"I. All facts hereinafter set forth, except when expressly qualified, relate to the entire period involved in the above-styled cause.
"II. The defendant, Paramount-Richards Theatres, Inc., is a Delaware Corporation and was incorporated in 1935. One-half of its stock is owned by Paramount Pictures, Inc. and the remaining one-half of its stock is owned by E. V. Richards.
"Prior to the fall of 1940, Paramount-Richards Theatres, Inc., did not own and operate any individual motion picture theatres but was a holding company controlling the stock of a corporate structure involving forty corporations and including those corporations which ultimately owned and operated the theatres. The defendant, Paramount-Richards Theatres, Inc., then held all of the stock of Saenger Theatres Corporation. Said Saenger Theatres Corporation held all of the stock of Saenger Realty Corporation, W. S. M. B., Capital Theatres, Inc., Saenger-Ehrlich Enterprises, Inc., Saenger Theatres of Texas, Inc., and Kennington-Saenger Theatres, Inc., respectively. Saenger Theatres Corporation and Saenger Realty Corporation each held controlling stock in numerous other subsidiary companies. Saenger Theatres Corporation and its subsidiaries, Saenger Realty Corporation and its subsidiaries, Capital Theatres, Inc., Saenger-Ehrlich Enterprises, Inc., Saenger Theatres of Texas, Inc., and Kennington-Saenger Theatres, Inc., each respectively owned motion picture theatres. W. S. M. B., Inc., owned and operated a 5,000 watt radio station in New Orleans, Louisiana.
"In 1940, all the subsidiaries of Saenger Realty Corporation were merged into Saenger Realty Corporation; and all the subsidiaries of Saenger Theatres Corporation were merged into Saenger Theatres Corporation. Then Saenger Realty Corporation was merged into Saenger Theatres Corporation. Then Saenger Theatres Corporation was merged into Paramount-Richards Theatres, Inc. As a result of these successive corporate mergers, the defendant, Paramount-Richards Theatres, Inc., became an owner of numerous motion picture theatres and at present owns forty-three of the sixty-nine individual theatres hereinafter listed.
"The defendant, Paramount-Richards Theatres, Inc., now owns one-half of the stock in W. S. M. B., Inc., Capital Theatres, Inc., Saenger-Ehrlich Enterprises, Inc., and Kennington-Saenger Theatres, Inc., and owns all of the stock in Saenger Theatres of Texas, Inc. The said W. S. M. B., Inc. owns and operates a 5,000 watt radio station in New Orleans, Louisiana. The said Capital Theatres, Inc. owns and operates the four theatres in Baton Rouge, Louisiana, hereinafter listed (excluding Drive-In). The said Saenger-Ehrlich Enterprises, Inc. owns and operates the eight theatres in Shreveport, Louisiana, hereinafter listed (excluding Drive-In). The said Kennington-Saenger Theatres, Inc. owns and operates the five theatres in Jackson, Mississippi, hereinafter listed (excluding Drive-In). The said Saenger Theatres of Texas, Inc. owns and operates the three theatres in Texarkana, Texas, hereinafter listed (excluding Drive-In).
"The defendant, Paramount-Richards Theatres, Inc., does not own any stock in Paramount-Richards Enterprises, Inc. One-half of the stock of Paramount-Richards Enterprises, Inc. is owned by Paramount Pictures, Inc. and the remaining one-half of its stock is owned by E. V. Richards. Paramount-Richards Theatres Inc. and Paramount-Richards Enterprises Inc. are thus companion corporations owned by the same stockholders. The said Paramount-Richards Enterprises, Inc. owns and operates the three Drive-In theatres in Pensacola, Florida, Baton Rouge, Louisiana, and Mobile, Alabama, hereinafter listed and operates for the account of Kennington-Saenger Enterprises, Inc. the Drive-In theatre in Jackson, Mississippi, hereinafter listed, and operates for the account of Richards-Ehrlich Enterprises, Inc. the Drive-In theatre in Shreveport, Louisiana, hereinafter listed, and operates for the account of Saenger Theatres of Texas, Inc. the Drive-In theatre in Texarkana, Texas, hereinafter listed.
"Paramount-Richards Enterprises, Inc. owns one-half of the stock in each of the three owning corporations for whose respective accounts it operates the three Drive-In theatres in Jackson, Mississippi, Shreveport, Louisiana, and Texarkana, Texas.
"III. Throughout the period covered by this suit, central executive, administrative and supply offices, separate and apart from the individual theatres, have been maintained in New Orleans, Louisiana, for a total of from sixty-five to sixty-nine motion picture theatres located in Mississippi, Alabama, Texas, Florida and Louisiana. The employees involved in this action are employed in the central executive, administrative and supply offices in New Orleans, Louisiana.
"Prior to the fall of 1940, Saenger Theatres Corporation (which was owned entirely by Paramount-Richards Theatres, Inc.) operated the central executive, administrative and supply offices. Subsequent to the fall of 1940 (when Saenger Theatres Corporation was merged into Paramount-Richards Theatres, Inc.) Paramount-Richards Theatres, Inc. has operated and is presently operating these central offices. There has been no material or substantial change in the actual operations carried on by the central offices or in their actual relationship with the individual motion picture theatres or radio station during the entire period covered by this action.
"IV. Prior to the period covered by this suit, Capital Theatres, Inc. (which owns and operates four theatres in Baton Rouge, Louisiana) Kennington-Saenger Theatres, Inc. (which owns and operates five theatres in Jackson, Mississippi) Saenger Theatres of Texas, Inc. (which owns and operates three theatres in Texas) and W. S. M. B., Inc., each entered into contracts with Saenger Theatres, Inc. `employing' said Saenger Theatres, Inc. `to supervise the operation and management' of the theatres or the radio station which each respectively operated and `the corporations owned or controlled by' each; `to keep the books and accounts thereof'; `to book pictures and other attractions for said theatres'; `to attend to the acquisition and distribution of all motion picture films and supplies and accessories for said theatres'; `and generally to do everything necessary to the conduct and control of said theatres' or radio station.
"The owning and operating corporations further `in consideration of, and as payment for said services' agreed to pay to Saenger Theatres, Inc. `four (4%) per cent of the gross box office receipts' of the theatres then or thereafter owned and operated by said corporations, such payment to `include the overhead expenses of the party of the second part at its home office in the City of New Orleans.' In `consideration of and as payment for said services,' W. S. M. B. agreed to pay to Saenger Theatres, Inc. `four (4%) per cent of its gross revenue,' such payment to `include the overhead expenses of the party of the second part at its home office in the City of New Orleans.' A complete copy of a typical contract is attached hereto and marked Exhibit A.
"By resolution, Saenger-Ehrlich Enterprises, Inc. provided for payment of `a sum equal to four per cent of the gross admissions of the theatres which' Saenger-Ehrlich Enterprises, Inc. operated to Saenger Theatres, Inc. `for services rendered to the corporation in management and supervision, buying and booking of motion picture films and other attractions and the keeping of books of account of the corporation.' A complete copy of this resolution is attached hereto and marked Exhibit B.
"Saenger Theatres, Inc. in 1933 filed a petition in bankruptcy under Section 77B of the Bankruptcy Act 11 U.S.C.A. § 207 and was reorganized in 1935 as Saenger Theatres Corporation. When Saenger Theatres Corporation was merged into Paramount-Richards Theatres, Inc. in 1940, the defendant, Paramount-Richards Theatres, Inc. succeeded to its duties and obligations under the contracts hereinabove described and assumed operation of the central executive, administrative and supply offices.
"V. Paramount-Richards Enterprises, Inc. did not enter into any contract with Saenger Theatres, Inc. or with Saenger Theatres Corporation or with Paramount-Richards Theatres, Inc. with respect to the relationship between these said corporations and the individual theatres which it owns and/or operates. Furthermore, Paramount-Richards Enterprises, Inc. did not compensate either of these corporations and is not now compensating the defendant, Paramount-Richards Theatres, Inc., for the functions performed for, the supervision exercised over and the records and accounts maintained for each of the individual theatres which Paramount-Richards Enterprises, Inc. owns and/or...
