Year book of motion pictures (1925)

and that he was a contributing infringer with Schenck on those rights. The Court held Herndon on the basis of a quasi partner of Underbill's for an abuse of trust resulting in a diversion of the profits and declared him to be under a duty to deal with the competing business as an asset of the joint adventure in which they were both engaged in the production of the play upon the stage. , To demonstrate the extent of Herndon's liability the Court assumed that the picture yielded $182,039.88 as gross receipts. The addition of such sum to the receipts of the spoken play would give to Underhill under his contract five per cent of the first $4,000, seven and one half per cent of the next $3,000, and ten per cent of the balance or a total of $17,929.98. The Court held that Herndon should not be required to account for more than the proportion of the receipts that would be payable if the wrong had not been done, but that "for the percentages of the gross re ceipts that would thus be added to the royalties, the delinquent fiduciary must respond out of whatever has come into his hands through the betrayal of his trust." Employee Not a Joint Adventurer In Carroll vs. Morosco. 298 Fed 461, the Cir cuit Court of Appeals in the Second Circuit had before it the complaint of Earl Carroll who claimed that he was a partner with Oliver Morosco and Elmer Harris in the authorship and ownership and production of a musical comedy and that Morosco and Harris had conspired to defeat the plaintiff's rights in the sale and dis position of the motion picture righ's of the comedy by a secret sale thereof, the plaintiff claiming to be entitled to one third of whatever the defendants received for those rights. In affirming the Court below in dismissing the plaintiff's case, the Court said: "This suit really grows out of the fact that Carroll actually received more than his agreed 3%. His endeavor is to rise from the posi tion of an employee to that of "co-author and co-owner" by means of these additional amounts paid him. But whether such additional amounts were merely generous gratuities or whether they grew out of a custom in the theater trade, is in our opinion quite imma terial. The sole question is whether by anv dealings between plaintiff and the defendants or either of them, the plaintiff's contract of employment made with Morosco was converted into a partnership or co-ownership. Evidently if there was once an agreement of employment, a new meeting of minds was necessary before the employee could become a partner. We agree with the court below that there is no evidence of such new meeting. Therefore, the contract set down in the appeal never existed as a matter of fact and the appeal and argument falls for lack of a firm foundation." Damages for Breach of First Run Contract The case of Vitagraph, Inc. vs. Park Theater Co. of Boston decided in the Supreme Court of Massachusetts contains several matters of interest to the industry The action was brought to recover damages for the breach of six contracts for the delivery of motion pictures for exhibition at the Park Theater. Boston. The defendants in July, 1919, repudiated the contracts and refused to take, exhibit or pay for the pictures. The plaintiff recovered a verdict which the Court reversed on appeal. The defendants first contended that the contract was invalid for want of mutuality basing the claim on a clause of the contract which gave plaintiff the right of cancellation on ten days' notice. But the Court held that the right of cancellation was limited to causes beyond the distributor's control and that since the distributor was bound to deliver the pictures to the defendant if the pictures were available and could not dispose of them to anyone else without breaching its contract with the defendant, this was sufficient consideration for the limited right of cancellation and that the contracts were n»t invalid for this reason. The plaintiff also sought to recover the 5% rental tax on pictures which had not been exhibited by the defendant and the court held that *uch recovery was not authorized by the Federal Statute. The chief importance of the case arises from the Court's rulings on the question of damages. The trial court charged the jury that the only question to be considered in that connection was that the agreed price for these pictures was the measure of damages recoverable. The Park Theater was a first run house and the contracts were first run contracts. The defendant claimed that it was entitled to reduce the damages recoverable a-jainst them for their breach of the contracts to the extent that the plaintiff had received sums of money for the exhibition of some of the pictures in question from other first run exhibitions in theaters other than the Park Theater and also that the plaintiff could not recover if it had not made proper efforts to reduce its damages by renting the films to other first run theaters. In considering this question the Court pointed out that the contracts in question were neither contracts of sale nor for a lease. They were classified as contracts constituting a license and a bailment (citing Orbach vs. Paramount Pictures Corporation ,233 Mass. 281. 284) and it was said that the usual rules of damages for breach of contracts were applicable. After pointing out that the contract in the present case was not like a sale where if the transaction is consummated the seller parts with all of his interest in the property and that it is not like a lease of land where the lessor eventually receives back the land, the court said : "Here the distributor does not part with all for it has the right to the film upon the termination of the contract in accordance with the terms ; and also the ripht to dispose of it thereafter for subsequent exhibitions — but if the contract is consummated the distributor loses the possibility of making first run contracts which in the nature of things cannot be twice carried out in the same district. The plaintiff after cancellation by the defend ant was free to sell the first run rights to others. What those first run rights were worth should have been deducted from the contract price in determining the damages actually resu'ting from the breach." The plaintiff also claimed that it had sustained further damages in that the pictures were not exhibited and that it had lost the incidental benefits resulting from exhibition beyond the mere loss of the rental price, but the court held that the contract did not require the defendant to exhibit the pictures although the defendants' right to exhibit had they wished to exhibit them, was undisputed. Consequently, the court held the defendant's obligation was to pay for the pictures not necessarily to exhibit them, and that there could be no recovery for this item of damage although if the cont-act had imposed the absolute obligation of exhibit the result might have been different. Interference with Contract Rights In Glucksman vs Gillespie (209 A. D. 48) the Appellate Division of the New York Supreme Court reversed a judgment in favor if Glucksman which awarded damages for alleged interference with Glucksman's rights in some of the pictures of the Select Pictures Corporation throughout Central America. It appeared that Gillespie had a contract wi*h Select which gave his firm the exploitation rights in certain pictures for the northern part of South America and the defendants had acted as agents for an Argentine corporation which had a similar contract with Select for the southern part of South America. While both contracts were in force, the defendants ordered certain pictures from Select without specifying \\ hether they were for their account as principals or whether they were for the defendant's account as agents of the Argentine Company. Meanwhile Select terminated its contract with the Argentine corporation and made a contract with Glucksman who ordered some of the pictures which had already gone forward to the defendants and had been exhibited in the territory which Glucksman 620