277 F.

2d 673

NORTH CAROLINA THEATRES, INC., Wilby-Kincey

Service Corporation and H. F. Kincey; Paramount Film
Distributing Corporation; Loew's Incorporated, Twentieth
Century-Fox Film Corporation, Warner Bros. Pictures
Distributing Corporation, RKO Radio Pictures, Inc.; United
Artists Corporation; Universal Film Exchanges, Inc.; Columbia
Pictures Corporation and Republic Pictures Corporation,
Appellants,
v.
Allen B. THOMPSON, Brona C. Thompson, Appellees.
No. 7981.

United States Court of Appeals Fourth Circuit.

Argued January 7, 1960.
Decided April 18, 1960.

John F. Caskey, New York City, and Fred B. Helms, Charlotte, N. C.

(Wm. H. Bobbitt, Jr., Charlotte, N. C., Kenneth C. Royall and Charles F.
Young, New York City, on brief), for appellants.
George S. Ryan, Boston, Mass., and Francis H. Fairley, Charlotte, N. C.
(W. Bradley Ryan, Boston, Mass., and William I. Ward, Jr., Statesville,
N. C., on brief), for appellees.
Before SOBELOFF, Chief Judge, SOPER, Circuit Judge, and DALTON,
District Judge.
SOPER, Circuit Judge.

The owners of a moving picture theatre in Graham, North Carolina, brought this
suit against certain exhibitors of motion pictures in the nearby city of
Burlington, North Carolina, and certain distributors of films in the United
States, claiming that the defendants, in violation of the federal antitrust laws,
had entered into a conspiracy to restrain and monopolize interstate trade in
motion pictures and pursuant thereto had refused to license the plaintiffs to

show films in their theatres at Graham until after they had been exhibited in the
theatres at Burlington and their value as public attractions had greatly
diminished. For this and other actions the plaintiffs sued to recover treble
damages under the statute amounting in the aggregate to the sum of three
million dollars.
2

The defendants moved for summary judgment on the ground that the claims
were barred by the one-year statute of limitation contained in the General
Statutes of North Carolina 1-54, subd. 2, since all the claims accrued before
December 17, 1951, and the suit was filed on December 17, 1952. That statute
provides for a one-year period of limitation for an "action or proceeding * * *
upon a statute, for a penalty or forfeiture, where the action is given to the State
alone, or in whole or in part to the party aggrieved, or to a common informer,
except where the statute imposing it prescribes a different limitation."

The District Judge dismissed the motion because of the holding of certain
federal courts that a private action for treble damages under the antitrust laws is
not an action to recover a penalty or a forfeiture but an action to recover
remedial or compensatory damages. He therefore held that the period of
limitations applicable to this suit is 1-52, subd. 2, of the General Statutes of
North Carolina, which provides for a threeyear period of limitation for an action
"upon a liability created by statute, other than a penalty or forfeiture, unless
some other time is mentioned in the statute creating it."

The case is now before us under the procedure for appeals from interlocutory
orders or judgments set forth in 28 U.S.C.A. 1292(b).

The federal antitrust acts in effect at the time of the institution of the pending
suit did not prescribe a period of limitations1 and in such case, under the
established rule, the period is fixed by the laws of the state in which the action
accrues. Chattanooga Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390,
27 S.Ct. 65, 51 L.Ed. 241; Miller Motors, Inc. v. Ford Motor Co., 4 Cir., 252
F.2d 441, 450. Hence the precise question for decision is whether or not the
instant suit was brought for a penalty or forfeiture within the meaning of 154, subd. 2 of the North Carolina statute.

Confusion has arisen in this and other similar cases because it has been held by
the highest federal courts,2 as the District Judge held below, that a private suit
under the antitrust acts is not a suit for a penalty while, on the other hand, a
number of state courts have held that a private suit for treble damages, under
state statutes similar in nature to the federal antitrust acts, is a suit for a penalty.

Hence a controversy similar to that in the pending case has arisen as to whether
the limitation prescribed by state statutes for suits for a penalty should be
applied to suits under the federal antitrust acts.
7

The subject has been carefully considered and discussed in the opinion of Judge
Maris in Gordon v. Loew's Incorporated, 3 Cir., 247 F.2d 451, where, as in the
pending case, treble damages were sought by owners of a theatre against
motion picture producers who were charged to have followed a system of
releasing motion pictures in violation of the antitrust laws to the detriment of
the plaintiffs. The suits were brought in New Jersey and the defendants filed a
motion for summary judgment, asserting that the actions were barred since they
were not brought within the time limited by the New Jersey statutes of
limitation, providing that actions at law for any forfeiture upon a penal statute
should be commenced within two years after the cause of action accrued. The
Supreme Court of the State had held that this statute was applicable to actions
for treble damages brought by a tenant against his landlord under the State Rent
Control Act, N.J.S.A. 2A:14-10, and since this statute carrying treble damages
was essentially similar in this respect to the action for treble damages under 4
of the Clayton Act it was held by the Third Circuit in the cited case that the
action was barred. Overruling the objection that the action was not based upon
a penal statute because of the decisions of the Supreme Court of the United
States, the Court said (at page 457):

"It is suggested that section 4 of the Clayton Act cannot thus be held to be a
penal statute because the Supreme Court of the United States held in
Chattanooga Foundry & Pipe Works v. Atlanta, 1906, 203 U.S. 390, 27 S.Ct.
65, that the five years limitation upon suits `for the enforcement of any civil
fine, penalty or forfeiture, pecuniary or otherwise' imposed by the predecessor
of section 2462 of title 28, United States Code, was not applicable to such a
suit. It must, of course, be conceded that such a suit is not for a penalty within
the meaning of the federal statute of limitations now incorporated in section
2462. But it does not follow that the law which authorizes such a suit to be
brought may not be a penal statute within the meaning of section 2A:14-10 of
the New Jersey Revised Statutes. For `penal' and `penalty' are not words of art.
On the contrary, as is the case with many other terms used in the law, their
meaning varies with the circumstances in which they are used and takes on the
meaning in each instance which the user intends. See Huntington v. Attrill,
1892, 146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123. As an illustration we may
point out that actions under the antitrust laws at other times and in other settings
have been described by the federal courts as authorizing the recovery of a
penalty. And indeed the fact that the antitrust laws had been held to be penal in
respect to the application of the statutes of limitations of some states but not of

others was one of the reasons why Congress in 1955 enacted the uniform
statute of limitations applicable to these cases.
9

"All we are called upon to decide and all we do decide is that section 4 of the
Clayton Act is a penal statute within the meaning of that phrase as used in
section 2A:14-10 of the Revised Statutes of New Jersey, and that, therefore, the
suit brought by Frank and Marion Gordon is barred by the limitation imposed
by that section."

10

To the same effect are the decisions in Hoskins Coal & Dock Corp. v. TruaxTraer Coal Co., 7 Cir., 191 F.2d 912, certiorari denied 342 U.S. 947, 72 S.Ct.
555, 96 L.Ed. 704; Schiffman Bros. v. Texas Co., 7 Cir., 196 F.2d 695; Bertha
Building Corp. v. National Theatres Corp., 2 Cir., 269 F.2d 785; Powell v. St.
Louis Dairy Co., 8 Cir., 276 F.2d 464.

11

No case on the precise point has been decided in this circuit but we are told that
we should not follow the current of authority in the other circuits because of
what we said in Barnes Coal Corp. v. Retail Coal Merchants Ass'n, 4 Cir., 128
F.2d 645, and Glenn Coal Co. v. Dickenson Fuel Co., 4 Cir., 72 F.2d 885.
These actions arose under the federal antitrust laws and in each the defense was
that the suit was barred by limitations since it was not brought within a year
after the right of action accrued, which was the period of limitations provided
by the state law for actions which do not survive the death of the claimant. The
crucial question was whether a right of action under the federal antitrust laws
survives the death of the claimant, and it was held that the question of the
survival of a right of action created by an act of Congress is one of substance
and not of procedure and must be answered upon a consideration of the statute
creating it in the light of the principles of common law, and unless the right of
action passes this test it does not survive by reason of provisions of the state
law. The decision did not actually turn in either case upon whether the federal
or state law controlled and the court was not confronted with conflicting
decisions in the two jurisdictions, for it was determined that under either law
the action survived and hence the five-year period of limitation set by the state
statute was applicable. The precise question was whether the action was barred
by limitations, but the attention of the court was primarily directed to the
question of the survival of an action under a federal statute. Under these
circumstances we are of the opinion that we should follow the course outlined
in the other circuits in deciding the question in the case at bar. 3

12

It remains to determine whether an action for treble damages is considered an

action for a penalty under the laws of North Carolina. We think the answer
must be in the affirmative. In Williams v. Gibson, 1950, 232 N.C. 133, 59

S.E.2d 602, the suit was brought in the state court under the Federal Housing
and Rent Act of 1947, 50 U.S.C. Apdx. 1895, which provided that a landlord
receiving rent in excess of the maximum prescribed should be liable to the
tenant in the sum of $50.00 or three times the overcharge whichever was
greater. Describing the statute the Court said (232 N.C. at page 134, 59 S.E.2d
at page 603):
13

"The Act is clearly a Federal penal law; for `the term "penalty" involves the
idea of punishment for the infraction of the law, and is commonly used as
including any extraordinary liability to which the law subjects a wrongdoer in
favor of the person wronged, not limited to the damages suffered.'"

14

The Court cited O'Sullivan v. Felix, 233 U.S. 318, 319, 324, 34 S.Ct. 596, 58
L.Ed. 980, where it is said that the term "penalty" involves the idea of
punishment for the infraction of the law and is commonly used as including any
extraordinary liability to which the law subjects a wrongdoer in favor of the
person wronged, not limited to the damages suffered.

15

Again in Smoke Mount Industries, Inc. v. Fisher, 224 N.C. 72, 75, 29 S.E. 2d
128, decided March 1, 1944, the Court had under consideration the
counterclaim of the defendant who charged that the plaintiff had violated the
Fair Labor Standards Act of 1938, 29 U.S.C.A. 201 et seq., and claimed that
the defendant was entitled under the statute to recover one and a half times the
amount of wages due him for services rendered the plaintiff. In sustaining the
counterclaim the Court said (224 N.C. at page 75, 29 S.E.2d at page 130):

16

"The counterclaim set forth in the answer sounds in contract. It is to enforce, or

to collect, a penalty and such actions have been universally held by us to be ex
contractu. `An action for a penalty given by a statute to any person injured, is
an action on contract.'"

17

The year after this decision was rendered the North Carolina Legislature added
1-52, subd. 11 to its statute of limitations wherein it provided that the period
of limitation should be three years for the recovery of any amount under the
Fair Labor Standards Act of 1938. Manifestly this enactment was unnecessary,
if the three-year period of limitations was already applicable to actions of this
kind under 1-52, subd. 2 of the Code above referred to. Hence it is reasonable
to assume that the new statute was passed in order to enlarge the period of
limitations for the recovery of penalties under the Fair Labor Standards Act
which would otherwise have been limited to the period of one year under 154, subd. 2 of the Code of North Carolina.

18

We think these decisions are decisive on the point. The plaintiff depends upon
the dictum in State v. Maultsby, 1905, 139 N.C. 583, 585, 51 S.E. 956, that a
penalty is always for a sum certain, although the opposite is stated in Dozier v.
Bray, 1822, 9 N.C. 57, and in Dowd v. Seawell, 1831, 14 N.C. 185, 187; and
also relies on the fact that actions in tort in which punitive damages are claimed
are governed by the three-year statute of North Carolina, as was held in Reid v.
Holden, 1955, 242 N.C. 408, 414, 88 S.E.2d 125; Barnette v. Woody, 1955,
242 N.C. 424, 431, 88 S.E.2d 223. Ordinary tort actions, however, are brought
primarily for compensatory damages to which the claim for punitive damages
is incidental and these decisions cannot prevail over the more specific holdings
as to the period of limitations applicable in suits brought under statutes
permitting the recovery of multiple damages.

19

The judgment of the District Court is reversed.

20

Reversed and remanded.

Notes:
1

It is now provided by the Act of July 7, 1955, 15 U.S.C.A. 15b that actions
under the antitrust laws shall be barred unless commenced within four years
after the cause of action accrues. The Act also provides that no cause of action
barred under the previous law should be revived by the amendment. This
statute was passed in part because of the difficulty in determining whether the
statutory liability imposed by the antitrust laws is in the nature of a penalty
under the state law. U.S.Code Congressional and Administrative News 1955, p.
2331

Huntington v. Attrill, 146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123; Chattanooga
Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed.
241; cf. Fleitmann v. Welsbach Co., 240 U.S. 27, 36 S.Ct. 233, 60 L.Ed. 505;
United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443;
Commissioner of Internal Revenue v. Glenshaw Glass Co., 348 U.S. 426, 75
S.Ct. 473, 99 L.Ed. 483; United States v. Borden Co., 347 U.S. 514, 74 S.Ct.
703, 98 L. Ed. 903; Lawlor v. National Screen Service, 349 U.S. 322, 75 S.Ct.
865, 99 L.Ed. 1122

When the survival of a corporation is at issue in criminal proceedings under the

federal statutes it is held that the decision turns on the law of the state creating
the corporation as intepreted by its courts. Melrose Distillers v. United States,
359 U.S. 271, 79 S.Ct. 763, 3 L.Ed. 2d 800; Alamo Fence Co. of Houston v.

United States, 5 Cir., 240 F.2d 179, 183