Fox Film Corp. v. Buchanan

• Decision Date: 14 July 1931
• Docket Number: 4006
• Citation: 17 La.App. 285,136 So. 197
• Court: Court of Appeal of Louisiana — District of US
• Parties: FOX FILM CORP. v. BUCHANAN

136 So. 197

17 La.App. 285

FOX FILM CORP. v. BUCHANAN

No. 4006

Court of Appeals of Louisiana, Second Circuit

July 14, 1931

Appeal from the Eighth Judicial District Court, Parish of Winn. Hon Wiley R. Jones, Judge.

Action by Fox Film Corporation against C. Buchanan.

There was judgment for defendant. Exception no cause of action sustained and plaintiff appealed.

Judgment reversed and remanded.

Judgment reversed and case remanded.

Rosen Kammer, Wolff & Farrar, of New Orleans, and John J. Peters of Winnfield, attorneys for plaintiff, appellant.

E. E. Kidd, of Winnfield, attorney for defendant, appellee.

OPINION

McGREGOR, J.

This is a suit brought by the plaintiff, Fox Film Corporation, against the defendant, C. Buchanan, based on defendant's breach of three certain contracts entered into by the parties, by the terms of which defendant agreed to exhibit certain talking moving pictures named therein, and at the prices agreed upon and set forth in the contracts. The plaintiff is engaged in the production and distribution of talking motion picture films throughout the United States for and to theater owners. On June 3, 1929, defendant, C. Buchanan, was the owner and operator of the Buck's Theater in the town of Winnfield, and as such entered into the three said contracts with plaintiff, in which he obligated himself, among other things, to reproduce and exhibit in his theater thirty-five Fox Sound Entertainment prints, twelve Fox Movietone and Sound All-talking Production prints, and one Fox Movietone Follies print, at times to be agreed upon as set forth in the contracts and at prices stipulated therein. The aggregate sum which the defendant agreed to pay plaintiff for the pictures named in the said contracts amounted to $ 1,125. The defendant accepted one picture under the contract and paid the stipulated price therefor. He then sold his theater to his son, Fred Buchanan, without the latter assuming the three contracts which had been entered into as above set out. Both the defendant and his vendee refused to reproduce or exhibit any more of the pictures or features enumerated in the contracts.

In order to simplify their business and for their mutual protection, practically all of the motion picture producers and distributors of America have adopted a standard exhibit contract which is used by them all in their dealings with theater owners for the reproduction and exhibition of pictures of any and all kinds. In this contract there are twenty-two separate provisions, one of which, the eighteenth, provides for compulsory arbitration without resort to any court to determine, enforce or protect the legal rights granted in the contracts. It specially provides that the parties will abide by and forthwith comply with any decision or award of the board of arbitration, and that such decision or award shall be enforceable in any competent court.

The contracts involved in this case were on this standard form, so when the defendant refused to reproduce or exhibit the rest of the pictures and features enumerated in the contracts, the plaintiff referred the entire matter to the board of arbitration at New Orleans. There was another difference between the parties which is not included in this suit, but which was referred to the board of arbitration at the same time. The plaintiff secured an award of $ 1,244 in its favor against the defendant. The defendant refused to pay any portion of this award and as a consequence the plaintiff has filed this suit for the balance due it under the three contracts named. The suit is not based on the award as such, but upon the contracts themselves. The fact of the submission of the dispute to the board of arbitration is mentioned in the suit, not as a basis of the demand, but to show that the plaintiff has complied with all the conditions and provisions of the contracts.

The defendant filed an answer to the plaintiff's suit which needs no statement or consideration at this time for the reason that subsequently he filed an exception of no cause or right of action, based on the theory that the three contracts sued on are violative of the acts of Congress concerning trusts and contracts made in restraint of trade. This exception was referred to the merits and the trial was proceeded with. In the course of the trial plaintiff offered in evidence the three contracts sued on. These offerings were objected to by counsel for the defendant on the ground that the contracts in question are violative of the act of Congress known as the Sherman Anti-trust Bill (15 USCA, sections 1-7, 15), and that they are contracts made in restraint of trade and, therefore, null and void and inadmissible. The court sustained the objection and excluded the contracts, and then sustained the exception of no cause of action and dismissed the suit at plaintiff's cost, and a judgment to that effect was signed. From that judgment the plaintiff has appealed. The defendant and appellee has made no defense of the judgment in this court and has filed no brief.

OPINION

As stated above, the defendant's exception of no cause of action is based on the theory that the three contracts sued on are violative of the act of Congress known as the Sherman Anti-trust Law and are, therefore, contracts in restraint of trade and that, if the contract contains any provision that is violative of the said law, the entire contract is null and void and of no effect, and a party to such contract has no standing in court to enforce any of its provisions. The uniform contract that has been adopted by the plaintiff and all other producers and distributors of motion pictures in the United States has been declared by the Supreme Court of the United States to be illegal in one of its provisions, the eighteenth, for the reason that this provision is violative of the Sherman Antitrust Law in that it is to that extent a contract in restraint of trade. The case in which the question arose is styled United States v. Paramount Famous Lasky Corporation et al., and was brought by the United States in the District Court for the Southern District of New York. The opinion in the case, which is reported in 34 F.2d 984, was handed down by Judge Thacher and is a very able discussion of the matter. Subsequent to the rendition of this opinion, Judge Thacher issued a similar decree or judgment which specifically held that the eighteenth provision of the said uniform contract and all activities and agreements entered into for the purpose of enforcing it constitute a conspiracy in restraint of trade in violation of the Sherman Anti-trust Act, and that, therefore, the said provision is illegal and unenforceable. But he did not declare or decree that the entire contract was stricken with nullity because of the inclusion of this illegal provision. On the contrary, article 3 of the decree specially provides:

"Nothing contained in this decree shall be construed as prohibiting any defendant or any member of any defendant Film Board of Trade from performing and/or continuing to perform, or enforcing and/or continuing to enforce, by any lawful means any contractual obligation the performance or enforcement of which is consistent with the provisions of this decree."

Reading the opinion and decree together it is clear that the court never intended to restrict the right of action to enforce the obligations lawfully assumed in the said uniform contract. The provision for compulsory arbitration is simply a means provided for the enforcement of the obligations of the contract and the fact that that provision has been declared to be illegal does not deprive the parties to the contract of the means provided by law for the enforcement of all the obligations legally assumed. The defendants are enjoined from enforcing the arbitration provision, but nothing in the decree would affect the prosecution of a claim such as the plaintiff herein is asserting against the defendant.

The defendants appealed from the decree in the above cited case to the Supreme Court of the United States, and with Justice McReynolds as the organ of the court, the decree as handed down by the district court was affirmed. We have been referred to no other case in which the legality of the uniform contract has been attacked, nor has any suggestion been made that any provision of the contract other than the eighteenth is illegal.

In a recent case similar to this one in the Supreme Court of Erie county, New York, styled Fox Film Corporation vs. Aprile, the court said:

"The Federal Court has forbidden the enforcement of the arbitration agreement set forth in the contract entered into between the parties. That Court has determined the illegality of the trust and restrained its continuance. But nothing in its decree forbids or interferes with the prosecution of the claim of the plaintiff herein."

The case of Paramount Famous Lasky Corporation v. National Theater Corporation (no opinion), brought in the United States District Court, for the Western District of Virginia and appealed to the United States Circuit Court of Appeals, Fourth Circuit, is very similar to the one now under consideration. In this case, the plaintiff filed suit, alleging a breach of contract for the distribution of certain motion picture films which the plaintiff furnished and for which the defendant agreed to pay, but failed and refused to do so. The contract in that case was written on the standard form, which included provision 18, being the same pro vision that was declared illegal by the Supreme Court of the United States in the case cited above. The defendant filed a demurrer, alleging that the plaintiff could not maintain the action because it had failed to comply with a condition precedent to suit, in that it had not submitted the matter...