1. Where jurisdiction of the district court depends on the
action arising under a law of the United States, and the court
sustains a motion by the defense for a directed verdict based on
the ground that the plaintiff's petition and opening statement fail
to state facts sufficient to constitute a cause of action within
the federal statute which the plaintiff relies on, the case is not
reviewable directly by this Court under Jud.Code § 238 as one in
which the jurisdiction of the district court was in issue. P.
263 U. S.
2. So held
where the trial judge, in a memorandum
accompanying the ruling, indicated his opinion that the motion went
to the jurisdiction, erroneously assuming that failure to allege
facts sufficient to constitute a cause of action under a federal
statute is a jurisdictional defect. P. 263 U. S.
3. A complaint setting forth a substantial, as distinguished
from a frivolous, claim under a federal statute presents a case
within the jurisdiction of the district court as a federal court,
and this jurisdiction cannot be made to stand or fall upon the way
the court may chance to decide an issue as to the legal sufficiency
of the facts alleged, any more than upon the way it may decide as
to the legal,sufficiency of the facts proven. P. 263 U. S.
4. New York manufacturers and distributors of motion picture
films, in the regular course of their business, shipped films from
that state to Nebraska and delivered them there to a Nebraska
resident, as lessee under agreements which, by their terms, were to
be deemed and construed as New York contracts, and which licensed
and obliged the lessee to exhibit the pictures for specified
periods in moving picture theaters, reserved rentals to the lessors
and provided for ultimate reshipment by the lessee on advices to be
given by them. Held
that the business of the lessors, and
their transactions with the lessee, were interstate commerce
notwithstanding that, in accordance with the contracts, the films
were delivered to him through agencies of the lessors in Nebraska
to which they were first consigned and transported. P. 263 U. S.
Page 263 U. S. 292
5. It does not follow that, because a thing is subject to state
taxation, it is also immune to federal regulation under the
commerce clause. P. 263 U. S.
6. A combination and conspiracy of concerns controlling the
distribution of motion picture films to put out of business an
exhibitor of motion pictures who has been procuring his films
through agreements made in interstate commerce with members of the
combination and can procure them in no other way, and to accomplish
this end by illegally cancelling his existing contracts and by
refusing to deal with him in the future, is a restraint on
interstate commerce in violation of the Anti-Trust Act. P.
263 U. S.
280 F. 301 reversed.
Error to a judgment of the circuit court of appeals affirming,
for want of jurisdiction in the district court, a judgment of the
latter which dismissed, upon a directed verdict, an action for
damages under § 7 of the Sherman Act.
Page 263 U. S. 301
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
This action was brought under the provisions of § 7 of the Act
of Congress of July 2, 1890, commonly called the Anti-Trust Act, c.
647, 26 Stat. 210. The complaint is long, but the allegations
necessary to be considered here may be summarized as follows:
Plaintiff in error, a resident of the State of Nebraska,
hereafter called the "exhibitor," owned a moving picture theater at
Minden in that state, and operated as lessee theaters in other
places, to all of which, including his own, he supplied moving
picture films and advertising
Page 263 U. S. 302
matter connected therewith. In addition, he was in the business
of selecting and distributing to a circuit of moving picture
theaters films and advertising matter accompanying them under
agreements with the various operators, some 20 or more in number,
in various parts of the state.
The corporations named as defendants in error, hereafter called
the "distributors," were located in the State of New York and were
there engaged in manufacturing motion picture films and
distributing them throughout the United States. The method of
distribution was to make public announcement from time to time that
films which had been manufactured and approved would be released,
and thereupon send them from New York by express or parcel post to
agencies in numerous cities for delivery to exhibitors who hired
and paid for their use.
Some of these distributors entered into contracts with the
exhibitor by the terms of which they leased motion pictures to him
with the right and license to display them publicly at the theater
or theaters named. The individual defendants named were managers of
branch offices or agencies for the various distributors at Omaha,
Nebraska, through which films were distributed to exhibitors in the
States of Iowa, Nebraska, South Dakota, and Minnesota. These
contracts, by their terms, were deemed made in New York, were to be
construed according to the laws of that state, and provided that
deliveries should be made to the exhibitor through the Omaha branch
offices. The exhibitor, upon his part, agreed to accept and
publicly exhibit the motion pictures for the periods of time fixed,
for which right he was to pay specified sums. When the use of the
pictures was completed according to the contract, they were to be
reshipped on advices given by the distributors.
The complaint further alleged that these distributors control
the distribution of all films in the United States,
Page 263 U. S. 303
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 goodwill among those engaged in the motion
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 theaters
constituting his circuit; that the Omaha Film Board of Trade was
organized for the purpose of enabling these distributors to 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 unlawfully combined and conspired in restraint of trade
and commerce among the 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
cooperated with and approved the action of the board and conspired
with the others to ruin the business, credit, and reputation of the
Page 263 U. S. 304
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. As a result of the foregoing, the
exhibitor asked judgment for three times the amount of damages
which he had suffered as alleged.
Upon this complaint and an answer, the case went to trial before
a jury. After counsel for the exhibitor had made his opening
statement to the jury, the defendants in error moved the court for
a directed verdict in their favor upon the ground "that the
petition and opening fail to state facts sufficient to constitute a
cause of action arising under the Sherman Act or any act amendatory
thereof." The court sustained the motion and instructed the jury to
return a verdict for the defendants, which was done. Thereupon
judgment was entered upon the verdict dismissing the cause. In a
memorandum opinion, the trial judge states that he had reached the
conclusion that the motion should be sustained upon the grounds:
(1) that the petition does not show with sufficient clearness that
the complaint is one over which the court has jurisdiction; (2)
that it fails to show with sufficient clearness any combination or
conspiracy sufficient to justify the court in proceeding further
with the trial.
The case was taken by writ of error to the circuit court of
appeals, where the judgment was affirmed for want of jurisdiction
in the district court. 280 F. 301.
First. Defendants in error have submitted a motion to dismiss
the writ of error here. The statement of the ground is somewhat
ambiguous, but it is, in substance, that the motion in the trial
court attacked the complaint for a failure to state a cause of
action under the Sherman Act; that this constituted a challenge to
Page 263 U. S. 305
and, consequently, the writ of error should have been taken
directly to this Court. But the motion below, in terms, was put
upon the ground that the complaint and the opening statement failed
to state facts sufficient to constitute a cause of action -- not
that the court was without jurisdiction -- and it is this motion
that was sustained. The memorandum, it is true, indicates that the
trial judge was of opinion that the motion for a directed verdict
went to the jurisdiction; but it is apparent that, as to this, he
assumed that an unsuccessful attempt to allege facts sufficient to
constitute a cause of action under a federal statute constitutes a
Section 238 of the Judicial Code provides that appeals and writs
of error may be taken from the district court direct to this Court
"in any case in which the jurisdiction of the [District] Court is
in issue." As it has been many times decided, the jurisdiction
meant by the statute is that of the court as a federal court only,
and not its jurisdiction upon general grounds of law or procedure.
See, for example, Louisville Trust Co. v. Knott,
191 U. S. 225
contention here seems to be broadly that, where the cause of action
is based upon an act of Congress, unless the complaint states a
case within the terms of the act, the federal court is without
Jurisdiction is the power to decide a justiciable controversy,
and includes questions of law, as well as of fact. A complaint
setting forth a substantial claim under a federal statute presents
a case within the jurisdiction of the court as a federal court, and
this jurisdiction cannot be made to stand or fall upon the way the
court may chance to decide an issue as to the legal sufficiency of
the facts alleged, any more than upon the way it may decide as to
the legal sufficiency of the facts proven. Its decision either way
upon either question is predicated upon the existence of
jurisdiction, not upon the absence of it. Jurisdiction,
Page 263 U. S. 306
as distinguished from merits, is wanting only where the claim
set forth in the complaint is so unsubstantial as to be frivolous,
or, in other words, is plainly without color of merit. Weiland
v. Pioneer Irrigation Co., 259 U. S. 498
259 U. S. 501
Newburyport Water Co. v. Newburyport, 193 U.
, 193 U. S. 576
Matters v. Ryan, 249 U. S. 375
249 U. S. 377
Flanders v. Coleman, 250 U. S. 223
250 U. S. 227
L. & N. R. Co. v. Rice, 247 U.
, 247 U. S. 203
Lovell v. Newman, 227 U. S. 412
227 U. S. 421
Denver First National Bank v. Klug, 186 U.
, 186 U. S. 204
Louie v. United States, 254 U. S. 548
Hart v. Keith Exchange, 262 U. S. 271
262 U. S. 273
The Fair v. Kohler Die Co., 228 U. S.
, 228 U. S. 25
that event, the claim of federal right under the statute is a mere
pretense, and, in effect, is no claim at all. Plainly there is no
such want of substance asserted here. In the case last cited, this
Court said (p. 228 U. S.
"We are speaking of a case where jurisdiction is incident to a
federal statutory cause of action. Jurisdiction is authority to
decide the case either way. Unsuccessful as well as successful
suits may be brought upon the act, and a decision that a patent is
bad, whether on the facts or the law, is as binding as one that it
is good. See Fauntleroy v. Lum, 210 U. S.
, 210 U. S. 235
. No doubt if
it should appear that the plaintiff was not really relying upon the
patent law for his alleged rights, or if the claim of right were
frivolous, the case might be dismissed. In the former instance, the
suit would not really and substantially involve a controversy
within the jurisdiction of the court, Excelsior Wooden Pipe Co.
v. Pacific Bridge Co., 185 U. S. 282
, 185 U. S.
-288, and in the latter, the jurisdiction would not
be denied, except possibly in form. Deming v. Carlisle Packing
Co., 226 U. S. 102
, 226 U. S.
. But if the plaintiff really makes a substantial
claim under an act of Congress, there is jurisdiction whether the
claim ultimately be held good or bad."
In Lamar v. United States, 240 U. S.
, this Court dealt with the question whether the
failure of an indictment
Page 263 U. S. 307
to charge a crime against the United States presented a question
of jurisdiction within the meaning of § 238 of the Judicial Code.
The Court held in the negative, saying (p. 240 U. S.
"Jurisdiction is a matter of power, and covers wrong as well as
right decisions. Fauntleroy v. Lum, 210 U. S.
, 210 U. S. 234
Burnet v. Desmornes, 226 U. S. 145
, 226 U. S.
. There may be instances in which it is hard to say
whether a law goes to the power or only to the duty of the court,
but the argument is pressed too far. A decision that a patent is
bad, either on the facts or on the law, is as binding as one that
it is good. The Fair v. Kohler Die Co., 228 U. S.
, 228 U. S. 25
. And nothing can
be clearer than that the district court, which has jurisdiction of
all crimes cognizable under the authority of the United States
(Judicial Code March 3, 1911, c. 231, § 24, second), acts equally
within its jurisdiction whether it decides a man to be guilty or
innocent under the criminal law, and whether its decision is right
or wrong. The objection that the indictment does not charge a crime
against the United States goes only to the merits of the case."
Our attention is directed to certain decisions of this Court
which are said to support the contention of defendants in error. We
think their effect is misapprehended. In The Steamship
Jefferson, 215 U. S. 130
case had been dismissed below expressly for want of jurisdiction.
It was asserted in support of a motion to dismiss the appeal that,
while in form of expression the suit was so dismissed, the action
of the lower court was
"in substance alone based on the conclusion that the facts
alleged were insufficient to authorize recovery, even though the
cause was within the jurisdiction of the court."
It was held, however, that the conclusion of the district court
was one which went to the jurisdiction, not to the sufficiency of
the allegations of the bill, and there is no suggestion in the
opinion that the two propositions
Page 263 U. S. 308
are equivalent. In The Ira M. Hedges, 218 U.
, where the same condition was presented, this
Court, after pointing out the difficulty of sometimes
distinguishing between matters going to the jurisdiction and those
determining the merits and suggesting that it might be said that
there the two considerations coalesced, rested its decision upon
the form of the decree, saying (p. 218 U. S.
"At all events, the form of the decree must be taken to express
the meaning of the judge. If the decree was founded, as it purports
to be, on a denial of jurisdiction in the court, this Court has
jurisdiction of the appeal. For all admiralty jurisdiction belongs
to courts of the United States as such, and therefore the denial of
jurisdiction brings the appeal within the established rule. See
The Steamship Jefferson, 215 U. S. 130
, 215 U. S.
In Blumenstock Brothers v. Curtis Publishing Co.,
252 U. S. 436
252 U. S. 441
it is said:
"In any case alleged to come within the federal jurisdiction, it
is not enough to allege that questions of a federal character arise
in the case; it must plainly appear that the averments attempting
to bring the case within federal jurisdiction are real and
The only authority cited in support of this statement is
Newburyport Water Co. v. Newburyport, supra,
where, at p.
193 U. S. 576
the rule is stated thus:
". . . It is settled that jurisdiction does not arise simply
because an averment is made as to the existence of a constitutional
question, if it plainly appears that such averment is not real and
substantial, but is without color of merit."
While the Blumenstock
case seems to put the emphasis of
the test in the opposite way, it cannot be supposed that it was
meant to modify the doctrine of the Newburyport
since its citation as authority is made without qualification.
It follows that the motion to dismiss the writ of error must be
Page 263 U. S. 309
Second. We come, then, to consider whether the averments of the
complaint are sufficient to constitute a cause of action under the
Anti-Trust Act, and this inquiry involves two questions: (1) are
the alleged transactions in which the exhibitor was engaged matters
of interstate commerce?, and (2) do the alleged acts of the
defendants in error constitute a combination or conspiracy in
1. The film contracts were between residents of different
states, and contemplated the leasing by one to the other of a
commodity manufactured in one state and transported and to be
transported to and used in another. The business of the
distributors of which the arrangement with the exhibitor here was
an instance was clearly interstate. It consisted of manufacturing
the commodity in one state, finding customers for it in other
states, making contracts of lease with them, and transporting the
commodity leased from the state of manufacture into the states of
the lessees. If the commodity were consigned directly to the
lessees, the interstate character of the commerce throughout would
not be disputed. Does the circumstance that, in the course of the
process, the commodity is consigned to a local agency of the
distributors, to be by that agency held until delivery 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 intermediate 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." Ill.
Cent. R. Co. v. Louisiana R. Co. Com., 236 U.
, 236 U. S. 163
And see Western Union Tel. Co. v. Foster, 247 U.
Page 263 U. S. 310
247 U. S. 113
Western Oil Refining Co. v. Lipscomb, 244 U.
, 244 U. S.
In Swift & Co. v. United States, 196 U.
, 196 U. S. 398
it was held that, where cattle were sent 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 stockyards, and this was a
typical, constantly recurring course, the whole transaction was one
in interstate commerce, and the purchase a part and incident of it.
It further appeared in that case that Swift & Co. were also
engaged in shipping fresh meats to their respective agents at the
principal markets in other cities 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 of the original packages.
Moreover, the sales are by persons in one state to persons in
In the same case in the court below, 122 F. 529, 533, upon this
branch of the case, it is said:
"I think the same is true of meat sent to agents, and sold from
their stores. The transaction in such case, in reality, is between
the purchaser and the agents' principal. The agents represent the
principal at the place where the exchange takes place, but the
transaction, as a commercial entity, includes the principal, and
includes him as dealing from his place of business."
The most recent expression of this Court is in Stafford v.
Wallace, 258 U. S. 495
258 U. S. 516
where, after describing the process by which livestock are
transported to the stockyards and thence to the purchasers, it is
"Such transactions cannot be separated from the movement to
which they contribute and necessarily take on its character. The
commission men are essential in making the sales without which the
flow of the current would be
Page 263 U. S. 311
obstructed, and this whether they are made to packers or
dealers. The dealers are essential to the sales to the stock
farmers and feeders. The sales are not in this aspect merely local
transactions. They create a local change of title, it is true, but
they do not stop the flow; they merely change the private interests
in the subject of the current, not interfering with, but, on the
contrary, being indispensable to its continuity."
The transactions here are essentially the same as those involved
in the foregoing cases, substituting the word "film" for the word
"livestock," or "cattle," or "meat." Whatever difference exists is
of degree and not in character.
The cases cited by defendants in error, upholding state taxation
as not constituting an interference with interstate commerce, are
of little value to the inquiry here. It does not follow that,
because a thing is subject to state taxation, it is also immune
from federal regulation under the Commerce Clause. Stafford v.
Wallace, supra, 258 U. S.
-527; Addyston Pipe Line Co. v. United
States, 175 U. S. 211
175 U. S.
2. The distributors, according to the allegations of the
complaint, controlled the distribution of all films in the United
States, and the exhibitor could not procure them from others. The
direct result of the alleged conspiracy and combination not to sell
to the exhibitor therefore was to put an end to his participation
in that business. Interstate commerce includes the interstate
purchase, sale, lease, and exchange of commodities, and any
combination or conspiracy which unreasonably restrains such
purchase, sale, lease or exchange is within the terms of the
Anti-Trust Act, denouncing as illegal every contract, combination,
or conspiracy "in restraint of trade or commerce among the several
states." The allegation of the complaint is that the exhibitor had
been procuring films from some of the distributors, but had refused
to buy from
Page 263 U. S. 312
others, who thereupon induced the former to cease dealing with
him, and that all then combined and conspired, in restraint of
interstate trade and commerce, to prevent him from carrying on his
said business; that they have ever since refused to furnish him
with film service, and have caused unexpired contracts which he
held with some of them to be illegally cancelled. It is difficult
to imagine how interstate trade could be more effectively
restrained than by suppressing it, and that, in effect, so far as
the exhibitor is concerned, is what the distributors in combination
are charged with doing and intending to do. It is doubtless true
that each of the distributors, acting separately, could have
refused to furnish films to the exhibitor without becoming amenable
to the provisions of the act, but here 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. See United States v.
Schrader's Son, Inc., 252 U. S. 85
252 U. S. 99
Bobbs-Merrill Co. v. Straus,
139 F. 155, 191. The
contracts with these distributors contemplated and provided for
transactions in interstate commerce. The business which was done
under them leasing, transportation, and delivery of films was
interstate commerce. The alleged purpose and direct effect of the
combination and conspiracy was to put an end to these contracts and
future business of the same character, and "restricts, in that
regard, the liberty of a trader to engage in business" (Loewe
v.Lawlor, 208 U. S. 274
208 U. S.
), and, as a necessary corollary, to restrain
interstate trade and commerce, in violation of the Anti-Trust
The judgments of the courts below are reversed, and the case
remanded to the district court for further proceedings in
conformity with this opinion.