Restatement Second of Torts Section 424
Restatement second of torts section 424 provides:
One who by statute or by administrative regulation is under a duty to provide specified safeguards or precautions for the safety of others is subject to liability to the others for whose protection the duty is imposed for harm caused by the failure of a contractor 4 employed by him to provide such safeguards or precautions.
In MBank El Paso, N.A. v. Sanchez, 836 S.W.2d 151 (Tex. 1992), the Texas Supreme Court considered whether the duty to avoid breaching the peace imposed by Texas's self-help repossession statute was nondelegable, such that a creditor could be held liable for a breach of the peace caused by its independent contractor. Id. at 151-52.
The court, over a dissent, held that it was. Id. at 154-55
Like A.R.S. 47-9609, the relevant Texas statute in MBank authorized a creditor to take possession of collateral upon default without judicial process "if this can be done without breach of the peace." Id. at 152 (citing Tex. Bus & Comm. Code 9-503).
The court noted that the purpose of imposing such an obligation was based on the public policy of avoiding the use of force or violence. Id. at 152-53.
The court held that the obligation was non-delegable based on Section 424 of the Restatement (Second) of Torts 424 (1965) ("Restatement").
See also Clark v. Assocs. Commercial Corp., 877 F. Supp. 1439, 1447 (D. Kan. 1994) (citing Hester v. Bandy, 627 So. 2d 833, 842 (Miss. 1993)) ("The creditor cannot set in motion causes dangerous to the person or property of others without taking all reasonable precautions to anticipate, obviate, and prevent their probable consequences.").
The court reasoned that the Texas legislature had indicated that the Texas Uniform Commercial Code, of which the repossession statute was a part, should be construed to effect uniformity with other jurisdictions and that other jurisdictions had found the obligation to avoid breaching the peace to be nondelegable. MBank, 836 S.W.2d at 154;
Gen. Fin. Corp. v. Smith, 505 So. 2d 1045, 1048 (Ala. 1987) (stating that secured creditor could not "delegate to independent contractor its liability for the wrongful manner in which the repossession was accomplished");
Massengill v. Ind. Nat'l Bank, 550 N.E.2d 97, 99 (Ind. Ct. App. 1990) (finding that "state case and statutory law make it clear that repossession of a secured chattel must be accomplished without breaching the peace");
Robinson v. Citicorp Nat'l Serv., Inc., 921 S.W.2d 52, 54-55 (Mo. Ct. App. 1996) ("A secured party may not delegate to third persons, including independent contractors, the secured party's duty to repossess in a peaceable manner.");
DeMary v. Rieker, 302 N.J. Super. 208, 695 A.2d 294, 301 (N.J. Super. Ct. App. Div. 1997) (adopting the rule "that an employer has a nondelegable duty to effectuate a repossession without a breach of the peace, as strongly in the public interest").
The court further opined that the interest of the creditor in obtaining the collateral must be balanced against society's interest in public peace and that if a creditor found that obligation too burdensome it could resort to the courts rather than attempt self-help repossession. MBank, 836 S.W.2d at 154.