Harrison's Reports (1929)

8 HARRISON’S REPORTS __ January 12, 1929 An Analysis of the Reformed Exhibition Contract — No. 5 RULE III This rule states how a complainant, exhibitor or exchange man, may bring a case before the arbitration board for trial. In former days, it was the practice of the secretary of the Film Board of Trade to notify the exhibitors’ organization that a complaint was entered with the Film Board of Trade by a member of the board against an exhibitor, and the exhibitor that a complaint was entered by a particular exchange against him, but gave no particulars. The exhibitor was compelled, therefore, to present himself before the board without an adequate preparation of the case. This practice is still resorted to in some zones. An exhibitor should demand the particulars of the complaint before accepting full service. In case you asked for particulars and they are refused you, notify this office, giving the name of the complaining exchange, and its address. 6. This article stipulates that each side has the right to one adjournment. In other words, you may demand for once that your case be put oil until the next succeeding meeting of the arbitration board, provided that you notify the Secretary of the Film Board of Trade or of the Exhibitors’ Association to that effect at least three days before the day your case is set for trial. 7. This article (of Rule III) provides that in case the defendant fails to present himself before tlie arbitration board on the date his case is set, the arbitration board may render judgment by default, on the strength of Section 4A of the New York Arbitration Act, which reads as follows : “Section 4A. Enforceability of Award in Certain Cases. Where pursuant to a provision in a written contract to settle by arbitration a controversy thereafter arising between the parties to the contract, or a submission described in section two hereof, an award has been, or is hereafter rendered, without previous application to the supreme court, or a judge thereof, as required by section three hereof, such award shall notwithstanding anything contained in section three hereof be valid and enforceable according to its terms, nevertheless to the provision of this section. At any time before a final judgment shall have been given in proceedings to enforce any such award whether in the courts of the State of New York, or elsewhere, any party to the arbitration who has not participated therein may apply to the supreme court, or a judge thereof, to have all or any of the issues hereinafter mentioned determined, and if, upon any such application the court, or a judge thereof, or a jury, if one be demanded, shall determine that no written contract providing for arbitration was made, or submission entered into, as the case may be, or, that such party was not in default by failing to comply with the terms thereof, or that the arbitrator, arbitrators and, or umpire was, or were not appointed or did not act, pursuant to the written contract, then and in any such case, he award shall thereupon become invalid and unenforceable. Where any such application is made any party may demand a jury trial of all or any of such issues, and if such a demand be made, the court or a judge thereof shall make an order referring the issue or issues to a jury in the manner provided by law for referring to a jury issues in an equity action.” It is manifest that this amendment applies chieflj’ to the motion picture industry. This makes me believe that it was introduced in the Legislature of this State by the lobby work of persons connected with the motion picture industry, either directly or indirectly. But a lawyer friend of mine expressed a doubt that this law is constitutional ; he believes that if it were tested in the courts, it would be declared unconstitutional. But as long as it is on the statute books, it stands, and the arbitration boards will render judgments by default. (I have been informed that many exhibitor arbitrators refuse to render judgments by default under any circumstances.) This article provides also for the re-opening of a case wherein a default judgment was rendered, if the application for the re-opening of the case was made within seven days after the award was rendered, and if it sets forth grounds that the arbitration board may deem “reasonable.” RULE IV This rule provides for the enforcement of Awards. And the means provided for are what this paper has often called “sand bag,” or “blackjack.” Article 1 stipulates that the Arbitration Board shall notify the Secretary of the Film Board of Trade of the names of the exhibitors that have refused to submit a controversy to arbitration, or that have refused to comply with the decision of the arbitration board ; he shall notify such board also of the maximum amount each distributor may demand of such exhibitor as “additional securities.” Before discussing the provisions of the articles of this rule, let me say that, in accordance with opinions expressed by reputable lawyers, a seller has the right to impose any conditions on the buyer (so long as these conditions do not break any law) ; but when two or more sellers, engaged in the same kind of business, adopt the same rules and conditions by common consent, then the act becomes conspiracy in restraint of trade. And as these arbitration rules have been adopted by the Hays organization commonly, their legality is questionable. It is the belief of these lawyers, in fact, that should an exhibitor against whom these conditions have been applied sue the distributors, he can get judgment. The distributors, as the members of an organization whose concern is to protect every member from “bad accounts,” have the right to impose certain conditions on these "accounts,” but not on existing contracts ; only on contracts entered into after existing contracts have been played out. When they refuse to deliver pictures contracted for by an exhibitor, because this exhibitor has a controversy not with them but with one of their members, the matter differs; the act is illegal. And the evidence of the illegality of this act is the fact that no producer has ever made a test case of it ; he always settles the dispute out of court. Article 2 specifies that when the Secretary of the Film Board of Trade receives the information from the arbitration board about such exhibitors, he shall send their names to every member of the Film Board of Trade. This seems to be, as I see it, a blacklist. I am informed that the Film Boards have a pink paper that they send to all members, with the names of such exhibitors on. In other words, the members of the Hays organization resort to the “Pink Slip” method to force exhibitors to comply with their demands. The matter would not have been so repulsive if the arbitration procedure in this industry were fair. But it is not. The means they adopt, therefore, are the means of persons that have power to impose them. How long, however, they can continue applying them is another matter. 3. This article gives instructions to the members of the Film Board of Trade under what conditions they may demand the “additional securities.” It is rumored that the distributors have an “unwritten” law whereby an exchangeman that will serve an exhibitor whose name appears on the pink slip before he is cleared is barred from further employment. 5. This article provides the conditions under which the members of the Film Board of Trade shall resume service to the exhibitor. 6. This article provides for the punishment of a distributor that has refused to comply with the decision of the arbitration board. Cases have come to the attention of this paper in which exchangemen refused to pay to the exhibitor the amount of the award, or they offered to pay it in credit for another picture. It is necessary for you to have it clearly established in your mind that when a distributor fails to settle the award within seven days from the daj it was entered, you can demand of the Film Board of Trade to impose the penalties on him provided for by this article. There is just one thing that I desire to call your attention to about this Rule : Articles 1, 5, 6, and 7, start as follows: “The Secretary of the Borad of Arbitration shall from time to time notify in writing the Secretary of the Film Board of Trade ...” I have searched the arbitration rules from end to end but have failed to find any provision about a secretary of the arbitration board. ^Vho appoints him ? W’ho pays him ? Whom does he represent ? Of course the exhibitors do not appoint him and naturally do not pay him (directly). Therefore he cannot represent them : he can represent only those that give him his check every Saturday. That is why I told you often that this arbitration system is a farce, that its machinerj is in the hands of the Hays organization, that it is used as a collection agency for the producers. By this I do not desire to imply that the producers have no right to make bad exhibitors pay their just debts; it is only the unlawful means they use that this paper condemns. Harrison’s Reports is not in sympathy with contract violating exhibitors and will not defend them, for if it were to do so, these would be encouraged in their contract-violating acts. But between sympathizing with a contract violator on the one hand, and a lawbreaker on the other, I am always willing to fight for those against whom unlawful methods have been employed. The whole arbitration system, as practiced in this industry-, is illegal, and if an exhibitor should resort to the courts for relief against awards that have been rendered against him unjustly, I am sure that he can get justice in every case. (To be continued) _