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R. C. Maxwell Co. v. Borough of New Hope

May 24, 1984


Appeal from the United States District Court for the Eastern District of Pennsylvania.

Hunter, Becker, Circuit Judges, and Hoffman,*fn* District Judge.

Author: Hunter


HUNTER, Circuit Judge:

1. This appeal involves the concerns of an historic township with large outdoor billboards. The owner of the billboards, The R.C. Maxwell Co. ("Maxwell"), alleges that the New Hope Borough Council violated Maxwell's first amendment right to free speech by asking the owner of the billboards' site, Citibank, N.A. ("Citibank"), to terminate Maxwell's lease and remove the billboards. Citibank complied, and Maxwell brought this action. The United States District Court for the Eastern District of Pennsylvania granted summary judgment in favor of New Hope. We will affirm.


2. The two large billboards*fn1 at issue in this case have stood on the outskirts of New Hope since 1927. They occupied part of a 150 acre tract, largely undeveloped, that was purchased in 1978 by Ivanhoe Properties, Inc. ("Ivanhoe"), a subsidiary of Citibank. On May 26, 1978, Maxwell signed a one year lease with Ivanhoe for the right to maintain the billboards on the site, at an annual rate of $600. At the end of the one year term the parties did not execute a new agreement, but Maxwell continued to remit, and Citibank to accept, the stated rent, giving rise to a year-to-year tenancy. Relations between tenant and landlord remained undisturbed until August, 1981, when the Borough Council of New Hope determined that it wanted the billboards removed.

3. New Hope is an historic town that prides itself on its quaint atmosphere. For some years, the Borough Council had tried to draft an ordinance to prohibit large, off-site billboards, of which Maxwell's were the only example in town. At the July 27, 1981 council meeting, a more expedient solution to the billboard problem was suggested and approved: an informal request to Citibank, Maxwell's landlord, to remove the offending billboards voluntarily.

4. Bettylou Smith, Secretary-Treasurer and later Borough Manager of New Hope, sent the suggested letter on August 7 to Alan Rosenstein, vice-president of both Ivanhoe and Citibank. The letter politely but firmly suggested that Citibank remove the unsightly billboards. It went on to mention the pending billboard ordinance, and the possibility that Citibank might find itself subject to legal proceedings if the billboards remained where they stood.*fn2

5. In the letter, Smith explained the sources of the Council's displeasure: "[N]ot only is this billboard incongruous to the ambience of the community, it further offends us by advertising business located outside of this community." In a follow-up letter, Smith pointed out that the billboards advertised a restaurant across the river in Lambertville, New Jersey, a Dansk Factory Outlet in New Jersey, a home furnishing store in Penns Park, Pennsylvania, and Windsor Canadian, a popular whiskey. Smith wrote, "You can easily see why New Hope Borough is adamant regarding the removal of this billboard just in terms of the advertising which is clearly unrelated to our community or atmosphere, and is otherwise offensive in size and totally unrequired in a historic scenic village." App. at 84a.

6. Rosenstein, on behalf of Citibank, readily agreed to remove the billboards. As he explained later, "Citibank is concerned as to how it is seen by any community in which it owns land." App. at 54a-55a. More particularly, Citibank had plans to develop the 150 acre parcel, and knew these plans would someday require the cooperation of Borough officials. App. at 48a. Rosenstein has denied that any explicit quid pro quo wa s contemplated or suggested, but admitted that Citibank's desire to stay in the Council's good graces was certainly a motivating factor.

7. Shortly after receiving the follow-up letter from the Borough Council, Rosenstein wrote to Maxwell and requested that the billboards be removed by May 26, 1982, the end of the lease period. Maxwell refused to comply, despite repeated demands by Citibank, and May 26 came and went without any change in the billboards' status.

8. On June 25, 1982, Maxwell brought this action against New Hope, alleging violations of Maxwell's free speech and due process rights, together with a pendent state claim for tortious interference with a contractual relationship. Maxwell sought punitive and compensatory damages, a declaration that the Borough Council acted unlawfully in "coercing" Citibank to evict Maxwell, and a permanent injunction directing Borough officials to cease from further interfering with the billboards.

9. Citibank, not a party to the federal action, brought suit in Pennsylvania state court to remove the holdover billboards. On Maxwell's motion, this action was removed to federal court and consolidated with Maxwell's suit ...

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