553 F.2d 764 (2nd Cir. 1977), 523, Brooks v. Flagg Bros., Inc.

Docket Nº:523, Docket 75-7437.
Citation:553 F.2d 764
Party Name:Shirley Herriott BROOKS and Gloria Jones, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. FLAGG BROTHERS, INC., Individually and as representative of a class of all others similarly situated, et al., Defendants-Appellees.
Case Date:April 07, 1977
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 764

553 F.2d 764 (2nd Cir. 1977)

Shirley Herriott BROOKS and Gloria Jones, Individually and

on behalf of all others similarly situated,

Plaintiffs-Appellants,

v.

FLAGG BROTHERS, INC., Individually and as representative of

a class of all others similarly situated, et al.,

Defendants-Appellees.

No. 523, Docket 75-7437.

United States Court of Appeals, Second Circuit

April 7, 1977

Argued Feb. 13, 1976.

Martin A. Schwartz, White Plains, N. Y. (The Legal Aid Society of Westchester County, White Plains, N. Y., on the brief, Lawrence S. Kahn, Evelyn K. Isaac, New York City, of counsel), for plaintiffs-appellants.

Alvin Altman, New York City (Brodsky, Linnett & Altman, New York City, on the brief, Michael J. Barnas, New York City, of counsel), for defendants-appellees Flagg Brothers, Inc., and Henry Flagg.

William H. Towle, Chicago, Ill. (Burke, Kerwin & Towle, Chicago, Ill. and Werner & Weiss, P. C., New York City, on the brief, Norman Weiss, New York City, of counsel),

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for defendants-appellees American Warehousemen's Ass'n and The Intern. Ass'n of Refrigerated Warehouses, Inc.

Arnold H. Shaw, New York City (Jaffe, Shaw & Rosenberg, New York City, on the brief), for defendants-appellees Warehousemen's Ass'n of New York and New Jersey, Inc., and the Cold Storage Warehousemen's Ass'n of the Port of New York.

A. Seth Greenwald, Asst. Atty. Gen., New York City (Louis J. Lefkowitz, Atty. Gen., State of New York, and Samuel A. Hirshowitz, First Asst. Atty. Gen., New York City, of counsel), for defendant-appellee Louis J. Lefkowitz, Atty. Gen. of the State of New York.

Before TIMBERS, Circuit Judge, and HOLDEN [*] and BRYAN, [**] District Judges.

FREDERICK van PELT BRYAN, Senior District Judge:

New York Uniform Commercial Code § 7-209 grants a warehouseman a lien upon goods in his possession for charges incurred in connection with storage, and permits him to retain the goods until such charges are satisfied. New York Uniform Commercial Code § 7-210 gives the warehouseman the power to enforce his lien by selling the stored goods, after complying with specified procedures. 1 This statute provides that notice of a prospective sale be given to the

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owner of the stored goods. It does not, however, contemplate any judicial determination of the amount owing prior to the sale of the goods in satisfaction of the warehouseman's charges.

The question presented by this appeal is whether the warehouseman's enforcement of his lien in this manner constitutes action "under color of" state law within the meaning of 42 U.S.C. § 1983 or state action under the fourteenth amendment. 2 We hold that it does, and therefore reverse the lower court's dismissal of the complaint and remand for a determination of whether the statutory scheme involved comports with due process.

I.

Since the case comes before us on the dismissal of the complaint, we accept the plaintiffs' allegations of fact as true. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

The original plaintiff in this case, Shirley Herriott Brooks, was a resident of Mount Vernon. On June 13, 1973, pursuant to an order of eviction of the City Court of Mount Vernon, the city marshal removed Brooks and her possessions from her apartment. Brooks told the marshal that she wanted to call someone to store her furniture and other household goods. The marshal informed her that she could not do so and

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that the man with him, defendant Henry Flagg, president of defendant Flagg Brothers, Inc., would store her furniture. Flagg told Brooks that she would have to pay $65 per month for the moving and storage of her furniture. Brooks replied that this sounded like a high price but, believing that she had no choice, authorized Flagg to proceed with the moving and storage of her furniture and household possessions.

As soon as her goods were loaded on Flagg's trucks, one of the moving men told Brooks that she would have to pay $178-$75 per month for storage, $75 for barreling and platforming, and $28 for fumigating. Brooks protested that the entire job was only to cost $65, but eventually handed over a check for $178.

On or about June 15, 1973, Brooks called Flagg Brothers to find out how long it would store her goods for the $178 payment. She was informed that she already owed an additional $156. On June 19, 1973, Brooks went to the Flagg Brothers office. She was given a "Combined Uniform Household Goods Bill of Lading and Freight Bill" indicating that Flagg Brothers regarded the $178 payment as a deposit and that there was a "balance due" of $156. 3 Brooks told Henry Flagg that the charges were unreasonable and that she could not pay them. He told her that on the first of July, 1973, she would owe an additional $75 for storage for the month of July. Brooks argued that her storage payment on June 13, 1973 should run to July 13, 1973, but Flagg insisted that, since storage charges are computed on a "per month" basis, even if her goods had been stored on June 29, 1973 an additional $75 would still be due on July 1, 1973.

The dispute over storage charges continued. On August 25, 1973, Brooks received a letter from Flagg Brothers informing her that unless she paid her outstanding balance of $306 within 10 days, her furniture would go up for sale. This letter was accompanied by a "Final Notice" informing Brooks that, unless payment on her storage account were made, Flagg Brothers would advertise her goods for public auction.

On September 21, 1973, Brooks instituted this action on behalf of herself and a proposed class consisting of

persons whose property is stored in a warehouse located in the State of New York and whose property has been encumbered by a lien pursuant to New York Uniform Commercial Code § 7-209 and subject to sale pursuant to New York Uniform Commercial Code § 7-210 because of warehouse fees allegedly due, without opportunity for a prior hearing.

Relying upon 42 U.S.C. § 1983 4 and its jurisdictional counterpart, 28 U.S.C. § 1343(3), 5 she sought injunctive and declaratory

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relief and damages on the ground that the detention and threatened sale of her goods pursuant to New York Uniform Commercial Code §§ 7-209 and 7-210 violated the due process clause of the fourteenth amendment. Named as defendants were the Mount Vernon marshal, 6 Henry Flagg, and Flagg Brothers, Inc., individually and as representative of a proposed defendant class consisting of

warehousemen doing business in the State of New York and who impose liens and subject goods to sale pursuant to New York Uniform Commercial Code §§ 209-210 (sic ) without affording the owner of the goods a prior opportunity to be heard.

In accordance with an agreement between counsel, on January 24, 1974, subsequent to the filing of the complaint, Brooks was permitted to remove her possessions from Flagg Brothers' warehouse without paying the disputed storage charges. Then in February, 1974 counsel stipulated that the action, with the classes described substantially as above, was a proper plaintiff and defendant class action under Fed.R.Civ.P. 23 with respect to the claims for injunctive and declaratory relief. These stipulations, however, were never approved by then District Judge Gurfein, to whom the case was assigned.

On June 25, 1974, Judge Gurfein granted the motion of Gloria Jones to intervene as party plaintiff pursuant to Fed.R.Civ.P. 24. Jones' allegations were parallel to those of Brooks. She, too, had been evicted by the Mount Vernon marshal, who was accompanied by an employee of Flagg Brothers. Jones denies, however, that she ever authorized Flagg Brothers to store her goods "either by written or oral contract, or otherwise," and claims that she was never advised of the rate she would have to pay for the storage of her household belongings. At the time of her proposed intervention, Jones' goods were still being retained by Flagg Brothers, who informed her counsel that they had no present intention to sell the goods and would inform him well in advance if they did decide to sell them. 7

By the same order that granted Jones' motion to intervene, Judge Gurfein permitted the Attorney General of the State of New York, the American Warehousemen's Association, the International Association of Refrigerated Warehouses, Inc., the Warehousemen's Association of the Port of New York, Inc., 8 and the Cold Storage Warehousemen's Association of the Port of New

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York to intervene as parties defendant. Brooks v. Flagg Brothers, Inc., 63 F.R.D. 409 (S.D.N.Y.1974). The Attorney General was allowed to intervene on consent. Judge Gurfein permitted the trade associations to intervene over the objection of plaintiffs' counsel. The associations claimed that their members were engaged in large scale warehousing on behalf of merchants and other commercial entities functioning in interstate commerce, and argued that their interests in upholding the constitutionality of §§ 7-209 and 7-210 would not be adequately represented by Flagg Brothers, whose business was the moving and storage of furniture and other household goods.

On August 26, 1974, plaintiffs moved for class certification as to both plaintiffs and defendants, and for summary judgment on the question of the constitutionality of §§ 7-209 and 7-210. On September 19, 1974, the Flagg defendants moved to dismiss the action for failure to state a claim upon which relief can be granted.

By decision and order dated July 7, 1975, Judge Werker, to whom the case had been reassigned, denied plaintiffs' motion for summary judgment and granted defendants' motion to dismiss the complaint. Applying the analysis of Jackson v. Statler Foundation, 496 F.2d 623 (2d Cir. 1974), cert. denied, 420 U.S. 927...

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