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KRINSLEY v. UNITED ARTISTS CORPORATION

November 15, 1955

LAZARUS KRINSLEY, PLAINTIFF,
v.
UNITED ARTISTS CORPORATION, DEFENDANT, AND C.J. PAPAS, MILWAUKEE TOWNE CORPORATION, JOHN S. PAPAS, SPIRO J. PAPAS, ANDREW M. SPHEERIS, ANDREW J. SPHEERIS, AND GEORGE J. SPHEERIS, DEFENDANTS-CROSS-CLAIMANTS.



The opinion of the court was delivered by: Campbell, District Judge.

Supplementing my findings of fact, conclusions of law and decree entered herein, March 17, 1954, 119 F. Supp. 665, and in obedience to the mandate of the Court of Appeals lodged herein August 10, 1955, 225 F.2d 579, I have given "further consideration" to such findings and conclusions and now reaffirming the same I herein "detail" with such "specificity" as I am able, my reasons for sustaining certain objections to some of the Master's findings. I shall also try to explain why in my "view" those "master's findings of fact are actually `clearly erroneous'" thus attempting to "dissipate" to the best of my ability the "utter paucity of clearly assigned grounds" which I regret was found by the Court of Appeals in my previous memorandum.

The Master's findings of fact are found in paragraphs numbered 59 through 99 of his report. In my previous memorandum I sustained objections to the findings contained in paragraphs 72 (1), 72(2), (The Master's Report contains 2 different paragraphs each numbered 72, 73, 74, 79, 82, 83, 85, 86, 88, 92, 93, 94, 95, 96, 97, 98 and 99, and to certain parts of the findings contained in paragraphs 76, 77, 78 and 80. The objections to all other findings of fact I overruled. I also, on the record before me, entered seven additional findings of fact of my own. On such findings of fact thus modified, I rejected the Master's Conclusions of Law, made three different Conclusions of Law and entered a Decree. My reasons for so doing in addition to or in attempted clarification of those set forth in my memorandum of March 17, 1954, are as follows:

The Master's findings in both paragraphs 72 of his report are based in part on his findings in paragraphs 70 and 71. In effect they state that United Artists Corporation entered into an agreement which fixed first run theatres in Milwaukee and subsequent clearances. In my opinion such findings are clearly erroneous. Paragraphs 70, 71, and 72 are based almost entirely upon the testimony of Harry Perlewitz that in 1930 one Ben Koenig was secretary of the Milwaukee Film Board of Trade, and, as such, represented film distributor members in the meetings held in 1930 for the purpose of devising a plan for film distribution. No proof was ever adduced that Koenig acted in these meetings as a representative of the Film Board of Trade, that the Film Board of Trade, as such, had anything to do with these meetings or with the formulation of any plan, and no evidence whatever was submitted that United Artists Corporation authorized Koenig or anyone else to act for it in these meetings. It is undisputed that United Artists Corporation was not a member of the committee of 18 that drafted the plan, and it was only after leading questions that Perlewitz remembered a man whose name might have been Egner who, Perlewitz said, worked for United Artists Corporation in some capacity, attended some meetings in 1930.

The Master found that Perlewitz' testimony was chargeable with discrepancies. These discrepancies go to Perlewitz' position in the 1930 meetings, his connection with the film distributors and with the Milwaukee Film Board of Trade and his status before the Master as a supposedly adverse witness. I find that these discrepancies destroy the credibility of Perlewitz' testimony. I further find, from Perlewitz' own admissions, that while he attempted to create a different impression, he actually attended only a limited number of meetings, and those as just a spectator, and that he was not connected with the distributors and the Milwaukee Film Board of Trade, as he attempted to imply and as found by the Master, but was rather only an exhibitor's arbitrator. Finally, far from being a witness adverse to cross-claimants, as stated by cross-claimants' attorney, Perlewitz was actually friendly with the Papas-Spheeris group and antagonistic to distributors and had actually filed a suit against the film distributors in Milwaukee. Aside from reasserting that Perlewitz had no interest in this lawsuit (answer to objections p. 3), cross-claimants make no attempt to explain these discrepancies.

Even assuming that United Artists Corporation was in some manner connected with the 1930 plan, in 1933, when a superseding plan was adopted, it is undisputed that United Artists Corporation was not a member of the Film Board of Trade, having resigned from all such Film Boards of Trade many months before, and there is not even a scintilla of evidence, nor do cross-claimants in their answer to objections, cite any evidence that United Artists Corporation was in any way represented at the plan-drafting meetings, or in any way participated in the formulation of the plan. Accordingly, what the distributors other than United Artists Corporation did is not relevant to any issue in this case.

In the first paragraph 72 which I have re-designated 72(1) of his Report, the Master finds that other witnesses (without naming them) for the cross-claimants established the existence of a conspiracy between United Artists Corporation and other distributors. From cross-claimants' answer to objections, it is apparent that those witnesses are Fitzgerald, Touchett and Vollendorf. Fitzgerald purchased pictures for the Fox-Wisconsin theatres, a company which, until 1946, was lessee of the Miller Theatre. The essence of his testimony (portions of which are cited at pp. 9-11 of cross-claimants' answer to objections) is that Fox-Wisconsin bought pictures for the Miller second run. It is undisputed that this run was the free choice of Fox-Wisconsin, and not the result of the theatre's being labeled by any plan. At pp. 27-28 of his Report, and in paragraph 75 of his Report, the Master cites and relies on two letters (cross-claimants' exhibits 67 and 69, also cited at pp. 6-8 of answer to objections) written by Fitzgerald to United Artists Corporation. The only logical inference that may be drawn from these letters is that, in 1939, United Artists Corporation was not selling according to any plan and that Fitzgerald, representing Fox-Wisconsin, was attempting to force them to do so. There is no evidence in the record that this attempt was successful.

Touchett, who also worked for Fox-Wisconsin, testified merely that he explained to United Artists Corporation's local and district managers "the Milwaukee clearance system or procedure." This certainly does not establish a conspiracy between United Artists Corporation and other distributors. The testimony of Vollendorf contains nothing which would connect United Artists Corporation with the formulation of the 1933 plan. Further, both Vollendorf and Touchett, film buyers for the Warner and Fox circuits respectively, testified that it was they, and not the distributors, who attached to the film contracts clearance schedules based on the schedules of previous years.

Allen, United Artists Corporation Milwaukee branch manager in 1946, testified that he found a copy of the Milwaukee plan in his desk when he started his job. The Master infers from this, in his second paragraph numbered 72 which for clarity I have designated as 72(2), that United Artists Corporation followed the plan in releasing its product. This is clearly erroneous. Allen testified, and this is uncontradicted, that after finding the plan in his desk he put it back in the drawer and never referred to it.

Allen testified that he examined United Artists Corporation's contracts for prior years to determine how to sell his pictures, and that he did not change the playing position of the Miller; however, I find that he had no opportunity to sell the Miller anything but second run, since that was the only run Fox-Wisconsin, lessee of the Miller, would purchase. In addition, I find that it was Allen who first suggested to Papas and Spheeris that they exhibit first run films and sent them to see Lohrenz, United Artists Corporation District Manager, about playing United Artists Corporation products first run, and that this was obviously an action contrary to the Milwaukee plan. This suggestion was made, not because Papas and Spheeris had demanded first run product, but because United Artists Corporation was at the time looking for a first-run outlet for its pictures.

The findings in paragraph 73 of the Master's Report that Raftery, former president of United Artists Corporation, was familiar with the Milwaukee plan of release, that he testified that United Artists Corporation operated under the plan and that contracts made by United Artists Corporation in Milwaukee while he was president contained references to the plan, all are clearly erroneous. No such admission is found in the record, and cross-claimants cite none in their answer to objections (pp. 26-27). Raftery did testify that he was familiar with cross-claimants' exhibit 71, a clearance schedule dated December 5, 1940, between Fox-Wisconsin and United Artists Corporation, but he also testified, and this is uncontradicted, that the first time he saw the exhibit was in 1944 or 1945 while preparing United Artists Corporation's case in United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260.

Lohrenz did testify, as found by the Master in paragraph 74, that he believed there was a conspiracy in Milwaukee. The Master clearly erred, however, in ignoring Lohrenz' testimony that he believed the conspiracy was directed against United Artists Corporation since United Artists Corporation was having great difficulty marketing its product first run in Milwaukee. It is uncontested that United Artists Corporation had a backlog of 11 first run pictures and I find that this fact supplied the reason for United Artists Corporation approaching cross-claimants in order to procure a first run outlet for its product in Milwaukee.

In paragraph 76, the Master found that under the 1933 plan, the Miller was first run "* * * in subsequent run zone". These four words, he correctly found, classified the Miller as a second run theatre. However, the Master erroneously failed to take into account the fact that the copy of the plan (cross-claimants' exhibit 41) identified by Perlewitz as coming from his files did not contain those four words. Thus, according to cross-claimants' exhibit 41, a copy of the Milwaukee plan, nothing prevented distributors from selling the Miller first run product. There is nothing in the record, nor do cross-claimants cite anything, which would dispute the fact that Exhibit 41 was the Milwaukee plan.

The Master found (findings 77, 78, 79 and 80) that the 1930 plan and the 1933 plan which superseded it were followed by all distributors until as late as 1948. As to United Artists Corporation, this is clearly erroneous. It is evident from the very agreements before the court that United Artists Corporation was acting to defeat the conspiracy by licensing first run product to cross-claimants' theatre. In the answer to objections, at pp. 21-22, cross-claimants cite a number of deal sheets, clearance schedules and letters which purportedly show that United Artists Corporation incorporated into its transactions with exhibitors, the provisions of the Milwaukee plan. However, of all the exhibits cited, only five exhibits to which United Artists Corporation was a party contain any reference to a plan, the last of those dated 1939. Further, after 1943, not a single provision of any plan was incorporated in any exhibit to which United Artists Corporation was a party.

In fact, Fitzgerald, cross-claimants' witness, stated that the 1933 clearance schedule was followed for a number of years and was then dropped. Pictures were thereafter sold either in groups or singly on a negotiated basis. It is, therefore, obvious, and I so find, that all the findings of the Master with regard to the 1930 and 1933 plans are ...


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