Bookout v. Schine Chain Theatres

• Citation: 253 F.2d 292
• Decision Date: 11 March 1958
• Docket Number: No. 183,Docket 23192.,183
• Parties: Raymond E. BOOKOUT, as Administrator, Appellant, v. SCHINE CHAIN THEATRES, Inc., et al., Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

253 F.2d 292 (1958)

Raymond E. BOOKOUT, as Administrator, Appellant, v. SCHINE CHAIN THEATRES, Inc., et al., Appellees.

No. 183, Docket 23192.

United States Court of Appeals Second Circuit.

Argued February 11, 1958.

Decided March 11, 1958.

Russell Hardy, Washington, D. C., Warner F. Thompson, Lockport, N. Y. (Russell Hardy, Sr., Russell Hardy, Jr., John F. Clagett, Washington, D. C., of counsel), for appellant.

Raichle, Tucker & Moore, Frank G. Raichle, Buffalo, N. Y. (James O. Moore, Jr., Albany, N. Y., of counsel), for appellees.

Before HAND, HINCKS and LUMBARD, Circuit Judges.

HAND, Circuit Judge.

Upon this appeal, coming as it does from a summary judgment dismissing the complaint, the plaintiff is concededly entitled to have all disputed issues resolved in his favor. On that assumption the substance of the facts is as follows. The plaintiff is the administrator c.t.a. of one, Dickinson, who had owned "a controlling interest" in Lock City Theatres, Inc., which held title to a parcel of land in Lockport, New York, on which stood a moving picture theatre. This parcel Dickinson leased to the "Palace Theatre" until December, 1932, when he evicted it for failure to pay rent. Thereupon he organized another corporation — Reliance Theatres, Inc. — to which he let the building for ten years: i. e., from January 1, 1933, to December 31, 1942, he himself holding one-third of the shares and one, Dipson, the other two-thirds. Reliance Theatres, Inc., used the theatre until October, 1936, when it was forced to close owing to an unlawful conspiracy under the Anti-Trust Acts of Schine Chain Theatres, Inc., and the individual defendants, by means of which they had cut off its supply of films. Dickinson had died in December, 1933, and his shares in Reliance Theatres, Inc., passed to his executors, of whom the plaintiff is the successor.

In May, 1935, after it became apparent that the business could not prosper Dickinson's executors tried to induce the defendants to buy the shares but they would not offer a satisfactory price. Thereupon in April, 1936, they got leave from the Surrogate of Niagara County to sell at public auction various interests of Dickinson in Lock City Theatres, Inc., together with the shares held by him in Reliance Theatres, Inc. The property was sold on April 21, 1936, and the only bidders at the sale were Schine, one of the defendants, and one, Osborne, who acted for Dipson. After Osborne had bid more than $25,000 for the whole property the bidding was suspended, Schine and Dipson conferred, the bidding was thereafter resumed, and a bid of Osborne for $37,600 was the last and highest bid, and for the purposes of this appeal we are to assume that in pursuance of the original conspiracy Schine and Dipson agreed that Osborne's bid should prevail, and that the property should be struck down to him. All the shares in Reliance Theatres, Inc., thereupon passed to Dipson, who in turn transferred them to Schine. In June, 1935, Reliance Theatres, Inc., had brought an action under the Anti-Trust Acts in the Western District of New York against Schine Chain Theatres, Inc., and other corporations for damages caused to its business by the conspiracy. This claim Reliance Theatres, Inc., released on October 10, 1936, and the release was followed on November 23, 1936, by a judgment dismissing the complaint.

The plaintiff's argument is that, since the Supreme Court in Schine Chain Theatres v. United States, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245, decided that the defendants had been engaged in a conspiracy under the Anti-Trust Acts, Dickinson and the plaintiff as his successor, as shareholders would have made out a prima facie case against the defendants under § 16, Title 15 U.S.C.A. However, so far as the action depends upon any injury to Reliance Theatres, Inc., the plaintiff's claim is only derivative from that injury and it is well established that he has no separate claim under the Anti-Trust Acts,¹ but must be content with the increase in value of his shares because of any recovery by the corporation. That was true before the passage of the Clayton Act in 1914,² which is a circumstance of importance in interpreting the Clayton Act itself.³

However, the plaintiff alleges that he has an additional claim, quite aside from any loss as a shareholder from the injury caused to the corporation. This position he asserts in such indefinite terms that we are not quite sure of its basis; but, as we understand it, it is that the sale of the shares at the auction in 1936, resulted from an illegal stifling of bids by agreement between Dipson and Shine, and since that was in pursuance of the original conspiracy, it was a separate wrong, individual to Dickinson's executors, for which an action will lie. It would seem on this theory that at best any...