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American Honda Finance Corp. v. One 2008 Honda Pilot

April 30, 2009

IN THE MATTER OF AMERICAN HONDA FINANCE CORPORATION, PETITIONER,
v.
ONE 2008 HONDA PILOT, DEFENDANT-IN-REM, SHARNJIT S. MANHAINI AND THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, RESPONDENTS.



The opinion of the court was delivered by: Nicholas Figueroa, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Petitioner, a finance company in possession of an automobile lien, seeks an order directing that the subject 2008 Honda Pilot vehicle be released to it by the Port Authority of New York and New Jersey, which has had the vehicle in its possession since December 2007. The Authority claims that it is entitled to keep the vehicle until petitioner pays over $25,000 for towing and storage. The owner of the vehicle, who has long been in default on his auto loan, was served with notice of this proceeding, but has not appeared.

Petitioner has held its perfected security interest since October 2007, on a purchase money loan of approximately $40,000. Under the terms of this financing contract, petitioner automatically became entitled to possession upon the owner's failure to make the second monthly payment on the loan.

The Honda was impounded by Port Authority police on December 28, 2007, at John F. Kennedy Airport, as a vehicle being used in connection with a criminal activity (the unlawful solicitation of passengers for ground transport). Petitioner does not dispute that it is the policy of JFK Airport management pursuant to Port Authority regulations to detain vehicles towed and stored under certain circumstances until the Authority's fees for such services have been paid. Petitioner maintains, however, that the New York State Lien Law does not allow the Authority to withhold the vehicle from a secured creditor such as petitioner under the present circumstances.

The statute in question is section 184 of New York's Lien Law. Its provisions create a lien in certain bailees where the common law recognized none. In relevant part the statute provides as follows:

(2) A person who tows and stores a motor vehicle at the request of a law enforcement officer authorized to remove such ... vehicle shall be entitled to a lien for the reasonable costs of such towing and storage, [provided certain notice is given to the owner]....

(5) A person who [meets the requirements of subdivision two] ...and who seeks to assert a lien for the storage of such ... vehicle ... shall mail by certified mail, return receipt requested, a notice pursuant to this subdivision to every person who has perfected a security interest in such ... vehicle ... within twenty days of the first day of storage. Such notice shall include [inter alia] the name of the person providing storage ..., the amount being claimed ..., and address and times at which the ... vehicle may be recovered.... A person who mails such notice within such twenty day period shall be entitled to a lien for storage from and after the first date of storage. A person who fails to mail such notice within such twenty day period shall only be entitled to a lien for the amount payable for storage from and after the date the notice was mailed.... A failure to mail such notice in a timely fashion shall not affect a lien for towing.

Petitioner alleges that the Authority has never given it the type of notice prescribed by subdivision (5) of section 184. The Authority for its part does not claim to have given petitioner such notice. The record is clear, however, that petitioner had actual notice of the impoundment by May 28, 2008. Since then, the Authority has continued to assess daily storage fees, from December 28, 2007, to date, initially at the daily rate of $100. Early on, the Authority suggested in effect that petitioner buy the Honda's release by paying the outstanding amount under protest, a proposition that petitioner rejected.

The threshold question is whether the Authority, as a bi-State agency, is governed by section 184. The Authority was created in 1921 pursuant to a compact between New Jersey and New York, as formally ratified by the United States Congress (L.1921, ch. 154, s. 1; N.J.S.A.. § 32:1-1 et seq.; 42 U.S. Stat. 174). Under the compact, the Authority is empowered to conduct its affairs pursuant to its own rules and regulations, and its operations are not subject to a unilaterally enacted statute of either State (such as section 184) if application of that statute would impinge upon the Authority's intended autonomy under the bi-State compact (see Agesen v Catherwood, 26 NY2d 521, 525).

To the extent relevant here, the Authority's self-governance at JFK Airport is expressed briefly in its regulations (21 NYCRR §§ 1260 et seq.), as explained in its publication, "Airport Rules and Regulations" (issued 7/22/06). Under section 1262.16 of the regulations, the Airport Manager is permitted to "remove from any area of [the] ... terminal any vehicle which is disabled, abandoned, parked in violation of the ... regulations ... or which presents an operational problem, to any other area at the terminal and may store the same thereat, all of the foregoing being at the owner's or operator's expense...." Thus, subparagraph (17) of subdivision (b) of Article VI of the Authority's publication explains that, "A vehicle which has been placed in the lawful possession of the ... Authority ... for any ... reason, and in respect of which any fee or charge, including towing and storage charges, are due, may be detained by the Airport Manager until said fees or charges have been paid."

It is noted that section 1220-b of the New York State Vehicle & Traffic Law prohibits "unauthorized solicit[ation of] ground transportation services at an airport." Moreover, that statute makes a violation punishable by fine or imprisonment. It appears that the Honda Pilot herein was towed and stored by the Authority as an incident of such unlawful operation and the arrest of its operator by Port Authority police under the New York statute.

In sum, the Authority has been empowered to promulgate regulations with respect to its operations, and it has done so, to the extent relevant here, by providing for towing and storage under circumstances such as these; by requiring that towing and storage fees be payable by the vehicle's owner or operator; and by authorizing retention of the vehicle until such fees are paid. Other than imposing such obligation on the owner or operator, such regulations do not purport to address the rights or obligations of any third person having an interest in the vehicle. In other words, the Authority has not purported to confer upon itself substantive and procedural rights and obligations relating to others' liens on or forfeiture of personalty, matters that are instead provided for in certain City, State, and federal enactments (see, e.g., N.Y.C. Administrative Code § 14-140; Lien Law, Article 9; 21 U.S.C. § 881).

Precedent establishes in any event that the Authority's autonomy is limited to its "internal operations" (Matter of Agesen v Catherwood, 26 NY2d 521, 525).Accordingly, any unilaterally enacted New York statute applies to the Authority if such statute governs "conduct affecting external relations of the Authority" implicating New York interests (Matter of Agesen v Catherwood, supra,26 NY2d 521, 525). In such connection,the Agesen court noted that conduct affecting the public's health and safety clearly were subject to each State's unilateral legislation, since they were "activities [that] may externally affect the public." But the Agesen court did not thereby propose to limit such "external" matters to issues of health and safety. In other words, the Agesen opinion does not necessarily imply that the Authority's claim against a vehicle owner for towing and storage fees is an "internal" matter, and therefore beyond any New York unilateral enactment, even where the ...


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