The plaintiff was a theatre critic who wrote reviews of performances in the city theatre in B. His articles appeared in the major daily papers and in a weekly magazine which he himself publishes. Disgruntled by his criticisms, the defendant city authorities decided to deny him access to their theatre, and communicated this decision to him by telephone on 15 July 1928 at about 3pm. Despite this communication, the plaintiff attended a performance of Faust, Part I that very evening, having had a ticket purchased for him for 6RM. During the performance one of the theatre staff, accompanied by a police officer, required him to leave the theatre. The same thing occurred at a performance of Faust, Part II on 18 July, the plaintiff having again procured an entrance ticket through an intermediary for 6 RM.

The plaintiff sued the city for the return of the price of the two tickets; he also sought a declaration that the defendant was bound to admit him to performances for which he held a valid ticket, and a declaration that the defendant is liable to him for all the harm attributable to his violent expulsion from the performances of 15 and 18 July 1928. The plaintiff contended that a city theatre, especially one which was subsidised from public funds, is bound to afford entrance to all comers, and that the defendant was liable to him in damages under para. 826 BGB for its unethical conduct in unjustifiably invading the freedom of the Press and his exercise of his profession as critic. The defendant denied that it was under any duty to contract, and contested the allegation that it behaved unlawfully, saying that it had good grounds for refusing to let the plaintiff in: the reason his criticisms, which had originally been favourable, had become subjective, derisive and depreciatory, was that the defendant had declined to provide financial support for the plaintiff's publishing venture. In reply the plaintiff asserted that his criticisms were purely objective and just.

The Landergericht allowed the plaintiff's claim, save for the 12 RM, but the Oberlandesgericht reversed, and dismissed the plaintiff's cross-appeal. The plaintiff's further appeal was unsuccessful.

Reasons

On 'selling' a theatre ticket the proprietor enters a Werkvertrag (contract of services) whereby he is to stage the play and permit the authorised ticket holder to attend it. But the plaintiff was not the authorised ticket holder when he attended the performances on 15 and 18 July, nor could he ever become so if the defendant's refusal of entry was justified: even if the plaintiff held an entry ticket, the defendant could always point to its declaration that it would not contract with him (paras 807, 796 BGB).

I.

The Court of Appeal held that in principle the defendant was free to decide whom it would let into its theatre by contract, and that, leaving aside any possible application of para. 826 BGB, even a city theatre was under no duty to make such a contract. Contrary to the appellant's argument, this view is correct. It was quite right of the Court of Appeal to emphasise that in our legal system the principle of freedom of contract is sovereign (art. 152, Imperial Constitution), that discussion of the question whether there is any legal duty to contract must start from that principle, and that only a statute can impose any such duty.

1. It has been suggested that theatres should be under a duty to contract if they are operated by public law bodies, on the ground that they are supported by public funds and are 'public institutions' designed for the entire public [references omitted]. But even in running a theatre a corporation of public law is subject to the private law system, and that system is innocent of provisions which force the unwilling owner or undertaker to enter a contract in such a case. Such provisions do exist for the railways (paras 453, 473 HGB), the imperial postal service (para. 3, Imperial Postal Law of 28 October 1871), and the telegraph office (para. 5, Imperial Telegraph Law of 6 April 1892), but they do not express any general principle to the effect that institutions which are authorised to offer a service to the whole public can only refuse their services on good grounds and not capriciously: they are rather exceptional derogations from the general principle of contractual freedom. Postponing for a moment the question how far para. 826 BGB may lead to a different result, a duty to contract arises from a licence granted under administrative law only if the licence so provides, and the defendant's theatre is not such a case. The use of public funds for such purposes may well impose on the state authorities a responsibility in public law to see that the undertaking is properly run, but it does not affect the applicable rules of private law.

2. It has been suggested that theatres which enjoy a legal or factual monopoly may be under a duty to contract even if they are in the private sector [references omitted]. The appellant argued that the defendant's monopoly position in the present case gave rise to such a duty to contract: 'as the only such cultural institution in B the defendant's theatre has a factual monopoly, and the need to attend such a cultural institution for one's general education should now be regarded as a legally protected interest.' Certainly the Reichsgericht has held that the misuse of a legal or factual monopoly position, especially when an entrepreneur so privileged refuses to contract on fair and normal terms, can constitute unethical conduct and lead to liability in damages (RGZ 48, 114; 62, 264; 79, 229; 115, 258; 132, 273). But liabilities arising out of the misuse of a monopoly position can only arise under para. 826 BGB, and whether nor not that paragraph applies in a particular case depends on the circumstances of that case. One cannot educe a general proposition to the effect that undertakers in monopoly positions are under a duty to contract, for that would conflict with the statutory principle of freedom of contract which has already been mentioned.

3. While recognising that theatre operators are under no duty to contract, some writers put them under a rather similar obligation by arguing that when they advertise a forthcoming theatrical event they are making a binding offer to the public which anyone can accept by asking for and obtaining a ticket [reference omitted]. But it is wrong to attribute such force to a mere announcement. It is obviously the intention of the entrepreneur, and it is obvious to the public in this situation that this is simply a non-binding declaration of readiness to contract such as one finds in other public announcements or in the circulation of price lists. While the announcement betokens readiness to sell tickets, it does not form part of any contract subsequently concluded. The contrary view of the plaintiff would not actually help him, for even its champions accept that the impresario can render the announcement ineffective as regards a particular person by telling him so specially in advance.

It follows from what has been said that the defendant was not bound to grant the plaintiff a contractual right to enter the theatre.

II.

Free as the defendant undoubtedly is to contract or not, the BGB contains a limit to the exercise of his freedom. By para. 826 BGB a person who intentionally injures another in a manner inconsistent with good morals is liable to him in damages. It could be immoral, and therefore illegal, of a city authority to refuse to sell a person a theatre ticket if its refusal were quite capricious or based on clearly insubstantial grounds. Given that an impresario's refusal to sell a ticket to a critic could be unwarrantable if his intention were to stifle proper criticism or to court flattering reviews and so impede the free expression of critical opinion, para. 826 BGB affords due protection to objective reporting and fair criticism.

But in order to show that the exclusion was unlawful under para. 826 BGB, the plaintiff must prove that the defendant acted in a capricious or arbitrary manner or with an unwarrantable motive of the kind just instanced. No such case can be made on the facts as found by the Court of Appeal, whereby the defendant issued its prohibition not from caprice but because it felt prejudiced by the altered critical stance of the plaintiff. Rather than put any pressure on the plaintiff in order to obtain unduly favourable notices, the defendant simply wanted to protect its theatre from the harm due to his reviews, which it believed to be biased, inaccurate and hurtful. The defendant's action was thus taken in protection of its own justified interests, and there were solid grounds for so acting.

The findings of fact so stated are unassailable. It is clear from them, contrary to the appellant's submission, that the judge below did not apply a purely subjective test to the question whether para. 826 had been infringed, but held that the defendant's conduct was based on substantial and documented grounds, which exclude any inference of arbitrariness or caprice. The Court of Appeal also expressly found that the defendant had no intention of exercising any improper influence or criticism. In this case, therefore, the defendant cannot, in refusing to contract with the plaintiff, be regarded as causing him harm in an immoral manner.

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