A Distraint Anniversary

On this date in 1983, a unanimous Supreme Court decided Callen v. Sherman’s, Inc., 92 N.J. 114 (1983). The case involved whether distraint, a procedure that allowed commercial landlords to seize, or even sell, without notice or hearing, property of a tenant who owes rent, violated due process.

As Justice Pollock noted in the Court’s opinion, “since at least the thirteenth century, the common law has condoned distraint as an exception to the principle that ‘self-help is an enemy of the law, a contempt of the king and his court.'” New Jersey had a distraint statute continuously since 1795. Despite the longstanding existence of distraint without notice or hearing, the Court held the distraint statute then in effect, N.J.S.A. 2A:33-1 et seq., to be unconstitutional as violative of due process.

For there to be a due process violation, some state action was required. Justice Pollock held that the involvement of a constable, a public officer appointed by the governing body of a municipality, in the distraint process pursuant to the distraint statute, constituted state action.

But it was still necessary to find that the distraint process deprived the tenant of property. Justice Pollock noted that making that determination “is a difficult and subtle task,” since not all state action results in a deprivation. “The padlocking of one’s business premises by a municipal constable, although temporary, qualifies as a deprivation of property …. Not only did the distraint preclude the tenant’s control of the goods within the store, but it further denied the tenant access to the property in which it held a leasehold estate.”

The next question was what process was due. After discussing a series of United States Supreme Court opinions, Justice Pollock held that “[w]hatever combination of procedures is necessary to meet minimum notice and hearing requirements under the due process clause, the New Jersey statute cannot survive in its present form. No notice and hearing need be given to the lessee before distraint. The tenant is remitted to a subsequent action in replevin for repossession of the goods or for damages suffered because of the excessive distraint. However, the statute contains a built-in disincentive to pursue an action for excessive distraint: the tenant who unsuccessfully pursues such an action is liable to the landlord for double costs. In the meantime, moreover, the tenant will have been deprived of the goods and their value.”

Finding that the Legislature would have wanted the distraint statute to survive, given the venerable history of distraint in New Jersey, the Court performed “judicial surgery.” Justice Pollock observed that “[t]he problem with the challenged statute lies not in the existence of the remedy it accords the landlord, but with the insufficiency of the notice and hearing it affords the tenant.” The Court solved that problem by reading in the procedural notice and hearing requirements of Rule 4:52, which deals with interlocutory relief. Doing that “does not deprive a lessor of his statutory rights; it merely requires him to proceed with due process. That is, without judicial approval, a lessor simply cannot help himself to a tenant’s goods.”

The Court did note one exception: “In the extraordinary case, e.g., where the landlord learns that a tenant is loading his goods onto a truck to avoid a just claim, the landlord still may resort to self-help. The need for relief in these circumstances is so compelling that a landlord need not seek judicial approval before availing himself of the statute. A post-deprivation hearing at the request of the tenant under N.J.S.A. 2A:33- 9 will satisfy the need for due process.”

Justice Pollock also cautioned that the Court’s ruling was not limited to distraints by a constable or sheriff. “[D]istraint by a landlord is its functional equivalent. Insofar as the tenant is concerned, he is deprived of possession of his goods no matter who effects the distraint. Landlords would be well advised not to rely on any assumed difference between distraint performed with or without the aid of a constable.” He also noted that the Chancery Division had, in two relatively recent cases, held that the distraint statute did not satisfy due process. Thus, “for over eight years landlords and their attorneys have been on notice that distraint is a doubtful and risky procedure.”

The law often does not always change quickly, or at all, when it should. Callen, however, shows that even an entrenched principle, centuries old, can be struck down at some point.

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