The film daily year book of motion pictures (1931)

hibitor's full requirement, he must deal with several. Under an agreement amongst themselves, appelant distributors will only contract with exhibitors according to the terms of the standard exhibition contract, dated May 1, 192S. Ordinarily neither party gives security for compliance with such agreements, by cash deposit or otherwise. This standard contract is an elaborate document, covering eight pages of the record. Under it the distributor licenses the exhibitor to display specified photo plays at a designated theater on definite dates. Provision is made for cash payment three days in advance of any shipment, time and place of delivery, return of the prints, etc., etc. Section 18 (*) provides in substance that each party shall submit any controversy that may arise to a board of arbitration, in the city where the distributor's exchange is located, established under and controlled by written rules adopted May 1. 1928; accept as conclusive the findings of this board ; and forego the right to trial by jury. And further : "In the event that the exhibitor shall fail or refuse to consent to submit to arbitration any claim or controversy arising under this or any other standard exliihition contract which the exhibitor may have with the distributor or any other distributor or to abide by and forthwith comply with any decision or award of such board of arbitration upon any such claim or controversy so submitted, the distributor may, at its option, demand, for its protection and as security for the performance by the exhibitor of this and all other existing contracts between the parties hereto, payment by the exhibitor of an additional sum not exceeding $500 under each existing contract, such sum to be retained by the distributor until the complete performance of all such contracts and then applied, at the option of the distributor, against any sums finally due or against any damages determined by said board of arbitration to be due to the distributor, the balance, if any to be returned to the exhibitor ; and in the event of the exhibitor's failure to pay such additional sum with seven (7) days after demand, the distributor may by written notice to the exhibitor suspend service hereunder until said sum shall he paid and/or terminate this contract." Board Appointed to Hear Disputes The rules of arbitration provide for a board, three of whom shall be members of the local Film Board of Trade and three proprietors or managers of theaters in its region. This Arbitration Board shall have power to determine the controversy, make findings, direct what shall be done with respect to the dispute; "and shall fix the maximum amount" (not exceeding $500) which each distributor may demand as security pursuant to the arbitration clause in the event of the failure of the exhibitor to submit to arbitration or to comply with the award. The secretary of the Board of Arbitration is required to notify the secretary of the Film Board of Trade of the name and address of each exhibitor found to have refused to arbitrate or comply with an award, and the maximum amount of security (not above $500) found by the Board. "On receipt of any such notice, each member having a confract (or representing a distributor having a contract) containing the arbitration clause with any such exhibitor shall demand payment by such exhibitor of such sum as in the judgment of such member or distributor shall be sufficient to protect such member or distributor in the performance of each contract with such exhibitor. Said sum shall not exceed the actual value of any print thereafter to be delivered under each such contract plus the maximum amount fixed by the Board of Arbitration as aforesaid. Thereafter each distributor (represented in the membership) to whom such exhibitor shall have failed within seven (7) days to pay the amount of security so demanded by such distributor shall proceed to suspend service under each such contract until such exhibitor shall have furnished such security or complied with the decision of such Arbitration Board. If service under any such contract shall be so suspended for a period of 10 days such contract, at the option of the distributor, may then be canceled. No member or distributor having so suspended service under any such contract with such exhibitor shall thereafter resume service under any such contract unless and until such exhibitor shall have furnished said security to such member or distributor or shall have complied with the decision of the Arbitration Board. Upon the happening of either of such events service under such contract shall be promptly resumed by such member or distributor." The record discloses that 10 competitors in interstate commerce, controlling 60 per cent of the entire film business have agreed to restrict their liberty of action by refusing to contract for display of pictures except upon a standard form which provides for compulsory joint action by them in respect of dealings with one who fails to observe such a contract with any distributor, all with the manifest purpose to coerce the exhibitor and limit the freedom of trade. The United States maintain that the necessary and inevitable tendency of the outlined agreement and combination (described with greater detail in the opinion below) is to produce material and unreasonable restraint ol interstate commerce in violation of the Sherman Act. Eastern States Lumber Assn. V. United States, 234 U. S. 600, 614; Binderup v. Pathe Exchange, 263 U. S. 29;. 312. The court below accepted this view and directed an appropriate injunction against future action under the unlawful plan. We agree with its conclusion and the challenged decree must be affirmed. Arbitration Adapted to Film Industry The Appellants claim: (1) The Standard Exhibition Contract and Rules of Arbitration dated May 1, 1928. having been evolved after six years of discussion and experimentation, are reasonable and normal regulations ; so that whatever restraint follows falls short of unlawful coercion. (2) Arbitration is well adapted to the needs of the motion picture industry. (3) The manner in which the contract and rules have worked out in practice, and the significant absence of complaints, reflect their reasonable character. (4) The decree is inconsistent with the stipulated facts, also with the court's findings of fact. "Founded upon broad conceptions of public policy, the prohibitions of the statue [Sherman Act] were enacted to prevent not the mere injury to an individual which would arise from the doing of the prohibited acts, but the harm to the general public which would be occasioned by the evils which it was contemplated would be prevented, and hence not only the prohibitions of the statute but the remedies which it provided were coextensive with such conceptions," Wilder Mfg. Co. v. Corn Products Co., 236 U. S. 165, 174. "The purpose of the Sherman Act is to prohibit monopolies, contracts and combinations which probably would unduly interfere with the free exercise of their rights by those engaged, or who wish to engage, in trade and commerce — in a word to preserve the right of freedom to trade." United States v. Colgate & Co., 250 U, S. 300, 307. "The fundamental purpose of the Sherman Act was to secure e(|uality of opportunity and to protect the public against evils commonly incident to destructioti of competition through monopolies and combinations in restraint of trade." Ramsay Co. v. Bill Posters Assn., 260 U. S, 501, 512. "The Sherman Act was intended to secure equality of opportunity and to protect the public against evils commonly incident to monopolies and those abnormal contracts and combinations which tend directly to suppress the conflict for advantage called competition— the play of the contending forces ordinarily en gendered by an honest desire for gain." United States V. American Oil Co., 262 U. S. 371, 388. The fact that the Standard Exhibition Contract an<l Rules of Arbitration were evolved after six (Continued on Page 650) 647