Opinion
14753
October 13, 1938.
Before BELLINGER, J., Richland, May, 1938. Affirmed.
Action by W.E. McNulty, taxpayer of the City of Columbia, suing for himself and for and on behalf of all other taxpayers of the City of Columbia, against L.B. Owens, Mayor of the City of Columbia, and others to enjoin the proposed action of the Columbia Housing Authority and of the City of Columbia in erecting a housing project, and to enjoin the demolition of certain slum areas. From a decree dismissing the complaint, plaintiff appeals.
The decree of Judge Bellinger, which is requested to be reported, follows:
This action was brought by a taxpayer representing himself and others similarly situated against the City of Columbia and the Columbia Housing Authority asking for an injunction against the proposed action of the Columbia Housing Authority and of the City of Columbia in erecting in Columbia a housing project to provide housing for persons of low income and to enjoin the demolition by the Housing Authority of certain slum areas in the city.
The plaintiff in addition to being a taxpayer is the owner of rental property leased for residential purposes in the city, with which property he claims the project to be built by the Columbia Housing Authority will compete.
The validity of the action of the defendants is questioned on a number of grounds which are set out in Paragraph 8 of the complaint. Returns and answers were filed in behalf of the defendants admitting that they proposed to erect in the City of Columbia, pursuant to valid legislation, a project to provide housing for persons of low income, pursuant to certain proposed agreements between the United States Housing Authority and the Columbia Housing Authority and certain proposed agreements between the Columbia Housing Authority and the City of Columbia. The defendants deny the illegality of the proposed project.
The proposed contracts, the resolutions of the Columbia Housing Authority and other exhibits were offered in evidence, and oral testimony taken before me in response to a rule issued with the summons and complaint.
The testimony shows that pursuant to an Act of the General Assembly of 19th of March, 1934 (38 Stat., 1368), providing for the creation of public authorities to engage in slum clearance projects and for the construction and acquisition of housing accommodations for families of low income, the City of Columbia, by proper resolution dated April 10, 1934, created a housing authority for the City of Columbia. Promptly thereafter, as authorized by statute, the Mayor of the City of Columbia named E.C. Coker, W. S. Hendley, L. Cooper Smith, S.L. Latimer, Jr., and G. H. Crawford as members of the Columbia Housing Authority. These citizens of Columbia qualified as members of the Authority and are still acting in that capacity.
The Congress of the United States by its Act of September 1, 1937 (42 U.S.C.A., § 1401, et seq.), set up the United States Housing Authority for the purpose of helping in the financing of these low-cost housing projects. The Columbia Housing Authority has been negotiating with the United States Housing Authority in connection with the financing of projects in the City of Columbia.
Immediately preceding the institution of this suit the United States Housing Authority submitted to the Columbia Housing Authority drafts of certain proposed contracts which have been approved by the Columbia Housing Authority, but which have not been executed by any of the parties thereto. These contracts were offered in evidence and provide substantially the following:
The Columbia Housing Authority will erect in the City of Columbia at a total cost of $560,000.00 a slum clearance and low-cost housing development, which will be financed by the issuance by the Columbia Housing Authority of 3% serial bonds maturing over a period of about sixty years, totaling $560,000.00. Of these bonds the Columbia Housing Authority proposes to sell to the United States Housing Authority an aggregate amount of between $458,000.00 and $504,000.00, selling the remaining bonds locally or to the City of Columbia.
The proposed contracts between the City of Columbia and the Columbia Housing Authority permit the City of Columbia to give to the Columbia Housing Authority any land which the city might own which may be useful to the project, or the services of the City of Columbia, such as engineering services, the use of the facilities of the Columbia Street Department, or other things which the City might contribute. Such property or services as may be contributed by the city are to be deducted from the total amount of bonds to be issued and will reduce the amount of bonds which will have to be financed locally.
These contracts further provide that the United States Housing Authority will make an annual contribution to the Columbia Housing Authority of approximately $19,000.00 to help defray the operating costs and interest and principal requirements in accordance with the bond maturities. The City of Columbia will also agree to accept the sum of $500.00 annually in lieu of all taxes and assessments. The bonds and operating expenses will be paid out of this government subsidy and from the rents collected from the project.
The Columbia Housing Authority and the City of Columbia by these agreements will obligate themselves to demolish as many dwelling units as are erected. If, therefore, the property on which the housing project is built does not contain as many dwelling units as would be erected on the property, the city is obligated to tear down a sufficient number of units on property owned by it or to use its police powers to accomplish the demolition of unsanitary dwellings on private property so as to make the demolition equivalent to the number of dwelling units erected.
As has been said heretofore these contracts have not been actually executed but the proposed plan is sufficiently definite to permit the Court to pass upon the validity thereof.
Several questions raised in the taxpayer's complaint present for the consideration of the Court the question of whether the elimination of slum areas and the building of low-rent housing units is a public municipal purpose within the meaning of the State Constitution, Article 10, § 4.
Under the division of the powers provided in our State Constitution the question of whether an Act is for a public purpose is primarily one for the Legislature and this Court will not interfere with the legislative finding unless the determination of that body is clearly wrong. Riley v. Charleston Union Station Co., 71 S.C. 457, 51 S.E., 485, 110 Am. St. Rep., 579; Park v. Greenwood County, 174 S.C. 35, 176 S.E., 870. In the Park case the Court had this to say (872): "The question of whether an Act is for a public purpose is primarily one for the Legislature; and this Court will not interfere unless the determination by that body is clearly wrong. Poulnot v. Cantwell, 129 S.C. 171, 123 S.E., 651. We find in the case before us that the General Assembly has by the Act of May 8, 1933 (38 Stat. at Large, p. 411), expressly authorized a county to build a plant for the generation and distribution of electric current. This Act has been amended twice since that time (38 Stat. at Large, p. 1306, 38 Stat. at Large, p. 1392). Another Act (38 Stat. at Large, p. 299), as amended in 1934 (38 Stat. at Large, p. 1302), permitted counties to erect, maintain, and operate electric light plants. It will therefore be seen that the Legislature has, at least four times during the past two years, found as a fact that the erection and operation of such a plant by a county is a proper public purpose. This finding, while not conclusive, is entitled to much weight."
We find in the Act setting up the Housing Authority adopted May 19, 1934, a declaration of public interest in the following language: "Declaration of Public Interest. — It is hereby declared as a matter of legislative determination that in order to promote and protect the health, safety, morals and welfare of the public, it is necessary in the public interest to provide for the creation of public corporate bodies to be known as housing authorities, and to confer upon and vest in said housing authorities all powers necessary or appropriate in order that they may engage in lowcost housing and slum clearance projects; and that the powers herein conferred upon the housing authorities including the power to acquire property to remove unsanitary or substandard conditions, to construct and operate housing accommodations and to borrow, expend, lend and repay moneys for the purposes herein set forth, are public objects essential to the public interest." 38 St. at Large, p. 1370, § 2.
This finding by the General Assembly has been reaffirmed in numerous amendments to the Act passed at subsequent sessions of the General Assembly. Act of May 17, 1935 (39 Stat., 424), Act of June 5, 1935 (39 Stat., 500, 501), Act of April 17, 1937 (40 Stat., 267), Act of May 10, 1937 (40 Stat., 431), Act of May 10, 1937 (40 Stat., 1426), and Act of the most recent General Assembly ratified May 6, 1938 (40 Stat., 1819), further amending the 1934 Act. In addition thereto we find similar public purposes declared in the Limited Dividend Housing Act of 1933 (38 Stat., 176).
Similar findings by the Congress of the United States are also entitled to great weight here. Thus we see that the Congress in creating the United States Housing Authority by its Act of September 1, 1937, declared in 42 U.S.C.A., § 1401: "§ 1401. Declaration of policy. It is hereby declared to be the policy of the United States to promote the general welfare of the Nation by employing its funds and credit, as provided in this chapter, to assist the several States and their political subdivisions to alleviate present and recurring unemployment and to remedy the unsafe and insanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low income, in rural or urban communities, that are injurious to the health, safety, and morals of the citizens of the Nation."
Twice prior to this time the Congress had also indicated the public character of housing by providing for federal expenditures for this purpose in the Reconstruction Finance Corporation Act of 1932, 15 U.S.C.A., § 601 et seq., and in Title II of the National Industrial Recovery Act, 40 U.S.C.A., § 401 et seq. (1933).
The evidence taken before me does not overthrow these legislative findings, but on the contrary confirms their correctness.
In the City of Columbia, for instance, of 12,000 dwelling houses, some 4,000 are without inside toilets, some 5,200 without bath or shower facilities, some 4,200 without gas or electric lights, and some 2,400 in need of substantial repairs. Columbia's high death rate, twenty per thousand against a national average of eleven per thousand, may well be attributable in part to the housing conditions in the city. An examination of the juvenile delinquency in Columbia during the year 1937 shows that practically all of these cases come from bad housing areas. A similar check indicates that bad housing is a very material factor in our high infant mortality rate.
Experience in other parts of the country and in England indicate a very substantial improvement in health and in morals where sanitary housing has been provided for persons of low income.
University Terrace, a complete slum clearance and lowcost housing project in Columbia, is illustrative of the benefits that accrue to Columbia from projects of this nature. This project was built on property immediately adjacent to the University of South Carolina and to the colored High School of Columbia. Of the fifty-four dwelling units which previously occupied this block, only one contained a bath tub and only two inside toilets. It was an area which was a subject of considerable concern to the City Police Department, and a very unwholesome influence to the students of the High School immediately adjacent thereto.
This area was eliminated and dwelling units for both white and colored persons erected thereon. It has been in operation for some seven or eight months now, and not a single police case has been made in connection with the 74 Negro families occupying the colored portion of this property.
The statistics of the Department of Labor show that in the corporate limits of the City of Columbia there are 2,500 white families with incomes of less than $1,000.00 a year, and 4,200 Negro families with incomes of less than $1,000.00 a year. Statistics indicate that twenty to twenty-five per cent. of a family's income is as much as should be spent for rent and utilities, which means that for a family with an income of $1,000.00 a year not over $20.00 per month for rent, water, heat and lights, and for those of smaller income correspondingly less.
Considering all of these matters, including the obvious need for low-cost housing, the apparent inability of private capital to supply such housing, and the satisfactory solution of the problem afforded by similar governmental programs of slum clearance and low-cost housing here and elsewhere, we conclude that the slum-clearance and low-cost housing project planned by the Columbia Housing Authority is an exercise of a proper governmental function for a valid public purpose.
Having reached this conclusion it follows that this property may be exempt in whole or in part from taxation under the provisions of Art. 10, Sec. 1 and Art. 10, Sec. 4 of the Constitution of 1895. This property is municipal property within the meaning of Sec. 4, it is also property used exclusively for public purposes within the meaning of that section. It therefore follows that the property of the Authority is exempt from taxation by the Constitution. The provisions of the Act of 1934 as amended by the Act of May 10, 1937 (40 Stat., 431, 440, § 11) providing for the exemption of this property from taxation constituted a confirmation by the Legislature of the exemption of this property by the Constitution, and further provided for the exemption of this property from special assessment. It thus appears that the property is exempted from taxation and special assessment, and therefore the contract between the City of Columbia and the Columbia Housing Authority for the payment of $500.00 in lieu of taxes and special assessment, which contract is authorized by the Act of 1934, is a benefit to the taxpayers of the City of Columbia rather than a detriment and they cannot complain thereof.
Having reached the conclusion that the project is for a public purpose it follows that the Columbia Housing Authority may exercise the power of eminent domain if that power be necessary in acquiring property for slum clearance or low-cost housing, and because of the public purpose of this project it does not constitute a taking of property for private purposes within the prohibition of Section 17 of Art. 1 of the Constitution.
The other allegations of Paragraph 8 of the complaint questioning the validity of the powers given to the Columbia Housing Authority because the project is not for a public purpose must similarly be overruled.
The taxpayer also alleges that the bonds to be issued by the Columbia Housing Authority will constitute an increase of the bonded indebtedness of the City of Columbia in violation of Section 7, Art. 8 and Section 5 of Art. 10 of the Constitution. This position is obviously unsound in that Section 11 of the Act provides specifically that "no indebtedness of any nature of an authority shall constitute a debt or obligation of a municipality or the state or any other subdivision or agency or instrumentality thereof." Those bonds, therefore, are not to be computed in arriving at the limitations of the bonded indebtedness of the City of Columbia. Cathcart v. City of Columbia, 170 S.C. 362, 372, 170 S.E., 435; Park v. Greenwood County, 174 S.C. 35, 176 S.E., 870; Roach v. City of Columbia, 172 S.C. 478, 174 S.E., 461; Clarke v. South Carolina Public Service Authority, 177 S.C. 427, 181 S.E., 481.
The next question presented is the taxpayer's allegation of illegality in the donation of land, services or money to the Columbia Housing Authority by the City of Columbia. Since the purposes of the Authority are public the city has discretion to donate land, money or services for these purposes. Haesloop v. City Council of Charleston, 123 S.C. 272, 115 S.E., 596.
It is next charged in the complaint that the City of Columbia by its contract will attempt to bind the future exercise of the governmental powers with regard to fixing water rates, maintaining streets, etc. An examination of the contract will show that the city is merely obligating itself to furnish municipal services and facilities for these tenants of the same character as those furnished other tenants in the City of Columbia. A municipal corporation is so obligated and this provision in the contract is merely an acknowledgment of the existing law on this point. Since the property is for a public purpose and totally exempt from taxation under the provisions of the statute, the City and Housing Authority may agree on a payment in lieu of taxes, and it is within the power of the City of Columbia to agree to such payment.
The proposed contract between the City of Columbia and the Columbia Housing Authority whereby the city will bind itself to demolish unsound and insanitary dwellings equal in number to the number of dwellings constructed by the Authority less the number of unsafe and insanitary units demolished by the Authority constitutes merely an agreement on the part of the city to exercise a power which it already has in such a manner as to cooperate with the program of the Housing Authority. Any action taken by the city in fulfillment of this contract will be subject to all of the limitations to which such actions are subjected under the Constitution and laws of the State, and this contract neither increases or decreases the protection afforded to citizens by those limitations. The contract does not constitute an attempt by the city to bind itself in its exercise of governmental functions. It is merely an agreement to cooperate in the use of those functions and as such is valid.
The final attack upon the validity of this project is based upon the theory that the United States Housing Authority has no power to obligate the federal government to make an annual contribution of $19,000.00, it being charged that the elimination of slums and providing of low-cost housing is not a proper function of the federal government.
Attention has been called elsewhere to the fact that the Congress on three separate occasions has passed Acts providing for the use of federal funds in assisting states and their political subdivisions in remedying insanitary housing conditions in both urban and rural communities. The declaration of policy in the present Act of the Congress has been quoted above and shows that Congress' appropriation is not merely for the purpose of remedying unsafe and insanitary housing conditions, but to also assist the states in alleviating the present and recurring unemployment. This Court will take judicial knowledge of the fact that conditions throughout the nation are similar to those shown to exist in the City of Columbia, and that there are ample grounds to support the findings by Congress as to the existence of national unemployment and of housing conditions which are injurious to the health and morals of the nation. It is now clear that the national Congress has a right to make appropriations under the taxing clause not confined to those matters on which Congress is given the right to legislate. United States v. Butler, 297 U.S. 1, 56 S.Ct., 312, 80 L.Ed., 477, 102 A.L.R., 914. Following this decision are the Social Security cases of Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct., 883, 81 L.Ed., 1279, 109 A.L.R. 1293; Helvering v. Davis, 301 U.S. 619, 57 S.Ct., 904, 81 L.Ed., 1307, 109 A.L.R., 1319. As said in the Steward Machine Co. case by Mr. Justice Cardozo (890): "It is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare."
The government's right to spend money for the relief of unemployment through states and their subdivisions is thus clearly established. See, also, the opinion of Judge Parker in Duke Power Co. v. Greenwood County, 4 Cir., 91 F.2d 665.
Although the above cases deal with unemployment and old age pensions, the reasoning contained therein would apply equally well to the elimination of unsafe and insanitary dwelling units and the erection of low-rent dwellings for families of low income, which is just as essential to the national welfare as is the relief of unemployment.
Since the consent of the State is necessary in this matter no question of the invasion of the reserved powers of the State or interference with its functions is present.
If, therefore, the taxpayer can raise the question of the validity of federal expenditures it is clear the federal Congress has the right to provide for federal contributions in this vital public work, and it is clear that under the Act of September 1, 1937, the Congress has authorized the United States Housing Authority to enter into contracts of this nature.
It might also be borne in mind that since there are some questions in the complaint as to the validity of the organization of the Columbia Housing Authority that the Legislature by its Act of May 10, 1937 (40 Stat., 1426), expressly validated the creation of housing authorities under the present Act. This action by the Legislature also renders academic any question as to delegation of power by the Legislature to the City Council and Mayor, even without the validating Act; such position cannot be maintained in view of the cases of City of Greenville v. Foster, 101 S.C. 318, 85 S.E., 769, and Dillon Catfish Drainage Dist. v. Bank of Dillon, 143 S.C. 178, 141 S.E., 274.
It follows, therefore, that the Acts of the Congress and of the Legislature of South Carolina are not in violation of any provision of either Constitution and that the actions of the City of Columbia and of the Columbia Housing Authority in the manners complained of in the complaint are legal in every particular.
From the record before the Court the conclusion is inescapable that bad housing conditions have an adverse effect on the health and morals of the City of Columbia, therefore, the elimination of these slum areas is a proper function of government, both city and State.
The views herein expressed are in accord with the rulings of the highest Courts of the several states that have passed upon these matters. Willmon v. Powell, 1928, 91 Cal.App. 1, 266 P., 1029; Simon v. O'Toole, 1931, 108 N.J.L., 32, 155 A., 449; New York City Housing Authority v. Muller, 1926, 270 N.Y., 333, 1 N.E., 2d 153, 105 A.L.R., 905; Spahn v. Stewart, 268 Ky., 97, 103 S.W.2d 651; In re Opinions of the Justices, 235 Ala., 485, 179 So., 535.
It is, therefore, ordered and adjudged that the prayer of injunction be denied and the complaint dismissed.
Messrs. McKay Manning, for appellant, cite: Power to take private property: 23 S.C. 57; 21 S.C. 560; 16 S.C. 32; 71 S.C. 457; 51 S.E., 485; 170 S.C. 362; 170 S.E., 435. Public purpose defined: 174 S.C. 35; 176 S.E., 870; 172 S.C. 478; 174 S.E., 461; 11 Am. Rep., 185; 15 Am. Rep., 45; 106 U.S. 487; 27 L.Ed., 238; 98 N.E., 611; 42 L.R.A. (N.S.), 221; 15 L.R.A., 809; 30 N.E., 1142; 66 N.E., 25; 22 L.R.A. (N.S.), 35. Tax exemption: 70 S.C. 433; 50 S.E., 28; 105 S.C. 303; 89 S.E., 641. Power of city to donate land: 123 S.C. 272; 115 S.E., 596. Power of municipal council to enter into contract for indefinite period: 226 F., 889; 71 S.E., 785; 173 S.E., 140; 79 S.C. 511; 72 S.E., 228; 36 L.R.A. (N.S.), 363; 169 S.C. 373; 168 S.E., 852. Right of Legislature to delegate power: 177 S.C. 427; 181 S.E., 481; 11 Am. Jur., 923.
Messrs. Paul A. Cooper, for respondent, City of Columbia, and Robinson Robinson, for respondent, Columbia Housing Authority, cite: Public purpose: 71 S.C. 457; 51 S.E., 485; 174 S.C. 35; 176 S.E., 870; 129 S.C. 171; 123 S.E., 651; 253 U.S. 233; 64 L.Ed., 878; 4 Am.Rep., 400; 266 P., 1029; 155 A., 449; 1 N.E.2d 153; 103 S.W.2d 651; 130 N.E., 601; 16 A.L.R., 152; 200 U.S. 527; 50 L.Ed., 581; 240 U.S. 28; 60 L.Ed., 507. Power of Legislature to establish political subdivisions for local improvements: 110 S.C. 36; 96 S.E., 545; 10 R. C.L., 11; 91 U.S. 371; 23 L.Ed., 449; 137 S.C. 496; 133 S.E., 538; 143 S.C. 178; 141 S.E., 274; 177 S.C. 427; 181 S.E., 481. Tax exemption: 179 So., 535; 116 So., 695; 301 U.S. 495; 81 L.Ed., 1245; 42 So., 114; 42 So., 116; 49 So., 814; 35 So., 454; 70 S.C. 433; 50 S.E., 28; 156 S.C. 299; 152 S.E., 865; 177 S.C. 427; 181 S.E., 481. Where debt limitation not violated: 174 S.C. 35; 176 S.E., 870; 170 S.C. 372; 170 S.E., 435; 41 P., 888; 137 S.C. 288; 135 S.E., 153; 172 S.C. 478; 174 S.E., 461; 177 S.C. 374; 181 S.E., 467; 177 S.C. 478; 181 S.E., 481; 177 S.C. 299; 181 S.E., 476. Power of city to donate land and services: 123 S.C. 272; 115 S.E., 596; 21 S.C. 435; 28 Cyc., 625. As to unlawful delegation of power: 152 S.C. 455; 150 S.E., 269; 101 S.C. 178; 85 S.E., 769; 143 S.C. 178; 141 S.E., 274; 12 C.J., 839; 239 U.S. 264; 60 L.Ed., 274.
October 13, 1938.
While we have considered with care the questions raised in this case, we do not deem it necessary to add anything to what Judge Bellinger has said in his decree. His order, the result of which we approve, is sustained generally by the authorities cited therein. We may say, however, that we are impressed with the very strong argument filed by counsel for the appellant, there being much in favor of some of the contentions made.
The circuit decree, which will be reported, is affirmed.
MR. CHIEF JUSTICE STABLER and MESSRS. JUSTICES BONHAM, BAKER and FISHBURNE and MR. ACTING ASSOCIATE JUSTICE LIDE concur.
MR. JUSTICE CARTER did not participate on account of illness.