Source: http://www.aoc.state.nc.us/www/public/coa/opinions/2002/001252-1.htm
Timestamp: 2014-03-07 14:08:01
Document Index: 581340569

Matched Legal Cases: ['§ 25', '§ 25', '§ 25', '§ 1', '§ 1', '§ 1', '§ 25', '§ 1', '§ 1', '§ 1', '§ 7', '§ 1', '§ 25', '§ 1', '§ 25', '§ 1', '§ 25', '§ 25', '§ 25', '§ 25', '§ 25', '§ 5', '§ 30', '§ 19', '§ 25', '§ 27', '§ 25', '§ 25', '§ 25', '§ 9', '§ 25', '§ 25', '§ 25', '§ 25', '§ 25', '§ 25', '§ 25']

Giles v. First Va. Credit Servs., 149 NC App 89 (00-1252) 03/05/2002
NO. COA00-1252
RICHARD GILES and wife, JOANN GILES,
. FIRST VIRGINIA CREDIT SERVICES, INC., and PROFESSIONAL AUTO
Appeal by plaintiffs from order signed 15 June 2000 by Judge
Forrest Donald Bridges in Superior Court, Lincoln County. Heard in
Sigmon, Clark, Mackie, Hutton, Hanvey & Ferrell, P.A., by E.
Fielding Clark, II, for plaintiff-appellants. Kirschbaum, Nanney, Brown & Keenan, P.A., by Pamela P. Keenan
and Stephen B. Brown, for defendant-appellee First Virginia
Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Sara H.
Young, for defendant-appellee Professional Auto Recovery, Inc.
Richard Giles and Joann Giles (plaintiffs) appeal the trial
court's order granting First Virginia Credit Services, Inc.'s
(First Virginia) motion for summary judgment in part.
Plaintiffs filed a complaint against defendants First Virginia
and Professional Auto Recovery, Inc. (Professional Auto Recovery)
for wrongful repossession of an automobile. Plaintiffs alleged in
an amended complaint that: (1) First Virginia and Professional Auto Recovery wrongfully converted and/or repossessed the automobile and
plaintiffs' personal property located within the automobile; (2)
plaintiffs made a payment on the account which First Virginiaaccepted immediately prior to First Virginia's repossession of the
automobile and which First Virginia subsequently cashed and applied
to plaintiffs' account after the repossession; (3) removal of the
automobile constituted breach of the peace in violation of N.C.
Gen. Stat. § 25-9-503; (4) N.C. Gen. Stat. § 25-9-503 is
unconstitutional; and (5) First Virginia was negligent in hiring
Professional Auto Recovery and committed unfair or deceptive trade
practices entitling plaintiffs to treble damages.
First Virginia filed an answer stating the automobile was
repossessed due to the default of Joann Giles in making the
payments to First Virginia on a loan secured by the automobile.
First Virginia stated that N.C. Gen. Stat. § 25-9-503 permitted a
secured lender to peaceably repossess its collateral upon default
by a debtor and that such repossession could not, as a matter of
law, constitute conversion of the collateral or an unfair or
deceptive trade practice. First Virginia moved to dismiss
plaintiffs' complaint for failure to state a claim pursuant to N.C.
Gen. Stat. § 1A-1, Rule 12(b)(6).
Joann Giles entered into an installment sale contract on or
about 18 January 1997 for the purchase of an automobile. The
contract was assigned to First Virginia, which obtained a senior
perfected purchase money security interest in the automobile. The
terms of the contract required Joann Giles to make sixty regular
monthly payments to First Virginia. The contract stated that Joann
Giles' failure to make any payment due under the contract within
ten days after its due date would be a default. The contractcontained an additional provision agreed to by Joann Giles that
If I am in default, you may consider all
my remaining payments to be due and payable,
without giving me notice. I agree that your
rights of possession will be greater than
mine. I will deliver the property to you at
your request, or you may use lawful means to
take it yourself without notice or other legal
. . . If you excuse one default by me, that will not
excuse later defaults.
During the early morning hours of 27 June 1999, Professional
Auto Recovery, at the request of First Virginia, repossessed the
locked automobile from plaintiffs' front driveway. According to
First Virginia, the account of Joann Giles was in arrears for
payments due on 2 May 1999 and 2 June 1999, and pursuant to the
terms of the contract, repossession was permitted.
In an affidavit filed by plaintiffs in opposition to First
Virginia's motion for summary judgment, plaintiffs' neighbor, Glenn
A. Mosteller (Mr. Mosteller), stated that he was awakened around
4:00 a.m. by the running of a loud diesel truck engine
on the road outside my house. Evidentially
[sic] the truck was stopped because I lay in
bed for a while and did not get up. I then
became concerned and went to the window to see
what was going on. At this time I saw a large
rollback diesel truck with a little pickup
truck on the truck bed behind it. The truck
only had its parking lights on. The truck
. . . started going toward the Giles' yard. It still only had its parking lights on. About that time, a man jumped out of the truck
and ran up the Giles' driveway. Their car was
parked up at their house. Then the car cameflying out back down the driveway making a
loud noise and started screeching off . . . .
At about the same time, the rollback also
pulled off real fast making a real loud diesel
noise and went down [the road]. . . . I got
to the phone, called the Giles and told them
someone was stealing their car. . . . My
lights were on . . . and the Giles' lights
were on and that portion of our neighborhood
had woken up. Richard Giles came out in his
yard and we hollared a few words back and
forth and I jumped in my truck . . . to try to
get the police. About 5 minutes later a
police car came up and pulled into the Giles'
yard. Then another police car came then a
Sheriff's Deputy car came. Then another
police car came. . . . There was a great
commotion going on out in the street and in
our yard all to the disturbance of the
quietness and tranquility of our
neighborhood. . . . It scared me and it
scared the Giles.
Joann Giles stated in a deposition that she was awakened by
Mr. Mosteller's telephone call in which he told her that someone
was stealing her car. She stated she ran to see if the automobile
was parked outside and confirmed that it was gone. Joann Giles
testified she woke up her husband and gave him the telephone; he
ran outside into the yard and heard Mr. Mosteller "hollering" at
him from across the street. Plaintiffs testified in their
depositions that neither of them saw the car being repossessed but
were only awakened by their neighbor after the automobile was gone. During the actual repossession, no contact was made between
Professional Auto Recovery and plaintiffs, nor between Professional
Auto Recovery and Mr. Mosteller.
First Virginia filed a motion for summary judgment pursuant to
N.C. Gen. Stat. § 1A-1, Rule 56. Plaintiffs filed a motion to
amend their complaint pursuant to N.C. Gen. Stat. § 1A-1, Rule 15. These motions were heard by the trial court on 17 May 2000. In an
order dated 15 June 2000, the trial court: (1) granted plaintiffs'
motion to amend their complaint; (2) granted First Virginia's
motion for summary judgment in part, stating there was no genuine
issue as to any material fact as to the conversion or repossession
of the motor vehicle; (3) denied First Virginia's motion for
summary judgment in part, concluding that there were genuine issues
of material fact as to the reasonableness of the taking into
possession or conversion of plaintiffs' personal property located
within the automobile and related damages; (4) declined plaintiffs'
request to declare N.C. Gen. Stat. § 25-9-503 unconstitutional; and
(5) ruled on other motions not at issue in this appeal. The trial
court certified in an order filed 6 July 2000 that its decisions in
the 15 June 2000 order constituted a final judgment as to some of
plaintiffs' claims and found the order was immediately appealable
pursuant to N.C. Gen. Stat. § 1A-1, Rule 54(b). Plaintiffs appeal.
We must first determine whether plaintiffs' appeal is properly
before this Court in that the trial court's order does not resolve
all issues among the parties and is therefore interlocutory. Veazey v. Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950). "A grant of partial summary judgment, because it does not
completely dispose of the case, is an interlocutory order from
which there is ordinarily no right of appeal." Liggett Group v.
Sunas, 113 N.C. App. 19, 23, 437 S.E.2d 674, 677 (1993). See also
N.C. Gen. Stat. § 1A-1, Rule 54(a) (1999). The purpose of thisrule is "to prevent fragmentary, premature and unnecessary appeals"
by allowing the trial court to determine all the issues in the case
before it is presented to the appellate courts for review. Waters
v. Personnel, Inc., 294 N.C. 200, 207, 240 S.E.2d 338, 343 (1978). There are, however, two circumstances in which a party may
appeal an interlocutory order. First, an immediate appeal may lie
if the order of the trial court is final as to some but not all of
the claims or parties, and the trial court certifies the case for
immediate appeal pursuant to N.C. Gen. Stat. § 1A-1, Rule 54(b)
(1999). Second, an appeal is permitted where the order appealed
from affects a substantial right of the parties. N.C. Gen. Stat.
§ 7A-27(d)(1) (1999) and N.C. Gen. Stat. § 1-277 (1999). See also
Davidson v. Knauff Ins. Agency, 93 N.C. App. 20, 24, 376 S.E.2d
488, 490-91, disc. review denied, 324 N.C. 577, 381 S.E.2d 772
(1989). A Rule 54(b) certification is reviewable by our Court on
appeal because a "trial court's denomination of its decree [as] 'a
final . . . judgment does not make it so,' if it is not such a
judgment." First Atl. Mgmt. Corp. v. Dunlea Realty Co., 131 N.C.
App. 242, 247, 507 S.E.2d 56, 60 (1998) (quoting Industries, Inc.
v. Insurance Co., 296 N.C. 486, 491, 251 S.E.2d 443, 447 (1979)). Although the trial court's determination that there is no just
reason for delay of an appeal is accorded great deference, it does
not bind our appellate courts because "ruling on the interlocutory
nature of appeals is properly a matter for the appellate division,
not the trial court." Estrada v. Jaques, 70 N.C. App. 627, 640,321 S.E.2d 240, 249 (1984). See also DKH Corp. v. Rankin-Patterson
Oil Co., 348 N.C. 583, 500 S.E.2d 666 (1998). In this case, the trial court granted partial summary judgment
for First Virginia on the issue of wrongful conversion and/or
repossession of plaintiffs' automobile, and refused plaintiffs'
request to declare N.C. Gen. Stat. § 25-9-503 unconstitutional.
Additionally, the trial court denied First Virginia's motion for
summary judgment on the issue of wrongful conversion and/or taking
into possession plaintiffs' personal property located within the
automobile, concluding that there were issues of material fact as
to the reasonableness of those actions. The trial court stated
that "these rulings constitute a final Judgment to some but not all
of the various claims in the action and that there is no
justifiable reason for delay." A judgment is final when it "in
effect determines the action[.] N.C. Gen. Stat. § 1-277. The
trial court's judgment granting First Virginia's motion for summary
judgment determined plaintiffs' claim for wrongful conversion
and/or repossession of plaintiffs' automobile, making it a final
judgment as to this claim, and we therefore may review this issue
on appeal. Before turning to the merits of plaintiffs' appeal, we note
that First Virginia filed a motion to dismiss plaintiffs' appeal
based upon alleged violations of the N.C. Rules of Appellate
Procedure. We deny First Virginia's motion to dismiss and exercise
our discretion under N.C.R. App. P. 2 to consider the merits of
plaintiffs' appeal.II. By their first assignment of error, plaintiffs argue the trial
court erred in granting in part First Virginia's motion for summary
judgment dismissing plaintiffs' claim for wrongful conversion
and/or repossession of their automobile. Plaintiffs specifically
argue that (1) the determination of whether a breach of the peace
occurred in violation of N.C. Gen. Stat. § 25-9-503 is a question
for the jury and not one to be determined by summary judgment, and
(2) there is a dispute as to whether plaintiffs were in default.
Summary judgment is proper when "the pleadings, depositions,
any material fact and that any party is entitled to a judgment as
a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (1999).
A. Plaintiffs first argue the trial court erred in granting
partial summary judgment to First Virginia because the issue of
whether a breach of the peace occurred is a question for the jury.
Our Courts have long recognized the right of secured parties
to repossess collateral from a defaulting debtor without resort to
judicial process, so long as the repossession is effected
peaceably. See e.g., Rea v. Credit Corp., 257 N.C. 639, 641, 127
S.E.2d 225, 227 (1962); Freeman v. Acceptance Corp., 205 N.C. 257,
258, 171 S.E. 63, 63 (1933). Our General Assembly codified
procedures for self-help repossessions, including this common law
restriction, in the North Carolina Uniform Commercial Code (UCC). N.C. Gen. Stat. § 25-9-503 (1999), in effect at the time of the
repossession in this case, reads in part,
Unless otherwise agreed a secured party
has on default the right to take possession of
the collateral. In taking possession a
secured party may proceed without judicial
process if this can be done without breach of
the peace or may proceed by action.
The General Assembly did not define breach of the peace but instead
left this task to our Courts, and although a number of our
appellate decisions have considered this self-help right of secured
parties, none have clarified what actions constitute a breach of
N.C. Gen. Stat. § 25-9-503, at issue in this appeal, has been
replaced by N.C. Gen. Stat. § 25-9-609 (Interim Supp. 2000)
(Effective 1 July 2001), which states that a secured party, after
default, may take possession of the collateral without judicial
process, if the secured party proceeds without breach of the peace. In Number 3. of the Official Comment to the new statutory
provision, our General Assembly continued to state that, "[l]ike
former Section 9-503, this section does not define or explain the
conduct that will constitute a breach of the peace, leaving that
matter for continuing development by the courts." N.C.G.S. § 25-9-
609. The General Assembly clearly may further define and/or limit
the time, place and conditions under which a repossession is
permitted, but it has not yet done so. In a pre-UCC case, Rea v. Credit Corp., 257 N.C. 639, 127
S.E.2d 225 (1962), a defaulting debtor left his locked automobile
on his front lawn. An agent of the mortgagee went to the debtor'shome to repossess the automobile, saw the automobile parked on the
lawn, found no one at home, and asked a neighbor where the debtor
was. The agent was told no one was at home and he thereafter
opened the automobile door with a coat hanger and removed the
automobile on a wrecker. Our Supreme Court found that this
evidence could not warrant a finding by a jury that the mortgagee's
agent wrongfully took possession of the automobile because no
breach of the peace occurred. In Rea, although our Supreme Court
did not define breach of the peace, it reiterated the common law
rule that the right of self-help repossession "must be exercised
without provoking a breach of the peace[.]" Id. at 641-42, 127
S.E.2d at 227. Our Supreme Court thought the law "well stated" by
the South Carolina Supreme Court in the case of Willis v. Whittle,
"if the mortgagee finds that he cannot get
possession without committing a breach of the
peace, he must stay his hand, and resort to
the law, for the preservation of the public
peace is of more importance to society than
the right of the owner of a chattel to get
Rea, 257 N.C. at 641-42, 127 S.E.2d at 227 (quoting Willis v.
Whittle, 82 S.C. 500, 64 S.E. 410 (1909)).
In a case addressing the issue of whether prior notice of
repossession is required under N.C. Gen. Stat. § 25-9-503, our
Court stated that repossession can be accomplished under the
statute without prior notice so long as the repossession is
peaceable. Everett v. U.S. Life Credit Corp., 74 N.C. App. 142,
144, 327 S.E.2d 269, 269 (1985). Without specifically definingbreach of the peace, our Court explained that "[o]f course, if
there is confrontation at the time of the attempted repossession,
the secured party must cease the attempted repossession and proceed
by court action in order to avoid a 'breach of the peace.'" Id. at
144, 327 S.E.2d at 270. This indicates, as argued by First
Virginia, that confrontation is at least an element of a breach of
the peace analysis. In that breach of the peace has not heretofore been clarified
by our appellate courts, but instead only vaguely referred to, we
must construe this term as the drafters intended. "In construing
statutes the court should always give effect to the legislative
intent." Electric Service v. City of Rocky Mount, 20 N.C. App.
347, 348, 201 S.E.2d 508, 509, aff'd, 285 N.C. 135, 203 S.E.2d 838
(1974). "The intent of the Legislature may be ascertained from the
phraseology of the statute as well as the nature and purpose of the
act and the consequences which would follow from a construction one
way or another." Campbell v. Church, 298 N.C. 476, 484, 259 S.E.2d
558, 564 (1979). In determining what conduct constitutes a breach
of the peace we consider each of these contributing elements.
The phrase "breach of the peace" is defined in Black's Law
Dictionary as the "criminal offense of creating a public
disturbance or engaging in disorderly conduct, particularly by an
unnecessary or distracting noise." Black's Law Dictionary 183 (7th
ed. 1999). The phrase is also commonly understood to mean a
"violation of the public order as amounts to a disturbance of the
public tranquility, by act or conduct either directly having thiseffect, or by inciting or tending to incite such a disturbance of
the public tranquility." 12 Am. Jur. 2d Breach of Peace § 5
In a criminal case, our Supreme Court defined breach of the
peace as "a disturbance of public order and tranquility by act or
conduct not merely amounting to unlawfulness but tending also to
create public tumult and incite others to break the peace." State
v. Mobley, 240 N.C. 476, 482, 83 S.E.2d 100, 104 (1954). See also
Perry v. Gibson, 247 N.C. 212, 100 S.E.2d 341 (1957) (wrongful
death case stating the same definition for breach of the peace). Such "'[a] breach of the peace may be occasioned by an affray or
assault, by the use of profane and abusive language by one person
toward another on a public street and in the presence of others, or
by a person needlessly shouting and making loud noise.'" Mobley,
240 N.C. at 482, 83 S.E.2d at 104 (quoting 4 Am. Jur. Arrest § 30).
A breach of the peace, as used in Chapter 19 of our General
Statutes, entitled "Offenses Against Public Morals," is defined as
"repeated acts that disturb the public order including, but not
limited to, homicide, assault, affray, communicating threats,
unlawful possession of dangerous or deadly weapons, and discharging
firearms." N.C. Gen. Stat. § 19-1.1(1) (1999).
We must also consider the nature and purpose of Chapter 25 of
the North Carolina General Statutes, the UCC, which is to be
"liberally construed and applied to promote its underlying purposes
and policies." N.C. Gen. Stat. § 25-1-102 (1999). Its stated
purposes are: (a) to simplify, clarify and modernize the law
governing commercial transactions; (b) to permit the continued expansion of
commercial practices through custom, usage and
agreement of the parties; (c) to make uniform the law among the various
Id. In carrying out the policy of uniformity with other
jurisdictions, we consider their treatment of the term of breach of
the peace. While cases from other jurisdictions are not binding on
our courts, they provide insight into how this term has been
analyzed by other courts and therefore are instructive. The courts in many states have examined whether a breach of
the peace in the context of the UCC has occurred. Courts have
found a breach of the peace when actions by a creditor incite
violence or are likely to incite violence. Birrell v. Indiana Auto
Sales & Repair, 698 N.E.2d 6, 8 (Ind. App. 1998) (a creditor cannot
use threats, enter a residence without debtor's consent and cannot
seize property over a debtor's objections); Wade v. Ford Motor
Credit Co., 668 P.2d 183, 189 (Kan. App. 1983) (a breach of the
peace may be caused by an act likely to produce violence); Morris
v. First National Bank & Trust Co. of Ravena, 254 N.E.2d 683, 686-
87 (Ohio 1970) (a physical confrontation coupled with an oral
protest constitutes a breach of the peace).
Other courts have expanded the phrase breach of the peace
beyond the criminal law context to include occurrences where a
debtor or his family protest the repossession. Fulton v. Anchor
Sav. Bank, FSB, 452 S.E.2d 208, 213 (Ga. App. 1994) (a breach ofthe peace can be created by an unequivocal oral protest); Census
Federal Credit Union v. Wann, 403 N.E.2d 348, 352 (Ind. App. 1980)
("if a repossession is . . . contested at the actual time . . . of
the attempted repossession by the defaulting party or other person
in control of the chattel, the secured party must desist and pursue
his remedy in court"); Hollibush v. Ford Motor Credit Co., 508
N.W.2d 449, 453-55 (Wis. App. 1993) (in the face of an oral protest
the repossessing creditor must desist). Some courts, however, have
determined that a mere oral protest is not sufficient to constitute
a breach of the peace. Clarin v. Minnesota Repossessors, Inc., 198
F.3d 661, 664 (8th Cir. 1999) (oral protest, followed by pleading
with repossessors in public parking lot does not rise to level of
breach of the peace); Chrysler Credit Corp. v. Koontz, 661 N.E.2d
1171, 1173-74 (Ill. App. 1996) (yelling "Don't take it" is
If a creditor removes collateral by an unauthorized breaking
and entering of a debtor's dwelling, courts generally hold this
conduct to be a breach of the peace. Davenport v. Chrysler Credit
Corp., 818 S.W.2d 23, 29 (Tenn. App. 1991) and General Elec. Credit
Corp. v. Timbrook, 291 S.E.2d 383, 385 (W. Va. 1982) (both cases
stating that breaking and entering, despite the absence of violence
or physical confrontation, is a breach of the peace). Removal of
collateral from a private driveway, without more however, has been
found not to constitute a breach of the peace. Hester v. Bandy,
627 So.2d 833, 840 (Miss. 1993). Additionally, noise alone has
been determined to not rise to the level of a breach of the peace. Ragde v. People's Bank, 767 P.2d 949, 951 (Wash. App. 1989)
(unwilling to hold that making noise is an act likely to breach the
Many courts have used a balancing test to determine if a
repossession was undertaken at a reasonable time and in a
reasonable manner, and to balance the interests of debtors and
creditors. See e.g., Clarin v. Minnesota Repossessors, Inc., 198
F.3d 661, 664 (8th Cir. 1999); Davenport v. Chrysler Credit Corp.,
818 S.W.2d 23, 29 (Tenn. App. 1991). Five relevant factors
considered in this balancing test are: "(1) where the repossession
took place, (2) the debtor's express or constructive consent, (3)
the reactions of third parties, (4) the type of premises entered,
and (5) the creditor's use of deception." Davenport, 818 S.W.2d at
29 (citing 2 J. White & R. Summers, Uniform Commercial Code § 27-6,
at 575-76 (3d ed. 1988)). Relying on the language of our Supreme Court in Rea,
plaintiffs argue that the "guiding star" in determining whether a
breach of the peace occurred should be whether or not the public
peace was preserved during the repossession. Rea, 257 N.C. at 641-
42, 127 S.E.2d at 228. Plaintiffs contend "the elements as to what
constitutes a breach of the peace should be liberally construed"
and urge our Court to adopt a subjective standard considering the
totality of the circumstances as to whether a breach of the peace
Plaintiffs claim that adopting a subjective standard for N.C.
Gen. Stat. § 25-9-503 cases will protect unwitting consumers fromthe "widespread use of no notice repossessions, clandestine and
after midnight repossessions" and will protect "our State's
commitment to law and order and opposition to vigilante policies,
opposition to violence and acts from which violence could
reasonably flow[.]" If a lender is not held to such a high
subjective standard, plaintiffs contend that self-help
repossessions should be disallowed altogether.
First Virginia, in contrast, argues that a breach of the peace
did not occur in this case, as a matter of law, because there was
no confrontation between the parties. Therefore, because the facts
in this case are undisputed concerning the events during the actual
repossession of the automobile, the trial court did not err in its
partial grant of summary judgment.
First Virginia disputes plaintiffs' contention that a
determination of whether a breach of the peace occurred should be
a wholly subjective standard, because if such a standard is
adopted, every determination of whether a breach of the peace
occurred would hereafter be a jury question and "would run directly
contrary to the fundamental purpose of the Uniform Commercial Code,
which is to provide some degree of certainty to the parties
engaging in various commercial transactions." Further, First
Virginia argues that applying a subjective standard to a breach of
the peace analysis could be detrimental to borrowers, with lenders
likely increasing the price of credit to borrowers to cover the
costs of having to resort to the courts in every instance to
recover their collateral upon default. The standard advocated byplaintiffs would "eviscerate" the self-help rights granted to
lenders by the General Assembly, leaving lenders "with no safe
choice except to simply abandon their 'self help' rights
altogether, since every repossession case could [result] in the
time and expense of a jury trial on the issue of 'breach of the
peace[.]'" Finally, First Virginia argues that a subjective
standard would be detrimental to the judicial system as a whole
because "[w]ith a case-by-case, wholly subjective standard . . .
the number of lawsuits being filed over property repossessions
could increase dramatically[.]"
Based upon our review of our appellate courts' treatment of breach of the peace in pre-UCC and UCC cases, as well as in other areas of the law, the purposes and policies of the UCC, and the
treatment other jurisdictions have given the phrase, we find that a breach of the peace, when used in the context of N.C. Gen. Stat.
§ 25-9-503, is broader than the criminal law definition. A
confrontation is not always required, but we do not agree with
plaintiffs that every repossession should be analyzed subjectively, thus bringing every repossession into the purview of the jury so as to eviscerate the self-help rights duly given to creditors by the General Assembly. Rather, a breach of the peace analysis should be based upon the reasonableness of the time and manner of the
repossession. We therefore adopt a balancing test using the five factors discussed above to determine whether a breach of the peace
occurs when there is no confrontation.
In applying these factors to the undisputed evidence in thecase before us, we affirm the trial court's determination that
there was no breach of the peace, as a matter of law. Professional Auto Recovery went onto plaintiffs' driveway in the early morning hours, when presumably no one would be outside, thus decreasing the possibility of confrontation. Professional Auto Recovery did not enter into plaintiffs' home or any enclosed area. Consent to
repossession was expressly given in the contract with First
Virginia signed by Joann Giles. Although a third party, Mr.
Mosteller, was awakened by the noise of Professional Auto
Recovery's truck, Mr. Mosteller did not speak with anyone from
Professional Auto Recovery, nor did he go outside until
Professional Auto Recovery had departed with the Giles' automobile. Further, neither of the plaintiffs were awakened by the noise of
the truck, and there was no confrontation between either of them
with any representative of Professional Auto Recovery. By the time
Mr. Mosteller and plaintiffs went outside, the automobile was gone. Finally, there is no evidence, nor did plaintiffs allege, that
First Virginia or Professional Auto Recovery employed any type of
deception when repossessing the automobile.
There is no factual dispute as to what happened during the
repossession in this case, and the trial court did not err in
granting summary judgment to First Virginia on this issue.
Plaintiffs next argue there was a factual dispute over whether or not a default occurred in the repayment of the note and
therefore summary judgment was improper. N.C. Gen. Stat. § 25-9-503 states that "unless otherwise
agreed a secured party has on default the right to take possession
of the collateral." The contract signed by Joann Giles stated that
she would be in default if she "fail[ed] to make any payment within
10 days after its due date." Additionally, she agreed that if the
bank chose to excuse a default, that would not excuse later
Plaintiffs argue in their brief to this Court that Joann Giles
was "one payment behind" when her automobile was repossessed on 27
June 1999. They claim a payment was made to First Virginia before
the automobile was repossessed, bringing her account up to date, but that payment was cashed and credited to Joann Giles' account
two days after the repossession. Plaintiffs thus imply that
because the check was ultimately received and cashed, Joann Giles'
account was not in default when the repossession occurred. This
position, however, is untenable. If a default is not cured before
repossession, the fact that the check was mailed before
repossession is immaterial when it is not received until after the
collateral is repossessed. 10 Ronald A. Anderson, Anderson on The
Uniform Commercial Code, § 9-503:52 (3d ed. 1999 Revision).
Plaintiffs also argue in their brief that Credit Co. v.
Jordan, 5 N.C. App. 249, 168 S.E.2d 229 (1968) "espouses the
proposition that acceptance of late payments along with evidence of
unconscionable or improper action on the part of the financial
institution would constitute waiver or estoppel." Plaintiffs
contend that First Virginia had accepted late payments in the pastfrom Joann Giles and that First Virginia's repossession of the
automobile was unconscionable; therefore, First Virginia was
estopped from repossessing her automobile on 27 June 1999.
Plaintiffs' reliance on Credit Co., however, is misplaced
because the proposition stated by plaintiffs is taken from dicta in
that case and is not binding on this Court in the case before us. Further, plaintiffs do not direct us to any evidence in the record
supporting a conclusion that First Virginia intended to forbear
plaintiffs' payments or that First Virginia acted unconscionably. In fact, Joann Giles agreed in the contract that acceptance of a
late payment by First Virginia would not excuse a later default. Plaintiffs' argument of forbearance by First Virginia is without
The trial court found, and we agree, that there is no genuine
issue of material fact as to whether Joann Giles' account was in
default when the automobile was repossessed. The trial court did
not err in granting summary judgment to First Virginia on this
Plaintiffs' first assignment of error is overruled.
III. Plaintiffs next argue that the provisions of N.C. Gen. Stat.
§ 25-9-503 granting a secured party the right to take possession of
collateral without judicial process, without notice and/or a right
to be heard, are unconstitutional as applied to the facts in this
case. They further argue that the waiver of notice in the contract
Joann Giles signed with First Virginia deprived her of herconstitutional rights under the Fourteenth Amendment to the United
Plaintiffs claim that the statutory scheme providing for non-
judicial repossession under N.C. Gen. Stat. § 25-9-503 constitutes
state action sufficient to evoke the protection of the due process
clause of the Fourteenth Amendment of the United States
Constitution. As support for their position, plaintiffs rely on
Turner v. Blackburn, 389 F.Supp. 1250 (W.D.N.C. 1975). Turner,
however, is distinguishable from the case before us because in
Turner, the court's determination that state action was involved,
thereby requiring application of the provisions of the Fourteenth
Amendment, was based upon the direct participation of the clerk of
court in the statutory procedure for foreclosure and sale under
deed of trust. Id. at 1254-58. In the case before us, however,
plaintiffs cite no participation on the part of any state official
in First Virginia's self-help repossession, nor can we find any in
our review of the record.
Plaintiffs argue the state action in this case, requiring our
Court to declare N.C. Gen. Stat. § 25-9-503 unconstitutional, is
based on our state's statutory scheme permitting the Department of
Motor Vehicles to title a motor vehicle, to create and perfect a
lien on a motor vehicle, to transfer title of a motor vehicle when
the motor vehicle is sold pursuant to a repossession, and to
transfer title absent the owner's signature. Further, plaintiffs
argue state action is present through our statutory scheme which
provides for repossession without judicial process, where paymentof any surplus from sale of the repossessed vehicle is paid to the
clerk of superior court who is liable on a bond for safekeeping the
funds. Except for the reference to N.C. Gen. Stat. § 25-9-503, the
statutes as recited by plaintiff, do not apply to this case and
A majority of the federal circuit courts have considered the
question before us and are in agreement that self-help repossession
pursuant to UCC provisions does not constitute "state action"
within the purview of the due process provision of the Fourteenth
Amendment. Shirley v. State National Bank of Connecticut, 493 F.2d
739 (2d Cir. 1974); Gibbs v. Titelman, 502 F.2d 1107 (3rd Cir.
1974), cert. denied, Gibbs, et al. v. Garver, Director, Bureau of
Motor Vehicles, et al., 419 U.S. 1039, 42 L. Ed. 2d 316 (1974);
James v. Pinnix, 495 F.2d 206 (5th Cir. 1974); Turner v. Impala
Motors, 503 F.2d 607 (6th Cir. 1974); Nichols v. Tower Grove Bank,
497 F.2d 404 (8th Cir. 1974); Nowlin v. Professional Auto Sales,
Inc., 496 F.2d 16 (8th Cir. 1974), cert. denied, 419 U.S. 1006, 42
L. Ed. 2d 283 (1974); Adams v. Southern California First National
Bank, 492 F.2d 324 (9th Cir. 1973), cert. denied, 419 U.S. 1006, 42
L. Ed. 2d 282 (1974). While this Court is not obliged to follow
decisions from other jurisdictions, these decisions are instructive
in our determination of whether there was sufficient state action
in this case to sustain a challenge under the Fourteenth Amendment. We agree with First Virginia's contention that N.C. Gen. Stat.
§ 25-9-503 is "wholly self-executing and takes no involvement by
any state employee to fully effect its purpose." In enacting N.C.Gen. Stat. § 25-9-503, our General Assembly codified a right
existing at common law; it did not delegate to private parties
authority previously held by the state. Therefore, plaintiffs'
argument that state action was involved in this case is without
Plaintiffs also claim that the waiver of notice in the
contract signed by Joann Giles is void because it deprives her of
her property without notice and an opportunity to be heard, as
required by the Fourteenth Amendment. Because we find that there
is no state action under N.C. Gen. Stat. § 25-9-503, this argument
also fails. Plaintiffs' second assignment of error is overruled.
The trial court's order granting partial summary judgment for
First Virginia is affirmed.
Judges WALKER and HUDSON concur. *** Converted from WordPerfect ***