Respondents Brief — Flagg Bros., Inc. v. Brooks

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FOR ARGUMENT

IN THE -

Supreme Court of the United States

October Term, 1977

Nos. 77-25, 77-37, 77-42

FLAGG BROTHERS, INc., individually and as representative of a class

of all others similarly situated, HENRY FLAGG, individually and

as President of Flagg Brothers, Inc.,

Petitioners,

and

LOUIS J. LEFKOWITZ, Attorney General of the State of New York,

aan Petitioner,

AMERICAN WAREHOUSEMEN’S ASSOCIATION AND THE IN-

TERNATIONAL ASSOCIATION OF REFRIGERATED WARE-

HOUSES, Inc.,

Petitioners,

vs.

SHIRLEY HERRIOTT BROOKS, GLORIA JONES, individually and

on behaif of all other similarly situated,

Respondents,

and

WAREHOUSEMEN’S ASSOCIATION OF NEW YORK AND NEW

JERSEY, Inc. and THE COLD STORAGE WAREHOUSEMEN’S

ASSOCIATION OF THE PORT OF NEW YORK,

Respondents in Support of Petitions.

BRIEF FOR RESPONDENTS.

WESTCHESTER LEGAL SERVICES, Inc.

Attorneys for Respondents

171 East Post Road

White Plains, N. Y. 10601

(914) 949-4797

Martin A. SCHWARTZ

LAWRENCE S. KAHN

Of Counsel

Table of Contents.

Page

TONNE | ericccccncicetenidcnsceneentngninanbtsinieantinionne 2

SS GE TD TID ecctscsssisinittccnitineerenteneennnieniibitnconsnen 2

A. Preliminary Statement ........................-.....-0-c0-s0+- 2

i ID OE I ececernscstnnnreienssintctigtmniccons 3

le Br IIE GEREN ccciiccessnniiisnie- <sctiinsiuntannsenedenienmins 10

I a I eansiediiiicesaiiesacsilininenelathittnnieninciien 12

ARGUMENT:

I. The warehouseman’s summary sale of a bailors’

goods constitutes state action because New

York has delegated to warehousemen the gov-

ernmental functions of lien enforcement and

non-consensual dispute resolution and has spe-

cifically encouraged, authorized and sanctioned

eS cateariibscenticiiinieneniniacienabiaisiaititinineditsictaies 15

A. State Authorization and Encouragement ........ 33

NU siciasitinseaisctathtddesicbenipiadeaceinaalaniiidiciadiappstascntildeanennesias 41

TABLE OF AUTHORITIES.

CasEs:

Adams v. Department of Motor Vehicles, 113 Cal.

Rptr. 145, 11 Cal. 3d 146, 520 P. 2d 961 (Cal.

Sup. Ct. 1974) .............. - 13, 18, 23

Adams v. Joseph F. Sanson Investment Co., 376 F.

I ( EEE

ii.

Page

Adams v. Southern Cal. First Nat. Bank, 492 F. 2d

$24 (9th Cir. 1973), cert. denied, 419 U. 8.

1006 (1974) cocccccccccccr. EE POE ee Ce AE 24, 26

Adickes v. 8S. H. Kress & Co., 398 U. S. 144 (1970) .... 35, 39

Blye v. Globe-Wernicke Realty Co., 33 N. Y. 2d 15

SEES RE a se NEE caisieabaiataadind 18, 18, 20, 21

Boddie v. Connecticut, 401 U. S. 871 (1971) ....... 14, 26, 27

Bond v. Dentzer, 494 F. 24 302 (2d Cir.), cert. denied,

419 U. S. 887 (1974) .......... auieeetaadaal speeniaiens 26, 30

Brooks v. Flag: Brothers, Ine., 68 F.R.D. 400 (S.D.

_* + a eS ae seicaaidateniaal saigiinbadaeas 9, 10, 11

Burton v. Wilmington Parking Authority, 365 U. 8S.

715 (1961) . Ty

Caesar v. Kiser, 387 F. Supp. 645 (M.D. N.C,

a sunenennieinddiiad a 13, 18, 23

CBS v. Democratic National Committee, 412 U. 8S. 94

RE a a al ai 35

City . Eastlake v. Forest City Enterprises, 96 8. Ct.

858 (1976) ......... mineemndages munmtinepeashininmnilialinitn 20, 30

Cockerel v. Caldwell, 378 F. Supp. 491 ah Ky.

1974) (three-judge COUTE) .........cccccccccccccccccercceees 18

Conley v. Gibson, 355 U.S. 41 (1957) ...... MAREEIS oaew ena Ae 3

Cox Bakeries v. Timm Moving & Storage, 554 F. 2d

SOG (Sth Clr. 1977) ......cccrcccccceccccsecsesses 13, 17, 22, 25, 26

Culbertson v. Leland, 528 F, 2d 426 (9th Cir, 1975) .... 18, 17

Eubanks v. Richmond, 226 U. S. 1387 (1912) ......... nates 30

Evans v. Abney, 396 U. S. 485 (1970) 0.000000... 38

iii.

Page

Evans v. Newton, 382 U. S. 296 (1966) .. 14, 15, 18, 19, 33, 37

Fuentes v. Shevin, 407 U. 8S. 67 (1972) ....... 4, 13, 16, 27,

31, 32, 40

Gibbs v. Titelman, 369 F. Supp. 38 (S.D. Pa. 1973),

rev'd, 502 F. 2d 1107 (3d Cir.), cert. denied,

ep La a 29

Griffin v. Maryland, 378 U. S. 130 (1964) 000.0000... 18

Hackett v. Nelson Express & Storage Co., 162 Mise.

144, 204 N. Y. S. 905 (Sup. Ct. 1987) 000000... 31

Hall v. Garson, 430 F. 2d 430 (5th Cir. 1970) .. 18, 17, 22, 31

Hernandez v. European Auto Collision, 487 F. 2d 378

FF 16, 28

Holt v. Brown, 336 F. Supp. 2 (W.D. Ky. 1971)

Le 25

Jackson v. Metropolitan Edison Co., 419 U. S. 345

Se 18, 19, 20, 39, 40

Jewett v. City Transfer & Storage Co., 128 Cal. App.

OO 24

Johnson v. Riverside Hotel, 399 F. Supp. 1138 (8.D.

STE) SISNET cossstenincitenitemnashiantensstbitenstoetasienienitaeipeiniteniates 23

Knapp Street and Co. v. McCaffrey, 177 U. 8S. 638

SUIT . ccissctnssapedbinsersiectuailinnntaatadinsititettinbesiuiameasnietemnsiteatins 24

Lindsey v. Normet, 405 U.S. 56 (1972) 2.0.0.0... 29

Lucas v. Wisconsin Electric Power, 466 F. 2d 638 (7th

Cir. 1972) (en banc), cert. denied, 409 U. 8.

I a 39

) iv. Page

ovr

McCabe v. Atchison, 235 U. S. 151 (1914) 0... 15, 37

MeMeans v. Schwartz, 330 F. Supp. 1397 (S.D. Ala.

BOTE) cctpecceccens a aa celile 31, 32

Marsh v. Alabama, 326 U. 8S. 501 (1946) .............. 14, 18, 19

Mason v. Garris, 360 F. Supp. 420 (N.D. Ga. 1973)

(three-judge COUFE) ....cccccccccscecccccsssssesescsseseseseessseses 25

Melara v. Kennedy, 541 F. 2d 802 (9th Cir, 1976) .. 17

Mitchell v. W. T. Grant Co., 416 U. 8. 600 (1974) .... 12, 18

16, 17, 32, 40

Moose Lodge v. Irvis, mY: S. 163 (1972)... 18, 38

Nixon v. Condon, 286 U. 8. 73 (1981) .... 14, 15, 19, 20, 34, 37

North Georgia Finishing Co. v. Di Chem, 419 U. 8.

|. 12, 13, 16, 31, 32, 40

Ovysterman’s Bank & Trust Co. v. Weeks, 35 A. D. 2d

H80, 313 N. Y. S. 2d 535 (2d Dept. 1970) ........ 21

Parks v. “Mr. Ford”, 556 F. 2d 132 (3d Cir. 1977)

(on PE 13, 14, 16, 17, 22, 23, 24, 25,

26, 28, 29, 31

Publie Utilities Commission v. Pollak, 348 U. S. 451

SETI ccuestubsienepiecnietcngunsinesnmabcanestenmacmaini 15, 34, 38

Ragin v. Schwartz, 393 F. Supp. 152 (W.D. Pa. 1975) = 25

Railway Employees’ Dept. v. Hanson, 351 U. 8. 225

CRED cnscneninentipmientmesninstintemnientinis 34

Reitman v. Mulkey, 387 U. 8. 369 (1967) ........ 14, 15, 20,

33, 34, 37, 38

Page

Robinson v. Florida, 378 U. 8. 153 (1964) ............... 14, 33

Santiago v. McElroy, 319 F. Supp. 284 (B.D. Pa.

1970) (three-judge COUPE) .oceens 25

Scheuer v. Rhodes, 416 U. 8S, 232 (1974) .......... cian Ce

Shaffer v. Holbrook, 346 F. Supp. 762 (S.D. W. Va.

1972) (three-judge COUPE) .o...cccccccccccccccceceseceseees 25

Sharrock v. Dell Buick-Cadillae, 56 A. D, 2d 446, 393

N. Y. 8. 2d 166 (2d Dept. 1977) 00000... 13, 20, 22

Shirley v. State National Bank, 493 F. 2d 739 (2d

Cir.), cert. denied, 419 U. 8. 1009 (1974) ... 14, 26, 27

Smith v. Allwright, 321 U. S. 649 (1944) 200... 18, 19

Sniadach v. Family Finance Corp. 395 U. 8. 337

Pee a 13, 16, 31, 32, 33, 40

State v. Amarillo Transfer & Storage Co., 94 8, W. 2d

590 (Tex. Civ. App. 1936)

Stewart v. Naud, 125 Cal. 596, 58 Pac. 186 (1889) .... 24, 25

Stroemer v. Shevin, 399 F. Supp. 993 (S.D. Fla.

SUSUTEEED.' sieveniesicnecniniiatnteeiesiecenintuiedeniiecissteinmidaciietiihet biel ia 2h

Svendsen v. Smith’s Moving & Trucking Co. (S.D.

Wie Sey CC Cav, BBGB CEP. Wed) cccececcscescccssscesesesere 9, 12

Terry v. Adams, 345 U. S. 461 (19538) ...0000000000. . 18, 19

The Civil Rights Cases, 109 U. S. 3 (1883) ........ 15, 35, 36

Turner v. Impala Motors, 503 F. 2d 607 (6th Cir.

SEED ‘cnsindiieciashiiaterinsenrinneeeeniaetnicecnnnianiemaseisbditentiiens 24

United States v. Kras, 409 U. S. 434 (1973) 0.0... 26, 27

— States v. Toys of the World —* 288 F. 2d

89 (2d Cir. 1961) .. dein . 24, $3

vi.

Page

Washington v. Roberge, 278 U. 8. 116 (1928) ............ 30

FevenaL Provisions:

be EU”, 2

GB TBR, GEBEB cccecccsnssessssscssssssescssnseszscencexsssnensscsnssessesene 2, 3, 11

Civil Rules of the Southern District of New _

ee 5, 8

Federal Rules of Appellate Procedure,

A EE 12

Federal Rules of Civil Procedure,

ee ae eee en 2

Strate Provisions:

New York CPLR,

Art. 52

ITE cntestasdnsseneenisaigentisitibnananinadieeseatenatietiimeniaeiiil 20, 21

TIT citncscrhineicanteineti dieiasditrideiapasiaiasmtaueptenmmaanmmiamaa 20, 21

eee 20, 21

ee 20

TTT scesaiessaiestsnnteeitisieesietcsatigiibinialiiaaiaandatantanl 20, 21

Art. 62

ee 20

IIIS ccnsescihhaneensshattnleieaniieiaistesesuatabandteninaniabiinatiaaiideltiins 20

I Se awe Sear re ee 20

STTTTIED cciineeisianeinechbadenieeimeiieaaiecstpaasiaaseatiiamniaiiieiaiaadiiibitiiadigl 20

New York Executive Law,

SE cobinecoseccizcneesslenmncenseietntineceiiaaiiaashiiihbliebsiatalalinasatinns 10

Page

New York Lien Law,

a sidiahents 20

SERRE SEE SE SE aes en a 20

REE EE Te a 20, 26, 33

I a 20, 21

i OSU ESE EEE ee Eee 20, 21

ES Ee Se 20

EMEA SS er 20

New York RPAPL,

RCE SS Oe 20, 21

New York Uniform Commercial Code,

ES Be ead SE Nl cell EE PE ES wae eaer ee 30

RES ee 2, 6

SEER 2, 6, 15, 21, 27, 28, 30

gE SE SRE Se ee 30

Ornern Avrnonities:

78 Am. Jur. 24, Warehouse .o...ccccccccccccccccccccccccccccees 24

Blackstone, Commentaries on the Laws of England

Ry Gils IED eccensesnssescccsmseusescnesaseenen: 25, 26, 28, 29

Brown, Personal Property (2d ed, 1955) .... 18, 14, 24, 28, 31

Brown, Personal Property (3d ed, 1975) .... 23, 24, 30, 35

13 Carmody-Wait 2d, Eneyelopedia of New York

RS EE 24, 30

Clark & Landers, Sniadach, Fuentes and Beyond:

The Creditor Meets the Constitution, 59 Va.

SR cee 33

Comment, Liens—Eztent to Which Common-Law Ar-

tisan’s Lien Has Been Supplanied By Statute,

I —_—y—>———— EE 31

viii.

Federalist Paper (Mentor, ed. 1961)... ——

Hall, Possessory Liens in English Law (1917) ......

Holdsworth, 3 History of English LAW oo....ccccccce

Jones, A Treatise on the Law of Liens (1888) ............

Jones, A Treatise on the Law of Liens (3d ed.

| ae. .. 23, 24, 26, 31, 33

Locke, Of Civil Government, Second Essay (Gate-

way) - RIN 28

35 N. Y. Jurisprudence, Liens ———— soosnenesedt 24

62 N. Y. Jurisprudence, Warehouse Receipts ...... 24

Overton, Treatise on the Law of Liens (1883) ....... 24, 30

Pollock and Maitland 2 Hetory of English Law ........ 29

Plucknett, ‘A Concise History of the Common Law

(Sth ed. 1956) secoeneunstenniaiiaiaeiaaaaal 25

Prosser, Law of Torts (Ath ed. LITL) coccccceces 34

Quinn, State Action: A Pathology And A Proposed

Cure, 64 Cal. L. Rev. 146 (1976) wo. =A

In THE

Supreme Court of the United States

Ocroser Term, 1977.

—>—

Nos. 77-25

77-37

77-42

F.iace Broruers, Inc., individually and as representative

of a class of all others similarly situated, Henry Fxaca,

individually and as President of Flagg Brothers, Inc.,

Petitioners,

and

Louis J. Lerxowrrz, Attorney General of the State of New

York,

Petitioner,

and

AMERICAN WAREHOUSEMEN’S ASSOCIATION AND THE INTER-

NATIONAL ASSOCIATION OF REFRIGERATED WAREHOUSES,

Ine.,

vs.

Petitioners,

Suirtey Herrrott Brooks, Guoria Jones, individually an’

on behalf of all other similarly situated,

Respondents,

and

WaREHOUSEMEN’s AssociaTION oF New York anp New Jzr-

sey, Inc. and THe Coty Srorace WareHousEMEN’s As-

SOCIATION OF THE Port or New York,

Respondents in Support of Petitions.

BRIEF FOR RESPONDENTS.

Question Presented.

Whether the warehouseman’s sale of bailed goods pur-

suant to New York Uniform Commercial Code, 47-210

constitutes state action on the grounds that New York

has delegated the governmental functions of lien enforce-

ment and binding, non-consensual dispute resolution to

warehousemen, and that New York has specifically au-

thorized and encouraged warehousemen to perform acts

which, if performed by the State, would violate the Four-

teenth Amendment?

Statement of the Case.

A. Preliminary Statement.

This action was commenced as a class action pursuant

to Rule 23(a) and (b) (2) of the Federal Rules of Civil

Procedure. The complaint seeks injunctive and declara-

tory relief and damages pursuant to 42 U.S.C. $1983 and

its jurisdictional counterpart, 28 U.S.C. §1343(3). The

complaint challenges the constitutionality of New York

Uniform Commercial Code, §§ 7-209 and 210. Section

7-209 authorizes warehousemen to impose a lien by de-

taining bailed goods indefinitely without providing the

owner of the goods with an opportunity for a hearing at

any time. Section 7-210 authorizes warehousemen to en-

force these liens by selling the goods without ever pro-

viding the owner of the goods with an opportunity for

a hearing. The issue before the Court is whether the

warehouseman’s enforcement of this lien pursuant to See-

tion 7-210 constitutes state action within the meaning of

the Fourteenth Amendment and conduct “under color of”

state law under 42 U.S.C. §1983.

AT os ete se se ee 8

B. Statement of Facts.*

1. Plaintiff Brooks

Plaintiff Shirley Herriott Brooks is a widow who re-

sides with her three minor children (A. 9a, 75a). She

has been employed as a nurse’s aide and as a homemaker,

earning approximately $100 per week. (A. 9a, 75a).

In June, 1973, an order of eviction was entered

against Mrs. Brooks in the City Court of Mount Vernon.

(A. 10a, 75a). On June 13, 1973, the City Marshal re-

moved plaintiff’s possessions from her apartment. Mrs.

Brooks told the City Marshal that she wanted to call

someone to store her household goods. He informed her

that she could not contact anyone, and that defendant

Henry Flagg, President of defendant Flagg Brothers,

Ine., who had accompanied the City Marshal to plaintiff’s

residence, was the person who would store her goods.

(A. 10a, 75a).°*

Defendant Flagg informed plaintiff that she would have

to pay $65 per month to move and store her furniture.

(A. lla, 75a). Believing she had no other choice, she

told Mr. Flagg to proceed with the moving and storage

of her furniture and household possessions. (A. 11a, 75a).

After the goods were loaded onto one of Flagg Brothers’

trucks, a moving man told Mrs. Brooks that she would

*Since the case is before the Court for review of the Court

of Appeals’ reversal of the district court’s order granting de-

fendants’ motion to dismiss the complaint, the allegations of the

complaint must be accepted as true. Scheuer v. Rhodes, 416 U. 8S.

232, 236 (1974); Conley v. Gibson, 355 U. S. 41, 45-46 (1957).

**A claim against the City Marshal pursuant to 42 U.S.C.

§§ 1983 and 1985 was dismissed without prejudice by agreement

of the parties.

have to pay $75 per month for storage, $75 for barrelling

and platforming and $28 for fumigating, for a total of

$178 (A. lla, 75a). Plaintiff protested that she had been

told that $65 would be the entire cost, but again believing

she had no choice, paid defendant Flagg $178. (A. Lia,

7da).

On Juue 15, 1973, Mrs. Brooks called defendant Flagg

Brothers in order to find out how long it would store her

goods for the $178 payment. (A. lla, 75a). She was in-

formed by an employee of Flagg Brothers that she owed

defendants an additional $156. (A. lla, 76a). On June

19, 1973, she was given a “Combined Uniform Household

Goods Bill of Lading and Freight Bill” which showed

that Flagg Brothers regarded the $178 as a “deposit”

and that Flagg claimed a balance due of $156. (A. lla,

18a-19a, 76a).* When plaintiff told defendant Flagg

that his prices were unreasonable, she was informed that

on July 1, 1973 she would owe an additional $75 for

storage for the month of July. (A. 1la-12a, 76a). When

plaintiff stated that her one month’s storage payment

of June 13, 1973 should run to July 13, 1973, defendant

*Plaintiff did not sign the bill of lading (A. 18a). In any

event, the bill of lading and freight bill provided for-a right of

sale of non-perishable property only where the ‘‘property which

has been transported to destination . . . is refused by consignee

or party entitled to receive it upon tender of delivery or [where]

said consignee or party . . . fails to receive it or claim within

15 days after notice of arrival of the property at destination. .. .’’

Bill of Lading and Freight Bill §4(b) (A. 19a). The provision

manifestly had no application to the transactions between plain-

tiff and defendants since there was no refusal or failure by

plaintiff to receive goods upon a tender of delivery at destination.

The court below held that since plaintiff was not given this form

until six days after defendant moved and stored her goods, and

since the clause appears in minute print on a form provided by

Flagg, she was not bound by the clause (A. 165a, n. 3). See

Fuentes v. Shevin, 407 U. S. 67, 94-96 (1972).

a —

pa ct A a OO Tc Ot he Ns ON OO AAA PALE

Flagg informed her that storage charges were incurred

on a “per month” basis, and that even if her goods had

been stored on June 29, 1973, an additional $75 would be

due by July 1, 1973. (A. 12a, 76a).*

On June 29, 1973, defendant Flagg informed plaintiff

that she could have her goods if she paid the balance of

the original bill, $156, plus $45. (A. 12a, 76a-77a). Plain-

tiff, however, was not able at that time to remove her

goods from the warehouse. (A. 12a, 77a).

In early July, 1973, defendant Flagg’s secretary in-

formed plaintiff that she could remove her goods on Au-

gust 14, 1973 only if she paid $484 in cash. (A. 12a, 77a).

On August 25, 1973, plaintiff received a letter from de-

fendant Flagg Brothers stating:

“Your account has to be brought up to date

within 10 days of the date of this letter (Sept. 1,

1973) or your furn. will go up for sale. It, (your

storage payments) have to be kept up or your

furniture will be sold. Your previous bal. from

Moving due 156.00

Storage for 7/73

& 8/73 150.00 at $75 a month

Total due 306.00”

(A. 12a-13a, 20a, 77a).

Accompanying this letter from defendant Flagg Brothers

was a “Final Notice”, dated August 22, 1973, informing

plaintiff that $150 in storage costs was due and that

“Tujnless such payment is made we will be obliged to

*Defendants’ Statement Pursuant to Rule 9(g) of the

Civil Rules of the Southern District of New York sets forth as

disputed factual issues whether a valid contract existed between

the parties, the rates agreed upon, and the reasonableness of

the charges (A. 202-203).

advertise your goods for sale at public auction.” (A. 13a,

20a-21a, 77a-78a). This notice was set forth in an offi-

cial form labeled “Final Notice”, see A. 116a.

Plaintiff and her attorney wrote to defendant contesting

the reasonableness of the rates and the fact that they

were repeatedly changing. (A. 13a, 20a-2la, 78a). De-

fendant Flagg’s letter in response stated that plaintiff

owed Flagg Brothers $482 and that “[hJer storage bill is

past due and must be brought up to date immediately to

avoid the sale of her furniture, or before we initiate pub-

lie auction proceedings.” (A. 13a, 24a-25a, 78a).

During this period, all of plaintiff’s furniture and house-

hold goods were in defendant’s warehouse. (13a-l4a, 27a,

28a). The family had to sleep on the floor on the one

remaining mattress they had, and had to get by without

most of their clothes. (A. 13a, 78a-79a). Plaintiff missed

a month and a half of work because her nurses uniforms

were held by Flagg Brothers. (A. 78a).

Faced with the threatened sale of all of her goods,

plaintiff instituted this action on September 21, 1973 for

injunctive and declaratory relief and damages, claiming

that Flagg Brothers’ detention and threatened sale of her

goods pursuant to New York Uniform Commercial Code,

§$§ 7-209 and 7-210 violate the Due Process Clause of the

Fourteenth Amendment. (A. 14a-15a). On January 24,

1974, defendant voluntarily returned all of the stored

goods to Mrs. Brooks. (A. 79a).

2. Plaintiff-Intervenor Jones

At the time Gloria Jones moved to intervene in the dis-

trict court, her sole source of income was her net wages

of approximately $87 per week. (A. 44a). By the time

she moved for summary judgment, she was a recipient

BR APE PE LA RL oP

of public assistance. (A. 80a). She resided in Mount

Vernon, New York. (A. 44a, 80a).

In the fall of 1973, a judgment of eviction was entered

against her by the City Court of Mount Vernon, and a

warrant of eviction was issued. (A. 45a, 80a). On No-

vember 26, 1973, the City Marshal came to remove plain-

tiff’s possessions from her apartment. (A. 45a, 80a). As

with plaintiff Brooks, the City Marshal informed Mrs.

Jones that she could only store her goods with defend-

ant Flagg Brothers. (A. 45a, 8la). Employees of de-

fendant Flagg Brothers then proceeded to load Mrs.

Jones’ goods and move them to a Flagg Brothers’ ware-

house without her authorization. (A. 45a, 8la). Plaintiff

was not advised of the rate of storage. (A. 45a, 81a).

In March, 1974, plaintiff was informed by an employee

of Flagg Brothers that she would have to pay $600 to

acquire her household goods. (A. 46a, 8la). She was

further informed that if she had not contacted Flagg

Brothers at that time, her goods would have been sold.

(A. 46a, 81a).

When plaintiff complained that defendant’s rates were

unreasonable and that she had not agreed to pay Flagg

Brothers any sum for the storage of her goods, she was

informed by an employee of defendant Flagg Brothers

that she actually owed only $500, and that if she ar-

ranged to move her goods from the warehouse by her own

means, the amount due would be reduced to $335. (A.

46a, 50a, 8la-82a). This employee also informed plain-

tiff that if she were unable to pay the bill by April 12,

1974, her goods would be sold. (A. 46a, 82a).

During this period, plaintiff was forced to reside with-

out most of her household goods, clothing and other pos-

sessions. (A. 46a-47a, 50a-5la, 82a-83a). As a result, she

was deprived of the companionship of her friends in her

home, had to purchase fabric to make replacement clothing

and suffered a nervous breakdown (A. 82a-83a).*

Faced with the threatened sale of her goods, plaintiff

moved to intervene as a party plaintiff on April 11,

1974. (A. 40a-4la). In response to Mrs. Jones’ motion to

intervene as a plaintiff, defendants admitted that they

had threatened to sell her goods, but stated that they had

no present intention of selling the goods, “and if defend-

ants do so decide, I will inform [Mrs. Jones’ counsel]

well in advance of any sale.” (A. 66a).

Mrs. Jones’ counsel subsequently received a letter dated

May 21, 1974 from defendant’s counsel stating:

“Flagg Brothers, Inc. advises me that Mrs. Jones

owes storage rental from January 1, through May

31 at the rate of $75.00 a month plus $35 auction-

eer’s fees or a total of $410.00.

Mrs. Jones has been on notice since December

13, 1973 by letter of that date from the Social

Services Department of Westchester County that

it would not pay for storage beyond one month.

It is the position of Flagg Brothers, Inc. that

the above charges should be paid upon release of

the storage lot.” (A. 85a-86a). (Emphasis added.)

By decision and order dated June 25, 1974, Mrs. Jones

was granted leave to intervene as a party plaintiff. Brooks

*Defendants’ Rule 9(g) statement sets forth as disnuted

factual issues whether a valid contract exists between the parties,

the rates of storage and the reasonableness of the rates (A. 118a).

Deneve eae Me

eR a nha SE EIN er le

Oe Nm te nt a ae Rat a es me. ————

senses ———— = a

v. Flagg Brothers, Inc., 63 F.R.D. 409 (S.D.N.Y.).* Sub-

sequent efforts by counsel to resolve the dispute between

the parties failed. (A. 83a-84a, 86a-88a). By letter dated

June 28, 1974, Flagg’s counsel informed plaintiff’s coun-

sel that “Mr. Flagg will take whatever steps he deems

necessary to protect his interests.” (A. 83a-84a, 88a).

After the district court rendered its decision of July

7, 1975, dismissing the complaint for lack of jurisdiction,

Mrs. Jones informed her counsel that she had paid de-

fendant Flagg $1,600 for the return of her goods; that

she had not received all of her goods from defendant

Flagg; that some of her goods were returned in a dam-

aged condition; and that she had not made the $1,600

payment voluntarily but only because of the threat of sale

and the twenty month retention of the goods. (A. 168a n.

7, see also A. 86a-87a).**

Plaintiff Jones died while the appeal from the district

court’s judgment of dismissal was pending. (A. 168a n.

7). The Court of Appeals granted leave to substitute

Jones’ personal representative as plaintiff pursuant to

*The district court’s decision granting leave to intervene is

printed in the petition for certiorari in No. 77-37 at 47a.

**The facts that the parties stipulated to the propriety of

the class action, A. 38a-40a, that plaintiff Jones alleges that she did

not receive all of her goods, and that she did not pay the $1600

voluntarily but only because of the threat of sale and lengthy de-

tention, defeat the Attorney General’s suggestion that the contro-

versy may not be justiciable. See Brooks v. Flagg Brothers, Inc.,

63 F.R.D. 409, 413 (S.D.N.Y. 1974). In addition, it should be

noted that defendants charged plaintiff Jones an auctioneers’ fee,

apparently for a scheduled sale pursuant to Section 7-210 (A.

143a, 147a). An action challenging the validity of Section 7-210

on behalf of a person whose goods have been sold is pending

in the Southern District of New York. Svendsen v. Smith’s Mov-

ing and Trucking Co., S.D.N.Y., 77 Civ. 2863 H.F.W. See page

12, n., infra.

Fed.R.Civ.P. 25(a). (A. 18la n. 19). Jones’ son, Wayne

Jones, has since filed an application for Letters of Ad-

ministration of Gloria Jones’ estate in the Surrogate

Court of the State of New York, County of Westchester.

No. 3906/1977.

C. Proceedings Below.

The action was commenced on September 21, 1973. (A.

la, A.6a-A.27a).

In February, 1974, the parties stipulated to the pro-

priety of the plaintiff and defendant class actions. (A.38a-

40a). By decision dated June 25, 1974, Judge Gurfein

granted the motion of Gloria Jones to intervene as a party

plaintiff. The Attorney General of the State of New York

was permitted on consent to intervene as a party de-

fendant to defend the constitutionality of the contested

provisions. N.Y. Executive Law, §71. The American

Warehousemen’s Association, the International Associa-

tion of Refrigerated Warehouses, the Warehousemen’s

Association of the Port of New York, and the Cold Stor-

age Warehousemen’s Association of the Port of New York

were also permitted to intervene as party defendants.

Brooks v. Flagg Brothers, Inc., 63 F.R.D. 409 (S.D.N.Y.

1974).

By notice of motion, dated August 26, 1974, plaintiffs

moved for a class action determination and for summary

judgment. (A.72-74a). By notice of motion dated Septem-

ber 19, 1974, defendant Flagg Brothers, Ine. and Henry

Flagg cross moved to dismiss the action for failure to state

a claim upon which relief can be granted. (A.97a).

By decision and order, dated July 7, 1975, District

Judge Werker denied plaintiffs’ motion for summary judg-

ment and granted defendants’ motion to dismiss the com-

SE ee ee eee re ce

~~ Pobre: hw

plaint “for lack of jurisdiction.” Brooks v. Flagg Broth-

ers Inc., 404 F.Supp. 1059, 1061 (S.D.N.Y. 1975) (A.14la-

157a). The court held that in enforcing the warehouse-

man’s lien, the warehouseman does not act under color of

state law within the meaning of 42 U.S.C. §1983 and the

Due Process Clause of the Fourteenth Amendment.

On April 7, 1977, the United States Court of Appeals

for the Second Cireuit reversed the judgment of the

District Court and remanded the case to the District

Court to resolve the due process claim and to determine

the scope of the classes. Brooks v. Flagg Brothers Inc.,

553 F.2d 764 (2d Cir. 1977) (A.159a).*

The Second Cireuit found state action present in the

warehouseman’s enforcement of the lien pursuant to sec-

tion 7-210 of the Uniform Commercial Code. The Court

determined that state action was present because New

York, by its enactment of section 7-210, delegated to ware-

housemen “a portion of its sovereign monoply power over

binding conflict resolution” and also, the power to “execute

a lien and thus perform a function which has traditionally

been that of the sheriff.” 553 F.2d at 771. (174a-177a).

This delegation substantially enhanced the warehouseman’s

remedies beyond those he possessed at common law, where

he had merely the power to retain but not the power to

sell goods stored by a bailor. 553 F.2d at 771-772. (A.176a).

The court concluded:

“The action of the state in granting the warehouse-

man the privileged position he enjoys under §7-210,

*In their Brief for Appellants, p. 45, n., and again at

oral argument, plaintiffs’ counsel represented to the court below

that plaintiffs have no objection to a modification of the scope

of the class so as to include only persons engaged in consumer

transactions. Plaintiffs agree with the court below that the due

process requirements may be different in commercial transac-

tions than in consumer transactions (A. 18la).

even though long ago, drastically changes the bal-

ance of power between debtor and creditor. It per-

mits a complete circumvention of the judicial pro-

cess, by installing the warehouseman as the final

and interested judge of any disputes over storage

charges, and as the sheriff who will! enforce his own

decisions. While we recognize generally the value

of preserving a sphere for private activity free from

the restrictions imposed upon the state by the four-

teenth amendment, it is plain that the state’s con-

scious election to delegate a portion of its uniquely

governmental power to the warehouseman in order

to enhance his common law position as creditor con-

stitutes state action.” 553 F.2d at 772 (A.176a-

177a).

Judge Holden, dissenting, concluded that state action

was not present because section 7-210 does not “command”

the sale of goods, and because the statutory authoriza-

tion allowing warehousemen to sell has existed sinee 1879.

993 F.2d at 775-777. (A.182a-184a).

The Court of Appeals granted defendants’ motion to

stay its mandate remanding the action to the district court

pending proceedings in the Supreme Court. Fed.R.App.

P., 41(b).*

Summary of Argument.

This Court has held in North Georgia Finishing, Ine. v.

Di Chem, Inc., 419 U.S. 601 (1975), Mitchell v. W.T. Grant

*On June 13, 1977, plaintiffs’ counsel filed an action or be-

half of Dorothy Svendsen, a person whose goods were sold par-

suant to the contested statute. Svendsen v. Smith’s Moving and

Trucking Co., 8.D.N.Y., 77 Civ. 2863 H.F.W. As in the instant

case, plaintiff Svendsen challenged the constitutionality of Section

7-210. This action is assigned to the same District Judge as the

Brooks case. Plaintiff Svendsen did not move to intervene in the

Brooks action only because of the stay of the Circuit Court’s man-

date.

Peck OR Mtehed (Pek Catnu s

Co., 416 U.S. 600 (1974), Fuentes v. Shevin, 407 U.S. 67

(1972), and Sniadach v. Family Finance Corp., 395 U.S. 337

(1969), that no state may deprive a person of prop-

erty without affording the owner an opportunity for a

hearing. The mere fact that New York has not required

“minor governmental functionaries”, Parks v. “Mr. Ford”,

556 F.2d 132, 148 (3d Cir. 1977) (en banc) (Judge Adams,

concurring), to be involved in the sale of goods by a ware-

houseman pursuant to section 7-210 of the Uniform Com-

merical Code should not deprive the owner of the bailed

goods of the procedural safeguards this Court has sought

to guarantee in North Georgia Finishing, Inc., Mitchell,

Fuentes and Sniadach.

New York, by enacting section 7-210 of the Uniform

Commercial Code, has delegated to warehousemen the

functions of lien enforcement and final, non-consensual

dispute resolution, functions that historically and tradi-

tionally are governmental in nature. This conclusion is

supported by (1) the determination of the highest state

courts of New York that “in [New York] the execution

of a lien . . . traditionally has been the function of the

Sheriff”, Blye v. Globe-Wernicke Realty Co., 33 N.Y.2d 15,

20 (1973); Sharrock v. Dell Buick-Cadillac, 56 A.D. 2d 446

(2d Dept. 1977); (2) the great weight of lower court au-

thority throughout the country holding lien enforcement

to be a public function, see, e.g., Parks v. “Mr. Ford”,

556 F. 2d 132 (3d Cir. 1977) (en banc); Cox Bakeries of

North Dakota, Inc. v. Timm Moving and Storage Inc., 554

F.2d 356 (8th Cir. 1977) (Mr. Justice Clark); Culbertson

v. Leland, 528 F.2d 426 (9th Cir. 1975); Hall v. Garson,

430 F. 2d 430 (5th Cir. 1970) ; Caesar v. Kiser, 387 F.Supp.

645 (M.D.N.C. 1975); Adams v. Department of Motor Ve-

hicles, 113 Cal.Rptr. 145, 11 Cal. 3d 146, 520 P.2d 961 (Cal.

Sup.Ct. 1974); (3) the fact that at common law the en-

forcement of the lien was accomplished by a sale of the

bailed property by the sheriff, Brown, Personal Property,

$121, pp. 602-603 (2d edition 1955); and (4) the fact that

one of the most fundamental obligations of sovereignty

is its duty to protect property by the judicial resolution

of disputes. See Boddie v. Connecticut, 401 U.S. 371, 375

(1971); Perks v. “Mr. Ford”, 556 F.2d 132 (3d Cir. 1977)

(en banc); Shirley v. State National Bank, 493 F.2d 739,

747 (2d Cir.), cert. denied, 419 U.S. 1009 (1974) (Kaufman,

J., dissenting).

Because New York has delegated to warehousemen

functions traditionally and historically associated with

sovereignty, state action is present in the performance of

those functions. Evans v. Newton, 382 U.S. 296 (1966) ;

Terry v. Adams, 345 U.S. 461 (1953); Marsh v. Alabama,

326 U.S. 501 (1946); Nixon v. Condon, 286 U.S. 73 (1932).

Without the sanction of section 7-210, warehousemen

would not possess the extraordinary power to sell sum-

marily another person’s property. At common law, while

the warehouseman had a possessory lien on the bailed

goods, he did not have the right to sell the goods. Brown,

Personal Property, §13.1, p. 394 (3d edition, 1955). To

enforce a claim against the bailor, the warehouseman’s

remedy was “suing his debtor for the amount of the claim,

and levying execution or attachment on the bailed goods.”

Brown, Personal Property, §121, pp. 602-603 (2d edition

1955). New York, by obviating the need for the warehouse-

man to bring an action, prove his claim, and obtain and

enforce a judgment, has authorized, sanctioned and “en-

couraged” him to deprive the bailor of his property with-

out a hearing, Reitman v. Mulkey, 387 U.S. 369 (1967);

Robinson v. Florida, 378 U.S. 153 (1964), and has thereby

become signifivantly involved in the contested activity.

This Court’s decisions hold that state action is present

where, as here, a statute specifically authorizes and en-

courages, even though it does not command, private indi-

ow Ane - i ee eke. ai

PRE ne ee

viduals to perform acts which otherwise would be unlawful,

and which the state itself could not perform consistent with

the Fourteenth Amendment. Reitman v. Mulkey, 387 U.S.

369 (1967); Evans v. Newton, 382 U.S. 296, 305-311 (1966)

(White, J., coneurring); Burton v. Wilmington Parking

Authority, 365 U.S. 715, 726 (1961) (Stewart, J., con-

eurring); id. at 727 (Frankfurter, J., dissenting); id. at

728 (Harlan and Whittaker, JJ., dissenting); Public Utili-

ties Commission v. Pollak, 343 U.S. 451 (1952); Nixon v.

Condon, 286 U.S. 73, 85 (1932); McCabe v. Atchison, 235

U.S. 151 (1914). See also Civil Rights Cases, 109 U.S. 3

(1883).

The warehouseman’s summary sale of a bailor’s goods

constitutes state action because New York has delegated

to warehousemen the governmental functions of lien

enforcement and non-consensual dispute resolution and

has specifically encouraged, authorized and sanctioned

summary sales.

The contested statute authorizes a warehouseman to

sell a person’s goods and possessions as a means of en-

forcing his possessory lien for transportation and stor-

age charges allegedly owed. N.Y. Uniform Commercial

Code, §7-210. The warehouseman’s exercise of his statu-

tory authority thus works a final and complete taking of a

person’s property. The statute does not, however, re-

quire that the owner of the goods be afforded an oppor-

tunity for a hearing prior to the sale of his goods or at

any time thereafter. Nor does the statute even require

the warehouseman ever to institute an action on his claim.

The contested statute delegates to warhousemen the power

to determine ex parte the owner’s liability for storage and

transportation fees, and to enforce that determination by

the summary sale of the goods. As the fact patterns of

the named plaintiffs show, the contested statute creates

enormous potential for egregious abuse.

There is no question that a sale of a person’s property

earried out with the assistance of “minor governmental

functionaries” performing purely ministerial tasks, Parks

v. “Mr. Ford”, 556 F.2d 132, 148 (3d Cir. 1977) (en banc)

(Adams, J., concurring), constitutes a final, complete and

drastie taking of property within the meaning of the

Due Process Clause. Under these circumstances, it is

clear that due process guarantees that the owner of the

goods be afforded an opportunity for a hearing prior to

sale. North Georgia Finishing, Inc. v. Di Chem Inc., 419

U.S. 601 (1975); Mitchell v. W.T. Grant Co., 416 U.S. 600

(1974); Fuentes v. Shevin, 407 U.S. 67 (1972); Sniadach v.

Family Finance Corp., 395 U.S. 337 (1969). In the instant

case, the State has delegated to the warehousemen the

power to deprive a person of property without an oppor-

tunity for a hearing.* The mere fact that New York, un-

like the states in Sniadach, Fuentes and North Georgia

Finishing, Inc., has not required warehousemen to enlist

“minor government functionaries to perform ministerial

acts...” to assist the warehouseman in his “taking”, should

not cause “divergent conclusions as to the presence, vel

non, of state action, particularly because the similarities

are more significant.” Parks v. “Mr. Ford”, supra, at 148

(Adams, J., coneurring).

In Mitchell v. W.T. Grant Co., supra, this Court, in up-

holding the constitutionality of the Louisiana sequestra-

*The taking in the instant case is greater, and the procedural

protections less, than in Sniadach, Fuentes, Mitchell and North

Georgia Finishing, Inc. See Parks v. ‘Mr. Ford’’, 556 F. 2d

132, 142-143 (3d Cir. 1977) (en banc); Hernandez v. European

Auto Collision, Inc., 487 F. 2d 378, 385 (2d Cir. 1973) (Timbers

and Lumbard, JJ., concurring).

“fe Pann

tion statute, relied on the statutory requirement that the

creditor present the relevant facts to an impartial judge.

“Mitchell was not at the unsupervised mercy of the credi-

tor and court functionaries.” Jd. at 616. In contrast, a

a person who stores goods in a warehouse is unquestion-

ably at the “unsupervised merey of the warehousemen”

because of the warehousemen’s power of summary sale

under section 7-210. Since state control was essential to

the conclusion that the statute in Mitchell conformed to

due process requirements, New York’s total abdication of

that control in the instant case should not serve to insulate

totally section 7-210 from the Due I rocess Clause.

The State’s delegation of the traditional governmental

functions of lien enforcement and binding non-consensual

dispute resolution, together with the State’s specifie statu-

tory authorization which allows warehousemen to con-

duct summary sales, supports the decision of the court

below that the state is significantly involved in the con-

tested activity. Accord, Parks v. “Mr. Ford”, 556 F.2d

132 (3d Cir. 1977) (en banc)*; Cox Bakeries of North

Dakota, Inc. v. Timm Moving & Storage, Inc., 554 F.2d

356 (8th Cir. 1977) (Mr. Justice Clark); Culbertson v.

Leland, 528 F.2d 426 (9th Cir. 1975); Hall v. Garson, 430

*Every one of the nine judges of the Third Circuit Court of

Appeals in Parks v. ‘‘Mr. Ford’’, 556 F. 2d 132 (3d Cir. 1977)

(en banc) was in agreement as to the presence of state action

with respect to the sale provision of the Pennsylvania garage-

man’s lien law. The Pennsylvania statute is virtually identical

to the contested statute herein. Not one of the several defend-

ants has even cited Parks, much less attempted to distinguish it

or show that it was wrongly decided. Defendants rely upon

Melara v. Kennedy, 541 F. 2d 802 (9th Cir. 1976). Melara

is distinguishable in that it involved a contractual power of

sale. Id. at 807. As is discussed more fully infra, there is

neither a contractual nor common law power of sale in the in-

stant case. The power of sale derives solely from the contested

statute.

F.2d 430 (5th Cir. 1976); Caesar v. Kiser, 387 F.Supp.

645 (M.D.N.C. 1975) ; Cockerel v. Caldwell, 378 F.Supp. 491

(W.D.Ky. 1974) (three-judge court); Adams v. Depart-

ment of Motor Vehicles, 113 Cal.Rptr. 145, 11 Cal. 3d 146,

520 P.2d 961 (Cal.Sup.Ct. 1974); Blye v. Globe-Wernicke

Realty Co., 33 N.Y.2d 15 (1973).

The court below applied the test set forth in this

Court’s decision in Jackson v. Metropolitan Edison Co.,

419 U.S. 345, 351 (1974), that is, “whether there is a suf-

ficiently close nexus between the State and the challenged

action of the regulated entity so that the action of the

latter may be fairly treated as that of the State itself.”

(17la). This test was set forth in Jackson in the con-

text of a claimed violation of procedural due process—

the same claim asserted in the instant case. Since the

court below employed the proper state action standard,

the essential question concerns the application of this

standard to the instant case.

This is not a case like Moose Lodge No. 107 v. Irvis,

407 U.S. 163 (1972) or Jackson v. Metropolitan Edison

Co., supra, where the state involvement with the private

entity was peripheral, tangential and unrelated to the

contested activity. Here, the State, in authorizing ware-

housemen to sell bailors’ goods, has specifically delegated

to warehousemen the governmental functions of lien en-

forcement and binding, final, noneconsensual dispute reso-

lution. There is thus a direct, significant and precise

nexus between the State action and the contested activity.

This Court has consistently held that state action is

present when the state delegates a function which is tra-

ditionally and historically associated with sovereignty.

Evans v. Newton, 382 U.S. 296 (1966); Griffin v. Mary-

land, 378 U.S. 130 (1964); Terry v. Adams, 345 U.S. 461

(1953); Marsh v. Alabama, 326 U.S. 501 (1946); Smith v.

Allwright, 321 U.S. 649 (1944); Nixon v. Condon, 286 U.S.

73 (1932). “[{WJhen private individuals or groups are

endowed by the State with powers or functions govern-

mental in nature, they become agencies or instrumentali-

ties of the State and subject to its constitutional limita-

tions.” Evans v. Newton, supra at 299.

The continued validity of this doctrine was recently

reaffirmed by this Court in Jackson v. Metropolitan

Edison Co., supra at 353, where the Court cited Evans,

Terry, Marsh, and Nixon, and stated:

“Tf we were dealing with the exercise . . . of some

power delegated to it by the State which is tra-

ditionally associated with sovereignty, such as

eminent domain, our case would be quite a different

one.’

It is not, of course, always easy to determine whether a

function is governmental or private in nature. In the

instant case, however, the conclusion of the court below

that the functions involved are governmental in character

is supported by an analysis of the following factors: (1)

the position of the New York courts with respect to the

nature of the function; (2) the conclusion reached by

courts throughout the country; (3) the manner in which

the function was carried out at common law; and (4) the

relationship of the activity to the purposes of govern-

ment and the values which the Fourteenth Amendment

seeks to protect.

**The underlying rationale of the state f nction cases is

that a state may not delegate to the private sector a substantial

degree of control over a traditional governmental function with-

out subjecting the private sector to the requirements of the

Fourteenth Amendment.’’ Comment, State Action: A Pathology

and A Proposed Cure, 64 Cal. L. Rev. 146, 167 (1976).

This Court has recognized that deference should be

given to the determination by the State courts as to

whether an activity constitutes a governmental function

in that State. Jackson v. Metropolitan Edison Co., supra

at 353; Nixon v. Condon, supra at 97 (McReynolds, J.,

dissenting). Cf. Reitman v. Mulkey, 387 U.S. 369, 374

(1967) (“eareful consideration” given to the California

Supreme Court’s determination of objective, effect and

historical context of the contested state constitutional

provision); City of Eastlake v. Forest City Enterprises,

96 S.Ct. 2358, 2368 (1976) (Stevens, J., dissenting). While

the question of state action is, of course, ultimately to be

determined by this Court, Nixon v. Condon, 286 U.S. 73,

88-89 (1932), the state’s highest state court is in the best

position to evaluate whether a particular function is a

governmental function in that particular state. Thus, in

concluding that the furnishing of utility service did not

constitute a public funciton, this Court in Jackson relied

upon the fact that the Pennsylvania courts did not regard

the furnishing of utility service to be the function of the

State or local government. Jackson v. Metropolitan Edi-

son, supra at 353, citing decisions of the Pennsylvania

courts.

In sharp contrast to Jackson, the highest court in New

York has coneluded that lien enforcement constitutes a

function traditionally and historically carried out by state

officials. Blye v. Globe-Wernicke Realty Co., 33 N.Y.2d 15,

347 N.Y.S. 2d 170 (1973): Sharrock v. Dell Buick Cadillac

Corp., 56 A.D. 2d 446, 393 N.Y.S. 2d 166 (2d Dept. 1977) ;

see also N.Y. Lien Law, §§ 41, 50, 206-210; N.Y. RPAPL,

§1351; N.Y.CPLR, §§ 5230, 5233-5236, 6211, 6214-6216.

In Blye v. Globe-Wernicke Realty Co., swpra, the New

York Court of Appeals concluded that in New York, lien

enforcement historically and traditionally has been the

function of the sheriff:

“In this State, the execution of a lien, be it a con-

ventional security interest (Lien Law, §207), a writ

of attachment (CPLR art. 62), or a judgment lien

(CPLR art. 52), traditionally has been the function

of the Sheriff.” Blye v. Globe-Wernicke, 33 N.Y.2d

at 20; 347 N.Y.S.2d at 175.

The Attorney General contends that Blye is distinguish-

able on the ground that while a seizure of goods was

invelved in that ease, the enforcement of the warehouse-

man’s lien does not require a seizure of goods. The

Court of Appeals in Blye, however, found that the inn-

keeper carried out a public function not because a seizure

was involved, but because “the execution of a lien . .

traditionally has been the function of the Sheriff.” Blye

v. Globe-Wernicke, 23 N.Y.2d at 20, 347 N.Y.S.2d at 175.

(emphasis added)* It was thus the function of lien en-

forcement, rather than its particular method, which was

critical to the Blye court’s conclusion that lien enforce-

ment is a function which in New York historically and

traditionally has been carried out by the sheriff.

*Whiie a seizure may be necessary to enforce some liens,

such as the innkeeper’s lien, the New York legislature has recog-

nized that a seizure is not always necessary to enforce a lien.

Thus, when plaintiff already has possession of the property, there

is no necessity for a seizure and the lien can be enforced by

sale alone. See N. Y. Lien Law, §208. Cf. N. Y. Lien Law, §207

(the sheriff shall seize the chattel prior to sale when it is not in

plaintiff’s possession). In addition, both mechanic’s liens and

mortgages on real property may be foreclosed by sale by a

sheriff or other public official without any need for seizure.

N. Y. Lien Law, §41; N. Y. RPAPL, §1351. Cf. Oysterman’s

Bank and Trust Co. v. Weeks, 35 A. D. 2d 580, 313 N. Y. S. 2d

535, 537 (2d Dept. 1970) (sheriff need not make formal levy or

seizure before foreclosing a judgment lien on real property).

Even in those situations where the sheriff must seize the prop-

erty, he must still also sell the property as a necessary step to

enforcing the lien. N. Y. CPLR, §§ 5230, 5233, 5234, 5236. The

sale by the sheriff is the precise function that the warehouseman

performs when he enforces his lien under Section 7-210 of the

Uniform Commercial Code.

The highest judicial authority in New York supports

the view that lien enforcement is a state function regard-

less of whether or not a seizure is involved. Sharrock

v. Dell Buick-Cadillac Inc., supra. The Court in Shar-

rock, concluded that a garageman, who enforces his statu-

tory lien by sale, without seizure, and in the same manner

as the warehouseman, “in executing his lien, like the inn-

keeper is performing the traditional funetion of the

Sheriff. ...” Sharrock v. Dell Buick-Cadillac, 56 A.D. 2d

at 455, 393 N.Y.S.2d at 171.*

In addition to the decisions in Blye and Sharrock, the

great weight of authority throughout the country has

concluded, like the court below, that the non-consensual

sale of a person’s property to enforce a lien constitutes

a public function. Parks v. “Mr. Ford’, 556 F.2d 132

(38d Cir. 1977) (en banc) (enforcement of garageman’s

lien is state action because lien enforcement is the fune-

tion of the sheriff); Cox Bakeries of North Dakota, Inc.,

v. Timm Moving & Storage, Inc., 554 F.2d 356, 358 (8th

Cir. 1977) (Mr. Justice Clark) (“[T]he state has dele-

geted the traditional reles of judge, jury and sheriff to

[the warehouseman] without providing for any judicial

supervision or other safeguards.”); Hall v. Garson, 430

F.2d 430, 439 (5th Cir. 1970) (“[T]he execution of a lien

*The defendants and the Attorney General have appealed

the judgment of the Appellate Division in Sharrock to the New

York Court of Appeals. As of the date of the submission of

this brief, the briefs of all the parties in Sharrock have been

filed in the Court of Appeals and counsel are awaiting a date

for argument. In view of the importance which should be given

to the determination of a State’s highest court as to whether a

particular function constitutes a public function, it is respect-

fully suggested that if there is any question whether the en-

forcement of a possessory lien is a public function in New York,

this Court should defer decision in the instant case until a de-

cision is rendered by the New York State Court of Appeals in

Sharrock.

. . - has in Texas traditionally been the function of the

Sheriff or constable.”); Johnson v. Riverside Hotel Inc.,

399 F.Supp. 1138, 1140 (S.D.Fla. 1975) (“The execution

of the Landlord’s lien in Florida was traditionally a

function of the Sheriff.”); Caesar v. Kiser, 387 F.Supp.

645, 647 (M.D.N.C. 1975) (“. . . the traditional govern-

mental function of lien enforcement.”); Adams v. De-

partment of Motor Vehicles, 113 Cal.Rptr. 145, 11 Cal.3d

146, 520 P.2d 961, 965, 64 A.L.R.3d 803 (Cal.Sup.Ct. 1974)

(“The State delegated . . . the traditional governmental

function of lien enforcement.”). In Parks v. “Mr. Ford”,

supra at i141, the Third Cireuit Court of Appeals de-

termined that

“(bly thus authorizing sales to take place, direct-

ing how they are to be carried out, and giving

them the effect of judicial sales, Pennsylvania

has quite literally delegated to private individuals

powers ‘traditionally exclusively reserved’ to sher-

iffs and constables. In our view, that grant of

power has the same effect for state action pur-

poses as if Pennsylvania had endowed private

individuals with the same authority to arrest sus-

pects and to execute warrants as state and local

police possess.”

The contested statute authorizes warehousemen to per-

form the precise function that the sheriff performed at

common law. Under the common law, a bailee was given

“a possessory lien... for the value of his services” and

permitted to “retain the chattel in his possession until

the same be paid.” Brown, Personal Property, $13.1,

p.394 (3d edition 1975). The bailee, however, had “no

right to sell the subject matter of the lien to reimburse

himself for his debt unless such right [was] conferred

expressly by statute or by special agreement between

him and his debtor.” Jd. at §13.1, p.394; $13.1, p.390;

§14.1, pp.446-447. Accord, Hall, Possessory Liens m

English Law, p.67 (1917); Jones, A Treatise on The

Laws of Liens, $10, pp.1033-1034 (1888); Overton, Trea-

tise on the Law of Liens, §14, p.10 (1883); 78 Am.Jur.2d

Warehousemen, §122, p.260; 35 N.Y.Jurisprudence, Liens,

§44, pp.234-235; Knapp Street and Co. v. McCaffrey, 177

U.S. 638, 645 (1900); United States v. Toys of the World

Club, 288 F.2d 89, 95 (2d Cir. 1961).* “A warehouse-

man’s lien, like other common-law liens, confers no right

to sell the property to which the lien attaches, but only

a right to hold it till the charges are paid.” 2 L. Jones,

A Treatise on the Law of Liens, $976, pp. 990-991 (3d

edition 1914).

Under the common law, a bailee with a possessory

lien who sought to enforce his claim resorted to the “ex-

pedient of suing his debtor for the amount of the claim,

and levying execution or attachment on the bailed goods.”

Brown, Personal Property, §121, pp. 602-603 (2d edi-

tion 1955); D. Overton, A Treatise on the Law of Liens,

§14.1, p. 10 n. 1 (1883); Cowen, Treatise, P. 227 n. 6

(4th Edition 1858) 62 N.Y. Jurisprudence, Warehouse

Receipts, §125, p. 747, n. 2; Parks v. “Mr. Ford”,

supra at 157 (Gibbons, J., coneurring); Stale v. Amarillo

Transfer & Storage Co., 94 S.W.2d 590, 592 (Tex. Civ.

App. 1936); Jewett v. City Transfer and Storage Co.,

128 Cal. App. 556, 18 P.2d 351 (1933); Stewart v. Naud,

*The enforcement of possessory liens is thus sharply dis-

tinguishable from the common law right of repossession enjoyed

by secured parties. ‘‘Probably the chief obstacle to conclud-

ing that self-help repossession involves a traditional state func-

tion is the fact . . . that in one form or enother the common

law very early recognized repossession as a private remedy.”

Gibbs v. Titelman, 502 F. 2d 1107, 1114 (3d Cir.), cert. denied,

419 U. S. 1039 (1974). Accord, Turner v. Impala Motors, 503

F. 2d 607, 612 (6th Cir. 1974); Adams v. Southern California

First National Bank, 492 F. 2d 324, 336 (9th Cir. 1973), cert.

denied, 419 U. S. 1006 (1974). Similarly, the power to sell

pledged property is distinguishable in that it derives from an ‘‘in-

herent or implied term of the contract.’’ 13 Carmody-Wait 2d,

Encyclopedia of New York Practice, §84:101, p. 223. See also,

Brown, Personal Property, §15.1, pp. 469-470 (3d edition 1975).

iin

125 Cal. 596, 58 Pac. 186 (1889).* In authorizing

warehousemen to sell an owner’s goods, section 7-210

thus authorizes warehousemen to perform the precise

function that at common law had been the function of

the sheriff. See also Cox “akeries v. Tim Moving and

Storage, supra at 358-359 (“The foreclosure of the lien

was conducted by the sheriff under the supervision of

the court.”); Mason v. Garris, 360 F.Supp. 420, 422-423

(N.D. Ga. 1973) (three-judge court) (state statute au-

thorized marshal to enforee garageman’s lien).**

The power delegated by the State in section 7-210 ob-

viates the necessity for a warehouseman to bring an ac-

tion on his claim, obtain a judgment, and have the sheriff

enforce that judgment, Parks v. “Mr. Ford”, supra at

146-147 (Adams, J., coneurring), or to bring a judicial

foreclosure proceeding and obtain an order of sale. 2 L.

*Under the common law, to execute a money judgment, the

court issued a writ of fieri facias to the sheriff which commanded

‘‘that he cause to be made of the goods and chattels of the

defendant the sum or debt recovered.’’ Blackstone, Commen-

taries on the Laws of England, Book ITI, §543, p. 2033 (Jones

edition) ; Plucknett, A Concise History of the Common Law, p.

390 (5th edition 1956). See also, Westminister II, ce. 18, p. 1285.

‘The writ of fieri facias is of great antiquity. ... It is the

writ most commonly resorted to. . .. The common law principles

of the writ prevail generally, with modification, in the United

States.’’ Blackstone, Commentaries of the Laws of England,

supra, at §543, p. 2033, n. 2.

**Sheriffs and constables also normally enforce landlord lien

under distress for rent statutes. These statutes uniformly have

been held unconstitutional by the federal district court. Stroemer

v. Shevin, 399 F. Supp. 993 (S.D. Fla. 1973) (three-judge court) ;

Ragin v. Schwartz, 393 F. Supp. 152 (W.D. Pa. 1975); Adams v.

Joseph F. Sanson Investment Co., 376 F. Supp. 61 (D. Nev.

1974); Sheffer v. Holbrook, 346 F. Supp. 762 (S.D. W. Va. 1972)

(three-judge court): Holt v. Brown, 336 F. Supp. 2 (W.D. Ky.

1971) (three-judge court); Santiago v. McElroy, 319 F. Supp.

284 (E.D. Pa. 1970) (three-judge court).

Jones, A Treatise on the Law of Liens, $1038, pp. 1046-

1047 (3d edition). See, e.g., N.Y. Lien Law, §206. The

contested statute authorizes warehousemen to determine

whether and how much the owner owes for transportation

and storage costs, and to enforce this decision by selling the

bailed goods. The State has thus delegated to ware-

housemen a portion of “the State’s monopoly over tech-

niques for binding conflict resolution.” Boddie v. Con-

necticut, 401 U.S. 371, 375 (1971) (Harlan, J.). Accord,

Parks v. “Mr. Ford”, supra at 146 (Adams, J., con-

curring) (“[eclonflict resolution is now seen as one of

the core attributes of the sovereign.”); Cox Bakeries of

North Dakota, Inc., v. Timm Moving & Storage, Inc.,

supra at 358 (“. .. the traditional roles of judge, jury

and sheriff. . . .”); Shirley v. State National Bank of

Conencticut, 493 F.2d 739, 747 (2d Cir.), cert. denied,

419 U.S. 1009 (1974) (Kaufman, J., dissenting); Bond

v. Dentzer, 494 F.2d 302, 312 (2d Cir.), cert.denied, 419

U.S. 837 (1974) (Kaufman, J., dissenting). See also,

United States v. Kras, 409 U.S. 434, 454-455 (1973)

(Stewart, J., dissenting).

Defendant Flagg contends that dispute resolution is

not a governmental function because the private sector

often resolves disputes by such means as arbitration and

voluntary settlement. (Brief for Petitioners Flagg

Brothers, Ine. and Henry Flagg, p.29). Historically, it is

of course true that parties have resolved disputes vol-

untarily through such methods as abitration, accord and

satisfaction and settlement. Blackstone’s Commentaries

on the Laws of England, Bk. TIT §§24 et seq. (Jones edi-

tion). Parties may also by contract provide security

for debts and agree that, in the event of default, the

security may be sold. See, Adams v. Southern California

First National Bank, 492 F.2d 324 (9th Cir. 1973), cert.

denied, 419 U.S. 1006 (1974); see also, N.Y. Uniform Com-

mercial Code §§9-102(a), 104(c), 204(1). The function

delegated by the State in the instant case, however, is not

simply dispute resolution, but final, non-consensual dispute

resolution, which is enforced by the forced and final sale

of another person’s property through the device of lien

enforcement. A person whose goods are sold ,pursuant

to section 7-210 stands in the position of a deféndant in

a judicial action who has had a judgment entered against

him, and whose property has been sold by the sheriff in

satisfaction of the judgment.

The difference between consensual and non-consensual

dispute resolution is crucial. Compare, Boddie v. Con-

necticut, supra, with United States v. Kras, supra. As

Judge Kaufman has concluded:

“(The decisive difference between ‘binding con-

flict resolution’, on the one hand, and ‘private struc-

turing ... and repair,’ on the other, is the element

of voluntary mutual consent, the presence of which

permits the latter just as its absence requires the

former. Accordingly where, as here, the creditor

is empowered, whether by common law or by statute,

to unilaterally resolve a conflict, he is acting within

a sphere reserved for the state alone and, there-

fore, his power, like state power, must be fettered

by the restraints of due process.” Shirley v. State

National Bank of Connecticut, 493 F.2d at 747

(Judge Kaufman, dissenting) (emphasis in orig-

inal).

The Uniform Commercial Code provides that a “ware-

houseman is liable for damages” which result from his fail-

ure to comply with the procedures set forth in section

7-210 “and in case of willful violation is liable for con-

version.” N.Y. Unif m Commercial Code, §7-210(9).*

*In Fuentes v. Shevin, supra, at 83 n-13, this court noted

that there was a ‘‘substantial possibility’’ that ‘‘uneducated,

uninformed consumer[s] with little access to legal help and little

familiarity with legal procedures’’ will not bring actions to test

the validity of the creditor’s sale.

This does not, however, detract from the fact that a sale

of goods pursuant to section 7-210 constitutes final, non-

consensual, binding dispute resolution with respect to the

title of the goods sold. See N.Y. Uniform Commercial

Code, §7-210(5), which protects good faith purchasers of

goods sold to enforce a warehouseman’s lien, despite the

warehouseman’s non-compliance with section 7-210. The

power to determine finally the ownership rights in a chat-

tel, “because of the drastic consequences, is necessarily

an attribute of sovereignty.” See Parks v. “Mr. Ford”,

supra at 164 n.2 (Hunter, J., concurring).

As the court below recognized, the power to sell an-

other’s property is “a truly extraordinary remedy.” (173a).

While the Attorney General contends that the right to dis-

pose of property “is one of the essential incidents of

property”, Brief of Petitioner Lefkowitz, p.13, the inci-

dent of property is the right to alienate one’s own prop-

erty, not the property owned by another. While the

warehouseman claims a possessory lien, it is at best a

limited interest based on a disputed and unresolved claim

for transportation and storage fees. In contrast, there

is no question that the bailor is the owner of the goods.

Brown, Personal Property, §107, p.505 (2d edition 1955) ;

Hernandez v. European Auto Collision, 487 F.2d 378, 385

(2d Cir. 1973) (Timbers, J., concurring).

One of the great and essential functions of government

is the protection of property rights by the judicial resolu-

tion of disputes. “The great and chief end, therefore, of

men’s uniting unto commonwealths, and putting themselves

under government is the preservation of property, to which

in the state of nature there are many things wanting.”

Locke, Of Civil Government, Second Essay, Ch. IX, §124

(Gateway). See also Federalist Paper, No.10 p.79; No.17,

p.120 (Mentor edition) ; Blackstone, Commentaries on the

Laws of England, supra at Book II, §5 p. 1490 n.2. Ac-

cording to Blackstone, self help at common law was lim-

ited to self defense, recaption, re-entry on land, abate-

ment of nuisances, distress, and the seizing of heriots.

Blackstone, Commentaries on the Laws of England, supra

at Book III, §§7-11,23. “The landlord-tenant relationship

was one of the few areas where the right of self-help was

recognized by the common law of most States, and the

implementation of this right has been fraught with ‘viol-

ence and quarrels and bloodshed.’” Lindsey v. Normet,

405 U.S. 56, 71 (1972). In our system of law, non-con-

sequental dispute resolution by the courts is the norm

and self-help the extremely limited exception. Pollack

and Maitland, 2 History of English Law, Ch.1X, §2, pp.

574-575; Holdsworth, 3 History of English Law, Ch.II,

p. 278; Gibbs v. Titelman, 369 F. Supp, 38, 45-47 (E.D.

Pa. 1973), rev’d, 502 F.2d 1107 (3d Cir), cert denied, 419

U.S. 1039 (1974).*

It is one of the constitutional assumptions that the

power of involuntary sale of property is limited to specific

exercises of governmental power, such as the power of

eminent domain, the enforcement of judgment liens, and

the judicial foreclosure of mortgages. A state delega-

tion of the power of the non-consensual sale of property,

without providing the owner of the property with any

procedural safeguards, is repugnant to the most basic

notions of sovereignty, Parks v. “Mr. Ford”, supra at 164

*‘*A political society, in the first place, puts this rude self-

help under stringent regulation, and second, provides a sub-

stitute for it in the shape of judicial process. Self-help is in-

deed but an unsatisfactory means of redress. Its possibility de-

pends upon thc injured party being stronger than the wrong-

doer, a state of things which is by no means a matter of course,

and the party is made judge in his own cause, often at a time

when he is least likely to form an impartial opinion upon its

merits.’”’ Blackstone, Commentaries on the Laws of England,

supra, at Book III, §5, pp. 1490-1491, n. 2 (Hammond), citing

Pollock and Maitland, 2 Hist. Eng. Law (2d ed.), 574; 3 Holds-

worth, Hist. Eng. Law, 243 ff.

n.2 (Hunter, J., concurring), and frustrates the very values

which the Due Process Clause seeks to protect. Wash-

ington v. Roberge, 278 U.S. 116 (1928); Eubanks v. Rich-

mond, 226 U.S. 137 (1912). Cf: Eastlake v. Forest City

Enterprises Inc., 96 S.Ct. 2358 (1976), distinguishing

Washington and Eubanks.

This enormous power of sale delegated to warehouse-

men is far from, as defendants suggest, consumer oriented

legislation. Compare, Bond v. Dentzer, supra. The statu-

tory power of sale is not a substitute for other creditor

remedies, but is “in addition to all other rights allowed

by law to a ereditor against his debtor.” N.Y. Uniform

Commercial Code, §7-210(7).* Absent section 7-210, no

such power of sale would exist, and any sale by the ware-

houseman would render him liable for damages in con-

version. Brown, Personal Property, §14.1, p. 446 (3d edi-

tion 1975).

Warehousemen obtained the powe summary sale in

large part because they have “constivuted, and still con-

stitute special interest groups to which the state legis-

latures are traditionally responsive.” Brown, Personal

Property, §13.1, p. 391 (3d edition 1975).** The present

*Defendant Flagg Brothers is thus in error in suggesting

at page 27 of its brief that a warehouseman may not obtain

a deficiency judgment following sale. See 13 Carmody-Wait 2d,

§§ 84:95, 84:104.n.10. In addition, the fact that the warehouse-

man has complete discretion as to whether to sell makes his

remedy of sale broader than that of U.C.C. Article 9 creditor

who must sell if the debtor has paid 60 percent of the cash

price of loan. N. Y. Uniform Commercial Code, §9-505(1).

**No special duties were imposed upon the warehousemen

in exchange for the power of sale. Unlike common carriers, ware-

housemen need not accept all customers. In addition, warehouse-

men are ‘‘only bound to ordinary care and diligence in the care

and protection of the property entrusted to them.’’ D. Overton,

A. Treatise on the Law of Liens, §222, p. 256 (1883); NW. Y.

Uniform Commercial Code, §7-204.

power of sale stands in contrast to that earlier granted

by some states which authorized the sale “only after a

hearing in court and an order by the judge... .” Com-

ment, Liens—Extent to which Common-Law Artisan’s Lien

Has Been Supplanted by Statute, 37 Mich.L.Rev. 273,

274 (1938). See description of statutes of Georgia, Ken-

tucky, Maine, Massachusetts, Michigan, North Dakota,

Rhode Island, South Dakota and Tennessee in 2 L. Jones,

A Treatise on the Law of Liens, §§1052, 1053, 1054a, 1055,

1056, 1056a, 1059a, 1059b, 1060 (3d ed. 1914). In addition,

“several of the statutes required a justice of the peace

or sheriff to inventory the goods and conduct the sale.”

Brief of Petitioners American Warehousemen’s Associa-

tion and the International Association of Refrigerated

Warehouses, p. 12; Brown, Personal Property, §119, p.

590 (2d edition 1955).

A statute which grants a class of creditors the power

to summarily sell another person’s goods in order to satisfy

a disputed claim, without the necessity of instituting an ac-

tion and proving the validity of the claim, and without

even affording the owner of the goods an opportunity for

a hearing, can hardly be said to be consumer oriented."

The warehouseman’s foreclosure of his lien is the func-

tional equivalent of the ministerial functions performed by

the clerks and sheriffs in Sniadach, Fuentes and North

Georgia Finishing. Parks v. “Mr. Ford”, 556 F.2d 182,

148 (3d Cir. 1977) (Adams, J., coneurring) ; Hall v. Garson,

430 F.2d 480, 440 (5th Cir. 1970). See McMeans v.

*The statement in Hackett v. Nelson Express and Storage

Co., 162 Mise. 144, 294 N. Y. S. 905, 909 (Sup. Ct. 1937), that

the statute ‘‘seeks to protect the person storing the goods’’ re-

fers to the requirement of notice and advertisement which pre-

cedes the sale. The court did not state that the involuntary

final sale of a person’s goods is beneficial to the owner of the

goods.

Schwartz, 330 F.Supp. 1397, 1399 (S.D. Ala. 1971) (“Fed-

eral jurisdiction should not depend on who served the

writ of garnishment in the state court—the sheriff or

the creditor’s lawyer.”)* This is made clear by Mr. Jus-

tice Stewart’s description in Fuentes v. Shevin, supra

of the state’s role in the issuance of a writ of replevin:

“The statutes, moreover, abdicate effective state

control over state power. Private parties, serving

their own private advantage, may unilaterally in-

voke 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 infor-

mation to the court on these matters. The State

acts largely in the dark.” Fuentes v. Shevin, 407

U.S. 67, 93 (1972).

This description is fully applicable to the State’s delega-

tion to the warehouseman of the power to enforce his lien.

The critical question is not whether a state intends to

circumvent constitutional guarantees by delegating its

functions to private parties, but whether the function dele-

*A finding of no state action in the instant case would create

an ironic situation: ‘‘Those creditors who do resort to some form

of judicial process are simultaneously found to have invoked state

a court clerk and sheriff

typically—and to have violated dug process because they have

not done enough. Meanwhile, creditors who resort to no ju-

dicial process whatsoever, and mofe flagrantly violate individual

rights, are insulated from judicial review because no state ac-

tion is found.’’ Comment, State Action: A Pathology and a Pro-

posed Cure, 64 Cal. L. Rev. 146, 176-177 (1976); McCall, Due

Process and Consumer Protection Concepts and Realities in Pro-

cedure and Substance—Repossession and Adhesion Contract Is-

sues, 26 Hast. L. J. 383, 404 (1974).

gated is governmental in nature. A finding of no state

action in the instant case may serve as a clear message to

state legislatures that they will be able to insulate a variety

of creditor remedies from the due process protections es-

tablished by this Court in Sniadach, Fuentes, Mitchell and

North Georgia Finishing, by simply eliminating the minis-

terial functions of clerks or other officials.

It is thus clear that the State has delegated the public

functions of non-consensual dispute resolution and lien

enforcement to warehousemen. The warehouseman’s

power of sale is “so impregnated with a governmental

character as to become subject to the constitutional limi-

tations placed upon state action.” Evans v. Newton, 382

U.S. 296, 299 (1966).

The State is also significantly involved in the contested

_activity because section 7-210 delegates to warehousemen

an extraordinary power which they would not otherwise

have, and authorizes them to engage in acts which the

state could not itself engage in consistent with the Four-

teenth Amendment. Moreover, by authorizing the sum-

mary sale of goods, section 7-210 has granted warehouse-

men a power which, from their standpoint, is an economic-

ally and strategically attractive alternative to either com-

mencing an action for monetary damages, proving a claim

and obtaining and enforcing a judginent, or obtaining ju-

dicial foreclosure on the lien, N.Y.Lien Law, §206,

et.seq. New York has thereby “significantly encourag[ed]”

the contested activity. Reitman v. Mulkey, 387 U.S. 369,

381 (1967); Robinson v. Florida, 378 U.S. 153 (1964);

Clark and Landers, Sniadach, Fuentes and Beyond: The

Creditor Meets the Constitution, 59 Va.L.Rev. 355, 382

(1973).

Although the bailee’s possessory lien has ancient roots

dating back to the fifteenth century, United States v.

Toys of the World Club, 288 F.2d 89, 94 (2d Cir. 1961)

(Friendly, J.); 2 L. Jones, The Law of Liens, §731 (3d

edition, 1914), the power to enforce this lien by summary

sale did not come into existence until the enactment of

statutes like the predecessors to section 7-210. The com-

mon law possessory lien is “merely a device to coerce

the debtor into payment of his debts by the retention

of his property from him until he pays. A sale by a

lienor in attempted foreclosure of his lien is indeed, as

to the owner of the goods, a conversion.” Brown, Per-

sonal Property, §14.1, p.446 (3d edition 1975). In addi-

tion, in the instant ease there is no contractual power of

sale.* But for the contested statute, a warehouseman who

sold a baiver’s goods would be a converter and judicially

decreed a forced purchaser. Prosser, Law of Torts, §15,

pp.80-81, 87 (4th edition 1971). When a warehouseman

sells goods to enforce his possessory lien, he is acting

pursuant to, under, and only under color of section 7-210.

Defendants contend that a state command is necessary

to find state action. This Court’s decisions, however, show

that state action is present where the statutory authoriza-

tion constitutes the sole basis of authority for an act which,

if performed by the state, would violate the Fourteenth

Amendment. Reitman v. Mulkey, 387 U.S. 369 (1967);

Evans v. Newton, 382 U.S. 296, 305-311 (1966) (White, J.,

concurring); Burton v. Wilmington Parkway Authority,

365 U.S. 715, 726 (1961) (Stewart, J., concurring); td. at

727 (Frankfurter, J., dissenting); id. at 728 (Harlan and

Whittaker, J.J., dissenting) ; Railway Employees Dep’t v.

Hanson, 351 U.S. 225 (1956); Public Utilities Commission

*This case is thus unlike a pledge or secured transaction

where the right to retake or sell the collateral is conferred by

contract. See Brown, Personal Property, §15.1, pp. 469-470 (3d

edition 1975).

v. Pollak, 343 U.S. 451 (1952); Nixon v. Condon, 286

U.S. 73, 85 (1932); McCabe v. Atchison, 235 U.S. 151

(1914). See also, CBS v. Democratic National Committee,

412 U.S. 94, 178-180 (1973) (Brennan, and Marshall, J.J.,

dissenting); Adickes v. S.H. Kress & Co., 398 U.S. 144,

202-203 (1970) (Brennan, J., concurring in part and dis-

senting in part).

In the Civil Rights Cases, 109 U.S. 3 (1883), this court

stressed the fact that the Fourteenth Amendment was de-

signed to provide protection against unconstitutional state

legislation. The Fourteenth Amendment “nullifies and

makes void all State legislation, and State action of every

kind” which conflicts with the Privileges and Immuni-

ties, Due Process and Equal Protection Clauses. The

Cwil Rights Cases, supra at 11 (emphasis added). “[TJ]he

prohibitions of the amendment are against State laws and

acts done under State authority.” Jd. at 13. “[{T]he mis-

chief and wrong which the amendment was intended to

provide against ... is State laws, or State action of some

kind adverse to the rights of the citizen secured by the

amendment.” Jd. at 13. “he wrong must be “sanctioned

in some way by the State”, or “done under state authority.”

Id. at 17. The wrong must rest “upon some State law

or State authority for its excuse and perpetration.” Id.

at 18.°

*This is consistent with the language of the Fourteenth

Amendment itself. The Amendment begins: ‘‘no state shall

make or enforce any law. ...’’ This language directly pre-

eedes the Privileges and Immunities Clause. The language pre-

ceding the Due Process Clause—‘‘nor shall any state deprive any

person . . .’"—does not indicate a more restrictive scope of pro-

tection against state action than is provided by the Privileges

and Immunities Clause. The use of the word ‘‘nor’’ indicates

that the same state action requirement applies to both clauses.

This Court in The Civil Rights Cases indicated that the same

state action requirement applies to both clauses. The Civil Rights

Cases, supra at 11.

In Burton v. Wilmington Parking Authority, 365 U.S.

715 (1961), four Justices agreed that specific statutory

authorization for the contested discrimination by itself

constituted state action. Mr. Justice Stewart, concurring,

stated that “[t]he highest Court of Delaware has .. .

construed this legislative enactment as authorizing dis-

criminatory classifications based exclusively on color.

Such a law seems to me clearly violative of the Four-

teenth Amendment.” Burton v. Wilmington Parking

Authority, supra at 726-729. Justice Stewart found that

the specifie statutory authorization granting the restau-

ranteur the power to deny service to blacks constituted

significant state action.

Justices Harlan, Whittaker and Frankfurter agreed

that if the state statute had been construed by the highest

court in Delaware to specifically authorize the diserimina-

tory conduct, this would clearly support a finding of state

action. Mr. Justice Harlan, in an opiinon joined by Mr.

Justice Whittaker, stated that if the statute were so

construed, he “would certainly agree, without more, that

the enactment is offensive to the Fourteenth Amend-

ment.” Jd. at 729. (Harlan and Whittaker, JJ., dissent-

ing). Mr. Justice Frankfurter agreed that if Justice

Stewart was “correct in so reading the decision of the

Delaware Supreme Court, his conclusion [regarding state

action] inevitably follows.” Jd. at 730 (Frankfurter, J.,

dissenting).*

*Justices Harlan and Frankfurter dissented only because they

concluded that the construction given to the statute by the Dela-

ware Supreme Court was unclear, and that the action should be

remanded to that Court for clarification of the meaning of the

statute.

In McCabe v. Atchison, 235 U.S. 151, 162 (1914), this

Court stated that if an individual is discriminated against

on the basis of race “by a common carrier, acting in the

matter under the authority of a state law... he may

properly complain that his constitutional privilege has

been invaded.” While the case was resolved on pro-

cedural grounds, not one Justice expressed disagreement

with this language in the Court’s decision. Moreover,

this Court in Reitman v. Mulkey explained the decision

in McCabe as “nothing less than considering a _per-

missive state statute as an authorization to discriminate

and as sufficient state action to violate the Fourteenth

Amendment in the context of that case.” Jd. at 379.

In Evans v. Newton, 382 U.S. 296 (1966), Mr. Justice

White concluded that specific statutory authorization to

engage in conduct offensive to the Fourteenth Amend-

ment constitutes state action particularly where, as in

the instant case, the statute “depart[s] from a policy

of strict neutrality” by reversing the common law, and

constitutes the sole basis of authority to perform other

an unlawful act. Jd. at 305-307 (White, J., concurring).

Similarly, in Nizon v. Condon, 286 U.S. 73, 85 (1932),

the Court found that the state’s statutory conferral of

a power which that the state itself could not itself con-

stitutionally exercise under the Fourteenth Amendment

is highly significant for state action purposes. “If the

state had not conferred it, there would be hardly color of

right to give basis for its exercise.” In Reitman v. Mul-

key, 387 U.S. 369 (1967), this Court made it clear

that state action was found in Nixon v. Condon, supra

because a state statute conferred on the committee “au-

thority which the committee otherwise might not have

had,” even though the statute contained “no directions

with respect to the exercise of that power.” Reitman

v. Mulkey, supra at 379. The exercise of the power in

Nixon was considered to be “an expressed of state au-

thority contrary to the Fourteenth Amendment.” Reit-

man v. Mulkey, supra at 379. And, in Public Utilities

Commission v. Pollak, 343 U.S. 451, 462 (1952), this Court

held that the Commission’s approval of the contested ac-

tivity, by simply dismissing an investigation to determine

its legality, was sufficient to constitute government action.

This Court’s decision in Moose Lodge No. 107, v. Irvis,

407 U.S. 163 (1972) makes it clear that a state command

that the private party perform a particular act is not a

prerequisite for a finding of state action. In Moose

Lodge, this Court held that the Liquor Control Board’s

regulation, which required licensed clubs to “adhere to

all of the provisions of its Constitution and By-Laws”,

constituted state action because its effect was “to place

state sanctions behind [the club’s] discriminatory mem-

bership rules. . . .” Jd. at 177-178. State action was

found even though the Board’s regulation was “neutral”

and did not require the club to adopt or enforce any

particular regulation. The initiative for any particular

regulation or policy came solely from the private club

and not from the Board, and the Board did not take

any view of what regulations or policy the club should

adopt. In this sense, the state’s involvement in the

instant case is more significant than in Moose Lodge.

While the Board in Moose Lodge did not set forth its

policy with respect to discriminatory practices, but simply

required the club to enforce whatever policy it chose

to adopt, New York, in authorizing the summary sale of

goods by warehousemen, has expressly sanctioned and

approved the particular conduct that plaintiffs challenge.

Defendant Flagg’s reliance on Evans v. Abney, 296

U.S. 435 (1970) is misplaced. Most of that opinion does

not deal with state action, but is premised on the fact

that the decision of the Georgia Supreme Court, pursuant

to which the property reverted to the testator’s heirs,

constituted state judicial action that did not violate the

Equal Protection Clause. That part of the Court’s deci-

sion which holds that the making of the will did not consti-

tute state action is based on the fact that the testator had

made it clear that he had not relied upon the Georgia

trust statute:

“Nor is there any indication that Senator Bacon

in drawing up his will was persuaded or induced

to include racial restrictions by the fact that such

restrictions were permitted by the Georgia trust

statutes. (citation omitted). On the contrary, the

language of the Senator’s will shows that the ra-

cial restrictions were solely the product of the

testator’s own full blown social philosophy.” Kvans

v. Abney, swpra at 445.

In the instant case, since a sale of goods by the ware-

housemen would, absent statutory authority, be an un-

lawful act, there is no question that warehousemen “act

with the knowledge of and pursuant to that statute.”

Adickes v. S.H. Kress and Co., swpra at 162 n. 23. Com-

pare Lucas v. Wisconsin Electric Power Co., 466 F.2d

638, 656 (7th Cir. 1972) (en banc), cert. denied, 409 U S.

1114 (1973), where the court stated that a “different

question” would have been presented had the utility termi-

nated service pursuant to statutory authority.

In Jackson v. Metropolitan Edison, Co., supra, this

Court held that Metropolitan Edison’s termination of util-

ity service did not constitute state action because Penn-

sylvania was not involved or concerned with the contested

activity. Pennsylvania had not delegated a governmental

function and had not specifically authorized or encour-

aged the summary termination of utility service. The

“initiative” for the utility shut-off policy came from the

utility company which had filed its tariff with the Com-

mission. The Commission did not act on this tariff. It

had “never been the subject of a hearing or other scru-

tiny by the Commission.” Jackson v. Metropolitan Edi-

son Co., supra at 354. Moreover, it was “less than clear

under state law that Metropolitan was even required

to file this provision [providing for utility shut offs] or

that the Commission would have had the power to dis-

approve it.” Jd. at 355. In addition, the utility had the

right to terminate service at common law. Id. at 354 n.

11.

Here, by contrast, there is a direct nexus between the

State conduct and the contested activity. New York, un-

like Pennsylvania, has by statute expressly delegated

governmental power to the private sector. The New

York legislature, unlike the totally passive non-involve-

ment of the Publie Service Commission in Jackson, took

the initiative by enacting the contested statute. In so

doing, it specifically authorized warehousemen to sum-

marily sell a bailor’s goods. This power, unlike the power

to terminate utility service in Pennsylvania, did not exist

at common law. Thus, unlike Jackson, the State has

placed its “imprimatur” on the contested conduct. Jackson

v. Metropolitan Edison Co., supra at 357.

New York has specifically delegated to warehousemen

the power to summarily sell another’s property—an act

which if performed by the State would violate the Four-

teenth Amendment’s command that the state not deprive

a person of property without due process of law. North

Georgia Finishing Inc., v. Di Chem Inc., supra; Mitchell

v. W.T. Grant Co., supra; Fuentes v. Shevin, supra; Snia-

dach v. Family Finance Corp., supra. This Court’s de-

cisions support the conclusion that this specific statutory

authorization and encouragement constitute state action.

Moreover, New York has delegated to warehousemen the

governmental functions of lien enforcement and non-con-

sensual, final dispute resolution. This delegation of public

power clearly constitutes state action.

A finding of state action will allow the courts to bal-

ance the competing interests to determine the procedure

required by the Due Process Clause. It will not deprive

the warehouseman of his lien or of the means to enforce

it. It will only insure that an owner of property will be

afforded some opportunity to be heard before his goods

are sold.

Conclusion.

For the foregoing reasons, the judgment of the court

below should in all respects be affirmed.

Dated: December 20, 1977,

White Plains, New York.

Respectfully submitted,

WESTCHESTER LEGAL SERVICES, Inc.

Martin A. Scuwartz, Lawrence 8. Kaun,

Attorneys for Respondents,

171 East Post Road,

White Plains, N. Y. 10601

(914) 949-4797.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.