Adams v. Southern California First National Bank, No. 72-1484

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtHUFSTEDLER, Circuit (dissenting from denial of hearing en banc
Citation492 F.2d 324
Decision Date12 March 1974
Docket NumberNo. 72-1484,72-1888.
PartiesGeorge T. ADAMS, Plaintiff-Appellee, v. SOUTHERN CALIFORNIA FIRST NATIONAL BANK, Defendant-Appellant. Willie O. HAMPTON and Mattie Hampton, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. The BANK OF CALIFORNIA, NATIONAL ASSOCIATION, a California banking corporation, Defendant-Appellee.

492 F.2d 324 (1973)

George T. ADAMS, Plaintiff-Appellee,
v.
SOUTHERN CALIFORNIA FIRST NATIONAL BANK, Defendant-Appellant.

Willie O. HAMPTON and Mattie Hampton, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
The BANK OF CALIFORNIA, NATIONAL ASSOCIATION, a California banking corporation, Defendant-Appellee.

Nos. 72-1484, 72-1888.

United States Court of Appeals, Ninth Circuit.

October 4, 1973.

As Modified on Denial of Rehearing March 12, 1974.


492 F.2d 325

Jeffrey Isaacs (argued), Richard B. Munks, Procopio, Cory, Hargreaves & Savitch, San Diego, Cal., for defendant-appellant (Southern California First Nat. Bank).

Michael B. Weisz, Legal Aid Society of San Diego, San Diego, Cal., (argued), Richard A. Weisz, Legal Aid Foundation of Long Beach, Long Beach, Cal., (argued), for plaintiff-appellee (Adams).

William M. Burke (argued), Sheppard, Mullin, Richter & Hampton, Los Angeles, Cal., Robert Ames, Sterling Hutcheson, Gray, Cary, Ames & Frye, San Diego, Cal., Gendel, Roskoff, Shapiro & Quittner, Los Angeles, Cal., Styskal, Wiese & Melchione, N. Hollywood, Cal., Morrison, Foerster, Holloway, Clinton & Clark, San Francisco, Cal., Pizer & Michaelson, Santa Ana, Cal., Walter Malcolm, Bingham, Dana & Gould, Boston, Mass., Soia Mentschikoff, Chicago, Ill., for amici curiae.

Mark E. Budnitz, National Consumer Law Center, Boston, Mass., as amicus curiae in support of plaintiff-appellee (Adams).

Henry S. Hewitt (argued), Legal Aid Society of Alameda County, Oakland, Cal., Stefan M. Rosenzweig, Legal Aid Society of Alameda County, Model Cities Unit, Oakland, Cal., for plaintiff-appellant (Hampton).

Noble K. Gregory (argued), John A. Sutro, Jr., Bernard Zimmerman, Pillsbury, Madison & Sutro, San Francisco, Cal., for defendant-appellee (Bank of California).

Before: CHAMBERS and TRASK, Circuit Judges, and BYRNE,* District Judge.

TRASK, Circuit Judge:

These two cases present appeals from contrary results reached by two district courts on the question of the constitutional due process rights of debtors

492 F.2d 326
whose property is repossessed by self-help, without formal legal proceedings

The Adams case is before this court on an interlocutory appeal by the Southern California First National Bank (S. Cal. Bank) from an order of the District Court of the Southern District of California granting Adams' motion for partial summary judgment.1

The trial court concluded first that the enactment of sections 9503 and 95042 of the California Commercial Code set forth a state policy constituting sufficient state action "to raise a federal question" under the provisions of the Civil Rights Act, 42 U.S.C. § 1983, and its jurisdictional counterpart, 28 U.S.C. § 1343(3). From that position it concluded that the repossessions denied the plaintiffs their constitutional rights and that sections 9503 and 9504 "which provide for such takings" are constitutionally invalid.3 This court has jurisdiction under 28 U.S.C. § 1292(b), the trial judge having certified that his order involves a controlling question of law, and a panel of this court having granted leave to appeal.

The controlling questions of law are whether the repossession of motor vehicles by self-help on default of a payment contract which provides for such repossession, is an act under color of state law, and thus gives rise to a claim under 42 U.S.C. § 1983, in view of the provisions of sections 9503 and 9504 of the California Commercial Code and is thus state action within the meaning of the Fourteenth Amendment; and whether such sections are unconstitutional as state action which authorizes summary repossession without affording due process.

The Hampton case involves an appeal from an order of the District Court for the Northern District of California dismissing appellant's complaint challenging the prejudgment summary repossession procedure for lack of jurisdiction over the subject matter. The appeal from the decision in the consolidated cases from the Southern District was joined with the appeal from the decision of the Northern District in this court.

Plaintiff-appellee Adams had been a continuous resident of California for nearly 48 years, and of San Diego for nearly eight years prior to the initiation of this action. While residing in San Diego, Adams had maintained a good credit record. In need of money for medical bills, on June 17, 1968, Adams borrowed $1,000 from the Bank of La Jolla (predecessor in interest to the S.

492 F.2d 327
Cal. Bank). In return for the loan, Adams executed a promissory note to repay $48.44 per month, for a total of $1,160.16, and a security agreement giving the bank a security interest in three vehicles — a 1961 VW sedan, a 1960 VW sedan, and a 1959 VW van. The security agreement contained the following language
"Should Debtor fail to make payment of any part of the principal or interest, as provided in said promissory note . . . the whole principal sum unpaid upon said promissory note with interest accrued thereon, . . . shall immediately become due and payable at the option of the Secured Party. Upon the occurrence of any such event of default Secured Party shall also have all of the rights and remedies of a Secured Party under the California Uniform Commercial Code, or any other applicable law, and all rights and remedies shall, to the extent permitted by law, be cumulative. Without limiting the generality of the foregoing, upon the occurrence of any such event of default the Secured Party is entitled to take possession of the vehicle and to take such other measures as Secured Party may deem necessary for the protection of the vehicles. . . ."

Between July, 1968 and October, 1970, Adams experienced three job changes and intermittent unemployment. By January 22, 1970, Adams had repayed nearly $900 of the loan. On this date he became unemployed, and a further payment was not made on his loan until July 7. Between July 25 and August 17, 1970, Adams and representatives of the S.Cal. Bank discussed the status of his loan, which at that point in time had an outstanding balance of $217.45.

On August 17, 1970, the decision was made by the S.Cal. Bank to take possession of the vehicles covered by the security agreement, and at some time between 5:00 p. m. on August 19 and 7:00 a. m. on August 20, Richard Egley, a repossessor licensed by the State of California, took the 1959 van and the 1960 sedan from Adams' possession.4

After deducting costs of repossession and storage of the vehicles from the proceeds of a private sale, the net recovery amounted to $219.15. This amount when applied against the balance due resulted in a deficiency of less than $1.00 which was cancelled.

On October 23, 1970, Adams filed suit in district court against the S.Cal. Bank and Richard Egley for damages and declaratory relief. The case was delayed pending decision by the Supreme Court of Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 32 L.Ed.2d 556 (1972). After that decision and following oral argument, Adams' motion for partial summary judgment for the declaratory relief sought was granted.

Plaintiff-appellant Hampton purchased a 1967 Buick on September 3, 1969. The purchase was financed by means of a contract of sale which was assigned to The Bank of California (Bank), and which called for 30 monthly payments of $118.30, or a total of $3,549. After nearly two years of making payments, Hampton was allegedly late in making his August, 1971 payment. Hampton claims that the Bank agreed that he could make up the missed payment at a later date, so long as he kept current on the rest of his payments, and in accordance with this agreement, Hampton tendered the next month's payment. This payment was returned to him, and sometime during the night of October 14, 1971, the Bank repossessed the car. In a letter dated October 4, the Bank noticed their intent to sell the vehicle unless Hampton paid the contract balance plus collection charges, a total of $946.89.

Hampton then commenced this lawsuit as a class action, challenging the constitutionality

492 F.2d 328
of summary pre-judgment repossession without due process requirements of notice and opportunity for a hearing. The district judge enjoined the private sale pending a hearing on an order to show cause. Following settlement of the dispute between the Bank and Hampton, the trial judge for the Northern District of California on his own motion dismissed the case for lack of subject matter jurisdiction, finding that the state action required for jurisdiction in the federal courts under 28 U.S.C. § 1343(3) was lacking. An appeal was taken which has been consolidated with the appeal in the Adams case

The issue on these appeals is whether prejudgment self-help repossession of secured property, as provided for in the security agreements between the creditors and the debtors and as authorized under sections 9503 and 9504 of the California Commercial Code involves sufficient state action to establish a federal cause of action.5 Adams and Hampton invoke the jurisdiction of the federal courts pursuant to 42 U.S.C. § 1983 and 28 U.S.C. § 1343(3),6 claiming that the summary repossession procedures constitute action taken "under color of state law" within the meaning of the Fourteenth Amendment.7 If the repossession was not state action but only an individual invasion of individual rights, then the remedy is not the subject of the Fourteenth Amendment. Civil Rights Cases, 109 U.S. 3, 11, 3 S. Ct. 18, 27 L.Ed. 835 (1883). Adams also asserts federal question jurisdiction under 28 U.S.C. § 1331.

Both Adams and Hampton allege that California authorizes, regulates and participates in self-help repossessions by means of a pervasive statutory scheme which sets forth, inter alia, the basic right to repossess summarily; several terms which must appear in retail installment contracts; the procedures to be followed during and after repossessions; licensing requirements for a person...

To continue reading

Request your trial
109 practice notes
  • Roberts v. Cameron-Brown Co., Civ. A. No. 174-62.
    • United States
    • United States District Courts. 11th Circuit. United States District Court (Southern District of Georgia)
    • February 4, 1975
    ...Corp., 359 F.Supp. 1079 (M.D. Ga.1973). Accord Bond v. Dentzer, 494 F.2d 302 (2d Cir. 1974); Adams v. Southern Calif. First Nat'l Bank, 492 F.2d 324, 13 UCC Rptr. 161, 174 (9th Cir. 1973); Bichel Optical Laboratories v. Marquette Nat'l Bank, 487 F.2d 906 (8th Cir. 1973); Pease v. Havelock N......
  • Writers Guild of America, West, Inc. v. FCC, No. CV 75-3641-F
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • November 4, 1976
    ...cert. denied, 419 U.S. 1001, 95 S.Ct. 320, 42 L.Ed.2d 277 (1974); Adams v. 423 F. Supp. 1136 Southern California First National Bank, 492 F.2d 324, 334-35 (9th Cir. 1973), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974); cf. Lucas v. Wisconsin Electric Power Co., 466 F.2d 6......
  • De Malherbe v. INTERN. U. OF ELEVATOR CONSTRUCTORS, No. C-76-1668-CBR.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • July 16, 1979
    ...a substantial question as to the existence of state action" for jurisdiction to obtain). See also Adams v. Southern California Nat'l Bank, 492 F.2d 324, 338 (9 Cir. 1974), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974); Hines v. Cenla Community Action Comm., Inc., 474 F.2d......
  • Shapiro v. Columbia Union Nat. Bank and Trust Co., No. 60561
    • United States
    • United States State Supreme Court of Missouri
    • December 18, 1978
    ...739, 741 (2nd Cir. 1974), Cert. den. 419 U.S. 1009, 95 S.Ct. 329, 42 L.Ed.2d 284 (1974); Adams v. Southern California First National Bank, 492 F.2d 324, 329 (9th Cir. 1973); Martin Hodas, East Coast Cinematics v. Lindsay, 431 F.Supp. 637 (D.C.N.Y.1977); Weiss v. J. C. Penney, Co., Inc., 414......
  • Request a trial to view additional results
110 cases
  • Roberts v. Cameron-Brown Co., Civ. A. No. 174-62.
    • United States
    • United States District Courts. 11th Circuit. United States District Court (Southern District of Georgia)
    • February 4, 1975
    ...Corp., 359 F.Supp. 1079 (M.D. Ga.1973). Accord Bond v. Dentzer, 494 F.2d 302 (2d Cir. 1974); Adams v. Southern Calif. First Nat'l Bank, 492 F.2d 324, 13 UCC Rptr. 161, 174 (9th Cir. 1973); Bichel Optical Laboratories v. Marquette Nat'l Bank, 487 F.2d 906 (8th Cir. 1973); Pease v. Havelock N......
  • Writers Guild of America, West, Inc. v. FCC, No. CV 75-3641-F
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • November 4, 1976
    ...cert. denied, 419 U.S. 1001, 95 S.Ct. 320, 42 L.Ed.2d 277 (1974); Adams v. 423 F. Supp. 1136 Southern California First National Bank, 492 F.2d 324, 334-35 (9th Cir. 1973), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974); cf. Lucas v. Wisconsin Electric Power Co., 466 F.2d 6......
  • De Malherbe v. INTERN. U. OF ELEVATOR CONSTRUCTORS, No. C-76-1668-CBR.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • July 16, 1979
    ...a substantial question as to the existence of state action" for jurisdiction to obtain). See also Adams v. Southern California Nat'l Bank, 492 F.2d 324, 338 (9 Cir. 1974), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974); Hines v. Cenla Community Action Comm., Inc., 474 F.2d......
  • Shapiro v. Columbia Union Nat. Bank and Trust Co., No. 60561
    • United States
    • United States State Supreme Court of Missouri
    • December 18, 1978
    ...739, 741 (2nd Cir. 1974), Cert. den. 419 U.S. 1009, 95 S.Ct. 329, 42 L.Ed.2d 284 (1974); Adams v. Southern California First National Bank, 492 F.2d 324, 329 (9th Cir. 1973); Martin Hodas, East Coast Cinematics v. Lindsay, 431 F.Supp. 637 (D.C.N.Y.1977); Weiss v. J. C. Penney, Co., Inc., 414......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT