The film daily year book of motion pictures (1936)

State and Distributors — Interstate Commerce — State Regulation In Paramount Publix Corp. v. Hill^ a State Department was enjoined by a Federal District Judge from proceeding against Paramount under a Wisconsin statute against unfair competition and trade practices : COMMENT The Court said : ". . . complainants are carrying on their business, first, through the medium of interstate commerce; secondly, through exercise of their rights under the copyright laws; and, third (if the complaint of the state department is true), through violations of obligations or prohibitions of the laws of the United States respecting freedom of competition and trade in interstate commerce, monopoly, trusts, and the like — including the manner of exercising rights secured by patent or copyright laws — if it be contended that such latter are violative of the former." Concerning the claim that the alleged practices were incidental to interstate commerce, the Court said : "We do not mean to say that the state is devoid of any and all power to enact regulations in the broad field characterized by defendants as the 'moving picture business' or of theaters for carrying it on simply because moving picture films, from their production, in their shipment, during exhibition and on return are and continue to be subjects of interstate commerce and not having a situs as property in a particular state. No one, we think would challenge the exercise of power by a state over safety, orderly conduct, and the like of theaters; nor, probably over the character of exhibitions, for example, of immoral films, merely because of their ownership in another state, or even because they may be copyrighted. Such power, if exercised, would truly be directed against 'incidentals'; and it suffices to repeat what has been said, that the defendants in no aspect of the record are attempting to vindicate the statute in question as endowing them with, nor are the plaintiflFs challenging, that sort of power. ". . . . everything complained of, if true, is clearly in the field covered by the national Legislature in the several acts referred to. And that situation, as we believe, on principles quite elementary, excludes the possibility of concurrence of like power — either executive, legislative, or judicial, by the state over identical subject-matter — that is power remedially to vindicate, concurrently, rights protected or wrongs denounced in the lawful exercise of national authority, whose exercise operates to dominate and by dominating, excluding possibility of concurrence." TAXATION Distributor and State — Interstate Commerce Taxability of Film Rentals In Paramount Pictures Distributing Corp. V. Henneford, et aP^, the distributors sued the Washington State Tax Commission to recover the taxes which they had paid under the State Occupation Tax Law"^ and for an order restraining collection of future taxes thereunder. The amount of the tax was based on the gross income which passed through the local exchange. The Trial Court concluded that the plaintiffs were entitled to recover the taxes paid and to the injunctive relief sought. The Tax Commission appealed to the Supreme Court of Washington which affirmed the judgment for the distributors. COMMENT The Court said that the tax provided for in the statute was an excise tax to raise revenue and the act of the Legislature imposing it was not in the exercise of police power. The Court said further that the business done by the local exchange was a part of interstate commerce. As the tax was therefore measured by recipts from interstate coinmerce, a direct burden thereon resulted and the tax could not be sustained. The court cited the case of Glass v. Hoblitselle"^ heretofore digested and that of State v. Paramount''* which was digested in last year's article as supporting its position that the biisiness of the local exchange was interstate in character. One of the judges dissented and said that the state had the right to tax because the rentals paid to and received by the distributor which were the sole basis for the tax were the proceeds of wholly local exhibitions which consumed wholly the commercial value of the films within the state. As it has been the writer's custom to digest yearly only such cases as involve persons in the motion picture or theatrical field, he will not digest the case of Lee v. Kenan, commonly known as the Florida Documentary Stamp Tax Case. The decision of the United States Circuit Court of Appeals in Florida was directed to executory agreements for the sale of a commodity in which there was no obligation to pay money until the article was delivered. However, it definitely deserves mention here because the reasoning of the Court is believed to apply to motion picture exhibition contracts and it seemingly follows from the principles enumerated in the Kenan case that such contracts are not a proper subject for such a tax. The writer hereof also draws to the attention of the industry a ruling by the State Treasurer of Colorado under date of March 21, 1935, in which he said that his understanding was that "accessories are leased by distributors to the theaters for use in connection with the exhibition of the picture only, and assuming that that is the fact they are not subject to the tax." The ruling was that a consumer must, however, pay the tax upon accessories which are purchased. The writer is informed that the State of Iowa has made a similar ruling under the Iowa Sales Tax. Personal Property Tax — Sound Equipment — Notice— Rights of Buyer at Tax Sale In RCA Photophone v. Huffman^ a 819