# Flagg Bros., Inc. v. Brooks

> Supreme Court of the United States · May 15, 1978 · 436 U.S. 149

URL: https://www.frixlaw.com/law-library/cases/9427187

## Case

- **Full name:** FLAGG BROS., INC., Et Al. v. BROOKS Et Al.
- **Court:** Supreme Court of the United States
- **Decided:** May 15, 1978
- **Citations:** 436 U.S. 149; 23 U.C.C. Rep. Serv. (West) 1105; 98 S. Ct. 1729; 56 L. Ed. 2d 185; 1978 U.S. LEXIS 90
- **Precedential status:** Published
- **Opinion:** Dissent by Stevens
- **Judges:** Rehnquist, Burger, Stewart, Blackmun, Powell, Marshall, Stevens, White, Brennan
- **Cited by:** 2,219 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9427187

## How later opinions describe it (automated extraction)

- holding that “the settlement of disputes between debtors and creditors is not traditionally an exclusive public function,” and clarifying that “the conduct of private actors in relying on the rights established under [certain] liens to resort to self-help remedies does not per…
- stating that “[w]hile the Constitution protects private rights of association and advocacy with regard to the election of public officials, [the Supreme Court] cases make it clear that the conduct of the elections themselves is an [e]xclusively public function.”
- holding that the sale by a storage company of an individual’s property to enforce a lien on that property, pursuant to a provision of the New York Uniform Commercial Code, did not constitute “state action” for fourteenth amendment purposes.
- explaining that where the only named 3 defendants were private parties, the “total absence of overt official involvement plainly 4 distinguishes this case from earlier decisions imposing procedural restrictions on creditors’ 5 remedies”
- stating that among the functions that “have been administered with a greater degree of exclusivity by States and municipalities” were “such functions as education, fire and police protection, and tax collection”

## Opinion text

Mr. Justice Stevens,
with whom Mr. Justice White and Mr. Justice Marshall join,
dissenting.
Respondents contend that petitioner Flagg Brothers’ proposed sale of their property to third parties will violate the Due Process Clause of the Fourteenth Amendment. Assum *169 ing, arguendo, that the procedure to be followed would be inadequate if the sale were conducted by state officials, the Court holds that respondents have no federal protection because the case involves nothing more than a private deprivation of their property without due process of law.' In my judgment the Court’s holding is fundamentally inconsistent with, if not foreclosed by, our prior decisions which have imposed procedural restrictions on the State’s authorization of certain creditors’ remedies. See North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U. S. 601 ; Fuentes v. Shevin, 407 U. S. 67 ; Sniadach v. Family Finance Corp., 395 U. S. 337 .
There is no question in this case but that respondents have a property interest in the possessions that the warehouseman proposes to sell. 1 It is also clear that, whatever power of sale the warehouseman has, it does not derive from the consent of the respondents. 2 The claimed power derives solely from the State, and specifically from § 7-210 of the New York Uniform Commercial Code. The question is whether a state statute which authorizes a private party to deprive a person of his property without his consent must meet the requirements of the Due Process Clause of the Fourteenth Amendment. This question must be answered in the affirmative unless the State has virtually unlimited power to transfer interests in private property without any procedural protections. 3
*170 In determining that New York’s statute cannot be scrutinized under the Due Process Clause, the Court reasons that the warehouseman’s proposed sale is solely private action because the state statute “permits but does not compel” the sale, ante, at 165 (emphasis added), and because the warehouseman has not been delegated a power “exclusively reserved to the State,” ante, at 158 (emphasis added). Under this approach a State could enact laws authorizing private citizens to use self-help in countless situations without any possibility of federal challenge. A state statute could authorize the warehouseman to retain all proceeds of the lien sale, even if they far exceeded the amount of the alleged debt; it could authorize finance companies to enter private homes to repossess merchandise ; or indeed, it could authorize “any person with sufficient physical power,” ante, at 157, to acquire and sell the property of his weaker neighbor. An attempt to challenge the validity of any such outrageous statute would be defeated by the reasoning the Court uses today: The Court’s rationale would characterize action pursuant to such a statute as purely private action, which the State permits but does not compel, in an area not exclusively reserved to the State.
As these examples suggest, the distinctions between “permission” and “compulsion” on the one hand, and “exclusive” and “nonexclusive,” on the other, cannot be determinative factors in state-action analysis. There is no great chasm between “permission” and “compulsion” requiring particular state action to fall within one or the other definitional camp. Even Moose Lodge No. 107 v. Irvis, 407 U. S. 163 , upon which the Court relies for its distinction between “permission” and *171 “compulsion,” recognizes that there are many intervening levels of state involvement in private conduct that may support a finding of state action. 4 In this case, the State of New York, by enacting § 7-210 of the Uniform Commercial Code, has acted in the most effective and unambiguous way a State can act. This section specifically authorizes petitioner Flagg Brothers to sell respondents’ possessions; it details the procedures that petitioner must follow; and it grants petitioner the power to convey good title to goods that are now owned by respondents to a third party. 5
While Members of this Court have suggested that statutory authorization alone may be sufficient to establish state action, 6 it is not necessary to rely on those suggestions in this case because New York has authorized the warehouseman to perform what is clearly a state function. The test of what is a state function for purposes of the Due Process Clause has been variously phrased. Most frequently the issue is presented in terms of whether the State has delegated a function traditionally and historically associated with sovereignty. See, e. g., Jackson v. Metropolitan Edison Co., 419 U. S. 345, 353 ; Evans v. Newton, 382 U. S. 296, 299 . In this Court, petitioners have attempted to argue that the nonconsensual trans *172 fer of property rights is not a traditional function of the sovereign. The overwhelming historical evidence is to the contrary, however, 7 and the Court wisely does not adopt this position. Instead, the Court reasons that state action cannot be found because the State has not delegated to the warehouseman an exclusive sovereign function. 8 This distinction, how *173 ever, is not consistent with our prior decisions on state action; 9 is not even adhered to by the Court in this case; 10 and, most importantly, is inconsistent with the line of cases beginning with Sniadach v. Family Finance Corp., 395 U. S. 337 .
Since Sniadach this Court has scrutinized various state statutes regulating the debtor-creditor relationship for compliance with the Due Process Clause. See also North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U. S. 601 ; Mitchell v. W. T. Grant Co., 416 U. S. 600 ; Fuentes v. Shevin, 407 U. S. 67 . In each of these cases a finding of state action was a prerequisite to the Court's decision. The Court today seeks to explain these findings on the ground that in each case there was some element of “overt official involvement.” Ante, at 157. Given the facts of those cases, this explanation is baffling. In North Georgia Finishing, for instance, the official involvement of the State of Georgia consisted of a court clerk who issued a writ of garnishment based solely on the affidavit of the creditor. 419 U. S., at 607. The clerk's actions were purely ministerial, and, until today, this Court had never held that purely minis *174 terial acts of “minor governmental functionaries” were sufficient to establish state action. 11 The suggestion that this was the basis for due process review in Sniadach, Shevin, and North Georgia Finishing marks a major and, in my judgment, unwise expansion of the state-action doctrine. The number of private actions in which a governmental functionary plays some ministerial role is legion; 12 to base due process review on the fortuity of such governmental intervention would demean the majestic purposes of the Due Process Clause.
Instead, cases such as North Georgia Finishing must be viewed as reflecting this Court’s recognition of the significance of the State’s role in defining and controlling the debtor-creditor relationship. The Court’s language to this effect in the various debtor-creditor cases has been unequivocal. In Fuentes v. Shevin the Court stressed that the statutes in question “abdicate [d] effective state control over state power.” 407 U. S., at 93. And it is clear that what was of concern in Shevin was the private use of state power to achieve a non-consensual resolution of a commercial dispute. The state statutes placed the state power to repossess property in the hands of an interested private party, just as the state statute in this case places the state power to conduct judicially binding sales in satisfaction of a lien in the hands of the warehouseman.
“Private parties, serving their own private advantage, *175 may unilaterally invoke state power to replevy goods from another. No state official participates in the decision to seek a writ; no state official reviews the basis for the claim to repossession; and no state official evaluates the need for immediate seizure. There is not even a requirement that the plaintiff provide any information to the court on these matters.” Ibid.
This same point was made, equally emphatically, in Mitchell v. W. T. Grant Co., supra, at 614-616, and North Georgia Finishing, supra, at 607. Yet the very defect that made the statutes in Shevin and North Georgia Finishing unconstitutional — lack of state control — is, under today’s decision, the factor that precludes constitutional review of the state statute. The Due Process Clause cannot command such incongruous results. If it is unconstitutional for a State to allow a private party to exercise a traditional state power because the state supervision of that power is purely mechanical, the State surely cannot immunize its actions from constitutional scrutiny by removing even the mechanical supervision.
Not only has the State removed its nominal supervision in this case, 13 it has also authorized a private party to exercise a governmental power that is at least as significant as the power exercised in Shevin or North Georgia Finishing. In Shevin , the Florida statute allowed the debtor’s property to be seized and held pending the outcome of the creditor’s action for repossession. The property would not be finally disposed of until there was an adjudication of the underlying claim. Similarly, in North Georgia Finishing, the state statute provided for a garnishment procedure which deprived the debtor of the use of property in the garnishee’s hands pending the outcome of litigation. The warehouseman’s power under § 7-210 is far broader, as the Court of Appeals pointed out: *176 “After giving the bailor specified notice, . . . the warehouseman is entitled to sell the stored goods in satisfaction of whatever he determines the storage charges to be. The warehouseman, unquestionably an interested party, is thus authorized by law to resolve any disputes over storage charges finally and unilaterally.” 553 F. 2d 764 , 771.
Whether termed “traditional,” “exclusive,” or “significant,” the state power to order binding, nonconsensual resolution of a conflict between debtor and creditor is exactly the sort of power with which the Due Process Clause is concerned. And the State’s delegation of that power to a private party is, accordingly, subject to due process scrutiny. This, at the very least, is the teaching of Sniadach, Shevin, and North Georgia Finishing.
It is important to emphasize that, contrary to the Court’s apparent fears, this conclusion does not even remotely suggest that “all private deprivations of property [will] be converted into public acts whenever the State, for whatever reason, denies relief sought by the putative property owner.” Ante, at 165. The focus is not on the private deprivation but on the state authorization. “[W]hat is always vital to remember is that it is the state’s conduct, whether action or inaction, not the private conduct, that gives rise to constitutional attack.” Friendly, The Dartmouth College Case and The Public-Private Penumbra, 12 Texas Quarterly, No. 2, p. 17 (1969) (Supp.) (emphasis in original). The State’s conduct in this case takes the concrete form of a statutory enactment, and it is that statute that may be challenged.
My analysis in this case thus assumes that petitioner Flagg Brothers’ proposed sale will conform to the procedure specified by the state legislature and that respondents’ challenge therefore will be to the constitutionality of that process. It is only what the State itself has enacted that they may ask the federal court to review in a § 1983 case. If there should be a deviation from the state statute — such as a failure to give the *177 notice required by the state law — the defect could be remedied by a state court and there would be no occasion for § 1983 relief. This point has been well established ever since this Court’s first explanations of the state-action doctrine in the Civil Bights Cases, 109 U. S. 3 , 17:
“[CJivil rights, such as are guaranteed by the Constitution against State aggression, cannot be impaired by the wrongful acts of individuals, unsupported by State authority in the shape of laws, customs, or judicial or executive proceedings. The wrongful act of an individual, unsupported by any such authority, is simply a private wrong, or a crime of that individual; . . . but if not sanctioned in some way by the State, or not done under State authority, his rights remain in full force, and may presumably be vindicated by resort to the laws of the State for redress.” 14
On the other hand, if there is compliance with the New York statute, the state legislative action which enabled the deprivation to take place must be subject to constitutional challenge in a federal court. 15 Under this approach, the federal courts do not have jurisdiction to review every foreclosure proceeding in which the debtor claims that there has been a procedural defect constituting a denial of due process of law. Rather, the federal district court’s jurisdiction under *178 § 1983 is limited to challenges to the constitutionality of the state procedure itself — challenges of the kind considered in North Georgia Finishing and Shevin .
Finally, it is obviously true that the overwhelming majority of disputes in our society are resolved in the private sphere. But it is no longer possible, if it ever was, to believe that a sharp line can be drawn between private and public actions. 16 The Court today holds that our examination of state delegations of power should be limited to those rare instances where the State has ceded one of its “exclusive” powers. As indicated, I believe that this limitation is neither logical nor practical. More troubling, this description of what is state action does not even attempt to reflect the concerns of the Due Process Clause, for the state-action doctrine is, after all, merely one aspect of this broad constitutional protection.
In the broadest sense, we expect government “to provide a reasonable and fair framework of rules which facilitate commercial transactions . . . .” Mitchell v. W. T. Grant Co., 416 U. S., at 624 (Powell, J., concurring). This “framework of rules” is premised on the assumption that the State will control nonconsensual deprivations of property and that the State’s control will, in turn, be subject to the restrictions of the Due Process Clause. 17 The power to order legally bind *179 ing surrenders of property and the constitutional restrictions on that power are necessary correlatives in our system. In effect, today’s decision allows the State to divorce these two elements by the simple expedient of transferring the implementation of its policy to private parties. Because the Fourteenth Amendment does not countenance such a division of power and responsibility, I respectfully dissent.
Of course the warehouseman may also have a property interest and the ultimate resolution of the due process issue will require a balancing of these interests. See Mitchell v. W. T. Grant Co., 416 U. S. 600, 604 .
Although the petitioners have at various stages of this case contended that there was an “implied contract” between the warehouseman, and respondents providing for the sale of respondents’ possessions in satisfaction of a lien, the Court of Appeals rejected this claim, 653 F. 2d 764 , 767 n. 3, and petitioners conceded in this Court that, taking respondents’ allegations as fact, as we must, there is no contractual issue in this case. Tr. of Oral Arg. 11.
It could be argued that since the State has the power to create property interests, it should also have the power to determine what procedures *170 should attend the deprivation of those interests. See Arnett v. Kennedy, 416 U. S. 134, 153-154 (Rehnquist, J.). Although a majority of this Court has never adopted that position, today’s opinion revives the theory in a somewhat different setting by holding that the State can shield its legislation affecting property interests from due process scrutiny by delegating authority to private parties.
In Moose Lodge the Court found state action on the basis of the Liquor Control Board’s regulation which required that “[e]very club licensee shall adhere to all of the provisions of its Constitution and By-Laws.” As the Court recognized, this regulation was neutral on its face, see 407 U. S., at 178, and did not compel the Lodge to adopt a discriminatory membership rule.
In fact, § 7-210 (5) (1964) provides:
“A purchaser in good faith of goods sold to enforce a warehouseman’s lien takes the goods free of any rights of persons against whom the lien was valid, despite noncompliance by the warehouseman with the requirements of this section.”
See, e. g., Burton v. Wilmington Parking Authority, 365 U. S. 715, 726 (Stewart, J., concurring); id., at 727 (Frankfurter, J., dissenting); and id., at 729 (Harlan, J., dissenting).
The New York State courts have recognized that the execution of a lien is a traditional function of the State. See Blye v. Globe-Wernicke Realty Co., 33 N. Y. 2d 15, 20, 300 N. E. 2d 710, 713-714 (1973). See also-3 W. Blackstone, Commentaries §§ 7-11, pp. *3-6, which notes that the right of self-help at common law was severely limited.
I fully agree with the Court that the decision of whether or not a statute is subject to- due process scrutiny should not depend on “ 'whether a particular class of creditor did or did not enjoy the same freedom to act in Elizabethan or Georgian England.' ” Ante, at 163 n. 13 (citation omitted). Nonetheless some reference to- history and well-settled practice is necessary to determine whether a particular action is a “traditional state function.” See Jackson v. Metropolitan Edison Co., 419 U. S. 345 . Indeed, in Jackson the Court specifically referred to Pennsylvania decisions, rendered in 1879 and 1898, which had rejected the contention that the furnishing of utility services was a state function. Id., at 353 .
See ante, at 157-158. As I understand the Court’s notion of “exclusivity,” the sovereign function here is not exclusive because there may be other state remedies, under different statutes or common-law theories, available to respondents. Ante, at 159-160. Even if I were to accept the notion that sovereign functions must be “exclusive,” the Court’s description of exclusivity is incomprehensible. The question is whether a particular action is a uniquely sovereign function, not whether state law forecloses any possibility of recovering for damages for such activity. For instance, it is clear that the maintenance of a police force is a unique sovereign function, and the delegation of police power to a private party will entail state action. See Griffin v. Maryland, 378 U. S. 130 . Under the Court’s analysis, however, there would be no state action if the State provided a remedy, such as an action for wrongful imprisonment, for the individual injured by the “private” policeman. This analysis is not based on “exclusivity,” but on some vague, and highly inappropriate, notion that respondents should not complain about this state statute if the State offers them a glimmer of hope of redeeming their possessions, or at least the value of the goods, through some other state action. Of course, the availability *173 of other state remedies may be relevant in determining whether the statute provides sufficient procedural protections under the Due Process Clause, but it is not relevant to the state-action issue.
The Court, for instance, attempts to distinguish Evans v. Newton, 382 U. S. 296 . Newton coneededly involved a function which is not exclusively sovereign' — the operation of a park, but the Court claims that Newton actually rested on a determination that the city was still involved in the “daily maintenance and care of the park.” Ante, at 159 n. 8. This stark attempt to rewrite the rationale of the Newton opinion is fully answered by Mr. Justice White’s opinion in that case. Mr. Justice White observed:
“It is . . . evident that the record does not show continued involvement of the city in the operation of the park — the record is silent on this point.” 382 U. S., at 304 .
As the Court is forced to recognize, its notion of exclusivity simply cannot be squared with the wide range of functions that are typically considered sovereign functions, such as “education, fire and police protection, and tax collection.” Ante, at 163.
See, e. g., Parks v. “Mr. Ford,” 556 F. 2d 132, 148 (CA3 1977) (en banc) (Adams, J., concurring); Gibbs v. Titelman, 502 F. 2d 1107 , 1113 n. 17 (CA3 1974), cert. denied sub nom. Gibbs v. Garver, 419 U. S. 1039 ; Shirley v. State Nat. Bank of Connecticut, 493 F. 2d 739 , 743 n. 5 (CA2 1974).
For instance, state officials often perform ministerial acts in the transferring of ownership in motor vehicles or real estate. See Burke & Reber, State Action, Congressional Power and Creditors’ Rights: An Essay on The Fourth Amendment, 47 S. Cal. L. Rev. 1 , 19-23 (1973). It is difficult to believe that the Court would hold that all car sales are invested with state action. See Parks v. “Mr. Ford,” supra, at 141.
Of course, the State does “supervise” the warehouseman’s actions in the sense that it prescribes the procedures that warehousemen must follow to complete a legally binding sale.
Furthermore, if the warehouseman has deviated from the statutory requirements, the statute would not provide him with the kind of support that would justify the conclusion that he acted “under color of law.” With respect to this requirement of § 1983, while I agree with the majority that the concepts of “under color of law” and “state action” may be separately analyzed, see Lucas v. Wisconsin Electric Co., 466 F. 2d 638, 654-655 (CA7 1972), normally as a practical matter they embody the same test of state involvement. See United States v. Price, 383 U. S. 787 , 794 n. 7.
Indeed, under the Court’s analysis as I understand it, the state statute in this case would not be subject to due process scrutiny in a state court.
See, e. g., Thompson, Piercing the Veil of State Action: The Revisionist Theory and A Mythical Application To Self-Help Repossession, 1977 Wis. L. Rev. 1 ; Glennon & Nowak, A Functional Analysis of the Fourteenth Amendment “State Action” Requirement, 1976 S. Ct. Rev. 221; Black, Foreword: “State Action,” Equal Protection, and California’s Proposition 14, 81 Harv. L. Rev. 69 (1967); Williams, The Twilight of State Action, 41 Texas L. Rev. 347 (1963); Van Alstyne & Karst, State Action, 14 Stan. L. Rev. 3 (1961).
Mr. Justice Harlan explained this principle as follows:
“American society, of course, bottoms its systematic definition of individual rights and duties, as well as its machinery for dispute settlement, not on custom or the will of strategically placed individuals, but on the common-law model. It is to courts, or other quasi-judicial official bodies, that we ultimately look for the implementation of a regularized, orderly *179 process of dispute settlement. Within this framework, those who wrote our original Constitution, in the Fifth Amendment, and later those who drafted the Fourteenth Amendment, recognized the centrality of the concept of due process in the operation of this system. Without this guarantee that one may not be deprived of his rights, neither liberty nor property, without due process of law, the State’s monopoly over techniques for binding conflict resolution could hardly be said to be acceptable under our scheme of things. Only by providing that the social enforcement mechanism must function strictly within these bounds can we hope to maintain an ordered society that is also just. It is upon this premise that this Court has through years of adjudication put flesh upon the due process principle.” Boddie v. Connecticut, 401 U. S. 371, 375 .

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9427187. Public record. Not legal advice.