Johnson v. The Goodyear Tire & Rubber Company Appendix Vol II

    IN  T H E

Initefo I to te  (Umtrt af Appeals
For the Fifth Circuit

No. 16040

PRINCE HEYWARD, et al,

v.
Appellants,

PUBLIC HOUSING ADMINISTRATION, et al.,
Appellees.

REPLY BRIEF FOR APPELLANTS

A. T. W alden
200 Walden Building 

Atlanta, Georgia

F rank D. R eeves
473 Florida Avenue, N. W. 

Washington, D. C.

Constance B aker M otley 
T htjrgood Marshall 

107 West 43rd Street 
New York 36, New York

Supreme Printing Co., I nc., 114 W orth Street, N. Y. 13, BEekman 3-2320



TABLE OF CONTENTS

PAGE

I. Jurisdiction ......................................................  1

A. The Court Below Erred In Ruling That It
Was Without Jurisdiction As To Appellees 
PHA and Hanson Under Title 28 U. S. C. 
§1343(3) ...................................................... 1

B. The Court Below Erred In Granting Motion
For Summary Judgment On Ground That 
Requisite Jurisdictional Amount Was Not 
Shown ...........................   7

II. Venue ...............................................................   9

III. Justiciable Case Or Controversy......................  12
A. There Is Injury To Appellants ’ Rights As

A Result Of Action By P H A ....................  12
B. There Is A Duty On PHA To Secure Observ­

ance Of The Statutory Preferences For 
Admission ......................................    12

C. PHA Has The Power To Prevent The Viola­
tion Of Appellants’ R ights.........................  12

D. Federal Action Is Involved H e re ............... 13

IV. Indispensable P a rtie s .....................    16
A. There Is No Problem Of Indispensable Par­

ties Involved In This C ase .......................... 16

V. Sufficiency Of The Complaint.......................  17
A. The Allegations Of The Complaint Are Suffi­

cient To State A Cause Of A ction............... 17

Conclusion 19



11

Table of Cases
PAGE

Barrows v. Jackson, 346 U. S'. 249, 258 (1953).........  5
Bitterman v. Louisville & N. R, Co., 207 U. S. 205 . . .  8
Blackmar v. Guerre, 342 IT. S. 512......................... .. 9
Breen v. Housing Authority of City of Pittsburgh,

119 F. Supp. 320 (W. D. Pa, 1954) ........................ 10
Civil Rights Cases, 109 U. S. 3, 17 (1883)................  5
Condra v. Leslie & Clay Coal Co., 101 F. Supp. 774 

(E. D. Ky. 1952) ................................................... 5
Department of Conservation & Development v. Tate,

231 F2d 615 (C. A. 4th 1956), affirming 133 F. Supp.
53 (E. D. Ya. 1955) .................................................  5,13

Dorsey v. Stuyvesant Town, 299 N. Y. 512, 87 N. E.
2d 541, cert, denied, 339 IT. S. 981 ........................ 13

Ebensberger v. Sinclair Refining Co., 165 F2d 803
(C. A. 5th 1948) ..................................................... 8

Employers Group of Motor Freight Carriers v. Nat’l.
War Labor Board, 143 F2d 145 (C. A. D. C .) .......  15

Ex parte Young, 209 IT. S. 123 (1908)......................  9
Federal Crop Insurance Corporation v. Merrill, 332

U. S. 380 .................................................................  11
Federal Housing Administration v. Burr, 309 U. S.

242 ..........................................................................  10,11
Georgia R. R. and Banking Co. v. Redwine, 342 IT. S.

299 (1952) ..............................................................  9
Gulbenkian v. Gulbenkian, 33 F. Supp. 19 (S. D. N. Y.

1940) ........................................................................ 8
Heyward v. Public Housing Administration, 214 F2d 

222 (C. A. D. C.) ..................................................... 16
Isner v. Interstate Commerce Commission, 90 F.

Supp. 361 (E. D. Mich. 1950) ...............................  11
Jey May Lune v. Dulles, 226 F2d 796 (C. A. 9th 1955) 8
Johnson v. Levitt & Sons, 131 F. Supp. 114, 116-117 

(E. D. Pa. 1955) ................................................4,5,6,14



I l l

Keifer and Keifer v. Reconstruction Finance Corp.,
306 U. S. 381 ..........................................................  9

Kelly v. Lehigh Nav. Coal Co., 151 F2d 743 (C. A.
3rd 1945) ................................................................  8

Kerr v. Enoch Pratt Free Library, 149 F2d 212 
(C. A. 4th 1945) ....................................................  5

Larson v. Domestic & Foreign Commerce Corp., 337
U. S. 682, 689-690 (1949) ......................................  9

Love v. Chandler, 124 F2d 785 (C. A. 8th 1942).......  4, 6
Mitchell v. Wright, 154 F2d 924 (C. A. 5th 1946) . . .  18
Moehl v. E. I. Dupont Nemours & Co., 84 F. Supp.

427 (N. D. 111. 1947) ...............................................  8
Muir v. Louisville Park Theatrical Association, 347 

U. S. 971 (1954), reversing 202 F2d 275 ................  5,13
Nat’l. War Labor Board v. Montgomery Ward & Co.,

144 F2d 528 (C. A. D. C.) ......................................  15
Offcutt Housing Company v. County of Sarpy, —

U. S. —, 100 L. ed. Adv. 658 (1956) ...................... 14
Picking v. Penn. R. Co., 151 F2d 240, 249 (C. A. 3rd

1945) ........................................................................ 5
Public Utilities Commission v. Pollack, 343 U. S. 451 

(1952) ..................................................................... 12
Reconstruction Finance Corp. v. J. G. Menihan Corp.,

312 U. S. 81 ( ) ...............................................  10
Reconstruction Finance Corp. v. Langham, 208 F2d

556 (C. A. 6th 1953) ...............................................  11
Rice v. Elmore, 165 F2d 387 (C. A. 4th 1947), cert, 

denied 333 U. S. 875 ...............................................  5
Scott v. Donald, 165 U. S. 107....................................  8
Scott v. Pennsylvania R. Co., 8 F. R. D. 548 (E. D.

Pa. 1949) .................................................................  8
Seven Oaks v. Federal Housing Administration, 171

F2d 947 (C. A. 4th 1948) ........................................  10,11
Shelley v. Kraemer, 334 U. S. 1 (1948)....................  5
Smith v. Allwright, 321 U. S'. 649 (1944)..................  5

PAGES



IV

pagk

Terry v. Adams, 345 U. S. 461 (1953) ......................  5
Topping v. Fry, 147 F2d 715 (C. A. 7th 1945)........  8
Truax v. Raich, 239 U. S. 33 (1915) .........................  5
Valle v. Stengel, 176 F2d 697 (C. A. 3rd 1949)........  5
Van Deman v. United States, 119 F. Supp. 599, 601 

(N. D. Ind. 1948) ..................................................... 11
Williams v. Yellow Cab Co., 200 F2d 302, 307 (C. A.

3rd 1952) ................................................................  4, 6

Other Authorities

Federal Rules of Civil Procedure, Rule 1 9 (b )....... . 16
99 Ga. Code Ann. § 1131, 1155, 1160 .........................  2
6 Moore’s Federal Practice, 2025-2026 ....................  7
Sen. Rep. No. 84, 81st Cong., 1st Sess., 2 U. S. Code 

Congressional Service 1566 (1949) ...................... 2
Title 8, United States Code, § 4.3............................... 2
Title 28, United States Code, § 1331.........................  1
Title 28, United States Code, §1343(3) .............1, 2, 3, 4, 7
Title 28, United States Code, § 1391(c) ..................  10
Title 42, United States Code, § 1410(g) and 

1415(8) (c) .............................................................7,17,18



IN THE

Initefr States (Erairt in Appeals?
For the Fifth Circuit

No. 16040

------------------- o-------------------
P bince H eyward, et al.,

Appellants,
v.

P ublic H ousing A dministration, et al.,
Appellees.

— ------------------ o------------------ .—

REPLY BRIEF FOR APPELLANTS 

I

Jurisdiction

A . The Court B elow  Erred In Ruling That It W as 
W ithout Jurisdiction A s To A p p ellees PH A and  
Hanson Under T itle 28 U. S. C. § 1 3 4 3 (3 ) .

The plaintiffs relied not only upon Title 28, United 
States Code, §. 1331 as the basis for invoking the jurisdic­
tion of the court below, but also upon Title 28, United 
States Code, § 1343(3) 1 (R. 3).

1 “The district courts shall have original jurisdiction of any civil 
action authorized by law to be commenced by any person:

* * * *
(3) To redress the deprivation, under color of any state law, 

statute, ordinance, regulation, custom or usage, of any 
right, privilege or immunity secured by the Constitution 
of the United States or by any Act of Congress providing 
for equal rights of citizens or of all persons within the jur­
isdiction of the United States.”



2

The Complaint alleges in paragraph 2 that jurisdiction 
was “ invoked pursuant to Title 28, United States Code, 
§1343(3), this being a suit in equity, authorized by law, 
Title 8, United States Code, § 43, to be brought to redress 
the deprivation under color of state law, statute, ordinance, 
regulation, custom or usage of a right, privilege or immu­
nity secured by the Constitution and laws of the United 
States or any act of Congress providing for equal rights 
of citizens” (B. 3). The specific rights which are secured 
by the Constitution and laws of the United States and which 
plaintiffs sought to have redressed are thereupon set forth 
(B, 3).

The Complaint alleges in paragraph 18 that, “ The en­
tire public housing program in the City of Savannah, 
Georgia, has been jointly planned, constructed, operated 
and maintained by the defendant Housing Authority of 
Savannah, Georgia, and the defendant Public Housing Ad­
ministration, pursuant to the provisions of the United 
States Housing Act of 1937, as amended, and Title 42, 
United States Code, § 1501, et seq., and the laws of the 
State of Georgia” (E. 9).

The laws of the State of Georgia specifically authorize 
cooperation with federal authorities in providing public 
housing. 99 Ga. Code Ann. §§ 1131, 1155, 1160.

The first federal statute referred to authorizes Public 
Housing Administration (PHA) to enter into contracts 
only with a “ state or state agency” which, “ under the 
applicable laws of the state,” is to develop and administer 
the projects. Title 42, United States Code, § 1402(11). The 
express purpose of this provision was to prevent federal 
authorities from constructing and operating low cost public 
housing within a state without state involvement and re­
sponsibility.2

2 Sen. Rep. No. 84, 81st Cong., 1st Sess., 2 U. S. Code Con­
gressional Service 1566 (1949).



In paragraph 19 it is alleged that ‘ ‘ The defendant Hous­
ing Authority of Savannah, Georgia, and defendant Public 
Housing Administration in administering the entire piiblic 
housing program of the City of Savannah, Georgia, have 
determined upon and presently enforce an administrative 
policy of racial segregation in public housing in the City 
of Savannah, Georgia” (R. 9).

In paragraph 24 it is alleged that “ Plaintiffs and each 
of them have suffered and will continue to suffer irrepa­
rable injury for which there is no adequate remedy at law 
by the enforcement of the racial segregation policy of these 
defendants in public housing projects in the City of Savan­
nah, Georgia, by being denied certain housing for which they 
are otherwise eligible and for which they have a preference 
for admission and for which they are more qualified for 
admission than the white families admitted thereto, and 
will be denied their civil and constitutional right not to be 
discriminated against by the state and federal governments, 
solely because of race, in leasing an interest in real prop­
erty, unless this court grants injunctive relief” (R. 11-12).

It is thus clear from the allegations of the Complaint, 
and the laws referred to therein, that in invoking the 
court’s jurisdiction under § 1343(3), appellants’ conten­
tion is that all appellees, including PHA and Hanson, are 
acting “ under color of state law” in enforcing the segre­
gation policy, and that such action is state action violative 
of the Fourteenth Amendment and laws passed pursuant 
thereto.

In granting the motion for summary judgment, the 
court below ruled that it was without jurisdiction under 
§1343(3) as to appellees PHA and Hanson because these 
appellees were “ not acting under color of any state law” 
(R. 47). The court below did not write an opinion in grant­
ing the motion of these appellees. In their brief on page 9, 
footnote 3, these appellees assert that “ appellants appear



4

to have abandoned that ground here, since it is plain that 
appellees Public Housing Administration and Hanson did 
not act under color of state law.” Appellants have not 
abandoned this ground. On the contrary, appellants assert 
here that there was in the court below adequate jurisdic­
tional ground under § 1343(3) as to all appellees, i. e., 
Savannah Housing Authority (SHA) and its officials as 
well as PHA and Hanson.

The assertion that “ it is plain that appellees Public 
Housing Administration and Hanson did not act under 
color of state law” is apparently predicated on the notion 
that the phrase “ under color of state law” contemplates 
only action by state officials, qua officials, or persons spe­
cifically authorized by state law or persons acting pursuant 
to state law. Three cases are cited by PHA and Hanson 
on page 9, footnote 3, in support of their assertion. Wil­
liams v. Yellow Gal Co., 200 F2d 302, 307 (C. A. 3rd 1952); 
Love v. Chandler, 124 F2d 785 (C. A. 8th 1942) and Johnson 
v. Levitt & Sons, 131 F. Supp. 114,116-117 (E. I). Pa. 1955). 
These cases are not apposite here.

In the Williams case plaintiff cab drivers, who were 
Negroes, sued the cab company and plaintiffs’ union alleg­
ing discrimination. These defendants were clearly not 
state officers. Plaintiffs contended, however, that the union 
acted under color of law, i. e., the Pennsylvania Labor 
Belations Act which gave the union power to act as exclu­
sive bargaining representative. The court held that the 
union was acting as bargaining agent for its members, in­
cluding the Negro members, pursuant to “ their consent” 
as members and not by virtue of any power conferred by 
statute.

In the Love case plaintiff sought redress against defend­
ants, state and federal officers, under the Civil Eights Con­
spiracy Statute on the ground that defendants conspired to 
prevent plaintiffs employment on the WPA. Plaintiffs’ 
right to bring the action was denied on the ground that no



federally protected right was involved and plaintiff sought 
damages against these defendants as individuals, and not 
as state or federal officials.

In the Johnson case the Negro plaintiffs sought to en­
join a private housing corporation from refusing to sell 
homes to them. Federal FHA and VA officials were joined 
as defendants against whom the relief sought was an injunc­
tion enjoining insurance of the mortgages involved in the 
sale of the homes, as long as the corporation refused to sell 
to Negroes. The court ruled that the corporation’s refusal 
was admittedly its alone and not that of the federal officials, 
and since Congress had not put any duty on the federal offi­
cials to enjoin the discrimination, no relief could be had 
against these defendants. As to the private corporation 
the court ruled that there was “ no suggestion” that the 
private corporation acted under color of state law, but on 
the contrary it was alleged that this defendant was acting 
in violation of state law.

Thus, in two of the cases cited by PHA and Hanson, it 
was clear that defendants were sued as individuals only, 
and not as persons acting under color of state law; and in 
the other case defendant was acting pursuant to plaintiffs’ 
authority rather than that of the state. None of these 
factors is involved here.

The concept of action “ under color of state law” is by 
no means limited to action of state officials, qua officials, 
or to persons specifically authorized by state law or per­
sons acting pursuant to state law. It includes the wrongful 
acts of individuals, corporations or officials other than state 
officials which are supported in some way by “ State au­
thority in the shape of laws, customs, or judicial or execu­
tive proceedings ”, or “ sanctioned in some way by the State, 
or done under State Authority”, or “ protected in these 
wrongful acts by some shield of State law or State author­
ity.” See, Civil Rights Cases, 109 U. S. 3, 17 (1883); Shel­



6

ley v. Kraemer, 334 U. S. 1 (1948). It includes such acts 
when they are in fact a part of a state function, Smith v. 
AUwright, 321 U. S. 649 (1944); Sice v. Elmore, 165 F2d 
387 (C. A. 4th 1947), cert, denied 333 U. S. 875; Kerr v. 
Enoch Pratt Free Library, 149 F2d 212 (C. A. 4th 1945), 
or permitted or condoned by the state in connection with 
such function. Terry v. Adams, 345 U. S. 461 (1953). It 
includes such wrongful acts when committed in connection 
with property merely leased from the state. Muir v. Louis­
ville Park Theatrical Association, 347 U. S. 971 (1954), 
reversing 202 F2d 275 (C. A. 6, 1954); Department of Con­
servation £  Development v. Tate, 231 F2d 615 (C. A. 4th 
1956) affirming 133 F. Supp. 53 (E. D. Va. 1955). It in­
cludes wrongful acts “ coerced” by the state, Barrows v. 
Jackson, 346 U. S. 249, 258 (1953); Truax v. Raich, 239 
U. S. 33 (1915), or which are “ aided and abetted” by the 
state, Valle v. Stengel, 176 F2d 697 (C. A. 3, 1949), or 
which result from conspiracy with state officials, Picking 
v. Penn. R. Co., 151 F2d 240‘ (C. A. 3,1945); Condra v. Leslie 
£  Clay Coal Co., 101 F. Supp. 774 (E. D. Ky. 1952).

In short, it is only where it is found that there is in 
fact no state involvement in action allegedly violative of 
federally protected rights that one is precluded from invok­
ing the jurisdiction of a district court pursuant to § 1343(3). 
Williams v. Yellow Cab Co., supra; Love v. Chandler, supra; 
Johnson v. Levitt £  Sons, Inc., supra.

On page 19 of the brief filed by PHA and Hanson they 
there define and interpret their role in the racial policies 
enforced by SIIA as follows:

Apart from the preferences in occupancy pre­
scribed by the Housing Act itself (see page 14, 
above), as to which appellants make no complaint, 
the only policy requirement imposed by appellee 
Public Housing Administration is that the Housing 
Authority of Savannah must make ‘equitable pro­



7

visions for eligible families of all races determined 
on the approximate value [sic] and urgency of their 
respective needs for such housing’.

Thus it is the PHA Racial Equity Formula which calls 
for the limitation of a specified number of units for white 
families and a specified number of units for Negro families 
which is enforced by the state officials in this case (R. 33, 
36-37). It is PHA’s Racial Equity Formula, which must 
be enforced by S'HA, which prevents SHA from selecting 
persons on a first come first serve basis, subject only to 
the provisions of Title 42, United States Code § 1410(g) 
and 1415(8) (c) and which, as appellees put it, on page 19 
of their brief, prevents the SHA from leasing its dwelling 
units to either whites or Negroes exclusively. Thus, we 
clearly have in this case a PHA determination which is 
enforced “ under color of state law” and which violates 
rights secured to appellants by the Constitution and laws 
of the United States. The appellants, therefore, properly 
invoked the jurisdiction of the court below pursuant to 
§1343(3) as to all defendants.

B. The Court B elow  Erred In Granting M otion For 
Summary Judgm ent On Ground That Requisite 
Jurisdictional Am ount W as Not Shown.

Appellees PHA and Hanson claim that the jurisdic­
tional amount was properly raised by their motion for 
summary judgment (Brief p. 9). But it is well established 
that a motion for summary judgment is not the proper 
method of raising the issue of lack of jurisdiction over sub­
ject matter. 6 Moore’s Federal Practice, 2025-2026 and 
cases cited therein. While, in some circumstances, this 
error in pleading may be rectified simply by treating the 
motion for summary judgment as a motion to dismiss for 
lack of jurisdiction, this cannot be the solution in the case 
at bar, where appellees did not support their motion by



8

affidavits directed to jurisdictional amount and appellants 
received no opportunity to offer proof of the amount.

Where a plaintiff alleges the existence of the requisite 
amount in controversy and defendant by a proper plea puts 
the matter in issue, plaintiff must be given an opportunity 
to establish the jurisdictional facts at a hearing. Topping 
v. Fry, 147 F2d 715 (0. A. 7th 1945); Moehl v. E. I. Dupont 
De Nemours d  Co., 84. F. Supp. 427 (N. D. 111. 1947). Juris­
diction cannot be destroyed by an ex parte showing. Jew 
May Lune v. Dulles, 226 F2d 796 (C. A. 9th 1955). Some 
courts, in fact, will defer a decision on the jurisdictional 
issue until trial on the merits is had. Moehl v. E. I. Dupont 
De Nemours Co., supra; Scott v. Pennsylvania R. Co., 
8 F. R. D. 548 (E. D. Pa. 1949) ; cf. Gulhenkian v. Gulben- 
kian, 33 F. Supp. 19 (S. D. N. Y. 1940).

Thus, even if it were assumed, arguendo, that appellees 
properly traversed appellants’ allegation of jurisdictional 
amount and offered evidence to support their plea, the grant­
ing of summary judgment would still have been error be­
cause appellants were not given an opportunity to sustain 
their burden of proof (and also because a genuine issue of 
jurisdictional fact existed).

Cases cited by appellee on page 11 are irrelevant to a 
proper determination of the amount in controversy. All of 
these cases deal with the proper measure of damages to be 
awarded in condemnation proceedings to a party whose 
land has been taken by eminent domain. It is well settled 
that in a proceeding where the relief sought is something 
other than money damages, the amount in controversy is 
not limited to the amount of monetary damage that is 
threatened by the acts of defendant. Scott v. Donald, 165 
U. S. 107; Bitterman v. Louisville >& N. R. Co., 207 U. S. 205; 
Kelly v. Lehigh Nav. Coal Co., 151 F2d 743 (C. A. 3rd 
1945); Ebensberger v. Sinclair Refining Co., 165 F2d 803 
(C. A. 5th 1948).'



9

On page 12 of their brief PHA and Hanson say that 
appellants are not aided on the question of amount in con­
troversy by virtue of the fact that each appellant is claim­
ing $5,000 for the reason that the rule that the amount of 
damages claimed in good faith is sufficient to establish jur­
isdiction, has no application here, because it is obvious that 
these appellees, having acted under color of their govern­
mental functions, are immune from personal liability. Per­
sonal immunity, of course, does exist where an officer acts 
under color of his authority, but subject to the well-estab­
lished exception that where an officer acts under an uncon­
stitutional statute or where his actions violate constitu­
tional rights this immunity is not available to him. Georgia 
B. B,. amd Banking Co. v. Bedwine, 342 U. S. 299 (1952); 
see, Larson v. Domestic <& Foreign Commerce Corp., 337 
U. S. 682, 689-690 (1949); Ex parte Young, 209 U. S. 123 
(1908).

II

Venue

None of the cases cited by PHA and Hanson in connec­
tion with the question of venue are helpful to its cause and 
several, in fact, are extremely helpful to appellants.

Blackmar v. Guerre, 342 U. S. 512 is totally irrelevant. 
There the court held that sovereign immunity for the Civil 
Service Commission had not been waived by Congress; thus 
the commission could not be sued as an entity in any juris­
diction. The court specifically stated that no question of 
venue arose.

No case cited by appellee supports its artificial distinc­
tion between “ sue and be sued” clauses and “ sue and be 
sued in any court of competent jurisdiction . . . ’ ’ provi­
sions. In fact, Keifer & Keifer v. Beconstruction Finance



1 0

Corp., 306 U. S. 381 and Federal Housing Administration! 
y. Burr, 309 U. S. 242, stand for the proposition that waivers 
of sovereign immunity will be liberally construed. In the 
Burr case, the Court said at p. 245:

[W]e start from the premise that such waivers 
by Congress of governmental immunity in cases of 
such federal instrumentalities should be liberally 
construed . . . Hence, when Congress establishes 
such an agency, authorizes it to engage in commer­
cial and business transactions with the public and 
permits it to ‘sue and be sued’ it cannot be lightly 
assumed that restrictions are to be implied.

In that case the Court held the FHA subject to garnish­
ment proceedings for sums due to its employees. And see 
Reconstruction Finance Corp. v. J. G. Menihan Corp., 312 
U. S. 81 where the same rule of liberal construction was 
applied to require the Reconstruction Finance Corporation 
to pay costs in a suit which it had begun and lost.

Seven Oaks v. Federal Housing Administration, 171 
F2d 947 (C. A. 4th 1948) not only fails to support appel­
lee’s artificial distinction, but is totally destructive to its 
argument that venue cannot be sustained under 28 U. S. C. 
1391(c). For in that case, the court of appeals said that 
even if proper venue was not established by the statute 
authorizing suit against the FHA,

we think that suit within the district was author­
ized on the ground that the administration is to be 
regarded as a public corporation within the meaning 
of the venue statutes and was suable within the dis­
trict because engaged in business there (p. 949).

The case appellee cites to prove that it is not a corpora­
tion distinguishes itself. Breen v. Housing Authority of 
City of Pittsburgh, 119 F. Supp. 320 (W. D. Pa. 1954).



11

There the court held that in disposing of property under 
the Lanham Act, P.HA was an unincorporated agency for 
which Congress had not waived sovereign immunity. But 
the court specifically noted that suit against PHA was au­
thorized by Congress under sections of the law dealing with 
low rent housing (at 323). The distinction is made more 
pointedly in Van Deman v. United States, 119 P. Supp. 599 
(N. D. Ind. 1948) upon which the court in Breen relied. In 
that case, the court while reaching the same conclusion with 
respect to the functions of PHA under the Lanham Act, 
noted that in its low-rent housing duties, PHA is a cor­
poration for which the government had waived sovereign 
immunity (at 601).

While Isner v. Interstate Commerce Commission, 90 F. 
Supp. 361 (E. D. Mich. 1950) may stand for the proposition 
that the ICC, in performing its regulatory functions, is not 
“ doing business,” it has no applicability to the instant 
case. In Federal Housing Administration v. Burr, swpra, 
the Court said that in the absence of a showing that Con­
gress used the words of a waiver of immunity clause in a 
narrow sense;

it must be presumed that when Congress launched 
a governmental agency into the commercial world 
and endowed it with authority to ‘ sue and be sued, ’ 
that agency is not less amenable to judicial process 
than a private enterprise under like circumstances 
would be (p. 245).

See also Seven Oaks v. Federal Housing Administration, 
supra; Reconstruction Finance Corp. v. Langham, 208 F2d 
556, 559 (C. A. 6th 1953).

Federal Crop 'Insurance Corporation v. Merrill, 332 
U. S. 380, cited by appellees, held merely that a federal 
agency was not estopped to assert as a defense a federal 
regulation which its agents had previously disregarded. 
Note that plaintiff had no difficulty in suing the agency in 
the jurisdiction in which it was doing business.



1 2

I I !

Ju s tic iab le  C ase O r C on troversy

A. T h e re  Is In ju ry  T o  A p p e lla n ts ’ R ig h ts  A s A  R esu lt 
O f A ction  B y 'P H A .

As set forth above, on page 19 of the brief filed by PHA 
and Hanson these appellees admit that they impose upon 
the SHA a requirement that there be “ equitable provision 
for eligible families of all races determined on the approxi­
mate value [sic] and urgency of their respective need for 
such housing. ’ ’ As demonstrated on pages 15-18 of appel­
lants ’ brief, this requirement results in the limitation of a 
specified number of units for white families and a specified 
number of units for Negro families.

B. T h e re  Is A  D u ty  O n P H A  T o S ecure  O bserv an ce  
O f T h e  S ta tu to ry  P re fe ren c es  F o r A dm ission.

On page 19 of their brief these appellees also say that 
the statutory preferences for admission constitute another 
policy requirement imposed by them upon the SHA. This 
policy requirement undoubtedly stems from the intent of 
Congress that these federal agents have the duty to secure 
“ compliance with statutory requirements’’, as indicated 
on page 23 of appellants’ brief. This policy requirement 
tacitly admits this duty, as claimed by appellants. There­
fore, Public Utilities Commission v. Pollack, 343 U. S. 451 
(1952) is not distinguishable as claimed by appellees on 
the ground that there is no duty on PHA comparable to tbrl 
imposed by Congress on the Public Utility Commission of 
the District of Columbia.

C. P H A  H as T h e  P o w er To P rev e n t The V iolation  
O f A p p e lla n ts ’ R ights.

On page 19 of their brief PHA and Hanson also say:
In other words, appellee Public Housing Admin­

istration would not permit the Housing Authority



13

of Savannah to lease its low-rent dwelling units 
either exclusively to whites or exclusively to Negroes 
[emphasis added].

Appellants rely on the Pollack case for the proposition 
that where a governmental agency has the power to either 
prohibit or to permit certain conduct, if that agency per­
mits that conduct after notice to it, then such conduct must 
be deemed governmental action. To this crucial question 
of power to prevent the discrimination of which complaint 
is here made, these appellees do not address themselves— 
for the obvious reason that this goes to the very essence 
of the claim made by appellants against the federal offi­
cials here.

D. Federal Action Is Involved Here.

If action may be challenged as governmental when it 
takes the form of discrimination by persons who have 
merely leased government property, Muir v. Louisville Park 
Theatrical Association, supra; Department of Conservation 
and Development v. Tate, supra, then clearly appellants 
may challenge as federal action, discriminatory action on 
the part of the lessors of property made possible by federal 
financing. An apparently contrary decision, Dorsey v. 
Stuyvesant Town, 299 N. Y. 512, 87 N. E. 2d 541, cert, denied, 
339 U. S. 981, cited by appellees, was decided long before 
the United States Supreme Court’s decision in the case of 
Muir v. Louisville Theatrical Ass’n., supra, and the Fourth 
Circuit’s ruling in Department of Conservation and Devel­
opment v. Tate, supra. More important, however, is the 
fact that the Supreme Court did not review the Dorsey 
case. It should be noted also that in this case, contrary to 
the contention of appellees, the role of PIIA in connection 
with the housing here is far more pervasive than that of 
the state in the Dorsey case. In addition to federal financ­
ing, there is complete regulation of all significant activity



14

by the federal agents and control over the racial policy 
determination.

In Johnson v. Levitt & Sons, supra, another case cited 
by PH A and Hanson for the proposition that there is no 
justiciable controversy, the district court found that the 
‘‘financing” in that case (mortgage insurance) was given 
to banks which granted the mortgages and not to the cor­
poration which discriminated against the plaintiffs; and 
that incidental to the mortgage insurance granted by the 
federal officials and for the purpose of minimizing the risk 
of loss to the government were the prescribing of conditions 
upon which the bank loans were to be insured which touched 
the Levittown project at many points (at 116). The dis­
trict court ruled that this involvement of the government 
could not be deemed to make the private corporation the 
government of the United States or the government the 
builder of the Levittown project. This conclusion of course 
can not readily be reconciled with the broadened concept 
of governmental action which has emerged from recent 
cases referred to supra. However, in the Levitt case the 
policy of excluding Negroes was concededly that of Levitt 
alone. The district court said at page 116 “ The plaintiffs 
concede that the government defendants have not exercised 
or attempted to exercise any control over the sales policy 
adopted by Levitt.” As pointed out supra the federal 
officials here on page 19 of their brief admit that they have 
exercised control over the racial policies of the SHA.

Appellees rely on Offutt Housing Company v. County of 
Sarpy, — U. S. — 100 L. ed. 658 which involved the ques­
tion of the power of a state to tax certain property in an 
area over which Congress has exclusive legislative power. 
The court held at page 663: “ We hold only that Congress, 
in the exercise of this power, has permitted such state 
taxation as is involved in the present case.” The court



15

also said at page 664, ‘‘In the circumstances of this case, 
then, the full value of the buildings and improvements is 
attributable to the lessee’s interest” (for tax purposes, 
as in the case of an owner and mortgage company). Ap­
pellants submit that the narrow holding and reasoning in 
this case is without influence in the instant case.

Appellees also cite Employers Group of Motor Freight 
Carriers v. Nat’l War Labor Board, 143 F. 2d 145 (C. A. 
D. C.) and Nat’l War Labor Board v. Montgomery Ward 
& Co., 144 F. 2d 528 (C. A. I). C.) for the proposition that 
there is no controversy between them and appellants. In 
the former case the court held 1) War Labor Board orders 
were not reviewable and 2) Even under general equity 
principle no review of the order involved was warranted 
because “ No money, property, or opportunity has been 
taken or withheld from the appellants, and no one threatens 
any such act” (at 147). In the latter case the court held 
as in the former that 1) War Labor Board orders were 
not reviewable and 2) The complaint alleged no facts 
which indicate more than a possibility of any action by 
defendants which might cause injury to the plaintiff plus 
the fact that in that case one of the chief defendants filed 
an affidavit in which he set forth that he had neither threat­
ened to take action nor taken any action to effectuate com­
pliance with the “ directive” order of the Board sought 
to be reviewed. In the instant case suit against the PH A 
with respect to low rent public housing projects is specifi­
cally authorized by statute. Action against appellants, in 
the form of imposing its Racial Equity Formula upon the 
SHA, has already been taken by PHA resulting in the ex­
clusion of appellants from units limited to white families 
No affidavit has been filed in this cause setting forth that 
the PHA will not continue to require SHA to abide by the 
Racial Equity Formula. The statement in the affidavit 
of Commissioner Slusser to the effect that the determina­
tion as to racial matters is left entirely to the local author­



16

ity is contradicted by the record here which shows the 
PHA Racial Equity Formula as controlling (R. 36-37) and 
by the self-evident fact that the statutory preferences for 
admission cannot operate in conjunction with the Racial 
Equity Formula. Thus the holding and facts of the last 
cases cited are not controlling here.

IV

Indispensable Parties

A . T h e re  Is No P ro b lem  O f In d isp en sab le  P a rtie s
Invo lved  In  T his Case.

PHA claims that the holders of notes and bonds issued 
by SHA are indispensable parties to this action. Reliance 
is placed on Heyward v. Public Housing Administration, 
214 F. 2d 222 (C. A. D. C. 1954). However, it should be 
noted at the outset that the court did not hold that the 
SHA was an indispensable party to the suit brought by 
these appellants against PHA in an attempt to enjoin PHA 
from advancing funds to SHA for the all-white projects. 
The court ruled, in the face of argument by PHA that 
SHA was indispensable, that SHA was “ a conditionally 
necessary party within the meaning of Rule 19(b) Fed 
R. Civ. P .” (at p. 224).

It should also be noted that the relief sought here is 
an injunction which can only operate against future ad­
vances of federal funds. The funds sought to be enjoined 
are those going to the SHA (R. 12-13). In his affidavit 
Commissioner Slusser sets forth that, “ Monies to pay de­
velopment costs of low-rent housing projects under the 
United States Housing Act of 1937, as amended, are ad­
vanced by the Public Housing Administration directly to 
the local authority after the request by the local authority 
for such funds has been initially reviewed and approved



17

by the Public Housing Administration Field Office and 
finally approved by the Public Housing Administration 
Central Office in Washington. The payment of such ad­
vance is made directly by the Central office to the local 
authority” (E. 39-40). It is the advance of these funds 
which, if enjoined, will prevent the development of future 
projects limited to white occupancy. No third parties are 
involved in this preliminary advance of funds to SHA. 
Bonds may be sold by SHA to repay the preliminary ad­
vance made by PHA (E. 40). It is at this point that third 
parties who have an interest in future contributions to 
be made by PHA enter the picture. Thus complete relief 
between the parties may be afforded here without affecting 
the rights of third parties whose property rights are in­
volved. Therefore, since it appears that no injunction 
could be granted prohibiting the payment of Annual Con­
tributions already committed for payments to bondholders, 
since no injunction operates retrospectively, and since it 
further appears that no such relief is sought, as indicated 
supra, the sole relief sought being against the future 
advance of funds to SHA for the development of all-white 
projects in which no third parties are involved, there are 
no parties indispensable to this suit.

V

Sufficiency Of The Complaint

A . The A llegations Of T he Com plaint A re Sufficient 
To State A  Cause O f A ction.

Appellees SHA and its officials contend that the lower 
court’s order granting their motion to dismiss should be 
sustained on the ground that appellants failed to allege 
in their complaint that they ever applied for admission 
to Fred Wessels Homes as required by Title 42, United 
States Code, § 1410(g). Appellants have read Title 42,



18

United States Code, § 1410(g) but are unable to discover 
any requirement therein that applications for public hous­
ing be made in a certain form by all applicants for public 
housing.

In the court below, on the hearing of the motion of 
these appellees to dismiss and in support of appellants’ 
motion for summary judgment which was filed but not 
heard, appellants offered to prove that they had attempted 
to make application for Fred Wessels Homes (R. 97). The 
court below ruled that this evidence could not be accepted 
at that time (R. 54). It is thus clear that if this were an 
essential allegation of the complaint which appellants had 
failed to make, appellants’ complaint was not subject to 
dismissal for such failure but merely subject to amend­
ment. Mitchell v. Wright, 154 F. 2d 924 (C. A. 5th 1946).

But this was not an essential allegation of appellants’ 
complaint since appellants’ grievance is that they were not 
permitted to make application for Fred Wessels Homes 
or any other project limited to white occupancy. In ac­
cordance with this fact the complaint clearly alleges that 
appellants are persons who . . have been denied con­
sideration for admission and admission to the Fred Wes­
sels Homes and certain other public housing projects in 
the City of Savannah, Georgia . . . ” (R. 6) and further 
alleges that . . no eligible Negro is considered for or 
admitted to a project designated by defendants for occu­
pancy by low-income white families” (R. 10).

The contention of these appellees is, therefore, clearly 
without merit.



19

Conclusion

For the foregoing additional reasons which supplement 
the reasons advanced in appellants’ brief, the orders of 
the court below granting motion for summary judgment 
and the motion to dismiss should be reversed.

A. T. W alden
200 Walden Building 

Atlanta, Georgia

F rank I). B eeves
473 Florida Avenue, N. W. 

Washington, D. C.

Constance B aker Motley
T hurgood Marshall 

107 West 43rd Street 
New York 36, New York