Contract Buyers League v. F & F INVESTMENT
13 Fed. R. Serv. 2d 285, 300 F. Supp. 210, 1969 U.S. Dist. LEXIS 13015 (1969)
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Rule of Law:
Selling real property to Black citizens at higher prices and on more burdensome terms than would be offered to white citizens constitutes racial discrimination in the sale of property, which is prohibited by 42 U.S.C. § 1982.
Facts:
- A class of Black plaintiffs entered into installment contracts to purchase used residential properties in the City of Chicago.
- At the time, a condition of de facto racial segregation existed in Chicago, creating a scarcity of housing available to Black citizens.
- The defendant sellers allegedly exploited this segregated housing market by purchasing properties from white homeowners.
- Defendants then resold these properties to the Black plaintiffs through installment contracts at greatly inflated prices and on more burdensome terms than would have been offered to white buyers.
- Some defendants also engaged in 'blockbusting' tactics, stimulating racial fear to encourage white homeowners to sell their properties at panic prices, which furthered the segregation.
- The plaintiffs alleged that the contract terms, particularly the inflated prices, represented unlawful profits gained through a pattern of racial exploitation.
Procedural Posture:
- Plaintiffs, representing a class of Black home buyers, filed a five-count complaint against Defendant sellers in the United States District Court for the Northern District of Illinois.
- The complaint alleged violations of the Civil Rights Act of 1866, federal and state antitrust laws, federal securities laws, and state common law.
- The court previously certified the suit as a class action under Federal Rule of Civil Procedure 23.
- Defendants filed motions to dismiss each and every count of the complaint for failure to state a claim upon which relief could be granted.
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Issue:
Does selling residential property to Black purchasers at higher prices and on more burdensome terms than would be offered to white purchasers violate the Civil Rights Act of 1866, 42 U.S.C. § 1982?
Opinions:
Majority - Will, District Judge
Yes, selling residential property to Black purchasers at higher prices and on more burdensome terms than would be offered to white purchasers violates the Civil Rights Act of 1866, 42 U.S.C. § 1982. Relying on the Supreme Court's decision in Jones v. Alfred H. Mayer Co., the court held that § 1982 bars all private and public racial discrimination in the sale of property. The court rejected the defendants' argument that this case was distinguishable from Jones because it involved discriminatory pricing rather than an outright refusal to sell. The court reasoned that the legislative intent of § 1982 was 'to assure that a dollar in the hands of a Negro will purchase the same thing as a dollar in the hands of a white man,' and selling property on discriminatory terms is as much a violation of that right as a refusal to sell. It is irrelevant that the defendants did not create the system of segregation; exploiting it for profit is illegal. Furthermore, a claim is valid even without alleging that defendants actually sold similar property to whites at lower prices; an allegation that they would have done so is sufficient. The court therefore denied the defendants' motion to dismiss the § 1982 claim (Count I) and the federal and state antitrust claims (Counts II and III), but granted the motion to dismiss the federal securities law claim (Count IV) and the state common law claims for fraud, unconscionability, and usury (Count V).
Analysis:
This decision significantly broadened the application of 42 U.S.C. § 1982 by extending the Supreme Court's holding in Jones v. Alfred H. Mayer Co. from outright refusals to sell to discriminatory pricing and terms. It established a crucial precedent that predatory real estate practices targeting minorities in segregated housing markets are actionable under the 1866 Civil Rights Act. By allowing claims based on what a white buyer would have been charged, the ruling provided a viable legal path for victims of discrimination in markets where direct comparators are rare, thereby strengthening legal protections against systemic housing discrimination.
