Cook v. Carlson

• Decision Date: 02 August 1973
• Docket Number: Civ. 73-4042.
• Citation: 364 F. Supp. 24
• Parties: Elizabeth W. COOK, Plaintiff, v. Milton O. CARLSON, Defendant.
• Court: U.S. District Court — District of South Dakota

364 F. Supp. 24

Elizabeth W. COOK, Plaintiff, v. Milton O. CARLSON, Defendant.

Civ. 73-4042.

United States District Court, D. South Dakota, S. D.

August 2, 1973.

Timothy J. Nimick, Woods, Fuller, Shultz & Smith, Sioux Falls, S. D., appeared in behalf of plaintiff.

R. G. May, May, Johnson & Burke, Sioux Falls, S. D., appeared in behalf of defendant.

MEMORANDUM DECISION

NICHOL, Chief Judge.

This case centers upon the constitutionality of South Dakota's mechanics' and materialmen's lien statutes, S.D. Comp.L.Ann. 44-9 et seq. (1967). For reasons stated hereafter, I conclude that those statutes are constitutional.

The controversy necessitating resolution of this important and complex issue is rather simple. The plaintiff, Elizabeth W. Cook, is the owner of certain commercial rental property in Sioux Falls, South Dakota, a portion of which property she leases to Management Diversified Services of North Dakota, Inc. (M.D.S.). M.D.S. contracted with the defendant, Milton O. Carlson, for the improvement of that portion of the premises leased by M.D.S. Plaintiff contends that this contract violates the lease in that her prior written consent was not obtained. It is the contention of the defendant that plaintiff's husband acted as her agent in this matter and that he had authorized the improvements. On April 20, 1973, presumably upon failure of payment, defendant filed a mechanics' and materialmen's lien against the entire premises.

Under the South Dakota statutory scheme, whoever, at the instance of a property owner or his authorized representative, furnishes labor or materials for the alteration or repair of any building shall have a first lien upon the property, cutting off all subsequent purchasers and encumbrancers. S.D.Comp.L. Ann. 44-9-1 (1967). The lien attaches, without the necessity of filing, from the time the first item of material or labor is furnished upon the premises for the beginning of the improvement. S.D. Comp.L.Ann. 44-9-7 (1967). As against a bona fide purchaser, mortgagee or encumbrancer without notice, the lien does not attach prior to the actual and visible beginning of the improvement upon the premises, unless the lienholder files notice of the lien with the county register of deeds, which provides constructive notice to subsequent purchasers and encumbrancers. S.D.Comp. L.Ann. 44-9-8 (1967). The lien terminates unless a statement of the claim is filed with the register of deeds of the county in which the property is situated within 120 days of the completion of the improvements. S.D.Comp.L.Ann. 44-9-15 (1967). The lien also terminates unless an action to enforce is commenced within six years of the completion of the improvement. S.D.Comp.L.Ann. 44-9-24 (1967). The owner may make written demand upon the lienholder at any time, and if the lienholder does not commence a suit to enforce the lien within 30 days, the lien is forfeited. S.D.Comp.L.Ann. 44-9-26 (1967).

The plaintiff challenges this statutorily prescribed procedure on the ground that it affords no notice or opportunity to be heard prior to the attachment of the lien and thereby deprives the plaintiff of her property without due process of law. She prays that the lien be declared void, that the defendant be permanently enjoined from attempting to enforce it, and that the statutory scheme under which it attached be declared unconstitutional. 28 U.S.C. Sec. 1343 provides plaintiff's jurisdictional base, and 42 U.S.C. Sec. 1983 provides her basis in substantive law.

It is a fundamental principle that the ". . . procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as the private interest that has been affected by governmental action." Cafeteria Workers v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961); Goldberg v. Kelly, 397 U.S. 254, 263, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970); Bell v. Burson, 402 U.S. 535, 540, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971). Thus, whether or not a prior hearing is required in a given situation is dependent upon a judicial weighing of the seriousness of the deprivation against the importance of the governmental or public interest served by summary procedure. Boddie v. Connecticut, 401 U.S. 371, 378-379, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971). In certain areas, the existence and severity of the deprivation are not questioned. Where an individual is threatened with the deprivation of his liberty, there is no question that an effective prior hearing is required. Argersinger v. Hamlin, 407 U. S. 25, 92 S.Ct. 2006, 32 L.Ed.2d 530 (1972). Where an individual is threatened with the deprivation of title to or possession of property, there is no question. Chicago, Burlington and Quincy R.R. Co. v. Chicago, 166 U.S. 226, 17 S. Ct. 581, 41 L.Ed. 979 (1897). Where an individual is completely deprived of the use and enjoyment of that property, there is no question. Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969). The Supreme Court has recently held that an individual is entitled to a prior hearing when threated with the loss of a statutory entitlement such as welfare benefits or a driver's license. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970); Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971). At the frontier are courts which hold that a customer is entitled to a hearing before a utility company can terminate service, Lamb v. Hamblin, 57 F.R.D. 58 (D. Minn. 1972), and that a husband is entitled to a hearing before the issuance of a restraining order keeping him away from his home pending divorce proceedings. Geisinger v. Voss, 352 F.Supp. 104 (E.D. Wis. 1972).

The most recent objects of this weighing process have been summary creditors' remedies. With its decisions in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) and Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), the Supreme Court of the United States has inspired a massive judicial assault on summary creditors' remedies. Among the casualties have been landlords' lien remedies, Hall v. Garson, 468 F.2d 845 (5th Cir. 1972); MacQueen v. Lambert, 348 F.Supp. 1334 (M.D. Fla. 1972); Gross v. Fox, 349 F.Supp. 1164 (E.D. Pa. 1972), creditors' self-help repossession remedies, Adams v. Egley, 338 F. Supp. 614 (S.D. Cal. 1972), garagemen's lien remedies, Straley v. Gassaway Motor Co., Inc., 359 F.Supp. 902 (U.S.D.C. S.W.Va.1973), Mason v. Garris, 360 F. Supp. 420 (U.S.D.C. N.Ga. 1973), pre-judgment real property attachment remedies, Lake Arrowhead Estates, Inc. v. Cumming, 360 F.Supp. 1085 (U.S.D.C. Me. 1973), Idaho First National Bank v. Rogers, 41 U.S.L.W. 2492 (Idaho Dist. Ct., First Jud.Dist., Feb. 21, 1973), and remedies available to municipal and privately-owned utility companies by which they can terminate service without prior hearing, Ihrke v. Northern States Power Co., 459 F.2d 566 (8th Cir. 1972); Lamb v. Hamblin, 57 F.R.D. 58 (D. Minn. 1972). Rationale once deemed sufficient to justify these summary remedies have fallen to the superior interest of the individual in a fair and timely process of decisionmaking when the possession of his property is threatened.

But because some rationale have fallen before certain interests does not mean that other rationale must fall before other interests. This court is presented with a challenge to a previously unscathed creditors' remedy — the mechanics' and materialmen's lien. The test against which the validity of the lien must be measured, and possibly the most concise statement of the weighing process referred to above, is set forth in Boddie v. Connecticut, 401 U.S. 371, 378-379, 91 S.Ct. 780, 786, 28 L.Ed.2d 113 (1971):

What the Constitution does require is "an opportunity * * * granted at a meaningful time and in a meaningful manner," "for a hearing appropriate to the nature of the case". The formality and procedural requisites for the hearing can vary, depending upon the importance of the interests involved and the nature of the subsequent proceedings. That the hearing required by due process is subject to waiver, and is not fixed in form does not affect its root requirement that an individual be given an opportunity for a hearing before he is deprived of any significant property interest, except for extraordinary situations where some valid governmental interest is at stake that justifies postponing the hearing until after the event. In short, "within the limits of practicability," a State must afford to all individuals a meaningful opportunity to be heard if it is to fulfill the promise of the Due Process Clause. (citations omitted) (emphasis added).

Whether the mechanics' and materialmen's lien withstands constitutional attack, then, is dependent upon two considerations: (1) whether the deprivation can be classified as "insignificant" or "de minimis"¹; and, (2) whether the lien constitutes that "extraordinary situtation . . . that justifies postponing the hearing until after the event."

In the view of this court, the deprivation which results from the filing of a mechanics' lien is de minimis. The creditors' remedies thus far invalidated have completely, though temporarily, deprived the owner of the use of his property. Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L. Ed.2d 349 (1969) (garnishment "freezes" wages and prevents their use by debtor); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) (writ of replevin authorizes sheriff to seize the property, depriving debtor of possession and use); Hall v. Garson, 468 F.2d 845 (5th Cir. 1972) (landlords' lien allows landlord to seize tenants' personal property as security for rent payments); Adams v. Egley, 338 F.Supp. 614 (S.D. Cal. 1972)(self-help repossession remedies authorize creditor to peaceably seize collateral upon default in payments); Straley...