Electric Theater Co. v. Twentieth Century-Fox F. Corp., 7674.

CourtUnited States District Courts. 8th Circuit. Western District of Missouri
Citation113 F. Supp. 937
Docket NumberNo. 7674.,7674.
Decision Date18 July 1953


William G. Boatright, Kansas City, Mo., for plaintiff.

Joseph J. Kelly, Jr., and James C. Wilson, Kansas City, Mo., for defendants.

RIDGE, District Judge.

On July 15, 1952, this action was brought pursuant to Sec. 4 of the Clayton Act, 15 U.S.C.A. § 15, charging defendants with violating the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1, 2, and praying recovery of statutory treble damages.

By order of Court, dated January 31, 1953, separate trial on the issue of statute of limitations was granted. Stipulation of facts and well-prepared briefs having been submitted by the parties on this preliminary but very vital issue; we proceed to dispose of it at this time.

At the outset, it is recognized that there is no "federal statute of limitations" applicable to anti-trust, treble damage actions. Consequently, it is incumbent upon this Court to apply the statute of limitations of the lex fori, which in this instance is that of the State of Missouri, in the absence of qualifying considerations. To state the same proposition in slightly different words, in actions of this kind a federal court looks to the applicable statute of limitations of the State wherein the action is brought, to determine a claim of bar made by way of limitation. Dipson Theatres, Inc. v. Buffalo Theatres, Inc., D.C.N.Y., 1948, 8 F.R.D. 86; Winkler-Koch Engineering Co. v. Universal Oil Products Co., D.C.N.Y., 1947, 79 F.Supp. 1013; Bascom Launder Corp. v. Farny, D.C.N.Y., 1950, 10 F.R.D. 421; Christensen v. Paramount Pictures, Inc., D.C.Utah, 1950, 95 F.Supp. 446. Also see Cope v. Anderson, Receiver, 1947, 331 U.S. 461, 67 S.Ct. 1340, 91 L.Ed. 1602.

Although a federal court looks to the statute of limitations of the State wherein it is sitting, it is equally true that it must look to any qualifying directive imposed by the so-called "borrowing" statute of that state. Cope v. Anderson, Receiver, supra. A "borrowing" statute is a directive of the state, whose own limitation period might otherwise be applicable, requiring the court to apply, or "borrow", the statutory period prescribed by the laws of the state where a pending cause of action first accrued. Missouri has such a "borrowing" statute. It provides as follows:

Mo.R.S.1949, Sec. 516.180, V.A.M.S.: "Whenever a cause of action has been fully barred by the laws of the state, territory or country in which it originated, said bar shall be a complete defense to any action thereon, brought in any of the courts of this state."

In light of this "borrowing" statute, supra, we must ascertain where the instant cause of action "originated". In our opinion, there can be little question but that it originated in Kansas. Although none of the defendants were ever licensed under Kansas law to transact business in that State, nevertheless plaintiff's business, and the damage sustained as a result of the monopoly charged, both took place within the confines of that State. 15 U.S.C.A. § 15, expressly provides that recovery for anti-trust law violations is to be given to any person thereby "injured in his business or property". Since, therefore, plaintiff's private right of action necessarily accrued when, and only when, it was injured in its business or property, it follows that the right of action here asserted "originated" where said business or property was located, viz., in Kansas. Even though proof of conspiracy is a fundamental burden which plaintiff must assume, the fact that such conspiracy, if true, took place outside of Kansas does not preclude a finding that plaintiff's cause of action originated in Kansas. Plaintiff's cause of action is not derived from the mere conspiracy charged, but from the damage proximately resulting therefrom. Glenn Coal Co. v. Dickinson Fuel Co., 4 Cir., 1934, 72 F.2d 885; Foster & Kleiser Co. v. Special Site Sign Co., 9 Cir., 1936, 85 F.2d 742; Momand v. Universal Film Exchanges, D.C.Mass., 1942, 43 F.Supp. 996. As expressed and fully supported by authorities in defendants' briefs, a cause of action for injury to person or property accrues or originates at the place where the person or property is located at the time of injury. Seaboard Terminals Corporation v. Standard Oil Co. of New Jersey, D.C.N.Y., 1938, 24 F.Supp. 1018; see also, Hughes Provision Co. v. La Mear Poultry & Egg Co., Mo.App., 1951, 242 S.W.2d 285. This whole subject of the locus delicti is well established in the law of torts, and is, therefore, fully applicable in solving the instant question, since it is held that an action for treble damages under the Sherman Anti-Trust Act is "one sounding in tort for a liability created by statute." Kentucky-Tennessee Light & Power Co. v. Nashville Coal Co., D.C.Ky., 1941, 37 F.Supp. 728, 737; see also, Northwestern Oil Co. v. Socony-Vacuum Oil Co., 7 Cir., 1943, 138 F.2d 967.

Plaintiff's cause of action having thus "originated" in Kansas, it would seem to follow that statutes of limitation of that State only need be resorted to, to ascertain the applicable limitation period in light of the Missouri "borrowing" statute, supra. However, the matter is not that simple of resolution. Kansas has a tolling section included in its statute of limitations applicable to foreign corporations. The Clayton Act, 15 U.S.C.A. § 16, also contains a tolling provision applicable to private Sherman Act cases. Thus additional questions arise that must be disposed of or resolved.

The Kansas tolling statute above referred to provides as follows:

Sec. 60-309, G.S.Kan.1949: "If when a cause of action accrues against a person he be out of the state * * * the period limited for the commencement of the action shall not begin to run until he comes into the state, * * *: Provided, This act shall not apply to any foreign corporation authorized to do business in the state upon which service of process can be had within the state." (Italics ours.)

By stipulation of facts before the Court, it appears that none of the defendants herein have ever been licensed under Kansas laws to transact business in that State. As a consequence of that fact and the provisions of the above Kansas tolling statute, both sides have devoted a large portion of their instant briefs to the proposition whether defendants herein as foreign corporations may make claim to the benefits of any Kansas statute of limitation. Plaintiff, chiefly relying upon the 1939 opinion of the Supreme Court of Kansas in the case of Weishaar v. Butters Pump & Equipment Co., 149 Kan. 842, 89 P.2d 864, 122 A.L.R. 1190, takes the position that unless defendants, as foreign corporations, were authorized to do business in Kansas by virtue of Kansas licensing laws, they are not so privileged. Defendants, with equal vigor and relying heavily on Doherty v. Kansas City Star Co., 1936, 143 Kan. 802, 57 P.2d 43, claim that as foreign corporations engaged in interstate commerce they are "authorized" to do business in Kansas within the ambit of such tolling statute. Interesting as that proposition is, at this stage of unravelment we do not believe that we need resolve the conflict apparent in those opinions of the Supreme Court of Kansas. In our opinion, that matter becomes presently academic, in light of the conclusions hereinafter reached relative to the proper characterization of the instant action under federal law, and that the Kansas 3-year statute of limitation, G.S. 1949, 60-306, has not run so as to bar this action as to any of the defendants.

Before determining the applicability of any statute of limitations governing the instant action, we must first properly characterize the type of action we have before us. Plaintiff asserts that a private Sherman Act case is "an action upon a liability created by statute" remedial and compensatory in character; while defendants urge that it is "an action upon a statute for a penalty or forfeiture" and must be so classified by resort to applicable state statutes of limitation. Under plaintiff's theory, the contention is made that characterization of private Sherman Act actions must be made by consideration of federal law. Defendants strongly urge that such characterization must be made and conformed to the definitive interpretations classifying actions as made by the courts of the state whose statute of limitations is applicable thereto.

Whatever may be the judicial prerogative of state courts to construe their own statutes, we do not believe that they can ever assume the awesome role of Delphic Oracle on such a fundamental matter as to with finality characterize or classify a purely federal cause of action. It is true that a federal court will, particularly in diversity cases, apply state court construction to a state-derived cause of action. But when state court construction, even of its own statutes, invades the province of characterization in a field divorced from state regulation, then clearly such an invasion of the federal judicial province is entitled to no consideration. The line of demarcation between statutory construction and characterization is often elusive and distressingly vague. Yet, we cannot ignore the distinction. Although by federal law we are directed to the state statute of limitations in cases of this kind, we do not think that such procedural directive transforms state adjective law into a spring-board from which state courts can assert a formative influence on federal substantive law. Regardless of defendants' protestations to the contrary, to allow an antitrust action to be characterized as one for a penalty or forfeiture, depending on state court stare decisis, would involve considerably more than "statutory construction" for a limited procedural purpose.

In support of their argument that state court decisions determine the character of an anti-trust action for the purpose of applying a...

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