Motion Picture Herald (Mar-Apr 1945)

RULES MAJORS MAY SEE THEATRE BOOKS Companies Say Pittsburgh Ruling in Percentage Suit Sets Court Precedent A Federal court ruling last week in Pittsburgh permitting representatives of distributors to inspect the books of exhibitor defendants in the action charging falsification of box office receipts on percentage pictures is seen by distributor counsel as expediting the handling of similar cases throughout the country. The ruling was handed down by Federal Judge McVicar in a pre-trial hearing on a dual action involving charges of fraudulent returns on percentage contracts. It was pointed out in New York that although exhibition contracts contained clauses giving distributors the right to audit the books of exhibitors in connection with percentage playdates, many exhibitors had refused to open their records upon request. The new ruling, distributor legal representatives feel, will make it possible to obtain court orders quickly that will permit such examination. Eight Majors Filed Suit The eight major companies had filed a suit against 27 exhibitors in the Pittsburgh area, charging them with fraud in reporting revenue on percentage playdates. The exhibitors filed a counter action, asking declaratory judgment on the ground that percentage contracts violated the Sherman Anti-Trust Act. Replying to the exhibitors' suit, the distributors asked permission to examine the defendants' books. Distributor lawyers believe that the ruling clears the way for the plaintiffs to press almost 150 counter claims which have been filed against the Pittsburgh area defendants. Also, that it will permit access to records of receipts on each of 25,000 days in approximately 7,000 separate percentage playdates involved in the counter claims. Loew's and Twentieth Century-Fox have each brought 24 such claims ; Paramount, 23; Universal, 19; RKO Radio, 18; Warner Bros., 17; Columbia, 14, and United Artists, 9. In their reply to the exhibitors' action, the distributors charged that the exhibitors had gone into court asking for equitable relief because of alleged fraudulent practices in connection with percentage contracts about which they were complaining. The distributors had filed counter claims against all of the exhibitors served with percentage pictures for the same damages as had originally been sought by the eight distributors from the Arcade and Colonial theatres in Pittsburgh, operating as the Carson Amusement Company. The original eight suits filed by the distributors against the company had been on charges of fraudulent misrepresentation of receipts on percentage pictures exhibited. In addition, punitive damages also were sought. Audit Clause in Contract Shortly before the original suit was filed, representatives of the major distributors had reminded exhibitors in the Pittsburgh area in writing of the contractual clause permitting the audit of books. Similar notices have been dispatched in other areas since that time. Notification by the distributors of intention to invoke the audit clause created a furore in the Pittsburgh area. Attorneys for the dis 14 tributors in New York said that fraudulent returns on percentage dates from all parts of the country were costing their companies several millions of dollars annually. They indicated that a number of suits would be filed in various areas, and that a national campaign was beginning to stamp out misrepresentation of grosses. It was charged that in some areas certain exchange employees had conspired with theatre operators to defraud the companies on percentage engagements. Harrison is Named Inter-American Affairs Director Wallace K. Harrison, director of the Office of the Coordinator of Inter-American Affairs, was appointed last Saturday by President Roosevelt as director of Inter-American Affairs, at a salary of $10,000 a year. Under executive order, the President changed the name of the agency from the CIAA to the Office of Inter-American Affairs. Mr. Harrison has been acting executive officer of the agency since Nelson A. Rockefeller, former CIAA director, was named Assistant Secretary of State. Mr. Harrison will operate under the direction of the President in accordance with the foreign policies as defined by the State Department and administered through Mr. Rockefeller, in charge of Inter-American Affairs, under the reorganized State Department. Thus, Mr. Rockefeller will be active in the agency's program insofar as policy-making is concerned. Mr. Harrison is a member of the architectural firm of Harrison, Fouilhoux and Abramovitz, one of the companies which designed Rockefeller Center in New York. He formerly was acting head of Hemisphere Films, Inc., the non-profit making company organized last year to carry on the film work of CIAA after the war. Hemisphere Films, it is indicated, will be dissolved soon, since its intended program is expected to be carried out by the State Department. W. K. Harrison One Distributor Auditing Books in New Haven Area Notices have been served on a number of exhibitors in the New Haven territory by a major distributor invoking the auditing clause of the exhibition contract and advising that auditors would call soon for inspection. It is understood that the representatives will scan figures on company percentage playdates over the past four years. Independent exhibitors were said to be planning a meeting soon to discuss the development. Willis McGuire Missing P. A. McGuire, director of sales promotion for International Projector Corporation, has been advised in New York that his son, Willis R. McGuire of the U. S. Army Air Force, has been reported missing in action over the Western front. Hays Looks at II World Map anon Charts Policies (.Continued from preceding page) pointed out that it has been fashionable i cJ tain quarters during the last quarter c id — 'to question moral values, to debunk L tional virtues, to rationalize brutaliti I j make excuses for moral indignities.' Thflj tion picture industry has determined yield to such sophistry. " 'A lot of us forget,' said Mr. Jorjix "that our code of morals, respect for trufe fair dealing, are not arbitrary laws inf upon us from without. They are the pj of thousands of years of human experi the quintessence of the wisdom of the ag; violate these codes brings disaster as su the violation of physical laws of nature disease and death'." "We in the motion picture industry allow ourselves to forget these facts," co Mr. Hays. "We have based our Pro Code upon respect for the natural mori and have made its sanctity the maxim \ self-regulation. As producers of family tainment, we have .won a signal victor} the wartime pressures and temptations tended to relax the standards we have \ for ourselves. We have proved that eveJ ing the most savage war in history there' no themes or situations that could not b\ matically treated within the limits of de and good taste ; that even the accents of w^ [In realism do not require us to hurl prof an If children in motion picture theatres, thus *i ing it the approval of custom or example.' 1 There is significance in the closing II graph of Mr. Hays' report: "We have al a begun to move forward in extending the ss ciation's operating machinery and extendi f i personnel. Plans for many new and enl g< activities have been made and are in pipe of execution. We are prepared to do more|n time is now." Hays and Other Officers Reelected by MPPDA Will H. Hays was reelected president c MPPDA at the annual meeting in New Monday. Reelected with him were Carl E. Mil sescretary ; George Borthwick, treasurer, ai W. DuVall, assistant treasurer. Joseph I. I designated last December as vice-president director of the Production Code Administr was continued in that capacity. Hunt Stromberg Productions was elect' Class A member and Mr. Stromberg was c nated as representative. The board of directors for the new year Barney Balaban, Nate J. Blumberg, George B wick, Jack Cohn, Cecil B. DeMille, Earle Hammons, E. B. Hatrick, Will H. Hays, Jc H. Hazen, Edward Raftery, N. Peter Rati Hal E. Roach, Nicholas M. Schenck, Sj Skouras and Harry M. Warner. Walter Wa: a former board member, was not reek Charles Francis Coe, who had been vice-pres and general counsel, was not redesignated to office. Blair to RKO Harry Blair, former eastern advertising publicity manager for PRC Pictures, has named motion picture trade paper contact for F Radio. The appointment was announced bi Barret McCormick, director of advertising" publicity. Mr. Blair will join the staff of Rut Neilson, who is publicity manager for RKO Ri immediately. MOTION PICTURE HERALD, MARCH 31.