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U.S. Supreme Court

United States v. Crescent Amusement Co., 323 U.S. 173 (1944)

United States v. Crescent Amusement Co.

Nos. 17 AND 18.

Argued November 6, 7, 1944

Decided December 11, 1944*

323 U.S. 173


1. The motions in the District Court to amend the findings in this case raised questions of substance, and an appeal applied for and allowed while such motions were pending was premature, and must be dismissed. P. 323 U. S. 177.

2. That the District Court has allowed a premature appeal does not deprive it of jurisdiction to allow a subsequent and timely appeal. P. 323 U. S. 177.

3. The Sherman Antitrust Act may apply to the business of exhibiting motion pictures, when a regular interchange of films in interstate commerce is involved. P. 323 U. S. 180.

4. On appeal, this Court considers only the alleged errors which have been included in the assignments of error. P. 323 U. S. 180.

5. The evidence sustains the District Court's findings of a conspiracy of the defendant exhibitors of motion pictures, and certain officers thereof, unreasonably to restrain interstate trade and commerce in motion picture films and to monopolize the exhibition of films in the areas in question, in violation of § 1 and § 2 of the Sherman Act. P. 323 U. S. 181. chanrobles.com-red

Page 323 U. S. 174

(a) There was ample evidence that the combination used its buying power for the purpose either of restricting the ability of its competitors to license films or of eliminating competition by acquiring the competitor's property or otherwise. P. 323 U. S. 181.

(b) Whether the distributors were technically coconspirators is immaterial, since action by a combination of exhibitors to obtain an agreement with a distributor whereby commerce with a competing exhibitor is suppressed or restrained is itself a conspiracy in restraint of trade and a conspiracy to monopolize a part of the trade or commerce among the States, each of which is prohibited by the Sherman Act. P. 323 U. S. 183.

(c) Even if error be assumed in the introduction of certain evidence -- consisting of letters or reports written by employees of certain of the major distributors to other employees or officers in the same company stating reasons why the distributor was discriminating against an independent and in favor of the defendants -- there is sufficient other evidence to establish the restraints of trade and monopolistic practices, and the burden of showing prejudice has not been sustained. P. 323 U. S. 184.

(d) Though the findings leave much to be desired in the light of the function of the trial court, they are supported by the evidence, and must therefore be sustained. P. 323 U. S. 184.

6. Upon consideration of objections to provisions of the decree in this case, held:

(1) Lest the public interest be not adequately protected, the decree should be revised so as to prohibit future acquisitions of a financial interest in additional theaters outside of Nashville "except after an affirmative showing that such acquisition will not unreasonably restrain competition." P. 323 U. S. 185.

(2) Provisions of the decree enjoining the defendant exhibitors from making franchises with certain distributors "with the purpose and effect of maintaining their theater monopolies and preventing independent theaters from competing with them," and from entering into "any similar combinations and conspiracies having similar purposes and objects;" from combining, in licensing films, their closed towns with their competitive situations

"for the purpose and with the effect of compelling the major distributors to license films on a noncompetitive basis in competitive situations and to discriminate"

against the independents, and enjoining each defendant exhibitor

"from conditioning the licensing of films in any competitive situation (outside Nashville) upon the licensing of films in any other theater situation"

are sustained. P. 323 U. S. 187. chanrobles.com-red

Page 323 U. S. 175

(a) The franchise agreements and the licensing system were the chief instruments of the unlawful practices, and it was the duty of the court to enjoin their continuance and resumption. P. 323 U. S. 188.

(b) These provisions of the decree are not unenforceable, as too vague and general. P. 323 U. S. 188.

(3) The divestiture provisions of the decree -- requiring each corporate exhibitor to divest itself of the ownership of any stock or other interest in any other corporate defendant or affiliated corporation, and enjoining it from acquiring any interest in those companies; requiring one of the individual defendants to resign as an officer of any corporation (except Crescent) which is affiliated with any defendant exhibitor and enjoining him from acquiring control over any such affiliate by acting as officer or otherwise; requiring another of the individual defendants to resign as an officer of the affiliates (except one corporation of his choice) and enjoining him from acquiring any control over the others by acting as an officer or otherwise, and allowing a year from the date of the decree for completion of the divestiture -- are sustained. P. 323 U. S. 189.

(a) In this type of Sherman Act case, the Government should not be confined to an injunction against further violations; dissolution of the combination may be ordered where the creation of the combination is itself the violation. P. 323 U. S. 189.

(b) Those who violate the Act may not reap the benefits of their violations and avoid an undoing of their unlawful project on the plea of hardship or inconvenience. P. 323 U. S. 189.

(c) The fact that minority stockholders of the affiliated companies are not parties to the suit does not bar a separation of the companies. P. 323 U. S. 190.

(d) The requirement that two of the defendant corporate exhibitors sell their respective half interests in two companies which were not made parties to the proceedings is sustained, since it does not appear on this record that any legal right of any other stockholder would be affected. P. 323 U. S. 190.

No. 17 dismissed.

No. 18 reversed.

No.19 affirmed.

Direct appeals under the Expediting Act from a decree against defendants in a civil suit under the Sherman Antitrust Act. Two of the appeals were taken by the Government, the other by certain of the defendants. chanrobles.com-red

Page 323 U. S. 176


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