United States v. Northside Realty Associates, Inc.

• Citation: 474 F.2d 1164
• Decision Date: 14 March 1973
• Docket Number: No. 72-2151.,72-2151.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. NORTHSIDE REALTY ASSOCIATES, INC., and Ed A. Isakson, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

474 F.2d 1164 (1973)

UNITED STATES of America, Plaintiff-Appellee, v. NORTHSIDE REALTY ASSOCIATES, INC., and Ed A. Isakson, Defendants-Appellants.

No. 72-2151.

United States Court of Appeals, Fifth Circuit.

March 14, 1973.

Harold L. Russell and Lloyd Sutter, Atlanta, Ga., for defendants-appellants.

Thomas M. Keeling, Atty., Housing Section, Dept. of Justice, Washington, D. C., John W. Stokes, Jr., U. S. Atty., Atlanta, Ga., Frank E. Schwelb and Harold H. Moore, Civil Rights Div., Dept. of Justice, Washington, D. C., for plaintiff-appellee.

Before GEWIN, GOLDBERG and DYER, Circuit Judges.

GOLDBERG, Circuit Judge:

This is an appeal from an order enjoining appellants, Northside Realty Associates, Inc. and its Executive Vice President, Ed A. Isakson, from violating the Fair Housing Act of 1968. Although we are unable to ascertain the precise legal rationale for the District Court's decision, the Court apparently based its decision on constitutionally impermissible grounds. We therefore remand for fresh findings of fact and conclusions of law.

This action was brought by the Civil Rights Division of the Justice Department pursuant to Title VIII of the Civil Rights Act of 1968, 42 U.S.C. § 3601 et seq., alleging that appellants had engaged in a policy and practice of racial discrimination against Blacks with respect to the purchase and sale of homes in the Metropolitan Atlanta, Georgia area. The government sought injunctive relief, claiming that appellants' actions constituted a pattern or practice of resistance to the Fair Housing Act of 1968, and had denied groups of persons rights granted by the Act raising an issue of general public importance. See 42 U.S.C. § 3613.¹

After a three day non-jury trial, the District Court made the following pertinent factual findings:

Northside Realty Associates, Inc. is incorporated under the laws of the State of Georgia and is licensed to engage in the listing and selling of real estate. Its executive vice president, Ed Isakson, is also the sales manager for one of the Company\'s seven residential sales offices. Although Ed Isakson has not advertised, sold or shown any residential property since 1960, his broker\'s license inures to the benefit of the Company.

Northside, through its 165 salespeople and its brokers, acts as agent for listing sellers by presenting offers on behalf of potential buyers. Commissions are paid by the sellers when sales are consummated. The majority of such sales involve single family dwellings while a smaller proportion involve lots and multiple dwellings or commercial property. In the three years since the effective date of the Fair Housing Act, not a single one of the more than 3,000 homes sold by Northside has been sold to a black person.

Prior to the effective date of the Fair Housing Act, Ed Isakson violated the provisions of the Act by treating a black couple, the Bowers, in a discriminatory manner when he: (1) failed to discover the Bowers\' total financial potential before determining what priced house they could afford; (2) denied that Northside had any houses listed within the price range of the Bowers without consulting the listing book or the agents in the office; and (3) referred the Bowers to a black real estate broker without "co-operating" or receiving a referral fee, when he had never referred a white buyer to a black real estate broker. This violation evidenced a pre-Act practice of violating the Fair Housing Act.

Subsequent to the effective date of the Fair Housing Act, Ed Isakson violated the provisions of the Act on two separate occasions. On one occasion he discriminated by denying to a prospective black buyer that he, Isakson, sold real estate, without explaining that Northside Realty, of which he was executive vice-president, did; and by immediately referring the black buyer to two other real estate companies that sold primarily to Blacks. Isakson subsequently held this mode of behavior out as a model to be employed by white real estate people who did not wish to deal with Blacks. On a second occasion, Isakson violated the Act by showing an intention not to co-operate with a black real estate broker unless ordered to do so by the District Court.

Finally, Isakson manifested an intent not to comply with the Fair Housing Act by stating that Congress had exceeded its constitutional authority in enacting the Fair Housing Act.²

After making the above findings of fact and conclusions of law, the Court held:

"The Court finds that Mr. Isakson\'s intentions to resist compliance with the Act have manifested themselves in his actions and that black people as a group have thereby been denied the protection guaranteed by the Act. This denial of protection is of sufficient importance to authorize the relief herein."

The Court then enjoined appellants from further discriminatory conduct and ordered them to take affirmative action to prevent future discrimination.³

Appellants attack the District Court's order on a number of grounds:

(1) The two post-Act violations of the Fair Housing Act that the District Court found occurred were insufficient to raise an issue of general public importance justifying the granting of injunctive relief.

(2) The District Court\'s finding that appellant Isakson violated the Act was insufficient to support the conclusion of wrongdoing by Northside Realty.

(3) A finding of only one pre-Act violation does not support a finding of a pre-Act pattern or practice of violating the Fair Housing Act.

(4) The District Court\'s finding that appellant Isakson violated the Act on three occasions was based upon a legally impermissible inference drawn from Isakson\'s constitutionally protected challenge to the Act and was clearly erroneous.

We find that appellants' first two contentions are without merit but that his third and fourth points require that we remand to the District Court for further proceedings.

I. PUBLIC IMPORTANCE

Appellants urge that the District Court's finding of two post-Act violations by Mr. Isakson is insufficient to establish an issue of general public importance and that injunctive relief is therefore not authorized by 42 U.S.C. § 3613.⁴ This contention is meritless. The question of what constitutes an issue of general public importance is, absent specific statutory standards, a question most appropriately answered by the executive branch. United States v. Bob Lawrence Realty, Inc., 5 Cir. 1973, 474 F.2d 115. See United States v. Greenwood Municipal Separate School Dist., 5 Cir. 1969, 406 F.2d 1086, 1090; Boyd v. United States, E.D.N.Y.1972, 345 F. Supp. 790, 794. Just as in his determination whether to prosecute a criminal case, the Attorney General must have wide discretion to determine whether an issue of public importance is raised. "Once the Attorney General alleged that he had reasonable cause to believe that a violation of . . . the Fair Housing Act denied rights to a group of persons and that this denial raised an issue of general public importance, he had standing to commence an action in District Court and to obtain injunctive relief upon a finding of a violation of the Act." United States v. Bob Lawrence Realty, Inc., supra, 474 F.2d at p. 125 n. 14 (citations omitted).

II. CORPORATE LIABILITY

Northside Realty argues that the District Court's findings of one pre-Act violation and two post-Act violations by the individual appellant, Ed Isakson, are insufficient to impute liability to the corporate appellant, Northside Realty. Northside urges that the District Court's finding of corporate liability does not comport with this Circuit's decision in Standard Oil Co. of Texas v. United States, 5 Cir. 1962, 307 F.2d 120, because (1) the evidence fails to establish that Isakson was acting within the scope of his employment when the violations occurred, since by stipulation Isakson is not normally a real estate salesperson, and (2) Isakson was not shown to have been acting with the purpose of benefiting the corporate appellant when he violated the Act. In light of the fact that Ed Isakson (1) is the Executive Vice President of Northside Realty, (2) is the broker whose license inures to the benefit of the corporation and enables it to engage in the business of selling real estate, and (3) directly supervises one sales office of Northside Realty and is in charge of hiring or selecting the sales managers for the other Northside offices, we do not think it clearly erroneous for the District Court to conclude that appellant Isakson acted within the scope of his duties when he spoke to customers at the office that he supervised and when he discussed sales policy with other people in the real estate business. Nor do we think the District Court was clearly erroneous in finding that these activities were conducted with the intention of benefiting the corporation for which Isakson served as executive vice president. See Standard Oil Co. of Texas v. United States, supra.

III. THE AMBIGUITIES OF THE DISTRICT COURT'S ORDER

42 U.S.C. § 3613 authorizes the District Court to grant injunctive relief pursuant to a complaint by the Attorney General if the court finds (1) an individual pattern or practice of acts violating the Fair Housing Act, see United States v. Reddoch, 5 Cir. 1972, 467 F.2d 897; United States v. West Peachtree Tenth Corp., 5 Cir. 1971, 437 F.2d 221; or (2) a group pattern or practice of violating the Act, see United States v. Bob Lawrence Realty, Inc., 5 Cir. 1973, 474 F.2d 115; or (3) that an act, or acts violative of the Fair Housing Act denied a group of persons rights protected by the Act, see United States v. Bob Lawrence Realty, Inc., supra.

In considering the Attorney General's request for injunctive relief in the instant case, the District Court stated the issue in this manner:

"The question before this Court is whether the government . . . has met its . . . burden of proving that Northside Realty and Ed Isakson have engaged in a discriminatory `pattern or practice\' of

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