Court Opinion

ID: 879114
Source: CourtListenerOpinion
Date Created: 2013-06-04 23:10:39.388372+00
Date Added: 2024-06-11T13:00:33.714672
License: Public Domain

No. 8 5 - 4 0 5
               IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1986

H. WALTER ROSE and RICHARD H.
ROSE,
              Plaintiffs and Appellants,

LARRY E. MYERS and MICHAEL A.
SCHAFER, Sheriff of Yellowstone
County, Montana
                Defendants and Respondents.

APPEAL FROM:    District Court of the Thirteenth Judicial District,
                In and for the County of Yellowstone,
                The Honorable Diane G. Barz, Judge presiding.

COUNSEL OF RECORD:

         For Appellant:
                 Robert E. La Fountain argued, Billings, Montana

         For Respondent:
                 Hon. Mike Greely, Attorney General, Helena, Montana
                 Harold Hanser, County Attorney, Billings, Montana
                 Charles A. Bradley argued, Deputy County Atty.
                 Larry Myers, pro set Billings, Montana

                                    Submitted:        July 2 4 , 1986
                                       Decided:       August 21, 1986

Filed:

                          e         Clerk
                                                 da
Mr. Chief Justice J. A. Turnage delivered the Opinion of the
Court.
      Appellants, H. Rose and R. Rose, brought an action in
the Yellowstone County District Court seeking to declare a
sheriff's sale of appellants' horses invalid as held under
the agisters' lien statutes, and attempting to nullify the
certificate of sale.    The District Court found that the sale
was valid, that the appellants were not denied their due
process by the manner of the notice and sale, and that the
remaining horses be returned to appellants upon their posting
a $30,000 bond pending resolution of the underlying contract
dispute.   From this order the Roses appeal.
      We affirm the District Court in this case because the
appellant had actual notice of the sale.
     Appellants raise the following issues on appeal:
      1.   Whether the sale should have been declared invalid
as unconstitutional for failure to provide for notice and an
opportunity to be heard prior to deprivation of property?
      2.   Whether the District Court erred in holding that
the notice provisions were complied with in this case?
      3.   Whether the court erred in failing to declare that
the sale was void or voidable?
      4.   Whether the court erred in using faulty figures in
taking judicial notice that the parties1 contract price was
too low to include feeding, and in applying that decision to
justify the court's order?
      This dispute arose from an oral contract entered into
in April 1984.    Myers agreed to care for the Roses' horses at
a cost of $12 per head per month.   The parties dispute wheth-
er Myers was responsible for feeding the horses or merely
pasturing them.    On November 30, 1984, Myers sent notice to
the Roses that an agisterls lien sale would take place in
December.    Money was paid to Myers and the sale was not held.
Over the course of the winter, Myers found it necessary to
feed the horses at his own expense as the pasture would not
support the horses in the winter.       Myers contends the agree-
ment was for pasturing only, while the Roses contend it was
for the care and feeding of the horses.
        On March 1, 1985, Myers again caused to be issued from
the Yellowstone County sheriff's office, a notice of an
agister's lien sale scheduled for March 11, 1985.     The notice
was postmarked March 1, 1985, and notices were posted in
Yellowstone County.      The sale was held March 11, 1985.   The
Roses contend they did not receive the notice until March 12,
1985.     Myers stated he informed the Roses of the sale by
telephone on March 2, and 3, 1985.
        At the sale, 55 of 129 horses were sold for $6,830
which was then applied by the sheriff to the outstanding
bill.    The Roses claim the horses' value was far in excess of
$6,830, but that none of the horses were sold as registered
and most were sold by lots or in gross.
        On March 20, 1985, the Roses filed their petition for
declaratory relief, and to set aside the sale.       Following a
hearing before Judge Barz, the District Court held that the
sale was valid and the Roses were not denied their due pro-
cess.    The Roses appeal that order.
        Appellants' horses were sold pursua-nt to the agisters'
lien statutes,   §   71-3-1201, MCA, et seq.   Section 71-3-1201,
MCA, states:
            (1) If there is an express or implied
            contract for keeping, feeding, herding,
            pasturing, or ranching stock, a ranch-
            man, farmer, agister, herder, hotel-
            keeper, livery, or stablekeeper to whom
            any horses, mules, cattle, sheep, hogs,
            or other stock are entrusted has a lien
            upon such stock for the a.mount due for
            keeping, feeding, herding, pasturing, or
           ranching the stock and may retain pos-
           session thereof until the sum due is
           paid.
      Enforcement of the lien is found at   §   71-3-1203, MCA.
That statute says:
          If payment for such work, labor, feed,
          or services or material furnished is not
          made within 30 days after the perfor-
          mance or furnishing of the same, the
          person entitled to a lien under the
          provisions of this section may enforce
          said lien in the following manner:
          (1) He shall deliver to the sheriff or
          a constable of the county in which the
          property is located a statement of the
          amount of his claim against said proper-
          ty, a description of the property, and
          the name of the owner thereof or of the
          person at whose request the work, labor,
          or services were performed or the mate-
          rials furnished.
           (2) Upon receipt of such statement, the
          sheriff or constable shall proceed to
          advertise and sell at public auction so
          much of the property covered by said
          lien as will satisfy same.
           (3) Such sale shall be advertised,
          conducted, and held in the same manner
          as provided by law for the sale of
          mortgaged personal property by sheriffs.
          Such notice shall be given for not less
          than 5 or more than 10 days prior to the
          date of sale.
          (4) The proceeds of the sale shall be
          applied by the sheriff to the discharge
          of the lien and the cost of the proceed-
          ings in selling the property and enforc-
          ing the lien, and the remainder, if any,
          or such part as is required to discharge
          the claims, shall be turned over by the
          sheriff to the holders, in the order of
          their precedence, of the chattel mort-
          gages or other lien claimants of record
          against said property, and the balance
          of the proceeds shall be turned over to
          the owner of the property.
          (5)  However, before making seizure of
          any property under the provisions of
          this section, the sheriff may require an
          indemnity bond from the lienor in [sic]
          not to exceed double the amount of the
          claim against said property, said bond
          and the surety or sureties thereon to be
          approved by said sheriff.
       Our decision in this case is arrived at on other than
constitutional grounds.       We find it unnecessary to decide
whether    §   71-3-1203, MCA, is constitutional and therefore do
not consider appellants' first issue.
       The attention of the Montana Legislature is respectful-
ly directed to the due process provisions of Article 11,
Section    17, of     the Montana   Constitution, the Fourteenth
Amendment of the Constitution of the United States and their
application to the notice provisions of 5 71-3-1203, MCA.
       The agisters' lien statute was first enacted in 1895
and is an important part of our commercial law, serving as a
practical matter both the interest of debtors and creditors.
If in a future case this statute was found to be unconstitu-
tional, it would invite chaos and confusion in this area of
law.
       Appellants' second issue is whether the District Court
erred in holding that the notice requirements were met in
this case.       Appellants argue that the notices of the sale
were untimely and deficient, and that the District Court
incorrectly interpreted the statutes in regard to notice.
       The Roses claim the notice was untimely as they did not
receive notice until one day after the sale.        The District
Court found that two notices were mailed to the Roses on
March 1, 1985, 10 days before the sale.         In addition, the
Roses received notice in the form of two telephone calls from
Myers on March 2, and 3, 1985.       The District Court correctly
concluded that the Roses received timely notice.
       Appellants also claim the notices were deficient in
that the notice failed to adequately describe the location of
the sale or the property to be sold.      The notice stated that
the sale was to be held at "10:OO o'clock a.m. 3% miles SW of
Laurel."       The notice described the property for sale as "10
mix horse colts, 25 mix mares, 17 mix colts, 1 gray stud, 1
sorrel stud, 1 chestnut stud."
         The description of the horses is satisfactory.         The
notice    described   the   horses   by   number, sex, and    color.
Appellants' contention that the notice should have described
what mix the horses were as well as any special breeding or
other special characteristics of the horses is not correct.
The notice description was sufficient to alert the public to
the nature of the sale and the property to be sold.      There is
no need for the kind of detailed description advocated by the
appellants.
         Further, appellants failed to raise the issue of the
adequacy of the sale location description during the trial
below.     Since appellants failed to raise the issue below, we
will not address the question on appeal.
         The Roses also argue that the District Court incor-
rectly interpreted the statutes in regard to notice.         Section
71-3-1203 (3), MCA, states:
             Such sale shall be advertised, conduct-
             ed, and held in the same manner as
             provided by law for the sale of mort-
             gaged personal property by sheriffs.
             Such notice shall be given for not less
             than 5 or more than 10 days prior to the
             date of sale.
The District Court concluded that the notice "must be reason-
ably calculated to reach the owners of the livestock."           We
agree with the District Court's conclusion that the method of
notice was reasonable, and that the Roses received notice of
the sale.
         Appellants' third issue is whether the District Court
erred in failing to declare the sale void or voidable.         Both
sides agree that for a sale to be valid, the seller, acting
in good faith, must substantially comply with the notice
requirements of the power of sale, and the resultant sale
must be a fair one.    As discussed above, the notice require-
ments were substantially complied with in this case.            Fur-
ther, we hold that the resultant sale was fair.
      The District Court applied the standard of commercial
reasonableness to judge the sale.     Appellants argue that the
sale was not commercially reasonable because the horses were
sold in lots for far less than their value.            The District
Court answered that:
            The Plaintiffs have not presented any
            evidence that this [sale in lots] is not
            reasonable. Deputy Sheriff Schmaing, on
            the other hand, testified that he has
            conducted thousands of sales and that he
            often sells horses in this manner.
            Further, he testified that he was will-
            ing to sell the horses individually
            should any bidder so request.       This
            method     was      not     commercially
            unreasonable.
      Although   this sale is not governed by          the Uniform
Commercial Code, that Code's discussion of commercial reason-
ableness is helpful.   Section 30-9-507(2), MCA, states:
            The fact that a better price could have
            been obtained by a sale at a different
            time or in a different method from that
            selected by the secured party is not of
            itself sufficient to establish that the
            sale was not made in a commercially
            reasonable manner. If the secured party
            either sells the collateral in the usual
            manner in any recognized market therefor
            or if he sells at the price current in
            such market at the time of his sale or
            if he has otherwise sold in conformity
            with reasonable commercial practices
            among dealers in the type of property
            sold he has sold in a commercially
            reasonable manner.   ..
      The   above   authority   supports   the    District   Court's
decision.    Although the appellants claim the horses were
worth far more than the selling price, that alone is insuffi-
cient to render the sale unreasonable.           Likewise, the fact
that the horses were sold by a method different from that
suggested by appellants (in lots as opposed to individually)
does not render the sale unreasonable.     The District Court
correctly decided that the sale was commercially reasonable,
and we will not reverse the District Court's decision.
      The final issue raised by appellants is whether the
District Court erred in using faulty figures in taking judi-
cial notice that the parties' contract price was too low to
include feeding, and in applying that holding to justify the
court's order.
      In its memorandum in support of its order, the District
Court stated:
          Before turning to the law regarding the
          sale, the Court takes notice of two
          factors.     The Court takes judicial
          notice that the sum of $12 per head per
          month cannot possibly include the cost
          of providing extra feed for the horses.
          The Court further notes that the Plain-
          tiffs have shown knowledge of this fact
          by making $7,000 payment to the Defen-
          dant prior to March, 1985. (114 head x
          $12 per month x 8 months = $1,824)
             The Court takes note of this, not to
             rule on the merits of the contract
             dispute, but rather as a factor in the
             notice Plaintiffs had regarding the
             sale.
     Appellants argue that the District Court erroneously
substituted its judgment for that of the parties who agreed
on a contract price knowing the horses were to remain with
Myers for an indefinite period of time.   The court calculated
114 head x $12 per head x 8 months equals $1,824.     Since the
Roses paid Myers $7,000 between December, 1984, and ~ebruary,
1985, the court inferred that the Roses recognized that they
owed more than $12 per head per month, and that the excess
would be applied to pay for feed over and above the original
contract amount.   This is wrong.
      The correct calculations are:   11.4 head x $12 per head
x 8 months equals $10,944, not $1,824.       Thus, appellamts
argue, the    $7,000 payment was a partial payment on the
$10,944, the balance to be paid when the horses were re-
trieved.      The court drew inferences from incorrect figures
and   erred    in   applying   those   inferences    to   justify   its
decision.
      Further, appellants       argue   the   court    took   judicial
notice of facts not properly subject to judicial notice.
      Appellants are correct when they say the court incor-
rectly calculated the bill and took judicial notice of a fact
not appropriate for judicial notice.          Rule 201, M.R.Evid.
states:
              (b) Kinds of facts.      A fact to be
              judicially noticed must be one not
              subject to reasonable dispute in that it
              is either (1) generally known within
              the territorial jurisdiction of the
              trial court or (2) capable of accurate
              and ready determination by resort to
              sources whose accuracy cannot be reason-
              ably questioned.
However, the error is harmless as there is ample evidence to
support the District Court's conclusion.            On cross-examina-
tion, the appellant Richard Rose, testified as follows:
              Q.  Mr. Rose, I believe you stated that
              the agreement you had with Mr. Myers was
              that you were to pay him $12.00 per
              month   per   horse    unit;   is   that
              correct? A. That is correct.
              Q. Now that was only for pasture;
              wasn't  it?    Tha.t didn ' t include
              feed? A. That is correct.
              Q. And if he had to feed them, that
              would be an additional charge; wouldn' t
              it? A. Yes.
              Q. And it doesn't include any labor on
              his part, either; does it? A. No.
Thus, even without the court's calculations there is ample
evidence that the appellants owed Myers more than $10,944 and
only paid $7,000.     The court took judicial notice that appel-
lants knew they owed Myers for feed and labor costs because
they paid Myers in excess of $12 per head per month.                The
court's calculations were wrong, but the result is the same.
Appellants' own testimony revealed that the Roses knew they
owed Myers for feed and labor costs in excess of the contract
price, so although the court improperly took judicial notice
of the fact, the result is supported by the evidence.   There-
fore, it is not necessary to reverse the District Court on
this issue.
      The order of the District Court is affirmed in all
respects.

                                        -   F
                                            -
                                  Chief Justice

We concur:

    Justices
Mr. Justice William E. Hunt, Sr., concurring:

       I concur in the result reached by the majority, but
cannot       agree      with    its     analysis      of   the    constitutional
challenge raised by appellants.
       The majority reaches its decision without addressing
appellant's claim that 5 71-3-1203, MCA, is unconstitutional
as violative of due process.                    Appellants first raised the
issue in their initial complaint before the District Court.
They       gave    notice      to    this     Court   of   the    constitutional
challenge         in     compliance      with     Rule     38    M.R.App.Civ.P..
Appellants have standing to challenge the statute.                        I cannot
agree with the majority opinion that it is unnecessary to
decide whether S             71-3-1203, MCA, is constitutional.                The
issue is squarely before us and cannot be ignored.
       I    would       hold    that          71-3-1203,     MCA,    is    clearly
unconstitutional.              The    statute violates          the due process
clauses of the state and federal constitutions.                       However, I
concur in the affirmance of the District Court's decision
because      the       appellants      have    already     had. their     hearing.
Following the sale, the appellants brought an action in the
District Court which they litigated to a final judgment, and
from which they now appeal.                 They received the full benefits
of a trial in which they had an opportunity to fully present
their case.             The District Court            found in      favor of the
respondents.            Therefore, it is unnecessary to reverse the
District Court and remand this case for a hearing.
       The agister's lien statute is clearly unconstitutional,
however, because there is significant state action involved,
and    because         the   statute provides         neither notice nor        an
opportunity to be heard prior to deprivation of property.
        First, it is clear there is significant state action
involved.      The Third Circuit Court of Appeals found state
action from the mere enactment of a statute authorizing a
garageman to sell a customer's vehicle for nonpayment of a
bil.1.     Parks v. Mr. Ford (3d Cir. 1977), 566 F.2d 132.          he
state action under       s   71-3-1203, MCA, is far more significant.
The sheriff is given a copy of the bill, a description of the
property, and the name of the owner.             The sheriff then must
advertise and conduct the sale, he applies the proceeds of
the sale to the debt, and provides the buyer with a bill of
sale.      Clearly this constitutes significant state action.
         Second, the statute does not satisfy the minimum due
process requirements elaborated by either the Montana or the
United States Supreme Court.          As this Court stated in Nygard
v. Hillstead and Coyle (1979), 180 Mont. 524, 528-529, 591
P.2d 643, 645:
       It is fundamental that " [n]o person shall. be
       deprived of life, liberty, or property without due
       process of law." 1972 Mont. Const. Art. 11, § 17.
       "'It is well settled that notice and opportunity to
       be heard are essential elements of Due Process.'"
       Halldorson v. Halldorson (1977), 175 Mont. 170, 573
P.2d 169, 171.
         The United States Supreme Court has addressed the due
process requirement in the area of garnishment, replevin, and
sequestration.       That line of cases includes Sniadach v.
Family Finance Corp. (1983), 395 U.S. 337, 89 S. Ct. 1820, 23
L. Ed. 2d 349; Fuentes v. Shevin (1972), 407 U.S. 67, 92 s.Ct.
1983, 32 L. Ed. 2d 556; Mitchell v. W.T. Grant Co. (19741, 416
U.S. 600, 94 S. Ct. 1895, 40 L. Ed. 2d 406, and North Georgia
Finishing Co. v. Dichem, Inc. (1975), 419 U.S. 601, 95 S. Ct.
719, 42 L. Ed. 2d 751.
         In Sniadach, it was held that the Wisconsin prejudgment
garnishment procedure whereby            the defendant's wages were
frozen    in     the    interim between      the   garnishment    and    the
culmination of the main suit, without the opportunity for a
hearing, violated the Fourteenth Amendment.                The Court noted
that     wages    were     a   specialized    type    of    property     and
prejudgment garnishment might impose tremendous hardship on
wage earners.          The Sniadach holding was expanded by Fuentes.
In Fuentes, Florida and            Pennsylvania statutes were           held
unconstitutional.         Those statutes authorized the issuance of
writs ordering state agents to seize a person's possessions
upon the ex parte application of any other person who claimed
a right to them and posted a security bond, without providing

the possessor with notice or an opportunity to be heard.                The
Court held that a person whose rights are to be affected is
entitled to be heard at a meaningful time and in a meaningful
manner, and that the replevin statutes in question were
constitutionally defective in failing to provide for notice
and hearing.      The Court noted that "extraordinary situations"
may     justify the lack of notice and hearing, but such a
situation did not exist in that case.
        Fuentes was distinguished by Mitchell wherein it was
held that a Louisiana statute which permitted the seller of
goods under an installment contract to obtain a writ of
sequestration to recover the goods, upon buyer's default, and
without notice or hearing, did not violate due process.
There were other adequate safeguards of due process because
the writ would issue only upon a verified affidavit, and upon
a judge's authority after the creditor had filed a sufficient
bond.     The statute entitled the debtor to immediately seek
dissolution of          the writ   unless    the creditor proved        the
grounds upon which the writ issued, and the debtor could
regain possession by posting a bond to protect the seller.
      The final case is North Georgia Finishing, Inc..                   That
case relied upon Fuentes to determine that Georgia statutes
authorizing garnishment of property                  other than wages        in
pending suits, but not providing for notice, hearing, or
participation by a judicial officer, violated due process.
      The above cases dealt with something less than a sale of
the property, i.e., sequestration, replevin, and garnishment.
Clearly a permanent deprivation of property, such as occurs
in a sale, warrants just as stringent a due process analysis
as lesser forms of deprivation.                As those cases indicate, due
process requires at a minimum both notice and an opportunity
to   be     heard     prior   to     deprivation      of    property   absent
extraordinary circumstances, or other sufficient safeguards
of due process.
      Section 71-3-1203, MCA, does not provide the kind of
safeguards which salvaged the Louisiana statute in Mitchell.
There      is    no   requirement        for   a   verified   affidavit, no
participation by a judge, no mandatory bond, and no procedure
to seek an immediate halt of the sale.                Further, there are no
other legal remedies available to sufficiently guarantee due
process.        The legal procedures available to the owner, such
as   the    institution of          an   action    for conversion or         for
declaratory       relief,     are    insufficient      substitutes     for    a
pre-sale hearing.        There is little probability that trial of
a contested lien claim can be held within the minimum period
preceeding transfer to the buyer, and injunctions or other
extraordinary remedies are discretionary with the trial court
and thus lack the certainty necessary to insure a hearing
prior to permanent deprivation.
      The       question then becomes whether              there exists any
extraordinary circumstances which would justify the lack of a
hearing prior to the sale.       The respondent, Schafer, argues
that because the personalty involved was live animals, this
constitutes an extraordinary circumstance.          This argument is
not persuasive.      The United States Supreme Court in Fuentes
discussed what is meant by "extraordinary situations."           As
that Court said:
     These   situations,   however,    must   be   truly
     unusual . . ..   First, in each case, the seizure
     has been directly necessary to secure an important
     governmental or general public interest.    Second,
     there has been a special need for very prompt
     action. Third, the State has kept strict control
     over its monopoly of legitimate force: the person
     initiating the seizure has been a governmental
     official responsible for determining, under the
     standards of a narrowly drawn statute, that it was
     necessary and justified in the particular instance.
Fuentes, 407 U.S. at 90-91.
     Thus, the Court has allowed summary seizure to collect
the internal revenue of the United States, to meet the needs
of a national war effort, to protect against the economic
disaster of a bank failure, or to protect the public from
misbranded   drugs    and   contaminated    food.      The   present
situation does     not qualify   as an     important governmental
interest.    It is a private dispute between two parties.
State intervention in a private dispute hardly compares to
state action furthering a war effort or protecting the public
health, and is of insufficient importance to override the due
process requirements of notice and hearing.            Therefore, I
would hold that S 71-3-1203, MCA, is violative of due process
as there is no provision for notice and hearing prior to
deprivation of property.
     The question remains what kind of notice and hearing
satisfy due process requirements?          The Supreme Court in
Fuentes stated that notice must be granted at a meaningful
time and in a meaningful manner.       Fuentes, 407 U.S. at 80.
Further, the Court noted that leeway remains to develop a
form      of hearing that will minimize unnecessary cost and
delay while preserving the fairness and effectiveness of the
hearing in preventing       seizures of goods where the party
seeking the seizure has little probability of succeeding on
the merits.     Sniadach, 395 U.S. at 343.
       The hearing should establish the validity, or at least
the probable validity, of the underlying claim before an
alleged      debtor   can   be   deprived    of   his   property.
Consideration should be given to the interests of the parties
including the basis of the underlying claim, the nature of
the property involved, i.e., its value, uniqueness, etc., and
the need for prompt action.      The hearing need not be a full
blown trial-type hearing, but must protect a property owner's
use and possession of property from arbitrary encroachment.
This is an especially relevant danger where the State seizes
and sells goods merely upon the application of a private
party.
       Because the appellants have properly       challenged the
constitutionality of 5      71-3-1203, MCA, the issue must be
addressed.     However, I concur in the result reached by the
majority and would affirm the District Court in all respects.
       I concur.