          THEA~TORNEYGENERAL
                          OFTEXAS



                             June 22, 1949


Hon. Beauford H. Jester              Opinion No. V-847.
Governor of Texas
Capitol Building                     Re: Whether under H. B. 808
Austin, Texas                            (1) Federal rent control
                                         will be terminated and (2)
                                         cities and towns may es-
                                         tablish emergency rent
                                          control within their limits.

Dear Governor   Jester:

                Your letter of June 14, 1949, states that House Bill
808 relating to rent decontrol has been passed byethe Legislature
and is on your desk. Your letter further states:

               “As I construe this Act, the Legislature
       has undertaken in it to accomplish two things:
                   (1) To abolish federal rent control in
       the State of Texas under the provisions of Sub-
       section j-2 of the Housing and Rent Act of 1949.
                   (2) To provide for the imposition of
       local rent control by municipalities, by action of
       their governing bodies.

                “I would be grateful for your ,opinion as
        to whether these two objectives are or may be
        accomplished under the terms of House Bill 808
      ,in the light of existing federal law and the Texas
        Constitution and Statutes.”

                House Bill 808 is brief.   The substance of the bill
is contained in Sections 1 and la: :

                “Section 1. Rent control as established
       by the Act of the Eighty-first Congress of the
       United States, extending rent control for a peri-
       od of fifteen (15) months from and after March
       31, 1949, as further described in Housing and
Hon. Beauford H. Jester, Page 2 (V-847)




       Rent Act of 1949, H. R. 1731, is hereby abol-
       ished in the State of Texas and is declared
       to be x10 longer needed in the State of Texas,
       and all Federal rent controls are hereby de-
       clared no longer needed in the State of Texas.

                “Sec. la. It is further provided how-
       ever that the govern&g body of any city or     ’
       town may, by ordinance duly passed, finding
       that a housing emergency exists, establish
       rent control in such city or town for the dura-
       tion of’such housing emergency provided that
       the ordinance so passed is approved by the
       Governor of the State of Texas.*

                 The answer to the first part of your question is in
the affirmative.   The bill, if signed, will bring about ‘the end of
Federal rent control in Texas. This will be true regardless of
our answer to your second question, since the bill contains a prop-
er severability clause.

                Without going into the technicalities of the greatly
involved Federal Rent Control Act, as applicable’here, it pro-
vides that if a state: (1) declares by law that Federal rent con-
trol is no longer necessary, snd (2) so notifies the Federal Hous-
ing Expediter, all rent controls under the Federal act with refer-
ence to housing accommodations *shall be terminated on the 15th
day after receipt of such advice.‘1    ‘,

T This is the substance of Section 204j(2) of the Housing and Rent
Act of 1947 as amended by Public Law 31, Blst Congress (1949).
That section reads:
                “If any state by law declares that Fed-
        eral rent cantrol is no longer necessary in such
        State or any part thereof and notifies the Hous-
        ing Expediter of that fact, the Housing Expediter
        shall immediately make public announcement to
        the effect that he has been so advised. At the
        same time all rent controls under this act, is
        amended, with respect to housing accommoda-
        Wons with&such State of part thereof shall be
        terminated on the fifteenth day after receipt of
        such advice.*
    Hon. Beauford H. Jester, Page 3 (V-847)




                     Section 1 of House Bill 808 declares that “Federal
    rent controls . . . are no longer needed in the State of Texas.“” In
    this manner the Legislature accomplishes all that is required to
    come within the terms of the quoted paragraph.      If and when this
    bill becomes law, all that would be necessary to accomplish the
    first objective would be the notification to the Housing Expediter
    of the legislative action, thus bringing into effect the provisions
    of Section 204j(2) of the Federal act.
.
                    Thereupon, the Federal control, under existing
    law, will be terminated,   If this bill ‘becomes law and the State
    is decontrolled, the Federal Housing Expediter cannot, under ex-
    isting law, recontrol rents anywhere in Texas.     This is because
    the Federal act also provides:

                     “(6) No maximum rents shall be es-
             tablished or reestablished under this subzc-
             tion for any housing accommodations . . . in
             ztate,      city, town, village or locality in
             which rent controls under this title have bzn
             terminated pursuant to section 204(j).“‘ (Em-
             phasis added).

                       Assuming the end of Federal control, we pass to
    your second     inquiry as to whether the State can set up its own
    rent control    in the manner directed by Section la of H. B. 808.
    We will first    consider the matter directly from the standpoint
    of the power     of the State itself.

                    It now appears to be generally est~ablished that
    when, as a result of an emergency, an acute and unprecedented
    shortage of housing accommodations is found to exist, legisla-
    tion intended .to prohibit the exaction of unjust and unreasonable
    rent during.the emergency has been held to be a legitimate exer-
    cise of the police.power of a state.3 The State of New York sftar
    both World Wars has enacted legislation setting up rent control
    in New York City during the emergency,       Its highest court and the

    2
        Subsection 6 of Section 204i.

    3 Block v, Hirsh, 256 U.S. 135 (1921); Brown Holding Co. v. Feld-
    man, 256 U.S. 170 (1921);‘32 Am. Jur. 867; 52 C.J.S. 293; Annota-
    tions, 16 A.L.R. 178,,~86 A&R.  1546, and 162 A.L.R. 202.
Hon. Beauford H. Jester, Page 4 (V-847)




Supreme Court of the United States have upheld such legislation.4
Congress also enacted similar legislation for the City of Washing-
ton, D.C., and the act was declared to be constitutional.5    The va-
lidity of such legislation rests entirely upon the state of the emer-
gency.

                The Federal rent control law is based on the war
power of Congress and the emergency situation created by the
War. Its validity was upheld on that basis.6    The United States
Supreme Court in 1948 held that the emergency was not over with
the termination of hostilities, and that the extension of the Federal
rent control law was constitutionsI.7    The Court took judicial no-.
tice that there existed sufficient facts to uphold the Congressional
declaration that the emergency still existed.

                The power of the states to act is not based on war
power.  but, as pointed out. upon their general police powers. This
police power, in the rent control cases. has been held to depend
also on the existence of an actual emergency, not merely a hous-
ing shortage unconnected with the general welfare, health, and
safety of the people as a whole,

                So the question as to whether there is an emer-
gency is of primary importance. With regard to Federal rent
control, the United States Supreme Court after the first World
War held in 1924 (many years after the cessation of hostilities in
1918) that the Congressional declaration that there was still an
emergency    was not binding on the courts, and that such fact issue
should be tried out on evidence to be presented.   There are three
cases by the Texas Courts which have invalidated legislation con-


4 Twentieth Century Associates v. Waldman, 294 N.Y. 571, 63 N.
E.2d 177 (1945), appeaople                        (Durham Realty
Co.) v. La Fetra. 230 N.Y. 429. 138 NE. 6011921); Edgar A. Levy
 Leasing Co. v. Siegel. 258 U.S. 242 (1922); Brown Holding Co.. v.
 Feldman. 256 US, 170 (1921); Finn v. Fifth Avenue Co., 153 F.2d
‘wA.2d         1946, cert. den. 328 US. 838); Application of Zohl-
man, 76 N,Y.S.2d 388 (N.Y. Sup. 1947).
5Block v. Hirsh, 256 U.S. 135 (1921).

6 Bowles v. Willingham,   321 U.S. 503 (1944).
7   Woods L &ler,   333 U.S. 138.(1948).


                                .
                                    .*
Won, Beauford H. Jester, Page 5 (V-847)




trolling rents where the courts found no emergency     to exist.8

                  The Texas cases involved the validity of legisla-
tion enacted in 1915 which was designed to aid the tenant farmer.
It provided among other things that any rental in excess of one-
third of the value of the grain and one-fourth of the cotton would
be+*,:    that the landlord would lose his lien, and that the tenant
could recover double its full amount of the rent so paid, The act
was not based on emergency police power. It was held that the
statute was void as a taking of property without compensation and
without “the due course of the law of the landW within Sections 17
and 19 of Article I of the Texas Constitution, It was also held to
be a violation of the Fourteenth Amendment of the Federal Con-
stitution.

                In Culberson v0 Ashford, one of the cases referred
to above, the Texas Supreme Court recognized the holdings of the
United States Supreme Court cases in the rent control cases above
mentioned. Those cases were distinguished as being based “pure-
ly on the ground that they were emergency enactments and of lim-
ited duration q . ,I

               An earlier Texas case9    on the same statute dls-
tinguished the two situations:

               “To differentiate this case from the
       cases of People v. La Fetra and Block v.
       Hirsh it is necessary only to bear in mind
       that no abnormal si.tuation prevailed calling
       for regulating contracts between rural land-
       lords and tenants as was done by our Legis-
       lature. and that no pretense was made to re-
       press a wide-spread evil arising out of an
       emergency and afflicting the entire public,
       impairing the public welfare; whereas, the
       other two acts were passed to relieve cru-

‘Cdberson   v. Ashford, 118 Tex. 491. 18 S.W,2d 585 (1929); Miller
v. Branch, 233 SW. 1032 (Tex. Civ. App. 1921); Rumbo v. Winter-
rowd. 228 SW. 258 (Tex. Civ. App. 1921),
9.
  Miller v, Branch, 233 SW.   1032 (Tex, Civ, App. 1921).
Hon. Beauford H. Jester, Page 6 (V-847)




       cial afflictions, pressing down upon the pub-
       lic out of a grave abnormality, superinduced
       by unprecedented and almost universal war-
       fare, d o * And, as said, the legislative acts
       in both instances cited expressly recognized
       these conditions. and resorted to the police
       power as a temporary means of dealing with
       a temporary exigency, in its nature a present
       emergency     demanding action for the public
       welfarc.‘”

              This case was cited with approval by the Texas      Su-
preme Court in Culberson v. Ashford, supra.

                Taking the cases together, therefore, it is our con-
clusion that where there are found to be facts sufficient to consti-
tute an actual emergency, the enactment of legislation regulating
rent is a valid exercise of the police power of the State. The de-
cisions are based not only on the fact that housing was so critical
as to become affected with the public interest, but also upon the
emergency situation affecting the health and welfare of the com-
munity,lO Where citizens are without shelter, or are forced to
live in a crowded condition, or where great numbers of people are
not able to obtain or retain healthful living quarters~, there is a
problem of health and welfare for the whole community wliieb the
courts  say the State is not impotent to deal with. But the emer-
gency must exist in fact, and it is so specified in Section la of H.
B. 808,

                Having concluded that rent control is a subject up-
on which the State may constitutionally act’in certain far-reaching
emergencies, we turn to the second part of your question: Does
H. B. 808, in the light of the Texas Constitution and laws, accom-
plish its purpose. “‘to provide for the imposition of local rent con-
trol by municipalities, by action of their governing bodies ? ”

loIn upholding the New York Rent Law, Justice Crane wrote: “This
is not a case where the Legislature has undertaken to regulate
housing rates because such a business has become charged with a
public interest. D DF Circumstances due to war conditions have
created a peril to life and health. and with this the state has at-
tempted to deal until the peril has passed.’ Guttag V* Shatnkin.
130 N.E. 929 (Ct. of App. N.Y. 1921).
Hon. Beauford H, Jester, Page 7 (V-847)




                In 1912 the people of Texas adopted what is known
as the “Home Rule Amendment’ to their Constitution.       Art. XI,
Section 5. It is applicable to cities of over 5,000 population which
have elected to come under its provisions.     Under the Amendment
and statutes enacted in harmony with it, those cities have very
broad powers.11 Such cities may not enact or enforce ordinances
which violate any statutory or constitutional provisions.   Nor may
they enter a field of legislation that has been entered and occupied
by general legislative enactments.12

                Among the powers possessed by such cities is the
general police power delegated to them by the people in the “Home
Rule Amendment” and by the Legislature in Articles 1165 to 1176,
V.C.S.  Section 34 of Article ll75 empowers cities “to enforce all
ordinances necessary to protect health, life and property0 and to
prevent and summarily abate and remove all nuisances and to pra-
serve and enforce the good government, order and security of the
                               ,.
city and its inhabitants.’      *’

               Article Ilf6 further provides ~that “the enumeration
of powers hereinabove made shall never be construed to preclude,
by implication or otherwise. any such city from exercising the
powers incident to the enjoyment of local self-government,   pro-
vided that such powers shall not be inhibited by the State Consti-
tution. *

                This power is to be used, among other things, for
the public health, safety, and morals, and many related purposes.
As related to the problem at hand, the police power is commonly

1L Beyond all question a home rule city acts by authority direct-
ly conferred by the Constitution nnd not through power conferred
by the Legislature.”   City of El Paso v. Ascarate. 209 S.W,2d 989
(Tex. Civ. App. 1947. error ref”d.) ““The amendment constitutes
the rule of the local inhabitants of the cityD and it is no longer
necessary for the Legislature to confer powers on them to act,
or is it necessary to look to the acts of the Legislature for a
grant of power; only limitations on the power to act need be con-
sidered.”   Yellow Cab Transit Co. vs Tuck, 115 S.W,2d 455 (Tex.
Civ. App. 1938, error ref’d,)

12Prescott v. City ,of Borger,   158 S.W.Zd 578 (Tex. Civ. App. 1942.
error ref’d.)
Hon. Beauford H. Jester, Page 8 (V-847)



used to regulate the sine, height. and location of buildings in cer-
tain areas, to fix zones, to require sanitary facilities in buildings.
to require fire exits and fire escapes in public buildings, to pro-
vide for slum clearance and low cost public housing, to promul-
gate and carry out regulations to safeguard public morals, to con-
trol indecent practices, gambling, lotteries, to prevent.extortion
and oppression, to regulate public conveyances, and so forth.

                The police power of “Home Rule” cities has been
tested in our courts. and where it has been reasonably exercised,
it has been very generally upheld.13 For example, cities have
been upheld in their power to provide for zoning.14 to inspect
food,15 and to enact various other ordinances for the public health
and welfare.16   The Texas Supreme Court in Lombard0 v. City of
Dallas, 124 Tex. 1, 73 S.W.2d 475, adopted the following language:

                 “The doctrine has long been estab-
         l&shed that the municipality may, under del-
         egated police power, exercise reasonable
         supervision and control over all kinds of
         business and property within the corporate
         limits whenever necessary for the public
         health, safety, morals, or general welfare.


                Though their powers are not as broad or exten-
sive, cities and towns which are not ‘Home Rule.” but are incor-
porated under the general laws, Articles 961 V.C.S. et seq., have
been delegated appropriate police powers by the Legislature. 17
Thus Article 962 provides that such incorporated cities:

13
  3 McQuillan on Municipal Corporations      (Rev. Ed. 1943) 57, et
seq,; 30 Tex. Jur, 119, et seq,
14Lombardo v. City of Dallas. 124 Tex. 1, 73 S,W.td     475(1934).

%lty   of Dallas v. City Packing Co.. 86 S.W.2d 60 (Tex. Civ. App.
1935. error dism”&)

‘6city   of Dallas v* Smith, 130 Tex. 225p 107 S.W.2d 872 (1937).

17Such powers may be delegated by the Legislature to municipal-
ities. 3 McQuillan on Municipal Corporations (Rev. Ed. 1943) 108;
11 Am. Jur. 943, Constitutional Law, Sec. 223; 16 C.J.S. 546, Con-
stitu&mol Law, Sec. 178; Stoutenburgh v. Hennick. 129 U.S 141
(1889); Cox v. City of Kinston, 8 S;E.2d 252 (N.C, Sup. 1940).
HOI-I,Beauford H. Jester, Page 9 (V-847)



               ”
                   .  may ordain and establish such
                       .   .


       acts, laws, regulations and ordinances, not
       inconsistent with the Constitution and laws
       of this State, as shall be needful for the gov-
       ernment, interest, welfare and good order of
       said body politic and under the same name
       shall be known in law ~ . . ‘”

                They have other enumerated powers in Article 1015.
Section la of H. B. 808 would be considered as an addition to such
specifically enumerated powers, It would constitute an additional
delegation of the police power to act in a housing emergency.

               It is not necessary to decide whether either or both
these types of cities could independently enact rent control ardi-
nances in a dire emergency    by exercise of their general police
power. House Bill 808 delegates that power to them. The specif-
ic provisions of Section la, when added to their broad police pow-
ers, would enable both these types of cities and towns to so act.
Of course, the Legislature does not undertake to apply Section la
to unincorporated towns and villages, since it is limited to those
cities and towns which can act by “ordinance” of its “governing
body. ”

                We wish to repeat here that this power to enact
housing control ordinances is wholly dependent upon the actual
existence of some great emergency.      And the emergency must,
under the cases, be closely associated with and affect the public
health, safety, morals, or general welfare, For example, it is
recited in sn opinion of New York’s highest court that when New
York in 1920 enacted its rent laws, there were upwards of 100,000
eviction suits actually pending in the courts of New York City;
each proceeding involved a family averaging 4 or 5 persons;
large numbers of people were forced to live in such crowded
conditions that actual health 2nd moral problems were presented;
construction of housing facilities was at a standstill or was great-
ly insufficient because of the shortage of material due to the war;
many landlords were taking advantage of the situation; and those
tenant& who could, paid exorbitant rents rather than to take the
risk of being unable to find other places of abode. The situation
was critical enough to warrant a special session of the New York
Legislature.18   In upholding the law, it was pointed out that it was

18People ex rel. Durham Realty Co. v. La Fetra, 230 N.Y. 429.
130 N.E. 681.
Hon. Beauford H. Jester, Page 10 (V-847)



an emergency measure which by its own terms was to remain in
force for only two years.

                 On the other hand, where Congress sought to con-
trol rent in Washington, D.C.. some six years after the end of
World War I, and the validity of such action was challenged in the
Supreme Court of the United States, Mr. Justice Holmes wrote
concerning the weight to be given to the declaration by Congress
that a sufficient emergency existedr

                “We repeat what was stated in Block
       vs Hirsh, 256 U.S. 135, 154, as to the respect
       dim to a declaration of this kind by the legis-
       lature so far as it relates to present facts.
       But even as to them a Court is not at liberty
       to shut its eyes to an obvious mistake, when
       the validity of the law depends upon the truth
       of what is declared . . . . And still more, ob-
       viously so far as this declaration looks to the
       future it can be no more than prophecy and
       is liable to be controlled by events. A law
       depending upon the existence of an ,emergency
       or other certain state of facts to uphold it
       may cease to operate if the emergency ceases
       car the facts change even though valid when
       passed. . . ,

               us . . In our opinion it is open to in-
       quire whether the exigency still existed upon
       which the continued operation of the law de-
       pended. It is a matter of public knowledge
       that the Government has considerably dimin-
       ished its demand for employees that was one
       of the great causes of the sudden afflw of
       people to Washington, and that other causes
       have lost at least much of their power, It is
       conceivable that, as is, shown in an affidavit
       attached to the bill, extensive activity in
       building has added to the ease of finding an
       abode. If about all that remains of war con-
       ditions is the increased cost of living, that
       is not in itself a justification of the act.“18


“Chastleton   Corp. v. Sinclair,   264 U.S. 543 (1924).
Hon. Beauford H. Jester, Page 11 (V-847)




               In this regard, the Texas Supreme Court wrote:

               *A law which assumes to be a police
       regulation but deprives the citizen of the use
       of his property under the pretense of preserv-
       ing the public health, safety, comfort, or wel-
       fare, when it is manifest that such is not the
       real object and purpose of the regulation, will
       be set aside as a clear and direct invasion of
       the right of property without any compansa-
       toiy *dVantagesT* Spann v, City of D&s,      111
       Tex. 513, 235 S.W. at 513 (1921).

                 Again, the Texas Supreme Court has declared void
the fixing of rents where there was no emergency.     Culberson v.
Ashford, 118 Tex. 491, 18 S.W.2d 585. This will serve to emphs-
size that the validity of these ordinances will absolutely depend
upon the existence of a grave emergency, and that they will be
valid only so long as such emergency exists.    We are not here
dealing with the regulation of rents as an ordinary measure to
meet an ordinary housing shortage or high rents. The Texas Su-
preme Court has held that this may not be done, and the Legisla-
ture has not attempted to regulate housing under ordinary circum-
stances, House Bill 808 authorizes such action only upon a “find-
ing that a housing emergency exists,’ and the courts will inquire
into the actualities of such a finding. We have pointed out the type
of emergency which must be found in order to justify use of the
police powers of a city for such purposes,   A mere “housing emer-
gency” unconnected with the public health. welfare, safety or mor-
als, would not justify such extraordinary use of, the police powers
to interfere with, take or regulate private property. Rent control
in the latter case would be unconstitutional, and it is presumed
that the Legislature intended to authorize control only in that type
of “housing emergency’ which would serve as a basis for consti-
tutional exercise of such powers.

                Assuming the finding of such a grave emergency
as to warrant and justify the exercise of the police power to con-
trol housing, the ordinance of a city imposing such control would
have to be very carefully drawn in order to be valid. It would
have to provide adequate standards for the operation of the ordi-
Han, Beauford H. Jester, Page 12 (V-847)




nancel9 and provide for a fair rental and fair return on investments,
and for adjustments in new and unusual situations; it must provide
for trials on contested cases, with adequate pr~i.isions for notice,
hearing and appeals, et cetera, Since H. B0 808 uses the word
“housing, ” it is evident that the Legislature did not intend for com-
mercial rent property to be controlled, What types of “housing”
are to be controlled would have to be determined by the city de-
pending on the type and extent of the emergency,     Finally, the or-
dinance must be reasonable and must be executed in a reasonable
manner. As stated by the Court of Civil Appeals:

                ““While a city has the power to enact
       ordinances to protect. the public health, and
       while ordinances are a valid exercise of the
       city”6 delegated police power under the Home
       Rule amendments, the power authorized un-
       der such ordinance cannot be exercised arbi-
       trarily and unreasonably,‘P City of Dallas v,
       City Packing Co,, 86 S.W.2d 60 (1935, error
       dism’d,)

                House Bill 808 contains a severability clause.     So
regardless of the validity or invalidity of Section la, the provision
in Section 1 for the end of Federal rent control will stand, In any
event, if and when this bill is signed and becomes effective, Fed-
eral rent control will be at an end in Texas.

                           suMh4ARY

               1. House Bill 808, 51st Legislature,
       if and when signed and effective, will bring
       about the end of Federal rent control in Texas.


191n Spann v, City of Dallas; 111 Tex. 513, 235 SW, 513 ‘(1921); an or-
dinance prohibited any commercial building in a residential area
except under certain circumstances.     Among other reasons, the
ordinance was held void because, ““No rule or standard is given
to govern the applicant in fashioning the design of his building or
to govern the inspector in approving or rejecting it B 0 0 This
leaves the right to construct the building subject to the arbitrary
discretion of the inspector and of itself renders the ordinance
void.“” 235 S.W. at 517,
Hon. Beauford H. Jester, Page 13 (V-847)




        This is true regardless of the validity of Sec-
        tion la of the bill providing for municipal rent
       .control where a housing emergency is found
        to exist in incorporated cities.

               2. Section la of H. B. 808 authorizes
       incorporated cities and towns in Texas to es-
       tablish rent control upon a finding that a hous-
       ing emergency exists.    That bill, together with
       their general police powers, give the cities
       the power to regulate housing only where there
       is such a grave emergency as to affect the
       health, welfare, safety or morality of the peo-
       ple of the city as a whole. This power may
       not be exercised in the absence of a clear
       showing of such a grave emergency.       Whether
       such emergency exists is a question of fact to
       be determined by the governing body of the
       city or town in the first place. In the event of
       suit. the court may reexamine such finding,
       because the validity of such ordinances abso-
       lutely depends upon an emergency and is valid
       only so long as the emergency exists.

                                           Yours very truly,

APPROVED:                       ATTORNEY      GENERAL OF TEXAS


  %LdikLp                              g.&J&Jwc
ATTORNEY     GENERAL            BY
                                           Joe R, Greenhill
                                           First Assistant




                                           Assistant
JRG:EJ:erc
