Request By:
Mr. Stephen P. Imhoff
Attorney at Law
310 West Liberty
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You request our opinion on the question as to the constitutionality of KRS 376.270 and 376.280. Those statutes relate to a lien on motor vehicles and boats for repairs, storage, etc.
KRS 376.270 provides that any person engaged in the business of selling, repairing or furnishing accessories or supplies for motor vehicles shall have a lien on the vehicle for the reasonable or agreed charges for such work or items furnished and for storage of the vehicle, and may detain the vehicle until the charge is paid.
Even if the vehicle is moved from the supplier of services, etc., the lien is not lost if it is asserted within six months by filing in the county clerk's office a statement showing the amount and cost of materials and labor furnished.
KRS 376.280(1) reads:
"(1) Any boat or motor vehicle remaining in the possession of a person who has made repairs, performed labor or furnished accessories or supplies therefor and to whom the charges for such repairs, labor, accessories or supplies has been owing for a period of more than thirty (30) days, may be sold to pay such deferred purchase money or charges. The proposed sale shall be advertised pursuant to KRS chapter 424, and notice thereof shall be sent by certified mail, return receipt requested or by registered mail to the owner of the boat or motor vehicle and to any other person known to have any interest therein, addressed to such persons at their last known addresses, at least ten (10) days before the sale is held.
You are really concerned about KRS 376.280, since that statute provides for a private or non-judicial sale of the vehicle upon which a lien for repairs, labor, accessories or supplies has attached.
The court, in Cockerel v. Caldwell, (U.S.D. Ct. V.D. Ky. -1974) 378 F.Supp. 491, held that KRS 376.280 was unconstitutional, in that it provided for no presale judicial hearing. The court cited as supporting authority Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 32 L. Ed. 2d 556 (1972); and Sniadach v. Family Finance Corporation, 395 U.S. 337, 89 S. Ct. 1280, 23 L. Ed. 2d 349 (1969). The court adopted the view that such sale must first have a prior judicial determination, since to require otherwise would deprive the owner of the vehicle of a significant property interest which is not extinguished by the voluntary delivery of the vehicle for purposes of temporary storage and perhaps eventual repair. Thus the court held the statutory sale was in violation of the Due Process Clause of the Fourteenth Amendment to the Federal Constitution.
In Fuentes, above, the Supreme Court held the replevin laws of Florida and Pennsylvania [authorizing summary seizure of goods and chattels without a judicial hearing] violated the Due Process Clause of the Fourteenth Amendment, since no judicial hearing was afforded prior to seizure of the goods.
In Sniadach, above, the Supreme Court struck down the Wisconsin prejudgment garnishment procedure, whereby the defendant's wages are frozen in the interim between garnishment of the wages and the termination of the main suit without the defendant's being allowed a hearing, such being a denial of Due Process.
Based upon the foregoing cases, cited in support in Cockerel v. Caldwell, above, this office concluded in OAG 74-865 that KRS 376.280 was unconstitutional in failing to provide a judicial hearing prior to deprivation of property.
In the recent case of Van Zandt v. Howard Ball Moving & Storage, Inc., (U.S.D. Ct. W.D. Ky. -1981), (not yet reported in Fed. Supp.), the district court dealt with KRS 355.7-210(2), Uniform Commercial Code, providing for non-judicial sale of goods held under a warehouseman's lien on the goods, upon proper notice being given to all persons claiming an interest in the property. In that case the property (household goods) was sold to pay storage charges, and plaintiffs did not receive notice of the sale nor was there any presale judicial hearing. The Kentucky District Court cited Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 56 L. Ed. 2d 185, 98 S. Ct. 1729 (1978), for the proposition that Cockerel v. Caldwell, 378 F.Supp. 491 (W.D. Ky. 1974) is no longer controlling law. The Kentucky District Court (Van Zandt v. Ball) cited Flagg Brothers for the point that in Flagg the Supreme Court held that the act of a warehouseman in New York in proceeding to sell goods stored with him without a judicial sale and pursuant to Sec. 7-210 (identical with KRS 355.7-210) was not a 'state action" for the purposes of 42 U.S.C. § 1983. As the Supreme Court pointed out, the State of New York did not compel the sale of a bailor's goods but merely announced the circumstances under which its courts would not interfere with a private sale.
42 U.S.C. § 1983 provides in part that any person who, under color of any statute of any state subjects any person within the jurisdiction thereof to the deprivation of any constitutional rights, shall be liable in a suit at law for redress.
A key question in Flagg Brothers, above, is whether or not a warehouseman's sale of goods entrusted for storage is a "state action" , as stated in 42 U.S.C. § 1983. The Supreme Court of the United States ruled that it was not a state action, and thus the dismissal in district court for want of jurisdiction was proper. The Second Circuit Court of Appeals' view that such sale violates the Due Process Clause of the Fourteenth Amendment was in effect held to be in error. The Court in Flagg Brothers wrote that a claim upon which relief may be granted under § 1983 must involve two elements: (1) Respondents must show that they have been deprived of a right secured by the Constitution and laws of the United States. (2) They must show that Flagg Brothers deprived them of this right "under color of any statute" of the State of New York. The court ruled that "neither respondent has alleged facts which constitute a deprivation of any right 'secured by the Constitution and laws' of the United States."
The court in Flagg Brothers further wrote that the settlement of disputes between debtors and creditors is not traditionally an exclusive public function. Here the respondent had other civil remedies. In fact, the court stated that the application of the New York statute involved a total absence of overt official involvement, and thus distinguished the earlier cases of Fuentes v. Shevin and Sniadach v. Family Finance Corp., which cases imposed procedural restrictions on creditors' remedies. Thus Flagg's action was not attributable to the State of New York.
In summary, the Supreme Court in Flagg Brothers held: (1) The respondents did not allege, in connection with the proposed private sale of stored goods, any facts constituting a deprivation of due process or of any right secured by the Constitution and laws of the United States. (2) The action of Flagg Brothers, in applying the sale statute, meant that they acted for themselves, and it was not a state action under 42 U.S.C. § 1983.
In view of the District Court's opinion in Van Zandt v. Howard Ball Moving & Storage, Inc., above, and the dispositive effect of Flagg Brothers, Inc. v. Prooks, above, it is our opinion that KRS 376.280 (private sale of lien goods on notice) is constitutional. OAG 74-865 and 81-359 are modified accordingly.
Under Department of Revenue v. Derringer, Ky., 399 S.W.2d 482 (1966) 484, 485, and under the broad impact of Flagg Brothers, above, it is our opinion that KRS 376.275 (storage or towing charges) is constitutional. In Department of Revenue v. Derringer, above, the Court of Appeals of Kentucky specifically held that KRS 376.275, in providing for non-judicial (private) sale of stored or towed motor vehicles upon notice, did not violate "due process." The court said that implicit in the statute is the idea that the sale must be commercially reasonable or effective. See § 2, Kentucky Constitution. The court added that the sale under KRS 376.275 was commercially reasonable since the sale comported with the requirements of KRS 376.280.
It is not necessary to give an opinion on KRS 376.270, since that statute, which does not provide for the sale aspect, does not raise the questions heretofore raised about KRS 376.280.