Any film that has passed into the public domain is completely legal to download without payment. In the United States, any film shown before the year 1923 is in the public domain. There are also a number of independent films that are released online for free.
For free streaming movies, try checking out services such as Hulu, PBS or Crackle. These services have agreements with major networks, allowing free streaming of TV shows and films. Many pubic domain films can also be found on basic streaming sites such as YouTube. Another source for free films is the public library. Most public libraries handle DVD's and Blu-rays of educational and popular films.