304 F. Supp. 23 | N.D. Ill. | 1969
DECISION ON THE MERITS
Twentieth Century-Fox Film Corporation (Fox), a Delaware corporation with its principal place of business in New York, seeks recovery of payments allegedly due under three film rental agreements with the defendant Woods Amusement Corporation (Woods), an Illinois corporation with its principal place of business also in Illinois. The individual defendants, Edwin Silverman, Jack Silverman and Ralph Smitha, managing agents of Woods, are charged with conspiring to injure the plaintiff and with maliciously interfering with the plaintiff’s business relationships. The defendants counterclaim that the licensing
THE “IN LIKE FLINT” AGREEMENT
Count I of the amended complaint charges the defendant Woods with breach of a written exhibition contract and seeks recovery under the liquidated damage provision of that contract.
The contract was negotiated between the parties well in advance of the anticipated first-run exhibition. The contract bears a typewritten date of November 25, 1966, and a Fox home office approval date of December 20, 1966. Fox was obligated to pay all advertising expenses for pre-opening and opening week, and thereafter to pay half of such expenses. The contract set forth stipulated rental terms based upon a schelude of percentages of gross receipts.
After execution of the contract, the agents of Woods did not communicate with Fox concerning “In Like Flint” until March, 1967. However, on or about January 10, 1967, the defendant Ralph Smitha, on behalf of Woods, entered a written exhibition agreement with another distributor which committed the Woods Theatre to an indefinite run of a film entitled “Blow-Up.” By the terms of this agreement, Woods was to exhibit “Blow-Up” for an unlimited run to open not later than February 8, 1967, and to “continue its unlimited run” as long as the weekly gross equaled $16,000. The gross admissions of the Woods Theatre during the “Blow-Up” exhibition indicate that the holdover terms were operative until May 4, 1967.
On March 10, 1967, Fox served the defendant Smitha with a written demand that the “In Like Flint” agreement be honored, and that the exhibition commence on or about. March 22, and not later than March 24. The defendants responded on March 16, 1967, by repudiating the contract. By the time Fox received this notification, it was too late to license the film with any other first-run Chicago exhibitor for Easter week. Subsequently, Fox licensed the film for exhibition at the United Artists Theatre. The picture was exhibited on a first-run basis at that theater for six weeks and five days, commencing April 7, 1967.
The defendants first contend that the exhibition agreement for “In Like Flint” was not contractually binding because the provision giving Fox discretion to terminate the indefinite run of the film lacked mutuality. However, the discretionary right granted Fox to continue or terminate the run after the March 22 opening was a valid option granted for valuable consideration. Armstrong Paint and Varnish Works v. Continental Can Co., 301 Ill. 102, 133 N.E. 711 (1922); Industrial Natural Gas Co. v. Sunflower Natural Gasoline Co., 330 Ill.App. 343, 71 N.E.2d 199 (4th Dist. 1947). A contract need not be reciprocal as to every separate obligation; a contract is sufficient if it legally obligates both parties to abide by and perform its conditions. Hillman v. Hodag Chemical Corp., 96 Ill.App.2d 204, 238 N.E.2d 145 (1st Dist. 1968); Hall v. Gruesen, 22 Ill.App.2d 465, 161 N.E.2d 345 (1st Dist. 1959). Fox was obligated to deliver “In Like Flint” to Woods on March 22, 1967, for the first exclusive exhibition of the film in the Chicago area. Fox was restrained from licensing the film to any other Chicago exhibitor until after that run. This constituted a substantial restriction upon a major revenue-producing activity of the plaintiff.
The defendants also challenge the validity of the liquidated damages provision of the exhibition contract. They contend that Fox did not suffer any actual damages by reason of the late opening of “In Like Flint” at another theater, and recovery under the liquidated damages provision would therefore constitute a penalty. However, 'this court finds the provision for liquidation damages both valid and reasonable. The difficulty in ascertaining the actual impact of the delayed first-run exhibition of the film upon hundreds of theaters in Chicago and surrounding cities affected by Chicago necessitates the application of a liquidated damages clause. A liquidated damages clause should be upheld where such a provision is reasonable at the time of contracting, even absent proof of any actual damages. Bethlehem Steel Co. v. City of Chicago, 234 F.Supp. 726 (N.D.Ill.1964), aff’d 350 F.2d 649 (7th Cir. 1965). When parties agree to have damages ascertained on a particular basis, as the parties did here, courts will not declare such a provision void as a penalty unless there is good ground for it. Covington v. Shaffer, 80 Ill.App.2d 164, 224 N.E.2d 26 (4th Dist.1967). Application of the liquidated damages clause
WEEK AVERAGE GROSS EACH WEEK ON 3 PRECEDING FOX PICTURES_ “FLINT” TERMS “FLINT” LIQUIDATED DAMAGES_
1st week $25,882 60% $15,529.20
2nd week 17,426 50% 8,713.00
3rd week 18,166 40%
4th week 14,118 35% 4,941.30
5th week 13,863 30% 4,158.90
6th week 11,502 25% 2,875.50
Total $43,484.30
This court therefore concludes that Fox is entitled to recover against the corporate defendant Woods the sum of $43,484.30 as liquidated damages for breach of the “In Like Flint” exhibition contract.
Fox seeks an additional $43,484.-30 recovery against the individual defendants as punitive damages for their allegedly willful and malicious conduct. Specifically, Fox charges that the defendants Ralph Smitha, Edwin Silver-man and Jack Silverman committed a tortious injury to its business by using the “In Like Flint” exhibition contract to prevent Fox from licensing that film to any other exhibitor for Easter week. However, the evidence does not indicate that any of the defendants communicated with any other exhibitor to prevent Fox from licensing “In Like Flint.” Nor does the evidence indicate that the defendants in any way interfered with any contractual relationship of the plaintiff. The individual defendants were acting as managing agents of the corporate defendant. This court does not find any evidence to support the contention that the defendants conspired to harm the plaintiff’s business or were otherwise guilty of any malicious conduct. The claim for punitive damages against the
THE “FANTASTIC VOYAGE” AND “WAY WAY OUT” AGREEMENTS
In Counts II and III of the amended complaint, Fox seeks rentals due under exhibition contracts for the first-run feature films entitled “Fantastic Voyage” and “Way Way Out.” The provisions of these two agreements are identical except that the opening of “Fantastic Voyage” was to follow a film entitled “Stage Coach,” and the opening of “Way Way Out” was then to follow “Fantastic Voyage.” The film rental schedules of both agreements, expressed as the distributor’s share of gross receipts, were provided to be as follows:
1st week 60%
2nd week 50%
3rd week 40/50'%
4th week 35%
5th week 30%
6th week 25%
The sixth week’s percentage was to apply to any subsequent holdover weeks. The contracts obligated Fox to pay all advertising expenses for pre-opening and opening week, and to assume half of such expenses thereafter. Both agreements also contained the following provision:
“9. CHANGES IN WRITING. This agreement is complete and all promises, representations, understandings, offers and agreements in reference thereto have been expressed herein. No change or modification hereof shall be binding upon the Distributor unless in writing signed by an officer of or a person authorized by the Distributor.”
The stipulated evidence shows that Woods exhibited “Fantastic Voyage” from September 28, 1966, to and including November 7, 1966, and exhibited “Way Way Out” from November 8, 1966, to and including December 6, 1966. The contracts obligated Woods to keep comprehensive records of its gross admission receipts. Payment of the film rental was expressly due immediately after the last exhibition of each picture.
To date, Woods has failed to pay any portion of the rental due on either film. Woods asserts as its defense that it is the long-standing custom and practice in the motion picture industry not to consider as binding the schedule of rental percentages characterized as the distributor’s share of gross receipts.
“FANTASTIC VOYAGE”
WEEK OF EXHIBITION GROSS ADMISSIONS CONTRACT TERMS FILM RENTAL
1st week $31,947.46 60% $19,168.48
2nd week 21,422.52 50%' 10,711.26
3rd week 20,209.36 40% 8,083.74
4th week 15,163.59 35% 5,307.29
5th week 12,948.17 30% 3,884.45
6th week 9,817.96 25%' 2,454.49
Total Film Rental $49,609.71
LESS: Allowance for plaintiff’s share of advertising costs 37,118.74
Net Rental Due $12,490.97
“WAY WAY OUT”
WEEK OF EXHIBITION GROSS ADMISSIONS CONTRACT TERMS FILM RENTAL
1st week $15,951.18 60% $ 9,570.70
2nd week 9,550.67 50% 4,775.34
3rd week 14,656.22 40% 5,862.49
4th week 6,011.23 35% 2,103.93
5th week • 402.71 30%' 120.81
6th week 25%
Total Film Rental $22,433.27
LESS: Allowance for plaintiff’s share of advertising costs 13,121.67
Net Rental Due $ 9,311.60
THE COUNTERCLAIM
The defendant Woods charges that Fox and the individual counterdefendants conspired to injure its business, thereby violating federal and state antitrust and fair trade laws. The conspiracy allegedly consisted of false statements made by Fox agents and their subsequent breaches of oral agreements obligating Fox to license certain feature films to Woods. None of these alleged “agreements” were reduced to writing. The record is devoid of any credible evidence in support of the various theories and conclusory allegations advanced in the counterclaim, and the counterclaim is therefore denied.
ORDERS
The plaintiff is directed to revise its findings of fact and conclusions of law to conform with this opinion. As a part of said findings, judgment should be rendered for the plaintiff. In the judgment order, the plaintiff shall compute damages to include the following: $43,-484.30 for breach of the “In Like Flint” agreement; $12,490.97, plus five percent interest running from November 7, 1966, to and including the date of the judgment order, as the amount due under the “Fantastic Voyage” agreement; and $9,-311.60, plus five percent interest running from December 6, 1966, to and including the date of the judgment order, as the amount due under the “Way Way Out” agreement. The defendant Woods’ counterclaim should be dismissed and the costs herein assessed against the defendant.
. Paragraph 3 of the exhibition contract provides as follows:
“3. DAMAGES — FAILURE TO EXHIBIT. If Exhibitor fails or refuses to exhibit any picture as herein provided, Exhibitor shall pay to Distributor, as liquidated damages for each day it should have exhibited the picture, a sum equal to the percentage specified in the Schedule of the theatre’s average daily gross receipts, or a sum equal to the figure specified in the Schedule for each person admitted to the theatre, during the exhibition thereat of the last three of Distributor’s pictures rented to the theatre on the same terms as the picture which Exhibitor so failed or refused to exhibit. * * * ”
. The evidence indicates that Easter week is one of the major grossing weeks in the motion picture business. “In Like Flint” opened in New York on March 15, 1967; in 24 other major cities on March 22; in Louisville and Houston on March 23, and in three other cities on March 24.
. The Chicago Exchange area served by the Chicago branch office of Fox includes Illinois north of Springfield and Lake County, Indiana.
. The distributor’s share of gross receipts were provided to be as follows:
1st week 60%
2nd week 50%
3rd week 40/50%
4th week 35%
5th week 30%
6th week 25%
The sixth week’s percentage was to apply to any subsequent holdover weeks.
. The “Blow-Up” grosses were as follows:
PLAY DATE GROSS
February 10-16 $39,210.02
February 17-23 34,620.95
February 24-March 2 27,945.40
March 3-9 29,300.20
March 10-16 26,773.47
March 17-23 29,033.16
March 24-30 * 33,251.75
March 31-April 6 23,962.13
April 7-13 22,122.53
April 14-20 20,606.58
April 21-27 17,697.59
April 28-May 4 16,138.12
* Easter week.
. The evidence shows that exhibition of “In Like Flint” in the Chicago Exchange area later resulted in over $275,000 in film rentals.
. See note 1, supra.
The scheduled percentage is “40/50%”; however, the plaintiff is just seeking the lower figure.
The plaintiff seeks to enforce the schedule at the 40% figure.
. Woods also asserts that “Fantastic Voyage” was delivered late. However, this contention is unsupported by the evidence. That film was delivered in the agreed upon sequence with other films supplied by Fox.