Thorpe v. Housing Authority of the City of Durham/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 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 re ain unchanged and that she does not violate the terms of the lease. 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.

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. After receiving notice, petitioner attempted through her attorneys, by phone and by letter, to find out the reasons for her eviction. 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, the Superior Court affirmed the eviction, and the Supreme Court of North Carolina also affirmed. 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 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 hear ng 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.' Since the application of 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.'

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 to the North Carolina rule that statutes are presumed to act prospectively only, the court held hat since '(a)ll critical events' 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. We again granted certiorari. 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.

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 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.

Pursuant to its general rulemaking power under § 8 of the United States Housing Act of 1937, HUD has issued a Low-Rent Management Manual, which contains requirements that supplement the provisions of the annual contributions contract applicable to project management. According to HUD, these requirements 'are the minimum considered consistent with fulfilling Federal responsibilities' under the Act. Changes in the manual are initially promulgated as circulars. These circulars, which have not yet been physically incorporated into the manual, are temporary additions or modifications of the manual's requirements and 'have the same effect.' In contrast, the various 'handbooks' and 'booklets' issued by HUD contain mere 'instructions,' 'technical suggestions,' and 'items for consideration.'

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 private conference inform any tenants who are given * *  * (termination) notices of the reasons for this action.' (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 and by its Chief Counsel. As we stated in Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed. 1700 (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.' 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.

Finding that the circular was intended to be mandatory does not, of course, determine the validity of the requirements it imposes. In our opinion remanding this case to the Supreme Court of North Carolina to consider the HUD circular's applicability, we pointed out that the circular was issued pursuant to HUD's rule-making power under § 8 of the United States Housing Act of 1937, which authorizes HUD 'from time to time (to) make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this Act.' The Housing Authority argues that this authorization is limited by the Act's express policy of 'vest(ing) in the local public housing agencies the maximum amount of responsibility in the administration of the low-rent housing program, including responsibility for the establishment of rents and eligibility requirements (subject to the approval of * *  * (HUD)), with due consideration to accomplishing the objectives of this Act while effecting economies.' But the HUD circular is not inconsistent with this policy. Its minimal effect upon the Authority's 'responsibility in the administration' of McDougald Terrace is aptly attested to by the Authority's own description of what the circular does not require:

'It does not * *  * purport to change the terms of the lease      provisions used by Housing Authorities, nor does it purport      to take away from the Housing Authority its legal ability to      evict by complying with the terms of the lease and the      pertinent provisions of the State law relating to evictions. It does not deal with what reasons are acceptable to HUD * *      *. Moreover, the Circular clearly does not say that a Housing     Authority cannot terminate at the end of any term without      cause as is provided in the lease.'

The circular imposes only one requirement: that the Authority comply with a very simple notification procedure before evicting its tenants. Given the admittedly insubstantial effect this requirement has upon the basic lease agreement under which the Authority discharges its management responsibilities, the contention that the circular violates the congressional policy of allowing local authorities to retain maximum control over the administration of federally financed housing projects is untenable.

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. If HUD's 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.' 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. 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. HUD has merely provided for a particular type of notification that must precede 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.'

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 enabling legislation under which it was promulgated. 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' 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.

The Housing Authority also urges that petitioner's eviction should be upheld on the theory relied upon by the Supreme Court of North Carolina: the circular does not apply to eviction proceedings commenced prior to its issuance. The general rule, however, is that an appellate court must apply the law in effect at the time it renders its decision. Since the law we are concerned with in this case is embodied in a federal administrative regulation, the a plicability of this general rule is necessarily governed by federal law. Chief Justice Marshall explained the rule over 150 years ago as follows:

'(I)f subsequent to the judgment and before the decision of     the appellate court, a law intervenes and positively changes      the rule which governs, the law must be obeyed, or its      obligation denied. If the law be constitutional, * *  * I know      of no court which can contest its obligation. It is true that     in mere private cases between individuals, a court will and      ought to struggle hard against a construction which will, by      a retrospective operation, affect the rights of parties, but      in great national concerns *  *  * the court must decide      according to existing laws, and if it be necessary to set      aside a judgment, rightful when rendered, but which cannot be      affirmed but in violation of law, the judgment must be set      aside.'

This same reasoning has been applied where the change was constitutional, statutory, or judicial. Surely it applies with equal force where the change is made by an administrative agency acting pursuant to legislative authorization. Exceptions have been made to prevent manifest injustice, but this is not such a case.

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 protected activity; 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. 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. 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.

Petitioner argues that in addition to holding the HUD circular applicable to her case, we must also establish guidelines to insure that she is provided with not only the reasons for her eviction but also a hearing that comports with the requirements of due process. We do not sit, however, 'to decide abstract, hypothetical or contingent questions * *  * or to decide any constitutional question in advance of the necessity for its decision *  *  * .' The Authority may be able to provide petitioner with reasons that justify eviction under the express terms of the lease. In that event, she may decide to vacate voluntarily without contesting the Authority's right to have her removed. And if she challenges the reasons offered, the Authority may well decide to afford her the full hearing she insists is essential. Moreover, even if the Authority does not provide such a hearing, we have no reason to believe that once petitioner is told the reasons for her eviction she cannot effectively challenge their legal sufficiency in whatever eviction proceedings may be brought in the North Carolina courts. Thus, with the case in this posture, a decision on petitioner's constitutional claims would be premature.

Reversed and remanded.