323 U.S. 173 (2007), United States v. Crescent Amusement Co.

Citation:323 U.S. 173, 65 S.Ct. 254, 89 L.Ed. 160
Party Name:United States v. Crescent Amusement Co.
Case Date:December 11, 1944
Court:United States Supreme Court
 
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Page 173

323 U.S. 173 (2007)

65 S.Ct. 254, 89 L.Ed. 160

United States

v.

Crescent Amusement Co.

United States Supreme Court

Dec. 11, 1944

[65 S.Ct. 256] APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE MIDDLE DISTRICT OF TENNESSEE

Syllabus

1. The motions in the District Court to amend the findings in this case raised questions of substance, and an appeal applied for and allowed while such motions were pending was premature, and must be dismissed. P. 177.

2. That the District Court has allowed a premature appeal does not deprive it of jurisdiction to allow a subsequent and timely appeal. P. 177.

3. The Sherman Antitrust Act may apply to the business of exhibiting motion pictures, when a regular interchange of films in interstate commerce is involved. P. 180.

4. On appeal, this Court considers only the alleged errors which have been included in the assignments of error. P. 180.

5. The evidence sustains the District Court's findings of a conspiracy of the defendant exhibitors of motion pictures, and certain officers thereof, unreasonably to restrain interstate trade and commerce in motion picture films and to monopolize the exhibition of films in the areas in question, in violation of § 1 and § 2 of the Sherman Act. P. 181.

Page 174

(a) There was ample evidence that the combination used its buying power for the purpose either of restricting the ability of its competitors to license films or of eliminating competition by acquiring the competitor's property or otherwise. P. 181.

(b) Whether the distributors were technically coconspirators is immaterial, since action by a combination of exhibitors to obtain an agreement with a distributor whereby commerce with a competing exhibitor is suppressed or restrained is itself a conspiracy in restraint of trade and a conspiracy to monopolize a part of the trade or commerce among the States, each of which is prohibited by the Sherman Act. P. 183.

(c) Even if error be assumed in the introduction of certain evidence -- consisting of letters or reports written by employees of certain of the major distributors to other employees or officers in the same company stating reasons why the distributor was discriminating against an independent and in favor of the defendants -- there is sufficient other evidence to establish the restraints of trade and monopolistic practices, and the burden of showing prejudice has not been sustained. P. 184.

(d) Though the findings leave much to be desired in the light of the function of the trial court, they are supported by the evidence, and must therefore be sustained. P. 184.

6. Upon consideration of objections to provisions of the decree in this case, held:

(1) Lest the public interest be not adequately protected, the decree should be revised so as to prohibit future acquisitions of a financial interest in additional theaters outside of Nashville "except after an affirmative showing that such acquisition will not unreasonably restrain competition." P. 185.

(2) Provisions of the decree enjoining the defendant exhibitors from making franchises with certain distributors "with the purpose and effect of maintaining their theater monopolies and preventing independent theaters from competing with them," and from entering into "any similar combinations and conspiracies having similar purposes and objects;" from combining, in licensing films, their closed towns with their competitive situations

for the purpose and with the effect of compelling the major distributors to license films on a noncompetitive basis in competitive situations and to discriminate

against the independents, and enjoining each defendant exhibitor

from conditioning the licensing of films in any competitive situation (outside Nashville) upon the licensing of films in any other theater situation

are sustained. P. 187.

Page 175

(a) The franchise agreements and the licensing system were the chief instruments of the unlawful practices, and it was the duty of the court to enjoin their continuance and resumption. P. 188.

(b) These provisions of the decree are not unenforceable, as too vague and general. P. 188.

(3) The divestiture provisions of the decree -- requiring each corporate exhibitor to divest itself of the ownership of any stock or other interest in any other corporate defendant or affiliated corporation, and enjoining it from acquiring any interest in those companies; requiring one of the individual defendants to resign as an officer of any corporation (except Crescent) which is affiliated with any defendant exhibitor and enjoining him from acquiring control over any such affiliate by acting as officer or otherwise; requiring another of the individual defendants to resign as an officer of the affiliates (except one corporation of his choice) and enjoining him from acquiring any control over the others by acting as an officer or otherwise, and allowing a year from the date of the decree for completion of the divestiture -- are sustained. P. 189.

(a) In this type of Sherman Act case, the Government should not be confined to an injunction against further violations; dissolution of the combination may be ordered where the creation of the combination is itself the violation. P. 189.

(b) Those who violate the Act may not reap the benefits of their violations and avoid an undoing of their unlawful project on the plea of hardship or inconvenience. P. 189.

(c) The fact that minority stockholders of the affiliated companies are not parties to the suit does not bar a separation of the companies. P. 190.

(d) The requirement that two of the defendant corporate exhibitors sell their respective half interests in two companies which were not made parties to the proceedings is sustained, since it does not appear on this record that any legal right of any other stockholder would be affected. P. 190.

No. 17 dismissed.

No. 18 reversed.

No.19 affirmed.

Direct appeals under the Expediting Act from a decree against defendants in a civil suit under the Sherman Antitrust Act. Two of the appeals were taken by the Government, the other by certain of the defendants.

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DOUGLAS, J., lead opinion

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

The United States brought this civil suit against nine affiliated companies (whom we will call the exhibitors) operating motion picture theaters in some 70 small towns in Alabama, Arkansas, Kentucky, Mississippi, and Tennessee against certain officers of these companies and against eight major distributors of motion picture films charging them with a conspiracy unreasonably to restrain interstate trade and commerce in motion picture films and to monopolize the exhibition of films in this area in violation of § 1 and § 2 of the Sherman Act. 26 Stat. 209, 15 U.S.C. §§ 1, 2. This suit was dismissed against five of the distributors on motion of the United States.1 Of the other three, the Court found that only one had violated the Sherman Act. The court also found that seven of the exhibitors and three of the individual defendants had violated the Sherman Act substantially as charged. It entered a decree against them. From the judgment entered,

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the United States, six of the exhibitors, and three individual defendants appeal directly to this Court under § 2 of the Act of February 11, 1903, 32 Stat. 823, 15 U.S.C. § 29, and § 238 of the Judicial Code, as amended by the Act of February 13, 1925, 43 Stat. 936, 938, 28 U.S.C. § 345.

I. Before we come to the merits, there is a preliminary question as to whether the appeal of the United States in No. 17 is premature. The District Court entered a final judgment in this case on May 17, 1943. On the sixtieth day after judgment, there were motions pending to amend the findings. On that day, the appeal was applied for and allowed. On August 30, 1943, the court ruled on the motions to amend its findings. Within sixty days thereafter, the United States applied for the appeal in No. 18, and it was allowed. The appeal in No. 17 was filed here at the same time as that in No. 18. The appellees move to dismiss No. 17 on the ground that it was premature, and to dismiss No. 18 on the ground that the District Court, by allowing [65 S.Ct. 257] the first appeal, lost jurisdiction of the cause, and was without power to allow a further appeal. We think the motion to dismiss the appeal in No. 17 must be granted, and the motion to dismiss the appeal in No. 18 denied.

The motion to amend the findings tolled the time to appeal if it was not addressed to "mere matters of form, but raised questions of substance" -- e.g., if it sought a "reconsideration of certain basic findings of fact and the alteration of the conclusions of the court." Leishman v. Associated Wholesale Electric Co., 318 U.S. 203, 205. An examination of the motion makes plain that matters of substance were raised. The appeal in No. 17 was accordingly premature. Zimmern v. United States, 298 U.S. 167. But it does not follow that the District Court had no jurisdiction to allow the appeal in No. 18. An appeal can hardly be premature (and therefore a nullity) here, and yet not

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premature (and therefore binding) below. Under these circumstances, an appellant may rely upon the later appeal (Ohio Public Service Co. v. Ohio ex rel. Fritz, 274 U.S. 12) and not run the risk of losing an appellate review on the appeal first allowed. Cf. Wilentz v. Sovereign Camp, 306 U.S. 573.

II. We turn to the merits. Crescent, the principal exhibitor,2 owns 50% of the stock of Cumberland and Lyric. The majority of Crescent's stock is owned by defendant Sudekum, by certain of his relatives, and by defendants Stengel and Baulch. Prior to 1937, Crescent owned almost two-thirds of the stock of Muscle Shoals; since that time, Muscle Shoals was run as a partnership in which Sudekum's wife had a half-interest. Defendant Stengel, Sudekum's son-in law, is the record holder of all of...

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