United States v. Crescent Amusement Co Crescent Amusement Co v. United States

• Decision Date: 11 December 1944
• Docket Number: 19,Nos. 17,18,s. 17
• Citation: 65 S.Ct. 254,323 U.S. 173,89 L.Ed. 160
• Parties: UNITED STATES v. CRESCENT AMUSEMENT CO. et al. (two cases). CRESCENT AMUSEMENT CO. et al. v. UNITED STATES
• Court: U.S. Supreme Court

323 U.S. 173

65 S.Ct. 254

89 L.Ed. 160

UNITED STATES

v CRESCENT AMUSEMENT CO. et al. (two cases).

CRESCENT AMUSEMENT CO. et al.

v. UNITED STATES.

Nos. 17, 18, 19.

Argued Nov. 6, 7, 1944.

Decided Dec. 11, 1944.

Rehearing Denied Jan. 8, 1945.

See 323 U.S. 818, 65 S.Ct. 437.

Appeals from the District Court of the United States for the Middle District of Tennessee.

[Syllabus from pages 173-175 intentionally omitted] Mr. Wendall Berge, Asst.Atty.Gen., and Mr. Robert L. Wright, of Washington, D.C., for the United States.

Mr. William Waller, of Nashville, Tenn., for Crescent Amusement Co. et al.

Mr. Justice DOUGLAS delivered the opinion of the Court.

The United States brought this civil suit against nine affiliated companies (whom we will call the exhibitors) operating motion picture theaters in some 70 small towns in Alabama, Arkansas, Kentucky, Mississippi, and Tennessee; against certain officers of these companies; and against eight major distributors of motion picture films, charging them with a conspiracy unreasonably to restrain interstate trade and commerce in motion-picture films and to monopolize the exhibition of films in this area in violation of § 1 and § 2 of the Sherman Act. 26 Stat. 209, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2. This suit was dismissed against five of the distributors on motion of the United States.¹ Of the other three the Court found that only one had violated the Sherman Act. The court also found that seven of the exhibitors and three of the individual defendants had violated the Sherman Act substantially as charged. It entered a decree against them. From the judgment en- tered the United States, six of the exhibitors, and three individual defendants appeal directly to this Court under § 2 of the Act of February 11, 1903, 32 Stat. 823, 15 U.S.C. § 29, 15 U.S.C.A. § 29, and § 238 of the Judicial Code, as amended by the Act of February 13, 1925, 43 Stat. 936, 938, 28 U.S.C. § 345, 28 U.S.C.A. § 345.

I. Before we come to the merits there is a preliminary question as to whether the appeal of the United States in No. 17 is premature. The District Court entered a final judgment in this case on May 17, 1943. On the sixieth day after judgment there were motions pending to amend the findings. On that day the appeal was applied for and allowed. On August 30, 1943, the court ruled on the motions to amend its findings. Within sixty days thereafter the United States applied for the appeal in No. 18 and it was allowed. The appeal in No. 17 was filed here at the same time as that in No. 18. The appellees move to dismiss No. 17 on the ground that it was premature and to dismiss No. 18 on the ground that the District Court by allowing the first appeal lost jurisdiction of the cause and was without power to allow a further appeal. We think the motion to dismiss the appeal in No. 17 must be granted and the motion to dismiss the appeal in No. 18 denied.

The motion to amend the findings tolled the time to appeal if it was not addressed to 'mere matters of form but raised questions of substance' e.g., if it sought a 'reconsideration of certain basic findings of fact and the alteration of the conclusions of the court.' Leishman v. Associated Wholesale Electric Co., 318 U.S. 203, 205, 63 S.Ct. 543, 544, 87 L.Ed. 714. An examination of the motion makes plain that matters of substance were raised. The appeal in No. 17 was accordingly premature. Zimmern v. United States, 298 U.S. 167, 56 S.Ct. 706, 80 L.Ed. 1118. But it does not follow that the District Court had no jurisdiction to allow the appeal in No. 18. An appeal can hardly be premature (and therefore a nullity) here and yet not premature (and therefore binding) below. Under these circumstances an appellant may rely upon the later appeal (Ohio Public Service Co. v. State of Ohio ex rel. Fritz, 274 U.S. 12, 47 S.Ct. 480, 71 L.Ed. 898) and not run the risk of losing an appellate review on the appeal first allowed. Cf. Wilentz v. Sovereign Camp, 306 U.S. 573, 59 S.Ct. 709, 83 L.Ed. 994.

II. We turn to the merits. Crescent, the principal exhibitor,² owns 50% of the stock of Cumberland and Lyric. The majority of Crescent's stock is owned by defendant Sudekum, by certain of his relatives, and by defendants Stengel and Baulch. Prior to 1937 Crescent owned almost two-thirds of the stock of Muscle Shoals; since that time Muscle Shoals was run as a partnership in which Sudekum's wife had a half-interest. Defendant Stengel, Sudekum's son-in-law, is the record holder of all of Rockwood's stock. Rockwood owns 50% of the stock of Cherokee and Kentucky and of five other theatre corporations. Rockwood was operated as a 'virtual branch' of the Crescent business under the immediate supervision of Stengel. Sudekum is president of Crescent, Cumberland, and Lyric; Stengel is an officer and director of Kentucky and Cherokee. Sudekum was paid $200 a week by Cherokee 'for his advice and assistance in running the business.' Each of these companies was an exhibitor operating motion picture theatres.

In the five-year period ended in August 1939 when this bill was filed the exhibitors experienced a rather rapid growth—in the number of towns where their theatres were operated; in the number of towns where they operated without competition; in their earnings and surplus. The United States claims that that growth was the prod- uct of restraints of trade in violation of § 1 of the Sherman Act and of monopolistic practices in violation of § 2.

The District Court found that each of the seven exhibitors had violated the Sherman Act by

'A. Creating and maintaining an unreasonable monopoly of the business of operating theatres in the towns of Tennessee, Northern Alabama, and Central and Western Kentucky, in which each has theatres.

'B. Combining its closed towns with its competitive situations in licensing films for the purpose and with the effect of compelling the major distributors to license films on a non-competitive basis in competitive situations and to discriminate against its independent competitors in licensing films.

'C. Coercing or attempting to coerce independent operators into selling out to it, or to abandon plans to compete with it by predatory practices.'

The court found that these violations were effected (a) by combining with each other and with certain major distributors in making franchises, i.e. term contracts for the licensing of films, with the purpose and effect of maintaining their theatre monopolies and preventing independents from competing with them; (b) by combining with each other for the purpose of dividing the territory in which theatres might be operated by any of them; (c) by combining with each other for the purpose and with the effect of eliminating, suppressing, and preventing independents from competing in the territory in which each operated; and (d) by combining with each other and with certain major distributors in licensing films for the purpose and with the effect of maintaining their theatre monopolies and preventing independents from competing with them. Three of the individual defendants were found to have participated actively in these violations.

Interstate commerce was found to have been employed in consummating the conspiracy. In the selling season each year the distributor's salesmen solicit contracts from the exhibitors for the distributor's approval by the home office. As the films are released for exhibition prints are sent to the numerous exchanges located in various states and delivered by them to the exhibitors in their respective areas.³ The exhibitor ordinarily returns the print to the distributor's exchange from which it is supplied to other theatres. The findings are wholly adequate to establish that the business of the exhibitors involves a regular interchange of films in interstate commerce. As we shall see, that course of business may be sufficient to make the Sherman Act applicable to the business of exhibiting motion pictures. Interstate Circuit v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610. Cf. Binderup v. Pathe Exchange, 263 U.S. 291, 44 S.Ct. 96, 68 L.Ed. 308. The crucial issues in the present case relate to the evidence and the appropriateness of the decree.

III. The defendants assert that the United States failed to prove the allegations of the complaint as amplified by the bill of particulars. But no such error was assigned. The only assignments on this phase of the case relate to subsidiary findings which are parts of sixteen of the one hundred and eighty-seven findings of fact contained in one hundred and twenty printed pages. Hence they are the only ones we will consider. Seaboard Air Line R. Co. v. Watson, 287 U.S. 86, 91, 53 S.Ct. 32, 34, 77 L.Ed. 180, 86 A.L.R. 174; E. R. Squibb & Sons v. Mallinckrodt Chemical Works, 293 U.S. 190, 55 S.Ct. 135, 79 L.Ed. 279; Rule 9, 275 U.S. 600, 50 S.Ct. xxxi. We have examined them and conclude that they do not constitute reversible error. If any modifications were made in these subsidiary findings they would not be basic or essential ones.

The crux of the government's case was the use of the buying power of the combination for the purpose of eliminating competition with the exhibitors and acquiring a monopoly in the areas in question. There was ample evidence that the combination used its buying power for the purpose either of restricting the ability of its competitors to license films or of eliminating competition by acquiring the competitor's property or otherwise. For example, the defendants would insist that a distributor give them monopoly rights in towns where they had competition or else defendants would not give the distributor any business in the closed towns where they had no competition. The competitor not being able to renew his contract for films would frequently go out of business or come to terms and sell out to the combination with an agreement not to compete for a term of years. The mere threat would at times be sufficient...