Request By:
Mr. Donald L. Davidson
Clerk, Greenup County
Courthouse
Greenup, Kentucky 41144
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter presenting the following question:
"What is the proper procedure for licensing a motor vehicle which has been sold to pay a lien for storage pursuant to KRS 376.275 or to pay a lien for repairs pursuant to KRS 376.280?"
KRS 376.275 provides as follows:
"Any person engaged in the business of storing or towing motor vehicles, shall have a lien on the motor vehicle, for the reasonable or agreed charges for storing or towing the vehicle, as long as it remains in his possession. If after a period of sixty (60) days the reasonable or agreed charges for storing or towing a motor vehicle have not been paid, the motor vehicle may be sold to pay the charges after the owner has been notified by registered letter of the time and place of the sale. This lien shall be subject to prior recorded liens."
KRS 376.280 provides the remedy of a nonjudicial sale of a boat or motor vehicle to a person, in possession of the boat or motor vehicle, who has made repairs, performed labor or furnished accessories or supplies therefor and to whom such charges have been owing for more than thirty days. The statute requires that the sale be advertised pursuant to KRS Chapter 424 and that the notice of the sale be sent by certified mail, return receipt requested, or by registered mail to the owner of the boat or motor vehicle and to any other person known to have any interest therein, addressed to such persons at their last known addresses, at least ten days before the sale is held.
In Cockerel v. Caldwell, 378 F.Supp. 491 (U.S. Dist. Ct. W.D. Ky 1974), the Court dealt with a challenge to the validity of KRS 376.280(1). The Court concluded that KRS 376.280(1) is unconstitutional and in violation of the Fourteenth Amendment of the United States Constitution. The following appears at page 493 of the Court's opinion:
"The plaintiff's contention that KRS 376.280(1) is unconstitutional in that it provides for no presale judicial hearing is well taken, in light of the decisions in Hernandez v. European Auto Collision, 487 F.2d 378 (2nd Cir. 1973); Straley v. Gassaway Motor Company, 359 F.Supp. 902 (S.D. W.Va. 1973); and Mason v. Garris, 360 F.Supp. 420 (N.D. Ga. 1973), a three-judge court. Each of these cases is bottomed upon an analysis of Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 32 L. Ed. 2d 556 (1972) and Sniadach v. Family Finance Corporation, 395 U.S. 337, 89 S. Ct. 1280, 23 L. Ed. 2d 349 (1969) . . . ."
In Department of Revenue v. Derringer, Ky., 399 S.W.2d 482 (1966), the Court faced the questions of whether the county clerk is authorized to effect a change of registration of and issue an automobile license for a motor vehicle sold to satisfy a lien claimed under KRS 376.275, in the absence of a bill of sale and a registration receipt presented to the clerk by the seller, and whether the procedure for a nonjudicial sale pursuant to KRS 376.275 denied due process. The court upheld the constitutionality of KRS 376.275 and affirmed the lower court's requirements as to the methods by which the sale could be completed. As stated at pages 483-484 of the Court's opinion, the approved procedures in connection with the completion of the sale are as follows:
"After the sale the appellee requested the county clerk to change the registration to his name and issue a current license in his name. This request was refused and the present litigation ensued. The trial court entered judgment declaring appellee Derringer entitled to the requested registration and license for the car, upon his presentation to the county clerk of a bill of sale in the form prescribed by the Kentucky Department of Revenue - OR, upon his presentation to the clerk of an affidavit, executed by appellee, containing the information required by KRS 186.200. The trial court's judgment provided that either of the just named documents should contain a statement of facts sufficient to reflect appellee's status as a lien holder pursuant to KRS 376.275. In addition to the bill of sale (or affidavit in lieu of it), the trial court directed that appellee should present to the county clerk the original, or a duplicate, of the current registration receipt for the car. . . ."
Thus, under the above authorities and as stated in OAG 74-865, copy enclosed, it is our opinion that the nonjudicial sale procedure authorized by KRS 376.280(1) is unconstitutional under the due process clause of the Fourteenth Amendment of the United States Constitution since no judicial hearing is provided prior to the sale of the property. The county clerk cannot make a valid transfer of a motor vehicle to a buyer when the vehicle is sold for the charges set forth in KRS 376.280(1) unless and until there is a court order validating such a sale.
The federal courts at this point have not specifically ruled on the validity of KRS 376.275. The state court in Department of Revenue v. Derringer, Ky., 399 S.W.2d 482 (1966), concluded that KRS 376.275 is constitutional and the county clerk may make a valid transfer of a motor vehicle when a vehicle is sold under that particular statute to satisfy a lien for towing and storage. Under the provisions of KRS 376.275, as construed in the Derringer case, supra, to effect a transfer of registration, after a nonjudicial sale for the enforcement of the statutory lien, the bill of sale or a properly executed affidavit containing the information required by KRS 186.200 and the original or a duplicate of the current registration receipt for the motor vehicle should be presented to the county clerk.
Although no federal or state court has ruled that KRS 376.275 is unconstitutional and although a state court decision held the statute to be constitutional in 1966, we have serious reservations at this time as to the statute's validity. We would, therefore, caution those persons seeking to rely upon the provisions of that statute in connection with a nonjudicial sale. A copy of this opinion is being sent to Mr. Vic Hellard, Jr., Director of the Legislative Research Commission in Frankfort for such consideration as is deemed appropriate.