Defining "breach of the Peace" in Self-help Repossessions

• Jurisdiction: United States,Federal
• Citation: Vol. 87 No. 2
• Publication year: 2021

DEFINING "BREACH OF THE PEACE" IN SELF-HELP REPOSSESSIONS

Ryan McRobert

Abstract: Since Roman times, creditors have invoked the limited extrajudicial remedy of self-help repossession. Pre-colonial English laws also allowed for a limited repossession remedy outside of the courts, provided the creditor accomplished the repossession without a "breach of the peace." The Uniform Commercial Code (UCC) has allowed for the self-help remedy since the 1950s, making it available for any secured party in the event of contractual default so long as there was no breach of the peace. The drafters of the UCC, however, failed to define what constituted a "breach of the peace," choosing to allow the courts to flesh out the definition in a fact specific, ex post fashion. This has resulted in a lack of clarity and consistency across jurisdictions as each court attempts to craft a breach of the peace requirement without guidance from the UCC. This Comment argues that courts across the country should adopt a two-part test for determining whether a breach of the peace occurred during self-help repossession. The two-part test involves three per se rules of exclusion followed by consideration of two factors to reach a final decision.

INTRODUCTION

The concept of self-help repossession has existed in law and society since Roman times.(fn1) Repossession is "[t]he act or an instance of retaking property"(fn2) and self-help is "[a]n attempt to redress a perceived wrong by one's own action rather than through the normal legal process."(fn3) Throughout history, this concept has allowed individuals to regain possession of their rightful and legal property without resorting to a formal judicial process. Appearing in the Roman Empire,(fn4) the concept evolved over time as it progressed through other societies,(fn5) into English law,(fn6) and then finally into the common law of the United States.(fn7) Congress first recognized the self-help repossession remedy in the Uniform Conditional Sales Act,(fn8) and it is presently codified in section 9-609 of the Uniform Commercial Code (UCC).(fn9)

The UCC established a very formal process for self-help repossession. Only secured parties have the option of self-help repossession.(fn10) In order to become secured, the party must form a security interest.(fn11) Only then does the debtor(fn12) have a specified obligation, as defined by the security interest, to the secured party.(fn13) If debtor default(fn14) occurs, then the secured party has certain rights to the collateral,(fn15) which could be in the debtor's possession.(fn16) One of the secured party's rights is self-help repossession. Section 9-609 of the UCC states that "[a]fter default, a secured party . . . may take possession of the collateral . . . pursuant to judicial process; or . . . without judicial process, if it proceeds without breach of the peace."(fn17)

This Comment focuses on the difficulty courts have in defining the term "breach of the peace" within the meaning of the UCC. For example, if a repossession agent asks the police to provide him with protection as he repossesses a vehicle, is this a breach of the peace that makes the self-help repossession unlawful? Does a breach of the peace occur when a homeowner assaults someone trespassing on his property in an effort to repossess lawn furniture? Imagine that the same homeowner does not notice his property being repossessed, but the creditor has to cut a lock and bypass a gate to repossess the property.

Does this breach the peace even if there is no confrontation? What if the debtor experiences emotional distress or something happens to a neutral third party? Chapa v. Traciers and Associates(fn18) illustrates the difficulty courts face in defining and applying the "breach of the peace" concept. In that case, a repossession agent performed a self-help repossession and towed the debtor's vehicle away while-unbeknownst to the agent-the debtor's children were still inside.(fn19) The court decided that the agent's actions did not constitute a breach of the peace,(fn20) even though the debtor likely experienced extreme emotional distress from thinking that her children had been abducted. As Chapa illustrates, the lack of a clear definition for "breach of the peace" in the self-help repossession context has left parties without a remedy in the face of significant emotional, physical, or financial harm caused by a repossessing creditor. It has also produced harmful uncertainty for creditors, who are unable to determine the scope of their repossession rights ex ante.

Part I of this Comment traces the history of self-help repossession from its origins in the Roman Empire through its eventual codification in the UCC. Part II explains how courts treat breach of the peace claims inconsistently, demonstrating the need for uniformity across jurisdictions. It also discusses how the UCC's ex post enforcement approach failed to anticipate certain modern day economic conditions that require a universal approach to breach of the peace review.(fn21) Part III recommends that all states adopt a two-part test to define "breach of the peace," considering the goals of self-help repossession while effectively balancing the rights of the debtor, the secured party, and the public at large.

I. BEFORE CODIFICATION IN THE UCC, SELF-HELP REPOSSESSION RETAINED ITS ESSENTIAL CHARACTER AS AN EXTRAJUDICIAL REMEDY AVAILABLE TO LIMITED GROUPS OF PEOPLE

Self-help repossession has existed in some form since the creation of the debtor-creditor concept, which prompted an "injured person to take from the wrongdoer . . . whatever is seizable and transportable."(fn22) When bartering was the sole method of immediate exchange, there was no need for repossession because payment was made in full upon exchange of goods. However, as the debtor-creditor relationship developed, self-help repossession became an efficient remedy for delinquency.(fn23) As economies developed and technology improved, the concept and execution of self-help repossession remained relatively unchanged.(fn24) Societies also continued to regulate how and when this extrajudicial right could be implemented.(fn25) This pattern continues to the present day: the drafters of the UCC adopted and endorsed self-help repossession as an efficient extrajudicial tool, but failed to provide a precise definition that indicates the lawful scope of the remedy.(fn26)

A. Self-Help Repossession Has Existed Since the Roman Empire and Was Incorporated into English Common Law

The concept of self-help repossession can be traced to the Roman legal concept of "distress," which was the practice of "taking [a] personal chattel without legal process from the possession of a wrongdoer into the hands of the party aggrieved, as a pledge for the redress of an injury, the performance of a duty, or the satisfaction of a demand."(fn27) Referred to in Roman law as pignoris capio, it differed from other legal remedies because of its extrajudicial nature.(fn28) This extrajudicial right could, however, only be exercised in a few specific situations.(fn29) For example, the remedy was available to enforce payment for animals or for animal sacrifices when payment was not properly made.(fn30) The property seized satisfied the claim and provided a complete remedy.(fn31)

The Teutonic people of the Middle Ages(fn32) also utilized self-help repossession, but only with limited procedures.(fn33) Though a party could pursue the remedy without recourse to the courts, formal procedural requirements applied.(fn34) The process required three witnesses to accompany the creditor to the debtor's home, at which point the creditor would make a formal demand for repayment.(fn35) The demand had to include a description of both the property that was to be repossessed and the property's value.(fn36) If the debtor refused to fulfill the demand, then the creditor was forced to pursue a remedy in the courts.(fn37)

Pre-colonial English law had similarly strict rules governing when a self-help repossession could take place, what items could be repossessed, and the manner of taking and disposing of these items.(fn38) Early English law opposed self-help remedies altogether, viewing them as "an enemy of law, a contempt of the king and his court."(fn39) Even self-defense was disfavored as a form of self-help remedy.(fn40) As the Middle Ages progressed, however, English opposition to self-help remedies relaxed, though such remedies remained subject to restrictive rules and regulations.(fn41) For example, the distress remedy was only available for non-payment of rent and destruction of property by someone else's animals.(fn42) Additionally, only personal chattels could be recovered as a distress remedy, and the performance of distress had to take place during the daytime, with very few exceptions.(fn43) Interestingly, the English permitted third-party assistance in performing the repossession and also gave the creditor a right of action for items that had been fraudulently removed from the debtor's property in anticipation of the distress action.(fn44) The cause of action for fraudulent removal applied not only against the debtor, but also to "all persons privy to, or assisting in, such fraudulent conveyance, forfeit double the value to the landlord."(fn45)

B. Self-Help Repossession Was First Recognized by the U.S. Courts in the Nineteenth Century and Codified in the Early...