Smith v. Holiday Inns of America, Inc., 15580.

• Decision Date: 22 September 1964
• Docket Number: No. 15580.,15580.
• Citation: 336 F.2d 630
• Parties: Vasco A. SMITH, Jr., Plaintiff-Appellee, v. HOLIDAY INNS OF AMERICA, INC., and James Dew, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

336 F.2d 630 (1964)

Vasco A. SMITH, Jr., Plaintiff-Appellee, v. HOLIDAY INNS OF AMERICA, INC., and James Dew, Defendants-Appellants.

No. 15580.

United States Court of Appeals Sixth Circuit.

September 22, 1964.

William Waller, Jr., Nashville, Tenn. (John Dunlap, Memphis, Tenn., on the brief; Waller, Lansden & Dortch, Nashville, Tenn., of counsel), for appellants.

Jack Greenberg, New York City (Avon N. Williams, Jr., Z. Alexander Looby, Nashville, Tenn., A. W. Willis, Jr., Memphis, Tenn., Constance Baker Motley, Frank H. Heffron, New York City, on the brief), for appellee.

Before MILLER, CECIL and EDWARDS, Circuit Judges.

EDWARDS, Circuit Judge.

This is an appeal brought by the defendants, Holiday Inns of America, Inc., and James Dew, the manager of the Holiday Inn-Capitol Hill motel located on James Robertson Parkway, Nashville, Tennessee. Appeal is taken from a judgment entered by Judge William E. Miller after a trial in the United States District Court for the Middle District of Tennessee.

The principal terms of the judgment go far toward outlining the nature of the case:

"1. This is a proper class action, of which this Court has jurisdiction under 28 U.S.C. Section 1343 (3), 42 U.S.C. Sections 1981, 1982 and 1983, brought by the plaintiff on behalf of himself and all other Negroes who are similarly situated, for declaratory and injunctive relief as alleged in the complaint, and the plaintiff is entitled to the relief sought by the complaint.

"2. The defendants, Holiday Inns of America, Inc., and James Dew, Manager of Holiday Inn-Capitol Hill, are required by the Fifth and Fourteenth Amendments to the Constitution of the United States to offer lodging, dining, recreational and all other accommodations available at Holiday Inn-Capitol Hill to plaintiff and other Negroes on the same terms and conditions as are applicable to white persons.

"3. The defendants, Holiday Inns of America, Inc., and James Dew, Manager of Holiday Inn-Capitol Hill, and each of them, their agents, employees and successors and all persons in active concert and participation with them, are permanently enjoined from denying to plaintiff or other Negroes similarly situated the right to purchase and enjoy all accommodations offered at Holiday Inn-Capitol Hill upon the same terms and conditions as are applicable to white persons."

On appeal no material issues of fact are presented. Appellants appear to concede that the plaintiff was denied accommodations at the Holiday Inn-Capitol Hill motel, where to quote appellants' brief: "James Dew, as * * * manager, followed a policy of refusing to accept Negroes as guests. * * *"

It is appellants' contention that the discrimination thus practiced was purely private in nature and not the product of any sort of state action; and that such discrimination was not barred by any federal constitutional provision or federal law.

The trial judge weighed the facts of this case as developed before him against the standard of interpretation of the Fourteenth Amendment laid down in Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 81 S.Ct. 856, 860, 6 L.Ed.2d 45 (1961): "Private conduct abridging individual rights does no violence to the Equal Protection Clause unless to some significant extent the State in any of its manifestations has been found to have become involved in it." He found "Extensive involvement by the state, in many and varied forms and through various agencies * * *."

On appeal the appellants attack this finding as both unsupported by the record and inadequate to support the judgment, since the trial judge did not define the "right" of plaintiff which was violated or properly establish the jurisdiction of the court to grant the relief which was ordered.

Since this appeal was argued to this court, the United States Congress has passed, and the President has signed the Civil Rights Act of 1964,¹ the terms of which (if sustained against constitutional test) would plainly render defendants' policy of racial exclusion illegal. This court has deliberately withheld decision of this appeal, recognizing that voluntary compliance of defendants with the statute referred to would render this appeal moot. No suggestion of mootness having been filed, we proceed to consideration and decision of the issues as presented. They require a recitation of facts extending over many years.

Prior to 1950, the State Capitol of Tennessee was located in the midst of an old and unsightly residential area. In that year the Nashville City Council authorized a contract between the City of Nashville and the Nashville Housing Authority wherein the city agreed to participate in a large-scale urban redevelopment program in which city, state, and federal funds would be employed to condemn, tear down, replan and redevelop through private and public agencies 72 acres of the blighted area surrounding the State Capitol. The project was designated the Capitol Hill Redevelopment Project.

In 1952 in pursuance of this plan the Nashville City Council held a public hearing and then adopted a resolution finding that the slum and blighting conditions existing in the Capitol Hill area were detrimental to the safety, health, morals and welfare of the city, and that these conditions should be eliminated. The resolution also approved the Redevelopment Plan as submitted.

In the same year the Nashville Housing Authority also approved the Redevelopment Plan and subsequently entered into a Loan and Grant Contract with the Housing and Home Finance Agency of the United States, whereby the United States undertook to furnish two-thirds of the cost of the project in the form of loans and grants provided by Title I of the Housing Act of 1949.²

The Nashville Housing Authority was and is a public agency created under the laws of the State of Tennessee (Tenn. Code Anno., §§ 13-801 et seq. and 13-901 et seq.). The Housing and Home Finance Agency was and is a public agency created under federal law (Title 12 U.S.C. § 1701 et seq. See also Title 42, U.S.C. § 1441 et seq.).

Thereafter the Nashville Housing Authority, acting under public laws of the State of Tennessee, condemned or purchased the 72 acres of land needed for the project and relocated the 301 families and 196 individuals who had been living there. Of these 301 families displaced, 288 were Negro. Of the 196 individuals displaced, 180 were Negro.

Thereafter the land was cleared, the site replanned, with provision for a wide boulevard (subsequently named James Robertson Parkway) to be built in an arc around the Capitol. Tracts were then developed for resale to private developers.

While this plan was proceeding, the State of Tennessee, employing state funds, acquired and improved other adjacent land on the steep slopes of Capitol Hill.

The trial judge in his opinion described the financing of this project in these terms:

"The total cost of the Project as of March 31, 1963 was $9,756,979. Of this amount, $5,696,560 was spent on land acquisition, $99,500 on site clearance, and $2,491,967 on site development. According to the most recently approved budget, the ultimate cost of the Project will be $11,727,901. Income from sales of land to private interests is expected to total $3,917,133, leaving a net project cost of $7,810,768. Two-thirds of the net project cost, or $5,207,179, is to be provided by federal grant. The remaining one-third, or $2,603,589, is charged to the Housing Authority. The Housing Authority\'s obligation is to be discharged by local cash grants totaling $1,488,422, and by non-cash credits * totaling $1,115,167. * (The City receives a non-cash credit for the value of two facilities, a fire hall and a park, formerly located in the Project area and donated by the City to the Housing Authority. It also received a non-cash credit for benefits accruing to the Project from expenditures of the State of Tennessee for the purchase, clearance and landscaping of the adjacent lands on Capitol Hill.)" (Footnote in original.) Smith v. Holiday Inns of America, Inc., 220 F.Supp. 1, 4 (M. D.Tenn.1963).

Thus it is apparent that the public funds of the City of Nashville, the State of Tennessee, and the United States of America were inextricably intermingled in the financing of the Capitol Hill Redevelopment Project. It is also obvious that that project was carried out by public agencies created by and operating under the laws of the United States and the State of Tennessee.

After development of the total area, 38 acres in 17 parcels were offered for sale or lease to private developers. Two such parcels were purchased by defendant-appellant, Holiday Inns of America, Inc.

The contract for sale bound the purchaser to begin construction of a modern motel on James Robertson Parkway in the immediate vicinity of the State Capitol and to use the land for no other purpose. Covenants previously placed on record by the Nashville Housing Authority otherwise restricted the uses to which the purchasers could put the land and retained certain additional controls in the hands of the Authority.

The trial judge summarized these covenants thus:

"Article IV of the covenants in defining the `general purpose\' of the conditions, provides that the `real property described in Article III hereof is subjected to the conditions, restrictions, reservations and easements contained herein for the purpose of insuring the use and improvement of each parcel or subparcel of land in such a way as to produce an economically sound development of the entire project area and to reduce to a minimum any depressing and blighting influences.\'

"Article V, requiring conformity to the plan for redevelopment, provides (Section 1) that `the land in the Project Area, and every part thereof, shall be devoted to, and only to the uses permitted by the Redevelopment Plan for the Project, so long as said Redevelopment Plan remains in effect.\'

"Section 2 retains governmental control in all-inclusive terms both as to use and

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