Moving Picture World (Nov-Dec 1923)

December 1, 1923 MOVING PICTURE WORLD 40/ Binderup Wins in U. S. Supreme Court; Movement of Films Is Interstate Trade WASHINGTON, D. C. — The movement of films from a producer or distributor to an exhibitor is declared by the United States Supreme Court to be in interstate commerce despite the fact that actual delivery may be made through a branch office of the former located in the same state as the latter. This decision was announced by the Supreme Court on November 19 in the case of Charles G. Binderup versus Pathe Exchange, Inc., of Nebraska, the Exhibitors Mutual Distributing Company et al., and was handed down by Justice Sutherland. Of equal importance was the court’s announcement that the forcing out of business of Binderup by the film men, as alleged by him, was a conspiracy in restraint of trade. Both these points were a reversal of the decisions of the courts below, and the case is remanded to the District Court for further proceedings in conformity with the Supreme Court opinion. Binderup owned a picture theatre at Minden, Neb., and operated as lessee theatres in other places, to all of which, including his own, he supplied moving pictures and advertising matter connected therewith. In addition, he was in the business of selecting and distributing to a circuit of picture theatres, films and advertising matter accompanying them, under agreements with the various operators, some twenty or more in number, in various parts of the city. In other words, he operated a booking agency. Some of the distributors entered into contracts with Binderup, by the terms of which they leased pictures to him, it is alleged, with the right and license to display them publicly at the theatre or theatres named. The individual defendants named were managers of branch offices or agents for the various distributors in Iowa, Nebraska, South Dakota and Minnesota. It is stated that the contracts by their terms were deemed made in New York, and were to be construed according to the laws of that state and provided that deliveries should be made to the exhibitor from the Omaha branch offices. The complaint further alleges that these distributors controlled the distribution of all films in the United States, and that the films cannot be procured from others. The Omaha Film Board of Trade is a Nebraska corporation, organized for the purpose of promoting good will among those engaged in the picture business and for other purposes, its membership being limited to one representative from each company or person engaged in the film business. It is alleged that the exhibitor’s business was successful and profitable, and that the cupidity of the distributors being thereby aroused, some of them requested a share of his patronage and, upon his refusal, made threats to put him out of business by underbidding and supplying the various theatres constituting his circuit; that the Omaha Film Board of Trade was organized for the purpose of enabling these distributors tc control prices and dictate terms to their patrons in Nebraska and other States. It is further alleged that the business of the exhibitor had grown to large proportions; that he was procuring films from some of the members of the Omaha Film Board of Trade, but had refused to buy from others, and that thereby a spirit of hostility was aroused against him on the part of the latter, who thereupon brought great pressure to induce those with whom he was dealing to cease doing business with him; that all the defendants in error thereupon illegally combined and conspired in restraint of trade and commerce among the several states, with the purpose and intent of preventing him from carrying on his said business, and with the intent to ruin him; that they caused false charges to be made against him before the Film Board of Trade and without his knowledge or an opportunity to be heard, placed him upon its blacklist, of which notice was given to distributors, who thereupon refused to transact further business with him; that those distributors who were not members of the Film Board of Trade co-operated with and approved the action of the board and conspired with others to ruin the business, credit and reputation of the exhibitor; that in furtherance of the combination and conspiracy the distributors have ever since refused to deal with him or furnish him with film service and have caused the unexpired contracts which he held with some of the distributors to be illegally and unlawfully cancelled, and that he has ever since been and still is deprived of such service, all of which allegations are recited in the opinion just handed down. As the result of the foregoing, the court points out, the exhibitor asked judgment for three times the amount of damages which he has suffered as alleged. The jury trial resulted in a decision in favor of the exchanges, and the Circuit Court of Appeals affirmed the judgment for want of jurisdiction. The Supreme Court of the United States does not concur in the findings of the courts below, and accordingly remanded the case to the latter for further proceedings, which means that the court will have to decide in favor of Binderup, in conformity with the Supreme Court’s findings on the points in contest. $750,000 for Binderup ? OMAHA, Nov. 21. Charles G. Binderup hopes to collect $750,000 from his victory in the United States Supreme Court, according to his lawyers, Baxter and Van Deusen, of this city. “Our client must now show damage,” said Irving F. Baxter. “We can show damage of $250,000 and that, because the law awards three times the amount of damage, means we are entitled to recover $750,000. “The immediate effect of this decision of the United States Supreme Court is to send our case to trial on its merits, but it also affects business in various other lines. In fact, it is almost revolutionary in its effect on business.” The Court remarks in its decision that the distributors acting separately could have refused to furnish films to Binderup without becoming amenable to the provisions of the anti-trust act, but in this case it is alleged that they combined and conspired together to prevent him from leasing from any of them. The illegality consists, not in the separate action of each, but in the conspiracy and combination of all to prevent any of them from dealing with the exhibitor. The Court states that the contracts with these distributors contemplated and provided for transactions in interstate commerce. The business which was done undei them — leasing, transportation and delivery of films— was interstate commerce. The alleged purposes and direct effect of the combination and conspiracy, the Court states, was to put an end to these contracts and future business of the same character and “restrict, in that regard, the liberty of a trader to engage in business,” and, as a necessary corollary, to restrict interstate trade and commerce, in violation of the antitrust act. “The film contracts were between the residents of different states and contemplated the leasing by one to the other of a commodity manufactured in one state and to be transported to and used in another,” the Court relates. “The business of the distributors of which the arrangement with the exhibitor here was an instance, was clearly interstate. It consisted of manufacturing a commodity in one state, finding customers for it in other states, making contracts with them, and transporting the commodity leased from the state of manufacture into the state of the lessees. If the commodity were consigned directly to the lessees, the interstate character of the commerce throughout would not be disputed. “Do the circumstances that in the course of the process the commodity is consigned to a local agency of the distributor, to be by that agency held until delivered to the lessee in the same State, put an end to the interstate character of the transaction and transform it into one purely intrastate? We think not. The immediate delivery to the agency did not end and was not intended to end the movement of the commodity. It was merely halted as a convenient step in the process of getting it to its final destination. The general rule is that where transportation has acquired an interstate character it continues at least until the load reaches the point where the parties originally intended that the movement should finally end.’” The Court refers to a case of Swift & Company versus the United States where it was held that where cattle were consigned for sale from a place in one state, with the expectation that the transit would end after purchase in another state, the only interruption being that necessary to find a purchaser at the stockyard, and this was a typical, constantly recurring course, the whole transaction was one of interstate commerce, and the purchase a part and incident of it. It further appeared from that case that Swift & Company were also engaged in shipping meat to their respective agents at the principal markets in other states for sale by such agents in those markets to dealers and consumers; and these sales were held to be part of the interstate transaction upon the ground “that the same things which are sent to agents are sold by them and * * * some at least of the sales are in the original packages. Moreover the sales are by persons in one state to persons in another.” This was held to be a parallel case.