83 S.W.2d 796 | Tex. App. | 1935
This appeal is from an interlocutory order refusing a temporary injunction. R. Z. Glass, appellant, owner and operator of two second or subsequent run motion picture theaters in the city of Dallas, brought this suit for himself and others similarly situated, against appellees, owners and operators of class A theaters in Dallas, exhibiting first-run motion pictures.
Appellant alleged in substance that, since about June 1, 1934, he (and others similarly situated) had not been able to obtain from producers and distributors motion picture films with the privilege of exhibiting same in his theater at admission prices fixed by himself; that this interference with his right to manage his business in his own way was due to an unlawful agreement and conspiracy, between appellees and the major producing and distributing companies, originating as follows: That appellees threatened said major producing and distributing companies to discontinue taking their motion picture films for exhibition unless the latter in their contracts with the owners and operators of second-run theaters, including appellant, would obligate them to charge an admission price of at least 25 cents for all pictures for which appellees charge on first run an admission of at least 40 cents, and forbidding the exhibition of such pictures within 75 days after their first exhibition by appellees; that such an arrangement was consummated by appellees and said major producers and distributors, by reason of which appellant, and others similarly situated, have been unable to obtain from said producers and distributors picture films for exhibition, without first agreeing to said stipulations with reference to the admission fee and time of exhibition; that such arrangement constitutes and is a conspiracy violative of the anti-trust laws of the state; wherefore, appellant prayed for injunctive relief, temporary and permanent, enjoining appellees and each of them from continuing in force such agreements.
Appellees, answering, contended that the contracts with the distributors, under which they were licensed to exhibit motion pictures, being interstate in character, and simply the licensing of copyrighted motion picture films, the anti-trust statutes of the state of Texas were not applicable and that no conspiracy, in law or in fact, existed; that appellant failed to show such probable damage justifying the issuance either of a temporary or permanent injunction, and that the provisions of the National Industrial Recovery Act (
After an exhaustive hearing, the trial court refused appellant's prayer for the temporary writ, and filed findings of fact and conclusions of law that, in our opinion, are fully sustained and are adopted as the holdings of this court on the issues presented. They are as follows: "1. That the contracts made by the several defendants with the distributing companies are made in reference to interstate commerce, and that the anti-trust laws of Texas have no application to such contracts or any alleged conspiracy in reference to the making of said contracts. 2. That the contracts complained of in plaintiff's petition show on their face that they were made for the licensing of copy-righted motion picture films, and the anti-trust laws of the State of Texas have no application to such contracts for the licensing of copyrighted motion picture films. 3. That it appears from the evidence that there was no conspiracy as alleged in plaintiff's petition. 4. That the plaintiffs have not shown such probable damage as would justify injunctive relief. 5. That the National Recovery Act for the motion picture *798 industry furnishes a remedy to the plaintiffs."
Ordinarily, on appeals of this nature, the only question to be considered is whether the trial court abused its discretion in making the interlocutory order appealed from. This general rule was announced in Harding v. W. L. Pierson Co. (Tex.Com.App.)
The combined effect of a number of assignments urged by appellant is that the court erred in holding the agreements between appellees and the distributors, interstate in character, hence not amenable to the anti-trust statutes of this state (Vernon's Ann. Civ. St. art.
The counter contention of appellee is that where the owner of a motion picture theater signs in Texas an application to a distributor outside the state of Texas for a license to exhibit a moving picture film, and the application is accepted outside the state and the picture film is shipped to the local representative of the distributor in the state and supplied by him to the exhibitor under the license contract and after being exhibited is returned to said representative, and then is supplied to other exhibitors under contracts similarly made, that the transaction is interstate in character, and the Texas antitrust laws have no application thereto, or to any alleged conspiracy incident to the making of such contract.
Each of the contracts between the distributor and exhibitor was made and carried out substantially in the following manner: The exhibitor would sign in Dallas, Tex., an application for a license contract of a copyrighted motion picture film; the contract attached to the application provided that it should not become effective until accepted at the home office of the respective distributor, either in New York or some other place outside the state of Texas. After being signed in Texas, the application was forwarded to the home office of the respective distributor outside the state, where it was accepted or rejected. If accepted, it became a contract for the licensing of a copyrighted motion picture film for a certain period of time, giving the exhibitor merely the right to exhibit the picture during such time and obligating him to return the picture to the distributor. After the acceptance of the contract, the distributor would ship the picture films described in the contract to its local representative in Texas for delivery to the exhibitor having the license contract, who, after exhibiting same for the required time, would return it to said local representative of the distributor, who would then supply the film to other exhibitors having similar contracts.
As above shown, the trial court found that these contracts were interstate in character, and that the anti-trust laws of Texas had no application thereto. In Binderup v. Pathe Exchange, reported in
In a similar case, that of Alexander Film Co. v. Lazeres
Morfesy,
We find no conflict between the cases above cited, and that of Ligon v. Alexander Film Co. (Tex.Com.App.)
We cannot accept appellant's view that the phase of the contract between distributor and exhibitor, brought under review, should be segregated from the rest of the contract, because in our opinion it constituted a material consideration. The record discloses that rentals paid by class A or first-run theaters, for the use of picture films, were exceedingly high, ranging from $2,500 to $9,000 per week, that it cost around $600 per week for advertising, besides taxes and the expense of maintenance and operation, whereas second or subsequent run theaters obtained these same pictures at a rental of about $20 per week, and their expense for advertising was relatively small. Appellant conceded that he would reap a material benefit from the advertisement given a picture by class A *800 theaters that was subsequently exhibited by him.
Mr. Hoblitzelle, a theater man of extended experience, expressed the opinion that the stipulations in question were reasonable and necessary for the protection of the large investments of class A theaters, without which they would not be able to rent and exhibit the best pictures. This witness was questioned and answered as follows:
"Q. What is your experience in the business as to what would be the effect on first-run picture houses, such as the Majestic and Palace in Dallas, charging 40 cents admission price, if the policy of subsequent run theatres charged less than 25 cents on feature pictures, would have eventually? A. I think it would eventually destroy it.
"Q. How? A. Well, I think the people, the public, would become price conscious and if they could see that same entertainment for one-half or one-third or, in many instances, one-fourth of the price that they would have to pay if they go downtown, they would not go downtown to see the picture, but wait for it to get to the second-run house."
Appellant conceded the necessity for such protection, and that it should exist in some fair way.
It is doubtless true that the feature of the contract objected to by appellant, if segregated and considered to itself would be intrastate in character, but in our opinion this cannot be done, rather the contract between distributor and exhibitor must be given a meaning broad enough to include, as constituent elements, these stipulations as to time and admission price for subsequent exhibitions, and as such they take on the character of the contract of which they are material parts.
The case of Dozier v. Alabama,
Neither can we agree that the interstate character of the transaction was changed by the shipment of the picture films to an agent in this state, to be serviced and delivered to exhibitors in the order in which the picture had been booked under similar contracts. Mr. Cooke, in his work on the Commerce Clause of the Federal Constitution (article 1, § 8, cl. 3), discussing this phase of the subject, in section 75 said: "Nor does it ordinarily make any difference that transportation is not directly from the seller to the buyer; thus, it may be directly from the seller to his agent in the State, and thereafter from the agent to the buyer. Nor does it make any difference, as commonly happens, for convenience sake, the articles are transferred `in bulk' to the agent, who thereafter `breaks' the bulk and makes distribution of the articles therein contained to the respective buyers." To the same effect, see the Caldwell Case (Caldwell v. State of North Carolina),
Appellant assigns as error the findings and conclusions of the trial court, *801 to the effect that the contracts in question show on their face that they were made for the licensing of copyrighted motion picture films, hence that the anti-trust laws of the state of Texas have no application; the contention of appellant being that there was no evidence to support a finding that the films were copyrighted, or that the distributors were owners of the copyrights, if the same existed; and, furthermore, that it was wholly immaterial whether the films were or were not copyrighted as touching the right of appellees to interfere with appellant's right to deal, without interference, with the distributing companies. Appellees, on the other hand, contend that the evidence was sufficient to sustain the finding of the trial court, and that the distributors of copyrighted motion picture films had the legal right to agree with any exhibitor, that no other exhibitor would be permitted to exhibit such picture, and by the same token had the legal right to contract that no other exhibitor would be permitted to show the picture within 75 days from the date of the first exhibition, nor at a less admission fee for adult performances than 25 cents.
The finding of the trial court, in our opinion, is sustained by evidence. It is true no written copyright or transfer thereof was introduced, yet the parties throughout dealt with reference to copyrighted films. The pertinent portion of the written contract reads: "Agreement of license under copyright made between * * * Distributing Company, of * * *, hereinafter referred to as `Distributor', Party of the First Part, and the exhibitor, hereinafter referred to as `Exhibitor.' The Distributor grants the exhibitor and the Exhibitor accepts a limited license under the respective copyrights of the motion picture designated and described in the schedule hereof, and under the copyright of any matter included in any sound recorded therewith to exhibit,' etc."
In this situation, what is the legal status? The leading case on the subject in this state is Coca-Cola Co. et al. v. State,
As before shown, the trial court held, "That the National Recovery Act for the motion picture industry furnishes a remedy to the plaintiff." Appellant challenges the correctness of this holding, contending that the National Industrial Recovery Act furnishes no relief whatever.
Article 5, subdivision E, part 3, § 1, of the National Industrial Recovery Act [Motion Picture Code] provides: "No exhibitor shall fail at all times to maintain the minimum price of admission specified in any contract licensing the exhibition of any motion picture during the exhibition thereof. This section shall not be deemed to prohibit exhibitors from reducing or increasing their admission scales as they see fit, except as may be prohibited by exhibition contracts."
After the Code was adopted, appellant and each of the appellee moving picture companies signed the same. It further provides that: "Complaint of any exhibitor that a competing exhibitor has committed any of the acts set forth in the following paragraphs * * * with the intention and effect of depriving without just cause the complaining exhibitor of a sufficient number of motion pictures to operate such exhibitor's theatre, shall be referred for determination to a local Grievance Board, constituted as hereinafter provided."
Paragraphs (c) and (d) read: "(c) The execution without just cause of an agreement from any distributor as a condition for entering into a contract for motion pictures that such distributor refrain from licensing its motion pictures to the complaining exhibitor. (d) The commission of any other similar act with the intent and effect of depriving, without just cause, the complaining exhibitor of a sufficient number of motion pictures to operate such exhibitor's theatre."
Appellant failed to lodge a complaint with the grievance board, but sought by suit to enjoin the other exhibitors in the respects heretofore shown, contending that the effect of the agreement called in question is to prevent appellant from obtaining sufficient pictures to operate his theaters.
The situation described in the pleadings of appellant, in our opinion, is just such as is provided for in the National Industrial Recovery Act, and, that the controversy should have been first submitted for determination to the local grievance board organized thereunder. It is well settled that, where contracting parties either agree or are required by law to resort to a designated tribunal for the adjustment of controversies, they must exhaust such remedy before resorting to the courts for redress. St. Louis B. M. Ry. Co. v. Booker (Tex.Civ.App.)
We do not deem it necessary to determine whether appellant made a sufficient showing of probable damage as to justify injunctive relief, but for reasons hereinbefore stated, affirm the judgment of the trial court.
Affirmed.