I wouldn't call this a "spite house." "Spite" is defined as "malicious ill will prompting an urge to hurt or humiliate." Who was being spited? Drunks below Mr. Hollensbury's bedroom?

If I owned a house, and the alley next to it, and strangers were using it as hangout/pissoir/thruway, I'd build there too. Actually, I would probably just expand my current house with a 7 foot wide addition.