Eaton v. Grubbs Supplemental Brief of Appellants

    Mmtvb (tart nf Appmla
F or the F ourth Circuit

No. 9058

In the

H ubert A. E aton, et al.,
Appellants,

E mory Grubbs and T he B oard of M anagers of J ames 
W alker M emorial H ospital, a Body Corporate,

Appellees.

on appeal from the  united states district court for the
EASTERN DISTRICT OF NORTH CAROLINA

SUPPLEMENTAL BRIEF OF APPELLANTS

J ack Greenberg
Constance B aker M otley
M ichael M eltsner

10 Columbus Circle 
New York 19, New York

R obert R. B ond
612 Red Cross Street 
Wilmington, North Carolina

Conrad O. P earson
203% East Chapel Hill Street 
Durham, North Carolina

Attorneys for Appellants

J ames M. Nabrit, III 
Of Counsel



In the

In M  Court of Appeals
F ob the F ourth Circuit 

No. 9058

H ubert A. E aton, et al.,
Appellants,

E mory Grubbs and T he B oard oe M anagers of J ames 
W alker Memorial H ospital, a Body Corporate,

Appellees.

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

SUPPLEMENTAL BRIEF OF APPELLANTS

Appellants file this Supplemental Brief pursuant to an 
order of this Court of November 16, 1963 granting the par­
ties leave to file sujjplemental briefs in light of this Court’s 
decision of November 1,1963 in No. 8908, G. C. Simkins, Jr., 
et al. v. The Moses H. Cone Memorial Hospital, et al. 1

1. Appellants urged in their Brief pp. 13-18 that a rever­
sionary interest in land in favor of government, restricting 
hospital property to use “ as a hospital for the benefit of 
the County and City . . . and in case of disuse or abandon­
ment to revert to the said County and City” subjects the 
hospital to the constitutional prohibition against racial dis­
crimination. The decision of this Court in Simkins v. Moses 
Cone Hospital (No. 8908, Decided November 1, 1963) ac­
cepted and applied this principle. One of the significant 
categories of “ state action” cited by the Court in Simkins 
was the Hill-Burton Act reverter provision “ that if within



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20 years after completion of a project a hospital is sold 
to anyone who is not qualified to file an application there­
under or is not approved by the state agency or if the hos­
pital ceases to be ‘non-profit’ the United States can recover 
a proportionate share of its grant to the hospital.”  The 
reverter in this case confers far greater control on govern­
ment than the statutory reverter in Simkins. It is, for ex­
ample, not limited to 20 years’ duration1 and the reverter is 
conditioned on use of the hospital for the benefit of County 
and City:1 2

“ To have and to hold in trust for the use of the Hos­
pital aforesaid, so long as the same shall be used and 
maintained as a hospital for the benefit of the County 
and City aforesaid, and in the case of disuse or aban­
donment to revert to the said County and City as their 
interest respectively appear.”

The Court in Simkins cited with approval Hampton v. 
City of Jacksonville, 304 F. 2d 320, 323 (5th Cir. 1982) 
cert, denied sub nom. Ghioto v. Hampton, 371 U. S. 911 
(reversionary interest held by government; racial discrimi­
nation prohibited). Even the dissenters in Simkins took the 
position that the type of reverter present here (and in 
Hampton) was of greater significance than the statutory 
reverter present in the Simkins case:

“ That provision [in Simkins], however, creates no in­
terest in the facilities. It is not comparable to a right 
of reverter retained by a public body. It simply creates 
a limited and declining personal right of action against 
the recipient of the grant in aid if it deserts the pur­

1 City and County have received the benefits of this interest in 
the hospital property for over 60 years.

2 See Appellants’ Brief, p. 17.



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pose it represented it had when it obtained the grant.” 
(Emphasis supplied.)

The interest in the hospital retained by the City and 
County here is not limited or declining in any manner. The 
County and City have the permanent assurance that the 
main hospital building and the land on which it stands will 
be used for hospital purposes only and “ for the benefit of 
the County and City” or else complete ownership devolves 
to the County and City. See Appellants’ Brief pp. 16-17.3

2. The Court in Simkins found that “ In light of Burton 
[365 U. S. 715] doubt is east upon Eaton’s continued value 
as precedent.” This conclusion disposes of appellees’ con­
tention (adopted by the Court below) that the first Eaton 
case, 261 F. 2d 521 (4th Cir. 1958), decided prior to Burton, 
forecloses any consideration of the merits here. As in 
Simkins, “ this case is controlled by Burton” where the Su­
preme Court found state action to exist because the state 
“ to some significant extent”  was involved in private con­
duct. Burton, supra, 365 U. S. at 722; Cooper v. Aaron, 358 
U. S. 1, 4; Smith v. Holiday Inns, 220 F. Supp. 1 (M. D. 
Tenn. 1963).

Appraisal of the totality of governmental involvement 
here in light of Burton, supra, and Simkins leaves little 
doubt that the policy of racial discrimination of this hos­
pital facility must be enjoined. In addition to the property 
interest in the hospital held by government in the form of 
a sharp limitation on use and a trust for the benefit of the

3 In accord with Simkins and Hampton upholding the signifi­
cance of a limitation on use in favor of government is Smith v. 
Holiday Inns, 220 F. Supp. 1 (M. D. Tenn. 1963), holding that a 
motel which is limited to use as a motel by a governmental prop­
erty interest in the nature of a reverter cannot racially dis­
criminate.



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public, government has supported and been significantly 
involved with the hospital throughout its history. The total 
effect of the hospital’s contacts with government are dis­
cussed at length in Appellants’ Brief, pp. 18-28 and sum­
marized there at pp. 28-30, and that discussion will not be 
repeated here. It should be noted, however, that while 
public funds received by James Walker Memorial Hospital 
were not allocated under the Hill-Burton Act, as in Simkins, 
North Carolina’s participation in the Hill-Burton program 
has significantly affected James Walker Memorial Hospital. 
Specifically, before any North Carolina hospital could re­
ceive federal money under Hill-Burton, the state was re­
quired to adopt minimum standards for the maintenance 
and operation of hospitals which receive federal aid, 42 
U. S. C. §§291f (a)(7), 291f (d). When the state, to meet 
this requirement, enacted a “ Hospital Licensing Act” in 
1947, N. C. Glen. Stat. §§131-126.1 et seq., authorizing the 
adoption of detailed regulations governing hospital main­
tenance and operation (22a-57a) both the licensing act and 
the regulations applied to all hospitals in the state regard­
less of whether they were allocated federal assistance under 
Hill-Burton. As a consequence, therefore, of North Caro­
lina’s participation in the Hill-Burton program, James 
Walker Memorial Hospital is licensed and its day to day 
operation subject to comprehensive regulation and control 
by the state.

This case is, in fact, far closer to Simkins than to the 
first Eaton case, 261 F. 2d 521 (4th Cir. 1958). A rever­
sionary interest in favor of government, detailed state regu­
lation, and governmental financial assistance for capital 
construction were all relied upon by the Court in Simkins. 
(And this case has elements of governmental involvement 
not present in Simkins, including, to name a few, use of the 
power of eminent domain for a public purpose, city and



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county contributions for capital improvement as well as 
contributions toward operating revenues, and use of the 
hospital to treat the poor.)4 The only arguable distinction 
between Simkins and the present ease is that here the Hos­
pital, though licensed and regulated because of Hill-Burton, 
did not receive its federal funds as part of the Hill-Burton 
program but through another federal assistance program, 
the Defense Public Works Act 42 U. S. C. §§1531, et seq.

This distinction is, however, more apparent than real. 
In order to be eligible, the United States determined the 
hospital a “ facility necessary for carrying on community 
life substantially expanded by the national defense pro­
gram” , 42 U. S. C. §1531, thus (as in Hill-Burton) clearly 
recognizing that the hospital was exercising a public func­
tion, the fulfilling of which was of more than local concern. 
Moreover, the administrators of the Defense Public Works 
Act considered the allocation of hospital resources through­
out a community in much the same manner as do the ad­
ministrators of the Hill-Burton Act. For example, the 
Federal Works Agency which administered the Defense 
Public Works Act considered that James Walker Hospital 
in its application had not stated what proportion of the 
new beds, to be financed by the federal grant, would be allo­
cated to Negroes, but apparently disregarded the conse­
quences of this omission for the reason that an application 
for Defense Public Works Act funds was pending from the

4 As stated by the dissent in Simkins: “the cases here [Simkins] 
are stronger for the defense [than Eaton] for these hospitals are 
not shown to have been the recipients of any contributions toward 
operating revenues, and the land of neither is subject to any right 
of reverter in favor of any governmental body.” This statement 
refers to the first Eaton case, 261 F. 2d 521 (4th Cir. 1958). It 
must apply with even more force to the present case where addi­
tional elements of state involvement have been alleged which were 
not raised, considered or decided in the first Eaton decision.



6

Community Hospital of Wilmington, North Carolina, a 
county-owned, all-Negro hospital (See Appendix A at 
p. 10—Document on file with Housing and Home Finance 
Agency. A  certified copy of this Document has been filed 
with the Clerk along with this Brief.) This affirmative sanc­
tion of “ separate but equal” facilities by the federal govern­
ment was condemned by the Court in Simians: “ It is settled 
that governmental sanction need not reach the level of com­
pulsion to clothe what is otherwise private discrimination 
with ‘state action’ ” .

Secondly, the idea that publicly owned and publicly sup­
ported hospitals are interchangeable as far as determining 
who shall meet the community need for medical facilities 
and be entitled to receive federal assistance was carried 
over and is central to the Hill-Burton program as recog­
nized by the Court in Simians. When government takes 
the responsibility of determining the allocation of a com­
munity’s medical facilities and supports the creation of 
these facilities with public funds, the function of these facili­
ties ceases to be a matter of solely private concern. A gov­
ernmental function or responsibility is being exercised and, 
as held by the Court in Svmkins, it matters not whether the 
participating institutions would otherwise be private.

“ Government’s thumb on the scales” (American Common 
Ass’n v. Bonds, 339 U. S. 382, 401) has been a constant in 
the history of the James Walker Memorial Hospital. The 
forms of government support have been as varied as the 
needs of the hospital. As appellants state in their Brief, 
pp. 29-30:

But for the “power” and “ property” of government 
and the “benefits mutually conferred” (Burton, 365 
U. 8. at 724, 725) the hospital would be a far different 
institution than it is now, poor in physical resources, 
and certainly not a facility “ necessary for carrying on



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community life,” 42 U. S. C. §1531. Support of the 
hospital enabled City and County to create an institu­
tion able to serve the medical needs of its citizens while 
enabling the hospital to fulfill its chartered purpose. 
This is as much a relationship of “ benefits mutually 
conferred” as found in the Burton case between a 
municipal parking authority and a coffee shop. It 
would be to divorce this hospital from its history to 
hold it may discriminate on the basis of race. For 
“ state action” , taking many forms, has always sup­
ported the hospital, and the fruits of government sup­
port— still clearly in evidence to any patient or physi­
cian—have played a crucial role in providing the 
hospital with the resources with which it presently 
serves the community.

Respectfully submitted,

J ack Greenberg
Constance B aker M otley
M ichael M eltsner

10 Columbus Circle 
New York 19, New York

R obert R. B ond
612 Red Cross Street 
Wilmington, North Carolina

Conrad 0 . P earson
203% East Chapel Hill Street 
Durham, North Carolina

Attorneys for Appellants

J ames M. Nabrit, III
Of Counsel



APPENDIX



APPENDIX A

(Document on File With Housing and Home 
Finance Agency)

October 1, 1941
Memorandum

1. Applicant’s present Hospital (James Walker Memorial 
Hospital, Wilmington, N. C.) facilities consist of six (6) 
buildings, providing f o r :

173 bed hospital, including 58 private rooms, 115 wards 
and 35 Negro beds.
36 Basinets
1 Power plant and laundry (to be removed)

2. Applicant proposes three (3) new buildings for N. G. 
31-127, two (2) of which are to be constructed upon a new 
site (across Gwynn Street) to be acquired, the other (new 
power plant and laundry) to be constructed on site now 
owned by Applicant and partially occupied by the existing 
buildings. The new buildings are intended to provide f o r :

200 bed hospital 
125 bed Nurses home 

1 Power plant and laundry

and the Applicant can contribute $100,000 cash in hand 
toward its estimated cost of $1,316,759.

3. Regional Director recommends a grant of $399,300 on 
his revised estimated cost of $499,300, based on a reduction 
in scope to provide for:

100 bed hospital 
70 bed Nurses Home 

including complete plant and equipment.



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4. DPW Form No. 28-C recommends an allotment in the 
amount of $399,440 which together with Applicant’s funds 
of $99,860, makes up the estimated cost of $499,300 based 
upon a limitation in scope.

Note: It is not stated in the revised scope, what proportion 
of the 100 beds will be available for Negroes, however, DPW 
Form No. 28-C recommends for Docket No. N. C. 31-132, 
The Community Hospital, City of Wilmington, N. C., a 
grant of $216,879 to construct an addition to the existing 
hospital (for Negroes) to provide for:

(a) 75 bed addition to present 47 bed. hospital

(b) Addition to the present Nurses Home; and,

(c) New Laundry Building
including equipment for (a), (b) and (c).

Pursuant to 28 U. S. C. 1733(b) and the designation at 28 
F. E. 2242 (3/7/63), I herebjr certify that this is a true 
copy of the document on file in the Office of the Administra­
tor, Housing and Home Finance Agency.

(S eal)

/ s /  Mary F. Dennis
Attesting Officer
Office of the Administrator
Housing and Home Finance Agency



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