December 13, 1982
Mr. Joaquin K. Hanson
Minnehaha County State's Attorney
Minnehaha County Courthouse
415 North Dakota
Sioux Falls, South Dakota 57102
Official Opinion No. 82-66
Existence of Common Law Liens
Dear Mr. Hanson:
You have requested an official opinion from this office in regard to the following factual situation:
FACTS:
From time to time the Minnehaha County Register of Deeds Office has been approached by individuals wishing to have filed and to have recorded certain documents purporting to be 'Common Law Liens' against the property of certain citizens, most of whom are employed or were serving in a public office or capacity. Such liens are typically prepared in large dollar amounts and are presented by proponents of fundamental Constitutionalism. The Register of Deeds upon the receipt of such a document has typically inquired of your office whether or not such documents ought to be allowed for filing and recordation under the laws of the State of South Dakota. You have advised, to this point, that such documents not be accepted by the Register of Deeds Office, as you could find no legal authority for the existence of such documents anywhere in South Dakota State Law.
Based upon the above facts you have asked the following question:
QUESTION:
Under South Dakota State law, should any Register of Deeds Office accept for filing or recordation any document purporting to be a 'Common Law Lien?'
To answer your question, it must first be understood what a common-law lien is. One definition provides:
A common-law lien is the right of one person to retain in his possession that which belongs to another until certain demands of the person in possession are satisfied. It arises by implication of law and not by express contract. It pertains exclusively to personality, and normally requires for its continued efficacy a continuance of possession in the lienor.
51 Am.Jur.2d, Liens, § 20; also see Black's Law Dictionary 251 (5th ed. 1979).
The definition's proviso that such a lien pertain 'exclusively to personalty' answers a portion of your question in view of SDCL 43-28-1. That statute provides in part:
Any instrument affecting the title to or possession of real property may be recorded as by law provided.
Clearly, common-law liens, if they exist at all, cannot be recorded, because they do not affect the title to or possession of real property. Whether such liens may be filed by a Register of Deeds depends on whether they still exist under South Dakota law. That they existed during the state's territorial days and at the state's inception is evident. Thompson v. Andrews, 39 S.D. 477, 165 N.W. 9, 12 (1917) ['The law of this state and of the territory from which this state was created has been at all times based on the rule of the civil law, which is also the rule of the English common-law . . .']. Indeed, even today the common-law plays a role in this state pursuant to SDCL 1-1-24 which states in part:
. . . In this state the rules of the common law, including the rules of the law merchant, are in force, except where they conflict with the will of the sovereign power, expressed in the manner stated in § 1-1-23.
SDCL 1-1-24, however, must be construed with the limitation contained in SDCL 2-14-12 which declares that the code establishes the law of the state respecting the subject to which it relates and where the code assumes to cover the whole subject to which it relates, the common-law remedy is excluded. Burnett v. Myers, 42 S.D. 233, 173 N.W. 730, 731 (1919). It must be decided then whether the state's statutory scheme regarding personal property liens was intended to cover the whole subject of personal property liens to the exclusion of common-law liens.
The analysis must begin by determining how a lien may be created. According to SDCL 44-1-4, a lien may be created either by contract or by operation of law. Since common-law liens arise by implication of law this statute in and of itself does not prohibit common-law liens. Similarly, the statutory definition of a lien does not preclude the existence of common-law liens. SDCL 44-1-1 states that: 'a lien is a charge imposed upon specific property by which it is made security for the performance of an act.'
An examination of the numerous statutes dealing with specific personal property liens, on the other hand, arguably could lead to the conclusion that the Legislature has preempted the personal property lien field. Many of these statutes represent codifications of common-law liens. See, e.g., SDCL 39-3- 18 (refrigerated locker plant lien); SDCL 40-27-1 (agister's lien); SDCL 57A-7-209 (warehouseman's lien). SDCL 44-11-11 (banker's lien); SDCL 44-11-9 (carriage lien); SDCL 44-11-10 (factor's lien); SDCL 44-11-5 (innkeeper's lien); SDCL 44-11-1 (mechanics', laborers' and materialman's liens). But this does not represent a complete list of all recognized common- law liens. See, e.g., Harris v. Woodruff, 124 Mass. 205 (1878), which held that a person may have a common-law lien for the expense and skill bestowed upon a horse delivered to him to be trained for running races.
Most importantly, there is a statutory provision which expressly recognizes the existence of common-law liens. SDCL 21-53-1 states in part that '[a]n action to foreclose a lien on personal property may be maintained by any person having a lien thereon by common-law, statute, or contract.' In view of this statute and the fact that allowance of common-law liens would not 'conflict with the will of the sovereign' in violation of SDCL 1-1-24, it must be concluded that such liens are recognized by South Dakota law. Having established the legality of common-law liens, it follows that such a lien may be filed with the Register of Deeds of the county where the personal property which is subject to the lien is located. See SDCL § § 7‑9‑1, 7‑9‑11, and 44‑2‑5.
Merely being recognized by the law of the state does not, however, automatically qualify a document labeled a 'Common Law Lien' to be filed with a Register of Deeds. Certain statutory requirements must first be complied with. SDCL 44-2-3 requires that the lien statement be sworn to and contain the following information:
(1) The names and addresses of the owner of the property and of the lien claimant;
(2) A description of the property sufficient to identify it;
(3) The approximate location of the property;
(4) The date on which the lien is claimed to have arisen;
(5) The amount claimed as a lien, and if the lien is one which may increase by future keep, care, or other transactions related to the property, the probable amounts by which it will increase;
(6) The circumstances out of which the lien is claimed to have arisen and the circumstances, if any, under which its future accumulations may arise, sufficient to show the legal or contract right to such lien and its accumulations.
Furthermore, SDCL 44-2-4 requires that before such a lien statement is filed a copy of the statement must be mailed by certified or registered mail to the property owner and the return receipt for such mailing must then be attached to the statement and filed with the Register of Deeds.
Of course, since the purpose of lien recordation statutes is to give lien- holders a means of preventing the failure of enforcement which would follow acquisition of property by a bona fide purchaser, the possession of personalty (a common-law lien requirement) by one holding a lien thereon dispenses with the necessity of recordation. 51 Am.Jur.2d, Liens, § 8; also see SDCL 44-2-8. Consequently, it would serve no purpose for a common-law lien holder to file such a lien. A Register of Deeds, therefore, should be cautious when faced with a purported common-law lien. Nevertheless, a person possessing a valid common-law lien is within his rights to file a lien statement with a Register of Deeds.
It should also be noted that an owner of personal property who has had a lien statement filed against him by a person who does not have reasonable grounds to believe he is entitled to such lien or by a person who has filed a statement containing wilfully made false statements, has a civil cause of action to remove such lien and recover all his damages including attorney's fees and a $100.00 penalty. SDCL 44-2-9. This legal remedy would seem to cover the outlandish lien claims described in your opinion request.
The answer to your question, therefore, is that a Register of Deeds should not accept for recordation any document purporting to be a 'Common Law Lien,' but that he may accept for filing in his office's personal property index such a document if the lien claimant states that he has possession of the personal property which the lien is claimed against and if the lien statement complies with the provisions contained in SDCL § § 44-2-3 and 44-2-4.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
