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Booth v. Lemont Mfg. Corp.

January 28, 1971


Swygert, Chief Judge, Major, Senior Circuit Judge, and Kerner, Circuit Judge.

Author: Kerner

KERNER, Circuit Judge.

Plaintiff-appellant, Harry R. Booth, in 1968 brought a class action suit in the district court on behalf of himself as a citizen and Illinois municipal taxpayer, and all other municipal taxpayers similarly situated, against Lemont Mfg. Corp., other private corporations and the Metropolitan Sanitary District of Greater Chicago (District). The defendant private corporations are long term lessees (50-99 years) of real estate leased to them by the defendant District. Plaintiff alleges that the execution of these leases without competitive bidding, provisions for periodic redetermination of rentals, and other safeguards that the District as trustee of the land for the benefit of Illinois citizens should have employed, resulted in taking the class members' equitable interest*fn1 in public property without due process of law. In addition, plaintiff's complaint alleges that the dismissal in the State court of an identical action against all but two of the named defendants herein, because plaintiff's injury did not qualify for standing pursuant to the State of Illinois' "special injury rule" requirement,*fn2 violated plaintiff's constitutional rights of equal protection.

Plaintiff asked the district court to declare the leases illegal and void or that they be reformed in accordance with their true value. Count II of plaintiff's complaint requested a declaratory judgment invalidating, in addition to the leases in question, seventy-five other leases held by persons or corporations which have not been made parties to the litigation. Plaintiff Booth asserted federal jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1343(3).

The district court granted defendant's motion to dismiss on the bases that plaintiff's complaint failed to allege a claim that was cognizable under federal jurisdiction and that even if a claim were established pursuant to 28 U.S.C. § 1331, plaintiff's complaint failed to satisfy the requisite $10,000 jurisdictional amount. Plaintiff Booth appeals from this dismissal. We affirm the action of the district court on the basis that plaintiff has failed to allege a claim that is recognizable under federal law.*fn3

Plaintiff's claim that the leases set inadequate rentals and should be reassessed to reflect their true value is not cognizable under either 28 U.S.C. § 1343(3) or 28 U.S.C. § 1331. Section 1343(3) confers federal jurisdiction without regard to jurisdictional amount, upon an action commenced:

(3) To redress the deprivation under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or all persons within the jurisdiction of the United States.

The law is clear, however, that § 1343 confers jurisdiction upon claims based upon infringement of "personal rights" not property rights. Ream v. Handley, 359 F.2d 728 (7th Cir. 1966); McManigal v. Simon, 382 F.2d 408 (7th Cir. 1967), cert. denied 390 U.S. 980, 88 S. Ct. 1099, 19 L. Ed. 2d 1276 (1968). We find that plaintiff's claim for a reassessment of the rental value of the District property is a claim based on alleged property rights, whether equitable or legal, and not recognizable under § 1343(3).

Booth's primary jurisdictional contention is that the execution of leases by municipal corporations with private citizens or corporations for grossly inadequate rentals, deprives municipal taxpayers of property without due process of law and, therefore, federal jurisdiction is conferred by 28 U.S.C. § 1331(a). We disagree. Federal courts have been very reluctant to interfere with the administration of municipal affairs. In Owensboro Waterworks Co. v. City of Owensboro, 200 U.S. 38, 26 S. Ct. 249, 50 L. Ed. 361 (1906), a municipal taxpayer complained that the municipal corporation had diverted or would divert certain funds collected from taxpayers for a specific object, and that the failure to apply these funds properly might ultimately cause increased taxation. The taxpayer asserted that this situation deprived it of its property without due process of law. The Supreme Court held that these allegations, even if proved, would not show any deprivation of due process or violation of other federal rights.

But no right involved in the present case has its origin in, or is secured by, the Constitution of the United States. * * * The plaintiff, however, complains that the defendant city has not properly discharged its duties under the laws of the state. For the purposes of the present discussion, let this be taken as true; still, maladministration of its local affairs by a city's constituted authorities cannot rightfully concern the national government, unless it involves the infringement of some Federal right. If the city authorities have received funds from taxation which ought strictly to have been applied to take up or cancel the bonds of the city, but have been used for other municipal purposes, and if, by reason of such misapplication of those funds, taxation may ultimately come upon the people for an amount beyond what the legislature originally intended, -- if nothing more can be said, -- the remedy must be found in the courts and tribunals of the state * * *. And there is here no deprivation of property without due process of law within the meaning of the 14th Amendment, even if it be apprehended that the defendant city may, at some future time, impose a tax in violation of its duty under the laws of the state.

Id. at 45-46, 26 S. Ct. at 251-252.

Similarly, in Otto v. Somers, 332 F.2d 697 (6th Cir. 1964), cert. denied 379 U.S. 1002, 85 S. Ct. 723, 13 L. Ed. 2d 703 (1965), a municipal taxpayer complained of past and threatened illegal expenditures by the municipality, and alleged that these violated his fourteenth amendment rights. The court of appeals affirmed a dismissal for lack of federal jurisdiction, because the allegations did not show any injury to constitutional rights.

If such funds have been so wrongfully expended or misapplied -- a species of conduct of which we are entirely without knowledge -- then a cause of action may exist in favor of the municipal corporation. In such a case, if the municipality or the municipal authorities refuse to act in bringing such an action, after a proper request, a taxpayer might bring suit for the benefit of the municipality -- if there is a right in the municipal corporation to prosecute such an action. But the recovery of funds in such an instance is for the benefit of the municipality. An action in the case above outlined would be a taxpayer's suit for the benefit of the municipality. There is no jurisdiction under ...

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