Eaton v. Grubbs Brief and Appendix of Appellees

    In  T h e

Imtefc BUtm (Enurt of Appeals
For th e  Fourth  C ircuit 

No. 9058

----------------------- «-----------------------

H ubert A. Ea t o n , et al.,
Plaintiff Appellants,

-  v. -

Emory Grubbs and  t h e  Board of M anagers of James 
W alker M emorial H ospital, A Body Corporate,

Defendant Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF NORTH CAROLINA

BRIEF AND APPENDIX OF APPELLEES

C. D. H ogue, Jr.

W illiam  L. H ill II

R onald  D. R owe

608 Carolina Power & Light Building 
Wilmington, North Carolina 
Counsel for Defendant Appellees



I N D E X

PAGE

Statement o f The Case- ________  - - ____________ 1

Questions Presented ______________  _................... .... ...........  2

Statement o f Facts- _____ ____________ _________________ 2

A r g u m e n t ________________________________________________  4

Point 1 There is no factual element alleged in the 
present complaint by plaintiffs, as a basis for 
showing State action on the part o f defend­
ants, which was not alleged and argued in the
former case involving these plaintiffs_________  4

Point 2 There has been no change in the law' since 
the decision in the prior Eaton case justifying 
a change in result____________________________10

Conclusion _______________________________ __ __________ 23

In d ex  T o A ppe n d ix

Charter o f Hospital; Chap. 12 Private Laws N . C.
(1901) _________________________________________________ la

Petition for W rit o f Certiorari__________________________  6a

Reasons for Allowance o f the W rit___________________11a

Conclusion__________________________________________18a



11

T a b l e  o f  C ases
PAGE

Board of Managers v. City o f Wilmington, 237 N . C.
179, 74 S.E. 2d 749 (1 9 33 )____ __ . . . . . . 6,  7, 8, 9, 12, 13, 21

Boman v. Birmingham Bus Company, 280 F. 2d 331
(C. C. A. 3th, 1960)_________________________ ___ 14, 18

Burton v. Wilmington Parking Authority, 363 U.S.
715 ----------------- ------------ -- 10, 11, 12, 13, 14, 15, 19, 23

Clark v. Nash, 198 U.S. 361_____________________________20
Dorsey v. Stuyvesant Town Corporation, 299 N .Y . 512,

87 N.E. 2d 541, cert, denied, 339 U.S. 981_______ ____21
Eaton v. Board o f Managers, et al, 164 F. Supp. 191, 261 

F. 2d 521 (C. C. A. 4th, 1958), cert, denied, 3 59 
U. S. 984-------------1, 2, 4, 6, 10, 11, 12, 13, 14, 15, 17, 23

Hampton v. City o f Jacksonville, 304 F. 2d 320
(C. C. A. 5th, 1962)...____________________________13, 14

Strickley v. Highland Boy Gold Mining Company, 200
U.S. 527_____________________ _____ ________ ____ _____ 20

Whitney v. State Tax Com., 309 U.S. 530, 84 L. Ed.
909, 915, 60 S. Ct. 63 5...___________________________ ___H

T a b l e  o f  St a t u t e s

General Statutes of North Carolina

20-7.50 ______________________________________ ______....__19
8 4 -4 ----------------------------------------- ---------------------------18, 19
90-18, 29______ ______ ________ ____ _____________ _______ _______ _______ _______  18, 19

131-126.3 _______________________ _______...________________17
131-126.4 ______________________  ___________ ________ 17

Private Laves of North Carolina—• Chap. 12 (1901)_____ la
United States Code —  28 U.S.C. 1343 ( 3 ) _______ _______  4

42 U.S.C. 1533 (4) ( c ) _____ __________ ______ _ _______17



In  T he

United Butm  (Emirt nf Appeals
F o r  t h e  F o u r t h  C ir cu it  

No. 9058

--------------------------------------------- --— -------------------------------------------------------

H u b e r t  A. Ea t o n , et al.,

Appellants,
- v. -

Em o r y  G ru bbs  a n d  t h e  B o ard  o f  M a n a g e r s  o f  Ja m e s  
W a l k e r  M e m o r ia l  H o sp it a l , A  Body Corporate,

Appellees.

ON a p p e a l  f r o m  t h e  u n it e d  states district  c o u r t

FO R  T H E  E A ST E R N  DISTRICT O F N O R T H  C A R O L IN A

BRIEF OF APPELLANTS

Statement of the Case

The defendants have no objection to the Statement o f the 
Case set out in Plaintiff Appellant’s Brief. The Motion to 
Dismiss was filed on the basis o f Eaton v. Board of Managers 
of James Walker Memorial Hospital, 261 F. 2d 521 (C. C. A. 
4th, 1958). A fter the decision in that case, the plaintiffs did 
not move to amend their complaint, but allowed the dismissal

Succintly stated, it is plaintiff’s contention that the form - 15 
er case was dismissed because the complaint contained a de­
fective statement o f a claim for relief over which this Court



2

has jurisdiction, and that the new complaint expands the old 
complaint, corrects the defects, and gives the Court juris­
diction. It is defendant’s contention that the former case 
finally adjudicated that the defendant Hospital was a private 
corporation and could not be sued in the Federal Courts for 
infringement o f Civil Rights; that, consequently, the mere 
expanding o f the former complaint, with a few additions, 
does not now give the Court jurisdiction over this action. 
This Court in the former appeal, as well as the Supreme 
Court in the Petition for W rit o f Certiorari (which is print­
ed in Appellee’s Appendix, P. 6a) had presented to it, 
through plaintiffs’ counsel, the very arguments which are be­
fore it now; we respectfully submit that there is no differ­
ence between the instant case and the previous case, and that 
Judge Butler’s Order was correct in dismissing same (A p ­
pellant’s Appendix 61a-68a).

Questions Presented
1. Does the instant complaint set forth any factual ele­

ments as a basis for showing State action on the part o f the 
defendants sufficient to allow the Federal District Court to 
take jurisdiction o f this action?

2. Since the decision o f the Fourth Circuit Court o f A p ­
peals in Eaton v. Board of Managers, et al, 261 F. 2d 521 
(C .C .A . 4th, 1958), cert, denied, 359 U.S. 984, has there 
been a change in the law as set forth by the Supreme Court 
o f the United States justifying a change in the result in this 
case, in order to give the Federal District Court jurisdiction 
thereof?

Statement of Facts
The Statement o f Facts set forth in Plaintiff Appellant’s 

Brief is substantially correct. W e feel that the opinion o f 
Judge Soper as contained in Eaton v. Board of Managers of 
James Walker Memorial Hospital, 261 F. 2d. 521 (C .C.A.



3

4th, 1958), clearly sets forth the pertinent facts which exist­
ed at the time o f the former appeal, and which still exist 
now. The express purpose o f the incorporation o f the Hos­
pital in the Private A ct o f 1901, (Appellee’s Appendix, P. la) 
was to remove the Hospital and the property o f the Hospital 
from the control o f local municipal authorities. This was 
the principal fact involved on the prior appeal, and is still 
true at the time o f this appeal.

In addition to these facts, an affidavit has been filed by 
Robert R. Martin, present Director o f the Hospital, (A p ­
pellants’ Appendix 58a) stating that there has been no change 
in the operation o f the Hospital since the decision in the 
former case, other than a change in the amount o f the per 
diem charge for the treatment o f welfare patients. It will 
be noted that the amounts received constitute about 2%  o f 
the gross income o f  the Hospital, that the amount paid by 
the City for W orkmen’s Compensation treatments since 
October 1961 was $1599.21, and that the only contractual 
relationship which still exists between the Hospital and the 
County is that for the treatment o f welfare patients on a 
per diem charge which is set out in this affidavit.

It is thus clear that the Hospital is operated in the same 
manner now as it was at the time o f the former decision, 
and plaintiffs do not allege any different operation.



4

A R G U M E N T  

Point No. 1

THERE IS NO FACTUAL ELEMENT ALLEGED IN THE 
PRESENT COMPLAINT BY PLAINTIFFS, AS A BASIS 
FOR SHOWING STATE ACTION ON THE PART OF DE­
FENDANTS, WHICH WAS NOT ALLEGED AND ARGUED 
IN THE FORMER CASE INVOLVING THESE PLAINTIFFS.

A t the outset it must be stated that the basis for the de­
fendants’ Motion to Dismiss this action is that the suit is 
one o f individuals suing another individual for the infringe­
ment o f individual rights, and that the action alleged is not 
State action for which redress can be had in the Federal 
District Court under 28 U.S.C.A. 1343 (3 ).

The authority for the motion is the ruling o f the District 
Court o f the Eastern District o f North Carolina in the case 
o f Eaton et al v. Board of Managers et al, 164 F. Supp. 191, 
which was unanimously affirmed by this Court o f Appeals, 
261 F. 2d 521 (1958), cert, denied, 359 U.S. 984. In this 
case, this Court held that the charter o f this same Hospital 
was granted by the General Assembly o f North Carolina pur­
suant to a private act creating the corporation. (Appellees’ 
Appendix, P. la ) with its own Board o f  Managers, with full 
power and authority to set forth its own rules and regula­
tions, and no public funds were received by the corporation 
except approximately 4 % %  o f its total revenue, which was 
paid by the County pursuant to contract for services per­
formed. Because o f this it was held that defendant Hospital 
was a private corporation and its act o f alleged discrimina­
tion in denying the admittance o f  Negro doctors to its staff 
was not action o f  the State and did not give the Federal 
Court jurisdiction. This was held, notwithstanding the fact 
that the City and County had a reverter in one-half o f the



5

Hospital land should it fail to use it, and that in the past the 
City and County had made contributions o f funds to it under 
laws which were subsequently declared unconstitutional.

It is defendants’ position that on the facts alleged in this 
case, and in the previous case, the Hospital has been ad­
judged to be a private corporation and that this Court con­
sequently has no jurisdiction over the present dispute, which 
is similar in nature to the previous dispute.

In order to compare the two suits let us first discuss the 
parties and the relief asked. In the former suit the parties 
were the three Negro doctors, who are also plaintiffs in this 
suit. In the present suit two individual plaintiffs have been 
added who have asked for the right to be treated on a non- 
segregated basis in the Hospital. This, however, does not add 
any additional facts to show that the Hospital is any less a 
private corporation. If the Hospital is a private corporation, 
the individual plaintiffs have no more right than the profes­
sional plaintiffs, for a private corporation has the right to 
serve whomsoever it wishes under the terms and conditions 
that it sets forth.

W e conclude then that the addition o f the two individual 
plaintiffs does not change the basic adjudication that the cor­
poration is a private corporation and that the Federal Court 
does not have jurisdiction.

Since the Hospital has already been adjudged a private cor­
poration it is the contention o f the defendants that this is not 
open to review by the Court at this time. It is further con­
tended by the defendants that the allegations in the instant 
complaint were all included in the previous complaint, inso­
far as they allege any activity, or control which would make 
the corporation a public corporation. A  review o f these alle­
gations is as follows:

(a) In paragraph V I o f the complaint (Appellants’ A p ­
pendix 6a) the Corporate Charter is alleged in detail and



6

the various acts which have supplemented the charter and 
provided for contributions to the Hospital are referred to. 
The allegations relative to the charter were in the prior com ­
plaint at paragraph 8 (Appellants’ Appendix 74a) and ref­
erences were made in paragraphs 10 and 11 o f the prior com ­
plaint (Appellants’ Appendix 75a) to the contributions 
which were made by the City and County under the legisla­
tion enacted after the Charter. All o f  these acts appeared in 
the record by stipulation in the former action, and being 
Private and Public laws were before the Court as a part o f 
the law o f North Carolina. The effect o f these acts and con­
tributions by the City and County are fully discussed in both 
the District Court and Circuit Court opinions, and it was 
decided on the basis o f  Board of Managers v. City of Wil­
mington, 237 N .C. 179 (1953) (referred to in the instant 
complaint paragraph V I-7  Appellants’ Appendix 9a), that 
these contributions were unconstitutional, and that no con­
tributions other than the per diem contract payments for 
the treatment o f indigents, were being made at the time the 
suit was commenced. This Court then decided that the prior 
contributions did not make the Hospital a public corpora­
tion, nor did the per diem payments under contract change 
its private nature. Eaton v. Hospital, supra.

(b ) The allegations o f paragraph V II-A  (Appellants’ 
Appendix 9a) relative to the property o f the Hospital were 
set out in paragraph 13 and 14 o f the prior complaint. (A p ­
pellants’ Appendix 76a ).

(c )  The allegations o f paragraph VII B & C (Appellants’ 
Appendix 10a) relative to James Walker were alleged in 
paragraphs 12, 13, and 14 o f the prior complaint, (Appel­
lants’ Appendix (7 6 a ). In fact the W ill o f James Walker was 
attached to the complaint in the previous action and was a 
part o f the record therein.



7

(d ) The allegations o f  paragraph VII D  (Appellants’ A p ­
pendix 10a) referring to the conveyance o f property to the 
Hospital in trust were referred to in paragraph 14 o f the 
prior complaint (Appellants’ Appendix 76a). These were 
fully discussed in each o f the prior opinions.

(e) The allegations o f paragraph VII o f the complaint 
(sub-paragraph E and E -l Appellants’ Appendix 10a) rela­
tive to the exemption from  the payment o f City and County 
taxes were alleged in the prior complaint at paragraphs 10 
and 11 (Appellants’ Appendix 75a) and although not dis­
cussed by the Court in its opinions, were fully argued both 
in the lower courts and in the petition for W rit o f Certiorari. 
(Appellees’ Appendix 6a). Apparently the Court did not 
feel that these allegations were o f enough significance to dis­
cuss them.

( f )  Paragraph VII-F o f the instant complaint (Appel­
lants’ Appendix 10a) sets forth other alleged indicia o f con­
tinuing control and influence o f the City and the County 
over the Hospital. They refer to the City as a self-insurer 
making payments to the Hospital for services rendered in 
treating workmen’s compensation cases. This is no different 
from  the per diem contract between the City and the Coun­
ty for treatment o f the indigent which was fully covered in 
the prior case, and the affidavit o f Robert Martin (Appel­
lants’ Appendix 58a) shows this amounts to less than $1600 
per year.

(g ) Paragraph VII-F-2 refers to the contributions o f the 
City and County which were made under the previous acts 
and were declared unconstitutional by the Supreme Court o f 
North Carolina in Board of Managers v. City, supra. These 
contributions for capital improvement are no different from  
the contributions for annual support and maintenance, and 
without the elements o f control necessary to make defendant



8

a public corporation do not change the nature o f the re­
cipient.

(h) Likewise the allegations o f paragraph VII F-3 (A p ­
pellants’ Appendix 11a) do not change the nature of the 
recipient, and these contributions by the State and Federal 
government were set forth in the allegations o f paragraph 12 
o f the former complaint (Appellants’ Appendix 11a and 
76a). The statute under which the plaintiffs allege jurisdic­
tion refers to State action and not Federal action. There is 
no allegation that the defendant is an agency o f the Federal 
government by reason o f the fact that contributions were 
made to the State and turned over to the Hospital. Such an 
allegation would be absurd, as is the implication desired by 
the plaintiffs.

(i) W ith regard to paragraph VII-F -4 (Appellants’ A p ­
pendix 11a) the prior complaint in paragraph 12 (Appel­
lants’ Appendix 76a) referred to the exercise o f the right o f 
eminent domain by the Hospital, and this was discussed in 
all o f the briefs. It was clearly before the Court in the form ­
er case, and, in fact, on the petition for W rit o f Certiorari to 
the Supreme Court the Petitioners, present plaintiffs in this 
action, through counsel appearing here, filed the record in 
the suit referred to in paragraph F-4 in the Supreme Court 
o f the United States. (Appellees’ Appendix 14a). The Court 
apparently gave this no significance in the light o f the cases 
which hold that the exercise o f eminent domain does not 
make a corporation an agency o f  the State.

( j)  In Paragraph VII-F-5 (Appellants’ Appendix 12a) 
the plaintiffs refer to the allegations in the suit o f Board of 
Managers v. City, 237 N.C. 139, supra, wherein the Board o f 
Managers alleged it was a public body. The Supreme Court 
o f North Carolina not only held that it was not a public 
body, but that the City and County could not make contri­



9

butions to it for its support and maintenance, and the effect 
o f this case was fully discussed in, and was a basis for the 
prior opinions.

(k ) In Paragraph VIII-4-B o f the complaint it is alleged 
that the Hospital is a public utility carrying out the func­
tions o f the City and County. It was clearly held, however, 
that the operation o f a hospital was not a necessary expense 
o f government or a governmental function in Board of Man­
agers v. City, supra, at page 191. This opinion was recognized 
as controlling on the former appeal for there is no control or 
right to control, and thus defendant cannot be carrying out 
a City or County function.

Judge Butler in his opinion below, after reviewing the com ­
plaints in both actions, concluded that they were substantial­
ly the same, except that there were three possible new allega­
tions: the workmen’s compensation payments by the City, 
the licensing o f the hospital by the State, and that the Hos­
pital was superior to other hospitals in the area (Appellants’ 
Appendix 66a).

He properly concluded that the compensation payments 
were not unlike the per diem payments for the indigent 
which had been held by this Court not to be a sufficient ele­
ment o f control to create state action.

Likewise he properly disposed o f the other two elements 
after careful consideration thereof (Appellants’ Appendix 
67a). Since these are discussed in the other part o f this brief 
they will not be discussed here.

The defendants invite the Court to carefully consider the 
complaint and motions in the prior action, to carefully con­
sider the judgment o f the District Court in the prior case, to 
carefully consider the briefs and appendices filed in the 
Fourth Circuit Court o f Appeals, to carefully consider Judge 
Soper’s able opinion in the prior case, which, based on the



10

precedents set forth in the Fourth Circuit, held that the 
Board o f  Managers o f James Walker Memorial Hospital is a 
private, not a public, corporation. When the allegations o f  the 
present case are applied to the law set forth in the prior case, 
we respectfully submit that it can only be concluded that 
nothing is added to that which was set forth in the prior case 
with regard to the defendant’s being a public corporation, 
and that consequently there can be no jurisdiction in this 
Court under 28 U.S.C.A. 1343 (3 ) .

Point No. 2

THERE HAS BEEN NO CHANGE IN THE LAW  SINCE 
THE DECISION IN THE PRIOR EATON CASE JUSTIFYING 
A CHANGE IN RESULT.

1. Plaintiffs rely entirely in asserting the jurisdictional 
right here on Burton v. Wilmington Barking Authority, 365 
U.S. 715. W e note immediately that Burton, supra, recog­
nizes the very principal that the Eaton case was decided on 
at 365 U.S. 722: "Individual invasion o f individual rights is 
not the subject-matter o f the [Fourteenth] Amendment,” ; 
and further: "and that private conduct abridging individual 
rights does no violence to the Equal Protection Clause . . 
This is clearly the theory o f Judge Soper’s opinion in Eaton, 
supra.

The Court in Burton further limits its holding to the facts 
in the Btirton case, and specifically states that Burton is not 
authority for any state o f facts other than those in Burton. 
A t 365 U.S. 725, the Court states as follows:

Because readily applicable formulae may not be fashioned, the con­
clusions drawn from the facts and circumstances of this record are 
by no means declared as universal truths on the basis o f which every 
state leasing agreement is to be tested. Owing to the very "largeness”  
of government, a multitude of relationships might appear to some



11

to fall within the Amendment’s embrace, but that, it must be re­
membered, can be determined only if the framework of the peculiar 
facts or circumstances present. Therefore respondents’ prophecy of 
nigh universal application of a constitutional precept so peculiarly 
dependent for its invocation upon appropriate facts fails to take into 
account “ Differences in circumstances [which] beget appropriate 
differences in law,”  Whitney v. State Tax Com. 309 U.S. 530, 542, 
84 L. ed 909, 915, 60 S. Ct. 635. Specifically defining the limits of 
our inquiry, what we hold today is that when a State leases public 
property in the manner and for the purpose shown to have been the 
case here, the proscriptions of the Fourteenth Amendment must be 
complied with by the lessee as certainly as though they were binding 
covenants written into the agreement itself.

Neither the purpose nor the manner is the same in the instant 
case. W e submit then that there is no fundamental change 
in the law as a result o f Burton; it merely applied the same 
law which was applied in Eaton to the facts in the Burton 
case.

In carefully reading the Burton case we find three very 
significant facts which were and are in no way present in 
Eaton.

A. The Parking Authority o f the City o f Wilmington was 
created by a provision o f the Delaware Code which created 
it "A  public body, corporate and politic, exercising public 
powers of the State as an agency thereof.”  P. 717 (Emphasis 
supplied).

B. The lease between the Parking Authority and Eagle 
provided that lessee would "occupy and use the leased prem­
ises in accordance with all applicable laws, statutes, ordin­
ances and rules and regulations o f any Federal, State or mu­
nicipal authority.”  P. 720.

C. The leased property was dedicated to "public uses”  in 
performance o f the Authority’s "essential governmental



12

functions”  and was found to be "a physically integral and 
indeed, indispensable part o f the state’s plan to operate its 
project as a self-sustaining unit.”  P. 723-725.

Compare this with Eaton where the charter o f the corpora­
tion, Private Laws o f North Carolina, 1901, Chapter 12 
(Appellees’ Appendix P. la ) specifically provided that 
the Hospital was created as a corporation for the purpose of 
removing it from  the vicissitudes which generally result when 
such an institution is left in the control o f local municipal 
authorities. Compare this with Eaton where Eaton was de­
cided on the basis o f the North Carolina Court decision in 
Board of Managers v. City of Wilmington, 237 N .C. 179 
(1953), which clearly held that the Hospital was not exercis­
ing public powers o f the City or the County, and that neither 
City nor County could provide revenues for its operation. 
Hence, if the property reverted back to the City and County 
they could not operate it. It could only be operated, if 
operated at all, by the independent private corporation 
created for that express purpose.

W e say that these differences are o f the greatest signific­
ance. Plaintiffs argue that the case should be reconsidered 
under the rule in Burton with regard to the variety o f rela­
tionships which exist between the Hospital and the Govern­
mental bodies. W e concede that some o f the relationships set 
out in Burton exist with regard to the Hospital, but these 
relationships must be considered in the light o f the principal 
objective o f the W ilmington Parking Authority, which was 
created to exercise public powers and to be an agency o f the 
State, and the lease to Eagle which was integral to carrying 
out this purpose; whereas the Hospital was created to remove 
it from  the control o f the City and County, and could in no 
sense be considered carrying out a public power or purpose.

In addition, in Burton it appears at 365 U.S. 723, that the 
cost o f land acquisition, construction and maintenance were



13

defrayed from  donations by the City; and at 724, that upkeep 
and maintenance o f the building including necessary repairs 
were the responsibility o f  the Authority and were payable 
from public funds. Although there is some allegation in the 
instant complaint o f donations and payments made prior to 
the decision in the suit o f Board of Managers v. City of Wil­
mington, 237 N .C. 179 (1953), the only allegations o f the 
payment o f funds or donations existing at the time the in­
stant suit was brought, or at the time o f Eaton, supra, are the 
allegations relative to payments by the County under con­
tract, the payments by the City under Workmen’s Compen­
sation, and the general allegation o f exemption from City and 
County taxes. The first two items are shown to be insignifi­
cant by the affidavit o f  the Director o f the Hospital (Appel­
lants’ Appendix 58a), and the latter is shown to be insignifi­
cant in the argument relating to it in this brief. It will be 
noted that the total of all o f these payments is less than 4 % %  
o f defendants’ gross revenues. But here again these allegations 
must be considered in the light o f the actual charter o f the 
Hospital; and the significance o f these items in Burton, supra, 
must be considered in the light o f  the fact that the Parking 
Authority was created to exercise "public powers o f the 
State as an agency thereof,”  the lease to Eagle being inci­
dental to doing this.

Likewise we feel that the dicta o f Judge Tuttle in Hamp­
ton v. City of Jacksonville, 304 F. 2d 320 (C .C.A. 5th, 
1962),  referred to on Page 16 o f plaintiffs’ brief, does not add 
anything to plaintiffs’ position, for certainly they do not 
argue that this Court is controlled by dicta in a decision o f 
the Fifth Circuit. N or do we agree that this dicta casts doubt 
on the authority o f Eaton, where plaintiffs have brought a 
suit alleging substantially the same facts which were alleged 
in Eaton.



14

W e note in Boman v. Birmingham Bus Company, 280 F. 
2d 531 (C .C .A . 5th, 1960), also decided by Judge Tuttle, 
that in referring to Eaton at page 5 3 5 o f the opinion, he states 
that there is nothing in Eaton which is inconsistent with his 
decision in the Boman case, clearly recognizing that each case 
must be decided on its own facts as did the Supreme Court in 
Burton, supra. W e respectfully submit that this Court should 
not go to the Fifth Circuit for an interpretation o f the con­
trolling decision which already exists in the Fourth Circuit, 
for Judge Tuttle in the Boman case clearly recognizes the 
rule that "the action inhibited by the first section o f the 
Fourteenth Amendment is only such action as may fairly be 
said to be that o f the State’s . . He thus recognizes in 
Boman that the facts o f the Eaton case did not disclose State 
action, and apparently his comment set out on page 16 o f 
Appellants’ Brief in Hampton v. City of Jacksonville, supra, 
was an attempt to justify his distinguishing the Eaton case 
when he decided the Boman case; this certainly cannot be 
considered by this Court as indicating that the Eaton case, as 
previously decided, is erroneous.

Likewise, we feel that the other cases cited in plaintiffs’ 
brief do not change the fundamental holding o f the previous 
Eaton case that the Hospital is not an agency o f the State.

2. W e feel that the comparison o f the Burton case with 
the Eaton case as set out in Paragraph II o f plaintiffs’ brief, 
page 18, is also without merit.

The Burton case may have explicitly rejected the single 
factor test with regard to whether or not the action o f  the 
individual became State action, but on the other hand the 
Eaton case was not decided on the single factor test. The al­
legations o f the previous case which are fully reviewed under 
Point No. 1 show that plaintiffs then were not relying on the 
single factor test. They alleged every allegation in the prev­
ious case which they allege now, and based on the previous



15

allegations the Court held that there was no jurisdiction. W e 
concede that the single factor test did not exist in the Burton 
case, and did not exist at the time o f the Eaton case. W e say, 
however, that the factors relied on in the Eaton case, which 
removed the Hospital from  the control o f the City and the 
County, still exist at the present time, and no new elements 
have been brought out which change this; thus its action is 
still individual action and not subject to a suit in Federal 
Court.

3. W ith regard to the other arguments in paragraph 2 o f 
plaintiffs’ brief, for the convenience o f the Court, we will 
discuss each separately.

A. Financial Contributions for Capital Construction.

Plaintiffs contend here that the contributions for capital 
construction were not considered in the prior appeal. They 
admit that the allegations o f the former complaint were 
sufficient to cover the contributions from  the Federal G ov­
ernment for capital improvement, and by the City and 
County for  capital construction. In the instant complaint 
they have these same allegations but have expanded them to 
set out the evidence which they presumably would offer to 
support them.

W e are satisfied that under the general allegations o f the 
former complaint that the allegations were sufficient to sup­
port the fact o f these contributions having been made. W e 
are also satisfied that Judge Soper in the opinion on the 
former appeal considered these allegations. In Eaton v. Board 
of Managers, 261 F. 2d 521 (C .C .A . 4th, 1958), at page 
525 Judge Soper specifically held that the Hospital ceased 
to be a public agency in 1901 when the Charter creating the 
Hospital was enacted and the property passed from the con­



16

trol o f the City and County to the new Board o f Managers 
created in that year. He stated as follows:

It would seem from the evidence that the Hospital then ceased to 
be a public agency, although in subsequent years until 1951 it re­
ceived certain financial support from the City and County, the 
amount of which the record before us does not reveal. Any doubt 
on this point vanished in 1952 and 195 3, when annual appropria­
tions came to an end as a result of the decision of the Supreme Court 
o f the State, and patients sent to the Hospital by the local govern­
ments were treated and paid for under contract on a per diem basis. 
It is beyond dispute that from that time on the civic authorities 
have had no share in the operation of the Hospital and the Board of 
Managers have been in full control.

It will be noted that the type o f appropriation which Judge 
Soper referred to was not limited, and the decision by the 
Supreme Court o f North Carolina would include as uncon­
stitutional appropriations for capital expenditures as well as 
those for annual support and maintenance; regardless of 
source they did not make the Hospital a State agency under 
Judge Soper’s ruling.

In addition, in the Petition for W rit o f Certiorari filed by 
these plaintiffs in the Supreme Court o f the United States 
(Appellees’ Appendix P. 15a) these same arguments were 
presented, and this same evidence set out as an example o f 
the evidence which would have been presented at the trial of 
the former case had the case been sent back by the Supreme 
Court for trial on its merits. Since this was presented to the 
Supreme Court, the only conclusion which can be made is 
that the Court in denying Certiorari agreed with Judge 
Soper’s analysis o f the history o f the defendant in that it 
was a private corporation, and that the contributions by the 
Federal and City and County Governments, for whatever 
purpose, did not make it a public corporation.



17

Plaintiffs refer to 42 U.S.C. sec. 1533 which provides that 
in the allocation o f funds for public works, in determining 
the need therefor, that there shall be no discrimination on 
account o f race or color. This A ct further specifically pro­
vides [42 U.S.C. 1533 (4) (c ) ] that no department or 
agency o f the United States shall have any control over the 
operation o f any hospital to which such grants were made, 
and that no condition shall be placed on any grant or con­
tribution to a hospital to "prescribe or affect its administra­
tion, personnel, or operation.”  The Statute is clear that the 
purpose was to prevent any discrimination being used in de­
termining the need for a hospital facility, but that once the 
need was determined that the United States Government did 
not wish to exercise any control over its operation including 
the hiring o f its personnel. This would clearly include the 
selection o f the staff o f the hospital.

B. Regulation and Licensing'.

Plaintiffs argue here that another factor not considered by 
the Court in E aton, supra, was the North Carolina Hospital 
Licensure Act, N.C.G.S. sec. 131-126 et seq. W e feel that 
the licensure o f the Hospital by the State o f North Carolina 
could not make it an agency o f the State.

The two sections o f the North Carolina General Statutes 
which are apparently referred to are short and read as fo l­
lows:

131-126.3 Licensure. After July 1st, 1947, no person or govern­
mental unit, acting severally or jointly with any other person or 
governmental unit shall establish, conduct or maintain a hospital in 
this State without a license. (1947, c. 933, s. 6.)
131-126.4. Application for license. Licenses shall be obtained from 
the Commission. Applications shall be upon such forms and shall 
contain such information as the said Commission may reasonably re­



18

quire, which may include affirmative evidence o f ability to comply 
with such reasonable standards, rules and regulations as may be law­
fully prescribed hereunder. (1947, c. 933, s.6; 1949, c. 920, s. 3.)

It is apparent that these are regulatory sections, and that they 
were enacted for the purpose o f protecting the health, morals 
and safety o f the citizens o f North Carolina as are the regu­
lations issued thereunder. It is further apparent that the 
phrase "no person or governmental unit”  as set out in the 
Statute, become meaningless if a "person”  becomes a "g ov ­
ernmental unit”  through the mere fact o f licensure; and it 
is difficult to believe that it can be seriously contended that 
the mere act o f  licensing a private institution to carry on its 
private operations will cause that private institution to be­
come a governmental agency. Many, if not most, o f the ac­
tivities o f  the individual are subject to regulation by govern­
ment in this modern era, but the State does not thereby 
adopt, or attempt to control, all o f  the activities o f  the in­
dividual performed within the scope o f the license granted; 
it only controls where health, morals and safety are involved.

The reference by plaintiffs to Boman v. Birmingham Tran- 
sit Company, 280 F. 2d 131 (C .C.A. 5th, 1960), is not in 
point, for the license there granted was for the exclusive 
right to transport persons within the City o f Birmingham on 
the public streets o f the City o f Birmingham. The license re­
ferred to by the plaintiffs in this case is a license which can 
be issued to any hospital, and the regulations set out under 
the act are no more than the regulations which are set out by 
the Boards o f Health in the State to require individuals to 
maintain a certain standard o f cleanliness in and around their 
premises. The only difference being that this act creates a 
higher standard which must be maintained where persons 
with disease are being treated.

The doctors who complain to this Court in this case, and 
the lawyers who represent them here, are all required to be



19

licensed by the State, (N orth Carolina General Statutes 90- 
18; 90-29; 8 4 -4 ); they are also ruled by certain ethical 
standards and regulations set up by the respective licensing 
Boards; but they would presumably concede that they do not 
thereby become governmental agents in the practice o f their 
professions. It might also be pointed out •—  to reduce the 
absurd to further absurdity —  that every automobile in 
North Carolina is required to bear, and every driver to carry, 
a license from  the State, (N orth Carolina General Statutes 
20-50; 20 -7 ), but it could hardly be suggested that every 
driver motoring along the streets and highways o f North 
Carolina is thus constituted an agent o f the State performing 
governmental functions.

C. Tax Exemption.

Plaintiffs argue that because the question o f tax exemption 
was not mentioned in the opinion o f the District Court or in 
the opinion o f this Court in the former appeal, that this in­
dicates that the matter was not considered by either Court in 
passing on the matter. They cited then, and they cite now, 
no case which holds that tax exemption when given to a 
private charitable hospital makes that hospital an agency of 
the State, and gives the State control over its operating func­
tions. The Supreme Court has not gone this far, and we sub­
mit that the statement in Burton v. Wilmington Barking Au­
thority, 365 U.S. 715, which is referred to in plaintiffs’ brief, 
does not extend the rule this far, since it expressly holds that 
the Parking Authority was a "government agency.”  The fact 
that it was tax exempt is insignificant in the light o f the fact 
that it was expressly created an agency o f the government. 
Such is not true with regard to defendant Hospital.

Assuming for the purpose o f this appeal that the tax 
exemption given by the City and County amounts to $50,- 
000 per year as argued by plaintiffs, this is only 2.5% o f the



20

gross annual revenues o f the Hospital, and is certainly in­
significant in regard to the total receipts o f the Hospital and 
the size o f its operation.

D. Eminent Domain.
The exercise o f the power o f eminent domain by the de­

fendant Hospital was admittedly alleged in the former com ­
plaint. Here again plaintiffs cite no case law which creates a 
corporation which is given the power o f eminent domain an 
agency o f the State. In the Petition for W rit o f Certiorari to 
the Supreme Court in the former case (Appellees’ Appendix 
P. 14a) plaintiffs filed a copy o f these very condemnation 
proceedings with the Court, and yet the Court did not feel 
that the matter was o f sufficient importance to grant the 
Writ.

The fact that the Hospital has exercised the right o f emi­
nent domain does not make it an agency of the State. It was 
held by the Supreme Court in Strickley vs. Highland Boy 
Gold Mining Company, 200 U.S. 527, that the right of emi­
nent domain may be given to private corporations as well as 
public corporations. Justice Holmes in deciding the case re­
fers to Clark v. Nash, 198 U.S. 361, at 200 U.S. 531 as 
follows:

In discussing what constitutes a public use, it recognized the in­
adequacy of use by the general public as a universal test. While em­
phasizing the great caution necessary to be shown, it proved that 
there might be exceptional times and places in which the very 
foundations o f public welfare could not be laid without requiring 
concessions from individuals to each other upon due compensation, 
which, under other circumstances, would be left wholly to voluntary 
consent. In such unusual cases there is nothing in the Fourteenth 
Amendment which prevents a state from requiring such concession.

If the Fourteenth Amendment does not prevent the states 
from giving the right o f  eminent domain to a private corpo­



21

ration, the fact that such private corporation has exercised 
the right o f eminent domain, properly given it, does not con­
stitute the private corporation an agency o f the State.

The same contention made here was made in Dorsey vs. 
Stuyvesant Town Corporation, 299 N .Y . 512, 87 N.E. 2d 
541, cert, denied, 339 U.S. 981, where tax exemption and 
power o f eminent domain were given a housing corporation. 
In this case the Court o f Appeals o f New York State held 
that "tax exemption and power o f eminent domain are 
freely given to many organizations which necessarily limit 
their benefits to a restricted group. It has not yet been held 
that the recipients are subject to the restraints o f the Four­
teenth Amendment.”  87 N.E. 2d 541 at 5 51. This reasoning 
applies in the instant case, for if the State o f North Carolina 
saw fit to give this private corporation the right o f eminent 
domain in order to expand its facilities to take care o f the 
sick and afflicted o f New Hanover County, such was not in­
consistent with its being a private corporation, and it did not 
thereby create it an agency o f the State.

E. Financial Contribution for Hospital Operation.
The effect o f the contributions to the Hospital prior to 

1951 and the payments to the Hospital since 1951 under the 
contract based on the per diem cost o f treatment o f welfare 
patients, was fully presented to the Court in the former 
action. Suffice it to say, that since the decision in Board of 
Managers v. City of Wilmington, supra, and at the time o f 
the application o f the plaintiffs for admission to the Hospital, 
neither the City o f Wilmington nor the County o f New 
Hanover had the right to use one dime o f the taxpayers’ 
money to support, maintain, or operate the Hospital other 
than the per diem payments under contract for services ren­
dered. Certainly the payments by a State Agency to a private 
corporation under contract for services rendered does not 
constitute the recipient an agency o f the State. This would



22

be true regardless o f the amount paid the agency, but in the 
instant case it will be noted that the revenues presently do 
not exceed 2%  o f the gross income o f the Hospital. (A p ­
pellants’ Appendix, P. 58a).

T o carry plain tiffs’ argument to its illogical and ultimate 
conclusion would require this Court to say that each time a 
municipality enters into a contract for services with a pri­
vate individual, that it was placing its power, property, and 
prestige behind that individual so as to create that individual 
an agency o f the State, and subject to the restrictions o f the 
Fourteenth Amendment. If this were done the Government 
would indeed become a many-armed thing, and the Federal 
Courts would become nothing more than a sounding board 
for innumerable individual disputes with no sound basis for 
Federal jurisdiction.



23

C O N C L U S I O N

In conclusion, we submit that the defendant Hospital at 
the present time is an individual, private corporation as it 
was at the time o f Eaton v. Board of Managers, supra. W e 
submit that this decision is controlling and that the law as 
reflected in Burton v  .Wilmington Barking Authority, supra, 
is clearly distinguishable.

W e further respectfully submit that the operation o f  the 
internal affairs o f the Hospital with regard to the qualifica­
tions for membership on its professional staff is one over 
which the Federal Courts should be reluctant to take jurisdic­
tion, since control o f matters o f public health, morals and 
safety have always been expressly reserved to the states. A  
decision as far reaching as that requested by the plaintiffs 
herein would create the Federal Courts a body to sit as referee 
in the administration o f the internal, personnel, and other 
affairs o f all private charitable hospitals. Such a result should 
not come about. The Judgment below should be affirmed.

Respectfully submitted,

C. D. H ogue, Jr.

W illiam  L. H ill II

R onald  D. R owe

608 Carolina Power & Light Building 
Wilmington, North Carolina 
Counsel for Defendant Appellees



A P P E N D I X



la

PRIV ATE LAW S OF N O R T H  C A R O L IN A  —  1901 

CH A PTE R  12

An act to provide for the Government o f the "James Walker 
Memorial Hospital o f the City o f Wilmington, 

North Carolina,”

Whereas, through the munificent liberality o f Mr. James 
Walker, o f the City o f Wilmington, N . C., and the County 
o f New Hanover, the said City and County have been pro­
vided with a substantial modern hospital for the mainte­
nance and medical care o f sick and infirm poor persons who 
may from  time to time become chargeable to the charity o f 
the said city and county, and for other persons who may 
be admitted; and,

W HEREAS, it is desirable that the management o f said 
hospital should be removed as far as possible from the vicis­
situdes which generally result when such an institution is left 
entirely in the control o f local municipal authorities subject 
to changing political conditions and its efficiency in sound 
degree thereby crippled; and

W HEREAS, it is also desirable that suitable provisions 
should also be made for the permanent maintenance o f the 
hospital by said City and County, therefore, The General As­
sembly o f North Carolina do enact:

Section I. That said hospital and the dispensary connected 
therewith shall be under the general supervision and control 
o f  a board o f nine managers who are hereby created a body 
politic and Corporate for the term o f thirty years, under the 
name and style o f the "Board o f Managers o f the James 
Walker Memorial Hospital o f the City o f Wilmington, North 
Carolina”  and by that name shall have succession and a com ­
mon seal, sue and be sued; plead and be interpleaded, and



2a

Control of hospital Corporate powers
Managers created a body politic: Board how selected

Corporate name RESTRICTION:

have all the rights and privileges conferred upon such cor­
porations. The said Board o f Managers shall be composed o f 
three members to be elected by the Board o f Commissioners 
o f N ew Hanover County, two members to be elected by the 
Board o f Aldermen o f the City o f Wilmington, North Caro­
lina, and four members to be selected by Mr. James Walker. 
The members o f the said Board o f Managers who are to be 
elected by the Board o f County Commissioners, and the 
Board o f Aldermen shall be elected at the first regular month­
ly meeting o f the respective bodies held in the month o f 
March, one thousand nine hundred and one, and no one o f 
said members shall be from  either the Board o f Aldermen or 
the Board o f County Commissioners. The members to be se­
lected by Mr. James Walker, shall enter upon the discharge 
o f their duties as soon as the hospital now in course o f erec­
tion shall have been completed and turned over to the Board 
o f Aldermen o f the City o f Wilmington and the Board o f 
Commissioners o f the County o f New Hanover, and formal­
ly accepted by them, and shall then succeed to all powers and 
duties o f "The Board o f Managers o f the City Hospital o f 
Wilmington, North Carolina.”

Section II. The Board o f Managers shall hold their first 
meeting on the day following their election. A t this meet­
ing they shall decide by lot the term of office o f each mem­
ber as follows: Three members shall be selected by lot whose 
term o f office shall be two years; three members shall be 
selected by lot whose term o f office shall be four years; and 
three members shall be selected by lot whose term o f office 
shall be six years A t all subsequent elections the term of 
office shall be six years. Should any vacancy occur in the 
board either by death or resignation, the remaining members 
shall fill the vacancy, and the term of office o f the person



3a

When to enter upon discharge 
of duties 
Powers:

When to hold 1st meet:
Term of office of each, how decided: 

Term of office:
Failure to attend meeting board may 

declare membership void & 
elect successor

Means of sustenance of hospital and 
maintenance and medical care of 
indigent sick and infirm provided 

City & County appropriations con­
trolled and disbursed by board 

of managers

elected shall expire at the time the original member’s would 
have expired. Should any member o f the Board o f Managers 
fail to attend a meeting o f the board for a period o f six 
months, the board may declare his membership void, and 
proceed to fill this position by the election o f a successor for 
his unexpired term. As the expiration o f the term of office 
o f members, the remaining members o f the Board shall elect 
their successors.

Section III. That for the purpose o f providing the proper 
means for sustaining the said hospital, and for the mainte­
nance and medical care o f all such sick and infirm poor per­
sons as may from time to time be placed therein by the au­
thority o f the said Board o f Managers, the Board o f Com ­
missioners o f N ew  Hanover County shall annually provide 
and set apart the sum o f four thousand eight hundred dollars, 
and the Board o f Aldermen o f the City o f Wilmington shall 
annually provide and set apart the sum o f three thousand two 
hundred dollars, which said fund shall be placed in the hands 
o f the said Board o f Managers to be paid out and disbursed, 
under their direction, according to such rules, regulations and 
orders as they may from time to time adopt.

Section IV. Should any portion o f the annual appropria­
tions by the County o f New Hanover and City o f W ilming­
ton remain unexpended on the first day o f March o f each 
year, it shall be the duty o f the Board o f Managers to invest 
such unexpended balance in bonds o f the City of Wilmington 
or County o f New Hanover, or State o f North Carolina, 
and such investment shall be known as a permanent fund.



4a

Unused portion of appropriations to Income, how used
be invested in City & County or When fund itself, used

State Bonds Transfer of bonds, how & when made
Bonds, how registered When & where board to meet &

organize

The bonds so purchased shall be registered in the name o f the 
"Board o f Managers o f the James Walker Memorial Hospital 
o f the City o f Wilmington, North Carolina.”  The income 
from  said permanent fund may be used for the maintenance 
o f the hospital, but no part o f the fund itself shall be used 
except in case o f additional emergency, or for some perm­
anent improvement or addition to the hospital. N o  part o f 
said fund shall be used as above provided, except by approval 
o f two-thirds o f the entire membership o f the Board o f  Man­
agers and any transfer o f the bonds, in which said funds is 
invested shall be made by the president and secretary o f the 
board, only after such approval by two-thirds o f the entire 
membership o f the Board o f Managers.

Section V. That the said Board o f  Managers shall, as soon 
after their election as may be practicable and advisable, con­
vene in the office o f the County Commissioners of said Coun­
ty, in the City o f  Wilmington, on a day to be named by the 
chairman o f the board o f  County Commissioners if no day 
has been selected as the first meeting o f the Board o f Man­
agers, and shall then and there proceed to organize by the 
election o f a president and such other officers as they may see 
fit for the purpose o f carrying out the provisions o f this act, 
and shall adopt such by-laws and regulations for their own 
government and for the control and management o f said hos­
pital and dispensary as they may deem right and proper. A  
majority o f said Board o f Managers shall constitute a quorum, 
with power to fix their times o f assembling to adopt, alter, 
amend, or repeal their by-laws, rules and regulations, and 
to do whatever, by law, the said Board o f Managers have 
authority to do.



Plan of organization 
By-laws

Quorum & Powers

5a

Board of Managers to report 
Contents of Report 

Conflicting laws repealed

Section VI. That the said Board o f Managers shall on the 
first Monday in January in each and every year, make two 
separate reports, one to the Board of County Commissioners 
and the other to the Board o f Aldermen, which said reports 
shall contain a full-time and accurate account o f the conduct 
and management o f said hospital and dispensary, giving an 
itemized account o f their receipts and disbursements, to­
gether with the number, sex, race, age and disease o f all o c ­
cupants o f said hospital for the proceeding year.

Section VII. That so much o f Chapter 23 o f the laws of 
1881, and all other laws as may conflict with this act are 
hereby repealed.

Section VIII. That this act shall be in force from  and 
after the first day o f March, one thousand nine hundred 
and one.



6 a

£§>uprm? Court o f ttjr llnitrb §tatro
October Term, 1958 

No. 789

H u b e r t  A. Ea t o n , et al.,
j"Petitioners,

Bo ard  o f  M a n a g e r s  o f  t h e  Ja m e s  W a l k e r  M e m o r ia l  
H o s p it a l , et al.,

Respondents.
------------—------- ------------------------

PETITION FOR WRIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT

Petitioners pray that a writ o f certiorari issue to review 
the judgment o f the United States Court o f Appeals for 
the Fourth Circuit entered in the above - entitled case on 
November 29, 1958.

Citations to Opinions Below
The opinion o f the Court o f Appeals is printed in the 

appendix hereto, page la, infra, and is reported at 261 F. 2d 
521. The opinion o f the District Court herein is reprinted 
in the appendix at page 13 a, and is reported at 164 F. 
Supp. 191.

Jurisdiction
The judgment o f the Court o f Appeals was entered on 

November 29, 1958. By order o f the Chief Justice, time to 
file petition for writ o f certiorari was extended to and in­
cluding March 23, 1959. The jurisdiction o f this Court is in­
voked under 28 U. S. C., §1254.



7a

Question Presented
Whether the complaint, which invoked the Fourteenth 

Amendment right to be free from  racial discrimination, and 
which alleged substantial governmental support o f  defendant 
hospital, that it had been created by the City and County, 
was governed by a governmentally created board, and had 
other significant governmental contacts, was properly dis­
missed under the Federal Rules o f Civil Procedure, where it 
was admitted that plaintiffs, Negro physicians, were excluded 
from  practicing in said hospital solely because o f race, or 
whether plaintiffs have stated a claim upon which relief can 
be granted sufficient to allow presentation o f proof on the 
merits.

Statement
The complaint in this case demanded declaratory judg­

ment and injunction and posed the following question:
. . . whether the custom and practice o f the defen­
dants in denying, on account o f race and color to plain­
tiffs and other qualified Negro physicians similarly sit­
uated the right to courtesy staff privileges, including 
the right to treat their patients when they are admitted 
to defendants hospital, the James Walker Memorial Hos- 
pital, Wilmington, North Carolina, is unconstitutional 
and void as being a violation to the Fourteenth Amend­
ment to the Constitution o f the United States (App. 
2) .*

The three plaintiffs herein are Negroes and physicians who 
reside and practice in Wilmington, North Carolina. The de­
fendants are the Board o f Managers o f the James Walker 
Memorial Hospital, a body corporate under and by virtue of 
the laws o f the State o f North Carolina and in the complaint 
alleged to be a governmental instrumentality, the Secretary

* App. refers to petitioners’ appendix in the Court o f Appeals.



8a

o f the Board o f Managers o f said hospital, who as its chief 
administrative officer has overall control and management 
thereof, the City o f Wilmington, North Carolina, and the 
County o f New Hanover in which that City is located.

The complaint sets forth the professional qualifications o f 
plaintiffs, including their education, training and experience, 
and that they have been denied, solely because o f race, the 
right to treat their patients at the James Walker Memorial 
Hospital (App. 3, 4 ) . It alleges certain contacts between the 
hospital and various arms o f government, by virtue o f which 
it is claimed that action o f the hospital is state action in the 
sense that it is governed by the equal protection clause o f the 
Fourteenth Amendment to the United States Constitution. 
These allegations, it may be noted at this point, are admitted 
both by motions to dismiss (App. 10, 11, 13) and by stipula­
tion. (App. 15).

In particular the allegations concerning state action con­
sist o f  the following:

1. "Defendants, including defendant Hospital, have ex­
ercised the right o f eminent domain . . . for expansion and 
maintenance o f the said Hospital”  (App. 6 ) .

2. Defendants have received "large grants o f money from 
the Federal Government for expansion and maintenance o f 
the said Hospital”  (App. 6 ).

3. That the hospital is on a tract o f land which was pur­
chased by the County and City o f W ilmington in 1881 
(App. 6, 5 5-57).

4. That the City and County held and used said hospital 
under the W ill o f James Walker "as a hospital for the treat­
ment o f the 'sick and afflicted’ ”  (App. 6 ). The will directed 
(App. 38-40) that the hospital be constructed by monies to 
be derived from Mr. Walker’s estate "and after the comple­



9 a

tion o f the said Hospital my said Executors are hereby direct­
ed to deliver and turn over the same to the proper authorities 
o f the City o f Wilmington and the County o f  N ew Hanover, 
State o f North Carolina, to be held and used by them and 
their successors as a Hospital for the treatment o f the sick and 
afflicted”  (App. 39).

5. That the County o f W ilmington "did by deed transfer 
the land upon which was situated the James Walker Memorial 
Hospital to the Board o f Managers o f the James Walker 
Memorial Hospital in trust for the benefit o f  the said Coun­
ty and City”  (App. 7) by a deed requiring the County and 
City " T o  h a v e  a n d  T o  h o l d  the same in trust for the use 
o f the Hospital aforesaid, so long as the same shall be used and 
maintained as a Hospital for the benefit o f the County and 
City aforesaid, and in case o f disuse or abandonment to revert 
to the said County and City as their interest respectively 
. . .”  (App. 59-60).

6. That the board o f the hospital was constituted by state 
statute, a majority o f its members to be selected by the Coun­
ty and City, and that since its constitution it has been self 
perpetuating (App. 33-34).

7. The City "has provided financial support for the said 
James Walker Memorial Hospital by granting said Hospital 
exemption from payment o f city taxes . . .”  (App. 5 ).

8. The "C ity  has for many years prior to 1951 made direct 
annual contributions from  its treasury for the support, main­
tenance and operation o f said Hospital and that since the 
year 1951, the said City has made per diem contribution to 
said Hospital in payment o f services rendered certain resi­
dents o f the City o f Wilmington, North Carolina”  (App. 5).

9. "The County has provided financial support for the 
James Walker Memorial Hospital by granting said hospital 
exemption from  payment o f County taxes . . .”  (App. 6 ).



10a

10. The "County has for many years prior to 1951, made 
direct annual contributions from  its treasury for the support, 
maintenance and operation o f the said hospital; and that 
since the year 1951, the said County has made per diem con­
tributions to said hospital in payment o f services rendered 
certain residents o f the County o f New Hanover.”  (App. 6).

As noted above, each o f the defendants filed a motion to 
dismiss under Rule 12 (App. 10, 11, 13). The existence o f 
certain statutes was stipulated by counsel for both sides and 
a tabular list o f funds paid over by the County and City be­
tween 1952 and 1957 was also stipulated as true. These funds 
totaled about 4 %  of the hospital’s income (App. 28) . It also 
was stipulated that none o f the original members o f the board 
were on the board at the time plaintiff applied (App. 15). 
The Mayor submitted an affidavit relating that the city does 
not contribute any financial support to the hospital but 
charges it for water and sewerage (App. 17). Other affidavits 
were submitted concerning City and County payments sub­
sequent to 195 3 (Appee. 1, 2, 4 ) . *

Reviewing the facts and the law the District Court held on 
defendants’ motion to dismiss under Rule 12 for lack o f fed­
eral jurisdiction (App. 18) "that for the lack o f jurisdiction 
the complaint must be dismissed . . (App. 30) . The 
Court o f Appeals affirmed, 261 F. 2d 521 (4th Cir. 1958).

* Appee. refers to respondents (appellee’s) appendix in the Court of 
Appeals.



11a

REASONS FOR ALLOWANCE OF THE WRIT

I

Under the Federal Rules of Civil Procedure dismis­
sal under Rule 12 was erroneous.

This case at this stage involves essentially a relatively nar­
row issue: whether the district court should have granted the 
motion "to  dismiss under Rule 12 [o f the Federal Rules of 
Civil Procedure] for lack o f federal jurisdiction,”  164 F. 
Supp. at 192. Petitioners contend that under the liberal pro­
visions o f the Federal Rules they stated enough in their com ­
plaint to have permitted them to go to trial and make their 
proof. As stated in Conley v. Gibson, 3 55 U. S. 41, it is "the 
accepted rule that a complaint should not be dismissed for 
failure to state a claim unless it appears beyond doubt that 
the plaintiff can prove no set o f facts in support o f his claim 
which would entitle him to relief.”  3 55 U. S. at 45-46. And 
as stated further in that case "the Federal Rules o f  Civil Pro­
cedure do not require a claimant to set out in detail the facts 
upon which he bases his claim. T o the contrary, all the Rules 
require is 'a short and plain statement o f the claim’ that will 
give the defendant fair notice o f what the plaintiff’s claim is 
and the grounds upon which it rests.”  Id. at 47. For " [t ]h e  
Federal Rules reject the approach that pleading is a game o f 
skill in which one misstep by counsel may be decisive to the 
outcome and accept the principle that the purpose o f pleading 
is to facilitate a proper decision on the merits.”  Id. at 48.

N or should it matter as here that the motion to dismiss 
particularly alleged lack o f  jurisdiction. For jurisdiction, in 
the sense that it was an issue here, was co-extensive with the 
issue posed by the merits: There was no jurisdiction, it was 
held, because the hospital in question was not a governmental 
instrumentality. But whether the hospital was a governmental 
instrumentality or not was the main substantive question in



12a

the case. The decision o f this question depended upon the na­
ture and extent o f the hospital’s contacts with the State,1 
something which could only be developed by the proof. Plain­
tiffs submit they were not obligated to plead except in general 
terms. And they should have been permitted, it is respectfully 
submitted, to adduce detailed proof to substantiate their gen­
eral allegations.

The general allegations which petitioner made were ade­
quate to permit detailed material proof to be made at the 
trial. For example, it should have been pertinent for petitioner 
to present proof o f  the extent to which and the manner in 
which the hospital exercised the right o f eminent domain 
(App. 6 ). Moreover, there is an allegation o f the complaint, 
admitted for purposes o f the motion to dismiss, that defend­

1 This Court, o f  course, has not expressed any definitive formula con­
cerning what constitutes state action under the Fourteenth Amendment. 
The cases indicate that any given determination may depend upon a full 
exposition of what constitutes the nexus between the alleged state instru­
mentality, and the government proper. See e.g., American Communications 
v. Douds, 339 U. S. 382, 401 (1950) (" . . . when authority derives in 
part from Government’s thumb on the scales, the exercise of that power 
by private persons becomes closely akin, in some respects, to its exercise by 
Government itself.”  And see Marsh v. Alabama, 326 U. S. 501 (1946) 
(company town; claim of free speech upheld against charge o f trespass); 
Dorsey v. Stuyvesant Town, 299 N . Y. 512, 87 N. E. 2nd 541 (1949) 
(state aided urban redevelopment; insufficient state action) cert. den. 339 
U. S. 981 (1950); Steele v. Louisville and N. R. R. Co., 323 U, S. 192 
(1944) (Railway Labor A ct held to require fair representation, forbid 
racial discrimination); Betts v. Easely, 161 Kan. 459, 169 P. 2d 831 
(1946) (union held governmental entity); Williams v. United States, 341 
U. S. 97 (1951) (private detective qualified as special police officer; state 
action); Derrington v. Plummer, 240 F. 2d 922 (5th Cir. 1956) (injunc­
tion issued against county’s lessee); Clark, Charitable Trusts, the Four­
teenth Amendment and the Will o f Stephen Girard, 66 Yale L. J. 979 
(1957); Horowitz, The Misleading Search for "State Action”  Under the 
Fourteenth Amendment, 37 Calif. L. Rev. 208 (1957).



13a

ants have received large grants o f money from  the federal 
government for expansion and maintenance o f the said hos­
pital (App. 6) .  It is difficult to see how the motion to dismiss 
could have been granted without knowing how much money 
was given and in what manner and under what conditions. It 
is noteworthy that neither o f  the opinions below so much as 
mentions the matter o f federal contribution.

It is further alleged that the City and County, by means o f 
a reverter clause, require the Board o f Managers to maintain 
the property as a hospital. This reverter clause, however, con­
cerns only part o f the property and it would bear upon the 
entire picture to know the fiscal significance o f this require - 
ment and its meaning for the operation o f the hospital as a 
whole. Moreover, it has been alleged that the County and 
City have over the years provided financial support for said 
hospital. It very well might make a difference for the ulti­
mate result if the court knew how much o f said financial aid 
was for capital construction which now is a part o f  the hos­
pital and how much was expended in day-to-day operation 
and is, in a sense, no longer a part o f the hospital.

In short, on the motion to dismiss none o f these, nor any 
other o f  the multitude o f facts which might have been de­
veloped upon a trial, were elicited. The purpose o f a complaint 
is not to plead such details but to state a claim upon which 
relief can be granted in support o f which such details may be 
marshalled.

Petitioners here note certain public records which are only 
part o f the evidence which may be produced in support o f 
petitioner’s general allegations. These are referred to merely 
as an example o f the injustice which is done to the notice 
pleading concept o f the Federal Rules by cutting off proof 
when a claim is well stated in general terms:



14a

1. The 1943-44 Annual Report o f the City o f W ilming­
ton, North Carolina, states at page 30:2 3 4 *

James Walker Memorial Hospital 
City’s Contribution $21,000

Located at Dickinson and Red Cross Streets, this gen­
eral, nonprofit hospital serves the greater portion o f W il­
mington’s white population as well as some o f the negro 
population. A  new addition, financed by federal funds 
at a cost o f $508,000, was placed in service in March, 
1944, to bring the total number o f beds available for 
patients to 3 00.8

2. Moreover, in a Petition for Condemnation in the Su­
perior Court o f New Hanover County, State o f North Caro­
line, filed by the Board o f Managers o f said Hospital against 
Kirby C. Sidbury and W ife on April 28, 1942 to condemn 
land taken for said half-million dollar addition the Hospital 
alleged that it was "a municipal corporation, a public body 
and body corporate and politic . . .”  Said petition for con­
demnation was granted by final judgment in said Superior 
Court on December 5, 1944, the judgment reciting that the 
petitioner is a public body, a body corporate and politic

5>4

3. There is also a public record o f  the fact that certain 
costs for capital construction have been paid for by the City 
and County in the Hospital’s complaint at page 6 o f the 
Record o f Board of Managers of the James Walker Memorial

2 A  copy of this Report is being deposited with this petition.

3 The original file concerning this federal grant is a public document, 
now on microfilm, held by the Housing and Home Finance Agency, 
Office of the Administrator, Records, Management Branch, F ¥ A  Project 
Docket No. 31-127.

4 A  copy o f the Petition for Condemnation and the Final Judgment
are deposited along with this Petition.



15a

H ospita l o f  W ilm in g ton  v . C ity  o f  W ilm in g ton  and N e w  
H a n over C o u n ty , 237 N . C. 179, 74 S. E. 2d 749, to which 
opinion the District Court (Appendix hereto, 19a) and the 
Court o f Appeals (Appendix hereto, 4a) referred:

The North wing referred to above cost approximately 
$100,000 all told, o f which the government contributed 
$40,000 and the City o f W ilmington and the County o f 
N ew Hanover paid, beginning the first o f  the fiscal year 
—  the first o f July, 1937, —  $10,000 each for three 
years, making $60,000 all told, in addition to their regu­
lar appropriations o f $15,000 each.

As stated above these references to public documents are 
made solely for the purpose o f demonstrating part o f the 
proof that would have been possible at a trial on the merits. 
But notwithstanding petitioners’ substantial general allega­
tions they were not permitted to go to such a trial.

On March 9, 1959, this Court handed down an order high­
ly suggestive o f what should be a proper disposition o f this 
cause. In passing on petition for writ o f certiorari in O liphant 
v. B rotherhood  o f  L o co m o tiv e  F irem en and E nginem en , 262 
F. 2d 359 (6th Cir. 1958) this Court ruled that "in  view o f 
the abstract context in which the questions sought to be 
raised are presented by this record, the petition for writ of 
certiorari is denied.”  27 U. S. L. W k. 3249. In the O liphant 
case, however, a "detailed record,”  265 F. 2d at 361, had been 
made. Since plaintiffs therein had made such a record, which 
nonetheless failed to remove the issues therein from  the level 
o f abstraction, no further proceedings were, it seems, war­
ranted. In the instant case, however, petitioners are in an en­
tirely converse position. Petitioners herein have n o t been p er­
m itted  to present the case in a manner sufficiently concrete to 
pose the highly important constitutional questions involved. 
Instead, petitioners have been dismissed on the basis o f an ab­
stract record.



16a

II

The issue presented is one of the highest importance.

Discrimination against Negro physicians generally, and 
especially by governmental institutions, raises a question o f 
the gravest national importance. The problem is not one 
merely o f the economic boycott practiced against such phy­
sicians, as in this case where Negro patients are permitted to 
use the hospital in question, but must accept a white physi­
cian. As stated in a recent scholarly study o f the subject con­
ducted under the auspices o f  the Commonwealth Fund,

. . . medicine is not simply a matter o f individual pa­
tients who seek out physicians according to whim or 
convenience. Modern medicine is practiced in a compli­
cated set o f institutions — ■ hospitals, clinics, public health 
agencies. The physician’s career involves finding a place 
in the system; the patient’s career as a consumer o f med­
ical services likewise involves access to hospitals, clinics, 
and other agencies, and his association with various so­
cial groups —  unions, employers, the armed forces, 
schools —  which connect him with health services and 
insurance schemes. The system, operating at its best, 
sends the patient on from  his first contact to whatever 
physicians or agencies can best handle his case; it also 
allows the physician, as he develops, to move towards 
those places in the system where he can best join his per­
sonal bent and ambition with maximum service.5

Because Negro physicians are so often excluded from  the 
main stream o f medical development they have increasingly 
in recent years eschewed practice in the South. It is shocking 
that notwithstanding the increase in Negro population in 
major southern cities the absolute number o f  Negro physi- 6

6Reitzes, Negroes and Medicine xxx (1958).



17a

cians in such cities is decreasing.6 This not only affects the 
quantity o f medical care available to the Negro community, 
but as indicated above, seriously affects the quality. For as 
Reitzes has written:

. . . The most important single element in the continu­
ed education o f physicians is affiliation with a hospital. 
The nature o f the affiliations and the type o f hospital 
with which a physician is affiliated is probably the best 
single index o f his ability to keep abreast o f good medi­
cal practice.7

Reitzes quotes a Negro physician, as follows, in the ensuing 
passage:

. . . One o f the Negro physicians stated that being ex­
cluded from  the stream o f medical knowledge in Atlanta 
made the Negro physician less competent than the white 
physician. He expressed his resentment and bitterness as 
follows:

All Negro doctors here suffer from  being cut off from 
the vital source o f information —  being with a good 
staff, and having the association and conferences o f an 
able staff. The young doctors suffer from  this as well as 
the older ones . . .  A  doctor so deprived dies at the root 
. . . White doctors my age and with my experience will 
rub shoulders with their superiors.8

In view o f the fact that the Board o f Managers o f hospital 
here involved was, as indicated by the record, appointed by 
statute to consist o f a majority o f governmental officers, it

6ld. at 272, 295, 316.

Ud. at 275.

8 Ibid. And see 49 Journal o f the National Medical Association, 272, 
352, 429 (1957) (setting forth reports on discrimination in hospitals 
throughout the nation).



18a

appears unquestionable that that board was at the time o f its 
appointment a governmental board. Since subsequent ap­
pointees to the board were appointed by the board itself, they
were appointees o f a governmental body and the case should 
seem squarely to fall under the first Girard T ru st decision, 
353 U. S. 230. For just as Girard College was managed by a 
municipal board, so the board in this case started out as a 
municipal board. It cannot seriously be urged that the death 
o f the original members whose replacements were selected  b y  
the board  made it any less a governmental entity. The O li-  
phant case, however, indicates that it is the view o f this Court 
that questions o f this sort should not be decided as abstrac­
tions, but on the basis o f a complete record. Therefore peti­
tioners respectfully submit that on the authority o f the O li- 
phant case and C on ley  v . G ibson, supra, the judgment below 
should be vacated and petitioners permitted to make their 
proof.

C O N C L U S I O N
Wherefore for the foregoing reasons it is respect­

fully submitted that the petition for writ of certiorari 
should be granted.

Respectfully submitted,

T h u r g o o d  M a r s h a l l

Ja c k  G r e e n b e r g

10 Columbus Circle 
New York 19, New York

C o n r a d  O. Pe a r s o n

203%  E. Chapel Hill Street 
Durham, North Carolina

R o b e r t  R . B o n d

612 Red Cross Street 
Wilmington, North Carolina

C ounsel fo r  Petitioners