Frank Santora Equipment Corp. v. City of New York
| Decision Date | 03 February 1988 |
| Parties | , 6 UCC Rep.Serv.2d 1297 FRANK SANTORA EQUIPMENT CORP. and Credit Alliance Corporation, Plaintiffs, v. The CITY OF NEW YORK, Defendant. |
| Court | New York Supreme Court |
Lewis Hovid, New York City, for plaintiffs.
Peter L. Zimroth, Corp. Counsel of City of New York, New York City, for defendant.
Legal issues raised in connection with civil forfeiture proceedings have recently occupied the attention of this court (See, e.g. City of New York v. David Siegel, 134 Misc.2d 172, 509 N.Y.S.2d 1021).
In this action, the plaintiff, a secured party having a perfected security interest in two large dump trucks seeks a preliminary injunction against the City of New York ("City") directing the City to return the trucks seized in connection with a claim of forfeiture.
The basic facts are these: The City's agents seized the two trucks, which had been sold to Major Taylor Trucking Co., Inc. under a conditional sale contract and note, and impounded them for alleged violations of the Administrative Code § 16-119, which prohibits "dumping" on city streets. As indicated, the secured party had properly perfected its UCC security interests in the vehicles and had filed with the New York State Department of Motor Vehicles a form noting the lien interest on the registration title certificate for the two trucks. The plaintiffs were apparently never notified of the forfeiture proceedings.
It is the plaintiff's position that it has an "absolute and inviolate right" to access to the trucks and to take possession of them upon default in payment (U.C.C. § 9-503). This right, it is claimed, is superior to the City's claim of possession under the forfeiture regulation. From this point, it is argued that the forfeiture section under the anti-dumping provision of the Administrative Code was never intended to foreclose the title of the secured lien holder who has an absolute right to possession upon default.
The disposition of this application revolves around the requirement for preliminary injunctive relief that the movant demonstrate a likelihood of success on the merits.
The City says, in effect, that there is not only no likelihood of success on the merits, but that the legal premise of plaintiff's application is legally unsupportable and accordingly they have cross-moved to dismiss the action.
The City's position is, I believe, the correct one. First, the plaintiff's ownership interests in the trucks will not be forfeited unless they permitted the trucks to be used for illegal dumping. The ownership interest that is subject to forfeiture is the ownership interest of Major Taylor, the party that was found liable for illegal dumping (emphasis supplied).
It is clear that in an in rem proceeding such as a forfeiture action, custody of the res is jurisdictionally necessary. ( Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 679, 94 S.Ct. 2080, 2089-90, 40 L.Ed.2d 452 (1974). Also, the Administrative Code provisions at issue exclude as an owner persons who have a security interest but not possession of the vehicle (i.e. VTL § 388(3)). This means, of course, that the innocent secured party's interest cannot be forfeited.
That being said, it does not follow that the secured party has a right to an immediate return of the collateral based...
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