Warner Brothers Pictures Inc v Nelson 19 Oct 1936 [1937] 1 KB 209, KBD

An actress, Bette Davis, contracted to work exclusively for Warner Bros. but then engaged with a rival studio. The court granted an injunction enforcing the negative covenant, preventing her from working for others, but refused to order specific performance.

Facts

The plaintiffs, Warner Brothers Pictures Inc., sought an injunction to restrain the defendant, the actress Bette Davis, from breaching her contract. In 1934, the defendant entered into a contract to provide her exclusive services as a motion picture actress to the plaintiffs for 52 weeks, with options for extension. The contract contained a positive covenant to render these exclusive services and a negative covenant that she would not, during the term of the contract, work for any other motion picture company or engage in any other occupation without the plaintiffs’ written consent. The defendant repudiated the contract and entered into an agreement to perform as an actress in England for a third party.

Issues

The central legal issue was whether the court should grant an injunction to enforce the negative covenant in a contract for personal services. The court had to consider two key questions:
1. Would granting an injunction to prevent the defendant from working for others amount to an indirect order for specific performance of the positive covenant to work for the plaintiffs, an order which the courts are reluctant to make for contracts of personal service?
2. Was the scope of the negative covenant, which prevented the defendant from engaging in ‘any other occupation whatsoever’, too wide and therefore an unreasonable restraint of trade?

Judgment

The judgment was delivered by Branson J. He conducted a thorough review of the key authorities, most notably Lumley v. Wagner, which established that a court could enforce an express negative promise within a contract even if it could not compel specific performance of the positive promise. He distinguished the present case from precedents like Whitwood Chemical Co. v. Hardman, where the negative stipulation was merely implied and not express. Branson J. held that where a contract contains an explicit negative covenant, the court has the jurisdiction to enforce it by injunction.

The crucial test applied by the judge was whether the injunction would effectively compel the defendant to perform for the plaintiffs or face starvation. He concluded it would not. He noted:

The defendant is stated to be a person of intelligence, capacity and means, and no evidence was adduced to show that, if enjoined from doing the specified acts, she will not be able to employ herself both usefully and remuneratively in other spheres of activity, though not as remuneratively as in her special line. She will not be driven, although she may be tempted, to perform the contract, and the fact that she may be so tempted is no objection to the grant of an injunction.

However, Branson J. did find that the part of the covenant preventing the defendant from engaging in ‘any other occupation whatsoever’ was void as an unreasonable restraint of trade. He held this part to be severable from the rest of the negative covenant. Consequently, he was prepared to enforce the valid part of the restraint, which prevented her from working as an actress for another studio.

Implications

The decision in Warner Bros. v. Nelson is a landmark authority in English contract law on the enforcement of negative covenants in employment and service contracts. It clarifies the position established in Lumley v. Wagner, confirming that the court will enforce an express negative stipulation provided it does not amount to a decree of specific performance in disguise. The case demonstrates the court’s pragmatic approach, balancing the employer’s legitimate interest in protecting their investment in a uniquely talented individual against the employee’s right not to be compelled into servitude. The judgment limits the injunction in both scope (to film and stage work) and duration, ensuring it is not unduly oppressive, reinforcing the principle that such equitable remedies are discretionary and will be tailored to the facts of the case.

Verdict: An injunction was granted restraining the defendant for the term of the contract (or for three years, whichever was shorter) from rendering services for any motion picture or stage production for any person or company other than the plaintiffs.

Source: Warner Brothers Pictures Inc v Nelson 19 Oct 1936 [1937] 1 KB 209, KBD