Helfinstine v. Martin

• Decision Date: 15 March 1977
• Docket Number: No. 47719,47719
• Citation: 561 P.2d 951
• Parties: 21 UCC Rep.Serv. 670 Robert E. HELFINSTINE, Appellant, v. Shelby MARTIN and Ford Motor Credit Company, a corporation, Appellees.
• Court: Oklahoma Supreme Court

Page 951

561 P.2d 951

21 UCC Rep.Serv. 670

Robert E. HELFINSTINE, Appellant, v. Shelby MARTIN and Ford Motor Credit Company, a corporation, Appellees.

No. 47719.

Supreme Court of Oklahoma.

March 15, 1977.

Max Cook and Ronald A. Callicott, Cook & Callicott, Lawton, for appellant.

Ralph W. Newcombe, Newcombe & Redman, Inc., Lawton, for appellees.

Michael Paul Kirschner, Hastie, Kirschner & Brown, Oklahoma City, for First National Bank and Trust Co. of Oklahoma City, amicus curiae.

James A. Bagley, Bagley & Moorman, Oklahoma City, for Fidelity Bank, N.A., of Oklahoma City, amicus curiae.

Robert L. Wheeler, Oklahoma City, for Oklahoma Bankers Association, amicus curiae.

BARNES, Justice:

Appellees filed Petition for Certiorari from a decision rendered April 20, 1976, by the Court of Appeals, Division No. 2, wherein it was held that the Appellees' act of repossessing certain collateral from Appellant was in violation of Article II, Section 7, of the Oklahoma Constitution in that such conduct constituted a deprivation of Appellant's property without first affording him due process of law, i.e., affording Appellant notice and an opportunity to be heard. The Court of Appeals specifically overruled the holding of the Trial Court, which upheld Appellees' act of repossessing its collateral, and, in effect, rendered unconstitutional both the statutory self-help repossession of 12A O.S.1971, § 9--503, and the self-help repossession terms of the parties' security agreement.

These issues raised in Appellant's original brief were:

'1. That the court erred in sustaining Defendants' Motion for judgment, notwithstanding the jury verdict for the reason that the court had no jurisdiction to render a judgment.

'2. That the court erred in sustaining Defendant's Motion for judgment, notwithstanding the verdict, for the reason that there was adequate evidence presented on the part of the Plaintiff to support the verdict of the jury.

'3. That the court erred in refusing to give Plaintiff's requested instruction to the fact that, 'A trespass may be considered a breach of the peace.'

The facts are not in dispute. Appellant, Robert E. Helfinstine, a painter by trade, entered into a retail installment contract and security agreement with Appellee Ford Motor Credit Company's assignor for the purchase of one 1970 El Camino Chevrolet pickup truck, pledging said vehicle as security for his obligation on the contract. Paragraph 19 ¹ of the agreement provided that in the event the buyer defaults or fails to comply with any other provision of the contract the seller shall have the right to declare 'all amounts due or to become due' and 'shall have all the rights and remedies of a Secured Party under the Uniform Commercial Code, including the right to repossess the Property wherever the same may be found with free right to entry, and to recondition and sell the same at public or private sale.'

Monthly payments on the mortgaged vehicle, though usually late, were made through August, 1973. Thereafter, in October, 1973, Appellant defaulted upon the installment obligation which was secured by the above-mentioned personal property. Appellee, Ford Motor Credit Company, was the creditor holding possession of the installment obligation and corresponding security agreement. Upon default, Appellee's agent, Shelby Martin, was dispatched to collect. He found Appellant incarcerated following a domestic complaint. After demand for and refusal of payment and after refusal of delivery of possession of the collateral by the debtor, the creditor, through its agent, Martin, repossessed the collateral from Appellant's driveway by means of self-help and drove the vehicle to Kirk's Wrecker Service and Salvage.

Upon his release from jail several days later, Appellant went directly to the credit company office to make arrangements to make up any payments. At that time he learned that his truck had been repossessed. Appellees refused to return the vehicle. Appellant's wife then joined him at the credit office and offered to make up to three payments for possession of the truck, but the woman in charge, on instructions from Florida, refused, and demanded the entire balance.

Appellant then instituted suit as against Appellees for conversion of the vehicle and sought (after amendment at trial) redelivery of his truck and cancellation of the mortgage which Appellees had against the property, or payment of its value and $50,000.00 punitive damages. Appellees' answer admitted taking the truck, but pleaded the right to do so arising from the retail installment contract Appellant signed and the Uniform Commercial Code, 12A O.S.1971, § 9--503.

The Trial Court rendered judgment for the Apellees notwithstanding the verdict of the jury in favor of Appellant for $594.00 actual and $20,000.00 punitive damages. On appeal, the Court of Appeals reversed, finding a wrongful conversion, that the self-help repossession terms of 12A O.S.1971, § 9--503, and of the security agreement were unconstitutional, and that the evidence was sufficient to sustain the verdict for the actual damages awarded.

On Petition for Certiorari Appellees contend (1) the Court of Appeals erroneously held 12A O.S.1971, § 9--503, to be unconstitutional.

The validity of self-help repossession as authorized in § 9--503 of the Uniform Commercial Code has been extensively litigated. That section which was adopted in Oklahoma in 1961 is set forth in 12A O.S.1971, § 9--503, and provides:

'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. If the security agreement so provifes the secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties. Without removal a secured party may render equipment unusable, and may dispose of collateral on the debtor's premises under Section 9--504. Laws 1961, p. 179, § 9--503.'

The Oklahoma Code Comment following this section states Oklahoma has previously allowed the secured party to take possession without judicial process so long as it was done without breach of the peace. Firebaugh v. Gunther, 106 Okl. 131, 233 p. 460 (1925). Furthermore, the right to peaceful self-help repossession of property under circumstances such as are here involved, far from being a right created by § 9--503 or case law, has roots deep in the common law. (2 F. Pollock and F. Maitland, The History of English Law, 573 (2d Ed. 1899), and 2 Blackstone, Commentaries on the Law of England, 857--858 (4th Ed. T. Colley, 1899)).

While the Supreme Court of the United States has not considered the constitutionality of § 9--503 of the Uniform Commercial Code, Appellant contends the statute does not on its face meet the requirements of notice and fair hearing established by the Supreme Court in Fuentes v. Shevin, 407 U.S. 67, 69, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), and North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975).

The United States Supreme Court, in Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948), held:

'Since the decision of this Court in the Civil Rights Cases, 109 U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835 (1883) the principle has become firmly embedded in our constitutional law that the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely rpivate conduct, however discriminatory or wrongful.' (Emphasis ours)

The question now before this Court was presented to the Supreme Court of Florida in Northside Motors of Florida, Inc. v. Brinkley, 282 So.2d 617 (Fla.1973). In that case the Trial Court had determined the self-help provision of § 9--503 to be unconstitutional, basing its decision on the authority of Fuentes v. Shevin, supra. The Florida Supreme Court reversed, holding the self-help provision of § 9--503 did not violate the due process clause of the Fourteenth Amendment because the due process clause was inapplicable to a factual situation presenting an individual invasion of individual rights, noting at page 620:

'* * * The Supreme Court of the United States has since emphasized and re-emphasized that state action will not be found in the purely private conduct of an individual voluntarily engaged in without some form of active assistance or cooperation on the part of the state. * * * (cases cited).'

The Florida Court adopted the language of Greene v. The First National Bank of Virginia, 348 F.Supp. 672 (W.D.Va.1972), which determined § 9--503 did not involve State action and was not violative of the Fourteenth Amendment, and went on to hold:

'We hold that self-help repossession by a creditor does not constitute state action. Florida Statutes, Section 679.503, F.SA., is no more than a codification or restatement of a common law right and a contract right recognized long before the promulgation thereof and creates no new rights. 2 Pollock & Maitland, The History of English Common Law (2nd ed. 1968), 574, 2 Blackstone, Commentaries on the Laws of England, 856--858, Messenger v. Sandy Motors, Inc., 121 N.J.Super. 1, 295 A.2d 402 (1972), Kipp v. Cozens, 11 U.C.C. Reporting Service 1067. Conditional sales or retain title contracts with self-help repossession provisions as the one entered into by the parties presently before us existed in this state long before statutes were enacted to regulate them. * * * (cases cited).'

The constitutionality of self-help repossession as authorized by § 9--503 has been the subject of numerous judicial challenges within the past decade. The United States Supreme Court has declined to grant certiorari to review four different appeals in which...