
    Cream of Wheat Company, Appellant, v. The Arthur H. Crist Company, Respondent. (Actions Nos. 1 and 2.)
    Third. Department,
    March 18, 1915.
    Contract — contract for publication of advertisement construed — guaranteed circulation — “paid subscriber” defined.
    The publisher of a magazine, upon entering into a contract to publish advertisements, guaranteed that its average circulation should not be less than a certain number of copies, and it was “ understood and agreed that the term 1 circulation ’ for the purposes above mentioned shall be construed as follows: The total number of copies of each issue of tho publication above mentioned which shall be published and sold and delivered by the publishers thereof, both to paid subscribers and to news agencies, exclusive of all returns from news agencies and copies given away in any manner whatsoever.” It was further provided that the manufacturer should be privileged to audit the books of the publisher to determine the circulation, and that there should be a rebate in proportion to the failure of the circulation to meet the guaranty.
    Action to recover such rebate and the cost of auditing the publisher’s books. Evidence examined in connection with the terms of the contract, and held, that the term “paid subscriber” was not limited to those subscribers who had paid in advance, but embraced all of the names carried upon the subscription list, seme of whom had paid nothing upon account from the time of them original subscription.
    Woodward, J., dissented, with opinion.
    Appeal by the plaintiff, Cream of Wheat Company, from two judgments of the Supreme Court in favor of the defendant, one in each action, both entered in the office of the clerk of the county of Otsego on the 6th day of July, 1914, dismissing the complaint in each action upon the merits upon the report of a referee.
    
      Rogers, Locke & Babcock [Evan Hollister of counsel], for the appellant.
    
      Arnold & Cooke [Lynn J. Arnold of counsel], for the respondent.
   Smith, P. J.:

These judgments might well be affirmed upon the opinion of the learned trial justice sitting as a referee. To this opinion we have only a few considerations to add. Under the contract, which is here for interpretation, the plaintiff is entitled to recover if it appears that the defendant in 1911 and 1912 had materially less than 63,000 “paid subscribers.” Upon the wording of the contract alone the court might interpret the expression “paid subscribers” to mean those only who had prepaid their subscriptions. The trial court has found that by an established custom of the trade the term “ paid subscribers ” has a broader meaning, and includes not only those whose subscriptions had been prepaid but any subscriber to whom the paper was sent and who had once paid, although the subscription had not been prepaid for the years in question. This finding is abundantly supported in the record.

First. The purpose of the contract is to advertise the plaintiff’s product. The actual circulation of the defendant’s magazine was confessedly over 70,000 copies per month, although some of these subscribers had not paid for several years. The magazine was only sent upon the request of the subscriber, renewed in writing each year, upon which the trial court has found that there was legal liability to pay. The purpose of the insertion of the advertisement would, therefore, seem to be fully accomplished whether or not the subscriber had in fact paid the subscription price in advance.

Second. The contract itself in effect defines a paid subscriber as one to whom the paper was not sent as a gift. The term “circulation” is therein described as “the total number of copies of each issue of the publication above mentioned which shall be published and sold and delivered by the publishers thereof, both to paid subscribers and to news agencies, exclusive of all returns from news agencies and copies given away in any manner whatsoever.” It appears that it was the custom of the different magazines to give away to employees, to advertisers, advertising agents, to exchanges and for other purposes what are called service copies. These would seem to be the part of the circulation that was intended to be excluded by the terms of the contract.

Third. The term “paid subscriber ” has been construed by the plaintiff’s general manager and secretary, who negotiated and signed the contracts in question. In 1912, E. Mapes, who for the plaintiff negotiated and signed these contracts, was upon the circulation committee of the Association of American Advertisers, which was an association composed of about seventy or eighty prominent advertisers, which at its own expense had audits made of magazines and newspapers to determine the extent of their circulation for the purpose of •ascertaining their value as advertising mediums. Among the papers thus examined by this association were the Knickerbocker Free Press and the Albany Times- Union in the city of Albany. In that year a contest arose between those two papers as to which had the larger “paid circulation.” This contest was referred to a committee of this association, of which Mr. Mapes was a member. That committee decided that in ascertaining the paid subscription list all those subscribers should be counted who' had once paid and to whom the paper was then being sent, although no subscription had in fact been paid for fourteen years. The record does not show whether or not Mr. Mapes assented to that decision, but as he was on the committee which made the decision and it could easily have been shown if he dissented therefrom, it is fair to assume that it was his interpretation, as well as that of the committee, of the term “paid circulation.” It is true that this was the interpretation of the term as that applied to the circulation of a newspaper and not of a magazine. As the audit of' a newspaper circulation, however, was for the same purpose as the audit of a magazine circulation, it is difficult to see why the term should have a different meaning when applied to the circulation of a magazine in a contract for advertising. This interpretation of the term made in 1912 by the man who negotiated and signed this contract for the plaintiff is most cogent, if not controlling evidence of what was intended in the contract to be included in the term “paid subscriber.” Fourth. The witness Turner is an expert accountant, who for four, years before the trial had done nothing except examine the circulation of magazines and newspapers. He had done this work under employment from the plaintiff and other individual advertisers, and also of the Association of American Advertisers before mentioned. Of this association said Mapes is now the president and was then upon the circulation committee. He swears that in making those audits the entire circulation of the paper was divided into two branches, paid and unpaid; that there was included in the paid class the entire mailing list and the news agencies, and in the unpaid class the employees, advertisers and advertising agents, exchanges, service Copies; that in the class of paid subscribers was included all subscribers to whom the magazine was sent, whether or not payment had been made in advance or the subscriber was in arrears. It is true that few magazines continue to send the paper where the payment of the subscription is far in arrears. That, however, was a matter entirely within the policy of each magazine, and some were more liberal than others, and since 1912 the tendency had been to draw the lines still closer. The plaintiff produced two experts, who made the audits of the defendant’s magazine for the years 1911 and 1912, in order to ascertain whether the plaintiff was entitled to any rebate under the contract. This audit was made, however, at the request of the plaintiff, and with a strict construction of the term “paid subscribers” as only those who had paid in advance, it was found the circulation was substantially less than 63,000 copies a month. The testimony of plaintiff’s main expert, Rink, as to what was understood to be included in the term “ paid subscribers ” is unsatisfactory and evasive, and in view of the purposes to be accomplished by the contract in question the trial judge was abundantly authorized to find that in the custom of the trade the term “paid subscribers” was not limited to those subscribers who had paid in advance. An examination of the evidence of the two experts called for the plaintiff will be found to contain no substantial dispute of the evidence of Turner, the defendant’s expert, as to what was understood to be embraced within the term “ paid subscribers ” in an audit made for the purpose of determining its value as an advertising medium.

Fifth. It appears that the price of this magazine was normally $1 a year, and that the receipts for the years in question from the subscription list were only between $20,000 and $30,000. This disparity between the circulation and the receipts therefrom undoubtedly casts some suspicion upon the good faith of this circulation. There is no question made, however, that the circulation in fact exceeded 70,000 copies per month. Moreover, while the subscription price was ordinarily $1 a year it is suggested in the evidence that clubs were formed with a subscription price of fifty cents. So that the actual paid subscriptions were not fairly represented by the actual amount of cash received. It appears from the evidence that other magazines, by offering prizes, send their numbers to many who in fact pay for the magazine much less than the subscription price. Presumably the increased price received from advertisements inserted compensates for loss in the subscription price. These facts were all known to Mapes when he made this contract, and with knowledge of these facts and of the fact that audits made for the purpose of these associations included in the list of paid subscribers many whose subscriptions were not prepaid, it is a fair inference that if he had intended to provide only for prepaid subscriptions he would have used more specific language to that end. There was no finding by the trial court of any bad faith on the part of the defendant in padding its circulation list, nor was there any request by the plaintiff so to find.

The judgment dismissing the complaint must, therefore, be affirmed.

All concurred, Kellogg, J., in result, except Woodward, J., dissenting in opinion.

Woodward, J. (dissenting):

The plaintiff, engaged in the manufacture and sale of cereal products, is a foreign corporation, and on or about the 27th day of August, 1910, at Minneapolis, Minn., entered into a contract in writing with the defendant to publish in the latter’s magazine, known as “American Motherhood,” certain advertising matter during the year 1911, at the agreed price of sixty dollars per page, “less five per cent (5%) for cash if paid within ten days from date of publication.” (A like contract was entered into for the year 1912, and these two actions are identical, except that they relate to different years and different sums of money are involved.) The contract provided that the party of the first part would pay the usual commissions to the advertising agents, and other details of the agreement, and that “the party of the first part does hereby guarantee that the average circulation of the above-mentioned publication shall not be less than sixty-three thousand (63,000) copies per issue for the time during which the above advertisement shall run, and it is understood and agreed that the term circulation, for the purposes above mentioned, shall be construed as follows: The total number of copies of each issue of the publication above mentioned which shall be published and sold and delivered by the publishers thereof, both to paid subscribers and to news agencies exclusive of all returns from news agencies and copies given away in any manner whatsoever.” It was then provided that the Oream of Wheat Company should be privileged to audit the books of the defendant, to determine the circulation as thus defined, and that the defendant would rebate its advertising bill in cash in proportion to the failure of the circulation to meet the guaranty, and to pay the cost of such audit in the event that the circulation did not meet the requirements of the contract. The plaintiff caused audits of the books to be made for the years 1911 and 1912, and as a result of such audits claimed a deficiency in the circulation of about fifty per cent, and demanded performance of the conditions on the part of the defendant. This was refused, the defendant claiming to have fulfilled its contract, and this action was brought to recover the damages alleged by the plaintiff, resulting in a judgment in favor of the defendant, on the ground that the contract had been fulfilled on the part of the defendant. The only question at issue on this appeal is the proper construction of the contract; what is meant by the words “ paid subscribers ? ” The auditors held that it meant the subscriptions paid in advance, or during the term of the contracts, up to the date of the audit, while the defendant contends that it embraces all of the names carried upon its subscription list, some of whom have paid nothing upon account of such subscriptions from the time of the original subscription, running back to the year 1903.

What did the parties agree to % What was their mutual understanding ? That is the real test so far as it finds expression in language, and we can get very little help in determining this question from the evidence in reference to the alleged customs of advertisers, if, indeed, such evidence has any proper place in the case. Obviously, without any extra language, the guaranty of the publishers of “ the average circulation ” of the publication would be satisfied by showing that a number equal to or exceeding 63,000 was sent out each month, or that the aggregate for the year reached this number for each issue, for circulation does not necessarily require that the publication shall be sold and delivered to individuals. But the parties did not stop with the guaranty of the number to be circulated; they stipulated what should constitute circulation for the purposes of this particular contract, and we have a right to assume that in making a definition they used language calculated to be accurate — language which conveyed the very idea which they intended. Indeed, the contract itself provides how the word “ circulation ” shall be construed; that is its very language. It “ is understood and agreed that the term circulation, for the purposes above mentioned, shall he construed as follows,” and this court has no right to give to the word any other construction than that provided for by the contract. Clearly, the word “ circulation ” was intended to be modified in its meaning; it was not to have any general or uncertain use, and the circulation was the basis of the contract — was the essential consideration for the making of the agreement "on the part of the plaintiff. The language clearly indicates that the parties understood that “circulation,” as used in the contract, was vague and uncertain; that it did not guarantee any certain amount of publicity of value to the plaintiff in seeking an enlarged market for its product, and for the purpose of making definite and certain what was otherwise indefinite and uncertain, the parties undertook to define circulation, and it was agreed that the word should be construed to mean “ the total number of copies of each issue of the publication above mentioned which shall be published and sold and delivered by the publishers thereof; ” and if it had ended here it would not have changed the general meaning of the word, for to publish is “to send forth, as a book, newspaper, musical piece, or other printed work, either for sale or for general distribution ” (23 Am. & Eng. Ency. of Law [2d ed.], 459), and a sale and delivery of the magazines would have been accomplished when the same had been sent to those who received them with an express or implied promise to pay for the same. But the contract definition did not end there; the parties had a different purpose to accomplish, in so far as the plaintiff is concerned, at least, and so it was provided further that these magazines ‘ ‘ published and sold and delivered by the publishers thereof ” should he “both to paid subscribers and to news agencies, exclusive of all returns from news agencies and copies given away in any manner whatsoever. ” It was not the whole number “published and sold and delivered” but the whole number “ published and sold and delivered * * * both to paid subscribers and to news agencies,” excluding all copies returned from news agencies as well as all copies “given away in any manner whatsoever.” In other words, “ circulation,” as used in this contract, was to cover only the papers “published and sold and delivered” to two classes, to “paid subscribers and to news agencies ” and no allowances were to be made for returned copies from the news agencies, or for any copies which were given away in any manner whatsoever. This latter clause had no relation to subscribers; it dealt with the sample copies, with copies which might be delivered to advertisers for their own private distribution, as in the case of Ashton v. Stoy (96 Iowa, 197; 30 L. E. A. 584) and with those given out to trainmen, policemen and others upon the complimentary list, and is not to be confused with the main purpose of the definition of “circulation” for which the plaintiff was contracting.

The learned referee has dealt with the question exactly as he would have been called upon to do in the absence of the definition; he has held, in effect, in so far as this controversy is concerned, that the defendant is to be credited with all of the copies published and sold and delivered whether to paid subscribers, or to those who are carried upon the books after having once been subscribers, though they have paid but a single subscription, and there is no more than an implied promise to pay. He has completely ignored the definition which the parties themselves agreed should control in the construction of the word “ circulation ” and has given it exactly the effect which it would have had without the definition, and, if this may be done, there is very little use in people reducing their contracts to writing. There was a distinct object'in making this definition; the plaintiff wanted to obtain a circulation among live people; among people who were taking this magazine because they were interested in it — because it had an individuality which appealed to them. The intelligent advertiser buys quality in his advertising as well as quantity, and he has a clear right to stipulate in his contract for any particular quality which he may desire. If the publisher does not have the quality of circulation demanded by the advertiser then he has no right to contract to deliver it. If he enters into a contract to furnish publicity among a particular class of- people he is bound to furnish such publicity, or respond in damages, upon the broad principle that where a person by express contract engages absolutely to do an act not impossible or unlawful at the time, neither inevitable accident, nor other unforeseen contingency not within his control, will excuse him, for the reason that he might have provided against them by his» contract (Wheeler v. Connecticut Mutual Life Ins. Co., 82 N. Y. 543, 550, and authorities there cited), and the plaintiff having carefully provided the rule by which the quality as well as the quantity of circulation was to be determined should not be deprived of its protection by a construction of the contract which utterly fails to give any force or effect to the rule. The contract itself, in other parts, uses the word “paid” in its proper sense, and why the word should be given any other sense, or given no sense at all, is not clear. The contract provides that the price of the advertising shall be sixty dollars for each insertion “less five per cent (5%) for cash if paid within ten days,” and it is provided that ‘c the party of the first part will pay to such advertising agents as are designated by the party of the second part their regular advertising agent’s commission,” and again that in the event of the circulation being materially less than above stated, the defendant will “immediately after said examination make a pro rata rebate to the said Oream of Wheat Company for such shortage in circulation, paying said rebate in cash,” and finally that “in consideration of the above agreement, the Cream of Wheat Company agrees to pay the party of the first part in payment in full for the insertion of the above advertisement,” etc. All of these words from the common root are used in their intelligent grammatical sense, yet it has been held that in that portion of the contract where the parties attempted to formulate a rule to govern in the construction of the word “ circulation the word “paid ” is to be understood as referring not only to those cases in which there has been an actual payment, but to all of those instances in which there is an implied promise to pay from the fact that the magazine is continued to an original subscriber years ago.

We are clearly of the opinion that the learned referee erred in this construction of the contract, because it fails to give any effect to the provision which assumes to define what circulation is contracted for, and because it ignores the maxim expressio unius est exclusio alterius. While this maxim will not be permitted to defeat the obvious intent of the parties, where it conflicts with the letter of the contract, such intent must, nevertheless, be discernible in the context of the contract itself. (Aultman & Taylor Co. v. Syme, 163 N. Y. 51, 57.) Here the context of the contract indicates clearly an intention to make- “ circulation ” mean something more than the mere publication and delivery of a given number of magazines; it specifically provides that it shall be confined to “paid subscribers and news agencies,” and we have no power to change that contract and make it practically ignore the word “paid,” which is the active word in the definition attempted by the parties. “I would wish,” says Lord Bacon (1 Lord Bacon’s Works [Eng. ed. 1826], 187), “all readers that expound statutes to do as scholars are willed to do; that is, first to seek out the principal verb; that is to note and single the material words whereupon the statute is framed; for there are in every statute certain words, which are as veins where the fife and blood of the statute cometh, and where all doubts do arise,” and the only word in this contract which makes the latter part of the definition any limitation upon the ordinary use of the word “circulation,” as applied to newspapers, and which is “ the life and blood of the ” contract, is the word “paid.” If this is dropped out, then the contract would in effect read that the party of the first part “ guarantees that the average circulation of the above-named publication shall not be less than sixty-three thousand copies per issue, excluding all returned copies from news agencies and copies given away in any manner whatsoever.” Obviously this was not the intent of the parties; the contract fairly read contemplates the live, paid subscribers to the magazine during the period covered by the contract. It was the quality of the circulation as well as the quantity which the plaintiff sought to secure, and the letter and the spirit of the contract are violated by including as paid subscribers persons who were not paid up at the beginning or during the life of the contract. The primary meaning of the word “subscriber” is to write underneath, as one’s name; but it also means to give consent to something written, to assent, to agree; and a subscriber is defined to be: (1) One who subscribes; one who contributes to an undertaking by subscribing; (2) one who enters his name for a paper,' book, map or the like. (Web. Int. Dict.) To become a subscriber to a newspaper includes some voluntary act on the part of the subscriber, or something which is in effect an assent by bim to the use of his name as a subscriber. A person to whom a newspaper is sent without his knowledge or consent, either expressed or implied, is not a subscriber within the meaning of the contract. (Ashton v. Stoy, 96 Iowa, 197; 30 L. R. A. 584.) To become a paid subscriber requires not only the act of subscribing but the act of paying, and the defendant’s form letter, in which the old subscriber is asked to “please remember that this order will be accepted without any remittance and payment can be made later,” strongly suggests that the so-called circulation of something over 70,000, yielding a revenue of only about $30,000 annually (the subscription price being $1 per year) is not in any proper sense such a paid subscription list as the plaintiff had a right to expect under its contract. “Paid subscribers ” are not persons who are legally obligated to pay, but those who have in fact paid, and if the defendant wanted to sell advertising space upon the basis of its general circulation, or to subscribers legally obligated to pay, it was easy to provide for that, but it has no right to specifically provide for one kind of circulation and to substitute another as “ just as good,” for that is not what the plaintiff purchased. The plaintiff allowed all of the paid subscribers up to the time of its audit in each case, giving the defendant the benefit of any one who had become a paid subscriber during the time under which the parties were operating under the contract, and is entitled to recover in these actions.

The judgment appealed from should be reversed and the findings of fact should be made to harmonize with this construction of the contract, the plaintiff having judgment for the amount of its claim.

In each case judgment affirmed, with costs.  