Waisner v. Jones

• Decision Date: 07 June 1988
• Docket Number: No. 17503,17503
• Citation: 755 P.2d 598,107 N.M. 260,1988 NMSC 49
• Parties: , 6 UCC Rep.Serv.2d 1374 Laura WAISNER, Petitioner, v. Larry JONES, Otero Federal Credit Union and Credit Union One, Respondents.
• Court: New Mexico Supreme Court

Page 598

755 P.2d 598

107 N.M. 260, 6 UCC Rep.Serv.2d 1374

Laura WAISNER, Petitioner, v. Larry JONES, Otero Federal Credit Union and Credit Union One, Respondents.

No. 17503.

Supreme Court of New Mexico.

June 7, 1988.

[107 N.M. 261] S. Thomas Overstreet, P.C., Alamogordo, for petitioner.

Wilson, Rank and Selph, Frank K. Wilson, Alamogordo, for respondents.

OPINION

RANSOM, Justice.

We granted certiorari to consider constitutional limitations on self-help repossession under the Uniform Commercial Code, specifically NMSA 1978, Section 55-9-503 (Repl.Pamp.1987). Section 55-9-503 in pertinent part provides that "[u]nless 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 * * *." At issue is whether the introduction of law enforcement personnel into a self-help repossession transcends the permissible extrajudicial remedy contemplated under that section.

In June 1982, Laura Waisner and Credit Union One (creditor) executed a security agreement for Waisner's purchase of a 1979 pickup truck. Waisner made payments on the truck through December 1982. In late March 1983, the creditor hired Larry Jones (repossessor) to repossess the pickup truck and employed Otero Federal Credit Union (Otero Federal) to store and possibly sell the vehicle on behalf of the creditor.

The repossessor went to Waisner's place of employment at Holloman Air Force Base (Holloman AFB). In accordance with base policy, the repossessor was accompanied by a Holloman security police sergeant who was armed and in uniform. The sergeant informed Waisner that "we have to take the truck" or words to that effect. According to the sergeant, the purpose of accompanying the repossessor was to insure his safety. Waisner testified, however, that she felt intimidated by the sergeant's presence and was unsure whether the sergeant would apprehend her if she refused to turn over the pickup truck. Waisner finally relinquished possession of her truck to the repossessor and the truck was stored at Otero Federal.

Waisner brought suit against the creditor, the repossessor and Otero Federal for unlawfully repossessing and retaining a motor vehicle. The district court granted a directed verdict in favor of Otero Federal and the jury returned a verdict in favor of the creditor and the repossessor.

On appeal to the court below, ¹ Waisner objected to the trial court's refusal to instruct the jury that "[r]egardless of the degree of participation or non-participation by a law enforcement official, the introduction of such law enforcement officer in the area of self-help repossession constitutes wrongful repossession." The court of appeals discounted Waisner's argument, concluding that the submitted jury instructions taken as a whole sufficiently presented the applicable law and issues. We do not agree. Further, based on the undisputed facts, we find that the repossession was wrongful as a matter of law. We reverse.

Because the repossession occurred on that portion of the base allegedly under exclusive federal jurisdiction, see NMSA 1978, Section 19-2-11 (Repl.Pamp.1985), the defendants argue that a decision concerning self-help repossession within the State of New Mexico will have no bearing upon the posture of this particular case. Defendants contend the base policy that a repossessor be accompanied by security police when executing a repossession is the controlling law. See Chischilly v. General Motors Acceptance Corp., 96 N.M. 264, 629 P.2d 340 (Ct.App.1980), rev'd on other grounds (jurisdictional situs wrongly decided), 96 N.M. 113, 628 P.2d 683 (1981) (the law of the place where the collateral is located at the time of the repossession governs any dispute involving the repossession). Defendants further maintain that it is the prerogative of the base commander to insure against breaches of the peace by instituting such a policy.

We initially address whether state law defining the limits of self-help repossession has applicability to a repossession occurring on Holloman AFB. When a state cedes exclusive jurisdiction over its territory to the federal government, the laws of the state in existence at the time of the cession continue in force until abrogated or altered by Congress. James Stewart & Co. v. Sadrakula, 309 U.S. 94, 60 S.Ct. 431, 84 L.Ed. 596 (1940). In New Mexico, the creditor remedy of peaceably repossessing a mortgaged chattel without legal process upon default predates the federal government's 1953 acquisition of exclusive jurisdiction over the territory where sections of Holloman AFB are now situated. See NMSA 1941, Sec. 63-509. As a consequence, self-help repossession remains a part of the body of the laws in the ceded area of Holloman AFB unless Congress has legislated otherwise. The parties did not brief the applicable federal law, if any, that would authorize an unwritten base policy, which concerns the security escort of repossessors, to override state law regulating debtor-creditor conduct. However, our disposition of this case rests on due process grounds and, consequently, we do not see a necessity for the parties to rebrief that issue.

When either the federal or state government acts to deprive a person of property without due process of law, it acts unconstitutionally. U.S. Const. amends. V, XIV ²; see, e.g., Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) (where the Court held that Wisconsin's prejudgment garnishment of wages procedure violated procedural due process). In Fuentes, the Court struck down as unconstitutional Florida's prejudgment replevin statute because the statute allowed for the seizure of a defaulting party's property pursuant to a writ summarily issued by a court clerk without affording the defaulting party prior notice and an opportunity to be heard. 407 U.S. at 73-75, 92 S.Ct. at 1990-91. The Court held that a party must be afforded procedural due process before the state can authorize its agents to seize property in possession of one person upon the application of another. 407 U.S. at 80, 92 S.Ct. at 1994. But see Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974) (where the Court held that Louisiana's writ of sequestration, although issued ex parte without notice to the debtor or an opportunity to be heard, was constitutional because unlike Fuentes the sequestration process from beginning to end was under the control of a judge, not a court functionary, and the statute included measures to minimize the risk of a wrongful taking). See also Del's Big Saver Foods, Inc. v. Carpenter Cook, Inc., 795 F.2d 1344 (7th Cir.1986).

Following Fuentes and Sniadach, commentators and judges questioned whether the mere legislative authorization of self-help repossession under the Uniform Commercial Code was not similarly constitutionally defective. See Massey-Ferguson Corp. v. Peterson, 102 Idaho 111, 115, 626 P.2d 767, 771 (1980). In Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978), the Court addressed an analogous issue when it examined whether a warehouseman's enforcement of a lien as permitted by New York's Uniform Commercial Code was action properly attributable to the State of New York. In Flagg Bros., Inc., the Court held that legislative endorsement of the code provision alone, without more, did not implicate sufficient state action so as to invoke the provisions of the due process clause of the fourteenth amendment. The "total absence of overt official involvement" plainly distinguished that case from earlier decisions imposing procedural restrictions on creditors' remedies such as Fuentes. 436 U.S. at 157, 98 S.Ct. at 1734. The creditor remedy in Flagg Bros., Inc. fell outside the strictures of due process because it was ruled to be entirely private in its execution.

Here, we do not have the "total absence of overt official involvement." We do not entertain any doubts that once a law enforcement officer is introduced into the actual self-help repossession and confronts the defaulting party, the purely private nature of the remedy is compromised. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 152, 90 S.Ct. 1598, 1605, 26 L.Ed.2d 142 (1970) ("The involvement of a state official * * * plainly provides the state action essential to show a direct violation of petitioner's Fourteenth Amendment * * * rights, whether or not the actions of the police were officially authorized, or lawful." Citations omitted.). The introduction of law enforcement personnel constitutes state action and results in an unconstitutional deprivation unless the defaulting party is afforded proper notice and an opportunity to be heard. Walker v. Walthall, 121 Ariz. 121, 588 P.2d 863 (Ct.App.1978). See also Stone Machinery Co. v. Kessler, 1 Wash.App. 750, 463 P.2d 651 (1970); Harris v. City of Roseburg, 664 F.2d 1121 (9th Cir.1981); but see Massey-Ferguson Corp. v. Peterson, 102 Idaho 111, 626 P.2d 767 (1980) (where the court in dicta ruled that it was not wrongful for a sheriff to cut the lock securing a combine in order to effectuate a self-help repossession where the combine was not on the defaulting party's property, the lock did not belong to the defaulting party, and the owner of the lock observed its removal without protest).

Unlike the court of appeals, we find the jury instructions taken as a whole insufficient. ³ The jurors were not instructed on the wrongfulness of self-help repossession when law enforcement officers are introduced into the activity. The trial court failed to instruct the jury that in a self-help repossession a repossessor is not permitted to be assisted by law enforcement officials in order to prevent a breach of the peace. A defaulting party is within her rights to resist lawfully the...