Heyward v. Public Housing Administration Appellants' Brief

    IN  T H E

Itttteii States dmtrt rtf Appeals
For the Fifth Circuit

No. 16040

PEINCE HEYWARD, et al,

v.
Appellants,

PUBLIC HOUSING ADMINISTRATION, et al,
Appellees.

APPELLANTS’ BRIEF

Constance B aker Motley,
T htjrgood Marshall,

107 West 43rd Street,
New York 36, N. Y.

A. T. W alden,
200 Walden Building,

Atlanta 3, Georgia.

P rank D. R eeves,
473 Florida Avenue,

Washington, D. C.
Attorneys for Appellants.

Supreme P rinting Co., I nc., 114 W orth Street, N. Y. 13, BEekman 3 - 2320 
« “49



I N D E X

Statement of the Case .............................................  1
Specification of E r ro r s .............................................  5
Argument ...................................................................  6

I. Jurisdiction....................................................  6
II. V enue.............................................................  10

III. Justiciable Case or Controversy ................  15
A. Nature and Extent of PH A Participation

In The Limitation of Certain Projects to 
White Occupancy....................................  15

B. By Placing Requirement of Title 42,
United States Code, §§ 1410(g) and 
1415(8) (c) in its Contract with SHA,
PHA Has Not Discharged Its Obligation 22

C. Plaintiffs Have Sufficient Legal Interest
in Expenditures of Funds By PHA To 
Give Them Standing To Challenge Vali­
dity of Such Expenditures ....................  24

1. Nature and Extent of PHA’s Financial
Assistance.................................................  24

2. Nature of Plaintiffs’ Interest in PHA
Expenditures ............................................ 26

IV. The Separate But Equal Doctrine ............. 28

Tabe of Cases

Armstrong v. Townsend (S. D. Ind. ), 8 F. Supp. 953 7
Bitterman v. Louisville & N. R. Co., 207 U. S. 205 .. 7, 8
Bolling v. Sharpe, 347 U. S. 497 ............................... 6
Buchanan v. Warley, 245 U. S. 60 ...........................  28, 29

PAGE



11

Chesapeake & Del. Canal. Co. v. Glring (C. A. 4th),
159 F. 662, cert, den., 212 U. S. 571 ....................  7

City of Birmingham v. Monk (C. A. 5th), 185 F. 2d
859, cert, den., 341 U. S. 940 ..................................  29

City of Memphis v. Ingram (C. A. 8th), 195 F. 2d
338 ............................................. ............................  9

Crabh v. Weldon Bros. (S. D. Iowa), 65 F. Snpp. 369 
rev. on other grds., 164 F. 2d 797 ........................ 23

Detroit Housing Commission v. Lewis (C. A. 6th),
226 F. 2d 180 ........................................................  28

Doremus v. Board of Education, 342 U. S. 429 . . . .  27
Downs v. Wall (C. A. 5th), 176 Fed. 657 ................  11
Ebensherger v. Sinclair Refining Co. (C. A. 5th), 165 

F. 2d 803, cert, den., 335 U. S. 816........................ 7,8
Federal Housing Administration v. Burr, 309 U. S.

242 ..........................................................................  10
Federal Trade Commission v. Winsted Hosiery Co.,

258 U. S. 483 ......................................................  26
Giles v. Harris, 189 U. S. 475 ..................................  6
Glenwood Light & Power Co. v. Mutual Light, Heat 

and Power Co., 239 H. S. 121...............................  7
Hague v. C. I. O., 307 U. S. 496 ...............................  6
Heard v. Ouachita Parish School Board (W. D. La.),

94 F. Supp. 897 ....................................................  11
Heyward v. PHA (C. A. D. C.), 214 F. 2d 222 . . . .  4,16
Housing Authority of San Francisco v. Banks, 120 

Cal. App. 2d 1, 260 P. 2d 668, cert, den., 347 H. S.
974 ..........................................................................  28

Hurd v. Hodge, 334 U. S. 2 4 ....................................  6
International Shoe Co. v. Washington, 326 U. S. 310 11,14
Joint Anti-Fascist Refugee Comm. v. McGrath, 341 

U. S. 123

PAGE

26



I l l

Jones v. City of Hamtramek (S. D. Mich.), 121 F.
Supp. 123 ...............................................................  28

Jones v. Fox Film Corp. (C. A. 5th), 68 F. 2d 116 .. 11
Kelley v. Lehigh Nav. Coal Co. (C. A. 3d), 151 F. 2d

743, cert, den., 327 U. S. 779 ...............................  7
Keifer v. Reconstruction Finance Corp., 306 U. S.

381 ..........................................................................  10
.Lansden v. Hart (C. A. 4th), 180 F. 2d 679 ............. 7
Lisle Mills, Inc. v. Arkay Infants Wear (E. D. N. Y.),

84 F. Supp. 697 .....................................................  11
Lone Star Package Car Co. v. Baltimore & Ohio R.

Co. (C. A. 5th), 212 F. 2d 147....................... 11
Massachusetts v. Mellon, 262 U. S. 447 ....................  27
Mississippi & Missouri R. R. v. Ward, 67 U. S.

(2 Black) 485 ..........................................................  7
Nixon v. Condon, 286 U. S. 7 3 .............................. 6
Nixon v. Herndon, 273 U. S. 536 ................................. 6
Nueces Valley Townsite Co. v. McAdoo (W. D. Tex.),

257 Fed. 143 ............................................................ 9
Perkins v. Benquet Consol. Min. Co., 323 U. S. 437 .. 11
Pollack v. Public Utilities Commission (C. A. I). C.),

191 F. 2d 450 ............................................................ 20
Public Utilities Commission v. Pollack, 343 U. S.

451...............................................................  18,19,20
Roberts v. Curtis, 93 F. Supp. 604 ...........................  6
Scott v. Donald, 165 U. S. 107.................................... 7
Seawell v. McWhithey, 2 N. J. Super. 255, 63 Atl. 2d 

542, rev. on other grds., 2 N. J. 563, 67 Atl. 2d 309 29
Seven Oaks Inc. v. Federal Housing Administration

(C. A. 4th), 171 F. 2d 947 ......................................  10
Shelley v. Kraemer, 334 U. S. 1..................................  29

PAGE



XV

Sigora v. Slusser (D. C. Conn.), 124 F. Supp. 327 .. 10
Smith v. Adams, 130 U. S. 167..................................  7
Smith v. Allwright, 321 U. S. 649 ............................... 6
Smith v. Merrill (C. A. 5th), 81 F. 2d 609 ..................  11
Swafford v. Templeton, 185 XL S. 487 .......................  6
Taylor v. Leoxxard, 30 N. J. Super. 116, 103 Atl. 2d,

633 ..........................................................................  29
Travelers Health Assoc, v. Com. of Va., 339 IT. S.

643 ..........................................................................  H
Vann v. Toledo Metropolitan Housing Authority

(N. D. Ohio), 113 F. Supp. 210 ...........................  28
Wiley v. Sinkler, 179 U. S. 5 7 ..................................  6
Young v. Kellex Corp. (E. D. Tenn.), 82 F. Supp.

953 ..........................................................................  23

Statutes

Title 5, United States Code, 113y-113y-16...................  10
Title 28, United States Code, § 1331.........................  1, 6
Title 28, United States Code, § 1343(3) ....................  1
Title 28, United States Code, § 1391(c)....................  10
Title 28, United States Code, § 1392 .........................  11
Title 42, United States Code, § 1401, et seq.................  3
Title 42, United States Code, § 1403a........................ 10
Title 42, United States Code, § 1404a........................ 10,19
Title 42, United States Code, § 1405a........................ 10
Title 42, United States Code, §1409, § 1410(a),

§ 1410(c) .................................................................  24
Title 42, United States Code, § 1410(g) .............1, 6,19, 22
Title 42, United States Code, § 1411(a), 1413...........  25
Title 42, United States Code, § 1415(7) (a) ............... 24
Title 42, United States Code, § 1415(7) ( b ) ..............  18
Title 42, United States Code, § 1415(8) (c) . . .  .1, 6,19, 22, 23

PAGE



V

Title 42, United States Code, § 1421a.......................  26
Title 42, United States Code, § 1982 ......................... 1, 6, 28
Title 42, United States Code, § 1983 .........................  1
Housing Authorities Law of Georgia, 99 Ga. Code 

Annotated, 1101 et seq............................................  3

Other Authorities

Annotation 30 A. L. R. 2d, 602, 621 (1953) ............ 7
Annotation 30 A. L. R. 2d, 602, 619 (1953) ............. 7
Form PHA-1954, Rev. July 1950 ....... ......................  15
HHFA-PHA Low Rent Housing Manual, Feb. 21,

1951, § 102.1 ........................................... ................  15
Journal of Housing Yol. 13, No. 4, April 1956, p. 134 8
Restatement of Torts, § 876 ......................................  27
Sen. Rep. No. 84, 81st Cong. 1st Sess., 2 U. S. Code

Congressional Service 1569 (1949) ........................ 22
Sen. Rep. No. 84, 81st Cong. 1st Sess., 2 U. S. Code 

Congressional Service 1566, 1570 (1949) ............. 23

PAGE

Terms and Conditions Constituting Part II of Annual 
Contributions Contract Between Local Authority
and Public Housing Administration, Form No. 
PHA-2172, Rev. Sept. 1, 1951, 107-110, 115, 118,
123(B), 124, 204, 205, 214, 215, 305(D), 308, 404,
407 ..........................................................................  13

Terms and Conditions Constituting Part II of Annual 
Contributions Contract Between Local Authority 
and Public Housing Administration, Form No. 
PHA-2172, Rev. Sept. 1, 1951, § 106(B) ..............  12



IN  T H E

Huttefc States Court of Appeals
For the Fifth Circuit

No. 16040

----------------o----------------

P rince H eyward, et al.,

Y.
Appellants,

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

— -------------------------------------o — ----------------------------------- --

APPELLANTS’ BRIEF

Statement of the Case

The gravamen of the Complaint is that defendants, as 
governmental officials, are enforcing a policy of racial 
segregation in public housing projects in the City of 
Savannah, Georgia, in violation of rights secured to plain­
tiffs by the 5th and 14th Amendments to the Federal Con­
stitution and by Federal Statutes, i.e., Title 42, United 
States Code, § 1982 (formerly Title 8 U. S. C. 42) and Title 
42, United States Code, §§ 1410(g), 1415(8)(c) (R. 9-10).

The jurisdiction of the court below was invoked pursuant 
to Title 28, United States Code, §§1331 and 1343(3) and 
Title 42, United States Code, § 1983 (formerly Title 8 
U. S. C. 43) (R. 3).

Relief sought is 1) a declaration that defendants may 
not pursue a policy of racial segregation in public housing 
and a declaration regarding the legality of numerous prac­
tices and procedures inherent in the enforcement of such



2

a policy, 2) an injunction enjoining all defendants from 
enforcing the segregation policy and the practices inherent 
therein, 3) an injunction also enjoining defendant Public 
Housing Administration and its field office director, defend­
ant Hanson, from giving federal financial aid and other 
federal assistance to the Savannah Housing Authority for 
the planning, construction, operation, or maintenance of 
any project which excludes plaintiffs, solely because of 
race and color, and 4) an award of $5,000 damages to 
each plaintiff against each defendant (EL 11-14).

Plaintiffs-appellants, hereinafter referred to as plain­
tiffs, are all adult Negro citizens of the United States and 
of the State of Georgia, residing in Savannah, Georgia. 
Each plaintiff has been or will be displaced from the site of 
his or her residence to make way for construction of a 
public housing project in Savannah known as Fred Wessels 
Homes. Although each plaintiff meets all requirements 
established by law for admission to public housing, each 
was denied consideration for admission and admission to 
Fred Wessels Homes and certain other public housing 
projects limited by defendants to occupancy by white 
families (R. 6, 9-10). Each plaintiff has a statutory 
preference for admission to public housing as a displaced 
and needy family. Plaintiffs bring this action on behalf of 
themselves and all other Negroes similarly situated (R. 
5-7).

Defendant-appellee, Public Housing Administration, 
hereinafter referred to as defendant PHA, is a corporate 
agency and instrumentality of the United States. Its 
principal office is in the District of Columbia and the Com­
missioner of PHA resides there. However, pursuant to 
authority vested in it, PHA has established branch offices 
in various states. It has a branch office in Atlanta, Georgia 
known as the Atlanta Field of the PHA. Defendant- 
appellee, Arthur R. Hanson, hereinafter referred to as



3

defendant Hanson, is the director of said office. PHA 
administers the Federal low-rent housing program involved 
in this case. United States Housing Act of 1937, as amended, 
Title 42, United States Code, § 1401, et seq. (R. 8).

Defendant-appellee,, Savannah Housing Authority, here­
inafter referred to as defendant SHA, is a public body 
corporate which administers the low-rent housing program 
of the City of Savannah, Georgia. Housing Authorities 
Law of Georgia, 99 Ga. Code Annotated 1101 et seq. The 
other defendants in this case are the members and the 
executive director of the SHA (R. 8).

Pursuant to provisions of the United States Housing 
Act of 1937, as amended, and the Housing Authorities Law 
of the State of Georgia, six low-rent projects have been 
built in Savannah and are presently in operation: Fellwood 
Homes (Ga-2-1) with 176 units, Yamocraw Village (Ga-2-2) 
with 480 units, Garden Homes Estate (Ga-2-3) with 314 
units, Fred Wessels Homes (Ga-2-4) with 250 units, 
Fellwood Annex (Ga-2-5) with 127 units and Garden Homes 
Annex (Ga-2-6) with 86 units (R>. 41).

At the time of the filing of the Complaint in this action, 
May 20, 1954, there were at least three remaining public 
defense housing projects in Savannah. These projects 
were built pursuant to provisions of various Federal enact­
ments. Title to these projects was in the United States. 
They were operated by the SHA under lease from the 
United States acting through the Federal Public Housing 
Authority or its successor PHA (PHA Exhibit 7). Since 
the filing of the Complaint, PHA has conveyed title to two 
of these projects to the SHA for use as low-rent projects; 
these are Nathanael Green Villa, consisting of 250 units 
(conveyed March 31, 1955) and Francis Bartow Place, 
consisting of 150 units (conveyed June 1, 1955). A third 
project, Deptford Place, was conveyed on June 17, 1953 
for the purpose of eventually removing the dwelling units



4

thereon and conveyance of the land to the city for industrial 
purposes (R. 35, 43-44).

With the exception of three of the above-named projects, 
i.e., Yamocraw Village, Fellwood Homes and Fellwood 
Annex, containing a total of 783 unite, all other public low- 
rent housing projects in Savannah, i.e., Garden Homes 
Estate, Fred Wessels Homes, Garden Homes Annex, 
Nathanael Greene Villa, Francis Bartow Place, with a 
total of 1050 units., are barred to qualified Negro families, 
solely because of race and color. In addition, Deptford 
Place is limited to white occupancy (R. 27, 31, 35).

Qualified Negro families are permitted to occupy a 
certain specified percent of the units determined by applica­
tion of an administrative formula known as the PH A 
Racial Equity Formula (R. 33, 37). The determination 
made as a result of application of this formula forms a 
part of the contracts between PHA and SHA, Heyward 
v. PHA (C. A. D. C.) 214 F. 2d 222.

As of August 30, 1955, 73 white families, whose applica­
tions for admission have been reviewed and whose eligibility 
for public low-rent housing has been determined, were 
awaiting admission. As of the same date, 319 Negro 
families similarly situated were awaiting admission (R. 
36). Not one of the 250 families now living in Fred 
Wessels Homes is a displaced family (R. 36).

A motion for summary judgment was filed on behalf 
of PHA and Hanson (R. 38). A motion to dismiss and 
an answer were filed on behalf of SHA and the other- 
defendants (R. 15, 21). Both motions were heard on Sep­
tember 30, 1955 (R, 74).

The court below granted the motion for summary judg­
ment on the following grounds: 1) the complaint fails to 
show that the matter in controversy as to each plaintiff 
exceeds $3,000.00; 2) PHA and Hanson are not acting 
under color of any state law; 3) court lacks venue of the



5

action under Title 28, United States Code, § 1391(b) in that 
PHA is not a corporation doing business in the judicial 
district within the meaning of Title 28, United States Code, 
§ 1391(c) ; 4) plaintiffs lack sufficient legal interest in the 
expenditure of Federal funds by PHA to give them stand­
ing to challenge the validity of such expenditures; 5) that 
PHA by placing in its annual contributions contract with 
SHA a requirement that the latter shall extend preferences 
in occupancy required by Title 42, United States Code, 
§ 1410(g) has fulfilled its obligation under that statutory 
provision; 6) in view of the fact that PHA has not pre­
scribed any policy as to whether low-rent housing in 
Savannah shall be occupied by any particular race but has 
left the determination of that policy to the SHA, there is no 
justiciable controversy between plaintiffs and PHA and 
Hanson; and 7) since Hanson as Field Office Director of 
PHA has no official function or duty with respect to dis­
pensing or withholding of Federal funds to SHA, plaintiffs 
fail to make out a claim on which any relief can be granted 
against defendant Hanson (R. 47).

The court below granted the motion to dismiss on the 
ground that “ the legal doctrine of separate but equal 
facilities is still the law of the land and controls this case” , 
135 F. Supp. 217 (R. 51, 52).

From the orders entered granting the above motions, 
plaintiffs appeal (R. 57).

Specification of Errors

The court below erred in granting the motion of defend­
ants PHA and Hanson for summary judgment on the 
grounds set forth in its order of October 15, 1955.

The court below erred in granting the motion to dismiss 
on the ground that the doctrine of separate but equal 
facilities is still the law of the land and controls this case.



6

ARGUMENT 

I. Jurisdiction

One of the grounds upon which the court below granted 
the motion of defendants PHA and Hanson for summary 
judgment is that the complaint fails to show that the matter 
in controversy as to each plaintiff exceeds $3,000. as re­
quired by 28 IT. S. C. § 1331.

In this action, plaintiffs allege they have been denied 
admission to Fred Wessels Homes, and certain other pub­
lic housing projects, by these defendants, solely because 
of race and color (R. 10). Plaintiffs’ right not to be 
deprived of a public housing unit by these defendants 
solely because of race and color is secured by the provi­
sions of 42 H. S. C. § 1982, the requirements of 42 H. S. C. 
§§ 1410(g) and 1415(8) (c), the due process clause of the 
Fifth Amendment to the Federal Constitution and by the 
public policy of the United States. Cf. Hurd v. Hodge, 
334 U. S. 24; cf. Roberts v. Curtis, 93 F. Supp. 604; cf. 
Bolling v. Sharpe, 347 U. S. 497.

In civil rights actions at law, as in other actions at law, 
the amount necessary for jurisdiction under § 1331 is deter­
mined by the sum claimed in good faith by the plaintiff 
seeking to redress the violation of his civil rights, Giles v. 
Harris, 189 U. S. 475; Swafford v. Templeton, 185 U. S. 
487; Wiley v. Sinkler, 179 U. S. 57. See, Hague v. C.I.O., 
307 U. S. 496, 507; cf. Smith v. AUwright, 321 U. S. 649; 
cf. Nixon v. Condon, 286 U. S. 73; cf. Nixon v. Herndon, 
273 U. S. 536.

In the Wiley case, supra, plaintiff sought redress against 
election officials claiming that they had denied him the 
right to vote in a congressional election. He sought 
damages which he alleged were $2500. At that time, $2000. 
was the required jurisdictional amount. The Supreme



7

Court held that since plaintiff alleged that his damages 
exceeded $2000., the jurisdictional requirement had been 
met.

In this case, plaintiffs allege that the amount in con­
troversy as to each plaintiff exceeds $3000. exclusive of 
interest and costs (R. 3) and pray damages in the amount 
of $5000. for each plaintiff against each and all defend­
ants (R. 13).

These allegations, as indicated by the Wiley case, clearly 
meet the jurisdictional requirements of § 1331.

In civil lights cases, as in other cases, when injunction 
is sought to restrain defendant from interfering with plain­
tiff’s right, there are two criteria which have been estab­
lished by the courts for determining amount or matter in 
controversy: 1) the value of that which the plaintiff seeks 
to gain or protect, and, 2) the value of what defendant will 
lose should requested relief be granted, Smith v. Adams, 
130 U. S. 167; Armstrong v. Townsend (S. D. Ind.), 8 F. 
Supp. 953; Cheseapeahe <& Del. Canal Co. v. Gring (C. A. 
4th), 159 F. 662, cert, den., 212 U. S. 571. See Annot. 30 
ALR 2d 602, 619 (1953).

The result of applying either criterion need not be the 
same. See Mississippi <& Missouri R.B. v. Ward, 67 U. S. 
(2 Black) 485, where the defendants’ criterion was adopted. 
See Kelley v. Lehigh Nav. Coal Co. (C. A. 3d), 151 F. 2d 
743, cert, den., 327 U. S. 779, where plaintiffs’ criterion 
was employed.

But the overwhelming majority of eases have employed 
the plaintiffs’ criterion, Scott v. Donald, 165 U. S. 107; 
Bitterman v. Louisville & N. B. Co., 207 U. S. 205; Glen- 
wood Light <& Power Co. v. Mutual Light, Heat and Power 
Co., 239 U. S. 121; Ebensberger v. Sinclair Refining Co. 
(C. A. 5th), 165 F. 2d 803, cert, den., 335 U. S. 816; Lans- 
den v. Hart (C. A. 4th), 180 F. 2d 679. See also Annot. 30



8

ALR 2d 602, 621 (1953) for collection of cases employing 
the plaintiffs’ point of view criterion.

Employing plaintiffs’ criterion to the instant case, each 
plaintiff here seeks to gain a public housing family unit. 
The value of such a unit, per se, as well as to each plaintiff, 
clearly exceeds $3,000. The record shows that maximum 
cost of construction and equipment per room in Fred Wes- 
sels Homes is to be $1,750. (See Exhibit 1. pg. 1, at­
tached to Slusser Affidavit and sent up to the court in 
original form.) A family unit would obviously consist 
of at least three rooms (R, 35). Thus construction cost 
of even the smallest family unit exceeds the jurisdictional 
amount.1

The group of cases which are perhaps most closely 
analogous to the instant case are those in which plaintiff 
has sought specific performance of a contract for the sale 
of real property. In these cases the courts have said that 
the test of jurisdiction is the value of the property which 
plaintiff seeks to acquire, and have rejected claims that 
plaintiff failed to meet the requisite jurisdictional amount 
because he did not show that his damages would exceed 
$3,000 if defendant failed to perform his contract. Eb'ens- 
berger v. Sinclair Refining Co., supra.

It should be noted at this point that no formal plea 
to the jurisdiction was made by defendants PHA and 
Hanson. Bitterman v. Louisville & N. R. Co., 207 U. S. 205, 
224. The motion filed by them was a motion for summary 
judgment on the ground that there is no genuine issue as 
to any material fact (R. 38). Their motion is supported 
by an affidavit which does not challenge the jurisdictional 
amount (R. 39). These defendants raised a question re­
garding jurisdictional amount by brief and oral argument 
(R. 79).

1 See Journal of Housing, Vol. 13 No. 4 April 1956 p. 134 where 
it is stated that construction costs of Fred Wessels Homes were 
$1538 per room, or about $7234 per unit.



9

While it is true that where challenged the burden is on 
plaintiff to show that the amount in controversy exceeds 
$3,000, to justify dismissal where there is an adequate 
formal allegation of amount, it must appear to a legal 
certainty that the claim is for less than the jurisdictional 
amount. City of Memphis v. Ingram (C. A. 8th), 195 F. 2d 
338. Here, on the contrary, it seems clear that the amount 
in controversy exceeds the requisite $3,000.

Applying the defendants’ point of view, there appears 
to be still another basis for jurisdiction. One form of 
relief sought here is an injunction enjoining PHA and 
Hanson from giving federal financial and other federal 
assistance to 8HA for projects from which plaintiffs are 
excluded solely because of race and color (R. 13). By the 
admission of these defendants at least three of these proj­
ects are limited to white occupancy (R. 78). The financial 
assistance given by PHA to the SHA is in the form of a 
loan and a subsidy (R. 78). The loan which PHA agreed 
to make to finance Fred Wessels Homes (GA-2-4), Yama- 
craw Village (GA-2-5) (Negro), and Garden Homes An­
nex (GA-2-6) (white) as of May 8, 1953 was $3,337,019.00 
(Exhibit 1, Amendatory Agreement No. 3 attached thereto). 
The rate of interest charged by PHA on this loan to SHA 
appears to be 2%% per annum (Exhibit 1, pg. 1).

It thus appears that if plaintiffs succeed in enjoining 
these defendants from giving such financial aid in the 
future (R. 36), PHA would lose the interest it would earn 
on such loans which is clearly in excess of $3,000 per annum 
on a single project loan.

In Nueces Valley Townsite Co. v. McAdoo (W. D. Tex.), 
257 Fed. 143, the plaintiff sought to enjoin acts of a Fed­
eral governmental official, alleging that if the injunction 
was granted, the government would save $400 per month 
for 21 months. The court held that this constituted the 
requisite jurisdictional amount. Thus another view of the



10

amount in controversy may be expressed in terms of the 
amount of money which PHA would save by being enjoined 
from furnishing loans and subsidies for the construction 
of segregated projects. From the Annual Contributions 
Contracts it is clear that the amount so saved would 
exceed $3,000 (Exhibit 1).

II. Venue

PHA, being successor to the United States Housing- 
Authority, is a public body corporate which Congress has 
authorized to sue and to be sued with respect to its func­
tions under the United States Housing Act of 1937 and the 
National Defense Housing Projects Acts [42 U. S. C. 1403a, 
1404a, 1405a; 5 U. S. C. 133y-133y-16, Reorganization Plan 
No. 3 effective July 27, 1947]. It may, therefore, be sued 
in the same manner as any other corporation. Sigora v. 
Slusser, (D. C. Conn.), 124 F. Supp. 327; cf. Keifer 
v. Reconstruction Finance Corp., 306 U. S. 381; cf. Federal 
Housing Administration v. Burr, 309 U. S. 242; cf. Seven 
Oaks Inc.'Y. Federal Housing Administration (C. A. 4th), 
171 F. 2d 947.

The court below ruled that venue was improper as to 
PHA since it is not doing- business in the judicial district 
within the meaning of 28 U. S. C. § 1391(c).

There is no question raised as to the residence of defend­
ants SHA, its members, and executive director. They 
reside in the southern judicial district of Georgia. There 
is no question that defendant Hanson resides in Atlanta 
or the northern judicial district of the state. There is 
apparently no question that PHA is doing business in 
Atlanta where its Field Office is located. By virtue of an 
amendment to the Judicial Code in 1948, 28 U. S. C. 1391(c), 
the judicial district in which a corporation is doing busi­
ness “ shall be regarded as the residence of such corpora­
tion for venue purposes.” The question raised by the



11

ruling of the court below is whether it is necessary to find 
that P ITA is doing business in the southern district before 
it can become amenable to suit there.

In this action, suit is brought against different defend­
ants “ residing” in the same state but in different judicial 
districts thereof. In such case, the Judicial Code provides, 
in language too clear to be misunderstood, that suit may be 
brought in any of such districts, except where the suit is 
one of a local nature. 28 U. S. C. § 1392; Jones v. Fox Film 
Corp. (C. A. 5th), 68 F. 2d 116; Smith v. Merrill (C. A. 
5th), 81 F. 2d 609; Downs v. Wall (C. A. 5th), 176 Fed. 657; 
Lisle Mills, Inc. v. Arkay Infants Wear (E. D. N. Y.), 84 
F. Supp. 697; Heard v. Ouachita Parish School Board 
(W. D. La.), 94 F. Supp. 897. Therefore, in deciding 
whether venue is proper as to PHA, appellants are not 
limited to a determination whether, under the facts of this 
case, PHA is doing business in the southern district of 
Georgia. If PHA was doing business anywhere in Georgia 
at the time this suit was instituted, then venue is properly 
laid in the southern district where other defendants reside.

In this case, appellants assert rights secured by the 
Constitution and laws of the United States (R. 3). This 
is therefore not a case in which federal jurisdiction is 
founded solely upon diversity of citizenship. In such a 
case, determination as to what constitutes doing business 
by a corporation for venue purposes is to be governed “ by 
basic principles of fairness.” Lone Star Package Car Co. 
v. Baltimore & Ohio R. Co. (C. A. 5th), 212 F. 2d 147; 
International Shoe Co. v. Washington, 326 U. S. 310; 
Travelers Health Assoc, v. Com. of Va., 339 U. S. 643; 
Perkins v. Benquet Consol. Min. Co., 323 U. S. 437. Under 
the basic principles of fairness established by the United 
States Supreme Court in the International Shoe Co. case 
and followed by this Court in the Lone Star Package Car 
case, the facts of this case require that the court below 
exercise jurisdiction over PHA.



1 2

PHA has established in the City of Atlanta, Georgia, a 
Field Office, the director of which is defendant Hanson. 
The record in this case discloses that this office has been 
in existence at least since March 19, 1952 when an Annual 
Contribution’s Contract between SHA and PHA was en­
tered into regarding the planning, construction, operation 
and maintenance of Fred Wessels Homes and other 
projects. The agreement is signed by the then Director 
of the Atlanta Field Office for PHA, and an amendment 
thereto dated March 18, 1953 was signed by defendant 
Hanson (Exhibit 1). The record also discloses that con­
tracts between PHA and SHA have existed since November 
25, 1940 and that the latest contract between SHA and 
PHA entered into on January 21, 1954 regarding the opera­
tion of existing projects which were the subject of a 1940 
contract, was signed by the Acting Director of the Atlanta 
Field Office (Exhibit 1). It is thus clear that the function 
of the Atlanta Field Office of PHA is to enter into con­
tracts with local public housing agencies in Georgia cover­
ing planning, construction, operation and maintenance of 
low-rent projects.

Part I of the Annual Contributions Contract reveals 
the nature and extent of PHA financial involvement in the 
housing involved in this controversy (Exhibit 1).

Part II of the Annual Contributions Contract reveals 
the detailed involvement of PHA in planning, construction, 
operation and maintenance of these projects (Exhibit 1). 
Examination of this latter document demonstrates that 
SHA is subject to complete regulation and control by PHA. 
Under the terms of this agreement, for example, PHA 
approves the plans and specifications of the local authority 
for construction of the project,2 all construction contracts

2 Term and Conditions Constituting Part II of Annual Contri­
butions Contract Between Local Authority and Public Housing 
Administration. Form No. PHA-2172, Rev. Sept. 1, 1951, § 106(B).



13

including bids for same,3 prevailing wages to be paid by 
local authority to all architects, technical engineers, drafts­
men, and technicians employed in the development of the 
projects;4 PHA prescribes the forms to be used by con­
tractors and subcontractors in preparing their payrolls and 
instructions with respect to same; 5 6 PHA approves form 
of contractor’s release from liability to local agency f  PHA 
approves salaries paid to local agency personnel,7 develop­
ment cost,8 budgets,9 income limits and rent schedules; 10 
PHA approves acceptance of work done under construction 
or equipment contract,11 insurance coverage,12 settlement 
for damaged or destroyed project,13 and sale of excess 
property.14

On the question whether PHA does business in Savan­
nah, it should be noted that Section 121 of Part II of the 
Contract requires that “ The local authority shall provide 
and maintain or require that there shall be provided and 
maintained, during the construction of each Project, ade­
quate facilities at the site for the use of PHA’s representa­
tives who may be assigned to the review of such Project.”

It should also be noted that the affidavit of PHA Com­
missioner Slusser, which supports the motion for summary 
judgment, admits that by virtue of the contracts existing 
between PHA and SHA, PHA has control over the projects 
here in controversy to the extent indicated and that this

3 Id., §§ 107. 108, 109, 110.
*Id., § 115.
6 Id., § 118.
6 Id,., § 123(B).
7 Id., §215.
8 Id., § 404.
9 Id., § 407.
10 Id., §§ 204, 205.
11 Id., § 124.
12 Id., § 305(D).
13 Id., § 214.
14 Id., §308.



u

control extends to the occupancy of such projects as re­
quired by the United States Housing Act of 1937, as 
amended, and the regulations promulgated by PHA pur­
suant thereto (E. 41).

And finally, it should be noted that PHA’s Eacial 
Equity Formula is the basis for the limitation of Fred 
Wessels Homes and certain other projects to white occu­
pancy (E. 27, 31, 33, 36-37).

In short, the record clearly exhibits that there are six 
projects which have been built in Savannah pursuant to 
contracts entered into by PHA and SHA (Exhibit 1); that 
since the filing of this suit PHA has turned over to SHA 
two former defense public housing projects located in 
Savannah for use as low-rent projects (E. 43); that the 
planning, construction, operation and maintenance of 
projects entails financial involvement on the part of PHA 
amounting to millions of dollars; that the PHA interest 
in these projects is substantial and continuing; that PHA 
exercises control over these projects, including occupancy; 
and that the limitation of certain projects to white occu­
pancy is a PHA determination.

In International Shoe Co. v. Washington, supra, the 
Supreme Court said at 317:

“ ‘Presence’ in the state . . . has never been 
doubted when the activities of the corporation there 
have not only been continuous and systematic, but 
also give rise to the liabilities sued on, even though 
no consent to be sued or authorization to an agent to 
accept service of process has been given.”



15

III. Justiciable Case or Controversy

A. Nature and Extent of PH A Participation In T he
Lim itation O f Certain Projects To W hite O ccupancy.

PHA’s racial policy is as follows:
“ The following general statement of racial policy 
shall be applicable to all low-rent housing projects 
developed and operated under the United States 
Housing Act of 1937, as amended:

1. Programs for the development of low-rent 
housing in order to be eligible for PHA assistance, 
must reflect equitable provision for eligible families 
to all races determined on the approximate volume 
and urgency of their respective needs for such hous­
ing.

2. While the selection of tenants and assigning 
of dwelling units are primarily matters for local 
determination, urgency of need and the preferences 
prescribed in the Housing Act of 1949 are the basic 
statutory standards for the selection of tenants.” 15 16

In accordance with this policy, the Development Pro­
gram., 1S< which is a form prepared by PHA for use by SHA 
in malting application for federal assistance and federal 
approval of its program, required SHA to indicate the 
racial composition of each federally-aided project and each 
proposed federally-aided project and to show, by the number 
of units alloted or to be alloted to white and non-white 
families, that equitable provision for eligible families of 
both races have been or will be provided, determined on 
the approximate volume and urgency of their respective 
needs for such housing. This determination must be based

15 HHFA PHA Low-Rent Housing Manual, Section 102.1 
February 21, 1951.

16 Form PHA-1954 Rev. July 1950, referred to in Exhibit 1, 
Part I, Section 2.



16

solely on the volume of substandard housing occupied by 
each group. The Development Programs submitted by 
SHA for approval, and which constitute the basis upon 
which federal financial assistance is being given to Savan­
nah, indicated that Fred Wessels Homes and two other 
projects would be limited to white families and that three 
others would be limited to Negro occupancy. They also 
indicated that equitable provision for both races, determined 
on the approximate volume and urgency of their respective 
need, would require an allocation of 63.7% of the dwelling 
units to non-white families and only 36.7% of the dwelling 
units to white families. Before any federal financial assist­
ance was granted, PHA, as required by law and its own 
rules and regulations, approved these Development Pro­
grams clearly indicating these limitations and indicating 
that PHA’s racial equity requirements would be met by 
the above-percentage allocations. These Development Pro­
grams became a part of Part One of the Annual Contribu­
tions Contracts entered into between PHA and SHA. 
Heyward v. PHA (C. A. D. C.) 241 F. 2d 222.

The nature of the role played by the PHA with respect 
to local racial policies can be pinpointed in the following 
manner: If a local authority is interested in securing 
approval for a Development Program, it has two alterna­
tives. First, it can agree to make all low-rent housing 
projects to be constructed by it available for occupancy to 
all racial groups without discrimination or segregation of 
any kind. However, if such a plan is unacceptable to the 
local authority, it has a second alternative. It can agree 
to provide a specified number of units for the occupancy 
of white families and a specified number for the occupancy 
of Negro families, the families to be housed on a racially 
segregated basis. If the percentage for white families and 
the percentage for Negro families meet the standards for 
achieving racial equity determined by the PHA, then the 
Development Program is approved insofar as this aspect 
is concerned. Once it is approved, it becomes a part of the



17

contractual relationship between PHA and SHA. There 
ie, of course, logically a third possible alternative. The 
local authority could conceivably have complete freedom 
of choice. But a local housing authority has no such free­
dom, and it is the determination of PHA which deprives 
local authorities of such freedom.

In the instant case, SHA was obviously unwilling to 
agree to the first alternative noted above—i.e., open oc­
cupancy. Therefore, it was required by PHA to agree 
to the second alternative plan, i.e., segregated housing with 
a specified percentage allocation to white families and to 
Negro families. For short-hand reference, we shall term 
the second plan the “ segregation-quota” plan. Once the 
SHA agreed to the “ segregation quota” plan, and once 
the number of units for white and the number of units for 
Negroes was agreed upon and thus made a part of the 
contractual relationship between the parties, SHA has 
no contractual right to deviate. SHA obviously has no 
right to lease to white persons all units in all projects 
including those units designated exclusively for Negroes. 
Similarly, it has no right to lease all units in all projects 
to Negroes. In other words, SHA has no right to deviate 
in any way from the quota system agreed upon. If SHA 
decided to integrate projects designated exclusively for 
whites, while leasing projects designated exclusively for 
Negroes in conformance with the overall plan, then Negroes 
in Savannah would be securing a disproportionate number 
of units in violation of PHA’s racial equity formula. Such 
action by SHA would be in violation of its contract.

A hypothetical situation may help clarify the above 
analysis. Assume that a local housing authority chooses 
the “ segregation-quota” plan of development. Assume 
further that the local authority agrees with PHA’s deter­
mination that an allocation of 200 units for whites and 200 
units for Negroes will provide racial equity. This agree­
ment of course becomes a part of the contractual relation­
ship between the local authority and PHA. Assume further



18

that the Negro project is completed first and that 200 Negro 
families were given occupancy. If 50 additional Negroes 
were to apply to the local housing authority and were able 
to prove that they were more qualified and had a higher 
priority than 50 white families who were scheduled to be 
given occupancy in the 200 unit white project, could the 
local housing authority admit those 50 Negro families 
along with 150 white families to the project originally 
designated for whites? Plaintiffs submit that the local 
authority would have no contractual right to admit these 
50 Negroes because such an act on the part of the local 
authority would be in violation of the racial equity formula 
agreed upon, and required by PHA. Thus, it is the PHA 
which determines whether any given Negro family can be 
admitted to Fred Wessels Homes.

Aside from PHA’s racial equity formula which resulted 
in the racial limitations complained of here, there is still 
another basis upon which this Court may find that the 
racial limitations are a result of PHA action.

There is, as demonstrated above, a sufficiently close 
relationship between PHA and SHA to make it necessary 
for this Court to consider whether PHA has violated 
rights secured to plaintiffs by the Constitution and laws of 
the United States, cf. Public Utilities Commission v. 
Pollack, 343 U. S. 451. Here we have a public corporation 
which has a monopoly on all decent, safe and sanitary 
housing available in Savannah at rents charged for public 
housing. [There must be a gap of at least 20 per cent 
between the upper rental limits for admission to public 
housing and the lowest rents at which private enterprise 
unaided by public subsidy is providing housing. Title 42 
U. S. C. 1415(7)(b)]. This monopoly position is made 
possible by financial assistance from the federal govern­
ment [annual contributions are given to SHA by PHA to 
help maintain the low rent character of the projects]. This 
public corporation is closely regulated by a federal agency,



19

as demonstrated, supra. It is closely regulated by PHA 
in order to assure that this housing is made available only 
to qualified low income families. The federal agency in 
this case has the duty, imposed upon it by the federal act, 
to protect eligible low income families, e.g., it must insert 
in its contract with SHA a provision requiring SHA to 
abide by the statutory preferences for admission [Title 42 
U. S. C. 1410(g), 1415(8) (c)]. The federal agency in this 
case has the power to make all rules and regulations neces­
sary to carry out its functions, powers and duties [Title 42 
U. S. C. 1404(a)], Finally, the federal agency is under 
a duty, imposed by the Constitution, laws, and public policy 
of the United States, to prevent discrimination wherever 
the federal authority extends. It is under a duty imposed 
by Congress to enforce the requirements of 42 U. S. C. 
§§ 1410(g) and 1415(8) (c). Yet, despite this relationship, 
PHA has permitted, and has specifically approved the racial 
segregation policy. Plaintiffs contend that under these 
circumstances, the action of PHA in permitting and approv­
ing this policy must be regarded as the action of PHA. 
cf. Public Utilities Commission, v. Pollack, supra.

The Pollack case arose out of the practice of Capital 
Transit Co., a street railway company, in receiving and 
amplifying radio programs through loud-speakers in its 
passenger vehicles. Capital Transit is a privately owned 
public utility owning an extensive railway and bus system 
which it operates in the District of Columbia under a 
franchise from Congress. Its services and equipment are 
subject to the regulation of the Public Utilities Commis­
sion of the District of Columbia. On its own motion, the 
Commission ordered an investigation of Capital Transit’s 
practice in order to determine whether the use of such 
receivers was “ consistent with public conveniences, public 
comfort and safety.” Two protesting passengers were 
allowed to intervene. The Commission found that the use 
of these radios was not inconsistent with public conveni­



20

ence, comfort, etc., and dismissed its investigation. The 
two protesting passengers appealed. The District Court 
denied relief, but on appeal the Court of Appeals reversed. 
The latter court held that this forced listening deprived 
passengers of liberty without due process of law in viola­
tion of the Fifth Amendment. In order for the court to 
reach such a conclusion, however, it was necessary for it 
to find governmental action rather than mere private 
action. The Court of Appeals found the necessary gov­
ernmental action in the action of Congress in giving Capital 
Transit a franchise to use the streets and a virtual mon­
opoly of the entire local business of mass transportation 
of passengers in the District of Columbia. In this way, 
Congress was really forcing persons dependent on Capital 
Transit to listen to the radio. In addition, the Court of 
Appeals found governmental action in the fact that the 
Commission had sanctioned the conduct of Capital Transit 
by dismissing its investigation and failing to take action 
to prohibit the broadcasts. Pollack v. Public Utilities Com­
mission (C. A. D. C.), 191 F. 2d 450.

On certiorari, the Supreme Court reversed on the 
ground that no constitutional right of the passengers had 
been violated. From plaintiffs point the important part 
of the opinion is that dealing with the presence of govern­
mental action. The Supreme Court agreed with the con­
clusion of the Court of Appeals that there was a sufficiently 
close relationship between the Federal Government and 
the radio services to make it necessary to consider whether 
the 1st and 5th Amendments had been violated. The perti­
nent part of the Supreme Court’s opinion is set forth 
below:

“ We find in the reasoning of the court below a 
sufficiently close relation between the Federal Gov­
ernment and the radio service to make it necessary 
for us to consider those Amendments. In finding this 
relation we do not rely on the mere fact that



21

Capital Transit operates a public utility on the 
streets of the District of Columbia under authority 
of Congress. Nor do we rely upon the fact that, 
by reason of such federal authorization, Capital 
Transit now enjoys a substantial monopoly of street 
railway and bus transportation in the District of 
Columbia. We do, however, recognize that Capital 
Transit operates its service under the regulatory 
supervision of the Public Utilities Commission of 
the District of Columbia which is an agency author­
ized by Congress. We rely particularly upon the 
fact that that agency, pursuant to protests against 
the radio program, ordered an investigation of it 
and, after formal public hearings, ordered its inves­
tigation dismissed on the ground that the public 
safety, comfort and convenience were not impaired 
thereby” (at 462).

A close reading of the above passage yields the follow­
ing interpretation: The Court gave either no considera­
tion or minimal consideration to the fact that Capital 
Transit used the streets of the District of Columbia under 
authority of Congress and the fact that, by reason of such 
authorization, Capital Transit enjoyed a substantial mon­
opoly. Substantial consideration, however, was given to 
the fact that Capital Transit operates under the regulatory 
supervision of a governmental commission. And greatest 
weight was given to the fact that a governmental agency, 
with power to prohibit or to permit this activity, permitted 
it to continue.



22

B. By Placing- Requirem ents o f T itle 42, U nited States 
Code, §§ 1 4 1 0 (g )  and 1 4 1 5 (8 ) (c )  in its Contract w ith  

SHA, PH A  H as Not D ischarged Its O bligation.

PHA contended in the court below that its only obliga­
tion under Title 42, United States Code, §§ 1410(g) and 
1415(8) (c) is to insert these provisions in its contract with 
SHA. This contention, although contrary to the state­
ments made by PHA Commissioner Slusser in his affidavit 
in support of motion for summary judgment (R. 41, 44) 
and the regulations promulgated by PHA itself (R. 37), 
was sustained by the Court below (R. 47).

Title 42 U. S. C. 1410(g) provides that every contract 
made by PHA with a local agency for annual contributions 
shall require that the local agency, as among eligible low 
income families for occupancy, shall extend first preference 
to displaced families, with priority among such families to 
disabled veterans. PHA argued below that Congress in­
tended nothing by this requirement except a mere direc­
tive to PHA as to the expenditure of federal funds, and it 
was not intended by Congress to create any legal rights in 
third persons such as plaintiff. Not only was it the express 
intention of Congress by this requirement to give first 
preference for admission to displaced families, but it was 
the express intention of Congress that PHA have the 
duty to see to it that this requirement is complied with 
by the local authority.

With respect to this requirement the Senate Committee 
said:

“ Families who are displaced or are about to be 
displaced by public slum-clearance or redevelopment 
projects will be given a first preference for admis­
sion to low-rent housing.” 17

17 Sen. Rep. No. 84, 81st Cong., 1st Sess., 2 U. S. Code Con­
gressional Service 1569 (1949).



23

With respect to this requirement and PHA’s duty the 
Committee said:

“ The prime responsibility for the provision of 
low-rent housing is thus in the hands of the various 
localities. The role of the Federal Government is 
restricted to the provision of financial assistance to 
the local authorities, the furnishing of technical aid 
and advice, and assuring compliance with statutory 
requirements.” 18 (Emphasis added.)

Title 42 U. S. C. § 1415(8)(e) requires that PHA’s 
contract with SHA provide that in initially selecting ten­
ants, SHA shall be required to give preference to families 
with the most urgent housing needs and that thereafter 
consideration must be given to the urgency of such needs.

With respect to this requirement the Senate Committee 
had this to say:

“ Moreover, in the initial selection of tenants for 
a project, the local authority will be required to give 
preference to families with the most urgent housing 
needs. Thereafter, consideration must be given to 
the urgency of such needs.” 10

Therefore, it is clear that Congress intended to confer 
a right on displaced and needy families, i.e., a right to a 
first preference to admission to low-rent housing. It se­
cured this right by requiring that it be made a part of 
PHA’s contract with every local agency. The legal sig­
nificance of this is that by so requiring, the plaintiffs and 
other displaced families could sue as third party bene­
ficiaries of the provision. In this case PHA had admittedly 
inserted this requirement in its contract with SHA. cf. 
Young v. Kellex Corp. (E. D. Tenn.), 82 F. Supp. 953; 
cf. Crahb v. Weldon Bros. (S. D. Iowa), 65 F. Supp. 369, 
rev. on other grds., 164 F. 2d 797. 18 19

18 Id. at 1566.
19 Id. at 1570.



24

C. Plaintiffs H ave Sufficient Legal Interest In Ex­
penditure O f Funds By PH A  To G ive Them  Standing  
To C hallenge V alid ity  o f Such Expenditures.

1. N ature and Extent o f P H A ’s Financial A ssistance.

PHA’s financial assistant to a project in Savannah may 
precede the actual construction of a project and continue 
for as long a period as sixty years after its construction.

PHA is authorized to make loans to local public housing 
agencies.20 These loans may be made for the purpose of 
assisting the local agency in defraying the costs involved 
in developing, acquiring or administering a project.21 PHA 
may therefore commence involving the federal government 
financially by making a preliminary loan to the local agency 
in order that it may have the funds with which to proceed 
to make plans for the proposed project and to conduct any 
necessary surveys in connection therewith.22 PHA may 
then make a further loan which enables the local agency 
to meet the cost of construction and to repay the prelimi­
nary loans.23 It may even loan money to pay any costs 
in administering the project.24

PHA is authorized by the basic enactment to specify 
in a contract with a local agency that it will contribute a 
fixed sum annually over a predetermined period of years 
“ to assist in achieving and maintaining the low-rent char­
acter” of the project.25 PHA may therefore commit the 
federal government to financially subsidizing a project, 
after it is constructed, for a period as long as sixty years.26

20 Title 42 U. S. C. § 1409. Loans may not exceed 90% of 
development or acquisition cost.

21 Ibid.
22 Title 42, U. S. C. § 1415(7) (a).
23 Ibid., and Title 42, U. S. C. §1409.
24 Id., § 1409.
25 Id., § 1410(a).
20 Id., § 1410(c).



25

From this subsidy the local agency may presumably repay 
any monies loaned to it by the federal government for 
construction of the project or in connection with its admin­
istration.

The annual contribution made by PHA is one of two 
methods provided whereby the federal government may 
subsidize a public housing project. The alternate method 
of effecting a federal subsidy provided for in the act pro­
vides for a capital grant to a local agency in connection 
with the development or acquisition of a project which 
will thereby enable it to maintain the low rent character 
of the project.27 PHA may make a capital grant in any 
amount which it considers necessary to assure the low rent 
character of the project.28 It may, therefore, make a capi­
tal grant to a local agency which will pay the entire cost 
of development or acquisition of a project.

In addition to this financial assistance which may be 
given to a local agency, PHA is further authorized to in­
volve the federal government financially in the event of 
any foreclosure by any party on, or in the event of any sale 
of, any project in which the federal government has a 
financial interest.29 In the event of foreclosure, PHA may 
bid for and purchase such project, or it may acquire and 
take possession of any project which it previously owned 
or in connection with which it has made a loan, annual 
contribution or capital grant. In such case it may com­
plete the project, administer the project, pay the principal 
of and interest on any obligation issued in connection with 
the project, thus further involving the federal government 
financially.

Finally, in the event of any substantial contractual 
default on the part of the local agency, PHA may involve

27 Id., § 1411(a).
28 Ibid.
28 Id., § 1413.



26

the federal government to the extent of taking title or 
possession of a project as then constituted and must involve 
the federal government further financially by continuing 
to make annual contributions available to such projects to 
pay the principal and interest on any obligation for which 
these contributions have been pledged as security.30

2. Nature o f P laintiffs’ Interest In PH A  Expenditures.

There can be no doubt that Fred Wessels Homes and 
the other all-white projects involved here were made pos­
sible by PHA expenditures and by PHA agreements to 
make further expenditures (Exhibit 1). A part of the 
relief against PHA and Hanson which is sought is a pro­
hibiting injunction against the use of federal funds for 
the construction and maintenance of such projects. The 
court below ruled that plaintiffs do not have standing to 
challenge such expenditures (B. 47).

The expenditures by PHA constitute more than minor 
assistance—the expenditure of federal funds makes the 
illegal projects possible. By these expenditures, PHA 
knowingly supplies the state agency with the means whereby 
the latter can effectively discriminate in violation of the 
Fourteenth Amendment. In doing so, PHA flagrantly vio­
lates plaintiffs’ rights and the public policy of the United 
States. There is a firm basis in the common law to support 
plaintiffs’ contention that a justiciable case or controversy 
exists. See Joint Anti-Fascist Refugee Comm. v. McGrath, 
341 U. S. 123, 159. For example, it has long been the law 
of unfair competition that one who furnishes another with 
the means of consummating a fraud is also guilty of unfair 
competition. See, Federal Trade Commission v. Wins ted 
Hosiery Co., 258 U. S. 483, 494. Section 876 of the Bestate- 
ment of Torts expresses general principles which are firmly 
imbedded in the common law.

30 Id., § 1421a.



27

“ Section 876. Persons Acting in Concert
For harm resulting to a third person from the 

tortious conduct of another, a person is liable if
he * * *

“ (b) knows that the other’s conduct constitutes 
a breach of duty and gives substantial assistance or 
encouragement to the other so to conduct himself, or

“ (c) gives substantial assistance to the other in 
accomplishing a tortious result and his own conduct, 
separately considered, constitutes a breach of duty 
to the third person.’’

The above principles can be used by analogy to demon­
strate that even if the injury which plaintiffs receive origi­
nates from the unlawful conduct of the SHA, PHA’s par­
ticipation nevertheless can be considered a legal cause of 
plaintiffs’ injury.

As a result of the expenditure of funds for an all-white 
housing project in Savannah, plaintiffs are deprived of 
federally-aided housing solely because of their race and 
color. Plaintiffs can therefore show “ a direct dollar s-and- 
cents injury” from the mere disbursement of federal funds. 
Dorewms v. Board of Education, 342 U. S. 429, 434. If 
plaintiffs were suing here as mere taxpayers, then it might 
be said that their interest in the expenditures are too con­
tingent and infinitesimal to be the subject of judicial action. 
Massachusetts v. Mellon, 262 U. S. 447. But plaintiffs do 
not sue as mere taxpayers here. They bring this action on 
behalf of themselves and on behalf of all other qualified 
low-income Negro families similarly situated. Their in­
terest is that of families who would suffer a direct pecuni­
ary loss by the improper expenditure of federal funds 
which Congress intended be used to provide housing for 
the class which plaintiffs represent, i.e., qualified low in­
come families. In addition, this deprivation of federally-



28

aided housing, solely because of race and color, violated 
rights secured to these plaintiffs by Constitution and laws 
of the United States.

The fact that the funds involved are not actually dis­
pensed by defendant Hanson or his office, but by the Wash­
ington office of PHA is not a material. The fact is that 
defendant Hanson must approve all requests made by 
SHA before the Washington office will pay (Exhibit 2 
attached to Slusser affidavit and sent up to this Court in 
original form).

IV. The Separate But Equal Doctrine

The court below ruled that the complaint be dismissed 
as to defendants SHA, its officers and members on the 
ground that “ the legal doctrine of separate but equal 
facilities is still the law of the land and controls this case.” 
This ruling is clearly erroneous. The separate but equal 
doctrine has never been extended to property rights. 
Buchanan v. Warley, 245 U. S. 60, 81. Application of the 
separate but equal doctrine here deprives plaintiffs of the 
right to lease certain units of public housing, which are 
leased to qualified applicants by public officials, solely 
because of plaintiffs’ race and color.

The right to lease real property free from govern- 
mentally imposed racial restrictions is a right not only 
secured by the due process and equal protection clauses of 
the Fourteenth Amendment to the Federal Constitution 
but is secured by a specific Federal Civil Rights Statute, 
Title 42 U. S. C. § 1982. Detroit Housing Commission v. 
Lewis (C. A. 6th), 226 F. 2d 180; Jones v. City of Ham- 
tramck (S. D. Mich), 121 F. Supp. 123; Vann v. Toledo 
Metropolitan Housing Authority (N. D. Ohio), 113 F. Supp. 
210; Housing Authority of San Francisco v. Banks, 120 
Cal. App. 2d 1, 260 P. 2d 668, cert, den., 347 U. S. 974;



29

Seawell v. McWhithey, 2 N. J. Super. 255, 63 Atl. 2d 542, 
rev. on other grds., 2 N. J. 563, 67 Atl. 2d 309; Taylor v. 
Leonard, 30 N. J. Super. 116, 103 Atl. 2d 633.

Cf. Buchanan v. War ley, 245 U. S. 60; City of Birming­
ham v. Monk (C. A. 5th), 185 F. 2d 859, cert, den., 341 U. S. 
940; Shelley v. Kraemer, 334 U. S. 1.

CONCLUSION

For the foregoing reasons, a p p e llan ts  subm it that the 
judgments below granting m otion  fo r sum m ary  ju d g ­
ment and motion to dism iss shou ld  be  rev ersed .

Respectfully submitted,

Constance B aker M otley,
T hurgood Marshall,

107 West 43rd Street,
New York 36, N. Y.

A. T. W alden,
200 Walden Building,

Atlanta 3, Georgia.

F rank D. R eeves,
473 Florida Avenue,

Washington, I). C.
Attorneys for Appellants.