Loew's, Inc. v. Don George, Inc., 43617

• Decision Date: 23 March 1959
• Docket Number: No. 43617,43617
• Citation: 110 So.2d 553,237 La. 132
• Parties: LOEW'S, INCORPORATED, v. DON GEORGE, INC.
• Court: Louisiana Supreme Court

Page 553

110 So.2d 553

237 La. 132

LOEW'S, INCORPORATED, v. DON GEORGE, INC.

No. 43617.

Supreme Court of Louisiana.

March 23, 1959.

Rehearing Denied April 27, 1959.

Smallenberger & Eatman, Shreveport, John E. Jackson & Baldwin J. Allen, New Orleans, Jackson, Smith, Mayer & Kennedy, Shreveport, for defendant-appellant.

Wilkinson, Lewis, Wilkinson & Madison, Shreveport, Chaffe, McCall, Phillips, Burke & Hopkins, New Orleans, for plaintiff-appellee.

HAMLIN, Justice.

By written agreements, Loew's, Inc., a distributor of motion pictures in interstate commerce and a licensor of the right to exhibit motion pictures distributed by it, granted to Don George, Inc., the alleged owner of seven theatres, the right to exhibit various motion pictures. The agreements provided for payment of either a fixed sum (known as a flat rental) or an amount determinable by a fixed or varying percentage of the gross receipts obtained from admissions to such exhibitions (known as a percentage rental), with or without a guaranty of a minimum amount; and further provided that Don George, Inc., submit to Loew's Inc., a correct itemized statement of gross receipts for each day of exhibition of a picture at a designated theatre.¹

On February 17, 1953, Loew's, Inc., instituted suit against Don George, Inc., for $2,500 and other unaccounted-for amounts to be determined by the trial court, alleging that these sums represented unreported and unaccounted-for percentages on gross admission receipts.

In answer to plaintiff's petition, defendant denied liability and reconvened for the sum of $1,201,585.90, treble damages for loss of earnings, alleged to have been suffered as a result of an unlawful conspiracy against reconvenor's business. As plaintiff in reconvention, defendant further prayed for the sum of $50,000 for false and libelous statements alleged to have been made by Loew's, Inc., in a petition filed in the United States District Court for the Western District of Louisiana on April 11, 1952 (Suit No. 3693, entitled 'Loew's, Incorporated v. Don George, Inc., and Don & Darrell George'²). In charging that 'as a direct and proximate cause of the operation of said unlawful agreements and conspiracy against the Reconvenor's business, Reconvenor has been subjected to a net loss of earnings in excess of * * * $400,528.63,³' Don George, Inc., relied on the findings in the case of United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915. 92 L.Ed. 1261, wherein Loew's, Inc., and other motion picture distributors were charged with a violation of the Sherman Act, 15 U.S.C.A. § 1 et seq. There, the defendants were found guilty of having committed unlawful conspiratorial restraints of trade in unreasonable clearances, pooling agreements, joint ownerships, formula deals, block-bookings, and discriminations.

Loew's, Inc., defendant in reconvention, filed exceptions to the jurisdiction ratione materiae and no cause or right of action to the reconventional demand.

The trial court sustained the exception to the jurisdiction, holding that the cause of action asserted by plaintiff in reconvention was purely statutory (Sherman Anti-Trust and Clayton Acts, 15 U.S.C.A. § 1 et seq.) and could only be brought in courts of the United States. In sustaining the exception of no cause or right of action, it held that the demand for libel would have to await the termination of the action, supra, in the federal court.

The demand in reconvention was amended so as to include the State Monopoly Act (LSA-R.S. 51:121--152). Loew's, Inc., filed a plea of prescription, on the ground that the reconventional demand was founded in tort and therefore prescribed in one year. The then trial judge, the late Honorable James U. Galloway, sustained the plea of prescription and dismissed the reconventional demand, stating in part:

'* * * It is our opinion first, that the action asserted by defendant in its reconventional demand is not Ex contractu. As we read the reconventional demand of defendant there is no claim that Loew's, Inc. breached any provision of any contract existing between the parties. As we appreciate defendant's position his claim is based solely on his allegations that he has suffered damages as the result of a nationwide conspiracy and combination between Loew's, Inc. and other named parties, which combinations were in restraint of trade and in violation of the Anti-trust Laws of the United States and likewise in violation of the Anti-trust Law of Louisiana in so far as said combinations and conspiracies entered into the realm of intrastate commerce. We agree with the proposition contained in Article 2315 of the Louisiana (LSA-) Civil Code, that every act of man that causes damage to another obliges him by whose fault it happened to repair it. We do not consider that said statutes created a new right or cause of torts. The fact that said statutes authorized the recovery of treble the amount of damages proved does not affect the basic right or cause of action.

'The Supreme Court of Louisiana, in the case of Lagrone v. K(ansas) C(ity) S(outhern) Railway Company, 157 La. 559, 102 So. 669, has succinctly stated what we think is the law.

The Court said:

"It has never been held that the mere fact of the law imposing upon a person some duty towards the public operates to create a quasi contract between such person and each individual member of the public. And it is of the essence of a contractual obligation (contract or quasi contract) that it be due to some particular person as distinguished from the public in general.'

'Certainly defendant's reconventional demand is not based upon any alleged breach of a specific contract between these parties and the mere fact that plaintiff has violated the Anti-trust Laws and breached an obligation imposed upon it by such laws to refrain from a certain type of conduct creates no quasi contractual obligation between them. It is our opinion that the one year's prescription applies to the reconventional demand, unless the operation of the prescription has been suspended.'

Don George, Inc., plaintiff in reconvention, then appealed to this Court from the above judgment. We reversed said judgment and remanded the case for trial on the merits (227 La. 127, 78 So.2d 534), holding that the law did not favor the trial of cases in piecemeal, Succession of Dancie, 187 La. 628, 175 So. 418, and that where the reconventional demand is incidental to and grows out of the main demand, the two demands should be tried together, First Nat. Bank Bldg. Co., Limited v. Dickson & Denny, 202 La. 970, 13 So.2d 283.

After the filing of numerous incidental pleas, the case was tried by a jury on its merits. The trial court⁴ sustained the plea of prescription of one year as to both the main demand and the demand in reconvention. Plaintiff, Loew's, Inc., offered no further evidence, and the trial judge excluded the evidence offered by defendant, Don George, Inc., in support of its reconventional demand. The jury was then discharged since there was no evidence before it for consideration. Final judgment by the court rejected both the main demand and the demand in reconvention.

Don George, Inc., plaintiff in reconvention, appealed to this Court, assigning the following errors:

'(1) The Court erred in excluding all defendants' evidence supporting its reconventional demand.

'(2) The Court erred in sustaining plaintiff's 'exception of prescription' of one year to defendant's demand in reconvention for damages under the Federal and State Antimonopoly Statutes.

'(3) The Court erred in dismissing defendant's demand for damages in reconvention for libelous statements plaintiff caused to be published in the local press and contained in its suit filed in the United States District Court, Western District of Louisiana.

'(4) The Court erred in sustaining the plea to the jurisdiction ratione materiae of the State Court to try a reconventional demand for damages under the Federal Antimonopoly Statutes.'

The instant matter involves only the receipts of the Glenwood Theatre, a suburban theatre owned by the defendant, Don George, Inc., in Shreveport, Louisiana; no issue is taken with the finding of the trial court that the last alleged damages encompassed by the reconvenor occurred in the year 1946--the reconventional demand being filed on March 5, 1953.

In its demand in reconvention, Don George, Inc., alleged that Loew's, Inc., together with other film producing distributing corporations 'engaged in a national conspiracy to restrain and monopolize, and have unreasonably restrained and monopolized, Interstate Trade and Commerce by the following means:

'1. Price Fixing.

A. Vertical

B. Horizontal

'2. Discriminatory and Unreasonable Clearance and Runs.

'3. Pooling Agreements and Joint Ownership.

'4. Formula Deals, Master Agreements and Franchises.

'5. Block-Booking.

'6. Discrimination on Contract Provisions.

'That this conspiracy was continued on and is presently being carried on on a national scale, and your reconvenor was adversely affected and damaged in its business and property by this conspiracy, * * *.

'That from 1939 to 1946 Reconvenor alleges that it could and should have profited to the extent of $61,976.00 per year had it received suitable pictures, or pictures with reasonable clearance, from all conspirators.'

Initially, we shall determine whether the reconventional demand filed herein alleged a tortious injury or a breach of contract. If it alleged a tort, the prescription of one year applies;⁵ whereas, an assertion of breach of contract is governed by the prescription of ten years.⁶

The character of the action given by reconvenor in its petition determines the prescription. Sims v. New Orleans Ry. & Light Co., 134 La. 897, 64 So. 823. An examination of the pleadings, stated in part, supra, reflects that in the instant case, reconvenor did not sue on a written contract nor did it rely on the terms of the written agreements which form...