Massey-Ferguson Credit Corp. v. Peterson

• Decision Date: 11 July 1974
• Docket Number: MASSEY-FERGUSON,No. 11340,11340
• Citation: 96 Idaho 94,524 P.2d 1066
• Parties: CREDIT CORPORATION, Plaintiff-Respondent, v. Arthur PETERSON, Defendant-Appellant.
• Court: Idaho Supreme Court

Page 1066

524 P.2d 1066

96 Idaho 94

MASSEY-FERGUSON CREDIT CORPORATION, Plaintiff-Respondent, v. Arthur PETERSON, Defendant-Appellant.

No. 11340.

Supreme Court of Idaho.

July 11, 1974.

May, May & Sudweeks, Jay D. Sudweeks, Twin Falls, for defendant-appellant.

Ling & Nielsen, Rupert, for plaintiff-respondent.

McFADDEN, Justice.

This appeal presents for consideration the constitutionality of the Idaho Claim and Delivery statute ¹ within the purview of Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972). Subsequent to the submission of this case to this court for consideration, the United States Supreme Court issued its opinion in Mitchell v. W. T. Grant Co., -- U.S. --, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974), which directly bears on the issues in the instant appeal.

In September 1970, appellant Arthur Peterson purchased a Massey-Ferguson combine from Zitlau Motors on a retail installment contract. In November of the same year he purchased another Massey-Ferguson combine from the same distributor under a second retail installment contract and in June of 1971 appellant purchased a diesel tractor from the dealer also under a retail purchase contract. Zitlau Motors assigned its interests under these contracts to Massey-Ferguson Credit Corporation, the plaintiff-respondent. Financing statements concerning these contracts were duly filed in the Gooding County Recorder's office, pursuant to I.C. § 29-9-401(1).

After taking possession of the various items of equipment, Peterson used them in farming operations and in custom farm work. In December 1971 Peterson failed to make payments due under the contracts, and he and the respondent entered into a series of negotiations in an attempt to work out a satisfactory arrangement towards bringing the past due contracts into a satisfactory state. In July 1972 under one phase of the negotiations appellant allowed the respondent to take possession of the combine purchased in November 1971, which equipment remained in respondent's possession. However, negotiations did not bring the desired results and on August 4, 1972, the respondent corporation instituted the instant action under the provisions of i.C. § 8-306 et seq. The respondent filed its complaint alleging the execution of the retail installment contracts on the items of equipment by appellant, his taking delivery of the same, and his failure to make the payments as provided in the contracts.

In its complaint respondent sought to have the various items of personal property sold pursuant to the Uniform Commercial Code and to apply the proceeds to the balances due. The respondent also sought possession of the other two items of equipment still in possession of the appellant.

Respondent corporation also filed a bond as provided by I.C. § 8-304 and an affidavit for possession of the combine and tractor still in appellant's possession. ² This affidavit was addressed to the sheriffs of Gooding and Jerome Counties. The Gooding County sheriff went to appellant's farm, served appellant with a copy of the affidavit, undertaking and notice, and took possession of the diesel tractor. The Jerome County sheriff took possession of the combine on a farm where appellant was harvesting grain under contract. In each instance the respondent's agent. Moore, accompanied the sheriff.

On August 25, 1972, appellant filed his answer to the respondent's complaint, generally denying the allegations thereof, and also counterclaimed for the seizing by the sheriffs of the diesel tractor and the combine, seeking general and punitive damages and for costs of suit and attorneys' fees for the alleged wrongful seizure of the property.

Respondent filed a motion to dismiss the appellant's counterclaim, which motion was supported by an affidavit of Mr. Moore, the respondent's area finance manager. A second affidavit by Moore was filed and a counter-affidavit was filed by appellant, depositions of the appellant and Mr. Moore were taken and made a part of the record. The trial court treated respondent's motion to dismiss as a motion for summary judgment, and entered summary judgment dismissing appellant's counterclaim with prejudice. It is from this action by the trial court that this appeal was perfected.

It is the conclusion of this court that the trial court erred in granting respondent's motion for summary judgment and that judgment must be reversed and the cause remanded for the reasons hereinafter set out.

At the outset it is to be observed that from the record this court cannot determine the basis of the trial court's summary judgment of dismissal of appellant's counterclaim. However, in view of the state of the law at this juncture, it is clear that the provisions of the Idaho Claim and Delivery statute as it existed prior to the 1973 amendment fail to meet the procedural due process requirements of the Fourteenth Amendment of the United States Constitution. Fuentes v. Shevin, supra; Mitchell v. W. T. Grant Co., supra.

Under the provisions of the claim and delivery statute (I.C. Title 8, Ch. 3) prior to its amendment personal property could be seized without any prior judicial proceedings upon a plaintiff's affidavit and the posting of a bond, at the time of the filing of the complaint. I.C. § 8-301. A plaintiff or his attorney by simply endorsing the affidavit could require the sheriff to take the property described. I.C. § 8-303. The sheriff then was required to take into his custody the property described and retain it in his custody, serving a copy of the affidavit, notice, and undertaking upon the defendant or his agent. The statute provides for no prior notice whatsoever or any opportunity of a defendant to challenge the factual statements in the affidavit.

The only means by which a defendant could retain possession of the property was by giving the sheriff a proper written undertaking in an amount double the value of the property. In the absence of a re-delivery bond being furnished, the sheriff, upon payment of his fees and expenses had to deliver the property taken to the plaintiff pending final judgment in the underlying action. I.C. § 8-310.

In Fuentes v. Shevin, supra, the United States Supreme Court struck down a Florida replevin statute (as well as a Pennsylvania replevin statute in Parham v Cortese (407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556)) as working a deprivation of property without procedural due process of law. The vice in the statutes before the court in both the Fuentes case and the Parham case was that neither the Florida statute nor the Pennsylvania statute afforded the defendants any opportunity to be heard prior to the time their property was taken from their possession.

In the recent case of Mitchell v. W. T. Grant Co., supra, the United States Supreme Court affirmed the judgment of the Supreme Court of Louisiana which upheld the constitutionality of that state's sequestration statutes. The United States Supreme Court in the majority opinion distinguished Fuentes v. Shevin, and rejected the concept that under the circumstances in Mitchell v. W. T. Grant Co., the due process clause guaranteed the buyer's use and possession of the goods until all issues of the case were judicially resolved. That Court upheld the procedures of the Louisiana sequestration statute, which allows a mortgage or lienholder to obtain a writ of sequestration if 'it is within the power of the defendant to conceal, dispose of, or waste the property,' during the pendency of the repossession action. La.Code Civ.Pro. Art. 3571. The creditor must post bond sufficient to protect the vendee against all damages in the event the sequestration is improvident, and the creditor must by verified petition or affidavit show 'specific facts' entitling him to the writ. La.Code Civ.Pro., Arts. 3501 and 3574. The writ was obtainable on the creditor's ex parte application without notice to the debtor or any opportunity being afforded for a hearing on the application. However, the statute did entitle the debtor immediately to seek dissolution of the writ, which must be ordered unless the creditor 'proves the grounds upon which the writ was issued.' Art. 3506. The debtor may, with or without moving to dissolve the sequestration, regain possession of the property by 'furnishing security for the satisfaction of any judgment which may be rendered against him.' Art. 3507. Finally, in Orleans Parish where the case arose, the writ of sequestration could only be issued by a judge. Arts. 281, 282. ³

Idaho's claim and delivery statute under which this appeal arises is similar to Florida's replevin statute in that it authorizes issuance of a writ of replevin upon an ex parte application by affidavit without any judicial participation, order or supervision. Indeed, the claim and delivery statute permits a secured installment seller, upon filing of a complaint and posting of a bond, to repossess the goods sold with only the assistance of the sheriff operating under the affidavit and bond issued by the interested creditor. It is noteworthy that the affidavit necessary under the claim and delivery statute requires only the most conclusionary claims by the affiant of his right to possession or ownership and the debtor's wrongful possession. In this case respondent's affidavit recited only the bare phraseology of the statute. The Court in Mitchell v. W. T. Grant Co., supra, found such conclusionary allegations particularly unsuited in ex parte applications for possession without judicial supervision:

'The risk of wrongful use of the procedure must also be judged in the context of the issues which are to be determined at that proceeding. In Florida and Pennsylvania property was only to be replevied in accord with state policy if it had been 'wrongfully detained.' This broad 'fault' standard is inherently subject to factual determination and adversarial input. As in Bell v. Burson, supra, (402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90) where a driver's...