Montgomery Enterprises v. Empire Theater Co.

• Citation: 204 Ala. 566,86 So. 880
• Decision Date: 30 June 1920
• Docket Number: 3 Div. 446
• Parties: MONTGOMERY ENTERPRISES et al. v. EMPIRE THEATER CO.
• Court: Supreme Court of Alabama

86 So. 880

204 Ala. 566

MONTGOMERY ENTERPRISES et al. v. EMPIRE THEATER CO.

3 Div. 446

Supreme Court of Alabama

June 30, 1920

Rehearing Denied Oct. 21, 1920

Appeal from Circuit Court, Montgomery County; W.L. Martin, Judge.

Suit by the Empire Theater Company against the Montgomery Enterprises and others to enjoin the production of the first run of moving picture films. From decree overruling demurrers to the bill, respondents appeal. Affirmed.

Of possible constructions of a contract, that must be adopted which would make it lawful rather than one making it unlawful.

The bill was filed by the Empire Theater Company, a corporation operating a theater for the exhibition of moving pictures for a reward in a city of the county where the bill was filed. One of the defendants, Select Pictures Corporation of Atlanta, Ga. (the state of its incorporation being averred as unknown), is engaged in the business of "distributing moving picture films." Another defendant, Montgomery Enterprises, an Alabama corporation, is engaged in the like business as complainant and in the same city, Montgomery Ala. R.B. Wilby is averred to be a resident of, or to have his principal place of business in, Jefferson county, Ala and to be the state manager of defendant Montgomery Enterprises.

The bill avers that on September 7, 1918, complainant entered into a contract with Select Pictures Corporation for the furnishing of moving pictures of the persons named in the contract--of eight photoplays for the times and on the terms indicated; that five of said pictures were furnished thereunder, in all of which the artist indicated performed the last picture being furnished for exhibition on September 17 and 18, 1919; that, though complainant has fully performed its part of the contract, Select Pictures Corporation attempted to cancel the contract on September 16, 1919, by writing a letter purporting to be a cancellation in accordance with the eighth paragraph of the contract. The reporter will set out this and other pertinent parts of said contract. It is averred that the recitals of said letter of attempted cancellation were such as that complainant naturally concluded that some of the conditions mentioned in paragraph 8 of the contract had arisen which placed it without the power of Select Pictures Corporation to furnish other films in which the artist in question performed.

The bill further avers that the five pictures secured by complainant were supplied as "first runs" that had not been previously exhibited by others in the city of Montgomery; that the "first run" of a picture is a matter of great importance to an exhibitor, drawing, as it does, greater patronage; that the sum of $150 a picture, the amount agreed upon in the contract to be paid Select Pictures Corporation, "was adequate compensatio and a reasonable charge for the use of the said film in the city of Montgomery for the privilege of exhibiting said films on their first exhibition, or what is known to the trade as the 'first run,' in said city of Montgomery by the said Empire Theater Company or any other theater."

It is further averred that it has been for a number of years the custom throughout the country, and in the city of Montgomery and vicinity, to make contracts similar to the one in question, in which the license to use or privilege of exhibiting the films was granted previous to the making or release of the film and "has always been understood by the said moving picture trade and persons engaged therein, to grant to the exhibitor what is known as 'first run,' meaning thereby the right to exhibit such picture for the first time in a city or vicinity, for which the privilege or license was granted by the contract"; that this custom was recognized and fully appreciated by the several parties to the contract at the time of the making of the same; that since its execution complainant had been accorded the right of exhibiting picture films in which the artist in question performed as a star as "first run" exclusively; that complainant's theater has become known as the one in the city of Montgomery which had the privilege of first exhibiting said artist's pictures; that on September 16, 1919, there remained to be shown as "first run" pictures two films in which said artist should perform as a star; that the letter of September 16th did not assign any of the reasons provided in said contract by virtue of and under which said Select Pictures Corporation had a right to cancel the contract, nor did it give complainant 10 days' notice of the cancellation thereof. It is further averred of Select Pictures Corporation's attempt to cancel said contract that it was in violation of complainant's rights under the contract, and that complainant did not learn until considerable time thereafter that none of the contingencies indicated in paragraph 8 of the contract had arisen or that Select Pictures Corporation had under its control any other picture films in which said artist performed as a star, until its agent proposed to lease the indicated picture in which said artist had performed as a star "at a proposed rental of $300"; that thereupon complainant demanded that said picture be furnished "under said contract at the rental of $150, as agreed upon therein, but that the said Select Pictures Corporation failed or refused to furnish *** said moving picture," and complainant "had no means by which it could compel it to do so."

It is further charged that Select Pictures Corporation will furnish defendant Montgomery Enterprises the moving picture in question in which said artist performs as a star; that the latter has advertised in the city of Montgomery that it will exhibit said picture at its theater on Monday, Tuesday, and Wednesday, February 2d, 3d, and 4th, of the present week (the year 1920); that complainant learned of the proposed exhibition on the night of January 29, 1920, and on the next day in writing informed defendant "of its rights in the premises and gave it warning not to exhibit the same, *** but notwithstanding said letter and said warning the said Montgomery Enterprises, a corporation, is preparing to begin the exhibition of said picture *** during the early afternoon of this date"; that complainant had for several days been advertising for February 2, 1920, a picture of a different name in which the same artist performs as a star, and if the Montgomery Enterprises is permitted to exhibit the other picture, it "will result in great loss of patronage and damage to your orator, serious and permanent and irreparable injury, for which there is no accurate method of measure capable of being used as evidence in the courts; that its loss of profits will be very large by reason of being deprived of the right to make a 'first run' of said picture; *** and that said damages will not only be irreparable, but incapable of enforcement in a court of law."

It is further averred that, when the contract in question was executed, defendant Select Pictures Corporation assured complainant by letter that they had a contract with the artist in question, lasting through November, l919.

The averments as to R.B. Wilby were that he was the state manager of Montgomery Enterprises; that he knew of complainant's contract with Select Pictures Corporation, advised and consulted with the manager of complainant theater in reference to contracts for films with a view to avoiding such conflict as has arisen on account of the matters averred, knew that complainant had a contract with said defendant and that complainant had been exhibiting the moving pictures in which said artist starred, and, while complainant could not "assert positively that the defendant Montgomery Enterprises, a corporation, or its state manager, R.B. Wilby, knew all the details of orator's contract with the Select Pictures Corporation, they did have enough knowledge of the same to put them on notice of orator's rights in the premises."

The prayer of the bill is that complainant is without any other remedy and asks for temporary injunction restraining the said defendant from exhibiting or otherwise displaying the designated moving pictures in Montgomery, Ala., until complainant shall have had first exhibition thereof, and that on a hearing said injunction be made perpetual. There was also prayer for general relief.

The bill was amended as follows:

"*** That moving pictures come in a series of photographic films on reels, and that the films comprising said picture *** were delivered to the defendant Montgomery Enterprises, Incorporated, on or before the 2d day of February, 1920, and on said date were in the city of Montgomery, Ala., and in the theater operated by said defendant known as the Strand Theater in said city."

To this amendment defendants Montgomery Enterprises and R.B. Wilby answered, admitting (to paragraph 8 1/2):

That moving pictures come in a series of photographic films, "that there was delivered to the defendant Montgomery Enterprises, Incorporated, on or before the 2d of February, 1920, and on said date there was in the city of Montgomery, Ala., one print of said photographic films of the picture" in question, "and was in the theater operated by said defendant and known as the Strand Theater in said city in that day, but they also aver that it was not the only print of said moving picture which the Select Pictures Corporation owned at the time, but none of the other prints of said picture were at that tme or have since been in the city of Montgomery, Ala."

The contracts involved in the suit follow:

Select Pictures. Advance Payment Contract. Season 1918-1919.

Agreement made in triplicate this 7th day of September, 1918 between Select Pictures Corporation, a corporation, hereinafter called the "distributor,"

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