The opinion of the court was delivered by: DIMOCK
This is a class action brought by and on behalf of real property owners and residential and business tenants in a neighborhood of the City of New York known as the Lincoln Square Project area. Plaintiffs face eviction as a result of a slum clearance and urban renewal project in the area.
Title I of the Housing Act of 1949, 63 Stat. 414, 42 U.S.C. § 1450 et seq., authorizes the Administrator of the Federal Housing and Home Finance Agency to make loans and capital grants to local agencies for urban renewal projects that conform to the conditions specified in the Act. The City formulated a plan for such a project in accordance with section 72-k of the New York General Municipal Law which was designed to permit the City to take advantage of the benefits of the Housing Act of 1949.
Defendants, Fordham University, Lincoln Center for the Performing Arts, Inc. and Webb & Knapp Lincoln Square Corporation, agreed to become 'sponsors' of the plan, to bid a stated minimum price at the auction provided for by section 72-k and, if successful in their bids, to redevelop the area in accordance with the plan. Public hearings were held on the project plan by the New York City Planning Commission and the New York City Board of Estimate and both of them granted their approval. No hearing was held by the Federal Housing and Home Finance Agency although certain of the plaintiffs and other members of the classes represented requested one. The plan was approved by defendant, Albert M. Cole, Administrator of the Federal Housing and Home Finance Agency, on December 26, 1957. The City condemned the area and then sold it at auction to the sponsors. The federal government has agreed to pay two-thirds of the difference between what the City paid for the land and what it received at the auction.
Plaintiffs allege various unlawful and unconstitutional acts by defendants in the execution of the plan and seek to enjoin them from further action in carrying out the plan.
All defendants move for summary judgment and to dismiss the complaint for failure to state a claim. The United States also moves to dismiss, first, for improper venue, and, second, for failure to obtain jurisdiction over an indispensable party in the event that the court sustains its claim that jurisdiction over Cole had not been obtained.
Plaintiffs allege in their complaint that the actions of the Board of Estimate of the City of New York culminating in the condemnation of the Lincoln Square Project area constituted a direct subsidy to a religious institution, defendant Fordham University, and was therefore in violation of the First and Fourteenth Amendments. They also allege that the condemnation constituted the taking of private property for a non-public use in violation of the Fourteenth Amendment.
The same claims were alleged in 65th St. Residences, Inc., v. City of New York, 4 N.Y.2d 268, 174 N.Y.S.2d 1, 150 N.E.2d 396, certiorari denied sub nom Harris v. City of New York, 357 U.S. 907, 78 S. Ct. 1152, 2 L. Ed. 2d 1157. All defendants here were defendants in that action except Albert M. Cole and Walter S. Fried. The defendants who were parties to the state court action invoke the judgment in their favor in that action as a bar to the present action under principles of res judicata. See Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 319, 47 S. Ct. 600, 71 L. Ed. 1069. Plaintiffs contend that they were not parties to the prior action and are not bound by the judgment of the state court. Plaintiffs in the state court were certain owners and tenants of real property in the Lincoln Square Project area who sued on behalf of themselves and all others similarly situated, 4 N.Y.2d at page 274, 174 N.Y.S.2d at page 3, 150 N.E.2d at page 397. Plaintiffs in this action are different persons but they are members of the same classes as those in the prior action.
Representative or class actions are permitted in the courts of New York by Section 195, N.Y.C.P.A. Section 195 provides:
' § 195. Suing for benefit of others. Where the question in one of a common or general interest of many persons or where the persons who might be made parties are very numerous and it may be impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.'
It is clear that the 64th St. Residences case was a suit involving questions of common interest to the real estate owners and the tenants in the area. The alleged injury affected all of the members of each of the classes in the same manner and the relief demanded was common to all. Greer v. Smith, 155 App.Div. 420, 140 N.Y.S. 43; Whitmore v. New York Inter-Urban Water Co., 158 App.Div. 178, 142 N.Y.S. 1098. In such a case the judgment will bind all members of the class as if they were actually joined as parties so long as they were adequately represented. Ashton v. City of Rochester, 133 N.Y. 187, 195, 30 N.E. 965, 31 N.E. 334; People's Gas & Electric Co. v. City of Oswego, 207 App.Div. 134, 202 N.Y.S. 243, affirmed 238 N.Y. 606, 144 N.E. 911. I find that plaintiffs in this action were adequately represented in the prior action by other members of their classes and are therefore bound by the judgment as if they had been parties.
Plaintiffs contend that federal law should be applied to determine this issue. The law of the state where the judgment is rendered is, I believe, applicable to determine who are bound by the judgment. See Restatement, Conflict of Laws, Section 450, p. 533.
In addition, this court is required to give full faith and credit to a judgment of a state court which had jurisdiction over the subject matter and the parties and to give it the same effect as it would have in the forum where the judgment was rendered. American Surety Co. v. Baldwin, 287 U.S. 156, 166, 53 S. Ct. 98, 77 L. Ed. 231; United States v. Silliman, 3 Cir., 167 F.2d 607, 620, certiorari denied 335 U.S. 825, 69 S. Ct. 48, 93 L. Ed. 379; U.S.Const. Art. IV, § 1; see also Magnolia Petroleum v. Hunt, 320 U.S. 430, 439-440, 64 S. Ct. 208, 88 L. Ed. 149. The effect of the judgment in the state court and necessarily the question of who are bound by it must therefore be determined by the law of that state.
Plaintiffs contend also that this court is not bound by the state court's determination of federal constitutional questions. It is true that a federal court does not apply state court rules of decision to determine a federal constitutional question. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188; 62 Stat. 944, 28 U.S.C. § 1652.
In this case, however, I am not applying a state rule of decision but merely giving effect to a valid state court judgment as required by the full faith and credit clause and principles of res judicata. The fact that federal questions were raised in the state court does not affect the validity of the judgment or lessen its effect. See American Surety Co. v. Baldwin, supra; Angel v. Bullington, 330 U.S. 183, 67 S. Ct. 657, 91 L. Ed. 832. The latter case was a diversity case in which the Supreme Court, applying North Carolina statutory law as required by Erie R. Co. v. Tompkins, determined that the action could not be maintained in a federal court because it could not be maintained in a North Carolina court. Irrespective of Erie, however, the court, following the principles of res judicata, gave effect also to a prior judgment of the North Carolina Supreme Court, Bullington v. Angel, 220 N.C. 18, 16 S.E.2d 411, 136 A.L.R. 1054, involving the same parties and the same claims insofar as it determined the federal question of the constitutionality of the North Carolina statute which prohibited the action. I cannot accept the negative implication drawn by plaintiffs that the constitutional questions that they raised in the state ...