Binderup v. Pathe Exchange

Decision Date19 November 1923
Docket NumberNo. 77,77
Citation263 U.S. 291,44 S.Ct. 96,68 L.Ed. 308
PartiesBINDERUP v. PATHE EXCHANGE, Inc., et al
CourtU.S. Supreme Court

Mr. Dana B. Van Dusen, of Omaha, Neb., for plaintiff in error.

[Argument of Counsel from pages 292-294 intentionally omitted] Messrs. Wm. M. Seabury, of Los Angeles, Cal., and Arthur F. Mullen, of Omaha, Neb., for defendants in error.

[Argument of Counsel from pages 295-301 intentionally omitted]

Page 301

Mr. Justice SUTHERLAND delivered the opinion of the Court.

This action was brought under the provisions of section 7 of the Act of Congress of July 2, 1890, commonly called the Anti-Trust Act, c. 647, 26 Stat. 210 (Comp. St. § 8829). The complaint is long, but the allegations necessary to be considered here may be summarized as follows:

Plaintiff in error, a resident of the state of Nebraska, hereafter called the 'exhibitor,' owned a moving picture theater at Minden, in that state, and operated as lessee theaters in other places, to all of which, including his own, he supplied moving picture films and advertising

Page 302

matter connected therewith. In addition, he was in the business of selecting and distributing to a circuit of moving picture theaters, films and advertising matter accompanying them, under agreements with the various operators, some 20 or more in number, in various parts of the state.

The corporations named as defendants in error, hereafter called the 'distributors,' were located in the state of New York, and were there engaged in manufacturing motion picture films and distributing them throughout the United States. The method of distribution was to make public announcement from time to time that films, which had been manufactured and approved, would be released, and thereupon send them from New York, by express or parcel post, to agencies in numerous cities for delivery to exhibitors who hired and paid for their use.

Some of these distributors entered into contracts with the exhibitor, by the terms of which they leased motion pictures to him with the right and license to display them publicly at the theater or theaters named. The individual defendants named were managers of branch offices or agencies for the various distributors at Omaha, Neb., through which films were distributed to exhibitors in the states of Iowa, Nebraska, South Dakota, and Minnesota. These contracts by their terms were deemed made in New York, were to be construed according to the laws of that state, and provided that deliveries should be made to the exhibitor through the Omaha branch offices. The exhibitor, upon his part, agreed to accept and publicly exhibit the motion pictures for the periods of time fixed for which right he was to pay specified sums. When the use of the pictures was completed according to the contract, they were to be reshipped on advices given by the distributors.

The complaint further alleged that these distributors control the distribution of all films in the United States

Page 303

and that the films cannot be procured from others. The Omaha Film Board of Trade is a Nebraska corporation, organized for the purpose of promoting good will among those engaged in the motion picture business and for other purposes, its membership being limited to one representative from each company or person engaged in the film business. It is alleged that the exhibitor's business was successful and profitable and that, the cupidity of the distributors being thereby aroused, some of them requested a share of his patronage, and, upon his refusal, made threats to put him out of business by underbidding and supplying the various theaters constituting his circuit; that the Omaha Film Board of Trade was organized for the purpose of enabling these distributors to control prices and dicate terms to their patrons in Nebraska and other states. It is further alleged that the business of the exhibitor had grown to large proportions; that he was procuring films from some of the members of the Omaha Film Board of Trade, but had refused to buy from others, and that thereby a spirit of hostility was aroused against him on the part of the latter who thereupon brought great pressure to induce those with whom he was dealing to cease doing business with him; that all the defendants in error thereupon unlawfully combined and conspired in restraint of trade and commerce among the states, with the purpose and intent of preventing him from carrying on his said business and with the intent to ruin him; that they caused false charges to be made against him before the Film Board of Trade, and, without his knowledge or an opportunity to be heard, placed him upon its blacklist, of which notice was given to distributors who thereupon refused to transact further business with him; that those distributors who were not members of the Film Board of Trade cooperated with and approved the action of the board and conspired with the others to ruin the business, credit, and reputation of the exhibitor;

Page 304

that, in furtherance of the combination and conspiracy, the distributors have ever since refused to deal with him or furnish him with film service and have caused the unexpired contracts which he held with some of the distributors to be illegally and unlawfully canceled and that he has ever since been and still is deprived of such service. As a result of the foregoing, the exhibitor asked judgment for three times the amount of damages which he had suffered as alleged.

Upon this complaint and an answer the case went to trial before a jury. After counsel for the exhibitor had made his opening statement to the jury the defendants in error moved the court for a directed verdict in their favor, upon the ground 'that the petition and opening fail to state facts sufficient to constitute a cause of action arising under the Sherman Act, or any act amendatory thereof.' The court sustained the motion and instructed the jury to return a verdict for the defendants, which was done. Thereupon judgment was entered upon the verdict dismissing the cause. In a memorandum opinion the trial judge states that he had reached the conclusion that the motion should be sustained upon the grounds: (1) That the petition does not show with sufficient clearness that the complaint is one over which the court has jurisdiction; (2) that it fails to show with sufficient clearness any combination or conspiracy sufficient to justify the court in proceeding further with the trial.

The case was taken by writ of error to the Circuit Court of Appeals where the judgment was affirmed for want of jurisdiction in the District Court. 280 Fed. 301.

First. Defendants in error have submitted a motion to dismiss the writ of error here. The statement of the ground is somewhat ambiguous, but it is, in substance, that the motion in the trial court attacked the complaint for a failure to state a cause of action under the Sherman Act (Comp. St. §§ 8820-8823, 8827-8830); that this constituted a challenge to the jurisdiction

Page 305

and, consequently, the writ of error should have been taken directly to this court. But the motion below in terms was put upon the ground that the complaint and the opening statement failed to state facts sufficient to constitute a cause of action—not that the court was without jurisdiction—and it is this motion that was sustained. The memorandum, it is true, indicates that the trial judge was of opinion that the motion for a directed verdict went to the jurisdiction; but it is apparent that, as to this, he assumed that an unsuccessful attempt to allege facts sufficient to constitute a cause of action under a federal statute constitutes a jurisdictional defect.

Section 238 of the Judicial Code (Comp. St. § 1215) provides that appeals and writs of error may be taken from the District Court direct to this court 'in any case in which the jurisdiction of the [District] Court is in issue.' As it has been many times decided, the jurisdiction meant by the statute is that of the court as a federal court only, and not its jurisdiction upon general grounds of law or procedure. See, for example, Louisville Trust Co. v. Knott, 191 U. S. 225, 24 Sup. Ct. 119, 48 L. Ed. 159. The contention here seems to be broadly, that where the cause of action is based upon an act of Congress, unless the complaint states a case within the terms of the act the federal court is without jurisdiction.

Jurisdiction is the power to decide a justiciable controversy, and includes questions of law as well as of fact. A complaint, setting forth a substantial claim under a federal statute presents a case within the jurisdiction of the court as a federal court, and this jurisdiction cannot be made to stand or fall upon the way the court may chance to decide an issue as to the legal sufficiency of the facts alleged any more than upon the way it may decide as to the legal sufficiency of the facts proven. Its decision either way upon either question is predicated upon the existence of jurisdiction, not upon the absence of it. Jurisdiction,

Page 306

as distinguished from merits, is wanting only where the claim set forth in the complaint is so unsubstantial as to be frivolous, or, in other words, is plainly without color of merit. Weiland v. Pioneer Irrigation Co., 259 U. S. 498, 501, 42 Sup. Ct. 568, 66 L. Ed. 1027; Newburyport Water Co. v. Newburyport, 193 U. S. 561, 576, 24 Sup. Ct. 553, 48 L. Ed. 795; Matters v. Ryan, 249 U. S. 375, 377, 39 Sup. Ct. 315, 63 L. Ed. 654; Flanders v. Coleman, 250 U. S. 223, 227, 39 Sup. Ct. 472, 63 L. Ed. 948; L. & N. R. R. Co. v. Rice, 247 U. S. 201, 203, 38 Sup. Ct. 429, 62 L. Ed. 1071; Lovell v. Newman, 227 U. S. 412, 421, 33 Sup. Ct. 375, 57 L. Ed. 577; Denver First National Bank v. Klug, 186 U. S. 202, 204, 22 Sup. Ct. 899, 46 L. Ed. 1127; Louie v. United States, 254 U. S. 548, 41 Sup. Ct. 188, 65 L. Ed. 399; Hart v. Keith Exchange, 262 U. S. 271, 273, 43 Sup. Ct. 540, 67 L. Ed. 977; The Fair v. Kohler Die Co., 228 U. S. 22, 25,...

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