United States v. West Peachtree Tenth Corporation, 29431.

• Decision Date: 04 January 1971
• Docket Number: No. 29431.,29431.
• Citation: 437 F.2d 221
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. WEST PEACHTREE TENTH CORPORATION d/b/a One Tenth Street Apartments et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

437 F.2d 221 (1971)

UNITED STATES of America, Plaintiff-Appellant, v. WEST PEACHTREE TENTH CORPORATION d/b/a One Tenth Street Apartments et al., Defendants-Appellees.

No. 29431.

United States Court of Appeals, Fifth Circuit.

January 4, 1971.

John W. Stokes, Jr., U. S. Atty., Jerris Leonard, Asst. Atty. Gen., Dept. of Justice, Civil Rights Div., Frank E. Schwelb, Chief, Michael J. Hoare, Atty., Housing Sec., Civil Rights Div., Dept. of Justice, Washington, D. C., for plaintiff-appellant.

Maurice N. Maloof, Paul Hanes, Atlanta, Ga., for defendants-appellees.

Before JOHN R. BROWN, Chief Judge, and DYER and INGRAHAM, Circuit Judges.

DYER, Circuit Judge:

The United States brought a civil action against appellee, West Peachtree Tenth Corporation, for an alleged pattern or practice of racial discrimination in the rental of housing in violation of the Fair Housing Act of 1968, 42 U. S.C.A. § 3601 et seq.¹ In a trial without jury, the district judge found that appellee had engaged in a program of restriction in rentals which effectively excluded blacks before the effective date of the Act, but that the Government had failed to establish a "pattern or practice" of discrimination after the effective date of the Act, as required by 42 U.S.C.A. § 3613. We reverse.

Appellee operates the One Tenth Street Apartments, a 96-unit high-rise in downtown Atlanta. The units range in price from $139 to $186 per month. Mr. Ted Levy, a majority stockholder and President of the Corporation, has general responsibility for operation of the apartments. Mrs. Francis Price, acting under Mr. Levy's authority, manages the apartments, maintains the rental office, and hires and supervises night managers and part-time rental clerks.

All interested prospective tenants are required to complete a written application indicating: (1) present residence and landlord, (2) occupation and place of employment, (3) former employers, (4) two character or personal references, (5) two credit references, and (6) price range or rental unit desired.

If there is no vacancy in the price range sought, the application is placed in a "pending" file in no particular order. When a vacancy occurs, it may be filled by a new application or by one of the pending applications, but no preference is given to pending applications.

Unless a rental applicant is personally known to Mrs. Price or is referred to her by a personal friend or is a prior tenant, it is a non-uniform practice to require a security deposit before the application will be processed, i. e., before references are checked out and other information in the application is verified. In each instance, Mrs. Price or one of her rental clerks conducts an interview with the applicant.

The apartment has a continuing policy against admission of drunks, hippies, children and belligerent appearing applicants. As the trial judge found,

there is considerable subjective decision by Mrs. Price in rentals. While such a procedure appears necessary and practical on the part of management in order to keep undesirables of any race out of the building, it does create the "opportunity" for discrimination in rentals.

Based on the application, the character and credit checks, and the interview, the management decides whether to accept or reject the applicant.

Since appellee opened its doors in 1965, it has received approximately 850 written applications, twelve of which were made by blacks. While appellee rented to some 400 white tenants, it never admitted a black tenant prior to the filing of this suit on June 26, 1969.² Nine blacks made applications in 1968 and 1969.³

Pre-Act black applicants

During 1968, appellee received five applications from blacks. All applicants were college graduates, and all were employed. After completing applications, they were told either that there were no vacancies or that they would be notified later, or they were instructed to call back. None of the applicants were contacted again and those who called back were told either that they had been rejected or that still no vacancies existed. Four of these applicants were never advised that a security deposit was required before their applications would be processed.⁴ One of the applicants, Robert Pitts, told the management that he wanted to leave a $20 deposit if it would improve his chances. While the management did accept the deposit, none was requested.

The word "Colored" or the letters "C" or "N" were placed on three of the applications. The trial judge specifically found, and appellee does not challenge, that "prior to the effective date of the Act on January 1, 1969, there existed at the defendant apartment a program of restrictions in rentals which effectively excluded Negroes." For example, after several fruitless phone calls and a second visit to the rental office, Pitts returned again to check on his application. This time appellee admitted to him that he had been rejected because the owners had not yet permitted integration of the apartment. In contrast, many whites were admitted during 1968 with little or no delay.

Post-Act black applicants

In 1969, two of the previous applicants, Robert Pitts and Sandra Threadcraft, reinquired or reapplied. Additionally, for the first time, four other blacks submitted applications, only two of which warrant discussion.⁵

On January 15, 1969, three months after Pitts was rejected because of the apartment's policy of racial discrimination, he telephoned the rental office and asked if there had been any change in his "status." Appellee replied, "No." Thereafter Pitts made no further contact with the apartment.

Miss Threadcraft reapplied in May 1969 and was advised that "possibly" her application was rejected on account of credit and/or lack of a security deposit. She then revisited the rental office, gave additional credit references, and demanded that a credit report be obtained. Both sides continued to display mutual hostility. Finally, Threadcraft was told that no vacancies existed but that she would be contacted shortly. After hearing nothing for two weeks, she called back and was told that she had been rejected.

John Lloyd also applied in May 1969 and was told that there were no vacancies but that he would be contacted. After hearing nothing, he called back and was told that he was rejected. The trial court found that he was justifiably rejected, since he had six children and the apartment was unable to get any credit information pertaining to him.

On June 26, the same day this suit was filed, Franklin Biggins applied for an apartment. Biggins was not advised of the deposit requirement. Although no apartments were available in his requested price range, he was told that there might be vacancies later and that he would be called.

Again, in contrast to the black applicants, some whites were admitted with little or no difficulty.

The Court's findings

The District Court found that before an applicant is advised of the security requirement he must meet certain objective requirements,⁶ including the financial ability to satisfy rental obligations under the lease. This finding is clearly erroneous under Rule 52(a), Fed.R.Civ.P. It is clear from the record that in almost every instance these criteria were not even considered until the applicant submitted a security deposit. Appellee repeatedly testified without contradiction that any person interested in an apartment is always advised that a security deposit is required, even if he "actually talks funny or looks funny." Furthermore, unless the applicant is known to Mrs. Price, is referred to her by a personal friend, or is a prior tenant, he must submit a security deposit before his application is processed. In other words, appellee's policy was to refrain from processing an application until the applicant submitted a security deposit. This distinction is critical in view of the fact that many blacks were not advised of the deposit requirement; thus, their applications were shelved without further consideration or processing by the management. In light of this chronology, however sure the trial court may have been that its finding was correct, we cannot approve, because the undisputed testimony is to the contrary. Janigan v. Taylor, 1 Cir. 1965, 344 F.2d 781, 784, cert. denied, 1965, 382 U.S. 879, 86 S.Ct. 163, 15 L.Ed.2d 120; see Moore v. Chesapeake & Ohio Ry., 1951, 340 U.S. 573, 576-577, 71 S.Ct. 428, 95 L.Ed. 547.

The District Court also found that Pitts was not subjected to discrimination after the effective date of the Act, since he did not formally reapply for an apartment in 1969. However, the Government points out that Pitts, having been rejected in 1968, again called Mrs. Price in 1969 and was informed that his status had not changed. According to the Government, Mrs. Price's response can only be interpreted as an admission that the management's policy of racial discrimination remained in effect. It taxes credulity to conclude otherwise. The trial court placed mistaken importance on whether Pitts' 1969 call constituted a reapplication. It is clear that during the conversation he was discouraged from making another offer to rent an apartment; telling him that his status remained unchanged was tantamount to saying that in view of the management's continuing policy of segregation, any reapplication would be fruitless. Thus it was not necessary for Pitts to formally renew his application, or otherwise make a bona fide offer to rent. This Court is in substantially as good a position as the District Court to draw inferences and conclusions from the 1969 phone conversation between Pitts and Mrs. Price. Daniel v. First National Bank of Birmingham, 5 Cir. 1956, 228 F.2d 803, 805; see Galena Oaks Corp. v. Scofield, 5 Cir. 1954, 218 F.2d 217.

The Government also argues that appellee discriminated against John Lloyd. In view of the conflicting testimony concerning Lloyd's treatment, due regard must be given to the trial court which had...