COURT OF APPEALS DECISION DATED AND RELEASED May 15, 1996 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-0407
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
SCOTT ZOELLICK,
Plaintiff-Appellant,
v.
ROBERT F. UNGER and
NANCY UNGER, d/b/a
NORTHWOODS CRAFTSMAN,
Defendants-Respondents.
APPEAL from a judgment
of the circuit court for Waukesha County:
PATRICK L. SNYDER, Judge. Affirmed.
Before Brown, Nettesheim
and Snyder, JJ.
PER CURIAM. Scott Zoellick appeals
from a judgment dismissing his complaint for royalties on the sale of limited
edition prints of his original artwork.
We affirm.
Zoellick sued Northwoods
Craftsman to recover royalties allegedly due under a January 1989 agreement
between the parties for the publication and distribution of Zoellick's limited
edition art prints. In that agreement,
Northwoods agreed to bear the costs of reproducing the original art, furnish
Zoellick's biography and pay for advertising and promotion. Zoellick agreed to furnish original artwork
for reproduction and granted Northwoods the exclusive right to publish and
distribute his limited edition art prints.
The contract provided that all art prints remained the property of
Northwoods until sold.[1] Northwoods agreed to pay Zoellick a royalty
of 25% of the wholesale price on each art print sold.[2] The contract was for a twelve-month term and
renewed automatically for like periods unless either party gave written notice
of termination six months prior to the contract renewal date.
Zoellick gave a
termination notice in January 1992, effective in January 1993. The parties were unable to resolve questions
regarding disposal of Northwoods' inventory of Zoellick's prints. Ultimately, in June 1993, Northwoods sold
the inventory to a third party.
Zoellick sued Northwoods to recover royalties on the sold
inventory. Prior to trial, the parties
stipulated that the issue to be tried was whether any royalties were due
Zoellick as a result of the disposal of Northwoods' inventory of Zoellick's
prints.
In its ruling after a
bench trial, the trial court dismissed Zoellick's complaint on the grounds that
there was no meeting of the minds as to what would happen to the inventory and
royalties upon termination of the contract.
The court noted that although the contract stated that the inventory
belonged to Northwoods, it made no provision for royalties to be paid to
Zoellick after termination of the contract.
The court rejected Zoellick's claim for compensation under the contract
as well as his unjust enrichment claim.
Preliminarily, we
address Northwoods' argument that Zoellick's claim sounded in copyright rather
than contract and therefore was preempted by federal copyright law. The trial court denied Northwoods' motion to
dismiss Zoellick's complaint after concluding that it alleged a cause of action
for royalties due under the parties' contract.
"[A]n action is not
one ‘arising under' the Copyright Act merely because it has ‘an aroma of
copyright.'" Hall v. Inner
City Records, et al., 212 U.S.P.Q. (BNA) 272, 273 (S.D.N.Y. 1980)
(quoted source omitted). Zoellick sued
for unpaid royalties on prints sold subsequent to the termination of the
contract. He did not allege that the
inventory sale occurred in violation of either the contract or his rights. He merely sought payment he believes was due
him pursuant to the sale. Claims of
nonpayment of royalties are not claims arising under the Copyright Act. Malinowski v. Playboy Enters., Inc.,
706 F. Supp. 611, 615 (N.D. Ill. 1989).
Resolution
of the parties' dispute depends upon construction of their 1989 contract. While construction of a contract to
ascertain the intent of the parties is normally a matter of law for this
court, Eden Stone Co. v. Oakfield Stone Co., 166 Wis.2d 105, 115,
479 N.W.2d 557, 562 (Ct. App. 1991), where a contract is ambiguous, the
question of intent is for the trier of fact.
Armstrong v. Colletti, 88 Wis.2d 148, 153, 276 N.W.2d 364,
366 (Ct. App. 1979). We will not
disturb a trial court's findings of fact regarding intent unless they are
contrary to the great weight and preponderance of the evidence, i.e., clearly
erroneous. See id.;
see also Noll v. Dimiceli's, Inc., 115 Wis.2d 641, 643,
340 N.W.2d 575, 577 (Ct. App. 1983) (the great weight and preponderance of the
evidence standard is identical to the clearly erroneous standard). However, whether a contract is ambiguous in
the first instance is a question of law which we decide independently of the
trial court. Wausau Underwriters
Ins. Co. v. Dane County, 142 Wis.2d 315, 322, 417 N.W.2d 914, 916 (Ct.
App. 1987). Ambiguity exists in a
contract if it is reasonably susceptible to more than one meaning. Id.
We conclude that the
1989 contract is ambiguous on the question of Zoellick's entitlement to
royalties after termination of the contract.[3] The contract states that Northwoods retains
ownership of prints of Zoellick's artwork until they are sold and that Zoellick
will receive a royalty on each print sold.
The contract also gave Northwoods the exclusive right to publish and
distribute Zoellick's prints. The
contract is reasonably susceptible to more than one meaning on the question of
Zoellick's entitlement to royalties once the contract and Northwoods' exclusive
right to sell Zoellick's prints terminated.
Having concluded that
the contract is ambiguous on this point, we turn to the trial court's findings
regarding the parties' intent on this question. See Armstrong, 88 Wis.2d at 153, 276 N.W.2d
at 366. We will not disturb a trial
court's findings of fact regarding intent unless they are clearly
erroneous. See id.
Here, the trial court
found that the parties did not have a meeting of the minds as to entitlement to
royalties upon termination. This
finding is supported in the record. Zoellick
testified that there was nothing in the contract which mentioned rights in
existing inventory and that he understood that his right to royalties was
dependent upon Northwoods' exclusive right to publish and distribute his
limited edition prints. We acknowledge
that Zoellick later testified that he believed he was entitled to royalties
because he was involved in the process of creating the art and that his right
to royalties was triggered when the prints were sold. It was the trial court's responsibility to weigh what may have
been Zoellick's contradictory testimony.
See Micro-Managers, Inc. v. Gregory, 147 Wis.2d
500, 512, 434 N.W.2d 97, 102 (Ct. App. 1988).
Robert Unger testified
that under the contract Northwoods was in charge of remaining inventory when
the contract terminated. Unger
testified that at the time he entered into the contract on behalf of
Northwoods, Zoellick did not have any questions about disposition of the
inventory or royalties after termination of the contract. Unger further testified that it was his
belief that when the contract terminated, Zoellick forfeited any right to
royalties in existing inventory and Northwoods retained the inventory because
it had paid for its production.
The parties to the
contract testified to their differing interpretations of the contract. The evidence at trial supports the trial
court's finding that the parties did not have a meeting of the minds as to
Zoellick's entitlement to royalties upon termination of the contract. This finding is not clearly erroneous and we
are bound by it. Given this finding,
construction of the contract requires a conclusion that Zoellick was not
entitled to royalty payments after he terminated the contract.
The trial court's
refusal to award Zoellick damages on an unjust enrichment theory is first
raised in the respondent's brief.
Zoellick responds in his reply brief.
However, because the unjust enrichment ruling is adverse to Zoellick, he
was bound to raise it in his appellant's brief if he desired appellate
review. Because we do not consider
arguments raised for the first time in a reply brief, Swartwout v.
Bilsie, 100 Wis.2d 342, 346 n.2, 302 N.W.2d 508, 512 (Ct. App. 1981),
we decline to consider the trial court's unjust enrichment ruling. However, were we to do so, we would affirm
the trial court's refusal to award damages to Zoellick on an unjust enrichment
theory because the doctrine does not apply where the parties have entered into
a valid, enforceable contract. Continental
Casualty v. Wisconsin Patients Comp. Fund, 164 Wis.2d 110, 118, 473
N.W.2d 584, 587 (Ct. App. 1991).
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[3] In this respect, we differ from the trial court's analysis. The trial court concluded that the contract did not address Zoellick's entitlement to royalties upon termination; it did not conclude that the contract was ambiguous on this point. We are not bound by the trial court's analysis; we must independently construe a contract and assess its ambiguity.