United States v. Paramount Pictures

• Decision Date: 20 January 1948
• Citation: 75 F. Supp. 1002
• Parties: UNITED STATES v. PARAMOUNT PICTURES, Inc., et al.
• Court: U.S. District Court — Southern District of New York

75 F. Supp. 1002

UNITED STATES v. PARAMOUNT PICTURES, Inc., et al.

District Court, S. D. New York.

January 20, 1948.

Tom C. Clark, Atty. Gen., for plaintiff.

Post, Morris & Lovejoy, of New York City (Winslow M. Lovejoy and Houston H. Wasson, both of New York City, of counsel), for New Salinas Theatres, Inc.

Dwight, Harris, Koegel & Caskey, of New York City (John F. Caskey, Frederick W. R. Pride, and Robert E. Nickerson, all of New York City, of counsel), for defendants Twentieth Century-Fox Film Corporation and National Theatres Corporation.

BRIGHT, District Judge.

New Salinas Theatres, Inc., not a party to the above entitled action, petitions for an order adjudging the defendants Twentieth Century-Fox Film Corporation and National Theatres Corporation to be in contempt of the final decree entered herein on December 31, 1946, 70 F.Supp. 53, and for damages and counsel fees, alleging that said defendants have violated section III subdivision (6), which restrains said defendants "from expanding its present theatre holdings in any manner whatsoever except as permitted in the preceding paragraph" (an exception which at present has no materiality).

It appears without dispute that petitioner is and since 1939 has been engaged in the business of exhibiting motion pictures in the Vogue Theatre in Salinas, California. On April 7, 1946, it purchased a lot in Watsonville, California, for the purpose of constructing a new motion picture theatre thereon and is proceeding with the construction thereof. No theatre had been constructed at the date of this application.

The defendant National Theatres Corporation is the owner through subsidiaries of two-thirds of the stock of Fox Salinas Theatres, Ltd., which has since 1931 been the lessee and operator of the Fox California Theatre in Salinas, and in association with Borg and Peters, has been the operator of the El Rey Theatre there. Fox Salinas is also the lessee of the Strand Theatre in that city, which has been subleased to Borg and Peters, at a fixed rental. These were the only motion picture theatres in Salinas until petitioner erected the Vogue in 1939.

In that year, Borg and Peters acquired title to a piece of property in Salinas for the purpose of erecting a theatre thereon, and entered into negotiations with Fox Salinas for the purpose of having the latter acquire a one-half interest in the site and pay one-half of the construction cost of the new theatre. Nothing was done, largely because of the impact of the war, until August 21, 1945, when Fox Salinas did acquire the one-half interest. Shortly thereafter a contract for the construction of the theatre on the site was executed and construction commenced. The opinion upon which the decree in question was entered was filed in this action on June 11, 1946. When the decree was filed on December 31, 1946 (which provided for a ninety day stay in the event of an appeal which was thereafter taken), the construction of the theatre was substantially completed, the only work remaining to be done was some decorating and painting, the alteration of some doors and hardware and the installation of sets and projection equipment. On March 31, 1947, when the stay mentioned expired, the theatre was ready for operation but its actual opening did not take place until April 10, 1947, and since then it has been continuously operating.

West Coast Theatres, substantially all of whose stock is owned through a subsidiary by the defendant National Theatres Corporation, is the lessee of the only three theatres in Watsonville — the Fox, the State and the Pajaro, which latter was closed shortly after it was leased in 1936. During the war, it was determined to open the Pajaro but it was found that extensive renovation and remodeling would have to be done to comply with building ordinances. The lease expires in 1949 and West Coast has been unable to make satisfactory arrangements for the purchase of the property. In February 1946, it secured an option to purchase other property for the purpose of erecting a theatre thereon. The purchase was completed on February 27, 1946, and title taken on May 1, 1946. On May 5, 1947, it commenced excavation for the theatre. West Coast claims that the erection of the theatre on the new site would be for the purpose of replacing its Pajaro theatre when the lease is terminated or expires.

Defendant National Theatre claims that its action in Salinas and Watsonville with reference to new theatres would not in any way violate the provision of the decree quoted, for the reason that in Salinas the property had been acquired and the theatre practically completed at the time the decree was signed, and in Watsonville, that the construction of the new theatre would not be an expansion of its theatre holdings but merely a replacement of the Pajaro, which is closed and which it cannot reasonably be expected to renovate and remodel unless it can obtain title, which it has been unable to do.

The decree entered in this action on December 31, 1946, also provided in section VIII:

"Jurisdiction of this cause is retained for the purpose of enabling any of the parties to the judgment and no others, to apply to the court at any time for such orders or direction as may be necessary or appropriate for the construction, modification, or carrying out of the same, for the enforcement of compliance therewith, and for the punishment of violations thereof, or for...