Brown v. Babbitt Ford, Inc.

• Decision Date: 30 August 1977
• Docket Number: CA-CIV,No. 1,1
• Parties: , 23 UCC Rep.Serv. 266 Alice BROWN, Appellant, v. BABBITT FORD, INC., an Arizona Corporation, Appellee. 3363.
• Court: Arizona Court of Appeals

Page 689

571 P.2d 689

117 Ariz. 192, 23 UCC Rep.Serv. 266

Alice BROWN, Appellant, v. BABBITT FORD, INC., an Arizona Corporation, Appellee.

No. 1 CA-CIV 3363.

Court of Appeals of Arizona, Division 1, Department C.

Aug. 30, 1977.

Rehearing Denied Oct. 7, 1977.

Review Denied Nov. 1, 1977.

Robert L. Miller, Tuba City, and Richard W. Hughes, Window Rock, for appellant

Mangum, Wall & Stoops by Gerald W. Nabours, Flagstaff, for appellee.

OPINION

JACOBSON, Presiding Judge.

In this appeal from a dismissal of plaintiff's complaint for failure to state a cause of action, we are asked to determine the legal effect of a Navajo tribal resolution which creates civil liability for repossessing personal property from within the Navajo Reservation in other than a prescribed manner.

Appellant-plaintiff, Alice Brown, brought an action in the Superior Court of the state of Arizona, Coconino County, seeking civil penalties prescribed by a resolution of the Navajo Tribal Council for failure of appellee, Babbitt Ford, Inc., to comply with a Navajo Tribal Council resolution concerning repossession of personal property within the boundaries of the Navajo Reservation. The trial court granted Babbitt Ford's motion to dismiss for failure to state a claim for which relief could be granted, and Brown has appealed.

The facts as alleged in Brown's complaint or as conceded by the parties are that Alice Brown is a Navajo Indian residing at Tuba City, Coconino County, Arizona. Tuba City is within the exterior boundaries of the Navajo Reservation and the state of Arizona.

On March 3, 1973, Brown purchased a 1972, one-half ton, Ford pickup truck from Babbitt Ford in Flagstaff, Arizona. Flagstaff, Arizona is outside the exterior boundaries of the Navajo Reservation. The purchase price of the pickup truck was financed in part by an installment sales security agreement with the pickup truck as the collateral for that agreement. This agreement provides, insofar as pertinent to this litigation, that in the event of a default occurring under the agreement, "Secured party shall have all rights and remedies for default provided by the Arizona Uniform Commercial Code, . . . " and that "(t)he validity, construction, and enforcement of this Agreement are governed by the laws of Arizona."

At all times pertinent here, A.R.S. § 44-3149 of the Arizona Uniform Commercial Code provided in part:

"Unless otherwise agreed a secured party has on default the right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action." (emphasis added)

The security agreement was assigned by Babbitt Ford to the Arizona Bank. Apparently Brown had difficulty keeping the payment current under the security agreement for on March 21, 1974, Brown refinanced the pickup with Babbitt Ford. The refinancing was also subject to an installment sale security agreement identical in pertinent terms to the original agreement. This agreement was also assigned to the Arizona Bank.

Sometime prior to December 21, 1974, Brown defaulted in the payments under the security agreement and Arizona Bank upon being paid the balance due under the agreement by Babbitt Ford, reassigned the agreement back to Babbitt Ford.

On December 21, 1974 ¹ agents of Babbitt Ford repossessed the pickup truck from the grounds of the Tuba City High School in Tuba City, Arizona. This repossession was accomplished without a breach of the peace and pursuant to the "self-help" provisions of the Arizona Uniform Commercial Code.

At the time of the repossession, the Navajo Tribal Council had passed a resolution (7 N.T.C. § 307) which provided in part that:

" § 307. Repossession of personal property.

"The personal property of Navajo Indians shall not be taken from land subject to the jurisdiction of the Navajo Tribe under the procedures of repossession except in strict compliance with the following:

"(a) Written consent to remove the property from land subject to the jurisdiction of the Navajo Tribe shall be secured from the purchaser at the time repossession is sought. The written consent shall be retained by the creditor and exhibited to the Navajo Tribe upon proper demand.

"(b) Where the Navajo refuses to sign said written consent to permit removal of the property from the land subject to the jurisdiction of the Navajo Tribe, the property shall be removed only by order of a Tribal Court of the Navajo Tribe in an appropriate legal proceeding."

Section 309 of the Navajo Tribal Code (7 N.T.C. § 309) provides that any person who violates section 307 "shall be civilly liable to the purchaser," for a sum not less than "the credit service charge plus ten percent (10%) of the principal amount of the debt or the time price differential plus ten percent (10%) of the cash price."

Babbitt Ford neither secured the written consent of Brown at the time of repossession nor obtained an order of the Navajo Tribal Council prior to the repossession.

In this case, Brown sought damages, in addition to other relief, in a sum "equal to the time price differential plus ten percent (10%) of the cash price of her vehicle, as set forth in Plaintiff's original motor vehicle installment sale security agreement." In this case, that sum would be $1,213.04.

The sole issue raised by this appeal is whether the violation of § 307 of Title 7 of the Navajo Tribal Code will give rise to a cause of action in the Arizona State Superior Court.

At this juncture, in order to focus our inquiry, it is important to state what is not before us. We do not have the issue of whether, if Brown had brought an action in Navajo Tribal Court for violation of § 307, and a judgment obtained in that forum ² the state of Arizona would give either full faith and credit or comity to that judgment. Likewise, we do not have any issue as to whether the state of Arizona is attempting to enforce its laws or impose its authority within the boundaries of the Navajo Reservation. ³ In fact, the opposite is true. The jurisdiction of the Arizona courts has been invoked for the purpose of enforcing the statutory enactments of the Navajo Tribal Council.

In short, we have a dispute between two citizens of Arizona (one a Navajo Indian and the other a private corporation) concerning their contractual rights, obligations and actions.

Having thus narrowed our field of inquiry, we turn to Brown's contention as to why her complaint stated a cause of action. Her underlying thesis is that this is a conflict of laws case. Once that principle is accepted, she then argues that Navajo Tribal Law should govern and under that law she has a cause of action.

Central to her theory is the premise that a "law" exists which Arizona will recognize and thus create a conflict. The "law" sought to be recognized is, of course, 7 N.T.C. § 307 and it is urged that recognition of this law may be had either under the doctrine of full faith and credit or under the principles of comity.

FULL FAITH AND CREDIT

Brown immediately concedes that under the rationale of Begay v. Miller, 70 Ariz. 380, 222 P.2d 624 (1950), 7 N.T.C. § 307 is not entitled to "full faith and credit" under U.S.Const. art. 4, § 1, as that clause applies only between states of the union. She does argue, however, that under federal law, 28 U.S.C. § 1738, ⁴ 7 N.T.C. § 307 is entitled to full faith and credit in the courts of the state of Arizona, because the Navajo Tribe is a " territory" within the meaning of that section. Since Begay v. Miller, supra, did not consider the effect of 28 U.S.C. § 1738, it is an open question in Arizona as to whether the Navajo Tribe is a "territory" so as to fall within the provisions of that statute.

At the outset, we recognize that the Supreme Court of our sister state of New Mexico has granted "territory" status to the Navajo Tribe within the meaning of 28 U.S.C. § 1738. Jim v. CIT Services Corporation, 87 N.M. 362, 533 P.2d 751 (1975). The New Mexico Supreme Court in turn relied upon the reasoning of the dissenting opinion of Judge Hernandez in the New Mexico Court of Appeals decision in the same case. 86 N.M. 784, 787-788, 527 P.2d 1222, 1227 (1974), rev'd on other grounds, 87 N.M. 362, 533 P.2d 751 (1975). Judge Hernandez in reaching his conclusion that the Navajo Tribe was a "territory" relied upon two cases Mackey v. Cox, 59 U.S. 100, 15 L.Ed. 299 (1855), and Americana of Puerto Rico, Inc. v. Kaplus, 368 F.2d 431 (3rd Cir. 1966), cert. denied, 386 U.S. 943, 87 S.Ct. 977, 17 L.Ed.2d 874 (1967). Admittedly, language from these cases would leave one to believe that Indian Reservations are "territories". For example, in Mackey v. Cox, supra, the United States Supreme Court stated:

"A question has been suggested whether the Cherokee people should be considered or treated as a foreign state or territory. The fact that they are under the constitution of the Union, and subject to Acts of Congress regulating trade, is a sufficient answer to that suggestion. They are not only within our jurisdiction, but the faith of the nation is pledged for their protection. In some respects they bear the same relation to the federal government as a territory did in its second grade of government, under the Ordinance of 1787. Such territory passed its own laws, subject to the approval of Congress, and its inhabitants were subject to the Constitution and Acts of Congress. The principal difference consists in fact that the Cherokees enact their own laws, under the restrictions stated, appoint their own officers, and pay their own expenses. This, however, is no reason why the laws and proceedings of the Cherokee territory, so far as relates to rights claimed under them, should not be placed upon the same footing as other territories in the Union. It is not a foreign, but a domestic territory a territory which originated under our Constitution and laws." (emphasis added) 15 L.Ed. at 301.

However, Mackey...