Miller sign gave new document that him an pursuant interest agreement. the new RCA Surely supports the inference she,was that Mrs. Miller understood that the interest assigning to Mackay was limited in time the payment schedules underlying otherwise, If RCA contracts. it were there would be no reason for her sign a new document every time the payment schedule—and only schedule—was changed. attempt, above, Mrs. Miller’s mentioned to put Mack ay’s interest year-to-year on a basis further supports this infer ence. support

Additional for the March 1967 termination date is manifest from parties what the believed would be the revenues under the RCA contracts. admitted that none of the profitable realized how the sale of the RCA records would be. accounting his first intermediate as successor estate, executor of the Glenn September dated anticipated paid stated that it was that the amounts under the RCA contract would have decreased until there was so, no further income. If this is it probability unlikely of is that contemplated go receiving Mrs. Miller that payments indefinitely. likely It seems more that she believed i.e., by expired, that the time the last schedule March 15,1967, estate, the Mackay, Glenn and as a result David longer, receiving would no income from RCA. writings are the

Finally, there themselves. Where an written ambiguity appears agreement, writing in a is to be strictly against construed the draftsman. Terminal Construc Corp. Bergen County Sanitary tion v. Hackensack River Sewer Authority, (1955). Dist. 18 N.J. It undisputed is giving drafted the documents him an interest in the handwriting. RCA contracts. The 1951document is in his If he wanted to ensure that interest in the his would contin accrued, ue as as it would have simple been so to word the documents. failure to do so must be con against strued him and in favor of Helen Miller. dissent, that, post

We cannot at agree urged by as “sell, the use of the assign, words transfer and set over” will suffice to convey permanent a interest to the transferee. The (1950), quotation Phily, by from Hirsch v. 4 N.J. 408 invoked support proposition, dissent in of is less compelling than when read in context. part

Here is the relevant of Hirsch : * * * paragraph assignment: the technical first uses words of “we quoted * * * transfer and set over the claim and account set forth and all sell, above, right, paragraph our title and interest etc. The second therein,” quoted employs language the traditional of a which has been used for power attorney rights assignee: centuries in the common law to describe the of an “and hereby * * * constitute and S. Hirsch our true and lawful irrevocable, appoint attorney foregoing for use and in name and and to receive all stead, accounts, [sic] grow due or to due thereon.” It is difficult to conceive of more effective moneys language outright assignment an either or express technically historically. at [Id. 413-14.] It is clear that the document examined in Hirsch contained more “sell, assign, set over” convey than the words transfer and parties. support interest of the We find no the law for the use alone proposition that of those words “establishes a in the permanent assignment absence sufficient credible assignment evidence that the intended the to be tempo- rary.” where, here, Post at 240. Especially agreement question greater party sophistica- was drawn who had documents, drafting tion in must legal Court examine all the determining evidence with toward the true eye an intent of the parties.

All of this lends to the ample support evidence trial court’s rise give conclusion that the circumstances to a compelling inference that Helen Miller intended interest to termi- guaranteed payment nate when the final under the agree- i.e., 15, made, ment March 1967.

Judgment affirmed.

PASHMAN, J., dissenting. that the majority supports finds evidence a “compelling inference” that Helen Miller intended David Mackay’s right to royalties to specific end a Ante at 222. I find date in 1967. inference, supports that the evidence no such much less a compelling majority’s description one. The the facts is diffi- cult to what the reconcile with record shows. The majority has contracts, misconstrued the various misdescribed important events, misinterpreted parties the intent of the and misapplied the law judgment of contracts. I would reverse Appellate finding and hold Division of the trial court assignment intended Helen Miller’s temporary to be is not based on sufficient credible majority evidence. I believe the accurately Because does not here, describe happened what I must recount rather compli- so, cated facts will doing in detail. After I my discuss differ- ences majority’s legal with the analysis.

I Glenn disappeared military flight on a in 1944. After Department War 1945, declared him wife, dead in his Helen Miller, became executrix of his estate. David Mackay had been her attorney husband’s since death, 1939. After Miller’s attorney served as for the Glenn Miller estate.

In the five years or six following death, Miller’s the royalties from the sale of Miller’s records declined substantially. In $54,342.48 the estate earned in royalties. By this had $14,415.94. fallen to response income, to this decline in Mackay conceived an might

idea that increase the royalties earned the estate. He suggested to Helen Miller that the recordings of Glenn Miller’s radio performances be turned into records. Glenn Miller had recorded these broadcasts to improve evaluate and the orches- performance. tra’s These recordings or “air checks” were of poor quality. death, After Miller’s his personnel orchestra in- tended to discard them. They evidently felt that the air checks were valueless. Rather than let the air checks be destroyed, Mackay removed them from preserved Miller’s office and them. n When Helen Miller pursue decided to Mackay’s idea of con- verting the records, air checks into Mackay offered to do the substantial necessary work to prepare them possible for use by Corporation Radio (RCA). of America return, In Helen Miller offered royalties one-third of the earned from the sale of any records made from the air checks.

Having received Helen approval Miller’s and her offer of royalties, one-third of the Mackay spent hundreds of hours preparing the 250 presentation air checks for to RCA. He listened to each of catalogued them and them. He later moni- tored recording by their expert RCA. An witness testified that the task of preparing the air for presentation checks to RCA job.” was a “monumental No one contests that assertion. Once had done all the work to prepare checks, the air he presented them to RCA. He successfully persuaded RCA’s

engineer attempt splice together good to to portions the of each selection. RCA liked idea air and determined the be checks could indeed made into records. August

In into RCA entered a contract with the Glenn signed Miller estate. Helen Miller the contract as executrix for August contract, the estate on promised 1951. the RCA to release three albums. produced One album would be each year from 1951 1953. Each eight album would contain selections from the 250 air checks. RCA the royalties price estate of 6% of the retail list of 91½% the of records sold.

The granted 1951 contract also the option RCA to release further containing “any albums or aIT’ of remaining the air terms, checks [emphasis same towas added] option by exercise the giving prior estate notice to Septem- ¶ ber 1953. The contract stated at 2: foregoing If the shall exercised us option of this by pursuant provisions we shall contract, have series of successive one-year same options, upon long terms and conditions as herein which shall continue so we provided for, as shall re-record and release at least one additional album of records in such each one-year period... long produced As as one new album year, option each produce new records from the air go checks would on indefinite- ly, royalties. as would the provided ¶ The contract further at 7: right

We shall have the phonograph to manufacture and release perpetually containing records such the recorded selections as are made and released us under contract. Thus, RCA could continue to manufacture and sell records produced under the “perpetually.” contract granted estate right right RCA this for return as the records were sold.

On day signed the same Helen Miller the 1951 contract with estate, RCA as signed executrix for the she a second contract that assigned to David one-third earned. That second contract stated: undersigned For value received the of Alton G. Miller [Estate Helen D. By assigns,

Miller, over Executrix] hereby sells, transfers and sets unto David a sum to one-third of the to accrue to the under- Maekay equivalent royalties signed agreement August from the of 1951 entered into simultaneously undersigned covering between the and herewith Radio of America Corporation recording releasing phonograph recordings and of to be made from Glenn recordings. Miller radio broadcast reference library Maekay The contract between and the estate require did not Maekay anything. to do It was not a contract for hire or a Maekay right service contract. had the to receive one-third of royalties earned whether or not he ever anything did else. services, Rather than a contract for future it was a sale of services, Mackay’s past future in return for without recordings Maekay which no would have been made at all. had performed prepare the hundreds of hours of work to the air after specifically checks Helen Miller offered him one-third of whatever Maekay would be earned. If had not done work, there would have been no royalties. records and no him, He conceived the idea. But for these old records would still sitting in a drawer. Because the records released under the 1951 contract were commercially, well-received the estate signed RCA and a second contract in 1954. The 1954 contract modified the 1951 contract changing one-year options the series of renewable to release recordings right new to a in RCA to make records out any of remaining promised 250 selections at time. RCA recordings release between 1954 and 1959 containing at least 80 of the selections. The contract did not end in 1959 since RCA go making selling could records after that date from yet put selections not on record. It could also continue to sell already records of selections released.1 1Although language the 1954 contract did not contain the explicitly granted right 1951 contract which manufacture records “perpetu right did not intend to limit RCA’s to sell ally,” clearly the records guaranteed to the This is the fact period payments. supported by RCA continued to sell records and to the pay royalties estate after guaranteed ended in 1967. the payment royalties.

The contract also modified of a of promised price the estate flat 6% the retail of many 90% of records sold. Because more records were selling anyone anticipated, earning than had the estate was royalties. amounts in To lower the tax substantial burden income, provided payments the 1954 contract that the would spread over time rather than paid be out as earned. RCA $50,000 year to pay only each from 1955 to 1959 from the royalties. Any royalties earned above that amount would be held RCA. When the accumulated amount earned exceeded $250,000, paid earned, the excess would be to the estate as semi-annually. arrange-

Several observations must be made this new about First, the of purpose spreading ment. out the estate’s royalty income into the future was to lower the overall tax burden on the income. If the estate were to all receive as royalties earned, large a By chunk would be taken in taxes. lowering the year, estate’s income each a smaller paid amount would be to the Second, $50,000 government. purpose payment was guarantee not. to that a certain minimum would be earned each Rather, year. intended to limit the paid amount in year. everyone each The evidence demonstrates that concerned $50,000 expected royalties year. to exceed $50,000 each merely were spread device to royalties into the future to reduce the liability. estate’s tax Third, the did contract not end 1959. While it is true that the guaranteed payments year, would cease it in that is clear that parties contemplated both that records would continue to be produced long sold, and sold after that they date. As as were royalties Thus, would be paid to estate. neither the contract royalties royalties nor the ended in 1959. The continue paid permanently, as the records were sold. When the signed, 1954 contract with RCA was Helen Miller executed a document Mackay. identical to the 1951 contract with granted It one-third earned under the However, 1954 contract. Helen Miller realized that the estate $15,000 year from RCA earning roughly had been Mackay was not entitled to a records before 1951. on other Therefore, royalties. Helen insisted percentage of those he receive Mackay provide with not that the 1954 contract earned, $15,000 limiting his thereby the first any royalties on excess. share to the one-third far more than continued to earn income the records

Since a third contract between RCA and the anyone anticipated, had again signed Helen Miller this signed was in 1955. estate The 1955 contract amend- as executrix for the estate. contract $50,000 extending the time of the by contract ed the 1954 five) (rather than from 1954 to 1962. eight years payments the change spread royalty was to out income purpose of this promised RCA also to record 120 even farther into the future. opposed to 80. The 1955 contract increased the selections as $250,000 $400,000 paid the estate would be figure to so that the when the total of undistributed earned royalties only as earned $400,000. respects, other the 1955 In all royalties exceeded contract. was identical to the 1954 agreement 1955 contract between RCA and the In connection with the document, 1, estate, a new dated March signed Helen Miller royalties earned 1955, Mackay one-third granted which contract, $15,000 with the again 1955 the terms of the under sign Helen Miller did not in fact undisputed It that exclusion. is undisputed also in 1958. It is this contract until sometime pay Miller continued to one-third of 1955 to Helen from Mackay. the 1955 contract to royalties earned under the signing the 1955 contract with delay for her The reasons by The record contains four letters Mackay are not clear. 10,1955. March 11 to June the Mackay to Helen Miller from “change wrote that the in the Mackay letter March first ^[1954] contract will re-execution of the financial require ar- letter, Mackay In his June 10 rangement you between and me.” contract with RCA had not been explained that if the 1954 contract, would have had to replaced by the 1955 RCA April 15, $200,000. estate on 1955 all over This would $138,052.67. Mackay’s amounted to share have would have been $41,017.56. Instead, $50,000, paid only estate with the balance retained for future estate. $50,000 $11,666.67. Mackay share of the concluded: foregoing figures I out so that have point these in mind you you may agreement connection with between us so that my request update you made to me are so made not under 1955 contract and under the 1954 contract. I have written to and about I have also previously you length with discussed it at some over the but still have not you telephone you agreement. sent me the You can see that are updated if we to continue readily agreement under the estate operate [between consider- Mackay], more now be due me. ably money reason, For some Helen Miller did not immediately sign the requested. contract with as he There is some evidence in 1958 letter to her from that she wanted to sign assignments new yearly, perhaps purposes. for tax What- was, problem ever the she continued to deliver to one-third of the earned the estate from 1955 to 1958 she though yet signed assignment. even not the had 1955 She clearly duty did not believe that her to Mackay royalties had ceased when the 1955 with signed. Moreover, contract RCA was eventually signed she assignment Mackay to in 1958. A fourth contract between the estate signed and RCA was 15, January 1958. This contract increased the yearly payment $50,000 $100,000 from to and guaranteed extended the minimum payments $400,000 from 1962 to 1964. It also raised the figure $700,000, ensuring money to that no paid would be to the estate $100,000 per over year from the royalties earned unless earnings $700,000. accumulated had exceeded This contract was previous much shorter than the and clearly contracts stated that was merely it an amendment of the terms of the 1955 contract. contract, connection with the fourth RCA Helen Miller signed assignment Mackay. another The wording was assignment except same as the 1955 that it adds words “as agreement. amended the 1958” signed The fifth RCA contract 1960. It extended the $100,000payments minimum from 1964to 1965. It also reduced $500,000. $700,000figure again Helen Miller executed an assignment Mackay of one-third of the earned under assignment the 1960 contract. This was different from the that had a one-third interest in previous ones. It stated to accrue to the estate under the 1955contract with the monies “any wording amendments thereof.” This was intend- RCA updates assignment ed to obviate the need for future of the underlying contract as the RCA/estate contract was modified. signed Two more contracts were with RCA in 1962and 1963. $100,000 payments per The contract extended minimum of $500,000 year figure to 1966. It reduced the in the 1960-contract $400,000. The 1963 contract extended minimum 1967.

Helen Miller died on June 1966. She left her entire estate children, spendthrift trusts to her two testamentary in two Soper Miller. was named successor Jonnie and Steven of Miller’s estate. executor Glenn 15, 1967, guaranteed payments March the minimum of On $100,000 stopped agreement. the 1963 This per year under did royalties stopped not mean that of or that rights contractual or the estale ceased to exist. other royalty payments only continued. The difference was (6% as earned of the sales paid now the were 90% records) the future spread rather than out over proceeds in smaller amounts. children, Miller’s Jonnie

In a June 1968 letter to Helen Miller, alter the Mackay suggested they Soper and Steve He did not ask them to assignment terms of the contract. in After the minimum ceased assignment. extend the 1967, the estate and one-third royalties paid continued to be to suggested revoking He the paid Mackay. of those were to $15,000 get would one-third of all exclusion so that time, $15,000. earned, At the same royalties including the first $5,000 give up his to a Maekay right yearly payment for legal services to Glenn Miller’s estate. The result miscellaneous changed nothing paid Maekay, in terms of the dollar amount to $5,000 payment Maekay equalled the to one-third of the since $15,000. in Nothing this letter to Jonnie and or in Steve 9, July suggests letter second dated that he their needed royalties. to continue to receive consent one-third Jonnie assignment. the of Soper change to the terms the 1975, Soper sought accounting Steven Miller and Jonnie an surcharge Maekay estate and a of as executor money the for wrongfully July 13,1977, he taken from the estate. On had the findings trial court made various not at only issue here. The question here trial finding is the court’s that Maekay not 15, royalties entitled to receive after March the date guaranteed payments on which the stopped under the last RCA Appellate contract. The Division affirmed trial court on substantially March for the expressed reasons in its We opinion. granted Mackay’s petition for certification on the legal assignments. issue of effect of the

II The issue this case is whether Helen Miller granted David Maekay permanent right royalties to one-third of the earned under RCA contracts or whether right she intended his royalties eventually though end even to the estate did not end. majority of this Court concludes signed that the documents Helen are ambiguous on question. It surveys therefore the surrounding circum- that adequately stances conclude the record supports the trial judge’s findings that Miller did not Maekay intend receive they paid as were Relying the estate. changes in the many RCA contract occurred years after signed original assignment, Miller had majority con- cludes 1967 is reasonable stopping point. disagree I for many reasons.

231 First, majority makes far too much of the ambiguity. In so, doing it unjustifiably ignores express language in the contract. It is true that when language contractual is ambigu- ous, surrounding we look to the circumstances to determine the However, of the parties. intent the words in the contract are primary indicator of that intent. Phily, Hirsch v. 4 N.J. (1950). Moreover, 413 it is not the case language that is either completely completely ambiguous. clear or Some words are others, clearer than depending on their context and their ordi- meaning. nary language susceptible Some is of only one mean- ing; language only vaguely suggests other a meaning. The contract, the language clearer in the the more hesitant we using parties’ should about conduct to override the clear Thus, import of the words. interpret parties’ intent properly, begin we must by examining the contractual language see ambiguous how it is. way question One to answer this is to ask whether persons agree reasonable would on what the words of the contract mean. Another test is to ask what words reasonable people they would use if intended a certain result. case, supposed

In this ambiguity is one of omission. Helen portion to sell to “to accrue” under the RCA contracts. The documents explic- do not itly long Mackay state how was to receive his interest. majority concludes that if Miller Mackay had meant permanently, they easily to receive his interest could have said Ante at 221-222. so. The fact not creates they did However, question doubt about their intent. is not whether easily either Miller or could have said that his interest permanent. The question yes. answer to that is obviously persons The real issue is whether reasonable have thought it necessary prudent permanent or to state that the interest was they if intended that result. previously

This Court has purports held a contract that “sell, rights transfer and set over” contractual is sufficient to convey permanent rights. Phily, interest in those Hirsch v. 4 agreed. N.J. at 413. Other courts have See Warner-Lambert 232 Inc., (S.D.N.Y. Reynolds, F.Supp.

Pharm. v. John J. 655 o.b., (2d 1959), 1960); v. Q & C Co., Cir. Spoor aff’d F.2d (7th 1947). 162 F.2d 529 Cir. As Chief Justice Vanderbilt wrote Phily, supra, in Hirsch v. language outright effective It is difficult conceive of more an to express assignment assignments right, either or the all title technically historically. By rights] NJ. at to the and interest was transferred ... [contractual question [4

414] it true that the Phily While is document Hirsch v. contained language an supporting convey permanent additional intent to a interest, is no believe there reason to that it was the additional language clarity that caused the Court to remark on the of the fact, parties’ language assignment intent. in the here is simple Although clear. Mackay easily and could have stated assignment permanent, that the it imagine is difficult to why thought he would have such a necessary. statement A normally arrangement. “sale” is not a temporary time, At the same if Helen had intended Mackay’s be temporary, interest to would she have signed the document Mackay majority argues worded it? The ambiguous that wording against must construed Mackay, who was the draft- However, at 221. majority er. Ante fails consider not person whether or a signed reasonable would have contract as worded if she had intended Mackay’s interest to be temporary. Granted assignment, wrote the Helen signing. According Miller must have read it before to the trial independent court she was an person.” “astute business It is that the also clear “sell” has an ordinary meaning word by layperson would be understood a a permanent constitute transfer. If she had Mackay’sinterest, indeed intended to limit signed she would not have the contract as wrote it. majority argues The assignment that the contracts “do not give any indication how towas continue to receive that interest.” at Ante 218. majority implies that the contractual is so ambiguous gives that it no language parties’ question. evidence of intent the crucial But this Moreover, the ambiguity. ignores overstates it the rule that the words of a contract are a primary parties’ indicator of the intent. It is not true that the contracts “contain no words” that an intent to convey permanent indicate interest. Ante “sells,” contain the word They which 218. at would be under- by laypersons stood and attorneys-alike to convey permanent They interest. incorporate provisions also of the RCA contract. That contract clearly states that RCA right had the produce records “perpetually” and that it would have duty pay royalties on all records sold.

Taking express language into account the assignments of the and the incorporation underlying contract, assign- ments are far clearer than the majority admits. As the primary intent, parties’ indicator of the those words should be interpret- convey permanent ed to interest in the royalties unless the circumstances or the conduct of the clearly shows other- wise.

Second, majority and the trial court erroneously rely on the doctrine imposing that courts disfavor perpetual contractual Caldwell, performance. West Caldwell v. (1958), 26 N.J. 9 relies, which the majority distinguishable. is In that case the town provide of Caldwell to sewer facilities to West which agreed pay Caldwell in turn to Caldwell for those serv- later, ices. More than forty years West Caldwell decided to sewerage build its own facilities. The court held that after forty years, West right stop Caldwell had the to paying Caldwell for its services and was free to build its own sewer system being without liable for breach of contract. That case stands proposition for the party that when one agrees to a contract services, another for its it may stop buying decide to those services from party the other after a reasonable time without being liable for breach of contract. case, by contrast,

This is not a contract for services. No one is being required buy the services of another for an unreason- period able of being time. is not compensated for services, continuing past but for his services in getting the air ready checks for in 1951. RCA The contract between Mackay place and the estate not did duties on provide continuing services to the estate. He was entitled to royalties whether or not he ever anything did else. The only continued “performance” payment money by here is the of the estate to Mackay. “performance” only And this arises when pays to the estate. Koch, N.J.Super. (App.Div.1967),

Koch v. is also easily distinguishable. There a woman made a pre-nuptial promise to her future husband that his mother could live with them after marriage. their years arrangement, After six of this the wife left the home with the children because of conflicts with her Appellate mother-in-law. The promise Division held that her her sufficiently husband had not been definite to constitute a However, contract. Id. at 550. even contract, if it had been a imposed the court would not have on her obligation to live Thus, with her permanently. mother-in-law the court would not agreement enforce the parties. between the contrast, By duty case involves no of performance by anyone other than the payment money. Neither the estate Mackay required anything. nor is to do agreement The puts no unreasonable only burden on the estate. The duty on the estate pay Mackay is to of any royalties one-third it receives from RCA, when and if it receives them. illegal merely is not because it lasts long

a time. This case is actually more like Warner-Lambert Pharm. Co. v. Reynolds, supra. John J. In Warner-Lambert, pay defendant to royalties plaintiff to as long as it made Listerine, and sold which had been by plaintiff. concocted After having paid royalties, millions of dollars in sought defendant to agreement, end the arguing that it was void as a contract in perpetuity. The court held that defendant had a duty keep to paying royalties long as as Listerine was manufactured and sold.

235 Similarly, case, in this RCA has duty a pay to the estate royalties long as as the records are party sold. No contends that stop paying RCA could royalties to the estate. If there is no limit duty pay on RCA’s to estate, to the why is there a limit on the estate’s duty pay one-third of royalties it receives to Mackay? The estate is not being buy forced to services from Mackay. It is also not being unduly burdened legal obligation. If it is require reasonable to RCA to continue paying royalties to the estate long as as it releases records, it is require also reasonable to pay estate to Mackay his fair share when the estate receives royalties. those

The presumption against perpetual performance contractual is inapplicable when the contract will terminate upon the occur specific rence of a event expressly impliedly or contained in the Payroll contract. Express Corp. v. Casualty Aetna and Surety Co., 285, 659 (2d 1981). F.2d 291-92 Thus, Cir. defendant in obligated Warner-Lambert was pay royalties only long so as Listerine; it continued to manufacture the contract was not one perpetuity since it defined the limits of defendant’s obliga tion. F.Supp. 178 at Products, 661-63. Timely See Inc. v. Costanzo, 91, 465 F.Supp. (D.Conn.1979) 96 (stating in dictum patent when federal provide otherwise, law did not court would enforce contractual obligation long as product manufactured); Co., Laff v. John O. Butler 64 603, 21 Ill.App.3d 314, 423, 433-34 Ill.Dec. 381 N.E.2d (1978)cert. 844, 100 den. 444 U.S. S.Ct. 62 (1979) L.Ed.2d 57 (holding that where the intent of the parties was to enter into a contract for the use of a trade secret in return for royalties, obligation pay royalties continue as as the formula was parties used since the did not specify otherwise). Multaplex, Lura v. Cal.App.3d Cal.Rptr. (1982), plaintiff’s defendant solicited assistance in obtaining various business accounts. When plaintiff successfully procured business, those customers for defendant’s entered into contract in which promised defendant pay plaintiff commission on each of the accounts. The contract contained no specifying long

term how the commissions would paid. court held that defendant was contractually obligated pay to long commissions as as he continued to make sales to the plaintiff customers which procured. had The court reasoned that the contract was not one in perpetuity: obligation contingent Since to is respondent’s its sales appellant to the upon agreement accounts he secured, is of a limited duration—until respondent selling being obligated to those accounts. stops far from Further, to make obligations could at forever, time terminate its respondent to ceasing to sell to the obligation accounts. The appellant by mere fact that an long under a contract continue for a time is no may reason in itself for very declaring giving the contract to exist in or for it a perpetuity construction which would do violence to the intent of the expressed ... Respondent’s arguments against based upon contracts public policy are perpetuity (citation omitted) at 849

inapposite. [179 Cal.Rptr. ] The court further supported this result by noting that the case did not involve a personal service contract. The court was not forcing defendant to continue to employ plaintiff or reimburse him continuing for services. Id. only duty Plaintiff’s under the contract was to secure the accounts. this, Once he had done “the only obligation remaining was that respondent pay to compensation.” plaintiff Id. Since had already performed all the services he was contractually obligated to perform, obligated defendant was paying continue the com- missions to him as long as it continued to benefit from the accounts he had secured. Id. at 850.

The situation here is no different than that in Lura v. Multa- plex. The contract is not one in perpetuity since the estate’s' obligation to pay royalties to Mackay will cease whenever RCA ips selling s. records and paying royalties to the estate. More- over, Mackay has already performed all the services he was contractually obligated perform. The only remaining obliga- tion is the estate’s obligation “unilateral” pay á share of the royalties whenever pays them to the estate. See id. at 849. As as the estate continues to benefit from Mackay’spast services, it is obligated him his share of the royalties. majority’s argument

The is third that “none of the parties profitable how the realized sale of the RCA records would be.” at undoubtedly Ante 220. This is true. Helen Miller probably that the would believed records not continue to sell as as they did. stopped selling, When the records payment the of end, royalties to the estate as would Mackay’s share. However, majority the incorrectly infers from this fact that Miller probably Helen would have Mackay’s intended share to even if payments end the to the estate did not end. It does not that profits follow because the were higher expected, than the can duty estate now be relieved from its legal to Mackay. It is not the majority also relevant that considers share of royalties adequate the between 1951to 1967to compensation Again, for his services. Ante at 220. could RCA be relieved duty royalties its pay merely from to the estate because the has far already money anticipated? estate earned more than Of not. course

Fourth, majority the and the trial incorrectly court state that “expired” RCA n.1, the contracts in 1967. Ante at 217 221. is simply This not true. It is also true not that the RCA periods during contracts “contained fixed guaran which be made.” Ante payments teed were to at 220. The original provision 1951 contract no limiting contained at all the total of the royalties during they amount or time which would be in the paid. payment modification schedule subsequent in guaranteed contracts was not intended to ensure minimum to the It was payments estate. also not intended to limit the years during which payments number would be made. Those designed for purposes modifications were tax to limit the total paid year. any amount one While it is true no guaranteed obligated were after RCA was to continue royalties long as it paying Eventually, sold records. if sold, royalties paid records continued to be would be above and beyond payments. Nothing scheduled the underlying limits payment period. contract fixed and to fact, to sell records after 1967 continued to the estate. induced RCA to to remember important It is also to decrease in 1954 and afterwards change payment schedule what relation those It is difficult to see estate’s taxes. to Helen Miller’s schedules have payment in the modifications agreements were made royalty in the The modifications intent. assignment Mackay signed original after she had years which had no such contract with RCA original and the thought pay- that RCA’s And even if Helen schedule. 1967, there is no evidence that would end in ments to estate share to cease when the Mackay’s have wanted she would estate continued. payments to the Fifth, argues Mackay’s conduct demonstrat- majority the temporary. to be Ante assignments he understood the ed that permanent assignments gave original If the 218-219. at not have insisted that royalties, Mackay in the interest assignments just payment because the sign new Helen was modified. schedule sign insistence that Miller majority implies assignment to that he believed the had

new documents indicates Mackay sign did not ask her to periodically renewed. Yet only he asked her to do so when periodically; new documents Moreover, in he was modified. underlying the contract assignment to obviate the need for changed language the assignment. This demonstrated that any modifications in the assignment periodi- the would have to be Mackay did not believe fact, assignments only had been modified renewed. In cally underlying contract was modified. when assign- in the Mackay insist on the modifications Why did Miller, Mackay In his 1955 letters to Helen ments? one of to make the assignment that the had to be modified explained with the new legal duty compatible to him estate’s He felt that unless Helen Miller schedule in the 1955 contract. obligated assignment, legally the estate would be modified the him on the basis of the schedule in the By 1954 contract. signing assignment, the new Miller would decrease estate’s legal obligation Mackay to one-third of the lower made under the 1955 contract. This that Mackay demonstrates 1954assignment believed that the remained in effect even after had signed. contract been It why also shows he modify assignments insisted that she the payment when was schedule modified.

Mackay explained also in a letter to Miller that when the audited, estate income return for tax 1955 was field agent assignment. it, called for the 1954 When the agent shown the payment deducted from the estate’s income. assignment feared that without a new keyed the 1955 contract, the estate would not be allowed to deduct from its the payments Mackay. income made to It would therefore be for it did money taxed not earn. right

Whether believing or not that new assignments legally were his required, gives conduct no evidence all at that he the assignments anything believed to be other fact, permanent. than the evidence in the record demon- assignments that he the new strates believed were needed to liability obligations limit both the tax and its legal estate’s year Mackay. one Sixth, argues majority that Helen conduct Miller’s indi- Mackay’s royalties cated that she did not intend in the interest 219. she permanently. attempt- continue Ante at Because to give year ed to an interest year in the on a to basis, she be permanent. never intended it to I find this inference untenable. The record contains no as to why evidence give Mackay yearly Helen Miller assignments. wanted But reason, whatever her the record is clear that she decided not to fact, assignments yearly. renew the evidence shows that yearly assignment, obliga- she did not believe absent a her tions to would end. continued to his She him share though between and 1958 even she had not signed assignment. the 1955 clearly She felt bound the 1954 assignment as late as 1958. Whatever the reason for the delay signing assignment, the 1955 the fact is that she sign did it. signed assignments She also new Moreover, 1958 and-1960. signed she no new documents at all after 1960. Yet as executrix of the give estate she continued to Mackay his share of the ' royalties.

Whatever her reason for seeking give yearly assignments Mackay, pay Mackay continued to his one-third share years for fifteen until her death. Is this the conduct of a person thought who so, share was temporary? If I cannot imagine person how a would act if she intended his share to be permanent.

HI I would hold that purports “sell, a contract that assign, transfer portion and set over” a continuing royalties to accrue under another permanent contract establishes a assignment of portion of the royalties in the absence of sufficient credible parties evidence that the assignment intended the to be tempo- rary. I conclude that the trial court’s finding that assignment intended the temporary is not based on suffi- cient credible evidence in the record. I would reverse the judgment Appellate Division and hold that the record is devoid of evidence that Helen Miller intended Mackay’sinterest to end even though royalty payments to the estate continued. Mackay was entitled to receive his share as RCA pay royalties continued to to the estate.

Chief Justice WILENTZ and join Justice HANDLER in this opinion.

For CLIFFORD, affirmance—Justices SCHREIBER, POL- LOCK and O’HERN—4.

For reversal—Chief Justice WILENTZ and Justices PASH- MAN and HANDLER—3.

Case Details

Case Name: In Re the Estate of Miller

Court Name: Supreme Court of New Jersey

Date Published: Jul 13, 1982

Citation: 447 A.2d 549

Court Abbreviation: N.J.