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City of Chicago v. Prus





Appeal from the Circuit Court of Cook County; the Hon. Meyer H. Goldstein, Judge, presiding.


This appeal is from an order finding unconstitutional an ordinance of the city of Chicago prohibiting the use of "For Sale" and "Sold" signs in designated residential areas of the city. Plaintiff contends that: (1) the trial court erred in ruling that it had the burden of proving that the ordinance is valid; and (2) the finding is against the manifest weight of the evidence.

In 1979, plaintiff filed seven two-count quasi-criminal complaints alleging that defendant violated a section of the Chicago Fair Housing Ordinance which provides in relevant part:

"In order to * * * eliminate as far as legislatively permissible, all forms of discrimination and segregation in the field of housing, it shall be an unfair housing practice and unlawful for any owner, lessee, sub-lessee, assignee, managing agent, or other person, firm or corporation having the right to sell, rent, lease or sublease any housing accommodation, within the City of Chicago, or any agent of any of these, or any real estate broker licensed as such by the City of Chicago.

H. To construct, place, maintain or install a `For Sale' sign or `Sold' sign of any shape, size or form on premises located in Residential Districts, zoned R1 through R8 under Chapter 194A of this Code." (Chicago, Ill., Municipal Code, ch. 198.7b, par. 4(h) (1973).)

Defendant moved to dismiss the complaints on the ground that the ordinance impermissibly infringed upon his right of free speech guaranteed by the first amendment of the United States Constitution (U.S. Const., amend. I) and protected from invasion by State action under the fourteenth amendment (U.S. Const., amend. XIV; Bigelow v. Virginia (1975), 421 U.S. 809, 811, 44 L.Ed.2d 600, 605, 95 S.Ct. 2222, 2227). The trial court, relying principally on Daugherty v. City of East Point (N.D. Ga. 1978), 447 F. Supp. 290, rejected plaintiff's offer of proof that Chicago suffers from instability as a result of rapid racial change in its neighborhoods; that such transition is caused in part by tactics such as "For Sale" signs; and that the ordinance in question helps promote the continued viability of stable, racially integrated neighborhoods. In effect, by granting defendant's motion to dismiss, the trial court held that the ban on "For Sale" signs was unconstitutional as a matter of law. We reversed and remanded the action for an evidentiary hearing (City of Chicago v. Prus (1981), 99 Ill. App.3d 473, 425 N.E.2d 426), stating that, under Linmark Associates, Inc. v. Township of Willingboro (1977), 431 U.S. 85, 52 L.Ed.2d 155, 97 S.Ct. 1614, plaintiff must be afforded an opportunity "to show that the purported harm caused by the posting of `For Sale' signs could not be avoided by any means other than an ordinance banning them." (99 Ill. App.3d 473, 476, 425 N.E.2d 426, 428.) We expressed no opinion therein on the constitutionality of the challenged ordinance, nor did we specify the proof necessary to establish the governmental interest involved; however, we noted that "only an emergency situation threatening a sudden and perhaps wrenching change in a neighborhood could justify derogation from protected commercial speech by means of a ban ordinance" (99 Ill. App.3d 473, 477, 425 N.E.2d 426, 429), and that such determinations must be made on a case-by-case basis.

On remand, a hearing was held at which Ed Marciniak, an urbanologist, testified for plaintiff that he was executive director of the Chicago Commission on Human Relations from 1960 to 1968, and deputy commissioner of the city's Department of Planning from 1968 to 1972. From 1964 to 1967 the commission received 59 complaints which he or a commission staff member investigated. He did not specify the subject matter of the complaints, nor did he indicate the number which were determined to be without foundation after investigation. However, where there was a basis for the complaint, he would find numerous "For Sale" signs in the area. During 1964, he had several occasions to view the southeast side of Chicago in his capacity as director of the commission, and noted signs of racial violence and a rapid, radical change in the racial composition of neighborhoods in that area. He defined "panic peddling" as an effort to frighten homeowners into selling in an area which may be undergoing racial or ethnic change. The practice usually involves real estate brokers who create fear or exploit prejudices to obtain property listings. Homeowners are sometimes induced to sell to the broker at less than market value, and the broker then resells the home for more than its market value. Panic peddlers use a variety of techniques, including door-to-door solicitation; dissemination of literature stating that a member of a minority group has purchased a home nearby; racial steering; telephone solicitations; obtaining numerous listings, then placing signs to frighten other residents of the area into selling; "wrong number" phone calls in which the caller indicates that he thought he was calling "the black family that just moved in"; purchasing a home in the area and selling it on contract to a minority buyer; telling owners that the FHA had inspected certain property, implying that it would be sold to a black or Hispanic, that the police could no longer patrol the area effectively, and that the influx of minorities would affect the schools.

Marciniak further testified that between 1950 and 1970, panic peddling was taking place primarily in the southwestern, southeastern and eastern portions of the city, and arose because of the dual housing market. The white and minority populations were served by different brokers, and houses in one market would not be shown to persons served by the other market. In this way, those who controlled the white real estate market were able to confine the movement of minority groups to areas adjoining existing minority communities rather than allowing movement throughout the city and suburbs. This dual market was able to maintain itself through connections between the real estate industry and the insurance and mortgage industries; prospective minority buyers would find that they could not obtain the necessary mortgage or insurance to purchase a home in a "white" area. During this time, the minority population was increasing, and brokers serving that population had to "open up" new areas, that is, transfer properties from the white real estate market to the minority market. Marciniak stated that had there been effective tools at that time to open the entire market to all persons, there would not have been the massive racial transition in concentrated areas that characterized the period. However, because of existing conditions, brokers serving the minority market practiced panic-peddling techniques in order to obtain listings in predominantly white areas adjoining minority neighborhoods. As a result of the activities of brokers who specialized in areas undergoing racial and ethnic change, community organizations were formed which attempted to stabilize the situation.

According to Marciniak's testimony, "For Sale" and "Sold" signs have two purposes: commercial advertisement and informing white homeowners that a broker serving the minority market is operating in the area. Such signs are an important tool of panic peddling, and were used extensively, for example, in the Austin area from 1960 to 1970. The ordinance in question was needed when first passed in November 1971, and appears to have been effective because instances of panic peddling have declined since 1970, and there has been a significant slowing of massive racial transitions. Marciniak admitted that the use of signs is only a problem in predominantly white areas adjacent to predominantly minority communities, and that a single sign or a few signs in an otherwise stable community will not of themselves cause a sudden change — it is their use in conjunction with other techniques that causes panic in an area near a minority neighborhood. Marciniak also stated that in the past several years "For Sale" signs had begun to appear again, and he had heard that, in some areas, there was a proliferation of them, and there is one area of the city that has been going through a rapid change since 1977. In his opinion, the ban on signs would be necessary even if other sections of the Chicago Fair Housing Ordinance were strictly enforced. He further indicated that a sudden, wrenching change may be caused by an increase in arson, door-to-door solicitation, moving minority families into predominantly white communities, the use of "For Sale" signs by a broker known to be a panic peddler, or a major depression. Currently, these factors operate collectively to cause change, but, in Marciniak's opinion, any one factor alone could have the same result.

Jeanine Stump, a member of the Northwest Austin Council, testified that the organization was founded in 1967 as part of a community effort to stabilize the area. There were many homes for sale at that time, and there were as many as 10 "For Sale" signs in a single block of 40 homes. In addition to the signs, residents were the object of intensive solicitation by brokers both in person and by phone or mail. Some solicitation letters might say "Don't get caught over a barrel. Sell your home now," while others listed all the homes for sale or recently sold in the area. The organization members went out into the neighborhood and talked to residents, trying to calm their fears, but many felt that the "white flight" could not be stemmed. Brokers were asked to take their signs down and cease their mass solicitations, but they refused. The organization then joined with other community groups in asking the city to institute a ban on signs; once the ordinance went into effect, the panic subsided and the change had become more gradual. Ms. Stump further stated that although the brokers were using all of the panic-peddling techniques during this time, the mass solicitation stopped about the time that the ban went into effect; that efforts of the organization had stabilized the area and there had been no sudden changes, although a few signs had recently appeared; and that when such signs had been placed, members of the organization had notified the police of the ordinance violation and the signs had been removed.

James Keck testified that he purchased a home in 1951 for $16,800, but sold it in 1969 for $14,500 when he thought the neighborhood was going to change; that he had been contacted through the mail, by phone, and in person by a number of brokers; that there were many "For Sale" signs in the area, perhaps one or two per block, for six months before he sold; and that the signs frightened him because he thought the area was going to change overnight. He further stated that the decisive factor in selling his home was the fact that his children were being harassed by some minority-group children who had moved into the area.

Marie Maher testified that she lived in the North Austin area for 56 years and was a member of the Northeast Austin Organization founded in 1971 to help stabilize the area. In 1970, "For Sale" signs began appearing in the area, as many as six per block. In conjunction with this, brokers were soliciting by mail, by phone, and in person, urging residents to sell "before they lost money." She further stated that the solicitation and signs were disrupting the community and that the ban on signs helped ease residents' fears, although solicitation was also curtailed at the same time. She also testified that the other panic-peddling tactics would have had the same unsettling effect on the community even in the absence of "For Sale" signs.

Charles Shanabruch, executive director of the Beverly Area Planning Association, testified that the association works with area realtors to prevent resegregation of the neighborhood and promote affirmative marketing. The organization opposes the use of "For Sale" signs because they have a destabilizing effect on a neighborhood. They also try to prevent the operation of realtors who engage in panic-peddling tactics such as solicitation and racial steering. When a panic peddler begins operating in the area, the organization reports the solicitation tactics to the city and holds community meetings to counteract the effects. Shanabruch stated that in the past three years, two signs were placed in the area, and the resident and realtor involved cooperated when asked to remove them. He also stated that although a combination of panic techniques is needed to cause a sudden, wrenching change in an area, it was nonetheless his opinion that signs alone could cause a gradual resegregation of an integrated community.

Frank Tobin testified that he served as a priest in a parish near 99th and Jeffrey in the late 1960's and early 1970's. In 1968 the surrounding area was a relatively stable, predominantly white community, but by 1972 it was 80-85% black. He stated the change began in 1968-69 when "For Sale" signs began appearing, and the number of real estate agencies in the area increased from three or four to 40 or 50. Residents of the area were receiving two or three calls a day from realtors soliciting real estate listings, as well as door-to-door and mail solicitations. It was Tobin's opinion that all of these factors disrupted the community, instilling fear and panic. Tobin also indicated that because of their high visibility, signs were a significant factor in creating panic, and it might have been easier to control the situation if signs were banned. He further acknowledged the fact that although it is a combination of factors which cause a rapid change, including signs, solicitation, rumors, and the condition of the community and the economy, a proliferation of signs probably would not cause panic in a neighborhood that was not in the process of change.

Shirley Reed testified that an agent from Easy Life Real Estate attempted to solicit a listing on her grandfather's home in Wicker Park in 1979 by making numerous telephone calls and telling him that blacks were moving into the area. She stated that in 1979 Wicker Park was predominantly black and Puerto Rican, but more white families had moved into the area recently. She also testified that although there were "For Sale" signs in the area, they would not have induced her grandfather to sell in the absence of the other panic tactics, and that she put an end to the calls by telling the agent that she owned the property and would not sell and that he should cease his solicitation.

Mary Frances Gast testified that she had lived in the Beverly-Morgan Park area since 1963. She further stated that she became very concerned about the stability of the area when as many as four "For Sale" signs appeared in block after block, and "was glad to see a ban on such signs." Ms. Gast also testified that as a real estate agent she felt that the ban had not harmed the industry; in fact, it was her opinion that it had helped business because prospective purchasers now had to consult brokers to find out what was available. She further admitted that her agency uses signs in communities where they are permitted and that they can be a useful selling device; however, because of the situation in the city, i.e., rapidly changing areas, Ms. Gast stated that signs do a great deal of harm to homeowners and property values. She could not name any area of the city that was currently undergoing a rapid racial change, but indicated that the suburbs of Bellwood and Country Club Hills ...

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