Hamrick Const. Corp. v. Rainsville Housing Authority

• Decision Date: 02 March 1984
• Citation: 447 So.2d 1295
• Parties: HAMRICK CONSTRUCTION CORP. v. RAINSVILLE HOUSING AUTHORITY, et al. 82-517.
• Court: Alabama Supreme Court

Page 1295

447 So.2d 1295

HAMRICK CONSTRUCTION CORP. v. RAINSVILLE HOUSING AUTHORITY, et al.

82-517.

Supreme Court of Alabama.

March 2, 1984.

John Baker, Fort Payne, for appellant.

F.J. Allen, II, Boaz, for appellees.

ALMON, Justice.

This is an appeal from an order and judgment quashing garnishments and executions against the defendant housing authorities.

Hamrick Construction Corporation recovered judgments against the Rainsville Housing Authority and the Housing Authority of the City of Boaz. Hamrick sought execution against the housing authorities' real property and filed garnishments against several banks holding money belonging to the housing authorities.

The housing authorities filed a motion to quash the garnishments, ¹ stating that they were prohibited by Code 1975, § 24-1-40, which reads:

"No interest of the authority in any property, real or personal, shall be subject to sale by the foreclosure of a mortgage thereon, either through judicial proceedings or the exercise of a power of sale contained in such mortgage, except in the case of the mortgages provided for in section 24-1-35. All property of the authority shall be exempt from levy and sale by virtue of an execution, or other process, to the same extent as now enjoyed by the properties of towns, cities and counties of Alabama. No judgment against the authority shall be a charge or lien upon its property, real or personal. The provisions of this section shall not apply to or limit the right of obligees to foreclose any mortgage of the authority provided for in section 24-1-35 and, in case of a foreclosure sale thereunder, to obtain a judgment for any deficiency due on the indebtedness secured thereby and issued on the full faith and credit of the authority. Such deficiency judgment shall be a lien and charge upon the property of the authority which may be levied on and sold by virtue of an execution or other judicial process for the purpose of satisfying such deficiency judgment."

Hamrick makes two arguments that this statute should not bar the process sought by Hamrick to recover on its judgment: first, that the property is not exempt because municipal or county property used for the purpose to which the housing authorities put their property would not be exempt; second, the statute is unconstitutional because it allows foreclosure and execution by the mortgagees specified in § 24-1-35 and by certain holders of tort judgments, but not by other creditors or judgment holders.

The first argument begins with the proposition that housing authority property is exempt only "to the same extent as now enjoyed by the properties of towns, cities and counties of Alabama." Code 1975, § 6-10-10, provides that "[a]ll property, real or personal, belonging to the several counties or municipal corporations in this state and used for county or municipal purposes shall be exempt from levy and sale under any process or judgment whatsoever." This Court has applied this statute and held that city property not used for public purposes may be seized and sold. Russell v. Town of Oneonta, 199 Ala. 64, 73 So. 986 (1917); Equitable Loan & Sec. Co. v. Town of Edwardsville, 143 Ala. 182, 38 So. 1016 (1905); Ellis v. Pratt City, 111 Ala. 629, 20 So. 649 (1896); Murphree v. City of Mobile, 104 Ala. 532, 156 So. 544 (1894).

Hamrick asserts that the property of the housing authorities is used not for public, but for private purposes, i.e., private housing for low-income individuals and families. There is ample authority to refute the contention that such a use is a "private" use.

The following excerpt from the legislative findings and declaration of necessity of the Housing Authorities Law indicates the legislature's judgment that the housing authorities' property is used for a public purpose:

"[T]he provision of safe, sanitary and uncongested dwelling accommodations at such rentals that persons who now live in unsafe or unsanitary or congested dwelling accommodations can afford to live in safe, sanitary and uncongested dwelling accommodations, [is a] public use[ ] and purpose[ ] for which public money may be spent and private property acquired.... The necessity in the public interest for this article is hereby declared as a matter of legislative determination."

Code 1975, § 24-1-21.

The legislature declared that "[a]n authority shall constitute a public body and a body corporate and politic exercising public powers ..." ( § 24-1-27(a)), and gave authorities the power of eminent domain, § 24-1-28. The whole tenor of the Housing Authorities Law thus indicates a legislative finding that the use of property for the purposes set out in that Law is public use. There is no contention that the appellees use any of their property in a manner other than as allowed by statute.

We see no reason to disturb this legislative declaration of public purpose. Indeed, in Rayborn v. Housing Authority of Washington County, 276 Ala. 498, 499, 164 So.2d 494 (1964), the parties and the Court took for granted that the defendant's "property for certain purposes is that of a municipal (county) corporation," and did not question the applicability of the parallel exemption of county housing authority property, § 24-1-78. See generally 40 Am.Jur.2d Housing Laws and Urban Redevelopment, esp. §§ 3 and 7 (1968), and cases cited therein.

The above-cited authorities amply establish that public housing projects are a "public use" within the meaning of the municipal exemption which applies to the appellees' property. The argument that the public housing projects of the housing authorities are private uses and thus not exempt must therefore fail.

We next address Hamrick's arguments that the exemptions granted to the housing authorities are unconstitutional. We understand Hamrick to make two such arguments: that the different treatment of creditors violates Hamrick's right to equal protection of the laws, U.S. Const. amend. 14, and that the preclusion of Hamrick from collecting on its judgment violates Hamrick's right not to be deprived of property without due process of law, id., and Ala. Const. of 1901, art. I, § 13.

Section 24-1-35 grants the right to foreclose and execute on mortgages made by housing authorities "[i]n connection with any project financed in whole or in part by a government ...." This right is granted only to a government holding bonds secured by the mortgage and to trustees or obligees "but only with the consent of the government which aided in financing the housing project involved." Hamrick argues that § 24-1-40, read in light of § 24-1-35, violates the equal protection clause of the 14th Amendment of the United States Constitution because it grants some creditors the right to foreclose against housing authority property while denying other creditors the right to execute on judgments, without a meaningful distinction between the two types of creditors.

Hamrick also argues that § 24-1-40 violates the right to equal protection of the laws by exempting housing authority property "to the same extent as now enjoyed by the properties of towns, cities and counties of Alabama." Section 11-47-191(b) allows for execution against municipal property under certain conditions by holders of tort judgments, and Hamrick argues that this creates an unconstitutionally unequal treatment of judgment holders. We find no merit in this argument, because we are not inclined to hold in the context of this case that § 11-47-191(b) allows execution against municipal property which is exempt under § 6-10-10. In other words, nothing in the record before us indicates that a holder of a tort judgment could reach the appellees' property under § 11-47-191(b) in any way in which Hamrick cannot.

Although Hamrick has not raised a substantial equal protection claim regarding § 11-47-191(b) executions, the claim regarding § 24-1-35 creditors requires more detailed analysis.

The United States Supreme Court has recently addressed the standard of review of equal protection challenges to economic regulations such as those at issue here:

"When local economic regulation is challenged solely as violating the Equal Protection Clause, this Court consistently defers to legislative determinations as to the desirability of particular statutory discriminations.... Unless a classification trammels fundamental personal rights or is drawn upon inherently suspect distinctions such as race, religion, or alienage, our decisions presume the constitutionality of the statutory discriminations and require only that the classification challenged be rationally related to a legitimate state interest. States are accorded wide latitude in the regulation of their local economies under their police powers, and rational distinctions may be made with substantially less than mathematical exactitude."

City of New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 2516, 49 L.Ed.2d 511 (1976) (citations omitted).

There is no suspect classification involved in this case, so the only basis on which Hamrick's claim should receive stricter scrutiny than the rational relationship test is if the classification "trammels fundamental personal rights." Among such fundamental rights is the right to civil justice or access to courts. Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971). See...