Mojica v. Automatic Employees Credit Union

• Decision Date: 16 August 1973
• Docket Number: No. 72 C 686.,72 C 686.
• Citation: 363 F. Supp. 143
• Parties: Hermogenes MOJICA et al., Plaintiffs, v. AUTOMATIC EMPLOYEES CREDIT UNION et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

363 F. Supp. 143

Hermogenes MOJICA et al., Plaintiffs, v. AUTOMATIC EMPLOYEES CREDIT UNION et al., Defendants.

No. 72 C 686.

United States District Court, N. D. Illinois, E. D.

August 16, 1973.

James O. Latturner, Michael Fitch, Chicago, Ill., for plaintiffs.

Max E. Wildman, Chicago, Ill., for Wood Acceptance Corp.

Kvistad & Dunn, Chicago, Ill., for Automatic Employees Credit Union.

Harris, Burman, & Silets, Chicago, Ill., for Car Credit Corp. and Overland Bond Investment Corp.

Gann, McIntosh, Flaherty, & Parker, Chicago, Ill. and William B. Davenport and Albert E. Jenner, Jr., Jenner & Block, Chicago, Ill., for Mercantile National Bank.

Aaron J. Kramer, Chicago, Ill., for Ford Motor Credit Co., amicus curiae.

Tenney, Bentley, Howell, Askow, & Lewis, Chicago, Ill., for Illinois Bankers Assn., amicus curiae.

Before SWYGERT, Chief Judge, and AUSTIN and McGARR, District Judges.

MEMORANDUM OPINION and JUDGMENT ORDER

AUSTIN, District Judge.

This action seeks a declaratory judgment that the automobile repossession and resale provisions of the Illinois Commercial Code are unconstitutional and further requests a permanent injunction against their enforcement. Plaintiffs contend that the statutes in question violate their rights, under the fourth, fifth, and fourteenth amendments, to notice, an opportunity to be heard, and an impartial determination of right to title before repossession of an automobile. Since a permanent injunction of state statutes is sought, a three-judge district court was convened pursuant to 28 U.S. C. §§ 2281 and 2284 (1970).

Plaintiffs' amended complaint contains six counts. Count I, pleaded as a plaintiffs¹ and a defendants² class action, asserts the invalidity of Ill.Rev. Stat., ch. 26, §§ 9 — 503 and 9 — 504.³ Count II alleges a plaintiffs' class action⁴ and challenges the constitutionality of Ill.Rev. Stat., ch. 95½, §§ 3 — 114(b), 3 — 116(b), and 3 — 612.⁵ Counts III, IV, and V demand compensatory and punitive damages to Plaintiffs Mojica, Gonzalez, and Barnett respectively. The final count alleges, on behalf of Mojica individually, violations by Defendant Credit Union of the federal Truth in Lending Act, 15 U.S.C. 1601 et seq. (1968). Counts III and VI, both relating to Plaintiff Mojica, were dismissed with prejudice by stipulation of parties.

An examination of the pleadings and other relevant papers submitted by the four representative plaintiffs reveals that three of them — Mojica, Gonzalez, and Barnett — allege almost identical factual situations. In each case, the debtor-plaintiff granted the creditor-defendant a purchase money security interest in a used automobile. In each case the defendant summarily repossessed the car, applied for and received repossession title, and resold it to a third party not involved in this litigation. And, in each case, plaintiff alleges that he was not in default at the time his automobile was repossessed.

Banks, the fourth representative plaintiff, also granted a defendant a purchase money security interest in his car. However, no repossession occurred and Banks' sole claim in this action is his anticipated "fear" that his automobile will be repossessed in violation of the Illinois Commercial Code. In fact, when this suit was instituted, Banks was immediately released by his creditor from all obligations under his security agreement and note of indebtedness.

Upon consideration of the posture of this case and the contentions of the various parties, we conclude that the amended complaint must be dismissed because the plaintiffs — individually as well as representatively — lack standing to maintain this action.

I.

The Commercial Code expressly conditions a creditor's right to repossession upon the existence of an actual, bona fide default. Ill.Rev.Stat., ch. 26, §§ 1 — 203, 9 — 501(1), 9 — 503, 9 — 504. Moreover, use of Ill.Rev.Stat., ch. 95½, §§ 3 — 114(b), 3 — 116(b) and 3 — 612 is contingent upon a lawful and proper transfer of interest in the automobile. Taking their complaint at face value, the transaction of which each plaintiff complains involved a violation (or, as to Banks, a feared violation) of the statutes plaintiff challenges. Indeed, each plaintiff whose car was repossessed charges that his creditor-defendant acted with malice and seeks punitive damages.

Thus, in a case where they assert that the repossession and resale provisions of the Illinois Code were used improperly and maliciously against them, plaintiffs ask this Court to determine the validity of these statutes when properly applied to debtors actually in default. We must decline. Such a context is hardly appropriate for the resolution of the constitutional issues plaintiff presents. The courts that have reached these constitutional arguments have done so only after careful consideration of their jurisdictional basis. See Adams v. Egley, 338 F.Supp. 614 (S.D.Cal.1972), Oller v. Bank of America, 342 F.Supp. 21 (W.D. Cal.1972), McCormick v. First National Bank of Miami, 322 F.Supp. 604 (S.D. Fla.1971).

We recognize full well that our insistence upon proper parties and proper procedure avoids what might otherwise be a meritorious claim. But we also recognize the danger of deciding such questions on inappropriate records. The impropriety of hypothetical determinations concerning the proper application of a statute wrongly applied in the given case have led the courts to uniformly decline to make decisions such as plaintiff seeks. Oil Workers Unions v. Missouri, 361 U.S. 363, 80 S.Ct. 391, 4 L.Ed. 2d 373 (1960); Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968); DeKorwin v. First National Bank, 275 F.2d 755 (7th Cir. 1960).

In Illinois, there is only one road to repossession and that road winds its way through §§ 9 — 503 and 9 — 504. Any taking that does not comply with these sections is unlawful and subjects the taker to criminal and civil liability. If plaintiffs' allegations in the amended complaint are accurate, actions may sound for conversion or for recovery under the generous damage provisions of Ill.Rev.Stat., ch. 26, § 9 — 507(1). Even their punitive damages may be sustainable. But, under their present status, they do not possess standing to assert these constitutional claims. See Dash v. Mitchell, 356 F.Supp. 1292 (D.D.C. 1972).

II.

A further bar to plaintiffs' constitutional claims must be noted. Counts I and II of the amended complaint seek the extraordinary remedies of declaratory and injunctive relief. Each of the named plaintiffs, however, lacks standing to request such relief. Indeed, even if this court granted plaintiffs the remedies they seek in these Counts, not one of them would benefit thereby.

It is highly questionable whether Plaintiff Banks ever had standing to maintain this action:

"The mere intention to take some action at some time in the future, which might or might not occur, and which if it does occur might present a situation coming under the Civil Rights Act does not present any justiciable question under the Civil Rights Act . . . ."

Progress Dev. Corp. v. Mitchell, 182 F. Supp. 681, 713 (W.D.Ill.1960), rev'd in part on other grounds, 286 F.2d 222 (7th Cir. 1961). Moreover, when Banks was released by his defendant from all obligations, he received all the relief to which he was entitled. Accordingly, he no longer has standing under the principles of Watkins v. Chicago Housing Authority, 406 F.2d 1234 (7th Cir. 1969) and Dale v. Hahn, 440 F.2d 633 (2d Cir. 1971). See also Crimmins v. American Stock Exchange, 346 F.Supp. 1256 (S.D. N.Y.1972).

The automobiles of Plaintiffs Barnett and Gonzalez were repossessed and resold, with titles transferred, before either party joined this action. It is well established that "if the act to be enjoined has already been committed, equity will not interfere, since the granting of an injunction under such circumstances would be a useless act." 1 High on Injunctions § 23 (4th ed. 1905) (citing cases). Granting declaratory and injunctive relief to these plaintiffs, then, would be a "useless act." See Todd v. Joint Apprenticeship Committee, 332 F. 2d 243 (7th Cir. 1964), cert. denied, 380 U.S. 914, 85 S.Ct. 880, 13 L.Ed.2d 800 (1965), McKee & Co. v. First National Bank, 397 F.2d 248 (9th Cir. 1968), and Manion v. Holtzman, 379 F.2d 843 (7th Cir.), cert. denied, 389 U.S. 976, 88 S.Ct. 479, 19 L.Ed.2d 470 (1967). Each of these cases held that injunctive relief would not issue where the act sought to be enjoined was completed after the suit was filed. It follows that standing to seek such relief must be lacking where the challenged event was completed before the claim was instituted.

Similar considerations apply to Plaintiff Mojica, the only representative whose car was resold with title transferred after the filing of this suit. Since his automobile was resold during this litigation, both declaratory and injunctive relief would be "useless acts". See Todd, McKee, and Manion, supra.

III.

One of the primary requirements of a class action is that the party maintaining the suit must be a member of the class he seeks to represent. Fed.R.Civ.P. 23(a); 7 C. Wright & A. Miller, Federal Practice and Procedure, § 1761; Bailey v. Patterson, 369 U.S. 31, 82 S.Ct. 549, 7 L.Ed.2d 512 (1962). Since plaintiffs here lack standing themselves, they certainly cannot represent others. This conclusion results from a fair reading of Fed.R.Civ.P. 23(a) which requires such litigants to be actual representatives of their class. Indeed, Rule 23(a)(4) states that representatives must "fairly and adequately protect the interests of the class." It can hardly be said that these plaintiffs — unable to obtain standing for themselves — will provide adequate representation for those alleged to be similarly situated. Kaufman v. Dreyfus Fund, Inc., 434 F.2d 727, 734 (2d Cir. 1970), cert. denied, 401 U.S. 974, 91 S.Ct. 1190, 28 L.Ed.2d 323 (1971); Fitzgerald v. Kriss, 10 F.R.D. 51 (N.D.N.Y.1950); Watkins v Chicago...