Vitagraph, Inc. v. Park Theatre Co.

• Decision Date: 20 May 1924
• Citation: 144 N.E. 85,249 Mass. 25
• Parties: VITAGRAPH, Inc., v. PARK THEATRE CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

249 Mass. 25

144 N.E. 85

VITAGRAPH, Inc.,

v.PARK THEATRE CO. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

May 20, 1924.

Appeal from Superior Court, Suffolk County; Marcus Morton, Judge.

Action of contract by the Vitagraph, Inc., against the Park Theatre Company and trustee, to recover damages for breaches of contracts for release of films which defendant failed to take. There was a verdict for plaintiff, and an order overruling a demurrer, and plaintiff and defendant bring exceptions and defendant appeals. Order overruling demurrer affirmed, plaintiff's exceptions overruled, and defendant's exceptions sustained.J. P. Sylvia, Jr., of Boston, for appellant.

Lee M. Friedman and P. D. Turner, both of Boston, for appellee.

CROSBY, J.

This is an action by a distributor of moving picture films against a moving picture theater (called the exhibitor), to recover damages for alleged breaches of six contracts for the release of films which the defendant failed to take, exhibit and pay for. The contracts were dated April 9, 1919, and all the releases that the defendant did take and exhibit were paid for before September 1, 1919. A verdict was rendered for the plaintiff and both parties filed bills of exceptions.

There was evidence that after a film has been produced a large number of prints are made upon celluloid and sent to the verious distributors' branches for release. The same picture is given approximately the same release date throughout the country. There are certain theaters called ‘first run’ theaters which get the first release and exhibit the picture in given places. The defendant theater was such a one, and the present action grows out of its contracts with the distributor to ‘accept’ releases of a considerable number of motion pictures made by certain ‘stars' to be selected by the distributor from productions controlled by it. The defendant took, exhibited and paid the contract price for some of the films, and in July, 1919, refused to take any more and repudiated the contracts. The six contracts were identical, except that they varied in the description of the films and the price to be paid. Each contract provided for rental by the plaintiff to the defendant of six separate pictures produced by six named artists.

[1] 1. It is the contention of the defendant that the contract, under the ninth clause (which permitted the plaintiff to cancel it upon 10 days' notice), was invalid at its inception for want of mutuality, and that as it was not binding upon the plaintiff there was no consideration to support it. An examination of the entire contract shows that this contention is not tenable. The ninth clause recites that, in the event of certain named contingencies, the distributor for reasons beyond its control might be unable to perform, and that therefore it is ‘specifically agreed that the distributor may, upon 10 days' notice to the exhibitor, cancel this contract.’ The fact that the tenth clause specifies further causes which are to ‘be deemed to constitute a cause beyond the control of the distributor within the meaning of this agreement’ shows that significance to be attached to the enumeration of such causes as limiting the otherwise general right of cancellation under clause 9. Construing the contract as a whole, it is plain that the plaintiff could not produce pictures representing artists named in the contract and then deny the defendant a release of them and distribute them to other exhibitors; neither could the plaintiff cancel the contracts and so relieve itself from liability, except upon the happening of specific contingencies ‘beyond its control.’ This restriction of the plaintiff's rights was enough to render its promise a sufficient consideration; and for breach of the contract the defendant is liable. Burgess Sulphite Fibre Co. v. Broomfield, 180 Mass. 283, 62 N. E. 367;Wellington Piano Case Co. v. Garfield & Proctor Coal Co., 236 Mass. 544,129 N. E. 285;Bernstein v. W. B. Manufacturing Co., 238 Mass. 589, 131 N. E. 200;McCall Co. v. Wright, 198 N. Y. 143, 91 N. E. 516,31 L. R. A. (N. S.) 249;Central Trust Co. v. Chicago Auditorium, 240 U. S. 581, 36 Sup. Ct. 412, 60 L. Ed. 811, L. R. A. 1917B, 580;Alcazar Amusement Co. v. Mudd & Colley Amuesement Co., 204 Ala. 509, 86 South. 209,19 A. L. R. 1006, note; Philadelphia Ball Club v. Lajoie, 202 Pa. 210, 51 Atl. 973,58 L. R. A. 227, 90 Am. St. Rep. 627. The case of Bernstein v. W. B. Manufacturing Co., 235 Mass. 425, 126 N. E. 796, and the one between the same parties in 238 Mass. 589, 131 N. E. 200, and cases from other jurisdictions cited by the defendant, are distinguishable in their facts from those in the case at bar. Ellis v. Dodge Bros. (D. C.) 237 Fed. 860;Velie Motor Car Co. v. Kopmeier Motor Car Co., 194 Fed. 324, 114 C. C. A. 284;American Agricultural Chemical Co. v. Kennedy & Crawford, 103 Va. 171, 48 S. E. 868. The defendant's exceptions for failure to give its fifth and sixth requests are overruled.

[2] 2. The circumstance that under the contracts some of the pictures were not to be released to the defendant until after the date of the writ does not prevent the plaintiff from recovery for failure of the defendant to take and exhibit them. The contracts were repudiated in July, 1919, and after they had been partially performed; the plaintiff was not required to wait until the end of the time for full performance in order to recover entire damages. Speirs v. Union Drop Forge Co., 180 Mass. 87, 90, 91, 92, 61 N. E. 825. The defendant's fifteenth and eighteenth requests were rightly denied.

[3] 3. The defendant appealed from an interlocutory order overruling its demurrer to the amended declaration. All the alleged grounds of demurrer relate either to the allowance of the amendment or to the accounts annexed. As the demurrer was to the entire declaration, and as there were numerous counts based upon alleged breaches of the contracts of unquestioned validity, the order overruling it was correct. Sears v. Trowbridge, 15 Gray, 184;Granara v. Italian Catholic Cemetery Association, 218 Mass. 387, 393, 105 N. E. 1073.

[4] 4. Subject to the defendant's exception, the trial judge instructed the jury that in assessing damages the plaintiff was entitled to recover a United States Revenue Tax of 5 per cent. under 40 U. S. Stats. at Large, p. 1125, § 906 (U. S. Comp. St. Ann. Supp. 1919, § 6309 4/5 g). The twenty-fourth clause of the contract provided that:

‘The exhibitor agrees further that so long as the United States Revenue Act, or acts which impose a tax upon motion pictures, shall remain in effect, the exhibitor shall pay to the distributor, for all films received hereunder, in addition to amount of the film rental, the amount of said excise tax or taxes imposed upon said motion picture films, in such manner as is described by the distributor.’

The tax which the act imposes is an ‘excise tax in respect to carrying on such business equal to 5 per centum of the total rentals earned from each such lease or license during the preceding month.’ By the terms of the contract the liability to pay taxes under the act is limited to films ‘received’ by the defendants; the word ‘received’ so used is to be construed in accordance with its usual and natural meaning and cannot be held to include films not actually received by the defendant. Daly v. Chapman Manufacturing Co., 246 Mass. 118, 140 N. E. 677. This exception therefore must be sustained.

[5][6][7] 5. The remaining questions raised by the defendant's exceptions numbered 8 to 14, both inclusive, and No. 17, and to the charge of the judge relate to the measure of damages. The court instructed the jury that the only question to be considered in this connection was ‘what was the agreed price for those pictures which they didn't take, and that is the measure of their damages.’ The defendant contended that it was entitled to be allowed for certain sums received by the plaintiff for releases by it of some of the pictures to other first run theaters than that of the defendant; also that the plaintiff could not recover if it had not made proper efforts to let the films to other first run theaters. There was evidence that, although notified in July, 1919, of the defendant's repudiation of the contracts, the plaintiff did not attempt to lease the pictures, except as a whole, until the release date set by it for the various pictures, and then, for the first time, made efforts to lease each film separately after its release date; and that it did sell three of them to first run theaters in Boston, and others for first runs to theaters not usually of that class. The evidence was in dispute as to how many first run houses there were in Boston besides that of the defendant, and whether there was a shortage of moving pictures in the summer of 1919. There was also evidence that there was no saving by the plaintiff from the defendant's failure to take the pictures; that the number of prints made from the original is governed by the contracts obtained therefor; that ‘after the first release follows the second release and after that the films are used or sent to smaller places'; that after the time fixed for releasing the first run the plaintiff did not attempt to lease them because ‘there was a second run contract that followed in; that they had tied up all second runs...