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United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975)

Citation
United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975)
Parent Document
United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975)
Effective Date
1975-10-06
Original Source
https://www.courtlistener.com/opinion/109272/united-housing-foundation-inc-v-forman/ ↗

Other Sections in This Document (195)

Full Text

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The Court of Appeals for the Second Circuit reversed. Forman v. Community Services, Inc., 500 F. 2d 1246 (1974). It rested its decision on two alternative grounds. First, the court held that since the shares purchased were called “stock” the Securities Acts, which explicitly include “stock” in their definitional sections, were literally applicable. Second, the Court of Appeals concluded that the transaction was an investment contract within the meaning of the Acts and as defined by Howey, since there was an expectation of profits from three sources: (i) rental reductions resulting from the income produced by the commercial facilities established for the use of tenants at Co-op City; (ii) tax deductions for the portion of the monthly rental charges allocable to interest payments on the mortgage; and (iii) savings based on the fact that apartments at Co-op City cost substantially less than comparable nonsubsidized housing. The court further ruled that the immunity claims by the state parties were unavailing.11 Accordingly, the *847case was remanded to the District Court for consideration of respondents’ claims on the merits.