Hogue v. the Housing Auth. of North Little Rock

This suit was brought by appellant, a citizen and taxpayer of North Little Rock, against the Housing Authority of North Little Rock, Arkansas, and the mayor and members of the City Council of said city in the chancery court of Pulaski county, Arkansas, to enjoin them and each of them from proceeding further under the Housing Authorities Act, No. 298 of the Acts of the Legislature of 1937, appearing in Pope's Digest as 10059 to 10088 on the grounds that the act is unconstitutional in its entirety and, if not invalid in its entirety, certain sections thereof are contrary to certain provisions of the Constitution of 1874 and should be stricken down leaving only the sections thereof in force and effect which are constitutional and valid.

Section 29 of the act is as follows: "Notwithstanding any other evidence of legislative intent, it is hereby declared to be the controlling legislative intent that if any provisions of this act, or the application thereof to any person or circumstances, is held invalid, the remainder of the act and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby."

Under this severability section of the act, invalid provisions of the act might be stricken down without invalidating the whole act. Sallee v. Dalton, 138 Ark. 549,213 S.W. 762; Alsup v. State, 178 Ark. 170, 10 S.W.2d 9; Conway County Bridge Dist. v. Williams,189 Ark. 929, 75 S.W.2d 814.

The attack made upon the act as a whole is that the agency created by it and powers conferred upon the agency are private and for private purposes, and not public and for public uses and purposes. This contention is without foundation because 2 of the act contains the Legislature's finding and declaration of the legislative purpose in passing the act. Section 2 of the act is as follows: "Section 2. It is hereby declared: (a) that there exist in the state insanitary or unsafe dwelling accommodations and that persons of low income are forced to reside in such insanitary or unsafe accommodations; that within the state there is a shortage of safe or sanitary dwelling accommodations available at rents which persons of low income can afford and that such persons are forced to occupy overcrowded and congested dwelling accommodations; that the aforesaid conditions cause an increase in and spread of disease and crime and constitute a menace to the health, safety, morals and welfare of the residents of the state and impair economic values; that these conditions necessitate excessive and disproportionate expenditures of public funds for crime prevention and punishment, public health and safety, fire and accident protection, and other public services and facilities; (b) that slum areas in the state cannot be cleared, nor can the shortage of safe and sanitary dwelling for persons of low income be relieved, through the operation of private enterprise, and that the construction of housing projects for persons of low income (as herein defined) would therefore not be competitive with private enterprise; (c) that the clearance, replanning and reconstruction of the areas in which insanitary or unsafe housing conditions exist and the providing of safe and sanitary dwelling accommodations for persons of low income are exclusively public uses and purposes for which public money may be spent and private property acquired and are governmental functions of state concern; (d) that it is a proper public purpose for any State Public Body to aid, as herein provided, any housing authority operating within its boundaries or jurisdiction or any housing project located therein, as the State Public Body derives immediate benefits and advantages from such an authority or project; (e) that it is in the public interest that work on housing projects be commenced as soon as possible in order to relieve unemployment which now constitutes an emergency; and the necessity in the public interest for the provisions hereinafter enacted, is hereby declared as a matter of legislative determination."

One cannot read 2 of the act quoted above and conclude that the intent of the Legislature was to create a private agent or authority for private purposes and uses. The plain and unambiguous declaration of intent therein is to the contrary. The declared intent is that it is creating a public agent or authority and conferring a power upon it to carry out public uses and purposes that are necessary. A reading of the whole act convinces us that the primary purpose or intent thereof is slum clearance by removing the evils existing therein and emanating therefrom which are a great detriment to the public welfare of our citizens generally and in the attempted prevention of which private agencies cannot successfully cope. Although courts have jurisdiction to determine what constitutes a public use as distinguished from a private use, or vice versa, yet in doing so it gives great weight to the declaration of the Legislature concerning the nature of the act. Cloth v. Rock Island R. R. Co., 97 Ark. 86,132 S.W. 1005, Ann. Cas. 1912C 1115; Ozark Coal Co. v. Penn Anthracite Rd. Co., 97 Ark. 495, 134 S.W. 634, Ann. Cas. 1912d 1000. Acts similar to the act attacked in this case have been enacted in many of our states and have successfully run the gauntlet of constitutional objection such as are made here and urged against the constitutionality of our Housing Authorities Act. In fact Housing Authorities Acts almost identical with ours have been declared constitutional in as many as forty decisions handed down by the Supreme Courts in perhaps twenty-five states. The general trend in practically all the cases has been to hold that housing projects provided for in Housing Authorities Acts are for public purposes. These forty or more cases are cited in appellee's brief and support the constitutionality of the several acts against practically every ground of attack made in this case. A few excerpts from some of the cases will reflect the trend of judicial construction of this and other similar acts. In the case of Housing Authority of the City of Dallas v. Higgenbotham, et al., 143 S.W.2d 79, the Supreme Court of Texas said: "We are thoroughly convinced that the use to which the housing projects will be devoted is a public one."

In the case of Housing Authority of the County of Los Angeles v. Dockweiler, 14 Cal. 2d 437, 94 P.2d 794, the Supreme Court of California said: "Both reason and authorities support us that the proposed elimination of slums and the erection of safe and sanitary low rent dwelling units for persons of the prescribed income will do much to advance the general welfare and to protect the public safety and morals and are in fact and in law public purposes."

In the case of Marvin v. Housing Authority of Jacksonville et at., 133 Fla. 590, 183 So. 145, the Supreme Court of Florida said: "Low rent housing and slum clearance are valid public purposes advancing the health, morals and general welfare of the people."

In the case of Allydonn Realty Corp. v. Holyoke Housing Authority et al., 23 N.E.2d 655, the court said: "Money expended for low rent housing, as well as for the elimination of slums, analogous to a public nuisance, are expenditures for a public purpose since the pernicious influence of slums reaches out and effects an entire community, lowers moral standards and increases the cost of police, fire and health protection."

In the last case cited, the court also said the elimination of slums is "an object raised to the dignity of a public service."

After carefully reading many of the cases cited by appellee we are completely convinced that the Housing Authorities Act of the Acts of the Legislature of 1937 appearing in Pope's Digest as 10059 to 10088 merely creates a public agency for the performance of a public purpose and that in so far as it permits or requires the expenditure of public funds by the state or by municipalities the expenditures are for public use in the promotion of proper governmental functions.

It seems almost like a work of supererogation to discuss at any length the separate attacks made upon many of the sections of the act, since lying at the very root of all the attacks is the inquiry of whether the act creates a public agency to perform necessary public service or whether it creates a private agency for private purposes and uses.

We declare broadly and without reservation that the act creates a public agency or authority to perform necessary public purposes and uses.

A careful reading of the act does not reflect that the Legislature has delegated its right to make laws to the public agency or authority. The most it does is to delegate power to the agency or authority to determine facts conditioning the operation of the law. This delegation of authority to determine facts upon which its law may operate is permissible. In the case of Johnston v. Bramlett,193 Ark. 71, 97 S.W.2d 631, in determining whether act No. 108 of the acts of 1935, p. 258, was unconstitutional as delegating power to make a law the court said (quoting syllabus 2): "The Legislature did not, in act 108 of the Acts of 1935, delegate the power to make a law, but it made a law, and delegated the power to the people of the county to ascertain facts upon which the law makes its action depend."

The Housing Authorities Act contains no prohibited delegation of legislative authority and is not unconstitutional on that account.

The act is not unconstitutional because same impowered the authority to exercise eminent domain in acquiring property for public purposes with which to construct and operate housing projects. We have already said that the act establishes a public agency for the exercise of a public purpose so it was perfectly proper to confer power upon the authority in the act to condemn property for such uses. This court said in the case of Fulton Ferry Bridge Co. v. Blackwood,173 Ark. 645, 293 S.W. 2:

"Whenever the public convenience or necessity is involved, the power of the Legislature to delegate to a public agency power of condemnation of private property for public use is supreme."

The act is also attacked on the ground that it grants special privileges to certain citizens or class of citizens. This attack was made on an identical act and the Supreme Court of Texas in the case of Housing Authority of the City of Dallas v. Higgenbotham, supra, says: "The legislature in the law under attack has made no attempt to grant special privileges to any man or set of men, but has made a reasonable classification of the members of the public and has provided that such low rent dwelling accommodations shall be available to all members of the public who presently or in the future shall fall within the classification made by the legislature."

The same attack was made on other similar acts that had for their primary purpose slum clearance for the benefit of the public at large without effect as may be observed in the cases of In re Brewster Housing Site in the City of Detroit, 291 Mich. 313, 289 N.W. 493; Edwards v. Housing Authority of City of Muncie,215 Ind. 330, 19 N.E.2d 741, and Krause v. Peoria Housing Authority, 370 Ill. 356, 19 N.E.2d 193, and many other cases that might be referred to.

This court is committed to the rule that the Legislature may make classification for taxation and for the exercise of a police power and that when the classifications are supported by any reasonable basis they are valid. Authority for the validity of classifications made upon a reasonable basis may be found in the following cases: Williams v. State, 85 Ark. 464, 108 S.W. 838, 26 L.R.A., N.S., 482, 122 Am. St. Rep. 47; Kelso v. Bush,191 Ark. 1044, 89 S.W.2d 594, and Bohlinger v. Watson,187 Ark. 1044, 63 S.W.2d 642.

By reading the act in a careful manner it must be seen that it does not authorize an unconstitutional loan or use of municipal credit; nor a misuse of public funds by municipalities.

Section 14 of the act specifically provides that the bonds and obligations of the agency or authority shall not be a debt of the city, county or state or any political subdivision thereof and that they shall so state on their faces and that they shall not constitute a debt within the meaning of any constitutional or statutory limitation. The language of the act itself, above quoted in substance, refutes the charge that the act is unconstitutional because it is a loan or use of municipal credit.

Again, the bonds and obligations to be issued by the public agency or authority are payable exclusively from the revenues of the agency or authority, so the credit of the city is not even involved.

The cases of McCutcheon, v. Siloam Springs,185 Ark. 846, 49 S.W.2d 1037; Jernigan v. Harris, 187 Ark. 705,62 S.W.2d 5; Snodgrass v. Pocahontas, 189 Ark. 819,75 S.W.2d 223; and McGehee v. Williams,191 Ark. 643, 87 S.W.2d 46, are authority to the effect that obligations and bonds payable exclusively from the revenues of the agency issuing them are not municipal debts within the provisions of the Constitution regulating the issue of interest bearing evidence of indebtedness or within the constitutional prohibition against the loan of municipal credit. Constitution, art. 12, 5, Amndt. No. 13; Robinson v. The Incorporated Town of DeVall's Bluff, 197 Ark. 391, 122 S.W.2d 552.

It is also contended that the act is unconstitutional because it proposes to make donations from general revenues of the city to pay the estimated administrative expenses of the authority for its first year. We think there is nothing in this contention because the Housing Authority serves a public purpose and use and on that account and for that reason may appropriate funds from its general revenues if it has such revenues and such an appropriation becomes necessary in the interest of the public welfare.

The Housing Authorities Act is also assaulted because it exempts the property used by the public agency or authority in the accomplishment of the slum clearing projects from all taxes. Our attention is called to a part of 5 of art. XVI and also 6 of art. XVI of the Constitution of 1874. That part of 5 to which attention is called is as follows: "All property subject to taxation shall be taxed according to its value. . . . Provided, further, that the following property shall be exempt from taxation; public property used exclusively for public purposes . . .; and buildings and grounds and materials used exclusively for public charity."

And 6 to which our attention is called is as follows: "All laws exempting property from taxation other than as provided in this Constitution shall be void."

The Constitution expressly excepts public properly and property devoted exclusively to charity, whether publicly or privately used, from taxation. The Housing Authority is a public agency and its property is public property devoted to a charitable use and as such the Legislature under the Constitution may exempt it from taxation at the hands of the state or any public body thereof.

The point is made and insisted upon that the property of the Housing Authority is not exclusively used for public or charitable purposes and that before it may be exempted from taxation such property must be exclusively used for this purpose. We think a fair construction of the act is that all the property acquired by it is to be used and will be used in the clearance of slum areas and the furnishing of safe and sanitary dwelling accommodations free from conditions of overcrowding and want of air and light prevailing in slum areas. It will be observed that in 3 of the act a housing project is defined to mean any work or undertaking to demolish or remove buildings from a slum area, embracing the adoption of such areas to public purposes and also to mean the provision of decent, safe and sanitary urban living accommodations. The Constitution of the state of Tennessee contains a clause authorizing the Legislature to exempt from taxation property held by the state, county or city or town and used exclusively for "public or corporation purposes." The Knoxville Housing Authority, Inc., created under the Housing Authorities Act of Tennessee, was attacked because the Legislature exempted its property from taxation and the Supreme Court of Tennessee on appeal of the case said (quoting syllabus 8): "Statute exempting property and bonds of housing authorities from all state, county, and city taxation and assessments is not unconstitutional, since, as applied to Knoxville Housing Authority, Inc., property held by such housing authority is held by the city of Knoxville within constitutional provision authorizing Legislature to exempt property held by states, counties, ``cities' or towns, and used exclusively for ``public or corporation purposes.' (Pub. Acts 1937, chap. 214; Const. art. 2, 28)." Knoxville Housing Authority v. City of Knoxville, 174 Tenn. 76, 123 S.W.2d 1085.

The Housing Authorities Act of Texas was attacked on the ground that it exempted the property of the agency or authority from taxation. Although the Texas Constitution does not use the words "exclusively used for charitable or public purposes" as our Constitution and the Constitution of Tennessee do yet the Supreme Court of Texas construed the Texas Constitution to mean just what the other constitutions say. In other words, the court said that in order to be exempted the property must be used exclusively for public or charitable purposes.

The Court of Civil Appeals of Texas said in the case of City of Longview v. Markham-McRee Memorial Hospital, 134 S.W.2d 793, quoting the syllabus, that: "The Markham-McRee Hospital located in the city of Longview, Gregg county, Texas, is entitled to exemption from taxation as a ``charitable institution' devoted to ``charitable purposes' notwithstanding rental of offices in hospital to house physicians with object of having a doctor subject to immediate call at all times. Vernon's Ann. Civ. St., art. 7150(7); Vernon's Ann. St. Const., art. 8, 2."

The Supreme Court of Texas in the case of Housing Authority of the City of Dallas et al. v. Higginbotham, supra, quoting syllabus 15, said that: "The Housing Authorities Law which declares the property of the authority to be public property, used for essential public and governmental purposes, and that such property and the authority should be exempt from all taxes and special assessments of the city, county, state or any political subdivision thereof, is not violative of constitutional provision concerning equal and uniform taxation. Vernon's Ann. Civ. St., art. 1269K, 22; Vernon's Ann. Const., art. 8, 1, 2; United States Housing Act of 1937, 42 USCA, 1401, et seq."

We, therefore, hold that the act in question is not vulnerable because it exempted the property of the Housing Authority from all taxes and special assessments by the state or any public body thereof.

The Housing Authorities Act is not void because it does not limit the location of its projects to slum areas. To so limit the act would be to read into it language which is not contained therein. The purpose of the act as stated in 2 is the clearance of slum areas and the furnishing of safe and sanitary dwelling accommodations free from the conditions of overcrowdedness, want of air and light prevailing in the slum areas and in 2 a housing project is defined to mean any work or undertaking to demolish or remove buildings from a slum area, embrace the adoption of such areas for public purposes and also to mean the provision of decent, safe and sanitary urban living conditions.

This act is not discriminatory against private owners of dwelling accommodations and does not take their. property for public purposes or uses without due process of law and without a just compensation therefor. All property rights are held subject to the state's police power and in the exercise of the police power the state has full power to establish and enforce all regulations reasonable and necessary to secure the health, safety and general welfare of the community. St. Louis-San Francisco R. R. Co. v. State, 182 Ark. 409, 31 S.W.2d 739; Euclid, Ohio, v. Ambler Realty Co., 272 U.S. 365,47 S. Ct. 114, 71 L. Ed. 303, 54 A.L.R. 1016.

We have not set out the co-operation contract between the city of North Little Rock and the Housing Authority for the reason that it is quite lengthy. We have read it very carefully and we think all of the provisions therein are specifically authorized by the Housing Authorities Act, and that same is in no sense ultra vires. It is a valid agreement between the city and the Housing Authority.

In closing, we quote from the case of Dornan v. Philadelphia Housing Authority, 331 Pa. 209,200 A. 834: "Moreover, views as to what constitutes a public use necessarily vary with changing conceptions of the scope and functions of government, so that today there are familiar examples of such use which formerly would not have been so considered. As governmental activities increase with the growing complexity and integration of society, the concept of ``public use' naturally expands in proportion."

Along the same line we also quote from Mr. Justice HOLMES in the case of Block v. Hirsh, 256 U.S. 135,41 S. Ct. 458, 65 L. Ed. 865, 16 A.L.R. 165, as follows: "Plainly circumstances may so change in time or so differ in space as to clothe with such an interest (public interest) what at other times and at other places would be a matter of purely private concern."

The chief attacks which have been made in all the courts against the Housing Authorities Act have been that they do not create public agencies which have to do with public purposes and uses, but that they create private agencies for private purposes and uses and so the two quotations above are quoted in this opinion as arguments against treating such acts as being for private purposes instead of for public purposes and uses.

The time has certainly arrived for the public to assume the burden of slum clearing to the end that the public health generally may be conserved.

The decree of the trial court is in all things affirmed.

SMITH and MEHAFFY, JJ., dissent.