LOEW'S v. Bays

• Decision Date: 29 January 1954
• Docket Number: No. 14514.,14514.
• Citation: 209 F.2d 610
• Parties: LOEW'S Inc. v. BAYS et al.
• Court: U.S. Court of Appeals — Fifth Circuit

209 F.2d 610 (1954)

LOEW'S Inc. v. BAYS et al.

No. 14514.

United States Court of Appeals Fifth Circuit.

January 29, 1954.

Earl T. Thomas, L. O. Smith, Jr., Jackson, Miss. (Wells, Thomas & Wells, Jackson, Miss., and Sargoy & Stein, New York City, W. C. Wells, III, W. C. Wells, Jr., Jackson, Miss., Edward A. Sargoy and John F. Whicher, New York City, of counsel), for appellant.

Phil Stone, Oxford, Miss., Walter P. Armstrong, Jr., Memphis, Tenn. (Armstrong, McCadden, Allen, Braden & Goodman, Memphis, Tenn., of counsel), for appellee.

Before HUTCHESON, Chief Judge, and HOLMES and RIVES, Circuit Judges.

HUTCHESON, Chief Judge.

Brought by plaintiff-appellant, hereafter referred to as plaintiff, a distributor of motion pictures, against the defendants-appellees, hereafter referred to as defendants, owners and operators of two motion picture theatres in Grenada, Mississippi, and based upon charges that, in connection with the operation of the theatres, defendants had entered into and engaged in a conspiracy to defraud plaintiff of the amounts justly due it under the terms of license agreements between plaintiff and defendants from pictures licensed to defendants, the suit was for damages, actual and exemplary.

The claim in general was: that from July 1, 1943, to February 14, 1952, the period in controversy, plaintiff licensed to defendants, under the respective copyrights thereof, numerous motion pictures; that a substantial number of such license agreements were what is known as percentage rental agreements which required defendants to pay, as the exhibition licensee, for a specified percentage of the gross box office receipts derived from the sale of admissions to the showing of such pictures; that defendants wilfully, intentionally, and deliberately conspired regularly to submit, or cause to be submitted, to plaintiff reports, falsely under-reporting the gross receipts therefrom; that plaintiff relied thereon to its damage, not only in accepting license fee payments for pictures already exhibited, but also in its subsequent dealings with defendants, including particularly further license agreements for additional percentage rental pictures; and that the result was that plaintiff was fraudulently induced to, and did, charge lower license fees for both "flat" and "percentage" rental pictures, than it otherwise would have done, to its actual damage as to each picture, as shown by Schedule "P" attached.

To the complaint filed February 14, 1952, defendants filed no answer either within the time required by the rules for answering or within the thirty days after March 6, allowed by order of the court.

Instead, the defendants, for the purpose and with the effect of taking into, and keeping in, their own hands the initiative in the case and of throwing and keeping the plaintiff off balance so that it could not take and assume its natural role as plaintiff, devised the grand strategy of swapping roles with the plaintiff by converting the attacker into the attacked.

Beginning its campaign of tactical offensive maneuvers, as shrewdly planned as they were brilliantly executed, on April 2nd, four days before its answer was due, with a motion for severance of claims, defendants followed this beginning by maintaining a continuous barrage of motions,¹ dilatory and otherwise, and securing orders thereon. These did not abate or lessen until on December 18th, some eight months later, when, prevented, by orders allowed on motion, from taking the depositions of, and from otherwise obtaining discovery from, defendants, the plaintiff, unable to regain the initiative, indeed, like Alice, in a strange and modern wonderland of procedural innovations, unable while running at top speed to do more than stand still, found the defendants cast in the roles of Little Red Riding Hood and her badly used grandmother, and itself in the role of the wicked wolf. In that role, it was found guilty of having brought its action in bad faith and was adjudicated not only out of its cause of action but out of its good name as well.²

Appealing from the summary judgment thus entered against it, plaintiff is here insisting that, for the reasons it assigns, the case, sounding as it did in fraud, was not under any circumstances one for summary judgment, and, further, that whether this is so or not, certainly under the record made in this case the judgment on the motion may not stand.

In support of its position, appellant puts forward and vigorously argues three specifications of error:

1. The record discloses, on its face, the existence of bona fide issues of material fact, precluding an award of summary judgment.

2. The evidence does not support the finding of the Court below that the facts disclosed by the papers submitted to the court indicate that plaintiff-appellant never had good cause to believe that it had a claim against defendants-appellees.

3. The procedure adopted herein by the court below was erroneous in the further respect that plaintiff-appellant was denied any opportunity for discovery of evidence in support of its claim in the possession of the adverse party, despite its repeated requests therefor.

Under these specifications, the appellant points to its definitely alleged charge that defendants have engaged continuously since July 1, 1943, in a conspiracy to defraud it; that this conspiracy was carried out by misrepresenting and underreporting the gross receipts derived from sales of admissions to each of the motion pictures listed in Schedule "P" by at least the amounts stated there and by concealing from plaintiff the true receipts so derived; and that plaintiff did not discover the evidence of this conspiracy until 1951.

It points out, too: that the defendants filed no answer; that their motion for summary judgment set forth no evidence whatever by affidavit or otherwise to refute the allegations of the complaint; and that the motion was based solely upon plaintiff's answers to written interrogatories, later amended in some respects, which showed the difficulties attending "checking" the exhibition of pictures; that defendants had refused to submit to an independent audit; and that its claim was supported by the affidavit of one Harris, containing a full and complete statement of the circumstantial evidence in plaintiff's possession, showing or tending to show that the claimed fraudulent practices had been carried out. So pointing, it urges upon us that all that defendants have done to accomplish the claimed conversion of a fraud case, based in large part on circumstantial evidence, and, therefore, essentially a fact case, a case in which the trier of facts, examining each circumstance in the light of its setting and relation to other circumstances, determines whether as a whole a chain of evidence is forged, into a case where there are no disputed issues of fact, is merely to oppose to the plaintiff's pleadings, answers to interrogatories, and affidavits, the affidavit of the main defendant charged with fraud doing in this case.

It insists that this procedure and result, by which defendants, refusing and avoiding discovery and disclosure, are enabled to avoid disclosing the evidence in their possession, and having their consciences searched, and at the same time to obtain a summary judgment, is to convert a motion for summary judgment a procedural device designed to advance and promote the discovery of truth, into an engine for its suppression. Insisting that in the end, all that can be said of Bays' affidavits, on which defendants so strongly rely, in refutation of the affidavit of Harris offered by plaintiff, is that the facts stated in Bays' affidavit, if testified to,...