BRIGHT, Circuit Judge.
D. C. Williams, a black man from North Little Rock, Arkansas, brought this civil action, individually and as a class representative for other black persons, charging defendants with racial discrimination in refusing to sell residential building lots to black people in violation of the Civil Rights Acts of 1870 and 1866 (42 U.S.C. §§ 1981, 1982)
We think that racial discrimination by the defendants in their real estate operations is shown as a matter of fact and law. The defendants' policy of selling lots only to builders, which, under the circumstances, operated to exclude black persons from acquiring building lots in the real estate subdivision, does not afford any legal justification for defendants' conduct.
The facts relating to defendants' conduct appear without substantial dispute in the record. Although defendants attacked the bona fides of Williams' proposal to purchase real estate, the trial court resolved that issue in Williams' favor in finding that "Mr. and Mrs. Williams did in good faith attempt to purchase a lot in Lakewood with the intention of building a home valued between $30,000 and $40,000."
"Lakewood", a large residential subdivision in North Little Rock, Arkansas, is being developed by the defendant-Matthews Company, which holds in trust a number of tracts originally part of the vast land holdings of the late Justin Matthews, Sr. Defendant-John Matthews, the son, is chairman of the board of the company; defendant-James Matthews, the grandson, is president. As was the case with four other Matthews Company subdivisions, none of the 2,000 residential lots in Lakewood were occupied by blacks as of the date of the filing of the complaint. At the trial, John Matthews testified that the company had excluded blacks from its subdivisions as an official policy since 1945, but that this policy had been abandoned in approximately 1965. He admitted that he had never notified the public of this change nor taken any affirmative steps to integrate the Lakewood community.
In March of 1970, Williams initiated his inquiry about purchasing a lot in Lakewood. He and his wife, Dinah, taught in the public school system in Little Rock and, at the time of the suit, jointly earned approximately $16,000 annually. Beginning in September 1969, the Williamses began looking for property upon which to a build a larger home for themselves and their two children. They had built their own home in Glenview (a Negro subdivision in North Little Rock) valued at $25,000, and, as a Korean War veteran, plaintiff had available to him V.A. loans. The couple planned to spend between $30,000 and $40,000 on a new home.
During this time, they looked at property in the Lakewood subdivision where they found a "for sale" sign posted on each vacant lot. Each sign gave the price and size of the lot and listed the Matthews Company as seller, with its phone number. If a lot had been sold, the sign gave the owner's name. According to the plaintiffs, these signs remained posted up to and after the time their suit was filed on April 29, 1970. Based on their visits to Lakewood, the
On March 16, 1970, the Williamses called to make an appointment at the Matthews Company. The next day, they met with Mr. James Matthews, the president of the company, who indicated that he could neither accept nor reject their offer to purchase a lot, but would have to take the matter up with his father, John Matthews, and call them later in the week.
On March 18, 1970, James Matthews called the Williamses and for the first time informed them that the company did not sell lots to individuals, but only to builders. He informed the plaintiff that they might find an approved builder and have him purchase a lot, and further advised the couple that it would be better for them to purchase an already constructed home. He suggested that he might even make his mother's "villa" available for $60,000. The couple restated their intention of building their own home. No list of builders was furnished to the Williamses by James Matthews nor was any further contact initiated by him or other members of the Matthews Company.
Shortly after this March 18 conversation with James Matthews, plaintiff attempted to contact several of the builders whose names had appeared on signs on other homes in Lakewood. One of the white builders to whom the couple talked indicated that he would go out of business if he built a house in Lakewood for blacks, but offered to build in a black residential area if they wished. A second white builder also refused to build for the Williamses. After these conversations, the couple approached a black builder, Joe Anderson, to visit the Matthews Company on their behalf.
In mid-April, Joe Anderson met with James Matthews and stated his desire to purchase a lot for the Williamses. Matthews stated that Anderson would have to be an "approved builder" before he could sell a lot to him, but he did not outline any procedures for becoming an approved builder. He informed Anderson that he could not give him any answer on his request until his father, John Matthews, returned from the Orient two months later. At the trial, it appeared from defendants' testimony that the company never had any formal policies or procedures relating to approved builders. According to James Matthews, builders were approved or disapproved by the board of directors, but, according to John Matthews, who was chairman of the board, he had not made any decisions on approving builders for five years and it was his son, James, who made the decisions.
On April 24, 1970, Mrs. Williams contacted James Matthews for the last time. He informed her that he would not sell them a lot and would not give them a decision on letting their builder purchase a lot until John Matthews returned to the country in June. Five days later, the plaintiffs filed this suit.
In defense of the conduct of the Matthews Company, John Matthews introduced into evidence an office memorandum dated February 13, 1970, to demonstrate that the personnel of the Matthews Company contemplated integration of the all-white Lakewood subdivision. This memorandum, while espousing the principle of integration as "morally right", ordered special treatment of any black person seeking entry into the subdivision, to be handled personally by the senior Matthews, John.
In denying Williams' claim, the district court characterized defendants' policy of selling only to builders as free of racial considerations and described defendants' fear — that sale of a subdivision lot to Williams would produce a challenge to their building restrictions — as sincerely but perhaps mistakenly held. Accordingly, the trial court concluded that plaintiff was not denied the right to purchase property because of his race and that plaintiff was afforded the same opportunity as others to purchase from an approved builder. The trial court additionally determined that "defendants have here demonstrated that their practice of selling to builders has a demonstrated business reason for its retention."
An examination of the statutes and case law require a conclusion contrary to that reached by the district court.
The policy of the United States contained in Title VIII of the Civil Rights Act of 1968 is to provide, within constitutional limitations, fair housing throughout the country. 42 U. S.C. § 3601. Like the 1866 Civil Rights Act, the Fair Housing Title is an exercise of congressional power under the thirteenth amendment to eliminate the badges and incidents of slavery. United States v. Hunter, 459 F.2d 205, 214 (4th Cir. 1972). As the Supreme Court commented in Jones v. Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968), construing 42 U.S.C. § 1982:
Thus, the Fair Housing Title of the Civil Rights Act of 1968 and the 1866 Civil Rights Act together comprehensively spell out the right of an individual to rent or purchase housing without suffering discrimination and to obtain federal enforcement of that fundamental guarantee. 392 U.S. at 413-417.
Race is an impermissible factor in real estate transactions under both 42 U.S.C. § 1982 and 42 U.S.C. § 3604 and "cannot be brushed aside because it was neither the sole reason for discrimination nor the total factor of discrimination." Smith v. Sol D. Adler Realty, 436 F.2d 344, 349-350 (7th Cir. 1970). The courts will look beyond the form of a transaction to its substance and proscribe practices which actually or predictively result in racial discrimination, irrespective of defendant's motivation. See United States v. Grooms, 348 F.Supp. 1130, 1133-1134 (M.D.Fla.1972); United States v. Real Estate Development Corporation, 347 F.Supp. 776, 782 (N.D.Miss.1972); United States v. Reddock, No. 6541-71-P (S.D.Ala., filed Jan. 1, 1972), aff'd, 467 F.2d 897 (5th Cir. 1972).
We think that the concept of the "prima facie case" applies to discrimination in housing as much as to discrimination in other areas of life. Cf. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 36 L. Ed.2d 668 (1973). This is not a new principle, but is a familiar one in the areas of employment,
Here, the defendants admittedly followed a whites-only policy in sales of real estate prior to 1965. John Matthews testified to a change of heart and a willingness, finally, to comply with the law and the obligations of good citizenship, but this change of heart was demonstrated only by a self-serving office memorandum written in 1970 and entitled, perhaps significantly, "Ever Tightening Lakewood Controls As It Affects Integration." Those tightened controls were exercised through approved builders, none of whom were black and none of whom would break the housing segregation barrier by building a home for a black family in an all-white neighborhood. The Matthews Company made no public announcement of their new devotion to integration, and the record shows that no black man or woman had ever acquired property in any subdivision of the Matthews Company up to and including the time of trial.
The special handling of the efforts of Mr. and Mrs. Williams to purchase a lot in Lakewood, in the light of this factual background, became nothing more than
We do not think that the trial judge reached a contrary determination as to these obvious facts of discrimination.
That conclusion is error. A prima facie case of discrimination resting as it does both on statistical evidence and real evidence cannot be overcome by defendant-Matthews' platitude that "integration is the law of the land and our Board of Directors feels that integration is morally right." Statistics, of course, are not everything, "but nothing is as emphatic as zero." United States v. Hinds County School Board, 417 F.2d 852, 858 (5th Cir. 1969), cert. denied, 396 U.S. 1032, 90 S.Ct. 612, 24 L.Ed.2d 531 (1970). When a plaintiff makes a prima facie case of discrimination, as here, the burden shifts to the defendant to articulate some legitimate, nondiscriminatory reason for the plaintiff's rejection. See McDonnell Douglas Corp. v. Green, supra, 411 U.S. at 802.
We need then examine the grounds asserted in the district court's opinion for his conclusion that no unlawful discrimination existed in this case. The trial court determined that Williams was in fact offered the opportunity to purchase on terms available to all persons. The conclusion, as we understand the trial court's opinion, was premised upon the proposal by Matthews to Williams to purchase a lot through an approved builder. In this connection the court also ruled that the procedure of selling to builders only was not adopted because of racial considerations nor was it used, or intended to be used, as a ruse by which to exclude blacks.
The policy adopted by the Matthews Company to sell lots only through approved builders served here to discriminate against Williams in obtaining a lot. That policy therefore cannot stand nor can it excuse the racial discrimination shown in this case. See McDonnell Douglas and Griggs, supra.
Finally, the trial court's suggestion — that any taint of discrimination is avoided in this case because "the practice of selling to builders has a demonstrated business reason for its retention" — also rests upon a legally unsound basis and must be rejected. In order to rely upon a "business necessity" justification for a business policy which, though fair in form, is discriminatory in operation, a defendant must demonstrate the absence of any acceptable alternative that will accomplish the same business goal with less discrimination. See Wallace v. Debron Corporation, 494 F.2d 674 (8th Cir., filed Mar. 28, 1974); United States v. St. Louis-San Francisco Railway Co., 464 F.2d 301, 308 (8th Cir. 1972). Here, of course, a number of alternatives are available to avoid the racial effect of the "builders-only" policy. For example, the Matthews Company could sell building lots directly to black persons who indicate a willingness to hire an available competent contractor, black or white, who will build a home in the subdivision for a black person, or Matthews could direct that its approved builders make the building lots they buy from Matthews available without discrimination to all persons regardless of race. The application of the "business necessity" doctrine offered here, however, rests upon pure chimera.
It is surely true that, on a showing of discrimination towards himself and other members of his race, a plaintiff may appropriately file and prosecute a class action on behalf of himself and other members of his race under Fed.R.Civ.P. 23(a). See Newbern v. Lake Lorelei, Inc., 308 F.Supp. 407, 416 (S.D.Ohio 1968) (citing cases). Although we do find some evidence in the case which might have justified a class action, the court determined that plaintiff has failed to show that other black persons have attempted and been denied the right to purchase property in Lakewood or other Matthews Company subdivisions. This finding afforded an appropriate basis for the dismissal of the class action, since one family is not a class and the burden is on the plaintiff to justify permitting the suit to proceed as a class action. See Cash v. Swifton Land Corporation, 434 F.2d 569 (6th Cir. 1970); Crim v. Glover, 338 F.Supp. 823 (S.D.Ohio 1972).
Accordingly, the plaintiff is entitled under 42 U.S.C. § 3612(c) to the following relief: (1) a declaratory judgment of his rights to purchase property in any subdivision developed by the Matthews Company; (2) counsel fees on trial and on appeal, see Knight v. Auciello, 453 F.2d 852 (1st Cir. 1972); Lee v. Southern Home Sites Corp., 444 F.2d 143 (5th Cir. 1971); (3) court costs; (4) actual damages for the defendant's failure to sell Williams a lot during the spring of 1970, to include such sum as will properly compensate plaintiff for his deprivation of civil rights and for humiliation suffered by him, see Seaton v. Sky Realty Company, Inc., 491 F.2d 634 (7th Cir. 1974); and (5) punitive damages not to exceed $1,000. See generally Smith v. Sol D. Adler Realty Company, 436 F.2d 344 (7th Cir. 1971).
We reverse and remand this case for the entry of a judgment consistent with this opinion.
Reversed and remanded.
42 U.S.C. § 1982 provides:
"Dwelling" as used in § 3604 is defined in 42 U.S.C. § 3602(b) as: