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ARBITRATION IN MOTION PICTURE INDUSTRY 643
and Distributors of America, Incorporated, and against the 10 distributors.
Prior to 1922, disputes arising from the distribution and exhibition of motion pictures had been both many and costly. Exhibition contracts used by one distributor differed from those used by another. Not infrequently the contracts used by the same distributor varied. Consequently, every exhibitor was compelled to examine each specific contract in order to learn its terms. The significance of this fact may be more readily seen from an example. One of the most troublesome clauses in an exhibition contract was that which dealt with the selection of play dates. If an exhibitor had contracts with 8 or 10 different distributors, he would find it necessary to "examine each contract separately as soon as a picture under it became available in order to comply exactly with the provisions of that contract relating to the designation of play dates. Failure to do so often would result in breaches of contract."3
The average exhibitor used each year about 200 feature pictures and about 350 short subjects. Since there were some 22,000 theaters being operated, and since no one distributor released more than 75 features and 100 short subjects, in practice there were between 500,000 and 750,000 contracts for exhibition of pictures entered into annually between distributors, on the one hand, and the operators of the theaters, on the other. Under these contracts there were about 10,000,000 deliveries of pictures each year from distributor to exhibitor.
While the volume of business prior to 1922 was not so great as it was in 1928, there were, nevertheless, innumerable disputes between distributors and exhibitors. Some of these disputes arose through honest differences of opinion concerning the terms of the contract ; others arose as a result of unscrupulous practices on the part of one party or the other. Sometimes pictures delivered on open account were never paid for. Sometimes a picture was not returned promptly to the distributor after exhibition, thereby causing the distributor to lose the rental provided for under contract with the next exhibitor scheduled to exhibit the picture. Sometimes an exhibitor would show a picture at a theater not named in the contract, exhibiting it at two theaters, for
3 See Answer of Paramount Famous Lasky Corporation, et al., Defendants, to United States of America, Petitioner.