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In honor of “Black History Month,” we look back at the Contract Buyers League (CBL) cases of the late 1960s and 1970s. It was a time when racial segregation still marred one foundation of the American Dream for hundreds of Chicago African-American families: buying a home.
Read More It is impossible fairly to summarize in a few paragraphs the extensive litigation, in both federal and state courts, spanning more than 15 years, involving hundreds of African-American home owners who were our clients. They purchased homes on the west and south sides of Chicago after the end of World War II. On the west side, the sellers engaged in blockbusting-panic tactics, purchasing from frightened white owners with predictions that black buyers were moving into their neighborhoods. The houses were then sold at highly inflated prices to unsophisticated black families. Owing to racial prejudice, the buyers were unable to obtain regular mortgage financing, because Chicago-area banks were unwilling to make mortgage loans to African-Americans, and the federal supervisory agencies were not authorized to take corrective action. As a result, the buyers were required to make significant down payments and sign contracts that extended for many years. The terms of the contracts provided that if the buyers missed a single payment, the sellers were entitled to declare the contracts terminated, retain all previous payments, and repossess the homes. The same situation existed on the south side, except that the homes were newly built, but were sold at similarly inflated prices on land contracts with the same harsh forfeiture provisions.
We filed two cases in the federal District Court in Chicago, one for the west side buyers, and the other for the south side buyers. We also brought suit against the federal lending agencies, alleging illegal racial discrimination in refusing to provide mortgage financing. We litigated the cases in the Court of Appeals for the Seventh Circuit.
To prepare the cases for trial, we held countless weekly meetings at churches located on the west and south sides. The lawyers from Jenner & Block included Tom Sullivan, John Tucker (deceased), Dick Franch, John Stifler (deceased), Carol Thigpen (deceased), Jeff Colman, and many others, including paralegals who served without fee. We were assisted by several Jesuit seminarians, including Jack Macnamara, the instigator of the CBL movement, and the young lady who later became his wife, Peggy. We were assisted by two of the finest lawyers in Chicago, William R. (Bob) Ming (deceased) and Thomas J. Boodell, Jr.
When we were unable to settle the cases or obtain a trial, the clients staged what became known as “the hold outs” — they refused to make their monthly payments, thus risking being foreclosed and evicted. Wide publicity followed. We sought relief from evictions from both the Illinois Supreme Court and then Mayor Richard J. Daley. Many of the evictions were halted, and settlements obtained. Eventually, we renegotiated contracts for over 450 families, which yielded a savings to the buyers of at least $7 million, or more than $30 million in today’s dollars.
The CBL cases resulted in two jury trials and a bench trial in the federal court. The publicity engendered by these cases, including that related to the holdouts, contributed to the end of exploitive contract sales, the availability of mortgage financing for African-American home buyers, and significant restrictions on racial profiling in the housing market.
The CBL cases have been the subject of numerous news and magazine articles, several books, and have been the subject of master and doctoral theses. We made lifelong friends of many of the client members of the Contract Buyers League.
Apart from the savings obtained by our CBL clients, the publicity engendered by the CBL cases were a major influence in bringing about a number of major reforms:
• Changes to the Illinois Forcible Entry and Detainer Act(the eviction law), to allow buyers to raise defenses for non-payment, and to remove the requirement that they post an appeal bond of one year’s payment.
• Passage of an Illinois statute requiring contracts to be treated like mortgages.
• Passage of the federal Home Mortgage Disclosure Act, which forced banks to disclose where they made their loans, thereby making it possible to prove that banks were racially discriminating in their lending policies.
• Passage of the federal Community Reinvestment Act, which by the early 1990s was responsible for the reinvestment of $18 billion dollars in more than 70 U.S. cities.