Court Opinion

ID: 9462352
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:39:17.69046+00
Date Added: 2024-06-11T17:37:33.523555
License: Public Domain

CHOY, Circuit Judge
(dissenting):
I respectfully dissent.
In Adams v. Southern California First National Bank, 492 F.2d 324 (9th Cir. 1973), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974), this court rejected a due process challenge to the self-help repossession provisions of the Uniform Commercial Code. A number of theories had been advanced to establish state action in the statutory authorization of repossession, each of which we rejected. Our discussion in Adams of each of these proposed grounds for finding state action is, with one exception, equally applicable to our consideration of Arizona’s innkeeper’s lien statute. That one exception is the “public function” analysis upon which the Supreme Court relied to invalidate racially discriminatory practices in political party primaries. Smith v. Allwright, 321 U.S. 649, 64 S.Ct. 757, 88 L.Ed. 987 (1944); Terry v. Adams, 345 U.S. 461, 73 S.Ct. 809, 97 L.Ed. 1152 (1953).
The Fifth Circuit relied on this public function analysis to find state action and invalidate a landlord’s lien in Hall v. Garson, 430 F.2d 430 (5th Cir. 1970). The court found that the action taken by the landlord, “the entry into another’s home and the seizure of another’s property, was an act that possesses many, if not all, of the characteristics of an act of the State.” Id. at 439. The court quoted from United States v. Classic, 313 U.S. 299, 326, 61 S.Ct. 1031, 1043, 85 L.Ed. 1368 (1941): “Misuse of power, possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law, is action taken ‘under color of’ state law.”
The landlady in Hall had entered the tenant’s apartment, as authorized by the Texas lien statute, and seized a television set as payment for overdue rent. The tenant returned to her apartment and discovered the set gone. Under those facts, I might agree that the landlady was “clothed with the authority of state law,” and thus subject to the restrictions of procedural due process. Unlike the landlady in Hall, however, Mrs. Leland did not invade the tenants’ dwelling in order to seize the property. Having exercised her right of eviction to terminate the tenancy, she necessarily came into possession as bailee of the Culbertsons’ property. The Culbertsons now demand that she restore their goods to them despite her doubt that she will receive the rent owed her.
The Fifth Circuit found in Hall that Texas law authorized the landlady to serve a governmental function in two respects: entry into the tenant’s residence and seizure of his property. 430 F.2d at 439. , Both are delegations by the state of the power — a power over which the state possesses a natural monopoly— to interfere coercively with possessory interests in property. See Yudof, Reflections on Private Repossession, Public Policy and the Constitution, 122 U.Pa.L. Rev. 954, 972 (1974). I agree with my *436Brother Ely regarding the dangers attendant on parceling this power out to individual creditors. Nevertheless, we clearly held in Adams that the state could delegate the power to repossess an automobile pursuant to U.C.C. § 9-503 without becoming “significantly involved” in the creditor’s activities. The dangers inherent in such delegations include the potential for violence and the invasion of the individual’s reasonable expectations of privacy. Id. at 978-80. Seizure of an automobile, or of other property which can be repossessed without the need of invading the debtor’s residence, arouses less concern on both points than does a repossession which requires entering a home. Furthermore, section 9-503 explicitly restricts the right of repossession to those instances when it can be accomplished without a breach of the peace.
I would interpret Adams as holding without qualification that a creditor authorized by state law to seize property of his debtor, where this can be done without a breach of the peace, does not perform a public function so as to constitute state action. Two possible limitations have been suggested, neither of which I can accept.
Judge Weigel believes that Adams should be limited to repossessions authorized by a security agreement contracted between the parties. I do not believe that the existence of such an agreement is material. The debtor’s defense might be a denial of the existence and validity of such an agreement. Until a hearing has been held, the claims that the debtor has granted a security interest to the creditor and has consented to repossession in case of default, as well as that he has defaulted, are no more than allegations by the creditor. Until the debtor’s consent to repossession has been judicially established, all attempts to reclaim goods by self-help run the same risks of violence and invasion of privacy, regardless of the purported existence of a security agreement. If state action is not present in one case, it should not be found in the other.
Another possible limitation proposed by Judge Weigel is suggested by language in Adams itself. I strongly question Adams’ dictum that Hall might be distinguished because in Hall the creditor had seized property which “belonged to the tenant” rather than property “that had been entirely his and that, practically and according to the terms of the contract, the debtor had not yet paid for.” 492 F.2d at 336. Fuentes v. Shevin, 407 U.S. 67, 86-87, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), emphasizes that the critical property interest at stake in the context of prejudgment seizure is the right of the possessor to continued possession pending litigation of the claimant’s claim. Until a hearing has been held, the creditor’s ownership of the property is entirely speculative and unresolved, and the only undisputed issue is the debtor’s present possession of the property.
If we are to hold that Adams’ application depends on the “relationship of property to debt,” the creditor finds his power to repossess before a hearing depending paradoxically on a fact that will not be established until a hearing is held. Even with the caveat that the creditor may not repossess if a breach of the peace is threatened, the possibility of violence is obviously increased when the debtor’s right to resist repossession before a hearing turns on a necessarily undetermined fact. Furthermore, the appeal to history — asserting that a creditor’s power to repossess an item sold under contract was recognized at common law while his right to seize property unrelated to the debt is a statutory invention — seems immaterial to determining the existence of state action.1 I concur *437in Judge Ely’s rejection of this spurious distinction in footnote 5 of his concurring opinion.
As I would interpret Adams, I could concur in Hall only because of the grave threat to privacy interests occasioned by permitting a creditor to intrude upon the residential privacy of the debtor in quest of collateral. Cf. Stanley v. Georgia, 394 U.S. 557, 89 S.Ct. 1243, 22 L.Ed.2d 542 (1969); Breard v. Alexandria, 341 U.S. 622, 71 S.Ct. 920, 95 L.Ed. 1233 (1951). Mrs. Leland, on the other hand, entered the Culbertsons’ apartment only after their tenancy had been terminated lawfully, and their right to expect and demand privacy had ended.2 The state permitted Leland the exercise of no “public function” in authorizing her to retain a bailment as security for a debt. The First Circuit has held analogously that a bank may set off deposits against debts unrelated to the deposits. Fletcher v. Rhode Island Hospital Trust National Bank, 496 F.2d 927 (1st Cir.), cert. denied, 419 U.S. 1001, 95 S.Ct. 320, 42 L.Ed.2d 277 (1974). The Seventh Circuit has held that retention of an automobile pursuant to a mechanic’s lien is not the exercise of a public function so as to be state action. Phillips v. Money, 503 F.2d 990 (7th Cir. 1974), cert. denied, 420 U.S. 934, 95 S.Ct. 1141, 43 L.Ed.2d 409 (1975). I agree with the court’s common-sense statement in Fletcher:
[WJhatever the truth of the old saw that possession is nine-tenths of the law, a creditor who holds something of value to his debtor is differently situated from one who does not: he does not need the state to facilitate his collection efforts.
496 F.2d at 930. See Davis v. Richmond, 512 F.2d 201 (1st Cir. 1975).
The great central theme of Fuentes is that the state should not disrupt the possessory status quo until a hearing has been held to resolve the merits of the conflicting claims. The state has not obstructed this objective by allowing Mrs. Leland to retain her control over property to which the legal rights are in dispute. More broadly, in the absence of an invasion of the privacy interests of the home, I believe that Adams forecloses any claim that the state has deprived the debtors of due process by allowing self-help repossession pursuant to an asserted consensual or statutory lien.
I would affirm the dismissal by the district court.

. [W]e are disinclined to decide the issue of state involvement on the basis of whether a particular class of creditor did or did not enjoy the same freedom to act in Elizabethan or Georgian England.
Davis v. Richmond, 512 F.2d 201, 203 (1st Cir. 1975).

. In Davis v. Richmond, 512 F.2d 201 (1st Cir. 1975), the court found no state action even when the tenancy was not, apparently, terminated. The landlord did not enter the tenant’s room to seize his personal effects, but prevented him from removing them from the premises. Where the landlord has an effective control over the entry to the rented premises, this procedure would protect his lien in the tenant’s goods without necessitating an invasion of the tenant’s dwelling.