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THE LAW OF MOTION PICTURES
Lessees of theatres are customarily required to deposit a sum of money with their lessors as security for the due performance of all of the provisions of the lease.
The agreement sometimes provides that in case of any default by the lessee, the lessor may retain the moneys deposited with him as liquidated damages. The courts will not be bound by the language of the parties. If the result is to penalize the lessee the courts will permit him to recover back his deposit.
In Stimpson v. Minsker Realty Co., the plaintiff as receiver brought an action to recover back $68,500, part of a deposit of $72,000, made by the lessee with the lessor under a lease for a theatre. In view of the fact that the amount sought to be retained was out of all proportion to the damages sustained by the defendant the court was constrained to treat the amount as a penalty, notwithstanding the express provision of the lease that the lessor was entitled to retain the entire amount as liquidated damages in the event of a breach.68
An action to recover back a deposit under a lease may be maintained only upon the expiration of the period of
French v. Quincy (1861), 3 Allen (Mass.), 9; Stone v. Oconomowoc (1888), 71 Wis. 155; 36 N. W. 829; Jones v. Sanford (1877), 66 Me. 585; Sugar v. Monroe (1902), 108 La. 677; 32 So. 961.
68 Stimpson v. Miasker Realty Co. (1917), 177 A. D. (N. Y.) 536. “We also think that the $72,000 retained by the lessor is out of all proportion to the probable
loss in case of a breach as viewed at the time the lease was made. In the event of a breach by the lessee, the lessor could assume absolute control of the premises and relet them for its own account. It is hardly credible that it would fail to relet them to advantage, situated as they were in the midst of numerous and theatre going population.”