United States v. First National Pictures, Inc. - 282 U.S. 44 (1930)
U.S. Supreme Court
United States v. First National Pictures, Inc., 282 U.S. 44 (1930)
United States v. First National Pictures, Incorporated
Argued October 27, 28, 1930
Decided November 24, 1930
282 U.S. 44
Ten competing corporations, which controlled 60% of the business of supplying the motion picture films used by theaters throughout the Union and had agreed amongst themselves upon a standard form of licensing contract for dealing with exhibitors (see Paramount Corp. v. United States, ante, p. 282 U. S. 30), thereafter combined with other distributors, who with themselves controlled 98% of the film distribution, in establishing certain rules. Under these, whenever a theater changed hands, the credit and business arrangements of the new proprietor were inquired into, partly through an elaborate questionnaire addressed to him, special attention being given to his willingness and agreement to assume contracts for film service existing
between his predecessor and any of the distributors, and no contract for the delivery and display of a picture, other than on for delivery in the immediate future, could be made by any distributor with any new proprietor who had not assumed such outstanding contracts unless he furnished cash security to the distributor, fixed as provided in the rule. The effect in such cases was to prevent the exhibitor who would not assume such obligations of his predecessor from meeting the seasonal demands of his theater by booking for future delivery of film through contracts made in advance, such as were customary and necessary in this business. The rules were sought to be justified as reasonable protection against a practice of evading film service contracts by transferring the theatre to which they related. Held that the arrangement conflicts with the Sherman Act. P. 282 U. S. 55.
34 F.2d 815 reversed.
Appeal from a decree of the district court refusing an injunction in a suit under the Sherman Act, and dismissing the bill on the merits.