Petition — City of Impact v. Whitworth

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IN THE _

Supreme Court of the United States

OCTOBER TERM, 1977

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CITY OF IMPACT, DALLAS PERKINS, NANCY

PERKINS, his wife, R. L. PERKINS, DICKIE

W. MAXWELL. MARION TEEL, IMPACT

DEVELOPMENT CORP., TOM RODEN,

and PINKIE’S, INC..

Petitioners

V.

EDGAR E. WHITWORTH,

d/b/a DINKIE’S FOOD MART.

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

DONALD ScoTT THOMAS, JR.

PAUL J. VAN OSSELAER

Post Office Box 1148

\ Austin, Texas 78767

Attorneys for Petitioners,

Tom Roden and Pinkie’s, Inc.

Of Counsel:

CLARK, THOMAS, WINTERS & SHAPIRO

BEVERLY TARPLEY

Post Office Box 356

Abilene, Texas 79604

Attorneys for Petitioners,

City of Impact, Dallas Perkins,

Nancy Perkins, R. L. Perkins,

Dickie W. Maxwell, Marion Teel,

and Impact Development Corp.

Of Counsel:

SCARBOROUGH, BLACK, TARPLEY & SCARBOROUGH

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Alpha Law Brief Co., One Main Plaza, No. 1 Main St., Houston, Texas 77002

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_———

SUBJECT INDEX

Page

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nf. cdc enc Cb065 O66 C604 Na eK EER CR ENEeE eee 2

ee oe ee oe eo Cee ea ene wawaenes 2

ls walt es ee ewecé euch eden Wane 2

Se os cbc cecdceevachusonbendbannes 3

Psmeems Gor Gramtine Ghe WE on. ccc ccc ccc wcccccccccs 5

Question One: Is Section One of the Sherman Act ap-

plicable to a city’s otherwise valid exercise of its zoning

ES ng ek baie ne 5654 e Ok esd CRED ee a eee 5

a. The Fifth Circuit’s decision will forge a new and

dangerous course in the role of federa! courts in local

EE SD occ ccccuvhuesekedadueasueeacsies 5

b. The Fifth Circuit’s decision conflicts with the prior

decision of this Court by misapplying Parker v. Brown

Se te ES, Gack boosesupecarecddieceheneaee )

Question Two: Does a private plaintiff have standing

under the antitrust laws to challenge a city’s otherwise

valid zoning ordinance when the business which was al-

legedly injured could not come into existence by reason

of state law and the ordinance and when the location

for which the business is sought was zoned residential

before its purchase by plaintiff? .................... 13

a. The Fifth Circuit’s decision conflicts with the de-

cision of other circuits by contravening important and

well-established principies of standing. ............. 13

al ee ee eee a heat ape hea es 16

si SP PPPerrrererrrrrrr TTT T rT erreirrire rT cree 17

PEE noc cae e wai ckcbasaceceaseseccceuccesedes 25

IE Wir e066 enee CoA caved ce dasdeabeusdenstbennens 36

II Ill

LIST OF AUTHORITIES CASES Page

Swain v. Board of Adjustment of City of University Park,

CASES Page 433 S.W.2d 727 (Tex. Civ. App.—Dallas, 1968, writ

- oF . . ref'd n.r.e.) cert. denied 396 U.S. 277 (1969) ......... 14

a ta inc. v. Americen Express Ce., 1977 . United Mine Workers v. Pennington, 381 U.S. 657 (1965) 12

é ases § 61, Se) errr 15 tr 7 7

Bates v. State Bar of Arizona, US. 07 S.Ct. Village of Euclid v. Amber Realty Co., 272 U.S. 365 (1926) 12

et Sn biedéuenddeeedaceekuesebeekendeeeneas 10,11, 12 —_ '

Brawner Building, Inc. v. Shehyn, 442 F.2d 847 (D.C. UNITED STATES STATUTES

ty a aca et ee ee Cea ee 8 cs ITs S Section 1. Sherman Act] ................ ;

Cantor v. Detroit Edison Co., 428 U.S. 579 (1976) ...... 10, 11, 12 ae Hy, ‘Section Page, ve ntiy ot eaten 2, i. 15

C. F. Lytle Company v. Clark, 491 F.2d 834 (10th Cir. 15 US.C. § 16 [Section 16, Clayton Act] .............-. 2,15

SUPE Kbibctebdwoddhue kind UGGS coed bats cneeeekeavce 13 .

City of Lafayette, La. v. La. Power & Light Co., 532 F.2d , ,

431 (Sth Cir. 1976), cert. granted, 430 U.S. 944 (1977) 5,6,10 TEXAS STATUTES

Clouser v. David, 309 F.2d 233 (D.C. Cir. 1962) cert. 7am. Rav. Cov. SEAR. AM. Gt. BOEES ...cccccccccsses 2,6, 12

GE, Bee: Wak Gee. COU hacasesecdiccssccccsccs 13 Texas Liquor Control] Act, V.A.T.S. Penal Auxiliary Laws,

Credit Bureau Reports, Inc. v. Retail Credit Company, 476 Nee en ee ek eed ae ae oo oe

F.2d 989 (Sth Cir, 1973) .......cccesecceceeseeeees 15 | Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,

Delaware Valley Marine Supply Co. v. American Tobacco Ee ii et cee ape Rh CAAA CAR A DEKS EEE EMSS 2,7

Co., 184 F.Supp. 440 (D. Pa. 1960), aff'd 297 F.2d 199 Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,

(3rd Cir. 1961) cert. denied 369 U.S. 839 (1962) ..... 15 PM wticucithcoae chensecease se eenneurnadss 2,7

Eastern Railroad Presidents Conference v. Noerr Motor Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,

Pretent, fac., 345 UB. 127 CHBBR) 2. cccccccccecccces 12 ET ae 2 Ge Cle eee eae eee ah e

Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) ....10,11,12

Kurek v. Pleasure Driveway and Park District of Peoria,

Jilinois, 557 F.2d 580 (7th Cir. 1977) ............. 10

Lombardo v. City of Dallas, 73 S.W.2d 475 (Tex. S.Ct.

TT CCCP ETOP ET RTT TEL TT TOT OTTTT Tee 12

Maltz v. Sax, 134 F.2d 2 (7th Cir. 1943) cert. denied, 319

ak See GE 62.06 066 ¢ebte5 6000600 x Geekeoeeses 14

Martin v. Phillips Petroleum Co., 365 F.2d 629 (Sth Cir.

DED 6 énbkaddd Webs br ihe baobab bb Cede aeeee eee tess 14

McMahon v. City of Dubuque, Iowa, 255 F.2d 154 (8th

Cir. 1958), cert. denied 358 U.S. 833 (1958) ........ 9

Okenfenokee Rural Electric Membership Corp. v. Florida

Power & Light Co., 214 F.2d 413 (Sth Cir. 1954) .... 15

Parker v. Brown, 317 U.S. 341 (1943) ........... 9,10,11,12,13

Peller v. International Boxing Ciub, 227 F.2d 593 (7th

Re SE: Cheeees a keddehekeds de éuebeatcednekbanbes 15

Reibert v. Atlantic Richfield Company, 471 F.2d 727 (10th

Sa Se Aeehebsisbbbeekesde sche tbabekcheesvenses 15

South Gwinnett Venture v. Pruitt, 491 F.2d 5 (Sth Cir.

1974) cert. denied, 419 U.S. 837 (1974) ............ 9

IN THE

Supreme Cort of the United States

OCTOBER TERM, 1977

CITY OF IMPACT, DALLAS PERKINS, NANCY

PERKINS, his wife, R. L. PERKINS, DICKIE

W. MAXWELL, MARION TEEL, IMPACT

DEVELOPMENT CORP., TOM RODEN,

and PINKIE’S, INC..

Petitioners

Vv.

EDGAR E. WHITWORTH,

d/b/a DINKIE’S FOOD MART,

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

CITY OF IMPACT, DALLAS PERKINS, NANCY

PERKINS, his wife, R. L. PERKINS, DICKIE W. MAX-

WELL, MARION TEEL, IMPACT DEVELOPMENT

CORPORATION, TOM RODEN, and PINKIE’S, INC.,

petition for a Writ of Certiorari to review the judgment

of the United States Court of Appeals for the Fifth

Circuit in this action.

OPINIONS

The opinion of the United States Court of Appeals

for the Fifth Circuit (Appendix A) is reported at 559

2

_ F.2d 378. The opinion of the United States District Court

for the Northern District of Texas (Appendix B) is

unreported.

JURISDICTION

The judgment of the Court of Appeals was entered on

September 19, 1977 and this petition is filed within 90

days of that date. This Court has jurisdiction under

28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

1. Is Section One of the Sherman Act applicable to

a city’s otherwise valid exercise of its zoning authority?

2. Does a private plaintiff have standing under the

antitrust laws to challenge a city’s otherwise valid zoning

ordinance when the business which was allegedly injured

could not come into existence by reason of state law

and the ordinance and when the location for which the

business is sought was zoned residential before its purchase

by plaintiff?

STATUTES INVOLVED

This case involves consideration of the following statutes

(the texts of which are set forth in Appendix C): Section

1 of the Sherman Act, 26 Star. 209 (1890), as amended,

15 U.S.C. § 1; Section 4 of the Clayton Act, 38 STar.

730 (1914), as amended, 15 U.S.C. § 15; Section 16 of

the Clayton Act, 39 Stat. 737 (1914), as amended, 15

U.S.C. § 26; Tex. Rev. Civ. Stat. ANN. art. 1011a;

The Texas Liquor Control Act, V.A.T.S. Penal Auxiliary

Laws, Arts. 60-4+{a), 666-24, 666-54, 667-1042 (1974).

3

STATEMENT OF THE CASE

This Petition arises from the district court’s entry of

summary judgment for the Petitioners, as Defendants

below, in an action filed by the Respondent on September

18, 1975 in the United States District Court for the

Northern District of Texas (Civil Action No. CA-1-75-

44). The Respondent has alleged that the Petitioners,

acting in violation of Section 1 of the Sherman Act,

unlawfully prevented his entry into the retail alcoholic

beverage business in Impact, Texas, and thereby injured

him. The named Defendants are the City of Impact, its

elected officials, retailers of alcoholic beverages. and two

other corporations.

In 1961 the City of Impact, Texas enacted a com-

prehensive zoning ordinance, which divided Impact into

districts zoned “R” (Residential) and districts zoned “C”

(Commercial). This ordinance, which has never been

amended or repealed, prevents the operation of any com-

mercial enterprise, including a retail alcoholic beverage

establishment, in a district zoned Residential. Some six

years after the enactment of this ordinance. in 1967,

the Respondent Whitworth purchased a lot in Impact

which was and is located in a district zoned Residential.

Acting on an alleged desire to enter the retail alcoholic

beverage business on that lot, Respondent Whitworth,

in 1975, submitted to the Secretary of the City of Impact,

an “APPLICATION FOR A WINE AND BEER RE-

TAILERS OFF-PREMISES PERMIT.” This state-promul-

gated form requires as a prerequisite to the state’s grant

of a license to engage in the liquor business that, if the

premises are located in an incorporated city, the City

Secretary certify that the city’s charter and ordinances

4

do not prevent the sale of the alcoholic beverages at the

location to be licensed." :

In accordance with the city zoning ordinance and Texas

law, the Secretary of the City of Impact refused to

certify that the sale of alcoholic beverages was permitted

on the property in question. Because the City Secretary

could not certify his application consistently with state

law, Respondent Whitworth could not obtain a state

license to engage in the alcoholic beverage business on

his residential lot, thereby allegedly suffering injury.

Rather than seeking the repeal or amendment of the

1961 zoning ordinance and instead of seeking a zoning

change or variance through appropriate local procedures,

Mr. Whitworth filed this federal antitrust action alleging

that the Petitioner-City and its officials entered into a

contract, combination or conspiracy to restrict competi-

tion in the retail sale of alcoholic beverages and, in

furtherance of that conspiracy, enacted the City’s general

zoning ordinance and refused to certify his wine and

beer application. The Petitioners, who were not City

Officials, allegedly participated in this conspiracy “through

their outright control of certain city council members.”

In granting the Petitioners’ motion for summary judg-

ment, the district court found the local zoning ordinance

to be in all respects valid and a proper exercise of the

City’s legislative power—thus removing the zoning ordi-

nance from federal antitrust challenge. The Respondent

did not challenge on appeal the trial court’s determination

that the ordinance was valid as a matter of state and

federal law. The Court of Appeals conceded the validity

1. See Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,

Arts. 666-24, 666-54, 667-10% (1974).

5

of the zoning ordinance as a matter of state law but

reversed the summary judgment and held that since the

enactment of the ordinance was itself alleged to be part

of the conspiracy, the mere presence of the zoning ordi-

nance did not insulate the Defendants from antitrust

liability. Relying on City of Lafayette, La. v. La. Power

& Light Co., 532 F.2d 431, 434 (Sth Cir. 1976), cert.

granted, 430 U.S. 944 (1977), the Court of Appeals

directed a factual inquiry as to whether the City’s actions

in zoning and in abiding by state liquor laws, were

“comprehended within the powers granted to it by the

Legislature.”

REASONS FOR GRANTING THE WRIT

QUESTION ONE: Is Section One of the Sherman Act

applicable to a city’s otherwise valid exercise of its

zoning authority?

(a) The Fifth Circuit’s decision will forge a new

and dangerous course in the role of federal courts

in local legislative matters.

Currently pending before this Court in City of Lafayette

La. v. La. Power & Light Co., 532 F.2d 431 (Sth Cir.

1976) cert. granted, 430 U.S. 944 (1977), is the issue

of the extent to which Section One of the Sherman Act

applies to the activities of city governments. The instant

case involves precisely the same issue. In relying prin-

cipally on its decision in City of Lafayette, the Fifth

Circuit would have the district court on remand of this

case apply a more stringent test in determining the

applicability of the antitrust laws when the governmental

unit concerned is a city rather than the state itself.

6

Because a central premise of the Court of Appeals’ deci-

sion is currently under review by this Court, the Peti-

tic ers respectfully urge that consideration of both their

case as well as the City of Lafayette case will afford this

Court a unique opportunity to delineate the proper ap-

plication of federal antitrust laws to the legislative deci-

sions of city governments. While herein urging those

same considerations which prompted this Court to grant

a writ of certiorari in the City of Lafayette case, the

Petitioners additionally suggest that their case, because

of the nature of the governmental decision involved,

presents more compelling reasons for granting review

and ultimately resolving the issues in this important area.

Even if this Court should agree with the Fifth Circuit

in City of Lafayette that subordinate state governments

are not ipso facto outside the coverage of the antitrust

laws, the decision of the Court of Appeals represents

a drastic departure from the traditional and proper role

of federal courts. This petition raises the issue of anti-

trust review by federal courts of regulatory functions of

local and state governments—functions which are unique-

ly sovereign. The importance of this question to local

governments cannot be overstated.

The challenged decisions of the City of Impact were

within the clear-cut zoning authority granted to cities

by the state. Tex. Rev. Civ. Srat. ANN. art. 101la

provides:

For the purpose of promoting health, safety, morals,

and for the protection and preservation of . . . the

general welfare of the community, the legislative

body of cities and incorporated villages is hereby

empowered to regulate and restrict . . . the location

and use of buildings, structures, and land for trade,

industry, residence, or other purpose... .

7

In addition to this statutory authorization, the State of

Texas expressly recognizes the right of an incorporated

city to prohibit the sale of alcoholic beverages in zones

designated as residential. Texas Liquor Control Act,

V.A.T.S. Penal Auxiliary Laws, Arts. 666-24, 667-1012

(1974). But it is not only local zoning decisions which

regulate the sale of liquor: Texas law prohibits any person

from engaging in the liquor business except upon the

receipt of a state license and upon conditions imposed

by the state. Texas Liquor Control Act, V.A.T.S. Penal

Auxiliary Laws, Art. 666-4(a) (1974). When a liquor

permit is sought for a location in an incorporated city,

one of these conditions is that the city secretary must

certify “whether or not the sale of alcoholic beverages

for which license or permit is sought is prohibited by

charter, ordinance, or any amendment thereto.” Texas

Liquor Control Act, V.A.T.S. Penal Auxiliary Laws, Art.

666-54 (1974). Therefore, the inability of the Respond-

ent Whitworth to enter the retail liquor business results

directly from the bona fide operation of state law.

In spite of this unquestioned statutory basis for the

City’s actions, the Fifth Circuit expressed doubt that the

zoning ordinance was a “bona fide governmental decision”

and “comprehended within the powers granted to it by

the Legislature.” The Court of Appeals would require

a judicial inquiry into “whether there was a conspiracy”

and an examination of the motives and intent which

underlie the legislative enactment. By the mere allegation

of an antitrust conspiracy, the Fifth Circuit would require

federal courts to go behind the legislative decisions of

governmental bodies in order to determine and weigh

the factors which contributed to the enactment. The

Petitioners suggest that such review is improper.

8

Because zoning by its nature has geographically anti-

competitive effects, the Court of Appeals has opened the

courthouse doors for a tedious review of the motives

behind all zoning ordinances both at the time of their

passage and whenever thereafter a disgruntled plaintiff

may come upon the scene. In the instant case, such a

review would occur before the city was even presented

with the opportunity to consider an amendment to the

zoning ordinance or a variance. The plaintiff should not

be permitted to by-pass these local procedures by the

filing of an antitrust action in federal court. See Brawner

Building, Inc. v. Shehyn, 442 F.2d 847 (D.C. Cir. 1971).

The omnipresent threat of treble damage liability would

seriously jeopardize the free exercise of sovereign func-

tions, especially in small communities whose coffers are

limited. Prior to the decision of the Fifth Circuit, a city

government was charged with the awesome responsibility

of acting in the public interest—a standard enforced

through the election process. The legislative bodies of the

city and state governments, not the courts, have tradition-

ally weighed the myriad of competing interest involved

in governmental decision-making. The Fifth Circuit’s deci-

sion below grants potential veto power over city legislative

enactments to those in the community whose perception

of the public interest differs from the elected officials.

In all other circuits judicial review of zoning matters

is limited to a determination of whether the general

purpose of the zoning scheme has a rational relation to

the public health, safety and morals, and was enacted

in a manner which was not arbitrary or capricious.

Whether a zoning ordinance causes hardship to a par-

ticular segment of the community or benefits another is,

and should be, irrelevant in federal court review. See,

9

e.g., McMahon y. City of Dubuque; Iowa, 255 F.2d 154

(8th Cir. 1958), cert. denied 358 U.S. 833 (1958).

Even the Fifth Circuit as recently as 1974 recognized

that zoning is a legislative function and “the only ques-

tion which Federal courts may consider is whether the

action of the zoning authority is arbitrary and capricious

and having no substantial relation to the general welfare.”

South Gwinnett Venture v. Pruitt, 491 F.2d 5 (5th Cir.

1974) cert. denied, 419 US. 837 (1974) [emphasis

added].*

The district court reviewed the zoning ordinance under

these standards and found it to be valid. The soundness

of this conclusion by the district court was unchallenged

on appeal and was assumed by the Fifth Circuit. The

validity of the zoning ordinance having been established,

federal court inquiry should cease. Rather than permit-

ting the federal courts to become zoning appeals boards,

the Petitioners urge this Court to address the issues raised

in their petition and return zoning and liquor regulation

to a legislative status in the Fifth Circuit.

(b) The Fifth Circuit’s decision conflicts with

the prior decisions of this Court by misapplying

Parker v. Brown and its progeny.

In Parker v. Brown, 317 U.S. 341, 352 (1943), this

Court held that the Sherman Act did not apply to a

2. The en banc decision of the Fifth Circuit in South Gwinnett

Venture specifically reversed the decision of the three-judge panel

of that court which would have required the zoning body to state

its reasons for its actions. Without distinguishing their decision in

South Gwinnett Venture, the Fifth Circuit in this case has apparently

created an exception where a federal statutory cause of action is

alleged. The Petitioners submit that such a standard is improper

and creates a serious confusion regarding the validity of the actions

of city governments.

10

restraint of trade imposed “as an act of government,”

a doctrine which has been refined by this Court in Gold-

farb v. Virginia State Bar, 421 U.S. 773 (1975), Cantor

v. Detroit Edison Co., 428 U.S. 579 (1976) and, most

recently, in B-tes v. State Bar of Arizona, ___U.S.___,

97 S.Ct. 15°; (1977). Even if this Court concludes in

the City of Lafayette case that city governments are to

be treated differently than state itself for antitrust pur-

poses, the Court of Appeals’ decision in the instant case

would remain in conflict with the prior decisions of this

Court.

Certainly there exist some actions by city governments

which are so central to their sovereignty, that the anti-

trust laws should be deemed inapplicable under any

analysis of the Parker line of decisions. The Petitioners

Suggest that zoning is precisely such a unique sovereign

function. Here the Court is faced with a challenge to

the acts of the sovereign itself—an unquestioned act of

the government rather than of a private party trying to

characterize its acts as state action. And unlike cases

where a governmental unit has endeavored to enter what,

for antitrust purposes, is the private sector,® there can

be no doubt that the valid exercise of a city’s zoning

power is purely governmental.

In reversing the district court’s summary judgment for

the Petitioners, the Fifth Circuit has interjected factual

issues beyond the contemplation of this Court’s opinions

and ignored the undisputed factual and statutory context

of this case. For example, in Goldfarb, which held that

3. See Goldfarb v. Virginia State Bar, supra; Cantor v. Detroit

Edison Co., supra; Kurek v. Pleasure Driveway and Park District

of Peoria, Illinois, 557 F.2d 580 (7th Cir., 1977).

1]

Parker did not prevent the application of Section 1 of

the Sherman Act to the enforcement of a minimum fee

schedule by the State Bar Association, this Court recog-

nized that the State Bar was a governmental unit only

for limited purposes and, absent enforcement of the State

Bar’s ethical opinions by the Virginia Supreme Court,

there could not be “state action.” In contrast to the

nature of the actions of the State Bar in Goldfarb, the

enactment of the City of Impact’s general zoning ordi-

nance and the refusal of the City Secretary to falsely

certify the Respondent’s application for a liquor license

flowed directly from the statutes of the State of Texas.

Furthermore, the opinion of the Court of Appeals,

while professing reliance on Bates v. State Bar of Arizona,

directly conflicts with this Court’s analysis in that deci-

sion. In finding no federal antitrust liability for the

Arizona Supreme Court’s adoption and enforcement of

rules which prohibited advertising by attorneys, this Court

distinguished Goldfarb and Cantor by recognizing the

direct involvement of the State of Arizona as the “real

party in interest.” Moreover, this Court acknowledged

that “the regulation of the activities of the Bar is at the

core of the state’s power to protect the public,” ___US.

at , 97 S.Ct. at 2697-98, and indicated that the result

in Cantor would have been different had Detroit Edison

Company been a governmenta! unit “respon[ding] to

health or safety concerns” with a program “essential to

regulation of electrical utilities.” ___. U.S. at ___, 97

S.Ct. at 2697. Finally, this Court in Bates found no

liability because “the state policy is so clearly and af-

firmatively expressed and ._. the state’s supervision is

so active.” ___. U.S. at _.__, 97 S.Ct. at 2698.

12

The enactment of the general zoning ordinance by

the City of Impact and its concomitant enforcement

through the state liquor laws are, like the activities of

the Bar in Bates, “at the core of the State’s power to

protect the public” and a “response to health or safety

concerns.”* The Petitioners present this Court with the

operation of two strong and clearly expressed areas of

state concern—zoning and liquor regulation. Given the

manner by which Texas has so clearly articulated its

policies, this case falls squareiy within this Court’s deci-

sion in Bates.

To the extent that the Fifth Circuit has permitted

possible antitrust liability to attach to a city’s valid

exercise of its uniquely sovereign functions, its decision

conflicts with the decisions of this Court in Parker,

Goldfarb, Cantor and Bates.

Additionally, the opinion of the Court of Appeals

further conflicts with this Court’s holdings in United

Mine Workers v. Pennington, 381 U.S. 657 (1965) and

Eastern Railroad Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961) by requiring the

court below to delve into the motives and political con-

siderations which prompted the City of Impact’s legisla-

tive enactment.

4. Indeed, the promotion of health and safety is the express

statutory basis for the granting of the power to zone to cities in

Texas, Tex. Rev. Crv. Stat. ANN. art. 1011la, and the traditionai

basis upon which zoning schemes have been upheld. Village of Euclid

v. Amber Realty Co., 272 U.S. 365 (1926); Lombardo v. City of

Dallas, 73 S.W.2d 475 (Tex. S.Ct. 1934).

13

QUESTION TWO: Does a private plaintiff have

standing under the antitrust laws to challenge a

city’s otherwise valid zoning ordinance when the

business which was allegedly injured could not come

into existence by reason of state law and the ordi-

nance and when the location for which the business

is sought was zoned residential before its purchase

by plaintiff?

(a) The Fifth Circuit’s decision conflicts with the

decision of other circuits by contravening import-

ant and well-established principles of standing.

In granting summary judgment for the Petitioners, the

district court in part based its decision on doctrines of

causation, injury and standing. That court recognized

that Mr. Whitworth had acquired his lot six years after

that lot had been zoned as residential by the City of

Impact. Even if the Court of Appeals was correct in its

Parker analysis, its decision is in direct conflict with the

Court of Appeals for the District of Columbia in Clouser

v. David, 309 F.2d 233, 234 (D.C. Cir. 1962) cert.

denied, 372 U.S. 929 (1963). Under similar undisputed

facts, the Clouser court held that summary judgment was

appropriate for the Defendants when the “hardship, if

any, has not resulted from the location, situation, or

condition of the property, but solely from [the Plaintiff's]

appropriation of it for commercial purposes without first

having obtained the necessary change in zoning.” Similar-

ly, the Tenth Circuit in C. F. Lytle Company v. Clark,

491 F.2d 834 (10th Cir. 1974) refused to find that the

zoning ordinances resulted in any “taking” where the

Plaintiffs voluntary acts caused the hardship. By pur-

chasing a residentially zoned lot, Respondent Whitworth’s

14

protectable property interest never included, ab initio,

a potential for commercial use.*° Because ne protectable

legal right of the Respondent Whitworth was affected by

any act of the City of Impact or its officials, the Fifth

Circuit, by allowing this case to continue, has broadened

traditional concepts of standing to an unconscionable

degree.

From a statutory perspective, the standing requirement

of Section 4 of the Clayton Act, 15 U.S.C. § 15, that a

private antitrust be “injured in his business or property”

has been seriously eroded by the Fifth Circuit’s decision.

It is fundamental that the injury required to confer stand-

ing under Section 4 is a violation of a legal right. Maltz

v. Sax, 134 F.2d 2 (7th Cir. 1943) cert. denied, 319

U.S. 772 (1943). When as here, a plaintiff does not

have an operating business he has not suffered an injury

to his “business or property” and has no cause of action

unless he can further show that he had made substantial

preparation to enter the business and was on the threshold

of entry. Martin v. Phillips Petroleum Co., 365 F.2d 629

(5th Cir. 1966). But even if Respondent Whitworth were

to show a desire to enter the liquor business at his loca-

tion in Impact and show some preparation to do so, it is

certain that he could not, by operation of state law,

establish that business, because so long as the valid zoning

ordinance prevents the sale of liquor at that location he

cannot obtain the necessary license from the state. Given

this factual and legal impossibility under state law of

5. Texas courts have reached the same conclusion. In Swain v.

Board of Adjustment of City of University Park, 433 S.W.2d 727

(Tex. Civ. App.—Dallas, 1968, writ ref'd n.r.e.) cert. denied 396

U.S. 277 (1969) the court held that “no vested righis were acquired

by the use of the property contrary to the purpose of the ordinance.”

15

establishing the business in question, the Respondent

can have no protectable “business or property” within

the meaning of Section 4.° Okenfenokee Rural Electric

Membership Corp. v. Florida Power & Light Co., 214

F.2d 413 (Sth Cir. 1954); Peller v. International Boxing

Club, 227 F.2d 593 (7th Cir. 1955): American Bankers

Club, Inc. v. American Express Co., 1977 Trade Cases

§ 61,247 (D. D.C. 1977). As with the plaintiff in

Okenfenokee, Respondent Whitworth had “no legal right”

without permission from the state. This important and

well-established requirement of causation and a violation

of a legal right has now apparently been abandoned by

the Fifth Circuit.

In contrast to other courts which require the plaintiff

to show that he would have been in the particular business

“but for” the defendants’ acts,’ the Fifth Circuit has per-

mitted Respondent Whitworth to maintain a cause of

action when the alleged injury results entirely from the

operation of state law. Petitioners respectfully urge that

when the sole cause of injury is valid state action, it

naturally follows that a plaintiff lacks standing under

Section 4 of the Clayton Act to go behind that state

action and maintain a claim against any private parties

who happen to benefit from it.

6. The standing requirements of Section 16 of the Clayton Act,

15 U.S.C. §26 have been similarly interpreted. See, e.g., Credit

Bureau Reports, Inc. v. Retail Credit Company, 476 F.2d 989 (Sth

Cir. 1973); Reibert v. Atlantic Richfield Company, 471 F.2d 727

(10th Cir. 1973).

7. See, e.g., Delaware Valley Marine Supply Co. v. American

Tobacco Co., 184 F.Supp. 440 (D. Pa. 1960), aff'd 297 F.2d 199

(3rd Cir. 1961) cert. denied 369 U.S. 839 (1962).

16

CONCLUSION

For the foregoing reasons, this Petition for a Writ of

Certiorari should be granted.

Respectfully submitted,

CLARK, THOMAS, WINTERS

& SHAPIRO

a wail we

DONALD Scott THOMAS, JR.

PAUL J. VAN OSSELAER

Post Office Box 1148

Austin, Texas 78767

Attorneys for Petitioners,

Tom Roden and Pinkie’s, Inc.

SCARBOROUGH, BLACK, TARPLEY

& SCARBOROUGH

BEVERLY TARPLEY

Post Office Box 356

Abilene. Texas 79604

Attorneys for Petitioners,

City of Impact, Dallas Perkins,

Nancy Perkins, R. L. Perkins,

Dickie W. Maxwell, Marion Teel,

and Impact Development Corp.

17

APPENDIX “A”

EDGAR E. WHITWORTH.

d/b/a Dinkie’s Food Mart, Plaintiff-Appellant,

v.

DALLAS PERKINS, et al.,

Defendants-Appellees.

NO. 76-1593.

United States Court of Appeals,

Fifth Circuit.

September 19, 1977.

Appeal from the United States District Court for the

Northern District of Texas.

Before TUTTLE, CLARK and RONEY. Circuit

Judges.

RONEY, Circuit Judge:

This antitrust suit charges that defendants conspired

to restrain competition in the sale of alcoholic beverages

in Impact, Texas, by preventing plaintiff from making

such sales on his property. The defendants are the town

(a municipal corporation), six individuals (sued both

individually and as aldermen of the town), and three

private Texas corporations (including the corporation

which developed this new town and those authorized to

sell liquor in the town).

18

The district court entered summary judgment for the

defendants. It concluded that the city’s valid zoning ordi-

nance, under which the operation of a liquor business on

plaintiff's property is prohibited, bars recovery regardless

of whether defendants’ actions otherwise violate the anti-

trust laws. It reasoned that the “cause” of the plaintiff's

injury would be the ordinance rather than any illegal con-

spiracy.

[1] The judgment is reversed. The mere presence of

the zoning ordinance does not necessarily insulate the

defendants from antitrust liability where, as here, the

plaintiff asserts that the enactment of the ordinance was

itself a part of the alleged conspiracy to restrain trade.

There are also significant questions concerning the avail-

ability of the “state action” exception to the antitrust

laws which may have to be legally and factually developed

and confronted on remand in the deteriination of

this case.

Taylor County, Texas, and its largest city, Abilene.

do not permit the sale of alcoholic beverages. In 1961

the individual defendant Dallas Perkins incorporated

the town of Impact near Abilene under the relevant

Texas statutes. Tex. Rev. Civ. Stat. Ann. art. 1133 (Ver-

non 1963). It had over the requisite 200 inhabitants but

only 31 qualified voters. After litigation, Impact was held

by the Texas courts to have been validly incorporated.

See Perkins v. State, 367 S.W.2d 140 (Tex. 1963).

Shortly thereafter, the new city authorized the sale of

alcoholic beverages under the local option provisions of

Texas law. Tex. Penal Code Ann. art. 666-32 (Vernon

1976 Auxiliary Pamphlet). Thus was created an “oasis”

on the boundary of a “dry” city in a “dry” county. At

approximately the same time the city council enacted a

19

comprehensive zoning ordinance. That ordinance pro-

hibited the sale of alcoholic beverages on lots zoned

residential.

In 1967 the plaintiff purchased a lot zoned residential.

In 1975 he attempted to secure appropriate authorization

to sell alcoholic beverages on that land. This was denied

by the city because of the ordinance. He then com-

menced this action against the City of Impact, its mayor,

secretary, and the three other aldermen of Impact, and

various other private defendants engaged in or related

to persons engaged in the sale of alcohol in Impact.

The district court determined that the zoning ordi-

nance had been enacted in accordance with Texas law.

That determination is accepted as being accurate for the

consideration of this case.

The court then stated that it had no authority to inquire

into the “motives or the integrity of the members of the

municipal legislative body in the exercise of their legisla-

tive powers” and concluded that the plaintiff would “not

be entitled to use his property in Impact for a place

to sell alcoholic beverages regardless of what the de-

fendants’ conduct has been in regard to the alleged anti-

trust violations.”

[2] Plaintiff clearly alleges that the defendants en-

acted the ordinance for the precise purpose of excluding

him from the liquor business in furtherance of their con-

spiracy:

At various times since the inception of the contract,

combination or conspiracy, the Defendants have

engaged in various overt acts in furtherance thereof,

some of which are known to the Plaintiff... .

20

Specifically, the Defendants, . . . in their capacity as

Aldermen of the City of Impact, have at various

times purportedly enacted various ordinances regu-

lating the sale of alcoholic beverages within said

City and restricting such sales to certain areas.

These ordinances include . . . an ordinance dated

December 29, 1961, entitled “Zoning Ordinance

for the City of Impact, Texas,” ....

If the plaintiff can prove this allegation and that he

was harmed by the zoning ordinance, questions remain as

to whether the ordinance was passed as part of an illegal

conspiracy, and whether any acts violative of the anti-

trust laws are nonetheless immunized because the ordi-

nance was the product of state action.

The starting point for the latter question is Parker v.

Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315

(1943). In that case an injunction was sought against

a state agricultural marketing program for raisins. The

program had been created by state statute and reduced

the amount of competition in the market for raisins.

The Supreme Court held that “nothing in the language

of the Sherman Act or in its history . . . suggests that

its purpose was to restrain a state or its officers or agents

from activities directed by its legislature.” 317 U.S. at

350-351, 63 S.Ct. at 313. In the three decades since

that opinion the contours of this exclusion have been

constantly redefined.

It is readily apparent that there are many factual dif-

ferences between the scheme left undisturbed in Parker

and the one here at issue. Parker involved the conduct of

a state, while we are concerned with a city, acting under

state law. Parker involved a program allegedly enacted

21

for the public good, while here the allegation is that the

program was enacted to further private financial ob-

jecuves. Finaily, in Parker the questioned state program

had been adopted “with the collaboration of officials of

the Department of Agriculture and aided by loans from

the Commodity Credit Corporation recommended by

the Secretary of Agriculture.” There is no such federal,

or even state conduct suggesting tacit approval in the

present case. In fact, this case appears to fall precisely

within a category that the Parker Court specifically re-

frained from dealing with. As the Supreme Court put

it, that case involved “no question of the state or its

municipality becoming a participant in a private agree-

ment or combination by others for restraint of trade”.

317 U.S. at 351-352, 63 S.Ct. at 314. That is the ques-

tion here.

[3] In resolving this type of question this Court

has recognized that the Parker doctrine is not to be ap-

plied automatically. A thoughtful analysis is called for to

ensure that it is a bona fide governmental decision for

which exemption is being sought.

[I]t is not every governmental act that points a path

to an antitrust shelter. We reject “the facile con-

clusion that action by any public official automatic-

ally confers exemption.” George R. Whitten, Jr.,

Inc. v. Paddock Pool Builders Inc., | Cir. 1970, 424

F.2d 25, 30. In Asheville Tobacco Board of Trade,

Inc. v. FTC, 4 Cir. 1959, 263 F.2d 502, 509, the

court stated: “. . such action must be state action.

not individual action masquerading as state action.

A state can neither authorize individuals to perform

acts which violate the antitrust laws nor declare

that such action is lawful.”

22

Woods Exploratiore & Pro. Co. v. Aluminum Co. of

America, 438 F.2d 1286, 1294 (Sth Cir. 1971), cert.

denied, 404 U.S. 1047, 92 S.Ct. 701, 30 L.Ed.2d 736

(1972). This Court’s focus on the nature of the decision

made by the governmental unit which claims the protec-

tion of Parker was reflected in Jeffrey v. Southwestern

Bell, 518 F.2d 1129, 1134 (Sth Cir. 1975), where the

activity was scrutinized to be sure that it wis not “per-

functory” or “slipshod.” See also Gas Light Co. of Colum-

bus v. Georgia Power Co., 440 F.2d 1135 (Sth Cir.

1971), cert. denied, 404 U.S. 1062, 92 S.Ct. 732, 30

L.Ed.2d 750 (1972).

If, on remand, the district court reaches the state

action exemption inquiry, it will need to take careful

note of two recent Supreme Court opinions which clarify

the scope of that doctrine. Cantor v. Detroit Edison Co.,

428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976),

concerned a regulated utility which provided free light

bulbs to consumers. It could not discontinue this practice

unless it filed a new tariff with the state public service

commission. The cessation of the light bulb program with-

out governmental approval would constitute a violation

of state law. The Court nonetheless held that the state

action defense was not available. Bates v. State Bar of

Arizona, ___U.S.___., 97 S.Ct. 2691, 53 L.Ed.2d____

(1977), addressed an attack on State Supreme Court

rules prohibiting lawyers from advertising. The Court

there ruled that because the allegedly anticompetitive

practice had been adopted by the affirmative act of the

state and reflected its policies, the state action defense

was available. Whether Parker might shield the defend-

ants in the instant case can only be determined by careful

consideration of these latest pronouncements.

23

[4] Finally, we note that where the governmental unit

concerned is other than a state itself, such as the munici-

pality here, a more thorough analysis is required before

Parker can be held to apply.

A subordinate state governmental body is not ipso

facto exempt from the operation of the antitrust

laws. Rather, a district court must ask whether the

state legislature contemplated a certain type of anti-

competitive restraint. . . the connection between

a legislative grant of power and the subordinate

entity's asserted use of that power may be too

tenuous to permit the conclusion that the entity’s

intended scope of activity encompassed such con-

duct. Whether a governmental body’s actions are

comprehended within the powers granted to it by

the legislature is. of course, a determination which

can be made only under the specific facts in each

case.

City of Lafayette, La. v. La. Power & Light Co., 532

F.2d 431, 434 (Sth Cir. 1976), cert. granted, ___U'S.

——, 97 S.Ct. 1577, 51 L.Ed.2d 791 (U.S. 1977).

Based on the pleadings in this case and this line of

authority interpreting Parker, we are unable to say at

this early stage that the plaintiff could prove no set of

facts which would entitle him to relief. Conley v. Gibson,

355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957):

Hepperle v. Johnston, 544 F.2d 201 (Sth Cir. 1976).

In the oral argument of this case, numerous factual

representations were made in defense of the district court’s

decision which have no support in the record now before

us. Matters such as the number of acres in Impact which

are zoned for commercial use, who owns such land, the

relationship of these zones to each other. and the past

24

and present status of the parcel of land owned by the

plaintiff are all issues which do not appear in the docu-

ments used’ to come to a summary disposition. In order

to properly develop these, and other facts, and to conduct

the inquiry into the Parker question, if such an inquiry

proves necessary, the case must be remanded. Our deci-

sion does not in the least forecast the probable outcome

of this litigation. Whether there was a conspiracy, or

whether any conspiracy restrained trade or competition,

or whether the zoning provisions “fall within the limited

state action immunity doctrine [are] question[s] that

we do not reach; it is for the trial court, in the first

instance, to make this determination.” Litton Systems,

Inc. v. Southwestern Beil Tel. Co., 539 F.2d 418, 423

(Sth Cir. 1976).

REVERSED AND REMANDED.

25

APPENDIX “B”

IN THE

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

CA 1-75-44

EDGAR E. WHITWORTH, D/B/A

DINKIE’S FOOD MART

V.

DALLAS PERKINS. NANCY PERKINS, His Wife,

R. L. PERKINS, DICKIE W. MAXWELL, MARION

TEEL, IMPACT DEVELOPMENT CORPORATION,

TOM RODEN, PINKIE’S, INC., CITY OF IMPACT

and HFW CORPORATION

(Filed January 30, 1976)

MEMORANDUM OPINION ON MOTIONS

FOR SUMMARY JUDGMENT

This suit, brought under Section | of the Sherman

Anti-Trust Act (15 U.S.C. #1), charges that the de-

fendants have engaged in various acts amounting to a

contract, combination or conspiracy in restraint of trade

or commerce among the several states. The plaintiff claims

that such alleged conduct has prevented him from selling

26

alcoholic beverages on a lot in Impact owned by him.

He seeks declaratory and injunctive relief, treble damages,

attorneys’ fees and court costs on account of the alleged

anti-trust violations. He also alleges that certain acts of

the defendant are in violation of Texas law, and prays

for declaratory and injunctive relief in relation thereto.

The defendants are:

1. The town of Impact, Texas, a municipal corpora-

tion.

2. Dallas Perkins and his wife, Nancy Perkins, R. L.

Perkins, Dickie W. Maxwell and Marion Teel, each of

whom is sued both individually and in his official capacity

as Aldermen of the City of Impact.

3. Impact Development Corp., Pinkie’s Inc., and HF W

Corp., each of which is a private corporation chartered

under the laws of Texas.

The theory of plaintiff's case is that the town of Impact

was chartered, and has been manipulated, by the other

defendants for the purpose of enabling such defendants

to have a monopoly on the sale of alcoholic beverages

on a small “oasis” in the middle of a vast expanse of

“dry” territory.

The case is now before the Court on motions filed by

the defendants for dismissal or, in the alternative, for

summary judgment.’ Briefs have been filed and a hearing

has been held on the motions. One of the grounds relied

1. Three of such motions are filed. One is by the town of Impact,

Dallas Perkins, Nancy Perkins, R. L. Perkins, Dickie Maxwell ana

Marion Teel. Another motion is by the defendants, Tom Roden and

Pinkie’s, Inc. A third motion is by Impact Development Corporation.

The first motion sets out the grounds relied upon, and the other

motions adopt such grounds by reference.

27

upon by the movants is that a zoning ordinance of the

town of Impact, adopted about six years before plaintiff

acquired his lot, limits the use of the area which includes

plaintiff's property to residential purposes only; and that

the plaintiff would therefore not be entitled to use his

property in Impact for a place to sell alcoholic beverages

regardless of what the defendants’ conduct has been in

regard to the alleged anti-trust violations. The Court is

of the opinion that this point is well taken, and that con-

sideration of the other grounds is unnecessary. The case

will be disposed of by summary judgment.

A review of the background of the town of Impact

and the liquor business there will be helpful to an under-

standing of the claims here presented. That review is

based on admissions of the parties, affidavits and docu-

ments on file herein, and the facts of which the Court

may take judicial notice.” Some of these facts are men-

tioned in the opinions of the Supreme Court of Texas

involving challenges of the legality of the incorporation

of Impact. Perkins v. Ingalsbee, 347 S.W.2d 926 (1961).

and Perkins v. State, 367 S.W.2d 140 (1963).

Impact is in Taylor County, Texas. Abilene is the

county seat of Taylor County and the hub city of the

area of Texas generally known as the “Big Country”.

The 1960 census showed that Abiiene had a population

of 90,368. Three large church supported schools of higher

learning have been located in the city for many years.*

2. The matters judicially noticed are geographical and historical

facts of common knowledge and census figures. 600 California Corp.

v. Harjean, N.D. Tex., 284 F. Supp. 843 (1968). and cases therein

cited.

3. Abilene Christian College is supported by the Church of Chris*:

Hardin Simmons University, by the Baptist Church. and McMurray

College, by the Methodist Church.

|

28

At the time of the incorporation of Impact in 1961,

Abilene and all of Taylor County and most of the voting

units in the surrounding counties did not allow the sale

of alcoholic beverages. Dallas Perkins, one of the defend-

ants herein, undertook to provide an alcoholic beverage

oasis through the incorporation of Impact and a subse-

queiit election therein under the Texas Liquor Control

Act.*

The local option system governs the sale of alcoholic

beverages in Texas. Art. 16, Sec. 20, Constitution of

Texas; Art. 666-32, Vernon’s Ann. Texas Penal Code.”

Upon the filing with the proper county clerk of a petition

meeting the statutory requisites and containing the actual

signatures of at least 35% of the qualified voters of a

county, justice precinct or incorporated city or town, an

election is required to be called te determine whether

to make legal the sale of alcoholic beverages of one or

more of the various types and alcoholic contents in the

voting unit involved.

There was in 1960 a sparsely settled, unincorporated

area of slightly more than 600 acres, with 85 qualified

voters, known as North Park, adjoinirig the northwest

boundaries of Abilene. Perkins selected 47.13 acres out

4. The local option provisions of the Texas Liquor Control Act

permit authorization of the sale of alcoholic beverages in a municipal

corporation in a dry county. Myers v. Martinez, Tex. Civ. App.,

320 S.W.2d 862, writ refused, n.r.e., 326 S.W.2d 171.

5. Chapter 8, Title 11 of the Texas Liquor Control Act, was

originally codified as Articles 666 (intoxicating liquors) and 667

(malt liquors), Vernon's Ann. Texas Penal Code, and that was tne

citation for it at the time of the incorporation of Impact and the

liquor election therein. The new Texas Penal Code, adopted in 1973,

neither repealed nor incorporated the above provisions of the Act.

They are still in force, and are found in the Penal Auxiliary Laws

Pamphlet pending enactment of the Alcoholic Beverages Code.

29

of that area to incorporate as the town of Impact."

Art. 1133, Vernon’s Ann. Texas Civil Statutes, permitted

the incorporation of a town having more than 200 in-

habitants. The area proposed to be incorporated as Impact

had slightly more than 200 inhabitants, 31 of whom

were qualified to vote. The vote in the election on the

issue of incorporation was 27 “for” and none “against”.

The town of Impact was declared to be incorporated on

August 2, 1961. The municipal officials were elected by

write-in votes on August 14, 1961. Shortly thereafter,

a local option election was held, and the voters of Impact

legalized the sale of all types of alcoholic beverages for

off-premises consumption.

The land in the Impact area was a marsh until recent

years, and the improvements on it are few and inexpen-

sive. There were no commercial or public buildings,

churches or schools there at the time of its incorporation.

There has been little growth or development since the

incorporation. Four of the five commercial buildings there

now are used in connection with the liquor and beer

businesses which plaintiff alleges are owned and operated

by some of the defendants. The other commercial building

is used solely for a grocery store. There are still no public

buildings, churches or schools in Impact.

On October 4, 1967, the plaintiff purchased from

Jimmie M. Lorenz the lot in Impact on which he now

says he wants to operate a liquor business. On December

6. Perkins was severely criticized by his opponents in the state

court litigation involving the incorporation of Impact for lifting only

a small parcel out of the larger area of North Park. It was not

unusual to expect a person with his plans to use only land that he

owned or could control, as local option elections could be hela

frequently.

30

29, 1961, the town of 'apact enacted a comprehensive

zoning ordinance which is still in effect. That ordinance

restricts to’ residential use the area embracing the lot

in question. There is no claim that there has ever been

any comr:ercial use of any of that property. The plaintiff

concedes that the zoning ordinance prohibits the use of

his lot for the operation of a liquor business or for any

other commercial use. He says, however, that the zoning

ordinance is invalid for each of the following reasons.

1. It constitutes a deprivation of due process and a

taking of property without just compensation in violation

of the Fifth and Fourteenth Amendments of the federal

constitution.

2. It was enacted for the purpose of preventing com-

petition which was not within the contemplation of the

state statutes authorizing municipalities to enact such

ordinances.

3. It was enacted by a city council “comprised in

significant part of persons having such a direct or in-

direct conflict of interest as to render ordinances passed

by them relating to the regulation of the sale of alcoholic

beverages null and void.”

The validity of zoning ordinances enacted pursuant to

statutory authority has long been recognized by the Su-

preme Court of the United States and the Supreme Court

of Texas. Euclid v. Amber Realty Co., 272 U.S. 365,

47 S.Ct. 114, 71 L.Ed. 303 (1926); Lombardo v. City

of Dallas, Tex. S.Ct., 73 S.W.2d 475 (1934). Such

ordinances are not unconstitutional merely because they

result in loss to owners of property by restricting its use.

Lombardo v. City of Dallas, supra, at p. 478. They

31

do not constitute a taking of property under the right

of eminent domain requiring compensation. Ellis v. City

of West University Place, Tex. $.Ct., 175 S.W.2d 396,

398 (1943). It is not necessary to go into detail in

describing the ordinance here involved. It is on file with

the papers in this case. There is no claim of spot zoning

or of retroactivity. The ordinance is comprehensive in

nature and within the scope of the Texas zoning statutes.

(Art. 1011a, b, Vernon’s Ann. Tex. Civ. Statutes). There

is no claim that there was a business operation on the

property in question at the time of the passage of the

ordinance. There is no basis for the claim that the ordi-

nance was unconstitutional on the grounds set out in the

first contention. Central Bank & Trust Co. v. City of

Miami Beach, 5 Cir., 392 F.2d 549 (1968): Blackman

v. City of Big Sandy, 5 Cir., 507 F.2d 935 (1975).

The second and third grounds—the motives of the

councilmen and their conflict of interest-——will be disposed

of together.

Plaintiff says that the City Council which passed the

zoning ordinance was composed of Dallas Perkins, the

owner of an interest in the liquor stores in Impact, his

wife, Nancy Perkins, his father, R. L. Perkins, and two

employees of the liquor stores owned by some of the

defendants. He argues that their connection with or rela-

tion to such liquor stores created such a conflict of interest

in regard to the zoning of Impact that the zoning ordi-

nance voted for by them was invalid.

The passage by a ‘nunicipal corporation of a zoning

ordinance represents the exercise of its legislative powers.

City of Bellaire v. Lamkin, Tex. S.Ct., 317 S.W.2d 43

(1958). The courts have no authority to inquire into

32

the motives or tle integrity of the members of the munici-

pal legislative body in the exercise of their legislative

powers. Soon Hing v. Crowley, 113 U.S. 703, 710, 5

S.Ct. 730, 28 L.Ed. 1145 (1884); Auto Transit Co. v.

City of Fort Worth, Tex. Civ. App., 182 S.W. 685

(1916), writ refused; City of San Antonio v. Fetzer,

Tex. Civ. App., 241 S.W. 1034 (1922), writ refused;

City of San Antonio v. Walters, Tex. Civ. App., 253

S.W. 544 (1923), writ refused; Community Natural Gas

Co. v. Southern Texas Utilities Co., Tex. Civ. App., 13

S.W.2d 184 (1929), writ dis.; Burford v. City of Austin,

Tex. Civ. App., 379 S.W.2d 671 (1964), writ refused,

n.r.e.; 2 McQuillin on Municipal Corporations, Sec. 739.

City of San Antonio v. Fetzer, supra, quoted the fol-

lowing from McQuillin on Municipal Ordinances, Sec.

257:

“Neither the motives of the members, nor the in-

fluences under which they acted, can be shown to

nullify an ordinance duly passed in legal form, with-

in the scope of their corporate powers.”

“A court has no right to sit in judgment upon

the motive or intent of such bodies in the perform-

ance of a purely legislative act whereof they have

undoubted jurisdiction. That right belongs exclu-

sively to the voters to whom the legislative body is

responsible.” City of San Antonio v. Fetzer, supra.

The following is quoted from the opinion in City of

San Antonio v. Walters, supra:

“In considering the questions involved in this

appeal, we remove from the discussion all inquiry

into the good faith or motives of the commission

government of the City of San Antonio. That is a

matter not subject to judicial inquiry.”

33

In oral arguments on the niotions, plaintiff's counsel

stated that he had been unable to find a Texas case

holding an ordinance of general applicatio,. invalid be-

cause it affected the interest of one or more of the

members of the municipal legislative body who voted

for its passage. The cases which he claims are most

nearly in point are Moody v. City of University Park,

Tex. Civ. App., 278 S.W.2d 912 (1955), writ refused,

n.r.e.; and Hager v. State ex rel Te Vault, Tex. Civ.

App.. 446 S.W.2d 43 (1969). writ refused. n.r.e. Neither

one of those cases is in point.

In the Hager case, it was held that a member of a

city council whose recall was demanded was disqualified

to vote on the resolution which authorized notice of

appeal from judgment in mandamus action requiring

city council to call an election for such recall. That case

is distinguishable on the ground that the subject matter

voted upon directly and immediately affected the council-

man in question individually, instead of being one of

general application.

The Moody case involved members of the City Board

of Adjustment. The powers in question were quasi-

judicial, not legislative. The members of the Board were

also appointed, rather than elected.

It would be impossible for a legislative body to func-

tion if its members were required to operate under the

conflict of interest standard applied to judges, as plaintiif

here contends they should be. How many members of

Congress, state legislatures or city councils would be left

to vote on a general tax bill, if all those affected by the

taxes were disqualified? Successful business men are

constantly urged to serve on city councils. They are af-

34

fected by many of the ordinances of general application.

It is apparently necessary to make the test whether or

not the proposed legislation directly and immediately

affects the legislator individually.’

The Court is of the opinion that the zoning ordinance

bars recovery by the plaintiff as a matter of law, and

that summary judgment should be rendered in favor of

the defendants.

Signed, January 29, 1976.

/s/ LEO BREWSTER

Judge

7. Nothing herein shall be taken to mean that the Court per-

sonally endorses the conduct of the members of the City Council,

if it was as claimed by the plaintiff. The cases apparently hold that

more harm would be done by allowing inquiry into the motives of

legislators voting on matters of general application, than by not

doing so.

35

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

C.A. NO. 1-75-44

EDGAR E. WHITWORTH, D/B/A

DINKIE’S FOOD MART

V.

DALLAS PERKINS, NANCY PERKINS, His Wife,

R. L. PERKINS, DICKIE W. MAXWELL, MARION

TEEL, IMPACT DEVELOPMENT CORPORATION,

TOM RODEN, PINKIE’S, INC., CITY OF IMPACT

and HFW CORPORATION

b4

SUMMARY JUDGMENT

The motions for summary judgment filed by the de-

fendants herein have been duly presented and argued

in a hearing held after proper notice, with the respective

attorneys of record for the various parties hereto present

and participating; and the Court has reached tke con-

clusion that such motions should be granted for the rea-

sons set out in its memorandum opinion filed in con-

nection herewith.

It is accordingly decreed that the plaintiff, Edgar E.

Whitworth, take nothing as against any of the defendants

herein, and that the court costs of this suit be taxed

against him.

Signed, January 29, 1976.

/s/ LEO BREWSTER

Judge

36

APPENDIX “C”

APPLICABLE STATUTES

{in pertinent part)

Section One, Sherman Act, 15 U.S.C. § 1:

Every contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade or

commerce among the several States, or with foreign

nations, is declared to be illegal. . .

Section Four, Clayton Act, 15 U.S.C. § 15:

. . « [AJny person who shall be injured in his

business or property by reason of anything forbidden

in the antitrust laws may sue therefor . . . and shall

recover threefold the damages by him sustained... .

Section Sixteen, Clayton Act, 15 U.S.C. § 26:

Any person, firm, corporation, or association shall

be entitled to sue for and have injunctive relief, in

any court of the United States having jurisdiction

over the parties, against threatened loss or damage

by a violation of the antitrust laws . . . when and

under the same conditions and principles as injunc-

tive relief against threatened conduct that will cause

loss or damage is granted by courts of equity, under

the rules governing such proceedings ....

Tex. Rev. Civ. Stat. Ann. art. 10112:

For the purpose of promoting health, safety,

morals, and for the protection and preservation

of . . . the general welfare of the community, the

legislative body of cities and incorporated villages

is hereby empowered to regulate and restrict . . . the

location and use of buildings, structures, and land for

trade, industry, residence, or other purpose... .

rm -

37

Texas Liquor Control Act, V.A.T.S.

Penal Auxiliary Laws, Art. 666-4:

. . . (a) It shall be unlawful for any person to

manufacture, distill, brew, sell, possess for the pur-

pose of sale, import into this state, export from the

state, transport, distribute, warehouse. store. solicit

orders for, take orders for, or for the purpose of

sale to bottle, rectify, blend, treat, fortify, mix, or

process any liquor in any wet area without first hav-

ing procured a permit of the class required for such

privilege. .. .

Texas Liquor Control Act, V.A.T.S.

Penal Auxiliary Laws, Art. 666-24:

In any city where the sale of liquor as herein de-

fined is prohibited by its charter from being sold in

its residence section, or any part thereof, such charter

amendment shall remain valid and continue effective

until such time as said charter provision may be

repealed or amended as provided by law.

Texas Liquor Control Act, V.A.T.S.

Penal Auxiliary Laws, Art. 666-54:

.. . The city secretary or clerk of the city in which

an application for a license or permit is made shall

certify whether or not the location or address is in

a wet area and whether or not the sale of alcoholic

beverages for which license or permit is sought is

prohibited by charter, ordinance or any amendment

thereto.

Texas Liquor Control Act, V.A.T.S.

Penal Auxiliary Laws, Art. 667-101:

In any incorporated city or town where the sale

of beer as defined in the Texas Liquor Control Act

is prohibited by charter or amendment thereto or

38

by any ordinance from being sold in the residential

section, such charter amendments or ordinances shall

remain valid and continue effective until such time

as such charter provisions, amendments, or ordi-

nances may be repealed or amended.

All incorporated cities and towns are hereby

authorized to regulate the sale of beer within the

corporate limits of such cities and towns by charter

amendment or ordinance, and . . . designate certain

zones in the residential section or sections of said

cities and towns where . . . such sales may be pro-

hibited... .

NOTE: In 1977, after the filing of the instant case, the Texas

Legislature repealed the entire Texas Liquor Control Act and sub-

stituted therefor the ALCOHOLIC BEVERAGE CODE, which made

no substantive change in the above sections.