Kogod v. Stanley Co. of America, 10398-10400.

• Decision Date: 21 December 1950
• Docket Number: No. 10398-10400.,10398-10400.
• Citation: 186 F.2d 763,88 US App. DC 112
• Parties: KOGOD et al. v. STANLEY CO. OF AMERICA et al. KASS REALTY CO., Inc. v. KOGOD et al. STANLEY CO. OF AMERICA v. KOGOD et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

88 US App. DC 112, 186 F.2d 763 (1950)

KOGOD et al. v. STANLEY CO. OF AMERICA et al. KASS REALTY CO., Inc. v. KOGOD et al. STANLEY CO. OF AMERICA v. KOGOD et al.

Nos. 10398-10400.

United States Court of Appeals District of Columbia Circuit.

Decided December 21, 1950.

Mr. Robert E. Sher, Washington, D. C., with whom Messrs. Monroe Oppenheimer and William P. Bernton, Washington, D. C., were on the brief, for appellants and cross-appellees Fred S. Kogod and Max Burka, individually and as copartners doing business as K-B Amusement Co.

Mr. Louis Ottenberg, Washington, D. C., with whom Mr. H. Max Ammerman, Washington, D.C., was on the brief, for appellee and cross-appellant Kass Realty Co., Inc.

Mr. Philip W. Amram, Washington, D. C., with whom Mr. James M. Carlisle, Washington, D.C., was on the brief, for appellee and cross-appellant Stanley Co. of America.

Before EDGERTON, PRETTYMAN and PROCTOR, Circuit Judges.

EDGERTON, Circuit Judge.

In 1945 Kogod and Burka (K-B), theater owners bought a site on MacArthur Boulevard in the District of Columbia and announced they would build a theater there. About the same time Stanley Company (Stanley), a wholly-owned subsidiary of Warner Brothers, made a contract with Kass Realty Company (Kass) by which Kass agreed to build a theater on MacArthur Boulevard and lease it to Stanley. The Stanley site was about three blocks from the K-B site, and the area could not profitably support two theaters. K-B sued to enjoin construction of the Stanley theater on the ground that it was part of a plan to perpetuate a Warner monopoly. That suit resulted in a settlement evidenced by three contracts.

Two of these contracts were between Stanley and K-B and provided for abandoning the Stanley theater project and forming the MacArthur Corporation, with stock control divided between Stanley and K-B, to own and operate a theater on the K-B site. But the settlement depended on a three-party contract by which Kass agreed to cancel its contract with Stanley and received (1) $45,000 for canceling the proposed lease; (2) $15,000 for the sale of the unwanted Stanley site to the MacArthur Corporation; and (3) a promise by Stanley and K-B to designate within two years a site for another theater, to be built by Kass elsewhere in the District of Columbia, and to be leased to Stanley or, at Kass' option, to Stanley and K-B. Stanley and K-B agreed to pay Kass $100,000 as damages if they failed to designate a site. They did not agree on one during the two-year period. K-B designated one at Georgia Avenue and Shepherd Street, and Stanley one at New Hampshire and Ethan Allen Avenues.

In 1946, when the contracts of settlement were made, United States v. Paramount Pictures, Inc., D.C., 66 F.Supp. 323, Id., D. C., 70 F.Supp. 53, was pending before a three-judge court in the Southern District of New York. In May 1948 the Supreme Court affirmed a part of the Paramount decree which required Stanley to divest itself of all theaters held jointly with independents. United States v. Paramount Pictures, Inc., et al., 334 U.S. 131, 149, 68 S.Ct. 915, 92 L.Ed. 1260. A consent decree was afterwards entered in the District Court in New York which provided specifically that Stanley divest itself, by sale or dissolution, of its interest in the MacArthur Corporation.¹

Meantime in June 1948 K-B brought the present suit against Stanley to compel Stanley to sell its interest in the MacArthur Corporation to K-B, and also to "determine the rights of the parties in the second theater to be constructed by Kass * * *" Kass intervened and claimed $100,000 damages because Stanley and K-B had not designated a site. Stanley answered K-B's complaint and filed a counterclaim. The court on its own motion dismissed the complaint, the intervening petition, and the counterclaim. It held the three contracts illegal per se as in restraint of trade. With respect to the three-party contract, the court held further that even if it "were not tainted with the same illegality as that of the original one between the plaintiffs and the defendant Stanley, there is no obligation on Kogod under its terms to designate any site, and Stanley is incapable of doing so either alone or...