Gen. Talking Pictures Corp. v. De Marce

• Decision Date: 27 May 1938
• Docket Number: No. 31302.,31302.
• Citation: 279 N.W. 750,203 Minn. 28
• Parties: GENERAL TALKING PICTURES CORPORATION v. DE MARCE.
• Court: Minnesota Supreme Court

203 Minn. 28
279 N.W. 750

GENERAL TALKING PICTURES CORPORATION
v.
DE MARCE.

No. 31302.

Supreme Court of Minnesota.

May 27, 1938.

Appeal from District Court, Swift County; Harold Baker, Judge.

Action by the General Talking Pictures Corporation against John DeMarce to recover on past-due promissory notes executed by defendant to plaintiff under and pursuant to a contract for the lease of certain talking motion picture projection equipment and for attorneys' fees, wherein the defendant filed a counterclaim, under the purported authority of the anti-trust laws, for treble the amount of damages alleged to have been suffered by him because of the asserted violation thereof. From a judgment in favor of the plaintiff, the defendant appeals.

Judgment affirmed.

Syllabus by the Court.

1. Where plaintiff in New York and defendant in Minnesota executed in New York a contract for the leasing of motion picture reproducing equipment, which, pursuant thereto, was subsequently installed by plaintiff's agents, the making of the contract itself was obviously an interstate transaction and subject to the federal anti-trust laws, and the installation of the complex and intricate equipment by plaintiff's engineers was purely incidental and did not remove the transaction from that field.

2. A tying agreement which requires the lessee or purchaser of such equipment to purchase repair parts from the maker of the equipment is not necessarily unreasonable restraint of trade since it may reasonably be necessary in order to effect satisfactory service to the lessee or buyer. It is a question of fact upon which the trial court's finding adverse to defendant is conclusive in the absence of a settled case or bill of exceptions.

3. The determination of issues arising under the federal anti-trust laws, whether raised by way of attack or defense, is made by the statutes to rest exclusively within the jurisdiction of federal courts and beyond that of the state courts.

[279 N.W. 751]

Hymen Z. Mendow, of Minneapolis, and John I. Davis, of Benson, for appellant.

R. F. Schroeder and F. M. Butler, both of St. Paul, and Louis Zimmerman, of New York City, for respondent.

HOLT, Justice.

This is an appeal from a judgment in favor of plaintiff in an action to recover on past-due promissory notes executed by defendant to plaintiff under and pursuant to a contract for the lease of certain talking motion picture projecting equipment, and for attorneys' fees. The trial was to the court. There being no settled case or bill of exceptions, the only inquiry is whether the findings sustain the conclusions of law.

Plaintiff, a New York corporation, is a manufacturer of sound reproducing equipment. Defendant operates a moving picture theater in Benson, Minn. In October, 1930, the parties entered into a contract under which defendant, for a consideration, was licensed to use one of plaintiff's machines. As part of the transaction, defendant also executed installment notes according to which payment was to be made. Both contract and notes were prepared by plaintiff in New York, sent to and signed by defendant in Benson, and returned to plaintiff in New York for execution. Thereafter the equipment was shipped and installed by plaintiff's engineers.

Defendant sought to avoid liability for the following reasons, inter alia: (1) A prior rescission; (2) false and fraudulent representations inducing the contract; (3) coercion by threat of litigation; (4) illegality of the contract because in restraint of trade in violation of the Sherman Anti-Trust Act, 15 U.S.C.A. § 1 et seq., and Clayton Act. He further counterclaimed, under purported authority of the anti-trust laws, for treble the amount of damages alleged to have been suffered by him in his business, for the asserted violation thereof. The trial court found adversely to the defendant on all the issues and made findings of fact and conclusions of law against him. Except as to the claim involving violation of the anti-trust laws, the determination of the trial court was final, and has been so considered by counsel. That issue alone presents the question to be decided on this appeal.

The following provisions of the contract are attacked as ‘tying agreements' restraining trade in violation of the federal laws (Clayton Act § 3, 15 U.S.C.A. § 14):

‘8. The Exhibitor shall not obtain any additional renewal, spare or assembled parts

[279 N.W. 752]

for the Equipment otherwise than through the Company and the Company agrees to furnish and supply the same upon the terms above set forth.

‘The Exhibitor shall keep, maintain and operate the Equipment together with any renewals or replacements thereof in such manner as amy be from time to time prescribed by the Company and only by such persons whose efficiency is first certified by the Company, and the Exhibitor shall not remove, shift, alter, change, modify, add to, take anything from or use any other device with the Equipment, or any part thereof in the reproduction of sound, or break any seal thereon. The exhibitor may, however, take all reasonable steps consistent with the intent hereof to correct or repair the Equipment in the event of any accident or breakdown.’

The appellant also cites the following paragraphs in support of his position:

‘12. The title to and ownership of the Equipment and of all parts or other equipment at any...