Leonards v. E.A. Martin Machinery Co.

• Decision Date: 03 July 1995
• Docket Number: No. 95-9,95-9
• Citation: 900 S.W.2d 546,321 Ark. 239
• Parties: A.P. LEONARDS d/b/a Carabeef Ranch, Appellant/Cross-Appellee, v. E.A. MARTIN MACHINERY COMPANY, Appellee/Cross-Appellant.
• Court: Arkansas Supreme Court

Page 546

900 S.W.2d 546

321 Ark. 239

A.P. LEONARDS d/b/a Carabeef Ranch, Appellant/Cross-Appellee, v. E.A. MARTIN MACHINERY COMPANY, Appellee/Cross-Appellant.

No. 95-9.

Supreme Court of Arkansas.

July 3, 1995.

[321 Ark. 241] Stephen P. Sawyer, Bentonville, for appellant.

Steven B. Davis, Harrison, for appellee.

CORBIN, Justice.

Appellant, A.P. Leonards d/b/a Carabeef Ranch (Leonards), appeals an order of the Benton County Chancery Court awarding a money judgment to appellee, E.A. Martin Machinery Company (Martin Machinery), for repairs Martin Machinery made to Leonards's bulldozer. Martin Machinery cross-appeals from that part of the order declaring the repairmen's lien statutes, Ark.Code Ann. §§ 18-45-201 to -207 (1987), unconstitutional as violative of both federal and state due process provisions set forth in U.S. Const. amend. 14 and Ark. Const. art. 2, § 8, respectively. Jurisdiction of this case is properly in this court as the constitutionality of a statute is questioned. Ark.Sup.Ct.R. 1-2(a)(3).

BACKGROUND FACTS

Testimony at trial revealed the following facts. In November 1992, Leonards contacted Martin Machinery concerning possible repairs to Leonards's 1965 model Caterpillar D8H bulldozer. Joe Bill Morris, then a field service mechanic for Martin Machinery, went to Carabeef Ranch and began discussing the bulldozer's problems with both Leonards and the ranch foreman, Jim Williamson. Morris suggested the bulldozer be transported to Martin Machinery's shop so the repairs could be done there. The bulldozer was transported to the shop where Martin Machinery made repairs to it for which Leonards was billed in the sum of $19,284.53.

Leonards questioned the amount of the bill as he thought it exceeded the current value of the bulldozer. Testimony from three witnesses placed the value of the bulldozer between $14,000.00 and $20,000.00. Leonards and Martin Machinery unsuccessfully attempted to reach a compromise on the repair bill. Pursuant to sections 18-45-201 to -207, Martin Machinery sent Leonards a notice dated July 9, 1993 of its intent to sell the bulldozer at public sale on July 31, 1993.

On July 30, 1993, Leonards initiated this suit by filing a petition in chancery court to enjoin the sale. Martin Machinery refrained from the sale, but answered the complaint in equity and counterclaimed for the amount of its repair bill, attorneys' fees, costs, and interest. In its answer, Martin Machinery asserted it was maintaining possession of the bulldozer in accordance with the repairmen's lien authorized in section 18-45-201. Leonards amended his petition twice to include a request that the repairmen's lien statutes be declared unconstitutional, a request for damages for lost use and wrongful possession of the bulldozer, and a request for damages for Martin Machinery's negligence in failing to advise Leonards of the costs of the repairs and in making the repairs without authorization from Leonards. A Deputy Attorney General for the State of Arkansas notified the trial court of the Attorney General's receipt of Leonards's second amended complaint as required by Ark.Code Ann. § 16-111-106(b) (1987), and informed the trial court that the Attorney General would not participate in the defense of the constitutionality of the repairmen's lien statutes.

After trial, the chancellor entered an order finding the repairmen's lien statutes unconstitutional, but dismissing Leonards's claims for damages. In addition, the chancellor awarded Martin Machinery attorneys' fees, interest, and the amount of the repair bill less $750.00 for unjustified expenses. The order did not address the issue of possession of the bulldozer.

Leonards's appeal and Martin Machinery's cross-appeal followed the entry of the trial court's order. We consider the cross-appeal first, as resolution of that question determines the need to address certain issues raised on direct appeal. See Nabholz Constr. Corp. v. Graham, 319 Ark. 396, 892 S.W.2d 456 (1995).

CROSS-APPEAL

Martin Machinery challenges the trial court's finding that the repairmen's lien statutes are unconstitutional as violative of the due process clauses in the United States and Arkansas Constitutions. The trial court ruled the repairmen's lien statutes violated both state and federal due process provisions because they did not provide the property owner with a right of replevin or conversion, or a hearing, or a right to post bond in order to obtain possession prior to the sale. In ruling the repairmen's lien laws unconstitutional, the trial court relied on Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978), and decisions of this court holding this state's statues on attachments, garnishments, and execution of judgments unconstitutional for lack of due process. See, e.g., Duhon v. Gravett, 302 Ark. 358, 790 S.W.2d 155 (1990); McCrory v. Johnson, 296 Ark. 231, 755 S.W.2d 566 (1988); see also Davis v. Paschall, 640 F.Supp. 198 (E.D.Ark.1986).

Martin Machinery makes several arguments on cross-appeal of which we consider only that concerning state action, as reversal is required on that point. Martin Machinery cites Flagg Bros., 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 and argues there was no state action in this case because there was no participation by any state officials. We agree with Martin Machinery and conclude the trial court's interpretation of Flagg Bros. and reliance on our case law on garnishment, attachment, and execution statutes was erroneous. Necessarily, we must consider separately the state action issue with respect to federal due process analysis and state due process analysis.

In the context of federal due process analysis, the issue of state action is well-settled in the area of state statutes on creditor's remedies and similar statutes. Citing with approval its decision in Flagg Bros., 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185, a case involving New York's version of the Uniform Commercial Code provision for a warehouseman's lien, § 7-210, the United States Supreme Court has stated that "[p]rivate use of state-sanctioned private remedies or procedures does not rise to the level of state action." Tulsa Prof. Collection Servs. v. Pope, 485 U.S. 478, 485, 108 S.Ct. 1340, 1345, 99 L.Ed.2d 565 (1988). The Supreme Court went on to state that "when private parties make use of state procedures with the overt, significant assistance of state officials, state action may be found." Id. at 486, 108 S.Ct. at 1345. Thus, we observe a significant distinction between cases involving actions taken by or with the overt assistance of state officials and those that do not involve any action or assistance by state officials. The former class of cases may include among others, procedures for attachment or execution of a judgment as those procedures necessarily require state action by a judge or sheriff or both. For example, in an attachment case, a creditor must first obtain a writ of attachment from a court and then have that writ executed by a sheriff. See, e.g., Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982). The latter class of cases may include cases such as the instant one where no action by a state official was taken inasmuch as Martin Machinery asserted its possessory lien pursuant to statute, but used no assistance from any state official in so doing. See, e.g., Flagg Bros., 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185. The Pope Court's classification was more recently relied upon by the Supreme Court in Connecticut v. Doehr, 501 U.S. 1, 111 S.Ct. 2105, 115 L.Ed.2d 1 (1991).

Therefore, we hold that, with respect to the application of federal due process analysis to this case, no state action has occurred, thus the deprivation of Leonards's property interest is not protected by the Fourteenth Amendment. While ownership is a significant interest in property, Mitchell v. W.T. Grant Co., 416 U.S. 600, 604, 94 S.Ct. 1895, 1898, 40 L.Ed.2d 406 (1974), it is a property interest that the Fourteenth Amendment protects only from deprivations by state action, not by private action. Pope, 485 U.S. at 485, 108 S.Ct. at 1345. The trial court misinterpreted Flagg Bros. and overlooked the distinction between private parties who utilize overt assistance from state officials and private parties who do not make use of state officials when relying on statutory remedies for settling a dispute. The trial court therefore erred in holding our repairmen's lien laws unconstitutional as applied in this case for violating federal due process requirements. We would reach an entirely different result, of course, had Martin Machinery used the assistance of any state official to retain possession of the bulldozer or to effect its sale.

Turning now to consideration of the state action issue in the context of due process under the Arkansas Constitution, we begin with this court's determination of state action in South Central Dist. of the Pentecostal Church of God of America, Inc. v. Bruce-Rogers Co., 269 Ark. 130, 599 S.W.2d 702 (1980). In Bruce-Rogers, this court held that the Arkansas mechanics' and materialmen's lien statutes, currently codified as Ark.Code Ann. §§ 18-44-101 to -133 (1987 & Supp.1993), did not violate either federal or state due process provisions. ¹ On the Arkansas constitutional question, this court observed, without discussion, that state action was involved in the lien procedures there at issue. Bruce-Rogers, 269 Ark. at 139, 599 S.W.2d at 705. However, the issue of state action was not raised in that case, and, thus, was an issue this court passed upon sub silentio. This court has never held itself bound by matters upon which it passed sub silentio, Ellison v. Oliver, 147 Ark. 252, 259, 227 S.W. 586, 588 (1921), nor has the United States Supreme Court, Harper v. Virginia Dept. of Taxation, 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993). As such, we are not bound by the statement of state action...