Dillon v. AFBIC Development Corp.

• Decision Date: 21 June 1979
• Docket Number: No. 76-3797,76-3797
• Citation: 597 F.2d 556
• Parties: Warren DILLON and Jean Dillon, Individually and on behalf of others similarly situated, Plaintiffs-Appellants, v. AFBIC DEVELOPMENT CORPORATION, Riley Smith, Inc., and Riley B. Smith, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 556

597 F.2d 556

Warren DILLON and Jean Dillon, Individually and on behalf of others similarly situated, Plaintiffs-Appellants, v. AFBIC DEVELOPMENT CORPORATION, Riley Smith, Inc., and Riley

B. Smith, Defendants-Appellees.

No. 76-3797.

United States Court of Appeals, Fifth Circuit.

June 21, 1979.

Rehearing Denied Aug. 9, 1979.

J. U. Blacksher, Gregory B. Stein, Mobile, Ala., Jack Greenberg, Linda S. Greene, Beth J. Lief, New York City, for plaintiffs-appellants.

Chase R. Laurendine, Alphonse Maples, Jr., Mobile, Ala., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Alabama.

Before WISDOM, COLEMAN and RONEY, Circuit Judges.

WISDOM, Circuit Judge:

This case involves the liability of participants in a subdivision development for a racially motivated refusal to sell a dwelling in violation of the Fair Housing Act of 1968, 42 U.S.C. §§ 3601 Et seq., and a provision of the Civil Rights Act of 1866, 42 U.S.C. § 1982. We hold that the district court misconstrued the applicable law when it exonerated three of the four participants. We find that two of these three defendants violated both statutes. Accordingly, we remand this case to the district court for determination of damages and a consideration of the plaintiffs' motion for an award of costs and attorney fees.

I. THE FACTUAL SETTING

The dispute in this case arises from the efforts of the plaintiffs-appellants, Warren Dillon and Jean Dillon, a black couple, to purchase a home located on lot 30 of the Lansdowne subdivision in Mobile, Alabama. To understand their grievance, we must first trace the development of Lansdowne.

Alabama Farm Bureau Insurance Corporation Development Company, Inc. (AFBIC), an Alabama corporation and a defendant-appellee, became interested in purchasing some land in Mobile and developing it into a subdivision. To carry out this project, AFBIC enlisted the assistance of Riley Smith, Inc. (RSI), also an Alabama corporation and a defendant-appellee. Riley B. (Boykin) Smith, the other defendant-appellee, is the son of the founder of RSI and, during the period of this dispute, was its vice-president and sole shareholder. Boykin Smith supervised RSI's efforts on AFBIC's behalf. RSI served as the real estate agent when the original owners of the land sold the area to AFBIC. AFBIC then subdivided the property and appointed RSI as its exclusive agent for the sale of the unimproved lots to professional home builders. Instead of receiving commissions on these sales, RSI obtained exclusive listing rights from the builders. By this series of transactions, RSI was assured a commission on the sale of every completed dwelling. In short, RSI was serving as AFBIC's agent for the sale of the lots to the builders and the builders' agent for the sale of the homes.

The purchase agreements between the home builders and AFBIC varied, depending upon the source of each builder's construction finances. Each builder that was financed by a construction loan paid the purchase price and received title to the lot when it received the loan money. Each builder using its own construction money usually paid a down payment to AFBIC, completed the home, and, through RSI, secured a purchaser before paying AFBIC the remainder of the purchase price. The latter arrangement governed the contract dated May 1, 1972, in which Bay City Construction Company, Inc. (Bay City) agreed to purchase lot 30, the lot involved in this case. That contract specified that Bay City had complete authority to accept or reject offers to purchase the home Bay City would build on the lot. The contract also required AFBIC to convey the lot to Bay City when the In the Spring of 1973, the Dillons became interested in the home built by Bay City on lot 30. Some time in April, Jean Dillon went to RSI's office at Lansdowne and asked one of RSI's salesmen, Robert Guillot, to show her the house at 5229 Drexel Drive. This is lot 30. Guillot urged her to make an offer on the house. A few days later, Mr. and Mrs. Dillon went together to see the house. While they were examining it, another RSI salesman, Bryson Hill, informed them that the asking price was $42,500 and asked whether he might show them some floor plans RSI could build for them somewhere else. Hill said that he would get back in touch with them, but he never did.

builder presented it with the remainder of the purchase price for the lot.

On May 14, 1973, Jean Dillon went to Lansdowne and asked Guillot to write an offer to purchase the home at 5229 Drexel Drive. Guillot wrote an offer for the full $42,500 asking price and said that $100 would be sufficient for the earnest money. Mrs. Dillon did not have her checkbook with her, but Guillot told her that he would submit the offer anyway and that she could deliver the check at any time.

Guillot took the offer to Boykin Smith. Guillot told Smith that Mrs. Dillon was black and that the home she wanted to purchase was located next door to the home owned by Brewton Greene, the owner of Bay City Construction Company. Smith presented the offer to Greene and informed him that Mrs. Dillon was black. According to Smith, Greene rejected the offer because no earnest money check was attached. Smith observed, however, that Greene was "unhappy" that the offeror was black. Smith then told Guillot that Greene had rejected the offer and, according to Guillot, also told him that Greene "went through the ceiling" as a result of the offer. Guillot then informed Mrs. Dillon that her offer had been rejected.

Guillot apparently put off Mrs. Dillon's efforts to make another offer until she appeared at RSI's Lansdowne office on May 16. At her insistence, he then wrote another offer. Like the first offer, it provided for the full $42,500 asking price and for $100 earnest money. This time, Mrs. Dillon's check for $100 was attached. Because Mr. Dillon was out of town on business, Mrs. Dillon asked Guillot if the offer could be conditioned on her husband's approval by May 24. Guillot informed her that the condition was not a problem. Guillot signed the offer as a seller's agent.

Guillot then took the offer to Smith, who passed it on to Greene. Greene rejected the offer, allegedly because it was conditional and because the $100 earnest money check was insufficient. During his testimony at trial, however, Greene admitted that he refused to sell because the Dillons were black and that he had probably informed Smith of his motive. ¹ In addition, Smith testified at the trial that he was aware that Greene's refusals to sell were racially motivated and After Smith had conversed with Greene about the Dillons' May 16 offer, Smith decided to reject the offer in writing. His letter to the Dillons stated that their offer had been rejected because it was conditional. Smith's letter also stated that several other persons were interested in the home. According to Greene's trial testimony, however, there were no other prospects at the time the Dillons' offers were rejected.

that he himself had been somewhat apprehensive about whether selling the home to the Dillons would have a detrimental effect on sales in Lansdowne. ²

On May 18, a Friday, Guillot delivered RSI's rejection letter to Mrs. Dillon. She demanded that he write a new, unconditional offer for the full asking price. She refused to accept return of her $100 earnest money check, so Guillot gave her a receipt for the check and attached it to the new offer. Mrs. Dillon telephoned Guillot several times during the weekend and went to see him at Lansdowne on Sunday, May 20. In each conversation, Guillot told her that he had been unable to contact Greene. In truth, however, Guillot had passed on the offer to Smith on Friday, May 18. Smith informed Greene of the offer that afternoon. Either on Friday or the following Monday, May 21, Greene rejected the offer and told Smith that he was going to sell the home on lot 30 to his son. In any event, on May 21 Smith telephoned Mrs. Dillon and stated that her offer had been rejected because of Greene's decision to sell it to a member of his family.

Throughout this period, AFBIC's involvement was minimal. James Richardson, an AFBIC official located in Montgomery, was responsible for supervising the Lansdowne development. Riley Smith, Boykin's father and the founder of RSI, testified that he had told Richardson that RSI had received an offer from a black couple, meaning the Dillons. Richardson told Riley Smith that he ought to accept the offer. Neither RSI nor Bay City informed AFBIC of Greene's wrongful refusal to sell. At the trial, Richardson testified that he might have objected if he had known of Greene's racially motivated refusal to sell. He also testified, however, that Greene's conduct might not have mattered to him and that AFBIC had never encouraged RSI and Bay City to seek black purchasers.

On May 24, the Dillons filed this action against Bay City, RSI, Boykin Smith, and AFBIC. The plaintiffs asserted causes of action for the wrongful refusal to sell the home under the thirteenth amendment; the Civil Rights Act of 1866, 42 U.S.C. §§ 1981 and 1982; and the Fair Housing Act of 1968, 42 U.S.C. § 3601 Et seq. The plaintiffs sought declaratory and injunctive relief for the class of similarly situated blacks, as well as injunctive relief, compensatory and punitive damages, and costs and attorney fees for themselves. On June 6, 1973, after a hearing on the plaintiffs' motion for a preliminary injunction, the district court ordered Bay City to convey the home on lot 30 to the Dillons for the full asking price. On that date, the district court also dismissed the plaintiffs' claims against RSI, Boykin Smith, and AFBIC. The plaintiffs bought the home, ³ settled with Bay City On remand, the district court certified the case as a class action on behalf of all blacks who sought or would seek to purchase or rent dwellings through the three defendants. Then, after a bench trial, the...