Flagg Brothers (p. 1137)

New York UCC section 7-210 provided:

 7 - 210. Enforcement of Warehouseman's Lien

(1) Except as provided in subsection (2), a warehouseman's lien may be enforced by public or private sale of the goods in bloc or in parcels, at any time or place and on any terms which are commercially reasonable, after notifying all persons known to claim an interest in the goods. Such notification must include a statement of the amount due, the nature of the proposed sale and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the warehouseman is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. If the warehouseman either sells the goods in the usual manner in any recognized market therefor, or if he sells at the price current in such market at the time of his sale, or if he has otherwise sold in conformity with commercially reasonable practices among dealers in the type of goods sold, he has sold in a commercially reasonable manner. A sale of more goods than apparently necessary to be offered to insure satisfaction of the obligation is not commercially reasonable except in cases covered by the preceding sentence.

From Oyez:

Question

Does a New York state statute that allows storage companies to sell stored goods if they do not receive payment violate the Fourteenth Amendment? [In other words, is there sufficient state action to require procedural due process before a person may be deprived of her private property?]

Conclusion (5–3 decision for Flagg Bros., Inc.)

Justice William H. Rehnquist delivered the opinion of the 5-3 majority. The Court held that the decision of the storage facility to sell the goods could not be considered a state action, and therefore did not violate the Fourteenth Amendment. To show that they had a claim worthy of relief, the respondents must have given evidence that they were denied a right guaranteed by the Constitution, and that Flagg Bros., Inc. was operating as the State of New York. The Court held that there was no deprivation of a Constitutional right, as the Constitution only protects against state seizure of property, not that of private actors. The Court also held that the statute that allows the sale to happen does not imply any state action, so Flagg Bros., Inc. was not acting on behalf of the state. [How is this case different from Shelley? Or is it different in any material respect?]

In his dissenting opinion, Justice John Paul Stevens wrote that the company’s right to conduct the sale derived from the state, and not the original property owners, so the sale must be held to the standards of the Fourteenth Amendment. He argued that state authorization of a “nonconsensual resolution of conflict between debtor and creditor” is the type of action that the Due Process Clause was meant to prevent. Justice Byron R. White and Justice Thurgood Marshall joined in the dissent.