501 F.2d 324 (7th Cir. 1974), 72-1655, Clark v. Universal Builders, Inc.

Docket Nº:72-1655.
Citation:501 F.2d 324
Party Name:Sidney CLARK and Julia Clark et al., Plaintiffs-Appellants, v. UNIVERSAL BUILDERS, INC., et al., Defendants-Appellees.
Case Date:July 26, 1974
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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501 F.2d 324 (7th Cir. 1974)

Sidney CLARK and Julia Clark et al., Plaintiffs-Appellants,

v.

UNIVERSAL BUILDERS, INC., et al., Defendants-Appellees.

No. 72-1655.

United States Court of Appeals, Seventh Circuit.

July 26, 1974

Argued Oct. 24, 1973.

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[Copyrighted Material Omitted]

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Ronald S. Samuels, Thomas J. Boodell, Jr., Thomas P. Sullivan, and John C. Tucker, Chicago, Ill., for plaintiffs-appellants.

Burton Y. Weitzenfeld, Chicago, Ill., for defendants-appellees.

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William J. McNally, Chicago, Ill., for amicus curiae.

Before SWYGERT, Chief Judge, SPRECHER, Circuit Judge, and GRANT, Senior District Judge. ([a1])

SWYGERT, Chief Judge.

This appeal is from a grant of a directed verdict for defendants at the close of the plaintiffs' case in chief. Plaintiffs are a class of black citizens who purchased newly constructed houses in Chicago from defendants under land installment contracts during the period from 1958 to 1968. Defendants include the building contractor of the houses and the various land companies through which the houses were sold to plaintiffs. 1 In the district court plaintiffs claimed that as a result of intense racial discrimination in Chicago and its metropolitan area there existed at all pertinent times a housing market for whites and a separate housing market for blacks, the latter confined to a relatively small geographical area in the central city. Plaintiffs contended that the demand among blacks for housing greatly exceeded the supply of housing available in the black market and that the defendants exploited this situation by building houses in or adjacent to black areas and selling the houses to plaintiffs at prices far in excess of the amounts which white persons paid for comparable residences in neighboring urban areas, and on onerous terms far less favorable than those available to white buyers of similar properties, all in violation of plaintiffs' rights under the Thirteenth and Fourteenth Amendments and under the Civil Rights Act of 1866. 2 Plaintiffs' exploitation theory of liability was sustained by District Judge Hubert Will as stating a claim for relief under section 1982 of the Civil Rights Act of 1866. Accordingly, Judge Will denied defendants' motion to dismiss plaintiffs' complaint. Contract Buyers League v. F & F Investment, 300 F.Supp. 210 (1969), aff'd on other grounds, 420 F.2d 1191 (7th Cir. 1970), cert. denied, Universal Builders, Inc. v. Clark, 400 U.S. 821, 91 S.Ct. 40, 27 L.Ed.2d 49 (1970). The case then went to trial before District Judge Joseph Sam Perry, and plaintiffs, pursuant to Judge Will's approval of their exploitation theory of liability under section 1982, presented evidence before a jury of defendants' alleged exploitation of the discriminatory housing situation prevalent in Chicago during the period 1958 through 1968. Upon completion of plaintiffs' case in chief, Judge Perry granted defendants' motion for directed verdict, holding in opposition to Judge Will's theory of the case that:

. . . Counsel for the plaintiffs have not painted a pretty picture of the defendants, but that picture is a picture of exploitation for profit, and not racial discrimination. Nowhere in the six weeks' trial is there one scintilla of evidence that the defendants or any of them or their agents ever refused to sell to a white person or a black person or a nonwhite person any house or refused to sell one or the other at a higher or lower price, absolutely no positive evidence of discrimination in this record. Accordingly, for want of any evidence in support of the complaint, the motion for a directed verdict by all of

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the defendants now on trial is hereby granted, and the complaint of all of the plaintiffs is hereby dismissed as to all of the defendants.

Under Judge Perry's theory of the case, absent evidence of defendants' sales of the same or similar housing to whites on more favorable terms and prices, namely, the traditional theory of racial discrimination, plaintiffs failed to make out a case of liability under section 1982.

Plaintiffs raise numerous issues in this appeal the most important of which of course is the correctness of the grant of a directed verdict for the defendants. The other issues can broadly be categorized as challenges to the correctness of certain of the trial judge's evidentiary rulings and other procedural rulings.

In judging the propriety of the grant of the directed verdict, we are confronted with two issues. We must first resolve the conflict as to the scope of section 1982. That is, we must determine whether section 1982 covers only the so-called traditional type of discriminatory conduct, or whether a claim may be stated under section 1982 by proof of exploitation of a discriminatory situation already existing and created in the first instance by the action of persons other than defendants. If we determine that section 1982 is violated under the latter theory we then must determine whether the evidence, both the admitted evidence and erroneously excluded evidence, when viewed in the light most favorable to plaintiffs, together with all inferences that may be reasonably drawn therefrom, is such that it can be found that plaintiffs have made out a prima facie case.

I

Section 1982 of the Civil Rights Act of 1866 provides:

All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property. 3

Plaintiffs' 'exploitation' theory of liability under this section can briefly be restated as follows: As a result of racial discrimination there existed two housing markets in Chicago, one for whites and another for blacks, with the supply of housing available in the black market far less than the demand. Defendants entered the black market selling homes for prices far in excess of their fair market value and far in excess of prices which whites pay for comparable homes in the white market and on more onerous terms than whites similarly situated would encounter. Plaintiffs contend that by so acting defendants seized upon and took advantage of the opportunity created by racial residential segregation to exploit blacks in violation of section 1982.

It is asserted that to countenance such actions by the defendant would be in direct contravention of the express language of section 1982 which provides by clear implication that black citizens 'shall have the same right . . . as is enjoyed by white citizens . . . to . . . purchase . . . real . . . property.' Moreover, plaintiffs claim

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that a ruling which would hold defendants' asserted acts of exploitation to be outside of the coverage of section 1982 would be contrary to the Supreme Court's declaration in Jones v. Mayer Co., 392 U.S. 409, 443, 88 S.Ct. 2186, 2205, 20 L.Ed.2d 1189 (1968), and that section 1982 was meant to be a vehicle through which 'to assure that a dollar in the hands of a Negro will purchase the same thing as a dollar in the hands of a white man.'

Defendants contend that absent a showing of the traditional form of discrimination, namely, that defendants refused to sell to blacks because of their race, or offered to sell the same houses to whites at lower prices or on more favorable terms than they offered to sell to blacks, plaintiffs have not made out a case under section 1982. Defendants assert that the houses they sold to plaintiffs in the black market were available to whites and would have been sold on the same terms and for the same prices as sales to the black plaintiffs. Therefore, defendants argue, plaintiffs enjoyed 'the same right' as enjoyed by white citizens to purchase houses in the black market. Moreover, it is urged that other sellers and not defendants discriminated against plaintiffs in the first instance by refusing to sell to plaintiffs housing in other urban areas, thereby excluding them from the white market. The defendants claim that an extension of section 1982 so as to proscribe their alleged acts of exploitation would be tantamount to holding defendants liable for the discrimination of others without a showing of any discrimination by defendants. With respect to the Supreme Court's decision in Jones v. Mayer Co., the defendants suggest that it lends no support to the plaintiffs' desired interpretation of section 1982. Rather, defendants view Jones v. Mayer Co. as authority for their contention that section 1982 prohibits only the so-called traditional type of discrimination and does not encompass plaintiffs' theory of exploitation liability. Also, defendants urge that plaintiffs' interpretation of section 1982 would render that section unconstitutionally vague and would expose defendants to risk or detriment without fair warning of the nature of the proscribed conduct. It is on the basis of these arguments that defendants claim that no case can be made under section 1982 for exploitation absent a showing that defendants offered to sell the same or similar homes to whites at lower prices and on more favorable terms than they made available to blacks. We do not agree.

At the outset we note that section 1982 is framed in broad yet clear language. It provides that:

All citizens of the United States shall have the same right . . . as is enjoyed by white citizens thereof to . . . purchase . . . real . . . property.

Facially, therefore, the scope of section 1982 would appear to be rather far reaching; indeed such a reading of the statute is supported by the Supreme Court's interpretation of section 1982 in Jones v. Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968). In that case the Court was confronted with questions as to the scope and...

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