conduct complained of but is no longer an officer of the
Prior to the events in issue here Maridan Construction Company
had constructed approximately 400 Section 235 financed houses in
the City of Harvey. All or substantially all of these houses were
purchased and occupied by Negroes. These houses are standard
models which conform to Federal Housing Administration
regulations and to all of the building code regulations of the
city in all respects save one: Some of the houses are single
family dwellings built on an unpaved street, which is in conflict
with the City of Harvey Housing Code Regulation No. 1527.
Regulation No. 1527 has been waived by the City of Harvey many
times and has never been enforced during the administration of
defendant Haines, which began May 1, 1967, except in the instance
complained of here. The city has no accurate record of the number
of times this provision has been waived.
Section 235 houses are financed under an arrangement whereby
the purchaser, who must meet a statutory standard as to earnings
and family size, may qualify for Government subsidized interest
payments. Beneficiaries under this kind of financing arrangement
are not destitute but are of "low and moderate income" as defined
by the statute.
Section 235 financed houses are not distinguishable from other
homes in their price category. A Section 235 house is not
permitted to exceed $24,500 for a four-bedroom single family
dwelling, under Department of Housing and Urban Development
regulations. It must meet local and federal housing standards and
regulations in the same way as any other newly constructed home.
It can be purchased under conventional financing, Veterans
Administration financing or standard F.H.A. financing. Section
235 relates only to the Federal Government subsidy in the form of
a partial payment of some percentage of the mortgage interest.
The exact percentage of the mortgage interest paid by the
Government is based on factors relating to cost, interest, and
the recipient family's net income and number of children.
In the summer of 1970 Maridan Construction Company received all
necessary H.U.D. and F.H.A. clearances and commitments to build a
group of 90 Section 235 homes in the City of Harvey, among which
at least one was to be built on a paved street so that Housing
Code Regulation No. 1527 would not apply. It was one of these 90
homes, to be located at 26 East 104th Street in the City of
Harvey, for which the plaintiff contracted to purchase and for
which she sought a building permit.
Late in the summer of 1970 the defendants administratively
decided that the city would not allow any more homes financed
under Section 235 to be built within the city's limits. In
implementing this decision the defendants refused to issue any
building permits for Section 235 homes which Maridan Construction
Company proposed to build, including the one which was to be
built for plaintiff. About one year later, on September 27, 1971,
the City Council adopted Resolution No. 868, which gave formal
recognition to this decision and provided that no permits would
be issued for such homes for a period of one year from the date
of the resolution.
Following the refusal by the city to issue a building permit
for construction of the home she had contracted to purchase from
Maridan Construction Company, plaintiff sought conciliation of
the refusal pursuant to 42 U.S.C. § 3610 by application to H.U.D.
She never personally consulted with H.U.D., but the defendants
did several times and during these consultations they never
raised the objection that any of the homes scheduled to have been
built were in technical violation of Housing Code Regulation No.
1527, relating to construction of single family dwellings on
It is stipulated that the number and percentage of the City of
population, as shown by the last two United States censuses, are
Total Negro of Negro
Year Population Population Population
1960 29,071 1,986 6.8%
1970 33,864 10,771 30.9%
The resolution in which the city prohibits the issuance of
building permits for Section 235 homes for a period of one year
recites the following reasons for its action:
"WHEREAS, it is deemed for the best interest of the
City of Harvey not to issue more permits for this
type of low construction housing for the following
A. It is a concentration of too much low cost
housing to one city.
B. This type of construction can only mean slums in
C. Building of these homes has discouraged other
builders to build better homes in the City of
D. These homes lower the land values of other
residents in the City of Harvey."
In his testimony defendant Haines stated as the reasons Maridan
Construction Company's application to build additional Section
235 homes was denied the four reasons listed in the resolution,
but he related them to the area of the city in which the houses
were to be built and not the city as a whole. He stated as an
additional ground that the street on which the houses were to be
built was unimproved, and that under the housing regulation
referred to above it was unlawful to issue a permit for the
construction of a house on such a street, but he acknowledged
that during his administration the regulation had regularly been
waived upon the undertaking of the builder to pave the street. He
testified that other new homes have been built in Harvey during
the past two years, and that he does not know whether there have
been any denials of permits for homes other than Section 235