Lead Opinion
OPINION OF THE COURT
Challenged here as violative of the due process clauses of the State Constitution (NY Const, art I, § 6) and the Fourteenth Amendment of the Federal Constitution is the statutory authorization afforded a garageman to foreclose his possessory statutory lien for repair and storage charges (Lien Law, § 184), by means of a public sale of the vehicle in his possession. We hold that sections 200, 201, 202 and 204 of the Lien Law, insofar as they empower a garageman to conduct an ex parte sale of a bailed automobile, fail to comport with traditional notions of procedural due process embodied in the State Constitution, as they deprive the owner of the vehicle of a significant property interest without providing any opportunity to be heard.
On October 12, 1975, plaintiff’s husband took her 1970 Cadillac to Dell Buick-Cadillac, Inc. (Dell), for installation of a replacement engine he had purchased elsewhere. The husband signed a work authorization wherein it was agreed that Dell was to remove the defective engine and install its replacement for the sum of $225. The affidavits of plaintiff and her husband recite that the work authorization form contained no provisions with respect to storage charges which were subsequently unilaterally imposed by Dell. Approximately one week later, plaintiff’s husband offered to pay the $225 to Dell, but was advised by its service manager to withhold payment until the engine was installed.
Unfortunately, the replacement engine proved to be defective and had to be removed. Delivery of a replacement engine was then arranged. When the new replacement engine arrived, Dell informed plaintiff’s husband that it would not be installed until Dell was paid the $225 due for the installation of the original defective engine. Although he agreed to pay this sum, plaintiff’s husband did not have that amount of money with him at the time and soon thereafter was hospitalized, rendering him incapable of continuing his business dealings with Dell.
On January 14, 1976 plaintiff received a "Notice of Lien and Sale” by certified mail, informing her that pursuant to section
Several days later, the auctioneer informed plaintiff that Dell refused to waive its storage charge and that the amount now due had been increased to $545. He also advised her that since the book value of the car was appreciably greater than $545, it would be to plaintiff’s advantage to pay the charges since Dell "had her over a barrel” because her husband had taken the car there for repair. On the day of the auction, March 15, 1976, Dell again modified its claim and informed plaintiff that the amount due had been reduced to $502. Later that day, plaintiff’s 1970 Cadillac, having an established resale value of between $1,200 and $1,400, was sold to Dell for the sum of $502.
Plaintiff then commenced the instant action for declaratory and injunctive relief, as well as damages, claiming that the sale provisions of the Lien Law are violative of her due process rights as they authorize public sale of her automobile without affording the opportunity for a hearing. Plaintiff’s motion for summary judgment was denied by Special Term on the ground that the affidavits submitted presented triable issues of fact. The Appellate Division modified, granting judgment to plaintiff declaring sections 200, 201, 202 and 204 of the Lien Law unconstitutional and granted leave to appeal to this court, certifying the following question for our review: "Was the order of this court, dated March 28, 1977, properly made?” We affirm, and answer the certified question in the affirmative.
The threshold question in any judicial inquiry into conduct claimed to be violative of the due process clause of the Fourteenth Amendment is whether the State has in some fashion involved itself in what, in another setting, would otherwise be deemed private activity (see US Code, tit 42, § 1983; Jones v Mayer Co.,
Despite its outward simplicity as a concept, State action is in fact an elusive principle, one which cannot be easily discerned by resort to ritualistic incantations or precise formalisms (see Burton v Wilmington Parking Auth.,
We need not address plaintiff’s contention that the actions taken by Dell are attributable to the State of New York for purposes of the due process clause of the Fourteenth Amend
But the mere fact that an activity might not constitute State action for purposes of the Federal Constitution does not perforce necessitate that the same conclusion be reached when that conduct is claimed to be violative of the State Constitution (see Ives v South Buffalo Ry. Co.,
In contrast to the due process clause of the Fourteenth Amendment, which is phrased in terms of State deprivation of life, liberty or property, section 6 of article I of the New York Constitution guarantees that "[n]o person shall be deprived of life, liberty or property without due process of law.” Conspicuously absent from the State Constitution is any language requiring State action before an individual may find refuge in its protections. That is not to say, of course, that the due process clause of the State Constitution eliminates the necessity of any State involvement in the objected to activity (see Stuart v Palmer,
The historical differences between the Federal and State due process clauses make clear that they were adopted to combat entirely different evils (see Schwartz, The Bill of Rights: A Documentary History, pp 161, 165, 387, 855-856). Prior to the Civil War, the Federal Constitution had as its major concern governmental structures and relationships. Indeed, prior to the enactment of the Fourteenth Amendment, the Bill of Rights delimited only the power of the National Government, imposing few restrictions on State authority and offering virtually no protections of individual liberties (see Barron v Mayor & City Council of Baltimore, 7 Pet [32 US] 243). The Fourteenth Amendment was a watershed — an attempt to extend and catalogue a series of national privileges and immunities, thereby furnishing minimum standards designed to guarantee the individual protection against the potential abuses of a monolithic government, whether that government be national, State or local (see Kurland, The Privileges or Immunities Clause: "Its Hour Come Round at Last”?, 1972 Wash U LQ 405; Brennan, State Constitutions and the Protection of Individual Rights, 90 Harv L Rev 489, 501). In contrast, State Constitutions in general, and the New York Constitution in particular, have long safeguarded any threat to individual liberties, irrespective of from what quarter that peril arose. Thus, as early as 1843, Justice Bronson, in speaking of the due process clause of our State Constitu
Examination of the indicies of State participation in nonjudicial foreclosure pursuant to the provisions of the Lien Law at issue here compels the conclusion that New York has so entwined itself into the debtor-creditor relationship as to constitute sufficient and meaningful State participation which triggers the protections afforded by our Constitution.
The garageman’s lien is a statutory declaration of the common-law artisan’s lien. At common law, a workman who by his labor enhanced the value of a chattel, obtained a lien upon it for the reasonable value of the work performed. That lien endowed the artisan with the exclusive right to possession of the repaired article until his charges were satisfied (1 Jones, Law of Liens, §§ 731, 749; Brown, Personal Property [2d], § 107, pp 505-511). The possessory nature of the garage-man’s lien is not in issue here, and in any event, does not constitute State action (see IDS Leasing Corp. v Hansa Jet Corp.,
As noted, common law afforded the garageman only the right to possession; it was the State which authorized enforcement of the lien by means of ex parte sale of the vehicle without first affording its owner an opportunity to be heard (see L 1909, ch 38, as amd). Thus, New York has done more than simply furnish its statutory imprimatur to purely private action. Rather, it has entwined itself into the debtor-creditor relationship arising out of otherwise regular consumer transactions. The enactment of substantive provisions of law which authorize the creditor to bypass the courts to carry out the
Even more fundamentally, the underlying purpose of the sale provisions of the Lien Law — that of conflict resolution— has always been deemed one of the essential attributes of sovereignty. Absent consent of the debtor, the power to fashion the means to order legally binding surrenders of property has always been exclusively vested in the State. Implementation of dispute settlement, irrespective of the strength of the competing interests of the parties, is the function of the judiciary, and is not dependent "on custom or the will of strategically placed individuals, but on the common-law model” (Boddie v Connecticut,
Additionally, as we held in Blye v Globe-Wernicke Realty Co. (
Having determined that enforcement of the garage-man’s lien constitutes meaningful State participation inasmuch as New York has delegated to private parties functions traditionally associated with sovereignty, we therefore reach the substantive constitutional question. Fundamental notions of procedural due process require that before the State may deprive a person of a significant property interest in aid of a creditor, that person be given notice and an opportunity to be heard prior to deprivation of that interest (Wynehamer v People,
Moreover, the statutes challenged here display none of the "saving characteristics” (North Ga. Finishing v Di-Chem, supra, at p 607) of the provisions sustained in Mitchell. Twenty-four days after notice of sale is served, the garageman may proceed with the sale without having even approached a court or consulted the debtor, without filing a bond or affidavit, and without affording the owner a hearing in which he may contest the amount due. Even more objectionable is the fact that the statutes at issue here result in a permanent deprivation of what is today a necessity of life, not a temporary deprivation as would be occasioned by attachment, sequestration or replevin.
Notwithstanding these patent inequities, it is urged that the vehicle owner may still enjoin an impending sale (CPLR art 63), maintain an action for a judgment declaring the charges imposed unreasonable (CPLR 3001) or initiate a replevin action to recover the vehicle (CPLR art 71; see Dininny v Reavis,
Nor may the summary sale here be justified on the ground that the initial retention of the vehicle arose out of a voluntary transaction. At most, voluntary delivery of the automobile created a bailor-bailee relationship, which relationship could not divest the bailor of his continuing interest and title, irrespective of whether the bailee has a possessory lien on the bailed chattel (Hernandez v European Auto Collision, 487 F2d 378, 385 [concurring opn]). Since that possessory lien is merely a security interest, the State may not constitutionally permit a garageman to extinguish the owner’s interest without adherence to minimum due process standards. To be rejected also is the assertion that the statutes here may be justified because of the extraordinary circumstances present.
It must be concluded, therefore, that the sale provisions of sections 200, 201, 202 and 204 of the Lien Law violate the due process clause of the New York Constitution inasmuch as they fail to provide the owner of a vehicle an opportunity to be heard prior to permanent deprivation of a significant property interest. The garageman’s right to retain his possessory lien is unaffected by this decision, but he may not sell the vehicle to satisfy his claim unless and until a method is
Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.
Notes
. In the series of cases in which the Supreme Court has imposed the requirements of procedural due process in situations in which a creditor sought to deprive a debtor of a significant property interest (Sniadach v Family Fin. Corp.,
.There are, of course, substantial differences between the private sale of goods authorized by the warehouseman’s lien law and the private sale authorized by sections 200, 201, 202 and 204 of the Lien Law. Critical to the determination in Flagg Bros, that the private sale did not constitute State action was the "total absence of overt official involvement” (
.It is true, as the Attorney-General and others have suggested, that the facts in Blye are distinguishable from those involved here. Blye involved the constitutionality of New York’s innkeeper’s lien (Lien Law, § 181), which permitted the summary seizure of the property of a guest. In contrast, the possessory lien of a garageman (Lien Law, § 184), arises out of a voluntary bailment by the owner of the vehicle, and in any event is not in issue here. Whatever the relative interests of the garageman or the innkeeper might be, the fact remains that whether the debtor’s property is summarily seized or is sold ex parte, the individual doing so is performing the traditional functions of the Sheriff and his actions are attributable to the State for purpose of section 6 of article I of the New York Constitution.
.The statutory scheme relating to the garageman’s lien and its foreclosure is relatively simple. Section 184 of the Lien Law grants a garageman a possessory lien against a motor vehicle for charges incurred in connection with its maintenance, repair or storage. The constitutionality of the possessory lien was upheld by the Appellate Division in IDS Leasing Corp. v Hansa Jet Corp. (
.In reaching this conclusion, we do not write on a clean slate. A significant number of courts have reached and decided the merits of procedural due process challenges to garageman’s lien foreclosure acts, striking down statutes virtually indistinguishable from those at issue here (see Parks v "Mr. Ford", 556 F2d 132; Hernandez v European Auto Collision, 487 F2d 378; Caesar v Kiser,
.We are not unmindful of the stake that a garageman has in the prompt enforceability of his lien. However, this interest should not be deemed inconsistent with the vehicle owner’s right to be afforded the opportunity for some sort of prior judicial determination of the existence and scope of the lien. In this regard, we do not pass on the form of the hearing which the due process clause requires (see Friendly, Some Kind of Hearing, 123 U of Pa L Rev 1267, 1275). As the Supreme Court has aptly noted, "we deal here only with the right to an opportunity to be heard. Since the issues and facts decisive of rights * * * may very often be quite simple, there is a likelihood that many defendants would forgo their opportunity, sensing the futility of the exercise in the particular case. And, of course, no hearing need be held unless the defendant, having received notice of his opportunity, takes advantage of it” (Fuentes v Shevin, supra, at pp 92-93, n 29).
.There are a number of statements in the dissenting opinion which merit comment. Most importantly, we do not hold or even intimate that the statutes at issue here are not violative of the due process clause of the Federal Constitution (dissenting opn, at p 168). Rather, when tested by the dictates of the State due process clause, the statutes fail to pass constitutional muster thus rendering any inquiry of State action for purposes of the Fourteenth Amendment wholly academic (at pp 158-160, and n 2). Noticeably, the dissenters do not address the issue of whether the deprivation of a motor vehicle under the questioned statutes accords with fundamental concepts of justice and fairness.
Also disturbing is the dissent’s suggestion that our holding is afflicted with "hasty embrace” or "novelty” or of a single State court (dissenting opn, at p 168). This is so, especially in view of the number of well-respected courts of other jurisdictions, notably those of commercially active States such as California and New Jersey, which have struck down statutes similar to those in issue here (see n 5, supra). This case was argued over two months ago and the subject has been before courts for years (see Ann., 64 ALR3d 814).
Moreover, it is difficult, if not impossible, to imagine that the lengthy list of horribles posed by the dissenters (dissenting opn, at p 172), will relegate the economy of this State into a Brobdingnagian "quagmire”. For all that appears, no disastrous aftermath followed in those States whose courts saw fit to invalidate similar statutes. Even assuming that the dire consequences which so alarm the dissenters could somehow come to pass, to exalt economic considerations over the rights of our citizens is nothing more than abdication of this court’s constitutional responsibility (cf. Brooklyn Union Gas Co. v New York State Human Rights Appeal Bd.,
Nor have we expressed any opinion as to the constitutionality of statutes not here in issue. It may very well be that in some instances the significance of the property interest involved does not rise to cdnstitutional proportions. However, we do not fall back from our position that where a garageman, with the blessing of the State, purports to deprive a person of an economic necessity such person be afforded an opportunity to be heard.
Dissenting Opinion
(dissenting). The majority holds today that the private sale on notice to the owner of a vehicle to satisfy a
Confronted by a controlling decision of the United States Supreme Court, the majority declines, as indeed it must, to hold these statutes violative of the due process clause of the Federal Constitution. In Flagg Bros. v Brooks (
Particularly paradoxical is that the present overturning of commercial legal principles occurs in a court noted throughout its history for its sensitivity and leadership in the commercial field. In doing so, the majority refers to the State action doctrine, the ground for its holding, as an "elusive principle” at p 158). Significant, too, is that the principles now being applied so hastily and with such novelty will proliferate similar litigation and by analogy propagate similar applications in parallel commercial lien transactions. This hasty embrace of novel doctrine follows on the heels of the rejection of the same attempted extension of the State action doctrine by the very court which gave initial impetus to the doctrine in more appropriate contexts. Moreover, this rejection by the
I believe the analysis in Flagg applies with equal force to the statutes challenged today. Not only is a private commercial transaction involved here, but the interest of the garage-man in a chattel, having stored it and having enhanced its value, is more substantial than the interest of a warehouseman, who merely stores a chattel.
The majority, however, asserts that "the mere fact that an activity might not constitute State action for purposes of the Federal Constitution does not perforce necessitate that the same conclusion be reached when that conduct is claimed to be violative of the State Constitution.” (At p 159.) Particularly in a case such as this involving commercial transactions, I would be reluctant to hold, as the majority does, that State and Federal due process protections are not coextensive. "The clauses”, we said in Central Sav. Bank v City of New York (
Apparently the majority concedes that under the State Constitution due process may not be invoked absent "State involvement”. I would add that the State involvement must be significant, rather than incidental. Traditionally, an inquiry into whether the State is significantly involved in private activity has focused on the nexus between the government and the private conduct. A close entwinement between the two has resulted in a finding of State action. Thus, where the State reaps some benefit from the private conduct (Phillips v Money, 503 F2d 990, cert den
But the presence or absence of State action may not be determined simply by tallying the number of connections between the State and a particular private activity. Nor can it be said that the mere statutory authorization of an activity signals that the State has become a participant or has encouraged the activity. (Flagg Bros. v Brooks, 436 US, at pp 164-166, supra; Moose Lodge No. 107 v Irvis,
Since the garageman’s lien (Lien Law, § 184) is merely a modern statutory codification of the ancient artisan’s lien, a proper application of the indices of State action to the case before us may be made only after reviewing the common-law artisan’s lien. At common law, a workman who, with the consent of the owner, enhanced the value of a chattel, obtained an artisan’s lien on the chattel for the reasonable value
While the challenged statutory scheme authorizes more than a mere possessory lien, permitting the lienor to conduct a foreclosure sale of the chattel (Lien Law, § 200) subject to strict notice requirements (Lien Law, §§ 201, 202), such an expansion of rights is merely an exercise of the State’s regulatory powers to provide guidelines for the resolution of legitimate divergent interests. The garageman, having enhanced the value of the chattel, has obtained a significant property interest in it. This interest served as the springboard for the creation of the common-law artisan’s lien, and it similarly supports statutory authorization for the lienor to foreclose the lien. Indeed, a mere possessory lien without the right to sell would offer little benefit to the garageman who might ultimately bear the expense and inconvenience of storage of the vehicle indefinitely. Such a burden could defeat the very purpose sought to be achieved by the lien. The right to foreclose, upon proper prior notice to the owner, is therefore both a reasonable and necessary means of insuring that the lien will serve its intended purpose. By contrast, the rights of the owner of the chattel are affected only minimally by the sale, since the lienor’s right to possession continues indefinitely until satisfied. The substantial interests of the garageman in the chattel, and the lesser impact that these statutes have
Moreover, the other indices of State action are not present to any significant degree. No benefit inures to the State by operation of these statutes, nor is the State encouraging the lienor to take any action whatever; the initiative rests with the lienor. As to governmental participation, it cannot be argued persuasively that the purely incidental involvement of a licensed auctioneer, who conducted the sale, or of the Department of Motor Vehicles, which transfers title of vehicles, rises to the level of State action, any more than that the use of the post office to mail the notice of sale constitutes Federal action. Indeed, the majority agrees that the State involvement must be more than just that and that it must be a "rather significant State involvement.” (At p 158.)
In concluding that no State action is present in this case, I am mindful that in Blye v Globe-Wernicke Realty Co. (
The majority, however, strains to reject this analysis so that it may nullify the challenged Lien Law provisions. However laudable the intentions of the majority may be, its ruling can only glut the commercial realm with pointless and trivial
The majority opinion states that "[a]bsent consent of the debtor, the power to fashion the means to order legally binding surrenders of property has always been exclusively vested in the State” (at p 162). I assume that the majority refers, among other things, to the classic pledge of personal property in which the pledgor expressly or impliedly "consents” to private sale of the pledged chattel in the event of default. The distinction, if that it be, from the statutory right to private sale in the event of a default in the obligation which gave rise to the lien is verbalistic. It is just as correct to say that the owner who gives possession of property for purposes of repair or other enhancement consents to the statutory right to execute the lien. He certainly does so impliedly, in the same way that innumerable other private transactions imply, as a matter of law, statutory obligations and conditions which affect property interests. (E.g., insurance policies, negotiable instruments [especially if collateralized], leases of real property, powers of attorney, general releases, covenants not to sue, rights of entry and rights to notice of termination in leaseholds [whether for a term or at will], contracts of employment, and the like.) The shallowness of the distinction is exposed by the fact that any garageman who, at the behest of a lawyer, added a pledge of the vehicle to secure the service charges for repair or storage would avoid what the court today holds to be a violation of constitutional due process.
Moreover, the court has severely afflicted the sphere of private commercial transactions, for this ruling applies equally to the numerous other liens on personal property which were enforceable by the provisions now declared uncon
Troublesome, too, is that this court’s ruling, applicable only in this State, will affect the uniformity of commercial lien law as it exists in most of the States.
Due process of law is a constitutional mandate, not an excuse for the imposition of one’s predilections. Rejecting sound analysis, the majority insists on voiding a reasonable statutory framework in the name of due process, when this decision will deal another blow to the economic welfare of the State. I cannot concur in such a result, and vote for reversal of the order of the Appellate Division.
Order affirmed, etc.
.In Jones v Gordon (76 Civ 1430, US Dist Ct, EDNY, June 21, 1978), the court held that the Flagg decision precludes a finding that sections 200-202 and 204 of the Lien Law involve State action since they are functionally and conceptually identical to section 7-210 of the Uniform Commercial Code, the statute challenged in Flagg.
.It is noteworthy that no decision, including those mentioned in footnote 5 of the majority opinion, which invalidated statutes similar to those at issue here, relied strictly on State, as opposed to Federal, due process grounds. Because all these cases preceded Flagg, their continued viability is questionable.