General Talking Pictures Corp. v. DeMarce
| Decision Date | 27 May 1938 |
| Docket Number | 31,302 |
| Citation | 279 N.W. 750,203 Minn. 28 |
| Parties | GENERAL TALKING PICTURES CORPORATION v. JOHN DeMARCE |
| Court | Minnesota Supreme Court |
Action in the district court for Swift county to recover unpaid installments claimed to be due plaintiff under a contract with defendant for the lease of certain motion picture sound-reproducing equipment. There were findings for plaintiff, Harold Baker, Judge. Defendant appealed from the judgment. Affirmed.
Commerce -- interstate transaction -- contract for lease of motion picture sound-reproducing equipment.
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 antitrust 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.
Commerce -- agreement not in restraint of trade.
Appeal and error -- record -- necessity of settled case or bill of exceptions.
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.
Court -- federal jurisdiction -- determination of issues under antitrust laws.
3. The determination of issues arising under the federal antitrust 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.
Hymen Z. Mendow and John I. Davis, for appellant.
R. F Schroeder, F. M. Butler, and Louis Zimmerman, for respondent.
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 theatre in Benson, Minnesota. 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 Antitrust and Clayton Acts. He further counterclaimed, under purported authority of the antitrust 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 antitrust 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 USCA, § 14):
The appellant also cites the following paragraphs in support of his position:
Appellant also invites attention to the finding that plaintiff's agent made representations that if defendant bought "bootleg" equipment he would be subject to lawsuits.
The trial court found that during the time the defendant operated the equipment here involved he ordered and used additional and renewal parts from concerns other than the plaintiff's and used such parts on his equipment without objection from the plaintiff. It further found that defendant was not obliged to and did not accept the terms and conditions for the installation of the equipment because of any threat or by reason of any false and fraudulent representations and inducements made by the plaintiff to the defendant. Its most important finding on the branch of the case we are now considering was:
"That the agreement, hereinbefore set forth, does not have a necessary and inevitable tendency to produce material and unreasonable restraint of interstate commerce in violation of the Sherman Antitrust Act and the Clayton Act."
1. Was the making of the contract and the installation of the equipment an interstate transaction and so subject to the Sherman and Clayton Acts? We answer that question in the affirmative. It is true that the findings show that the defendant had some preliminary negotiations with plaintiff's representative in Minneapolis, but the contract had not at that time been prepared. It was subsequently made out, together with the notes by plaintiff in New York City and mailed to the defendant and sent to Benson, where he signed it "free of interference from plaintiff." The answer and the findings indicate that the contract was then returned to New York City for the signature of the plaintiff. The defendant seems to have regarded the transaction as interstate commerce because in his amended answer he pleads that the contract effected a substantial lessening of competition as between the plaintiff and competing manufacturers in violation of the Sherman Antitrust Law and the Clayton Act. It is true that he also charges a violation of the Minnesota restraint...
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