Dieffenbach v. Attorney General of Vermont

• Decision Date: 08 August 1979
• Docket Number: No. 902,D,902
• Citation: 604 F.2d 187
• Parties: L. Paul DIEFFENBACH, Jr., Appellant, v. ATTORNEY GENERAL OF VERMONT, Hazel M. Stevenson, Robert B. Young, First National Bank of Orwell, Inc., Appellees. ocket 78-7507.
• Court: U.S. Court of Appeals — Second Circuit

Page 187

604 F.2d 187

L. Paul DIEFFENBACH, Jr., Appellant, v. ATTORNEY GENERAL OF VERMONT, Hazel M. Stevenson, Robert B.

Young, First National Bank of Orwell, Inc., Appellees.

No. 902, Docket 78-7507.

United States Court of Appeals,

Second Circuit.

Argued May 7, 1979.

Decided Aug. 8, 1979.

L. Paul Dieffenbach, Jr., pro se.

Michael R. Gadue, Asst. Atty. Gen., Burlington, Vt. (M. Jerome Diamond, Atty. Gen. of Vermont, Montpelier, Vt., of counsel), for appellees Attorney General and Stevenson.

John A. Kelley, Middlebury, Vt., for appellees Young and First National Bank of Orwell, Inc.

Before SMITH, OAKES, and VAN GRAAFEILAND, Circuit Judges.

OAKES, Circuit Judge:

Appellant pro se challenges on equal protection and due process grounds the so-called "strict foreclosure" laws of the state of Vermont under which on foreclosure of a real estate mortgage the mortgagee owns the mortgaged property absolutely and need not apply the proceeds of any sale in satisfaction of the mortgage debt. Appellant also seeks to challenge on constitutional grounds a Vermont statute, 12 Vt.Stat.Ann. § 4601, ¹ which provides that a defendant (but not a plaintiff) in a foreclosure action needs leave of court to appeal. And he also claims a violation of his right to due process by the failure of a deputy clerk of the Vermont Supreme Court to give him adequate notice of a hearing on the mortgagee's motion to dismiss his appeal from the state foreclosure decree for failure to secure from the lower court the needed permission to appeal. The United States District Court for the District of Vermont, James S. Holden, Chief Judge, granted the defendants' motion for summary judgment. We affirm.

I. THE FACTS

Appellant purchased certain real estate in Shoreham, Vermont, on February 25, 1974, financing the property with a first mortgage issued by the First National Bank of Orwell, Inc. (the Bank), in the amount of $10,000. The mortgage did not contain a clause providing for a power of sale; indeed, a statute permitting foreclosure by judicial sale in the case of mortgage deeds containing such clauses did not become effective until July 1, 1974. ² Appellant became delinquent in the payments due sometime before December, 1975, and the Bank commenced foreclosure proceedings on January 20, 1976, by filing an action in the Addison Superior Court, together with a motion for summary judgment and a motion to shorten ³ the statutory time of redemption of six months. ⁴ On February 18, 1976, appellant filed his answer and opposition to the Bank's motions. The Superior Court on April 13, 1976, found no material facts in issue concerning appellant's execution of the mortgage note and his default of payments, granted the Bank summary judgment on its motion for foreclosure, but set down for hearing the amount owing for principal, interest, taxes, insurance, attorney's fees and legal costs, under the terms of the mortgage deed, following Vt.R.Civ.P. 80.1(e). On June 18, 1976, the Superior Court held a hearing on the accounting pursuant to the judgment of foreclosure and found that appellant was indebted to the Bank in the total sum of $11,252, covering principal, interest, taxes, insurance premium, and reasonable attorney's fees, plus interest at the rate of $2.04 per day from the date of the decree to the date of payment. The court gave appellant six months from the date of the decree during which to redeem, I. e., the full, unshortened statutory period, note 4 Supra.

Appellant's motions to vacate the judgment and to stay the proceedings were denied on December 8 and 20, 1976, respectively. The time for redemption expired on December 18, 1976. On December 22, appellant filed with the Superior Court a notice of appeal from the denials of these motions. In that notice he also appealed to the Supreme Court to consider the constitutionality of "certain statutes" which resulted in the foreclosure judgment, and on January 21, 1977, appellant filed with the Superior Court a memorandum supporting his constitutional challenge to 12 Vt.Stat.Ann. § 4601. By order dated January 25, after argument, the court stated that it did "not find Title 12 § 4601 to be unconstitutional" and directed appellant to post a $5,000 bond on or before February 7, as a condition of perfecting the December 22, 1976, notice of appeal. The appellant did not file the bond but instead on February 7 unsuccessfully applied to the Superior Court to file a second notice of appeal of the January 25, 1977, order. Appellant then filed an original appeal in the Vermont Supreme Court on the issue of the constitutionality of the leave to appeal statute, note 1 Supra. By order dated March 29, 1977, the Supreme Court denied the original appeal but directed the Addison Superior Court to file appellant's second notice of appeal with the Supreme Court.

Meanwhile, the Addison Superior Court on March 2, 1977, issued a writ of possession to the Bank, and appellant was subsequently evicted from the premises by act of the sheriff. ⁵ Appellant then filed on April 21 1977, a motion to stay judgment with the Vermont Supreme Court. This motion was set for hearing on April 29, 1977, and the Bank filed a motion to dismiss the appeal on April 27, 1977. The clerk of the Supreme Court mailed notice of the Bank's motion to appellant on April 27, together with notice that the second motion would also be heard on April 29. ⁶ Appellant appeared before the Supreme Court on April 29, 1977, and the court proceeded to deny his motion to stay and grant the Bank's motion to dismiss for lack of jurisdiction, presumably because appellant had not complied with the Superior Court's conditions for leave to file the second appeal, I. e., filing a bond.

In October, 1977, the Bank sold the property to a third person for $20,000. The Bank was entitled to sell because the period for redemption had expired on December 8, 1976, and the Bank had been installed in possession of the premises by virtue of the writ issued on March 2, 1977, ⁷ so that it could deliver both legal title and possession to a purchaser. ⁸ Under Vermont law, once the period for redemption has expired following a decree of foreclosure and the mortgagee has lawfully acquired full legal title, it need not repay the mortgagor any excess sum recovered from a subsequent sale of the property over the amount owing on the mortgage. ⁹

Appellant filed suit in the United States District Court for the District of Vermont on March 17, 1978, against the Vermont Attorney General, the deputy clerk of the Supreme Court, the Addison County sheriff, the Bank, and a Bank officer, Robert D. Young. The court dismissed suit against the sheriff for lack of personal jurisdiction because he was not served with process.

II. JURISDICTION

Appellees Bank and Young have moved to dismiss the appeal on the ground that the strict foreclosure of appellant's property does not constitute state action and that we therefore lack subject matter jurisdiction under 28 U.S.C. § 1343 and 42 U.S.C. § 1983. ¹⁰ They refer us to the dismissal of a similar suit, brought by this appellant against certain attorneys, police officers, a New Hampshire bank and its officers, and the Attorney General of New Hampshire, Dieffenbach v. Buckley, 464 F.Supp. 670 (D.N.H.1979). That suit, challenging the power of sale mortgage foreclosure procedures of New Hampshire, was dismissed by the District Court for the District of New Hampshire for failure to show state action, apparently because the New Hampshire mortgage statutes do not create the power of sale foreclosure but merely serve to regulate and standardize an otherwise recognized practice. The New Hampshire district court cited a number of cases, including Charmicor, Inc. v. Deaner, 572 F.2d 694 (9th Cir. 1978), and Roberts v. Cameron-Brown Co., 556 F.2d 356 (5th Cir. 1977), which have held that such a non-judicial foreclosure under a private power of sale does not constitute state action.

Of course, the district court also referred to Flagg Brothers v. Brooks, 436 U.S. 149, 98 S.Ct. 1729 (1978), the recent Supreme Court case interpreting the state action requirement in the context of the New York warehouseman's lien. Flagg Brothers held that a warehouseman's proposed sale of goods entrusted to him for storage pursuant to his lien over the goods, as authorized by the New York Uniform Commercial Code, was not state action. The Court distinguished North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); and Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), all imposing procedural restrictions on creditors' remedies, by pointing to the failure in Flagg Brothers to allege the participation of any public officials in the proposed sale. 436 U.S. at 157, 160 n.10, 98 S.Ct. at 1734. Given "(t)his total absence of overt official involvement," the Court reasoned, state action could be found only if the acts of private parties could fairly be attributed to the state. 436 U.S. at 157, 98 S.Ct. 1729. The Court pointed out that the State of New York had not compelled the sale of the goods but merely had announced the circumstances under which its courts would not interfere with a private sale. "Our cases state 'that a State is responsible for the . . . act of a private party when the State, by its law, has compelled the act.' (Adickes v. S. H. Kress & Co., 398 U.S. 144, 170 (, 90 S.Ct. 1598, 26 L.Ed.2d 142) (1970).) This Court, however, has never held that a State's mere acquiescence in a private action converts that action into that of the State." 436 U.S. at 164, 98 S.Ct. at 1737.

Professor Tribe suggests that in a case such as this, involving constitutional restraints on governmental rules, not on governmental actors, a court should focus not on the private or public status of the actor but on whether the challenged rule of law can...