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THORPE v. HOUSING AUTHORITY OF THE CITY OF DURHAM.
CERTIORARI TO THE SUPREME COURT OF NORTH CAROLINA.
Argued October 23, 1968.
Decided January 13, 1969.
Petitioner had a month-to-month tenancy in a federally assisted public housing project operated by respondent, the lease providing for termination by either party on 15 days' notice. She received a lease cancellation notice, with no reasons being given, the day after being elected president of a tenants' organization. Petitioner, who fruitlessly tried to determine why she was being evicted, refused to vacate. Respondent brought an eviction action, and the State Supreme Court affirmed the lower court's eviction order which held that the reasons for cancellation were immaterial, notwithstanding petitioner's contention that she was being evicted because of her organizational activities in violation of her First Amendment rights. This Court granted certiorari. Thereafter, on February 7, 1967, the Department of Housing and Urban Development (HUD) issued a circular requiring local housing authorities to give tenants the reasons for eviction and to afford them an opportunity for explanation or reply. Following this Court's remand for further proceedings in the light of the HUD circular ( 386 U.S. 670 ), the State Supreme Court upheld petitioner's eviction on the ground that the parties' rights had "matured" before issuance of the circular, which the court held applied only prospectively. The court stayed execution of its judgment pending this Court's decision. Respondent urges that the circular (1) is only advisory; (2) if mandatory, constitutes an unconstitutional impairment of respondent's contract with HUD and its lease agreement with petitioner; and (3) if constitutional, does not apply to eviction proceedings commenced before its issuance. Held:
James M. Nabrit III argued the cause for petitioner. With him on the briefs were Jack Greenberg, Charles Stephen Ralston, Charles H. Jones, Jr., Anthony G. Amsterdam, and William Bennett Turner.
Daniel K. Edwards argued the cause for respondent. With him on the briefs was William Y. Manson.
MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.
This case raises the question whether a tenant of a federally assisted housing project can be evicted prior to notification of the reasons for the eviction and without an opportunity to reply to those reasons, when such a [393 U.S. 268, 270] procedure is provided for in a Department of Housing and Urban Development (hereinafter HUD) circular issued after eviction proceedings have been initiated.
On November 11, 1964, petitioner and her children commenced a month-to-month tenancy in McDougald Terrace, a federally assisted, low-rent housing project owned and operated by the Housing Authority of the City of Durham, North Carolina. Under the lease, petitioner is entitled to an automatic renewal for successive one-month terms, provided that her family composition and income remain unchanged and that she does not violate the terms of the lease. 1 The lease also provides, however, that either the tenant or the Authority may terminate the tenancy by giving notice at least 15 days before the end of any monthly term. 2 [393 U.S. 268, 271]
On August 10, 1965, petitioner was elected president of a McDougald Terrace tenants' organization called the Parents' Club. On the very next day, without any explanation, the executive director of the Housing Authority notified petitioner that her lease would be canceled as of August 31. 3 After receiving notice, petitioner attempted through her attorneys, by phone and by letter, to find out the reasons for her eviction. 4 Her inquiries went unanswered, and she refused to vacate.
On September 17, 1965, the Housing Authority brought an action for summary eviction in the Durham Justice of the Peace Court, which, three days later, ordered petitioner removed from her apartment. On appeal to the Superior Court of Durham County, petitioner alleged that she was being evicted because of her organizational activities in violation of her First Amendment rights. After a trial de novo, 5 the Superior Court affirmed the [393 U.S. 268, 272] eviction, and the Supreme Court of North Carolina also affirmed. 6 Both appellate courts held that under the lease the Authority's reasons for terminating petitioner's tenancy were immaterial. On December 5, 1966, we granted certiorari 7 to consider whether petitioner was denied due process by the Housing Authority's refusal to state the reasons for her eviction and to afford her a hearing at which she could contest the sufficiency of those reasons.
On February 7, 1967, while petitioner's case was pending in this Court, HUD issued a circular directing that before instituting an eviction proceeding local housing authorities operating all federally assisted projects should inform the tenant "in a private conference or other appropriate manner" of the reasons for the eviction and give him "an opportunity to make such reply or explanation as he may wish." 8 Since the application of [393 U.S. 268, 273] this directive to petitioner would render a decision on the constitutional issues she raised unnecessary, we vacated the judgment of the Supreme Court of North Carolina and remanded the case "for such further proceedings as may be appropriate in the light of the February 7 circular of the Department of Housing and Urban Development." 9
On remand, the North Carolina Supreme Court refused to apply the February 7 HUD circular and reaffirmed its prior decision upholding petitioner's eviction. Analogizing [393 U.S. 268, 274] to the North Carolina rule that statutes are presumed to act prospectively only, the court held that since "[a]ll critical events" 10 had occurred prior to the date on which the circular was issued "[t]he rights of the parties had matured and had been determined before . . ." that date. 11 We again granted certiorari. 12 We reverse the judgment of the Supreme Court of North Carolina and hold that housing authorities of federally assisted public housing projects must apply the February 7, 1967, HUD circular before evicting any tenant still residing in such projects on the date of this decision. 13
In support of the North Carolina judgment, the Housing Authority makes three arguments: (1) the HUD circular was intended to be advisory, not mandatory; (2) if the circular is mandatory, it is an unauthorized and unconstitutional impairment of both the Authority's annual contributions contract with HUD 14 and the lease agreement between the Authority and petitioner; and (3) even if the circular is mandatory, within HUD's power, and constitutional, it does not apply to eviction proceedings commenced prior to the date the circular was issued. We reject each of these contentions.
Despite the incorporation of the February 7 circular into the Management Manual in October 1967, the Housing Authority contends that on its face the circular purports to be only advisory. The Authority places particular emphasis on the circular's precatory statement that HUD "believes" that its notification procedure should be followed. In addition to overlooking the significance of the subsequent incorporation of the circular into the Management Manual, the Authority's argument is based upon a simple misconstruction of the language actually used. The import of that language, which characterizes the new notification procedure as "essential," becomes apparent when the February 7 circular is contrasted with the one it superseded. The earlier circular, issued on May 31, 1966, stated: "[W]e strongly urge, as a matter of good social policy, that Local Authorities in a [393 U.S. 268, 276] private conference inform any tenants who are given . . . [termination] notices of the reasons for this action." 21 (Emphasis added.) This circular was not incorporated into the Management Manual.
That HUD intended the February 7 circular to be mandatory has been confirmed unequivocally in letters written by HUD's Assistant Secretary for Renewal and Housing Assistance 22 and by its Chief Counsel. 23 As we stated in Bowles v. Seminole Rock Co., 325 U.S. 410, 414 (1945), when construing an administrative regulation, "a court must necessarily look to the administrative construction of the regulation if the meaning of the words used is in doubt. . . . [T]he ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation." 24 Thus, when the language and HUD's treatment of the February 7 circular are contrasted with the language and treatment of the superseded circular, there can be no doubt that the more recent circular was intended to be mandatory, not merely advisory as contended by the Authority. [393 U.S. 268, 277]
The Authority also argues that under the Due Process Clause of the Fifth Amendment HUD is powerless to impose any obligations except those mutually agreed upon in the annual contributions contract. 31 If HUD's [393 U.S. 268, 279] power is not so limited, the Authority argues, HUD would be free to impair its contractual obligations to the Authority through unilateral action. Moreover, in this particular case, the Authority contends that HUD has not only impaired its own contract with the Authority, but it has also impaired the contract between petitioner and the Authority. The obligations of each of these contracts, however, can be impaired only "by a law which renders them invalid, or releases or extinguishes them . . . [or by a law] which without destroying [the] contracts derogate[s] from substantial contractual rights." 32 The HUD circular does neither.
The respective obligations of both HUD and the Authority under the annual contributions contract remain unchanged. Each provision of that contract is as enforceable now as it was prior to the issuance of the circular. 33 Although the circular supplements the contract in the sense that it imposes upon the Authority an additional obligation not contained in the contract, that obligation is imposed under HUD's wholly independent rule-making power.
Likewise, the lease agreement between the Authority and petitioner remains inviolate. Petitioner must still pay her rent and comply with the other terms of the lease; and, as the Authority itself acknowledges, she is still subject to eviction. 34 HUD has merely provided for a particular type of notification that must precede [393 U.S. 268, 280] eviction; and "[i]n modes of proceeding and forms to enforce the contract the legislature has the control, and may enlarge, limit, or alter them, provided it does not deny a remedy or so embarrass it with conditions or restrictions as seriously to impair the value of the right." 35
Since the Authority does not argue that the circular is proscribed by any constitutional provision other than the Due Process Clause, the only remaining inquiry is whether it is reasonably related to the purposes of the [393 U.S. 268, 281] enabling legislation under which it was promulgated. 36 One of the specific purposes of the federal housing acts is to provide "a decent home and a suitable living environment for every American family" 37 that lacks the financial means of providing such a home without governmental aid. A procedure requiring housing authorities to explain why they are evicting a tenant who is apparently among those people in need of such assistance certainly furthers this goal. We therefore cannot hold that the circular's requirements bear no reasonable relationship to the purposes for which HUD's rule-making power was authorized.
To the contrary, the general rule is particularly applicable here. The Housing Authority concedes that its power to evict is limited at least to the extent that it may not evict a tenant for engaging in constitutionally [393 U.S. 268, 283] protected activity; 44 but a tenant would have considerable difficulty effectively defending against such an admittedly illegal eviction if the Authority were under no obligation to disclose its reasons. 45 On the other hand, requiring the Authority to apply the circular before evicting petitioner not only does not infringe upon any of its rights, but also does not even constitute an imposition. The Authority admitted during oral argument that it has already begun complying with the circular. 46 It refuses to apply it to petitioner simply because it decided to evict her before the circular was issued. Since petitioner has not yet vacated, we fail to see the significance of this distinction. We conclude, therefore, that the circular should be applied to all tenants still residing in McDougald Terrace, including petitioner, not only because it is designed to insure a fairer eviction procedure in general, but also because the prescribed notification is essential to remove a serious impediment to the successful protection of constitutional rights.
[ Footnote 2 ] "This lease may be terminated by the Tenant by giving to Management notice in writing of such termination 15 days prior to the last day of the term. The Management may terminate this lease by giving to the Tenant notice in writing of such termination fifteen (15) days prior to the last day of the term. Provided, however, that this paragraph shall not be construed to prevent the termination of this lease by Management in any other method or for any other cause set forth in this lease."
The Housing Authority construes this provision to authorize termination upon the giving of the required notice even if the tenant has not violated the terms of the lease and his income and family composition have not changed. Petitioner, however, insists that since the Authority is a government agency, it may not constitutionally evict "for no reason at all, or for an unreasonable, arbitrary and capricious reason . . . ." Brief for Petitioner 27. We do not, however, reach that issue in this case. See n. 49, infra.
[ Footnote 3 ] The text of the notice is as follows:
[ Footnote 4 ] One of those attempts was made on September 1. In an affidavit filed with the Superior Court of Durham County, petitioner alleged that on that day members of the Housing Authority met with a Durham police detective who had been investigating petitioner's conduct. Although petitioner's attorney met with Housing Authority representatives on this same day to request a hearing, the attorney was not informed what information had been uncovered by the police investigation or whether it had any bearing on petitioner's eviction.
[ Footnote 5 ] All of the essential facts were stipulated in the Superior Court, including:
[ Footnote 6 ] 267 N.C. 431, 148 S. E. 2d 290 (1966).
[ Footnote 7 ] 385 U.S. 967 .
[ Footnote 8 ] The full text of that circular is as follows:
TO: Local Housing Authorities Assistant Regional Administrators for Housing Assistance HAA Division and Branch Heads
FROM: Don Hummel
SUBJECT: Terminations of Tenancy in Low-Rent Projects
Within the past year increasing dissatisfaction has been expressed with eviction practices in public low-rent housing projects. During [393 U.S. 268, 273] that period a number of suits have been filed throughout the United States generally challenging the right of a Local Authority to evict a tenant without advising him of the reasons for such eviction.
Since this is a federally assisted program, we believe it is essential that no tenant be given notice to vacate without being told by the Local Authority, in a private conference or other appropriate manner, the reasons for the eviction, and given an opportunity to make such reply or explanation as he may wish.
In addition to informing the tenant of the reason(s) for any proposed eviction action, from this date each Local Authority shall maintain a written record of every eviction from its federally assisted public housing. Such records are to be available for review from time to time by HUD representatives and shall contain the following information:
1. Name of tenant and identification of unit occupied.
2. Date of notice to vacate.
3. Specific reason(s) for notice to vacate. For example, if a tenant is being evicted because of undesirable actions, the record should detail the actions which resulted in the determination that eviction should be instituted.
4. Date and method of notifying tenant with summary of any conferences with tenant, including names of conference participants.
5. Date and description of final action taken.
The Circular on the above subject from the PHA Commissioner, dated May 31, 1966, is superseded by this Circular.
[ Footnote 9 ] 386 U.S. 670, 673 -674 (1967).
[ Footnote 10 ] 271 N.C. 468, 471, 157 S. E. 2d 147, 150 (1967).
[ Footnote 11 ] 271 N.C., at 470, 157 S. E. 2d, at 149.
[ Footnote 12 ] 390 U.S. 942 (1968).
[ Footnote 13 ] The Supreme Court of North Carolina stayed the execution of its judgment pending our decision. As a result, petitioner has not yet vacated her apartment.
[ Footnote 14 ] Under 10 (a) of the United States Housing Act of 1937, 50 Stat. 891, as amended, 42 U.S.C. 1410 (a) (1964 ed., Supp. III), HUD is required to enter into an annual contributions contract with the local housing authorities. In that contract, HUD guarantees to provide a certain amount of money over a certain number of years.
[ Footnote 15 ] 50 Stat. 891, as amended, 42 U.S.C. 1408 (1964 ed., Supp. III).
[ Footnote 16 ] Housing Assistance Administration, HUD, Low-Rent Management Manual.
[ Footnote 17 ] Id., 0 (preface) (April 1962).
[ Footnote 18 ] Ibid.
[ Footnote 19 ] Housing Assistance Administration, HUD, Low-Rent Housing Manual 100.2, at 2 (Sept. 1963).
[ Footnote 20 ] Ibid.
[ Footnote 21 ] Circular from Commissioner Marie C. McGuire to Local Authorities, Regional Directors, and Central Office Division and Branch Heads, May 31, 1966.
[ Footnote 22 ] "[W]e intended it to be followed. . . . The circular is as binding in its present form as it will be after incorporation in the manual. . . . HUD intends to enforce the circular to the fullest extent of its ability. . . ."
Letter from Assistant Secretary Don Hummel to Mr. Charles S. Ralston of the NAACP Legal Defense and Educational Fund, Inc., July 25, 1967.
[ Footnote 23 ] HUD's Chief Counsel stated that his "views are the same as those expressed" by Assistant Secretary Hummel. Letter from Mr. Joseph Burstein to Mr. Charles S. Ralston, Aug. 7, 1967.
[ Footnote 24 ] Accord, Udall v. Tallman, 380 U.S. 1 (1965). See Zemel v. Rusk, 381 U.S. 1 (1965).
[ Footnote 25 ] See Udall v. Tallman, supra.
[ Footnote 26 ] 386 U.S. 670, 673 , n. 4 (1967).
[ Footnote 27 ] This rule-making power was transferred from the Public Housing Administration to HUD by 5 (a) of the Department of Housing and Urban Development Act, 79 Stat. 669, 42 U.S.C. 3534 (a) (1964 ed., Supp. III).
[ Footnote 28 ] 50 Stat. 891, as amended, 42 U.S.C. 1408 (1964 ed., Supp. III). Such broad rule-making powers have been granted to numerous other federal administrative bodies in substantially the same language. See, e. g., 72 Stat. 743, 49 U.S.C. 1324 (a) (Civil Aeronautics Board); 49 Stat. 647, as amended, 42 U.S.C. 1302 (Department of Health, Education, and Welfare); 52 Stat. 830, 15 U.S.C. 717o (Federal Power Commission).
[ Footnote 29 ] Section 1 of the United States Housing Act of 1937, 50 Stat. 888, as amended by 501 of the Housing Act of 1959, 73 Stat. 679, 42 U.S.C. 1401.
[ Footnote 30 ] Brief for Respondent 21, 23.
[ Footnote 31 ] Although the constitutional prohibition of the impairment of contracts, U.S. Const. Art. I, 10, applies only to the States, we have held that "[v]alid contracts are property, whether the obligor be a private individual, a municipality, a State or the United States. Rights against the United States arising out of a contract with it are protected by the Fifth Amendment." Lynch v. United States, 292 U.S. 571, 579 (1934).
[ Footnote 32 ] Home Bldg. & Loan Assn. v. Blaisdell, 290 U.S. 398, 431 (1934). The statute challenged in Lynch v. United States, supra, fell into the first of these two categories. It repealed "all laws granting or pertaining to yearly renewable [War Risk term] insurance . . . ." 292 U.S., at 575 .
[ Footnote 33 ] A far different case would be presented if HUD were a party to this suit arguing that it could repudiate its obligations under the annual contributions contract because the Authority had failed to apply the circular. Cf. Lynch v. United States, supra.
[ Footnote 34 ] Cf. Home Bldg. & Loan Assn. v. Blaisdell, supra, at 425.
[ Footnote 35 ] Penniman's Case, 103 U.S. 714, 720 (1881). See El Paso v. Simmons, 379 U.S. 497 , at 508 (1965); Home Bldg. & Loan Assn. v. Blaisdell, supra.
We have consistently upheld legislation that affects contract rights far more substantially than does the HUD circular. E. g., El Paso v. Simmons, supra, upheld a state statute that placed a time limit on the right to reinstate a claim in previously forfeited public lands; East N. Y. Sav. Bank v. Hahn, 326 U.S. 230 (1945), upheld a New York statute suspending mortgage foreclosures for the 10th year in succession; and Blaisdell upheld a statute that extended mortgagors' redemption time.
There is no reason why the principles that control legislation that affects contractual rights should not also control administrative rule making that affects contractual rights. Cf. Permian Basin Area Rate Cases, 390 U.S. 747, 779 -780 (1968), which upheld a Federal Power Commission order limiting the application of "escalation clauses" in contracts for the sale of natural gas; and 24 CFR 1.1-1.12 (1968), which proscribe a wide range of racially discriminatory practices by both governmental and private interests that receive any federal financial assistance whether or not pursuant to a pre-existing contract. This regulation was promulgated under 602 of the Civil Rights Act of 1964, 78 Stat. 252, 42 U.S.C. 2000d-1, which directs each federal agency that administers federal financial assistance "by way of grant, loan, or contract other than a contract of insurance or guaranty . . . to effectuate the provisions of section 601 [which prohibits racial discrimination in the administration of any program receiving federal financial assistance] . . . by issuing rules, regulations, or orders of general applicability which shall be consistent with achievement of the objectives of the statute authorizing the financial assistance in connection with which the action is taken."
[ Footnote 36 ] See, e. g., FCC v. Schreiber, 381 U.S. 279, 289 -294 (1965); American Trucking Assns., Inc. v. United States, 344 U.S. 298 (1953).
[ Footnote 37 ] Section 2 of the Housing Act of 1949, 63 Stat. 413, 42 U.S.C. 1441. That section further directs all agencies of the Federal Government "having powers, functions, or duties with respect to housing . . . [to] exercise their powers, functions, and duties under this or any other law, consistently with the national housing policy declared by this Act . . . ." Ibid.
[ Footnote 38 ] "A change in the law between a nisi prius and an appellate decision requires the appellate court to apply the changed law." Ziffrin, Inc. v. United States, 318 U.S. 73, 78 (1943). Accord, e. g., Vandenbark v. Owens-Illinois Glass Co., 311 U.S. 538 (1941); United States v. Chambers, 291 U.S. 217 (1934).
[ Footnote 39 ] United States v. Schooner Peggy, 1 Cranch 103, 110 (1801).
[ Footnote 40 ] See, e. g., United States v. Chambers, supra.
[ Footnote 41 ] See, e. g., Carpenter v. Wabash R. Co., 309 U.S. 23 (1940).
[ Footnote 42 ] See, e. g., Vandenbark v. Owens-Illinois Glass Co., supra.
[ Footnote 43 ] See Greene v. United States, 376 U.S. 149 (1964), in which we held that the petitioner's right to recover lost pay for a wrongful discharge was "vested" as a result of our earlier decision in Greene v. McElroy, 360 U.S. 474 (1959), which we construed to have made a "final" and "favorable" determination, 376 U.S., at 159 , that petitioner had been wrongfully deprived of his employment.
[ Footnote 44 ] "We do not contend that, in the case of Housing Authority leases if the purpose of the notice of termination of the lease is to proscribe the exercise of a constitutional right by the tenant the notice would be effective; the notice would be invalid, and the term of the lease and its automatic renewal would not thereby be affected." Brief for Respondent 11.
[ Footnote 45 ] See generally Thorpe v. Housing Authority of the City of Durham, 386 U.S. 670, 674 -681 (1967) (DOUGLAS, J., concurring).
[ Footnote 46 ] Transcript of Argument 28. Despite this admission, counsel for the Authority insisted throughout his oral argument that HUD has no power to require compliance with the circular. See id., at 26-27, 28, 30-32, 48-49. He even expressly suggested that the Authority could depart from its requirements "without violating any kind of Federal law." Id., at 48.
[ Footnote 47 ] Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 461 (1945). Cf. Zemel v. Rusk, supra, at 18-20; United States v. Fruehauf, 365 U.S. 146 (1961).
[ Footnote 48 ] Moreover, if the procedure followed by the Authority proves inadequate, HUD may well decide to provide for an appropriate hearing. Cf. 24 CFR 1.1-1.12 (1968), which establish a detailed procedure to dispose of complaints of racial discrimination in any federally assisted program.
[ Footnote 49 ] These same considerations lead us to conclude that it would be equally premature for us to reach a decision on petitioner's contention that it would violate due process for the Authority to evict her arbitrarily. That issue can be more appropriately considered if petitioner is in fact evicted arbitrarily. See Alabama State Federation of Labor v. McAdory, supra.
MR. JUSTICE BLACK, concurring.
The Court here uses a cannon to dispose of a case that calls for no more than a popgun. The Durham Housing [393 U.S. 268, 285] Authority has clearly stated, both in its brief and at oral argument, that it is fully complying with the directive of the Department of Housing and Urban Development concerning notice to tenants of reasons for their eviction. The only possible issue therefore is whether the directive should apply to Mrs. Thorpe, against whom eviction proceedings were started prior to the effective date of the HUD memorandum but who is still residing in public housing, as a result of judicial stays. I agree, of course, that the directive should apply to her eviction. Nothing else need be decided. [393 U.S. 268, 286]