Fermont Division, Dynamics Corp. of America, Inc. v. Smith

• Decision Date: 17 July 1979
• Citation: 423 A.2d 80,178 Conn. 393
• Court: Connecticut Supreme Court
• Parties: FERMONT DIVISION, DYNAMICS CORPORATION OF AMERICA, INC. v. Eugene SMITH.

Page 80

423 A.2d 80

178 Conn. 393

FERMONT DIVISION, DYNAMICS CORPORATION OF AMERICA, INC. v. Eugene SMITH.

Supreme Court of Connecticut.

Argued May 3, 1979.

Decided July 17, 1979.

Bruce E. Stern, Norwalk, for appellant (defendant).

John J. Graham, Bridgeport, with whom was Jonathan P. Blucher, Wantagh, N. Y., of the New York bar, for appellee (plaintiff).

Before COTTER, C. J., and LOISELLE, LONGO, PETERS and PARSKEY, JJ.

PETERS, Associate Justice.

This case concerns the propriety of certain prejudgment remedies obtained by the plaintiff at the commencement of its suit against the defendant to collect the balance of the purchase price of certain goods and services. The plaintiff manufactures and sells engine generator sets and related spare parts. It also provides market research services known as Dodge Scan Services. From May 1975 until February 1977, the plaintiff and the defendant maintained a business relationship through which the defendant purchased many such goods and services from the plaintiff.

On August 22, 1977, the plaintiff instituted suit against the defendant for approximately $91,000, the balance then claimed to be due on purchases. At the same time, the plaintiff applied, under the provisions of General Statutes § 52-278e, for prejudgment remedies consisting of garnishments of the defendant's bank accounts, attachment of his personal property, and temporary restraining orders against him. Attached to the application for prejudgment remedies was a supporting affidavit sworn to by the plaintiff's president, alleging in detail the factual bases for the plaintiff's claims of $91,000 due, and alleging further, upon information and belief, (1) that the defendant was by his own statement insolvent, and (2) that the defendant was fraudulently concealing and disposing of his property to the detriment of the plaintiff.

The trial court on August 23, 1977, in an ex parte proceeding without notice or hearing, found probable cause to sustain the validity of the plaintiff's claim and granted the requested prejudgment remedies. The original prejudgment remedies were twice subsequently modified on motions by the plaintiff to include further garnishments and an attachment of the defendant's real property. The defendant on November 10, 1977, moved to dissolve the prejudgment remedies. A week later, after a hearing before the court, the motion was denied, and from that denial the defendant has taken this appeal.

On appeal, the defendant claims that the court erred (1) in upholding the constitutionality of General Statutes § 52-278e; (2) in refusing to dissolve the temporary restraining orders issued against him; and (3) in not permitting testimony prior to ruling on the defendant's motion to dissolve the prejudgment remedies. We shall consider each issue separately.

The defendant contends that General Statutes § 52-278e, ¹ under which the prejudgment remedies in this case were granted, violates the due process clauses of the state and federal constitutions because it does not provide for adequate notice and opportunity to be heard. Requirements of procedural due process in like situations have been discussed extensively in recent cases in this court; see Society for Savings v. Chestnut Estates, Inc., 176 Conn. 563, 409 A.2d 1020 (1979); Roundhouse Construction Corporation v. Telesco Masons Supplies Co., 168 Conn. 371, 362 A.2d 778 (1975), vacated, 423 U.S. 809, 96 S.Ct. 20, 46 L.Ed.2d 29 (1975), on remand, 170 Conn. 155, 365 A.2d 393 (1976), cert. denied, 429 U.S. 889, 97 S.Ct. 246, 50 L.Ed.2d 172 (1976); and in the United States Supreme Court; see North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975); Mitchell v. W. T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Sniadach v. Family Finance Corporation, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969). Section 52-278e complies with the due process standards developed by these cases.

"It is fundamental that property cannot be taken without procedural due process as guaranteed by the fourteenth amendment to the constitution of the United States and article first, § 10, of the constitution of Connecticut." Roundhouse Construction Corporation v. Telesco Masons Supplies Co., 168 Conn. 371, 376, 362 A.2d 778, 781 (1975). Due process requires notice and an opportunity to be heard "at a meaningful time and in a meaningful manner"; Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965); Society for Savings v. Chestnut Estates, Inc., supra, 176 Conn. 563-572, 409 A.2d 1020-1024; Roundhouse Construction Corporation v. Telesco Masons Supplies Co., 168 Conn. 371, 362 A.2d 778 (1975) but does not mandate any specific form of procedure; rather, it protects substantive rights. Mitchell v. W. T. Grant Co., supra, 416 U.S. 610, 94 S.Ct. 1895. As we expressly held in Roundhouse, supra, 168 Conn. 380, 362 A.2d 783, "in testing whether a lien or sequestration procedure complies with the requirements of due process it will be examined in its entirety, and the lack of a provision for a prior hearing in and of itself will not be constitutionally fatal if other saving characteristics are present."

Section 52-278e exhibits all the saving characteristics that the law of procedural due process requires. The statute provides for adequate judicial supervision of the entire process of seizure, and does not permit writs to be issued by a court clerk. The statute can be invoked only by a verified affidavit that contains factual, rather than merely conclusory, supporting allegations. Most important, the statute affords to the defendant whose property has been attached the opportunity to obtain an immediate post-seizure hearing at which the prejudgment remedy will be dissolved unless the moving party proves probable cause to sustain the validity of his claim.

The defendant next argues that temporary restraining orders were improperly granted as prejudgment remedies pursuant to the plaintiff's application. He points to the definition of "prejudgment remedy," contained in General Statutes § 52-278a (d), which provides: " 'Prejudgment remedy' means any remedy or combination of remedies that enables a person by way of attachment, foreign attachment, garnishment or replevin to deprive the defendant in a civil action of, or affect the use, possession or enjoyment by such defendant of, his property prior to final judgment but shall not include a temporary restraining order." (Emphasis added.) Although a temporary restraining order may not be issued as a prejudgment remedy, the statute does not preclude the granting of a temporary restraining order in addition to a prejudgment remedy.

The propriety of some ancillary temporary restraining orders is established by General Statutes § 52-278c B. ² That section provides that, in the normal application for prejudgment remedy, which contemplates a preseizure hearing, when the court clerk receives from an applicant the required documents (which include the proposed writ, summons, and complaint, the application for prejudgment remedy, supporting affidavit, order for hearing, and summons), he must fix a date for the hearing and sign the order of hearing and notice to the defendant. An exception to this normal procedure is provided for cases in which a temporary restraining order is requested in addition to the application for prejudgment remedy. In that event, a court or judge, rather than a clerk, must act on the application for temporary restraining order, fix the date for hearing on the prejudgment remedy, and sign the order of hearing and notice. The foregoing procedure thus insures judicial supervision of the request for a temporary restraining order during the interim period between the...