Motion Pictures for Television, Inc. v. North Dakota Broadcasting Co.

• Decision Date: 03 February 1958
• Docket Number: No. 7674,7674
• Citation: 87 N.W.2d 731,68 A.L.R.2d 845
• Parties: MOTION PICTURES FOR TELEVISION, Inc., a foreign corporation, Plaintiff and Respondent, v. NORTH DAKOTA BROADCASTING COMPANY, Inc., a North Dakota corporation, Defendant and Appellant.
• Court: North Dakota Supreme Court

Page 731

87 N.W.2d 731

68 A.L.R.2d 845

MOTION PICTURES FOR TELEVISION, Inc., a foreign corporation Plaintiff and Respondent, v. NORTH DAKOTA BROADCASTING COMPANY, Inc., a North Dakota corporation, Defendant and Appellant.

No. 7674.

Supreme Court of North Dakota.

Feb. 3, 1958.

Syllabus by the Court

1. A provision in a film licensing contract limiting the rights of the licensee in case of the breach of a specific warranty is valid.

2. Where a film licensing contract requires the licensee to inspect the films furnished for specified defects, to give notice of any such defects found to the licensor and to afford the licensor an opportunity to replace defective films, and the licensee fails to make adequate inspection of the films and to give the required notice, he cannot recover for breach of the specified warranty.

3. The measure of damages for breach of warranty as to quality, where the subject matter of a contract is accepted and used, is ordinarily the difference between the contract price and the actual value of the article accepted.

4. Proof that a television station could secure no advertising sponsors for its motion picture exhibitions because the advertisers thought the rates were too high and that the films were defective in physical quality and inferior in story content afforded no basis for estimating damages for a breach of an alleged warranty as to the quality of the story content.

Joseph J. Funke, Minot, for appellant.

Waldron & Kenner, Minot, for respondent.

BURKE, Judge.

This is a suit to recover upon a contract licensing the exhibition of motion pictures. In its complaint the plaintiff alleged that it entered into a contract with the defendant on March 9, 1953, to furnish the defendant a sufficient number of motion picture films for twenty hours of exhibition a week for a period of two years commencing with the first week in April 1953; that for the right to exhibit such motion pictures the defendant agreed to pay the plaintiff the sum of $300 a week; that plaintiff fully performed all of its obligations under the contract until prevented from further performance by defendant's repudiation and breach of the contract on October 21, 1954; that the sum of $14,127.75 was due and owing to the plaintiff from the defendant upon said contract. In its answer the defendant, for its defense, alleged breach of warranty and, by counterclaim, alleged damages for breach of warranty in the sum of $17,179.50. Trial of the case resulted in a verdict and judgment for the plaintiff in the sum of $7,894.35. The defendant has appealed from the judgment.

The errors specified by the defendant upon this appeal relate to a denial of its motion for a mistrial and to the admission of certain evidence during the trial. It is plaintiff's principal contention upon this appeal that the matters specified by the defendant as errors, even if errors in fact were not prejudicial for the reason that upon the whole record the plaintiff was entitled to judgment as a matter of law at least in the amount set forth in the verdict and judgment. If plaintiff is correct in this contention, it will dispose of this appeal and we will therefore give it consideration first.

The evidence conclusively establishes that the plaintiff furnished a film service to the defendant for a period of 78 weeks under a contract which called for a payment by the defendant to the plaintiff of the sum of $300 a week plus a five per cent fee upon some of the films which was designated in the contract as the 'Petrillo Fee'. It was also established without contradiction that the defendant used this service and exhibited the motion pictures furnished for the full period of 78 weeks and that it was not until the end of this 78-week period that defendant served notice that it was breaking the contract which, by its terms, was to run 104 weeks. It was also undisputed that defendant had paid for the service for 52 weeks only and that there was due to the plaintiff according to the contract the sum of $300 a week for 26 weeks or $7,800 and 'Petrillo Fees' in the sum of $94.35.

The jury's verdict and the judgment were for the sum of $7,894.35 or for the exact amount due, under the contract, for films actually delivered to and accepted by the defendant. No award whatever was made for any damages because of defendant's repudiation of the contract and its refusal to accept films during the last 26 weeks of the contract's term. It is clear therefore that plaintiff is entitled to judgment, as a matter of law, at least in the amount set forth in the judgment, unless the evidence adduced by the defendant showed damages for alleged breach of warranty sufficient to make the issue of damages and the amount thereof questions for the jury.

In its counterclaim the defendant alleged breach of warranty because (1), a large number of films furnished were physically unfit for exhibition and (2), because the story content of many of the films was of inferior quality and in some cases morally unfit for exhibition. It is also alleged that because of the inferior quality of the films it was unable to sell them to sponsors; that it was therefore unable to recoup any of the purchase price of $17,179.50 it had paid for films during the first year of the contract term and that therefore it was damaged in the sum of $17,179.50.

We shall consider the evidence as to physical defects in the films first. The physical defects complained of were defective sprocket holes, defective splices, sections of blank film which caused 'blackouts' and blurred or 'scratchy' sound tracks. There is testimony in the record that about fifty per cent of film received was affected to a large or small extent by some of these defects. The defective sprocket holes and splices caused interruptions in the exhibition of the films and these interruptions and other defects caused dissatisfaction among television viewers and made it impossible for the station to secure sponsors for the films.

There are two provisions in the contract relating to physically defective films. Paragraph Five of the contract provides:

'The Distributor (plaintiff...