Gilchrist v Cuddy February 18, 1925 Trent, J.

RATIO DECIDENDI: The violation of a legal right committed knowingly is a cause of action, and that it is a violation of a legal right to interfere with contractual relations recognized by law, if there be no sufficient justification for the interference. QUICK FACTS: Cuddy leased his film to Gilchrist for a week. Prior to delivery of the film, Cuddy cancelled the arrangement because he rented it out to a third party who offered to pay a bigger amount for the film. FACTS: Nature- Appeal by ESPEJO and ZALDRIAGA from a judgment dismissing their cross-complaint upon the merits for damages against GILCHRIST for the alleged wrongful issuance of a mandatory and a preliminary injunction *Note: Appellants in this case were the third party to whom the film was rented. They brought this case to assail the decision of the lower court granting the injunction, which prohibited them from showing the film. o o o Cuddy was the owner of the film Zigomar Cuddy rented said film to Gilchrist for a week for P125. It was to be delivered on May 26. A few days prior to May 26, Cuddy returned the money to Gilchrist, saying he had made other arrangements with his film. He rented it out to another person, Espejo, for a bigger rate (P350/week). In a letter dated April 26, it was shown that Espejo tried to get the film through his agents, who informed him that he could not get the film for about six weeks so that he himsel made an offer that is three times as much as what Gilchrist paid for, which Cuddy accepted. Gilchrist procured an injunction against Espejo from showing the film for the week beginning May 26. Granted. Espejo argues: there was no valid and binding contract between Cuddy and Gilchrist and therefore, they had a right to compete with Gilchrist for the lease of the film, the right to compete being the justification for their acts.

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ISSUE: Whether or not the acts of Espejo and Zaldariaga were actionable. HELD: YES. o The arrangement between Cuddy and Espejo was perfected after April 26, so that six weeks would include and extend beyond May 26 (Remember that Espejo was informed that he could not get the film for about six weeks). They must necessarily have known at the time they made their offer to Cuddy that the latter had booked or contracted the film for 6 weeks from April 26. The inevitable conclusion is that they knowingly induced Cuddy o violate his contract with another person. Re: Espejos argument on the absence of a valid and binding contract between Cuddy and Gilchrist If there had been no contract, this would have been a valid defense, but the mere right to compete could not justify the appellants (Espejo and Zaldariaga) in intentionally inducing Cuddy to take away Gilchrists contractual rights.

The ground on which the liability of a third party for interfering with a contract between others rests on the fact that the interference was malicious. The only motive being the desire to make a profit to the injury of one of the parties of the contract. In this case, the only motive for the interference with the Gilchrist-Cuddy contract was a desire to make a profit by exhibiting the film in their theater. There was no malice beyond this desire, but this fact does not relieve them of the legal liability for interfering with that contract and causing its breach. The liability of Espejo arises from unlawful acts and not from contractual obligations. If the action had been one for damages, it would be governed by Article 1902 (now Article 2176). There is nothing in this article which requires as a condition precedent to the liability of a tortfeasor that he must know the identity of a person to whom he causes damage. BUT the fact that Espejos interference with the Gilchrist contract was actionable did not of itself entitle Gilchrist to sue out an injunction against them. This remedy must be justified under Section 164 of the Code of Civil Procedure, which specifies the circumstance under which an injunction may issue. However, the court said that the issuance of the injunction was nevertheless justified. It took judicial notice of the fact that owners of theaters secure an especially attractive film to exhibit as his feature film. Failure to exhibit this film will reduce the receipts of the theater. Hence, Gilchrist was facing the immediate prospect of diminished profits by reason of the fact that the appellants had induced Cuddy to rent to them the film that Gilchrist counted upon as his feature film. Injunction is the proper remedy to prevent a wrongful interference with contract by strangers to such contracts where the legal remedy is insufficient and the resulting injury is irreparable. And where there is a malicious interference with lawful and valid contracts, a permanent injunction will ordinarily issue without proof of express malice. But the remedy cannot be used to restrain a legitimate competition, though such competition would involve the violation of a contract.