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ROBERT M. SCHUCHMAN, Property Law and Racial Discrimination - Ralph Raico, New Individualist Review [1961]

Edition used:

New Individualist Review, editor-in-chief Ralph Raico, introduction by Milton Friedman (Indianapolis: Liberty Fund, 1981).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Property Law and Racial Discrimination

ROBERT M. SCHUCHMAN*

RECENT CIVIL RIGHTS legislation, both state and federal, has incorporated the premise that the right to use and dispose of private property is limited by the concept that all persons are deserving of an equality of treatment, regardless of race, creed, or nationality. It is not our purpose to review “public accommodations” legislation. Instead, we shall examine the judicially-inspired thesis that the doctrine of racial equality serves as a constitutional limitation on the use and disposition of property, regardless of the presence or absence of statute.

The first pertinent problem considered by the federal courts in this century was the obverse of the principal question here. The issue presented in Buchanan v. Warley, 245 U.S. 60 (1917), was whether the government could, through legislation, impose a racial preference on the use and disposition of property. An ordinance of the city of Louisville prevented the residential occupancy of a lot by “a person of color” in a block where the greater number of residences were occupied by white persons. A sale of private property to a Negro in such a block was declared to be void.

The law was defended on the ground that it was a proper exercise of the police power of the state. It was claimed that the ordinance “tends to promote the public peace by preventing racial conflicts; that it tends to maintain racial purity; that it prevents the deterioration of property owned and occupied by white people . . . .” 245 U.S. at 73-74.

A white person sold a residential lot to a Negro in a “white block.” When the buyer refused to fulfill the contract, relying upon the racial occupancy ordinance, the seller sued for specific performance, claiming that the Louisville act violated the Fourteenth Amendment to the Constitution.

In its decision, the United States Supreme Court upheld the right to freely dispose of one’s property regardless of the local law. The Court said that:

The effect of the ordinance under consideration was not merely to regulate a business or the like, but was to destroy the right of the individual to acquire, enjoy, and dispose of his property. Being of this character, it was void as being opposed to the due-process clause of the Constitution.

245 U.S. at 79-80.

It further said that:

The Fourteenth Amendment protects life, liberty, and property from invasion by the States without due process of law. Property is more than the mere thing which a person owns. It is elementary that it includes the right to acquire, use, and dispose of it. The Constitution protects these essential attributes of property.

245 U.S. at 74.

It must be stressed that Buchanan v. Warley does not speak in terms of the equal protection clause of the Fourteenth Amendment. The decision emphasizes the “essential attributes” of the rights of property, attributes which, it is said, are protected by the ancient concept of due process of the law.

RACIAL RESTRICTIONS on the alienation of property, when imposed by the government, were struck down in subsequent decisions even when couched in the guise of a zoning regulation. Thus, in City of Richmond v. Deans, 37 F.2d 712 (4th Cir.), aff’d, 281 U.S. 704 (1930), the court held as violative of the Fourteenth Amendment a zoning ordinance which prohibited the sale of a residence on a block “where the majority of residences on such street are occupied by those with whom said person is forbidden to intermarry . . . .” Because that question was not before the court, it did not rule on the constitutionality of the law prohibiting intermarriage.

The rule that the alienation of property was entirely free from restrictions based on the racial preferences of the state was again upheld in a 1932 case in Missouri. However, the decision in this case left the door open for future regulation if such regulation was found to be for the public welfare.

Private property cannot, under the guise of police power, be subjected to unreasonable annoyance and arbitrary restriction of its use where public welfare can in no way receive benefit by such restriction.

Women’s Kansas City St. Andrews Soc. v. Kansas City, 58 F.2d 593, 598 (8th Cir. 1932).

Now it was no longer a question of the “essential attributes of property.” The basic issue was said to be whether “public welfare” could in any way “receive benefit.” Since the racial ordinance did not benefit the public welfare, it was stricken.

The constitutional power of the states to attach a racial preference to the exercise of the rights of property seemed a settled issue after Buchanan v. Warley and the subsequent line of cases. A governmental body could not, constitutionally, command a property owner to restrict the sale and use of his property to members of a specified race or color.

These early cases dealt with statutes; they were concerned with the limits of the law as exercised through the police power, not with the purely private arrangements of men. If the state could not impose racial preference by law, then the next and obvious question was: Could the state impose racial non-preference on private property and private arrangements by the use of law?

As we have noted, Buchanan v. Warley held that a racially restrictive ordinance was void not because it interfered with the federal government’s notions of equality, but because it infringed upon the essential rights of property held by the individual. However, when state laws imposing non-discrimination on private arrangements were challenged in the courts, a completely new rationale was used to uphold the laws.

The New York Civil Rights Act provided, inter alia, that no labor organization could deny a person membership or equal treatment because of race, color, or creed. In Railway Mail Ass’n v. Corsi, 326 U.S. 88 (1945), the union challenged the Act on the ground that, in line with Buchanan v. Warley, it was an unconstitutional “interference with its right to selection of membership and abridgment of its property rights and liberty of contract.” It was argued that the right of property to be free from one brand of government racial preference implied freedom from any other preference.

The Supreme Court disagreed and held that property was only free from legislation imposing racial discrimination, not from that imposing racial equality:

A judicial determination that such legislation violated the Fourteenth Amendment would be a distortion of the policy manifested in that amendment, which was adopted to prevent state legislation designed to perpetuate discrimination on the basis of race or color.

326 U.S. at 93-94.

THUS THE PROTECTION of the right of property by the Fourteenth Amendment, in the racial context, became a simple expression of the racial policy preferences of the state. No longer was the right to use property free from the racial preference of law a part of the “essential attributes of property,” as far as freedom from positive law restriction was concerned.

The development of the law from a general protection of property rights to a judicially approved mirror of public policy is echoed in the area of purely private arrangements. Contemporaneous with the line of cases concerning laws which express racial preference in property relations is a trend of decisions affecting private agreements and decisions on the use and disposition of property.

The first of these cases concerned the so-called “restrictive covenant” in real property. A racial restrictive covenant is typically an agreement among property owners, binding on the land for a specified number of years, which declares that no property in the area covered by the contract may be sold, leased, or used by members of the Negro race.

Historically, racially restrictive covenants on land were considered to be valid and enforceable contracts. They were agreed upon voluntarily by the contracting landowners, were secured by a valuable consideration, and any new buyer took possession subject to and with notice of the restriction. Except for an isolated case in 1892, such covenants were consistently upheld, except where they violated the common law policy against unreasonable restraints on alienation, or where enforcement was deemed inequitable because of the changed character of the neighborhood. But, after Buchanan v. Warley, challenge after challenge was made to these covenants on the ground that they denied the excluded race due process of the laws.

The courts generally rejected this argument without much comment. The Buchanan rule was held to apply solely to state action. When purely private parties agreed to a restriction, there was no constitutional violation and no rights were denied by enforcement of the covenant. A clear statement of the early judicial reaction to the racial covenant challenge may be found in the lower court opinion in Corrigan v. Buckley, 299 Fed. 899 (D.C. Cir. 1924), which upheld the covenant, stating:

The constitutional right of a Negro to acquire, own, and occupy property does not carry with it the constitutional power to compel sale and conveyance to him of any particular private property. The individual citizen, whether he be black or white, may refuse to sell or lease his property to any particular individual or class of individuals . . . . Such a covenant is enforceable, not only against a member of the excluded race, but between the parties to the agreement.

299 Fed. at 901.

This was a restatement of the “essential attributes of property” argument embodied in Buchanan v. Warley. Just as a property owner was free to sell to a Negro despite laws attempting to negate this right, he could agree to refuse to sell to a Negro without state interference. The denial of due process occurred when the state dictated a racial preference in property, not when individual property owners expressed this preference.

On appeal, the Supreme Court affirmed the lower court holding in Corrigan v. Buckley, 271 U.S. 323 (1926). The Court emphasized that the due process clause of the Fifth and Fourteenth Amendments was a “limitation only upon the powers of the General Government, and is not directed against the action of individuals.” 271 U.S. at 330. Hence, there was no substantial federal question involved in the enforcement of private restrictive covenants. The Court dismissed, without much comment, the novel contention that the Court decree enforcing the covenant was itself state action, and such enforcement therefore denied due process of law to the petitioner.

Such was the state of the law when, in 1948, the landmark case of Shelley v. Kraemer, 334 U.S. 1, reached the Supreme Court. On February 16, 1911, thirty out of a total of thirty-nine owners of property in a certain lot in St. Louis, Missouri, signed an agreement, subsequently recorded, which provided in part:

. . . the said property is hereby restricted to the use and occupancy for the term of Fifty (50) years from this date, so that it shall be a condition all the time and whether recited and referred to as [sic] not in subsequent conveyances and shall attach to the land as a condition precedent to the sale of the same, that hereafter no part of said property or any portion thereof shall be, for said term of Fifty-years, occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property for said period of time against the occupancy as owners or tenants of any portion of said property for resident or other purposes by people of the Negro or Mongolian Race.

On August 11, 1945, Shelley, a Negro, purchased a parcel of land in the lot concerned. On October 9, 1945, the white landowners in the lot brought suit to enforce the terms of the restrictive covenant. The Supreme Court of Missouri granted the relief, holding the agreement effective and concluding that enforcement of its provisions violated no rights guaranteed by the Federal Constitution. Kraemer v. Shelley, 355 Mo. 814, 198 S.W. 2d 679 (1946).

Shelley took his appeal to the United States Supreme Court. Chief Justice Vinson, in his decision, noted initially that the racial restrictions of this private agreement “could not be squared with the requirements of the Fourteenth Amendment if imposed by state statute or local ordinance,” 334 U.S. at 11. But this was a voluntary, private restriction, and a different rule of law applied:

. . . the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however discriminatory or wrongful.

We conclude, therefore, that the restrictive agreements standing alone cannot be regarded as violative of any rights guaranteed to petitioners by the Fourteenth Amendment. So long as the purposes of those agreements are effectuated by voluntary adherence to their terms, it would appear clear that there has been no action by the State and the provisions of the Amendment have not been violated.

334 U.S. at 13.

SO FAR, this is just a restatement of the old law. But Shelley argued, and the Court agreed, that the mere enforcement of these admittedly lawful covenants constituted state action in violation of the Fourteenth Amendment. The reasoning of the Court in this regard is so vital for an understanding of later applications of the “state action” doctrine that I take the liberty of quoting from the decision at some length:

It is clear that but for the active intervention of the state courts, supported by the full panoply of state power, petitioners would have been free to occupy the properties in question without restraint.

These are not cases . . . in which the States have merely abstained from action, leaving private individuals free to impose such discriminations as they see fit. Rather, these are cases in which the States have made available to such individuals the full coercive power of government to deny to petitioners, on the grounds of race or color, the enjoyment of property rights in premises which petitioners are willing and financially able to acquire and which the grantors are willing to sell. . . . Nor is the Amendment ineffective simply because the particular pattern of discrimination, which the State has enforced, was defined initially by the terms of a private agreement. State action, as that phrase is understood for the purposes of the Fourteenth Amendment, refers to exertions of state power in all forms. And when the effect of that action is to deny rights subject to the protection of the Fourteenth Amendment, it is the obligation of this Court to enforce the constitutional commands.

334 U.S. at 19-20.

The decision in Shelley v. Kraemer was shattering in its impact. It held, in effect, that although private racial preference contracts were perfectly valid and legal, their enforcement was unlawful. The Court treated the equitable enforcement of a restrictive covenant as a positive discriminatory act of the state, bringing it within the limitations of the Fourteenth Amendment.

This analysis, it would seem, entirely misconstrues the historical role of courts of equity. Moreover, it ignores the distinction between the judicial function of enforcing positive law and that of settling private disputes and construing private agreements. In the Buchanan v. Warley situation, the courts were called upon to enforce a legislative enactment expressing racial preference. It was because the underlying act, an expression of the positive law, was contrary to the Fourteenth Amendment, that the enforcement of the law was also barred.

The private agreement in Shelley v. Kraemer presents an entirely different situation. There, the underlying act was a voluntary private covenant, admittedly in violation of no law. The role of the court was not one of enforcing a coercively based government measure. Rather, the court was to act as a neutral arbiter of private disputes by carrying out the solemn agreements of a contractual society. In its enforcement of private contracts, the courts should not judge the substance of such contracts. Private agreements, to this observer, need not reflect the prevailing government policies. Otherwise, liberty of contract is a sham.

IT HAD BEEN accepted doctrine in the Anglo-American community that courts were not to write the contracts of men: they were to construe and then enforce them, regardless of which party had the better bargain, so long as the bargain was not illegal. Those who dislike a contract need not agree to it. When a person received notice of a restrictive covenant on a property he wished to buy, he was free to accept it with the covenant or not make the purchase. The novel doctrine of Shelley v. Kraemer places the courts in the position of rewriting the bargain to conform to current majority sentiment. To say the least, this is not an expression of freedom of contract.

Numerous cases since Shelley v. Kraemer have extended the “state action” thesis even further. In the companion case to Shelley, Hurd v. Hodge, 334 U.S. 24 (1948), the Supreme Court considered the enforcement of a restrictive covenant in the District of Columbia. Inasmuch as the Fourteenth Amendment applies only to the states, and not to the District, a different rationale than that relied upon in Shelley was required.

One contention of the petitioners in Hurd v. Hodge was that “judicial enforcement of the covenants is contrary to . . . treaty obligations of the United States contained in the United Nations charter.” 334 U.S. at 28, n.4. To this and other arguments the Court stated that enforcement was

. . . judicial action contrary to the public policy of the United States, and as such should be corrected by this Court in the exercise of its supervisory powers over the Courts of the District of Columbia. The power of the federal courts to enforce the terms of private agreements is at all times exercised subject to the restrictions and limitations of the public policy of the United States as manifested in the Constitution, treaties, federal statutes, and applicable legal precedents. Where the enforcement of private agreements would be violative of that policy, it is the obligation of courts to refrain from such exertions of judicial power.

334 U.S. at 35.

Here, as in Shelley, we see the notion that property must be used in accordance with the majority sentiment of the day dignified into a governing juridical principle. The final statement of this doctrine, as applied to restrictive covenants in real estate, appeared in the case of Barrows v. Jackson, 346 U.S. 249 (1953). A sale of restricted real estate was made to a Negro purchaser and, under the authority of Shelley v. Kraemer, he was permitted to occupy the lot without challenge. However, the owners of the adjoining properties, who were parties to the restrictive covenant, sued the white vendor of the lot in question for money damages for breach of contract.

Here it could hardly be argued that “state action” was being used to exclude Negroes and deny rights guaranteed by the Fourteenth Amendment. Unlike Shelley, the court was not asked to enforce the contract and expel the Negro purchaser. Rather, the covenanting parties sought to hold the violating party liable for his breach. The Supreme Court disagreed however, and, in a terse decision, disallowed the recovery of damages under the authority of Shelley v. Kraemer.

The new departure of the Court in Barrows v. Jackson was emphasized by Chief Justice Vinson in a vigorously worded dissenting opinion. It will be recalled that Vinson actually wrote the opinion in Shelley v. Kraemer. Yet, in Barrows, he said:

The majority seems to recognize, albeit ignores, a proposition which I thought was made plain in the Shelley case. That proposition is this: these racial restrictive covenants, whatever we may think of them, are not legal nullities so far as any doctrine of federal law is concerned; it is not unlawful to make them; it is not unlawful to enforce them unless the method by which they are enforced in some way contravenes the Federal Constitution or a federal statute.

* * * * * * *

The majority identifies no non-Caucasian who has been injured or could be injured if damages are assessed against respondent for breaching the promise which she willingly and voluntarily made to petitioners, a promise which neither the federal law nor the Constitution proscribes. Indeed, the non-Caucasian occupants of the property involved in this case will continue their occupancy undisturbed regardless of the outcome of the suit.

346 U.S. at 261, 262.

As Chief Justice Vinson pointed out, the Shelley doctrine goes much further, as applied, than a mere ban on enforcement of private agreements expressing racial preference. Despite all the verbiage about the lawfulness of these agreements in themselves, the Court actually struck down the underlying voluntary agreements. Since Shelley v. Kraemer, the Supreme Court has extended the “state action” rule to prohibit more and more private uses of property. In a society where broken agreements can only be enforced through the judicial system, it has declared that, in effect, all contracts partake of state action. As the Supreme Court put it: “Once courts enforce the agreement the Sanction of government is, of course, put behind them [sic].” Railway Employe’s Dep’t. v. Hanson, 351 U.S. 225, 232 n.4 (1956). No longer is the Court the neutral enforcer of private contracts; instead, it becomes a participant in the contract.

The Shelley rule was extended to labor union contracts in Brotherhood of R.R. Trainmen v. Howard, 343 U.S. 768 (1952), where it was held that, under the Railway Labor Act, a union could not make a contract where race was a determinent of employment. One of the reasons therefore was that since Congress authorized the system of collective bargaining through union representatives such representatives would act in violation of the Constitution if they deprived a worker of benefits because of his race. 343 U.S. at 773.

ANOTHER FACET of the Shelley doctrine is whether a member of the excluded race has a right to use another person’s private property when the exclusion is based solely upon race. The recent trend of decisions concern not judicial enforcement of racial restrictive contracts, but judicial compulsion directed against those voluntarily agreeing to abide by such contracts.

An early case dealing with the question was Rice v. Sioux City Memorial Park Cemetery, 349 U.S. 70 (1955). The contract of sale of a burial lot in the cemetery provided that “burial privileges accrue only to members of the Caucasian race.” The Cemetery, acceding to its own contract, refused to bury a certain Winnebago Indian. The decedent’s widow sued the Cemetery to compensate her for its action. She argued that judicial recognition of the validity of the racial clause in the burial contract would violate the Fourteenth Amendment and, in addition, the provisions of the United Nations Charter.

The Supreme Court of Iowa denied relief to the widow. It held that, under Shelley v. Kraemer, it could not compel the Cemetery to obey its contract by excluding non-Caucasians. However, where the Cemetery was only relying upon the racial clause as a defense to an action, the court could not reform the contract by enforcing it without regard to the racial clause. Moreover, the court said, the provisions of the United Nations Charter “have no bearing on the case.”

The widow appealed the decision to the United States Supreme Court, which granted certiorari. The Court split down the middle, four Justices for affirmance, four for reversal. Under the traditional rules of the Court, an evenly-divided court is treated as an affirmance of the lower court, but no opinion is filed. Hence, the reasoning of the Justices in this case is unknown, although four jurists apparently believed that the racial restriction in the burial contract could not be privately enforced by the Cemetery. The Iowa Legislature then passed a statute prohibiting denial of burial solely on account of race. This law, governing future burial contracts, made the Rice situation a moot question.

But more recent cases have probed more deeply into the issue of a private right to express racial preference on one’s own property. In Wilmington, Delaware, a Negro was refused service in a privately owned and operated restaurant which was, however, in quarters leased from the municipal parking agency which owned the building. The Negro sued to compel the restaurant to serve him, on the ground that the restaurant had sufficient proximity to state action for denial of service to constitute a violation of the Fourteenth Amendment. From an adverse decision in the Supreme Court of Delaware, he appealed to the United States Supreme Court.

In, Burton v. Wilmington Parking Authority, 365 U.S. 715 (1961), the Court reversed the decision, holding that state action was involved in the restaurant, and the Negro could not be denied service because of his race. It was found that the Parking Authority and the city of Wilmington owned the land and the building in which the restaurant was located; the building, a municipal garage, was dedicated to a “public use”; the costs of acquisition, construction, and maintenance of the building were publicly defrayed; and the restaurant gained the benefits of proximity to the parking facility. 365 U.S. at 723, 724. The Court concluded that:

Addition of all these activities, obligations and responsibilities of the Authority, the benefits mutually conferred, together with the obvious fact that the restaurant is operated as an integral part of a public building devoted to a public parking service, indicates that degree of state participation and involvement in discriminatory action which it was the design of the Fourteenth Amendment to condemn.

365 U.S. at 724.

The Burton case, as can be seen, goes further than Shelley v. Kraemer. The issue is no longer limited to judicial enforcement of private contracts. In Burton the question is whether private uses of property, in terms of racial preference, can be restricted by the courts on the ground that there is “state participation and involvement” in the private property. The overwhelming involvement of the state in all aspects of private property today leads to the conclusion that the Burton doctrine can be used to eliminate virtually all expressions of racial preference by private owners on private property, as a matter of constitutional law. Moreover, the doctrine can be used to restrict other voluntary uses of property which do not conform to prevailing majority sentiment.

A FEW EXAMPLES of the broadness of the concept of “state involvement” demonstrates how easily private property can be limited merely by redefining it as government-involved property. Smith v. Holiday Inns of America, Inc., 220 F. Supp. 1 (M.D. Tenn. 1963) was a class action to enjoin the defendant motel from continuing its policy of refusing to accept Negroes as guests. The land for the motel had been acquired by the city of Nashville as part of an urban redevelopment project. The Holiday Inns purchased the land from the city, paying full market value, without tax rebates; the Inns erected the motel with its own funds and at no cost to the public; the operating motel paid all relevant taxes; and, it was found, the state had no interest in the property and no voice in the management, operation and control of the motel.

This did not satisfy the court, however. Since the deed to the property contained several reservations and covenants placed there by the state and federal governments, to insure future uses of the land in harmony with the redevelopment project, the court held that the state was “involved in private conduct to a significant extent,” and the private motel was compelled to drop its policy regarding Negro guests.1 220 F. Supp. at 8.

Another recent case, Simkins v. Moses H. Cone Memorial Hospital, 323 F.2d 959 (4th Cir. 1963), demonstrates how participation of any sort by a government entity in private property takes that property out of the voluntary sector and places it in the coercive sector of the economy. Simkins was an action by Negro physicians, dentists, and patients to compel private hospitals to end racial discrimination. The hospitals, which were entirely private, had accepted federal aid under the Hill-Burton Act (Hospital Survey and Construction Act), 42 U.S.C.A. §291. The court held that acceptance of federal monies placed the hospitals under the rule of the Burton case, and Negroes could not be excluded as either doctors or patients:

Weighing the circumstances we are of the opinion that this case is controlled by Burton . . . . Here the most significant contacts compel the conclusion that the necessary “degree of state [in the broad sense, including federal] participation and involvement” is present as a result of the participation by the defendants in the Hill-Burton program. The massive use of public funds and extensive state-federal sharing in the common plan are all relevant factors, . . . . But we emphasize that this is not merely a controversy of a sum of money . . . . As the case affects the defendants it raises the question of whether they may escape constitutional responsibilities for the equal treatment of citizens, arising from participation in a joint federal and state program allocating aid to hospital facilities throughout the state.

323 F. 2d at 967.

TO SUMMARIZE these cases, it has been held that “state action” or “state involvement” exists in private property when that property is: (a) leased from the government, and is physically part of a government project; (b) purchased from the government, with the government attaching some covenants restricting use to the deed of sale; and (c) the beneficiary of federal financial assistance. In each situation, the private property owner has been held subject to the same restrictions as a government body.

The most recent Supreme Court extensions of the “state involvement” doctrine have been in the celebrated “sit-in” cases in the South. In each of these cases, civil rights demonstrators entered the “white only” section of segregated lunch counters or restaurants; they demanded service and refused to leave until served. The store manager, following the restaurant’s policy, refused to serve them and asked them to leave; when they refused, he called the police, who arrested the demonstrators for criminal trespass. The defendants were convicted, the lower courts finding a clear case of trespass on property wherein the owner did not want their continued presence.

In reversing these cases, the Supreme Court found “state involvement” present in every instance. Peterson v. Greenville, 373 U.S. 244 (1963), for example, involved a city where the local ordinance required separation of the races in restaurants (clearly an unconstitutional ordinance). Said the Court:

It cannot be denied that here the City of Greenville, an agency of the State, has provided by its ordinance that the decision as to whether a restaurant facility is to be operated on a desegregated basis is to be reserved to it. When the State has commanded a particular result, it has saved to itself the power to determine that result and thereby “to a significant extent” has “become involved” in it, and, in fact, has removed that decision from the sphere of private choice.

373 U.S. at 247-48.

But, it was argued, the store manager removed the demonstrators because he wanted to run a segregated restaurant, independent of any ordinance. Thus, it was a private decision, without state involvement. Chief Justice Warren disagreed:

These convictions cannot stand, even assuming, as respondent contends, that the manager would have acted as he did independently of the existence of the ordinance. . . . When a state agency passes a law compelling persons to discriminate against other persons because of race, and the State’s criminal processes are employed in a way which enforces the discrimination mandated by that law, such a palpable violation of the Fourteenth Amendment cannot be saved by attempting to separate the mental urges of the discriminators.

373 U.S. at 248.

After reading Peterson v. Greenville, one would think that the touchstone of state involvement was the local segregation ordinance. In other words, absent the ordinance, the store manager could segregate Negroes to his heart’s content; it was only because the city government decreed segregation that the private decision to segregate was unlawful. But in the companion case of Lombard v. Louisiana, 373 U.S. 267 (1963), also written by the Chief Justice, there was no ordinance or statute compelling racial segregation in restaurants. The store manager called upon the demonstrators to leave his premises without any local command of law to guide his decision.

The Supreme Court found state involvement present anyway. In lieu of an ordinance, the Court found that during the civil rights crisis in the city of New Orleans, the Mayor and the Superintendent of Police had issued statements condemning violence, opposing the “sit-in” movement, and calling for an end to the demonstrations. Although these statements were not made with the force of a law behind them, the Court held that they constituted sufficient “state involvement” to nullify the private decision of the store manager:

A State, or a city, may act as authoritatively through its executive as through its legislative body. As we interpret the New Orleans city officials’ statements, they were determined that the city would not permit Negroes to seek desegregated service in restaurants. Consequently, the city must be treated exactly as if it had an ordinance prohibiting such conduct . . . . These convictions, commanded as they were by the voice of the State directing segregated service at the restaurant, cannot stand.

373 U.S. at 273-74.

The development of the law on private racial preference from Buchanan v. Warley to the “sit-in” cases has been most extraordinary. From the position that individuals were free to express a racial preference in the use of their property, regardless of ordinance or statute, we have come to the point where private racial preference is invalid if the Mayor expresses the same preference.

The notion that private property is to be treated as if it were an agency of the government whenever the state is “involved” in that property is a most comprehensive doctrine. In a country where every business must be licensed by the state; every profession must be authorized by the state; every piece of real estate must conform to zoning laws, building codes, fire regulations, housing ordinances, etc.; every labor union must be certified by the state; and almost everybody receives money from the state; in such a regimen one is hard pressed to find any substantial voluntary action which does not have “state involvement” to some degree.

If this be true, then the sphere of private contract and use of property is severely restricted. None can deny that discrimination solely on the basis of race is morally indefensible. But the right to discriminate, the right to express a preference in the use of one’s property which is at variance with the prevailing majority sentiment is of the very essence of liberty. It is possible that if the state involvement doctrine were alive a century ago, in the days of Dred Scott, the Court would have ruled that a property owner was obligated to treat Negroes as chattels, that manumission was illegal. Today the pendulum is on the other side, in favor of racial equality. But the principle remains: If state involvement means state determination of the uses of property, then private property is a nullity.

For those who may think this analysis far-fetched, and who may disbelieve that this is the trend of judicial decision, I close with the analysis of one of our most advanced jurists, Mr. Justice Douglas. Believing that the majority view in Lombard v. Louisiana did not go far enough, Justice Douglas wrote a concurring opinion in which he expressed the view that there was “state action . . . wholly apart from the activity of the Mayor and police.” 373 U.S. at 278. This is the basic substance of his commentary:

Places of public accommodation such as retail stores, restaurants, and the like render a “service which has become of public interest” in the manner of the innkeepers and common carriers of old. . . . In our time the interdependence of people has greatly increased; the days of laissez faire have largely disappeared; men are more and more dependent on their neighbors for services as well as for housing and the other necessities of life. By enforcing this criminal mischief statute, invoked in the manner now before us, the Louisiana courts are denying some people access to the mainstream of our highly interdependent life solely because of their race.

When the doors of a business are open to the public, they must be open to all regardless of race if apartheid is not to be engrained in our public places. It cannot by reason of the Equal Protection Clause become so engrained with the aid of state courts, state legislatures, or state police.

There is even greater reason to bar a State through its judiciary from throwing its weight on the side of racial discrimination in the present case, because we deal here with a place of public accommodation under license from the State.

State licensing and surveillance of a business serving the public also brings its service into the public domain. This restaurant needs a permit from Louisiana to operate; and during the existence of the license the State has broad powers of visitation and control. This restaurant is thus an instrumentality of the State since the State charges it with duties to the public and supervises its performance. The State’s interest in and activity with regard to its restaurants extends far beyond any mere income-producing licensing requirement.

There is no constitutional way, as I see it, in which a State can license and supervise a business serving the public and endow it with the authority to manage that business on the basis of apartheid, which is foreign to our Constitution.

373 U.S. at 279, 281, 282-83.

See also the concurring opinion of Mr. Justice Douglas in Bell v. Maryland. 378 U.S. 226, 242 (1964).

THE CONCLUSIONS expressed by Mr. Justice Douglas have been incorporated into the Public Accommodations section of the Civil Rights Act of 1964 However, the statute finds the authority of Congress to interfere with the racial policies of private owners in the plenary power granted the federal government by the Commerce clause of the Constitution.

The view of Justice Douglas goes much further. He enunciates a trend of juridical thinking which holds that all private properly used for business purposes is, as he phrased it, “an instrumentality of the State.” If this be true, then private business establishments must indeed conform to the current judicial interpretation of the Constitution, even absent all civil rights laws. The pattern of decision reviewed by this paper demonstrates that in the conflicts between the imposition of normative values by the state and the liberty of private property, it is property which is being sacrificed.

[* ] Robert M. Schuchman received his LLB from Yale Law School, where he was an Earhart fellow in economics. He is currently with the law firm of Casey, Lane, and Mittendorf in New York City.

[1 ]Smith v. Holiday Inns of America, Inc., has been affirmed by the Court of Appeals for the Sixth Circuit. 336 F.2d 630 (6th Cir. 1964). The Court noted that the Civil Rights Act of 1964 would plainly render the motel’s policy of racial exclusion illegal, but, since neither party raised mootness as a defense, they considered the case on its merits.

The motel operator attempted to bring the case outside the rule of the “sit-in” cases by contending, on appeal, that the excluded Negro failed to prove that the motel’s actions were “under color of any state law, statute, ordinance, regulation, custom or usage.” The Court rejected this argument, stressing that this motel was part and parcel of a large, significant, and continuing public enterprise, i. e., the urban redevelopment project. Thus, state action exists and the exclusion of Negroes in this context violates the Fourteenth Amendment.

Despite this holding, the Court emphasized that “We do not hold that the mere fact that a State agency once held title to a piece of property affects private title forever after with some public quality.” It will be interesting to see if the Supreme Court adheres to this admonition.