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THE LAW OF MOTION PICTURES
defense that plaintiff had received moneys from other exhibitors on account of the leasing of the film and that they should be allowed to offset as against the plaintiff’s
negatives and a sample print thereof.’ The plaintiffs undoubtedly would become entitled, upon an acceptance of the negative and films, to an absolute payment of a sum representing the actual cost expended by the plaintiffs in producing the picture. Upon the defendant’s failure or refusal to accept the negative and films the plaintiffs had the right to retain them and to hold the defendant liable for damages for the breach of contract if its refusal to accept was unjustifiable. These damages would be measured by the actual cost to the plaintiffs of producing the negatives and films, and of the proportionate amount of the gross receipts derived by the defendant from the picture, as provided in the contract. It is obvious, however, that it would be impossible in this case to establish what the gross receipts would be where the defendants have failed to accept the films. Hence, under the peculiar circumstances of this case, the plaintiffs would have the right to
retain the negatives and films and to lease or rent them to third parties upon the best terms obtainable, for the purpose of recouping themselves against the unknowable loss sustained by them by reason of the Popular Pictures Corporation’s alleged refusal to produce the pictures which deprived them of their proportionate share of the gross receipts. It seems to me that upon the alleged breach of the contract on the part of the defendant, by its refusal to accept the negatives and films, a cause of action thereupon accrued for damages for breach of the entire contract. Unless the complaint is amended to set up a case for damages for the breach, no cause of action is established. As the complaint now reads, there is no allegation as to what the actual cost of the production was. The defendant London & Lancashire Indemnity Company of America will also be liable as indemnitor, limited to the amount of the actual cost of the production.”