Since taking over this thumbnail-size Village institution a year ago, Toby Cox has managed to further Three Lives & Company's literary reputation no small task, considering that Susan Sontag gave the inaugural reading back in 1978, and since then a steady parade of literati has passed through the store's bright-red doors. Andrea Barrett and Calvin Trillin recently stopped by to sign books, and Howard Norman and Nicholas Dawidoff will be speaking in May. Set in an 1830s brick building, the store's burnished-wood bookcases, green-shaded lamps, and old Royal typewriters evoke a bookish gentility. But the books themselves are cutting-edge. After all, the West Village has a discriminating clientele, with perhaps the largest concentration of authors, agents, editors, and publishers in the city. "It's a very savvy customer coming in here," says Cox. "They know what's happening."