MITCHELL v. W. T. GRANT CO.
Lawrence Mitchell purchased a refrigerator, range, stereo, and washing machine from W. T. Grant Company and fell behind on payments. W. T. Grant sued Mitchell in state court to recover the $574.17 balance. Pursuant to Louisiana law, W. T. Grant offered proof that it had a vendor’s lien on the property and that Mitchell owed a balance and asked the court to issue a writ of sequestration to retain and hold the property pending the outcome of the suit. The trial court approved the writ without notifying Mitchell or allowing him an opportunity to defend his right to the property at a hearing. Mitchell moved to dissolve the writ of sequestration and argued that seizing his property without notice or an opportunity to defend his interest in the property violated his Fourteenth Amendment right to due process. The trial court, the appellate court, and the Louisiana Supreme Court rejected Mitchell’s argument and held that W. T. Grant’s course of conduct ensured Mitchell’s due process by proceeding according to Louisiana law.
Does sequestration of a debtor’s property without providing the debtor notice or a hearing to defend an interest in the property violate the Due Process Clause of the Fourteenth Amendment?
Legal provision: Due Process
No. Justice Byron R. White wrote the opinion for the 5-4 majority. The Court held that Louisiana’s procedure for sequestering property provided both the buyer and the seller with a fair opportunity to secure and defend their respective interests in the challenged property. W. T. Grant Company provided a sworn statement documenting proof of the debt, the lien, and delinquency, all of which showed the judge that Mitchell’s title to the property was encumbered. Additional safeguards in the Louisiana law required creditors to place a bond down at the time of sequestration to secure the buyer’s interests should the proceedings show that sequestration was wrongful. The Court held that these safeguards, coupled with Louisiana’s interest in preventing the buyer from transferring or concealing the property to the detriment of the creditor, justified sequestration without notice or a hearing.
In his concurring opinion, Justice Lewis F. Powell, Jr. wrote that the majority opinion overturned the rule established in Fuentes v. Shevin. In that case, the Court held that procedural due process required “an adversary hearing before an individual may be temporarily deprived of any possessory interest in . . . property.” Justice Powell argued that the Fuentes rule was unnecessarily broad and that the narrower grounds the majority set forth represented a better balance of the interests of creditors and debtors.
Justice Potter Stewart wrote a dissenting opinion in which he argued that the Court should adhere to the Fuentes rule. According to this rule, the Louisiana procedures violated due process by allowing the government to deprive a person of property with no advance notice or opportunity to be heard. Justice William O. Douglas, Justice Thurgood Marshall and Justice William J. Brennan, Jr. joined the dissent.
Argument of Robert J. Hobbs
Chief Justice Warren E. Burger: We’ll hear arguments next in Mitchell against W. T. Grant Company, 72-6160.
Mr. Hobbs, you may proceed whenever you are ready.
Mr. Robert J. Hobbs: Mr. Chief Justice and may it please the Court.
This matter is before this Court on a writ certiorari to review the decision of the Louisiana Supreme Court, upholding the Louisiana statutory procedure of sequestration.
The issue presented by the decision of the Louisiana Supreme Court and by the arguments of respondent is whether the decision of this Court in Fuentes v. Shevin should be applied to the Louisiana procedure of sequestration.
A procedure without any constitutionally significant references from the procedures and of Florida and Pennsylvania, a statutory replevin found unconstitutional in Fuentes v. Shevin.
Mitchell is not asking this Court for a novel holding.
The key facts in this case are brief.
On February 2, 1972, Grant filed a money claim in the First City Court in New Orleans.
That claim alleged $574.00 to -- against the purchase price of four appliances.
In conjunction with that money claim, Grant requested that a seizure by writ of sequestration be authorized.
In support of that request for seizure by sequestration, Grant filed a short affidavit which verified the petition and a surety bond.
The judge authorized the seizure.
The seizure could take place immediately.
As was true in Fuentes, the writ of sequestration issued upon the minimal showing the verified petition and affidavit.
As was true in Fuentes, it issued only by the -- with the filing of a surety bond.
As was true in Fuentes, the issuance of the writ of sequestration is a ministerial act.
It is the mandatory duty of the issuing official to issue the writ of sequestration if the documents presented to him are proper on their face.
The document need only show on its face, a claim, in this case the $574.00 money claim alleged to be due on four appliance purchased 11 to 19 months prior to the initiation of the suit.
Document need only show an interest of the claimant and the property to be seized, in this case, and unrecorded statutory lien was asserted and third, the document need only show the defendant’s power over the property to be seized, in this case, delivery of the goods to Mitchell was alleged.
The procedure is broadly available to every plaintiff who is willing to make these averments.
Once the writ of sequestration is authorized, the seizure may take place immediately.
As in Fuentes, there are only post-seizure procedures available to the dispossessed parties.
As in Fuentes, those procedures came too late, the depravation has already occurred.
However, to put this case in the proper perspective, I’ll briefly go through the post seizure procedures which Mitchell pursued.
The dispossessed party may defend both against the money claim and against the seizure, in this case, Mitchell sought to dissolve the seizure first.
Mitchell alleged state grounds, state exemptions statute, he argued applied it to certain of the appliances.
Mitchell also asserted at the Due Process Clauses of Louisiana and the United States Constitutions protected him against this seizure.
A hearing was held, both parties appeared.
No testimony was introduced.
Justice Byron R. White: Did he make any assertion that there was not a balance due on the debt?
Mr. Robert J. Hobbs: No, he can -- he could do this in his defense to the underlying petition for setting a money claim and that is his intent, what he intents to do --
Justice Byron R. White: You mean at the trial later?
Mr. Robert J. Hobbs: By pleadings and been at the trial --
Justice Byron R. White: You claim that's his motion to dissolve the writ, he may not challenge the averments that balance are due?
Mr. Robert J. Hobbs: He can -- the Louisiana law is actually unclear on this.
It does say he can attach and attack any --
Justice Byron R. White: I notice that respondent’s claim that at this hearing, he dissolved the writ, he may challenge anything that is relevant to the issuance of the writ.
Mr. Robert J. Hobbs: I suggest that’s not the law of Louisiana, what the law says and --
Justice Byron R. White: Well, let’s assume that it was the law of Louisiana.
Mr. Robert J. Hobbs: Yes.
Justice Byron R. White: That he could challenge the writ, to challenge the underlying facts on which the writ was based.
Mr. Robert J. Hobbs: Yes.
Justice Byron R. White: -- namely that there is a debt due.
Mr. Robert J. Hobbs: Yes.
Justice Byron R. White: And a balance due, would that make any difference to your argument?
Mr. Robert J. Hobbs: Well, respondent does make the argument out of the -- he makes the argument that because Mitchell could have raised defenses in that post-seizure hearing that he had to raise every defense and because he did not raise the seizures against the underlying claim, he only raised defenses against the seizure that he has waived all these defenses.
I -- it makes a difference if you reach that conclusion.
However, as to my constitutional argue -- argument, it makes no difference.
Justice Byron R. White: It still comes too late.
Mr. Robert J. Hobbs: Because it comes too late, it comes after the depravation.
Justice Byron R. White: Is it -- well, I’ll -- you go ahead.
Mr. Robert J. Hobbs: After the City Court refused to dissolve the seizure, Mitchell sought immediate interlocutory relief at the appellate level and intermediate Appellate Court refused to review.
The Louisiana Supreme Court granted review on interlocutory writs of review certiorari and mandamus, etcetera and after hearing briefs and oral arguments of the parties, the Louisiana Supreme Court upheld the constitutionality of the Louisiana procedure of sequestration.
To uphold the decision below would be in effect to overrule Fuentes v. Shevin.
However, the decision in Fuentes is not the only principle involved to uphold the decision below would be to depart from a sound constitutional principles applied, and a host of this -- of other decisions of this Court stretching over a period of more than 100 years.
That principle is the very fundamental principle that the state cannot seize a person’s property without prior notice and hearing except in the most extra ordinary of situations.
To uphold the decision below would be to carve a new and almost unlimited exception to that principle.
To uphold the decision below would also cast out an uncertainty upon the decisions of more than 60 Courts in more than 29 States which have struck down statutes similar to those involved in Fuentes in reliance upon this Court’s decision in Fuentes v. Shevin and Sniadach v. Family Finance.
The basic purpose of the Fourteenth Amendment is to protect the individual against the state.
The key stand to this constitutional protection is the right to defend one’s property prior to a state seizure.
This can be accomplished effectively only by affording the individual notice and an opportunity for a hearing prior to the state seizure.
This right to prior notice and hearing can be abridged only by the most overriding of state interest.
The broadly available procedure of statutory sequestration abridges the constitutional rights of the individual without any overriding state justification for that abridgment.
But they --
Justice Potter Stewart: Mr. Hobbs, you said that, I missed -- I think -- something you said, the Courts of how many states had held similar laws unconstitutional beyond understanding of --
Mr. Robert J. Hobbs: It’s a -- there’s been more than 60 decisions in more than 29 States.
Justice Potter Stewart: More than 29?
Mr. Robert J. Hobbs: Nine.
Justice Potter Stewart: Nine.
And have the state legislatures done anything either in those states where the existing law was declared unconstitutional or another states where the Courts have not done so but --
Mr. Robert J. Hobbs: There has been --
Justice Potter Stewart: Have there been modifications of (Voice Overlap) --
Mr. Robert J. Hobbs: I’m aware of the legislatures considering new legislation to give consumers prior notice and hearing.
I believe that a few states have -- had sufficient time to enact such legislature, legislation.
If it would aid the Court, I could prepare a supplemental memorandum on that point.
Justice Potter Stewart: Do you have a -- do you have in your brief the judicial decisions to which you referred more than -- you cite this -- citations to?
Mr. Robert J. Hobbs: No, to -- when I was writing it I thought it would -- it was -- would do -- to state the obvious.
Justice Potter Stewart: Yes.
Mr. Robert J. Hobbs: And including those 60 (Voice Overlap) --
Justice Potter Stewart: You say they’re more than 60 in over 29 -- in at least 29 states?
Mr. Robert J. Hobbs: Yes Your Honor.
Justice Harry A. Blackmun: I understand they are since Fuentes?
Mr. Robert J. Hobbs: No, those decisions are all since Sniadach and since Fuentes.
Sniadach was decided in 1969.
The cases that were based on Sniadach and pre Fuentes, I suppose, would be -- have been predicting this Court’s decision in Fuentes v. Shevin.
The basis on which the Louisiana Supreme Court distinguished Fuentes are not entirely clear.
However, none of those justifications, evidenced this the -- the type of state interest necessary to overcome the constitutional protection of prior notice and hearing.
The Louisiana Supreme Courts made it -- an opinion made it abundantly clear that seizure by sequestration is available to every Louisiana credit seller who believes that there has been a default in a credit transaction.
The Louisiana Supreme Court refused to confine the application of the sequestration statutes to narrow extraordinary situations.
The need for prompt action identified by the Louisiana Court is the ordinary desire which any anxious creditor might feel well enforcing his claim.
The procedure of sequestration is not confined to situations where a creditor can show the collateral is actually endangered.
The creditor need only show that the owner has power over that property.
Justice William H. Rehnquist: Do you think if it could be shown that the collateral were actually in danger that that would be a legitimate exception to Fuentes?
Mr. Robert J. Hobbs: We then have the problem of safeguards to ensure whether that determination to safeguard that the determination is accurate once it is made.
The usual safeguard is the adversary process and that’s why we say prior hearings.
Justice William H. Rehnquist: But of course, given notice and hearing, it’s also an opportunity for the person who is the object of the writ to spare that thing away?
Mr. Robert J. Hobbs: Well, if we presume that consumers do spare things away or sitting in their house with the hatchet ready to destroy the goods; that would raise our presumption to a constitutional presumption of malice of consumers.
Justice William H. Rehnquist: Well, it’s not a question of malice of consumers but I think almost everyone who has had any experience in this type of practice knows that stuff frequently disappears if the people have notice of the fact that it’s a subject of sequestration?
Chief Justice Warren E. Burger: And they don’t use hatchets.
They sometimes just sell it.
Justice Lewis F. Powell: Or move it next door?
Mr. Robert J. Hobbs: That is a presumption which I’m unwilling to indulge in.
However, I think if there were adequate safeguards to determine the probability of consumer destruction that then perhaps we would have a statute which would be narrowly drawn and come within the exceptions of Fuentes, however --
Chief Justice Warren E. Burger: What safeguards would be, what range of safeguards do you have in mind, I am not sure I follow you?
Mr. Robert J. Hobbs: Well the traditional safeguard is adversarial hearing in which both sides can assert their interests.
Perhaps, we could -- there are other traditional safe --
Chief Justice Warren E. Burger: How does that help if the property has already been sold after those --?
Mr. Robert J. Hobbs: It doesn’t, I’m talking about a hearing prior.
Chief Justice Warren E. Burger: Oh! I see.
Mr. Robert J. Hobbs: And those are the safeguards to protect --
Chief Justice Warren E. Burger: Not a safeguard --
Mr. Robert J. Hobbs: -- to make sure that the state is not engaging in an erroneous decision when it decides there's a need to seize this property to take it from one individual and --
Chief Justice Warren E. Burger: You didn’t mean a safeguard for the creditor, you meant to safeguard for the debtor, the purchaser?
Mr. Robert J. Hobbs: As a safeguard for the state to ensure that the state.
To ensure that the state is not engaging in mistaken deprivations and a safeguard for the debtor to insure that he is not deprived of his property through mistake or inadvertence or otherwise.
Justice Byron R. White: There are --
Mr. Robert J. Hobbs: I --
Justice Byron R. White: There doesn’t seem to be any question about -- why under a Louisiana law, the seller in this case had a property interest in the goods?
Mr. Robert J. Hobbs: No, there's no contest.
Justice Byron R. White: So, you would make the same argument if there were chattel mortgage on that or some -- something besides just a vendor's lien?
Mr. Robert J. Hobbs: That’s correct.
Justice Byron R. White: And so, both parties have property interest in the goods and the question is who has possession pending litigation?
Mr. Robert J. Hobbs: Correct.
Justice Byron R. White: And let’s assume there was a hearing of whatever kind of a hearing that you think would be satisfactory, what would you think would have to be established at that hearing in order to change possession or is your position that possession may not be changed until the entire litigation is over?
Would you say that at the hearing, all you would have to establish is probable cause to believe that there was a balance due on the debt?
Mr. Robert J. Hobbs: There is a --
Justice Byron R. White: Or would you have to try out the entire case and make final and conclusive findings?
Mr. Robert J. Hobbs: The Court in Fuentes suggested that at that hearing that the underlying merits of the claim would be what the claimant must prove in order to obtain the seizure.
Justice Byron R. White: Not just probable cause to believe?
Mr. Robert J. Hobbs: When you get in to probable cause which is getting into us a burden or the specific facts on which this -- the --
Justice Byron R. White: That’s right.
Mr. Robert J. Hobbs: Creditor must show.
If we have the adversarial context, I suppose we could go in the traditional manner where he states his claim, he tries to prove his claim and the defendant --
Justice Byron R. White: Well, I know but isn’t that -- so you, in effect -- you’re saying that you must have a full adversarial hearing on all of the issues in the case and decide them on the merits before possession maybe changed.
Mr. Robert J. Hobbs: I don’t think that the Court has to reach that question to --
Justice Byron R. White: Well, I think it’s very much the part of the inquiry is what kind of a hearing are you talking about as requiring before a change of possession?
Mr. Robert J. Hobbs: I think that perhaps one of the issues that could be involved is the necessity of the seizure and if it is not shown necessary at that hearing, that is that there is no danger of the goods to the goods to be seized, but then there would be no reason --
Justice Byron R. White: How do you fill that, to put the burden on the creditor for that and to show that -- how does he show that?
In effect you’re just saying --
Mr. Robert J. Hobbs: If you indulge --
Justice Byron R. White: In effect you’re just saying, let’s wait till the trial is all over.
Mr. Robert J. Hobbs: That is the ordinary way that we test the claims under our system.
I think it is a good system.
I would be reluctant to see this Court abandon that system, but I do believe state legislatures could come up with possibly new techniques.
I think I would have to examine those new safeguards to protect the state and the defendant once they were drawn to -- before I could defend them.
I mean, possibly, we could have a judicial investigation.
Justice Byron R. White: You also think that the private repossession would be illegal without any aid from the state?
Mr. Robert J. Hobbs: The -- well, let me make this clear.
The self-help repossession as is known under the UCC is not a part of the law of Louisiana.
It presents different questions than are presented by the statute.
I do not think that Court should reach that decision.
That question in this case, the Court does not have to, it presents difficult questions of state action and a number of the Courts had been splitting on this issue.
Justice Byron R. White: No self-help remedies under the Louisiana law permissible?
Mr. Robert J. Hobbs: Not in the context of the credit sale and under the law of Louisiana, there are no conditional sales, title vests in buyer immediately upon the agreement of the price and the goods and therefore --
Justice Byron R. White: Subject to the vendor’s lien?
Mr. Robert J. Hobbs: Subject to the vendor’s lien, and therefore, under that rational, they do not allow self-help repossession.
Chief Justice Warren E. Burger: Does Louisiana recognize a conditional sales type of contract for personal property?
Mr. Robert J. Hobbs: No it doesn’t, it will give full faith and credit to one made out of the state, but it will not enforce one made within the state.
If the Louisiana Supreme Court’s finding is read to mean that the creditor’s interest in the property is superior to the debtor’s right to be -- to have his property secure from arbitrary and unreasonable seizure, it is erroneous.
There are no safeguards prior to the seizure except those say -- those minimal showings that were present in Fuentes.
The Louisiana Supreme Court rules that none of those safeguards were necessary because it gave an unbridled preference to the interest of one litigant that was a security interest which without even considering the full legal title of Mitchell or his right to be secure from arbitrary or unreasonable state seizures.
Such a use of state power without proper safeguards is unconstitutional.
Mitchell requests that this Court reverse the decision of the Louisiana Supreme Court and reverse the unconstitutional seizure of his property.
To do so would be entirely consistent with this Court’s prior decisions.
To do so would be to vindicate the decisions of more than 60 lower courts in more 29 states which have relied upon this Court’s decisions in Fuentes v. Shevin, Sniadach v. Family Finance and a host of other decisions of this Court.
Unless there are any further questions, I’d like to reserve the remainder of my time for rebuttal.
Chief Justice Warren E. Burger: Very well Mr. Hobbs.
Argument of Thomas J. O'sullivan
Mr. Thomas J. O'sullivan: Mr. Chief Justice and may it please the Court.
This is a case in which though the petitioner claims the denial of an opportunity for a hearing regarding the taking of his property there has in fact already been a hearing in that regard.
The petitioner has been heard and his contentions have been decided adversely to him.
One point I might make right off the bat, Your Honor, is that this case arose prior to the time that the decision had been rendered in the Fuentes case and the trial court's determination was made at a time prior to the decision in the Fuentes case.
In terms of the arguments in the briefs, I submit that there are two basic areas of dispute between the parties with respect to Louisiana law.
The first of those areas is as to the nature and extent of the hearing which has been had in this case.
In the second area of dispute is with respect to the rule of the Court which issues the writ of sequestration.
Now, in the argument that’s preceded, there has been no discussion of that rule and I think that there should be a fuller development.
But first, I’d like to turn to the question of the hearing that has been had in this case.
We submit that the petitioner comes before this Court and is not in a position to assert an injury.
The Fuentes case was designed to prevent mistaken, unjustified or wrongful deprivations of property and that has not happened in this case.
The petitioner has had a hearing albeit after the property was taken from his possession and he’s been heard in that regard.
Now, as to the nature of that hearing, this was a hearing that was brought on by the petitioner to set aside the writ of sequestration in an endeavor to obtain the return of the property.
Now, the petitioner in essence claims that he was not able to go into the merits of the case at that time, but in fact, the petitioner was able to cause the court, the Louisiana Court to explore into the grounds for the issuance of what’s referred to as the auxiliary remedy.
There is a comment that the petitioner has referred to in his brief to the effect that at that hearing the merits may not be inquired into.
In fact, we submit that any significant defense can be raised at that hearing and the cases that we have cited in our brief at pages 22 through 25 amply demonstrate that in cases in which a motion has been brought on to dissolve a writ of sequestration, the Court has inquired into issues that go to the merits and that is because the burden of proof at such a hearing has been placed on the party that caused the goods to be seized in the first instance.
In short, the burden was on the respondent at that hearing to demonstrate that the property was properly seized.
Now, in addition at that hearing, after the property had been taken, there was a stipulation entered into by the parties to the effect that there was a valid vendor’s lien on the property.
Now, in short, this is a situation in which the petitioner purchased property and then having gone into default after the property was seized, came into the Court and admitted that there was a valid vendor’s lien on that property.
Justice Byron R. White: That means there is a -- you have a lien, you have to -- there has to be balance due I take it?
Mr. Thomas J. O'sullivan: Yes sir, I believe that that’s so.
In the event that there was not a balance due, there would be no such vendor’s lien.
Justice Byron R. White: Yes, but the -- you may have a vendor’s lien but not have the right to possess because the balance may not be due, may not be unpaid.
Now by just conceding that there's a balance vendors lien it doesn’t concede that it's unpaid?
Mr. Thomas J. O'sullivan: No Your Honor, I think that that’s so but beyond that --
Justice Byron R. White: What about that in this case.
Was there any concession, ever any concession that was un -- that the balance was unpaid?
Mr. Thomas J. O'sullivan: Well Your Honor, the allegations in the petition, in the initial affidavit pursuant to which this action was commenced were to the effect that the balance was unpaid and was due and that has never been contested nor contradicted and it could’ve been contested and contradicted.
Justice Byron R. White: But never been admitted -- never been admitted either, has it?
Mr. Thomas J. O'sullivan: No sir, but there has -- I submit, there has been a finding to that effect implicit in the decision of the Court at the hearing to set aside the writ of sequestration.
Justice Potter Stewart: I understand it only -- the -- there’s always a vendor’s lien in -- under Louisiana law, when personal property, when a chattel is sold and the full purchase price is not then in there paid, there’s always a so called vendor's privilege, isn’t it?
Mr. Thomas J. O'sullivan: Yes sir, that’s true.
Justice Potter Stewart: And that’s all the submission amounted to, wasn’t it?
Mr. Thomas J. O'sullivan: No, I think that it goes to something more than that because it’s an admission that it has not been extinguished, that its still, that it has not been extinguished, that it’s still in existence as of the time that the case has come on for a hearing before the Court.
Justice Potter Stewart: And that would simply be an admission of no more than that the full purchase price has still not yet been paid, isn’t that right under Louisiana law?
Mr. Thomas J. O'sullivan: I think that it goes beyond that.
I think that it implicitly meets that there aren’t defenses of such in nature as would extinguish that vendor’s lien.
Justice Potter Stewart: Well simply, and the only thing that would extinguish it as I understand it at least under Louisiana law of which I’m generally very ignorant, is that until the full purchase price has been paid plus whatever interest and service charges there maybe, the vendor’s lien remains and is not extinguished, isn’t that correct?
The vendor’s privilege, it's called in Louisiana.
Mr. Thomas J. O'sullivan: No sir.
I would think that that would not be so.
I think that we have cited case law in our brief to that effect that for example with discharge or with innovation or with -- in the past giving of notes, a vendor’s lien might be extinguished.
Justice Byron R. White: Your argument is -- I take it that the -- at this -- here you have the burden of showing that your seizure was proper?
That meant showing not only a vendor’s lien but there was a -- that there was a default?
Mr. Thomas J. O'sullivan: Yes sir we do.
Justice Byron R. White: And in order for them not to set us -- in order for the court not to set aside the writ and the sequestration and collect on your bond that there was any damages.
In order for the court to refuse to do that, it had to find, you argue that there was a default?
Mr. Thomas J. O'sullivan: Exactly so sir.
Justice Potter Stewart: But I -- that’s you and your brother are not in agreement as to that factual issue or as to that question of Louisiana Law?
Mr. Thomas J. O'sullivan: That is a correct statement.
I think that my brother’s argument goes a little bit further.
I think that he takes the position that there was not a final determination on the merits as to the ultimate right of possession of the property.
With that argument, I’m in agreement.
There was no such final determination.
The property so to speak is still in limbo.
There has not been a final judgment in this case but I would submit that the Fuentes case does not require an initial threshold preliminary ultimate determination of the right to the possession of property.
Justice Byron R. White: What is the (Voice Overlap) -- what do you think the standard is under Louisiana law at the hearing to quash the seizure such as what’s held in this case.
You have the burden of showing you say that the seizure was justified.
Mr. Thomas J. O'sullivan: Yes sir.
Justice Byron R. White: What standard does the court apply, probable cause or it’s sort of like a preliminary hearing you’ve established whether there’s a reasonable basis for the claim?
Mr. Thomas J. O'sullivan: In essence, I would submit Your Honor that at that hearing there is an inquiry into the probable validity of the claim.
Justice Byron R. White: Is that --
Mr. Thomas J. O'sullivan: In a sense, akin to the position asserted by Justice Harlan in the concurring opinion in the Sniadach case.
That I suggest is implicit in that, the burden of proof is on the party that has caused the goods to be seized in the first instance.
The party has to come into Court and prove at that time that there is a claim, that there is a default, that there’s a valid vendor’s lien or some other basis for having taken the property from the possession of the vendee.
Chief Justice Warren E. Burger: Of the showing of the valid vendor’s lien standing along would not justify it and then -- let me ask you this question hypothetically.
Suppose at this preliminary hearing, the debtor had come in and standard to the hearing officer receipts showing that he was paid right up to date, would the Court then be obliged to dissolve the writ of sequestration and return the property?
Mr. Thomas J. O'sullivan: Yes sir, I think so.
I think that Louisiana State Rice Milling case cited in our brief is to that effect and that case states that the mere coincidence that a fact is relevant both on the writ of sequestration and on the merits does not preclude use of that fact on the hearing to dissolve the writ.
We would submit that if such a showing were made and in fact we’ve cited in our brief a number of cases in which a party has come into Court with a meritorious defense and had the opportunity even before there need be a final determination on the merits to have that defense heard.
Now, that didn’t happen in this case.
Chief Justice Warren E. Burger: That’s the basis for your saying there is an implicit judicial determination of a default here?
Mr. Thomas J. O'sullivan: Yes sir.
Your Honor, we submit that in this case, given the facts of this case and the posture of the case before this Court that it makes no sense for the Court to order a new hearing, a new hearing as to the temporary depravation of the petitioner’s property, that hearing has already been held.
Now, I’d like if I could return to the second area of relevant inquiry here and that is as to the role of the judge who issues the writ of sequestration in the first instance.
We contend that in this case there was a prior judicial determination as to the propriety of the taking of the petitioner’s property before that property was taken.
Justice Potter Stewart: If that’s true of course and -- then the Fuentes in all its ramifications was fully satisfied, wasn’t it, this case, is that your point?
Mr. Thomas J. O'sullivan: No sir, I don’t think --
Justice Potter Stewart: There was a prior determination --
Mr. Thomas J. O'sullivan: I --
Justice Potter Stewart: -- of all of the issues that had to do with who should have relevant possession of the property before the property was taken then I should suppose that Fuentes if broadly read was fully satisfied, wasn’t it?
Mr. Thomas J. O'sullivan: No, I don’t think that that’s so Your Honor.
Justice Potter Stewart: Well, then what is your point?
Mr. Thomas J. O'sullivan: Well, the reason for that is that the prior judicial determination was ex parte and the question is whether or not the Louisiana ex parte prior judicial determination satisfies --
Justice Potter Stewart: I see.
Mr. Thomas J. O'sullivan: -- the rule that’s set forth in the Fuentes case.
Justice Potter Stewart: You don’t say there was prior --
Mr. Thomas J. O'sullivan: There was --
Justice Potter Stewart: -- hearing of it in the sense of any kind of an adversary hearing (Voice Overlap) --
Mr. Thomas J. O'sullivan: There was not an adversarial hearing, no sir.
Justice Potter Stewart: Right.
Chief Justice Warren E. Burger: On page 23 of your brief you -- beginning at the middle page you say in order to meet the burden of establishing that the writ was properly issued, the vendor must establish and then you list six elements.
Now, are you speaking there of the burden that he must carry to sequester the property or the burden that he must carry at the hearing on the purchaser’s motion to dissolve the writ?
Mr. Thomas J. O'sullivan: This is the burden that falls on him at the time of the purchaser's motion to dissolve the writ.
Chief Justice Warren E. Burger: And do you -- was that an adversary hearing?
Mr. Thomas J. O'sullivan: Oh, yes sir it was.
That was a hearing brought on by the petitioner at which both sides were present and there was argument before the Court.
I might say Your Honor, in regard to the record in this case and we have that question as to the nature of the stipulation and the extent of the stipulation as to the vendor’s lien in this case.
The record in this case is a very meager one and though I here argue this morning as to the role of the court on a motion to dissolve the writ and the role of the judge as of the time that the writ is issued in the first instance, there has not been in the record in this case, decisions below of the Louisiana Court, illuminating exactly what the functions of the Courts are under both those circumstances.
Justice William H. Rehnquist: Well, I suppose too that since you’re from New York and your opponent is from Boston, neither of you can contribute much personal knowledge of Louisiana.
Mr. Thomas J. O'sullivan: I recognize that problem and appear that that so Your Honor.
We have endeavored to make diligent inquiry into the Louisiana Law and we have done our best to breakout the cases, but I do have some hesitancy in that regard.
Coming back to the argument as to the prior ex parte judicial determination as to the issuance of the writ, we submit in this case, there is a significant difference in Louisiana from the situation both in Florida and in Pennsylvania as came off in those circumstances as the Fuentes case.
Now, in Louisiana, we submit that there is effective control by the state of the use of its power and that there is an official and impartial government official in this case, a reviewing judge who must consider the grounds that are presented in the application for the writ and that the Court is inquire -- entitled to inquire into those grounds and satisfy itself that there is a proper basis for the issuance of the writ.
Justice Thurgood Marshall: What is that, a lien as existing?
Mr. Thomas J. O'sullivan: Yes sir.
Justice Thurgood Marshall: And what else?
Mr. Thomas J. O'sullivan: And that there is a probable validity to the claim being asserted by the party commencing the lawsuit, seeking the taking of the property.
Justice Thurgood Marshall: But experience that some of us had with a computer, if all computer had made a mistake, that’s it?
Mr. Thomas J. O'sullivan: Well, Your Honor, this is a certain --
Justice Thurgood Marshall: Under the Louisiana law is that it or not.
It’s that enough to get it?
Mr. Thomas J. O'sullivan: Your Honor, there’s some question in my mind as to the answer to that question because I --
Justice Thurgood Marshall: Well, you have taken the burden of showing us in your answer to Mr. Justice Stewart’s question that this was a fully valid complete ex parte hearing, you’ve taken on that, now, you say you don’t know.
Mr. Thomas J. O'sullivan: Well --
Justice Thurgood Marshall: We won’t take which one you want to stand on?
Mr. Thomas J. O'sullivan: Sir, this is a situation in which the Court has the opportunity to make the inquiry into the claim --
Justice Thurgood Marshall: Did it?
Mr. Thomas J. O'sullivan: -- and the party seeking the issuance of the writ --
Justice Thurgood Marshall: Did it?
Did the court do it?
Mr. Thomas J. O'sullivan: Your Honor, you can’t tell from the record in this case and I --
Justice Thurgood Marshall: -- then you can’t say there was a full hearing.
The use -- the most you can say, am I correct is that there was an opportunity for an ex parte hearing?
Mr. Thomas J. O'sullivan: No sir. There was a ex parte hearing, the application was made to the court and under the Louisiana decisions that we’ve cited in our brief, it is the responsibility of the court to undertake an evaluation of the claim and look into these facts that are alleged in the petition to make a determination that as to the propriety of the issuing of the writ.
Justice Thurgood Marshall: And two facts are one that there’s a lien in two it was three-fold, that’s all there is, isn’t it?
Mr. Thomas J. O'sullivan: And that the property is in the possession of the vendee, yes sir.
Justice Thurgood Marshall: And that’s all it is?
Mr. Thomas J. O'sullivan: I think it is but I’m not entirely clear on that and the reason for that is because I do have some trouble in reading precisely what the Louisiana Supreme Court did --
Justice Thurgood Marshall: I answer me, clearance in reading, Louisiana law, the Supreme Court’s opinions, I think you should go on down and look at it because it’s the civil law.
Mr. Thomas J. O'sullivan: Yes sir and I appreciate that some of the problems in the civil law and in fact, Justice Holmes has addressed himself to the Question of dealing with problems under the civil law and he said, “When we contemplate such a system from the outside, it seems like a wall of stone, every part even with all the others except so far as our own local education may lead us to see subordinations to which we are accustomed.”
But to one brought up within it, varying emphasis, tacit assumptions, unwritten practices, a thousand influences gained only from life may give rise to the different parts, wholly new values that logic and grammar could never have gotten from the books and I submit that, that quotation maybe appropriate.
Justice Thurgood Marshall: But you have taken the burden of showing that you’ve got a full and fair hearing and you now say you don’t know what it was?
Mr. Thomas J. O'sullivan: No sir.
What I am saying is that the Louisiana Supreme Court in this case held that on the facts, the case fell within the exception to the rule in the Fuentes case.
Justice Potter Stewart: Well the -- their reasoning was as I understand it and I’ve just reread it here in the bench was that the vendee purchased the property, was implied in law knowledge of what the law of Louisiana was.
Mr. Thomas J. O'sullivan: Your Honor, I submit there is an ultimate ground in the decision.
Justice Potter Stewart: Was that what they said.
Mr. Thomas J. O'sullivan: Yes sir it did. But I submit there is an alternate ground of decision in this case which would be appropriate to consider in the court and this is set forth on page 29 of the appendix.
And the court stated that it was -- that this case fell within the exception to a rule announced in the Fuentes case that there maybe cases in which a creditor could make a showing of immediate danger that a debtor will destroy or conceal disputed good.
Justice Potter Stewart: But now, what if anything in the record of this case justified the statement that the -- that this case comes within that language of Fuentes.
There maybe cases in which a creditor could make a showing of immediate danger that a debtor will destroy or conceal disputed goods?
Mr. Thomas J. O'sullivan: The answer to that question Your Honor is the un-contradicted allegations made in the petition in this case to the effect that the respondent had reason to fear that the petitioner would alienate or dispose of the property.
Justice Potter Stewart: Isn’t that part of the form used in every single one of this in Louisiana?
Mr. Thomas J. O'sullivan: Your Honor, I don’t know the answer to that question, but I submit that this -- in this case, it was a fact, it was a sworn statement that was never contested.
Justice Potter Stewart: But what if it were a part of the form used in every single one of these or they used routinely and traditionally in every single one of these in Louisiana, would you say that was -- had came within the exception?
Exception and a part of the rule, doesn’t it in Louisiana?
Mr. Thomas J. O'sullivan: No sir, I would think that it would be completely inappropriate that the -- that there must be a stronger showing that merely pro forma showing.
Justice Potter Stewart: And is there anything in this case --
Mr. Thomas J. O'sullivan: And the suggestion here is that this is pro forma of showing.
Justice Potter Stewart: Yes.
Mr. Thomas J. O'sullivan: In that regard, I suggest that in part that maybe attributable to that fact that this case arose before the Fuentes case was decided and before the parties and indeed the country knew what was required for a showing that would have to be --
Justice Potter Stewart: But it came to the Supreme Court of Louisiana after Fuentes obviously because they dealt with Fuentes.
Mr. Thomas J. O'sullivan: Sir?
Justice Potter Stewart: By the time it got to the Supreme Court of Louisiana, Fuentes had been decided quite clearly.
Mr. Thomas J. O'sullivan: Yes sir it did.
Your Honor, one point that I would like to make clear is that, we believe we have cited the cases appropriately for the proposition that with respect to the threshold inquiry as to the issuance of the writ of sequestration at the ex parte hearing, there is considerable authority vested in the Court and the judge to make inquiry as to the claim that’s being asserted, and to test that claim.
We have seen the petitioner in his reply brief endeavor to distinguish the cases on the basis that there is a difference between judicial sequestration and these cases only apply to judicial sequestration and some other cases.
The claim is that in cases involving judicial sequestration, there is discretion in cases involving ordinary garden variety sequestration, there is no discretion.
We submit that attention to prior law under which these cases was decided indicates that there is one kind of sequestration and that is the judicial sequestration.
We have set forth the definition of sequestration on page 30 of our brief and that shows that sequestration applies to a mandate of the Court, to the sheriff to take property without regard whether it’s made at the request of one of the parties or both of the parties, so, those cases we submit are applicable.
One further point that I think deserve to be made in the context of this case and that is the unusual feature of the civil law.
Here, the vendor’s lien as in Louisiana Supreme Court has set forth in its opinion is thought to be an important creditor’s right.
At the same time, it’s a right that can easily be defeated by the debtor in the event that the debtor transfers the property, the vendor losses the rights as against the property and so that it was for this reason that Louisiana Supreme Court, I believe, took the position that this was an important right that needed to be safeguarded and that there were circumstances in which it could be shown that there was an immediate need for action on the part of the creditor and that it would be appropriate for the government to lend its power to the taking of that action.
Justice Thurgood Marshall: My question is, is justice Stewart’s -- in your appendix C, Supreme Court of Louisiana is the affidavit which uses the language that he might run away with materials and it appears that it’s a form just filled in.
Mr. Thomas J. O'sullivan: Your Honor, what page is that?
Justice Thurgood Marshall: This is the appendix C in the petition for writ of certiorari to the Supreme Court of the State of Louisiana which is on file here in this Court.
It said the petition of deputy grant, all of it was filled in except that part, that’s not filled in.
So, do you agree that was just a fall?
Mr. Thomas J. O'sullivan: Yes sir, I do.
But we submit that in view of the circumstances in which the case as a risk in view of the fact that the initial determinations and initial proceedings took place prior to the time that the Fuentes decision was rendered.
And in view of the fact that there has been a hearing in this case in which it’s been determined that in under the facts of this case, there has not been a mistaken or unjustified or wrongful taking of the property of the petitioner.
We submit that it would be appropriate for this Court either to vacate the writ as having been improvidently granted or to affirm the decision of the court below.
If there are any further questions of the Court, I’d be happy entertain them, if not --
Justice Harry A. Blackmun: Mr. O’Sullivan, are you asking, you are not asking I take it that Fuentes be overruled.
Mr. Thomas J. O'sullivan: No sir, no.
Far from it we would be contending that the Louisiana Supreme -- the Louisiana law and the facts that this case as well as the Louisiana Supreme Court’s decision are sufficiently different from the Fuentes case as to not require its application to the present case.
Justice Harry A. Blackmun: And you are content to rely on those distinctions.
Mr. Thomas J. O'sullivan: Yes sir.
Justice Harry A. Blackmun: So, if we don’t agree with you we should reverse it?
Mr. Thomas J. O'sullivan: That decision of the court below.
Justice Harry A. Blackmun: If the Fuentes governs this case, the decision should be reversed?
I mean, if there’s no real valid distinction between this case though.
Mr. Thomas J. O'sullivan: That is correct Your Honor.
Justice Byron R. White: You don’t hesitate that we overrule or modify the Fuentes language?
Mr. Thomas J. O'sullivan: No sir.
Justice William J. Brennan: Mr. O’Sullivan, before you sit down --
Mr. Thomas J. O'sullivan: Yes sir.
Justice William J. Brennan: Would you look at page 36 of the appendix, do you have it there?
Mr. Thomas J. O'sullivan: Yes sir, I do.
Justice William J. Brennan: Can you tell me what that disposition is by the Supreme Court of Louisiana and of what?
Mr. Thomas J. O'sullivan: Oh, Your Honor that is an application for a rehearing that was made by the petitioner below after the decision had been rendered by the Louisiana Supreme Court and the decision was --
Justice William J. Brennan: Made by whom, by Grant or by Mitchell?
Mr. Thomas J. O'sullivan: By Mitchell.
Justice William J. Brennan: I see.
Mr. Thomas J. O'sullivan: For rehearing and the --
Justice William J. Brennan: Right.
Mr. Thomas J. O'sullivan: -- and the request for rehearing was denied.
Justice William J. Brennan: Right, thank you.
Justice Harry A. Blackmun: May I ask -- as a further question along the lines of Mr. Justice White’s inquiry, why you don’t as an alternative take the position of Fuentes should be overrule?
After all, it was four to three decision by a -- Court?
Mr. Thomas J. O'sullivan: Well, Your Honor, I thought about that and I feel disturbed as my brother Hobbs does about the fact that there have been so many other jurisdictions and courts that have passed upon them and have acted upon the decision in the Fuentes case and concluded that it was an appropriate rule in the jurisdictions in which it applied and adopted it.
I would be --
Justice Byron R. White: As a matter of federal constitutional law which is at --
Mr. Thomas J. O'sullivan: Yes sir.
Justice William H. Rehnquist: I suppose they have --
Justice Byron R. White: Are there any -- the decisions weren’t necessarily voluntary, it doesn’t say.
Mr. Thomas J. O'sullivan: I detected some lack of enthusiasm in some of the decisions including, I might add the decisions, the many decisions that have recently been coming down in regard to self-help in which the courts have seen to be reluctant to extend the rule in the Fuentes case to the self-help situation admittedly on --
Justice Byron R. White: In the jurisdictions that have responded by the legislation, I guess there had been some --
Mr. Thomas J. O'sullivan: I Your Honor, I’m not aware of any states in which there has been legislation of yet.
Justice Byron R. White: So the decision have -- I suppose that issue have been on provision of the Uniform Commercial Code in some states permitting what the -- the repossession?
Mr. Thomas J. O'sullivan: Yes sir.
Justice Byron R. White: That’s Article 9, Section 9-503.
Mr. Thomas J. O'sullivan: 5 -- 9-503, yes sir and just recent --
Justice Byron R. White: Is that provision that has been at issue on this been held unconstitutional under Fuentes, in this other -- in these decisions?
Mr. Thomas J. O'sullivan: I would submit Your Honor that the great number of the decisions involving an application of that section of the Uniform Commercial Code have held that action under that section was not unconstitutional on the ground that it didn’t constitute state action, and just recently the -- both the Eighth and Ninth Circuit have come down on the side --
Justice Byron R. White: On the side of self help.
Mr. Thomas J. O'sullivan: On the side of self-help as being not unconstitutional.
Justice Byron R. White: What -- of what state statutes have been at issue where Fuentes is not implied to a bit -- what provision of the Uniform --
Mr. Thomas J. O'sullivan: The Uniform Commercial Code?
I can’t answer that question Your Honor, I don’t know.
Chief Justice Warren E. Burger: Mr. Hobbs, do you have anything further?
Rebuttal of Robert J. Hobbs
Mr. Robert J. Hobbs: Yes, I have a few.
Chief Justice Warren E. Burger: Let me ask you before you get started whether at the hearing to dissolve the writ of sequestration, there was either opportunity to prove an the absence of a default or whether there was an effort to prove the absence of a default?
Did your client in other words try to show that he has paid up?
Mr. Robert J. Hobbs: The law of Louisiana is not clear as to what is relevant at that post-seizure hearing.
This was my position, one that I had two good grounds to dissolve that sequestration, the constitutional claim and an exemption statute and -- but what the Louisiana Courts do say?
What -- in Louisiana Code of Civil Procedure, Article 3506 covers the dissolution of the writ of sequestration.
(Voice Overlap) see to that article states this article retains the jurisprudential rule that only the grounds for auxiliary -- for the auxiliary remedy can be inquired into on the motion to dissolve and significantly and not the merits of the main demand.
Chief Justice Warren E. Burger: Well, wouldn’t the -- as a practical matter if you could prove that you were not in default, that would end the whole matter here to get your merchandise back, wouldn’t you?
Mr. Robert J. Hobbs: Certainly, if the statute had been declared unconstitutional, I would have gotten the property back.
If the exemption statute had been found applicable to this procedure, I would’ve gotten the property back.
In fact, the Court, this -- Louisiana Supreme Court divided on the exemption issue, they did not divide on the constitutional issue.
I would like to point out Mr. Rehnquist directed a question to Mr. O’Sullivan regarding on geographical preference.
I’d like to point out that I’ve been in Boston for a year.
I didn’t realize I lost my Louisiana accent so much but my entire practice of law prior to that was in the City of New Orleans.
Justice Potter Stewart: Were you in in this case from the beginning?
Mr. Robert J. Hobbs: I was in the case initially and I left Louisiana before it was argued in the Louisiana Supreme Court but I --
Justice Potter Stewart: But you were in at the --?
Mr. Robert J. Hobbs: I was in at the outset.
Justice Potter Stewart: Outset.
Justice William H. Rehnquist: What is the practice in the parish of Orleans about the issuance of this writ of sequestration?
I mean, is it strictly a pro forma thing or does the judge who is asked to issue the writ review the affidavit, whether it complies with the statute?
Mr. Robert J. Hobbs: The -- I think the practice is that the -- is that a petition which I characterize and I think fairly so as a pro forma, that is a -- it’s a legal form that’s used over and over again, is presented to the judge.
He is then by the statute 3501 of the Civil Code of Procedure to the face of that document because the document is pro forma, because it is used over and over again, it does not tell him anything, it is not like an affidavit for a TR or under the federal rules of several procedure or under the Louisiana’s rule to obtain an injunction, that requires a detailed specific facts on an affidavit.
Perhaps, if we had such safeguards as is embodied in the federal rules for injunction, maybe then we could say, we will allow deprivations without the adversarial context, but those safeguards would have to be exempt in a case in which they were used because they are not the traditional methods of safeguarding one person’s interest against the claim of another.
Justice Byron R. White: Or would the -- the hearing if you would want before a seizure, would the standard that would be applied be one of probable cause or what or would the Court have to turn primarily that will be --
Mr. Robert J. Hobbs: I --
Justice Byron R. White: That was due unpaid and overdue unpaid --
Mr. Robert J. Hobbs: I do not think that the issue should finally -- be finally resolved if we have a very short mini hearing.
Justice Byron R. White: I take it -- take a standard like for a preliminary injunction would decide it?
Mr. Robert J. Hobbs: Yes sir or yes, I do.
Justice William J. Brennan: Well, how do you distinguish the standard in Bell and Burson from the one you have in mind?
Bell and Burson said that all that had to be established, well, that was the probable --
Justice William H. Rehnquist: The basic distinction --
Justice William J. Brennan: A reason to believe that a jury might find the driver negligent but no final determination of the issue of the --
Mr. Robert J. Hobbs: I think that would be sufficient.
I’m not saying that you have to reach what kind of --
Justice William J. Brennan: Well, that’s sort of a probable cause kind of the thing?
Mr. Robert J. Hobbs: Yes, I’m willing to concede any standard at this point and that prior hearing if you’ll give me the prior hearing.
Justice William J. Brennan: That’s right.
Mr. Robert J. Hobbs: But I would like to examine the statutes.
Justice Byron R. White: How about the probable cause, standard -- do you think that there must be a probable notice put an opportunity to appear first that you can’t just decide the probable cause issue on the basis of affidavits.
Let’s assume you had an opportunity to counter affidavit and then argue, you want to be before what?
Mr. Robert J. Hobbs: If that affidavit was presented in the adversarial context, that is where one party presents his side of the case.
Well, we’re dealing with the affidavit on what is -- judge’s acts -- acting on one side of the case.
Justice Byron R. White: That is on the probable -- for instance, say for summary judgment?
Mr. Robert J. Hobbs: I would suggest, if we had a requirement in Louisiana that there was a detailed showing of all that the creditor knows and the judge was given the discretion as a judge and the federal Court has given the discretion in issuing a TRO that we would have a very different situation and it should be closely examined and determined whether those safeguards are accurate, but this is not the case.
Justice Byron R. White: Well, if it is relevant, what kind of a hearing you’re talking about is whether you’re entitled to it or you’re talking about a kind of hearing on the merits before any transfer of possession is concerned?
Mr. Robert J. Hobbs: No.
Justice Byron R. White: It might be one thing.
If you're not, there’s something else maybe?
Mr. Robert J. Hobbs: I would also in conjunction with the request on what is relevant at that post-seizure hearing, there is one case in which a judge had a post-seizure hearing did enter a judgment on the merits against the dispossessed party, that case was reversed, it was held that that was not to be determined at that motion to dissolve and I cite that in my reply brief, it's Tucker versus Shawna (ph) case.
The question though is what standards apply to the judge at the time he is presented with these documents and requested to issue the sequestration.
The Louisiana Courts making clear that mandamus will lie to compel him to issue the writ of sequestration if the documents on their face are proper.
He does not have the discretion to go beyond the face of those documents or even to question what they say on their face.
In this case, there is simply no requirement of a detailed showing.
I think for these, unless there is any further questions, that’s my case.
Chief Justice Warren E. Burger: Thank you gentlemen.
The case is submitted.