Addison v. Department of Motor Vehicles

• Citation: 69 Cal.App.3d 486,138 Cal.Rptr. 185
• Court: California Court of Appeals
• Decision Date: 04 May 1977
• Parties: Arnold ADDISON et al., Plaintiffs and Respondents, v. DEPARTMENT OF MOTOR VEHICLES, Defendant and Appellant. Civ. 39718.

Page 185

138 Cal.Rptr. 185

69 Cal.App.3d 486

Arnold ADDISON et al., Plaintiffs and Respondents, v. DEPARTMENT OF MOTOR VEHICLES, Defendant and Appellant.

Civ. 39718.

Court of Appeal, First District, Division 2, California.

May 4, 1977.

Carman & Mansfield, E. Day Carman, Corona del Mar, for plaintiffs and respondents.

Evelle J. Younger, Atty. Gen., Gordon Zane, Deputy Atty. Gen., San Francisco, for defendant and appellant.

Loeb & Loeb, Lawrence Silver, Los Angeles, for amicus curiae Ford Dealers Ass'n of Southern California.

David Negri, Sacramento, for amicus curiae Independent Automobile Dealers Ass'n of California.

BRAY, ^* Associate Justice.

Defendant and appellant Department of Motor Vehicles appeals from a judgment of the Santa Clara County Superior Court in a declaratory relief action.

ISSUES PRESENTED

1) The power of inspection claimed by the Department of Motor Vehicles exceeds authority granted by statute.

2) The decision of the trial court does not render any of the Vehicle Code unenforceable.

3) The evidence supports the finding that plaintiffs were not engaged in more than one business.

4) There are no constitutional issues involved.

RECORD

Arnold Addison, Douglas Alman and Mort Addison, each individually and doing business as Bay Cities Auto Auction, Incorporated, and Great Western Auctions, Incorporated filed a complaint for declaratory relief against the Department of Motor Vehicles and Herman Sillas in his capacity as Director of the California Department of Motor Vehicles, alleging that plaintiffs own and operate a wholesale auction exchange in Santa Clara County and that an actual controversy exists concerning the authority of the Department of Motor Vehicles (hereinafter DMV) to inspect and peruse records and documents utilized in plaintiffs' business. Plaintiffs contend that the right of the DMV to inspect or temporarily or permanently take business records is specifically limited and narrowly defined by sections 285, 286, 320, 11713, subdivision (f), and 11714 of the Vehicle Code. The DMV contends that the aforesaid code sections permit and grant to it the statutory right without restriction to inspect plaintiffs' business records which in any way relate to the automobile business. Plaintiffs also contend that any interpretation of the aforesaid code sections which allows the DMV to arbitrarily take or inspect plaintiffs' records is in violation of plaintiffs' constitutional rights pursuant to the Fourth, Fifth and Fourteenth Amendments of the United States Constitution.

The DMV answered alleging that under the total statutory scheme found in the Vehicle Code, it is given the authority to take any forms or books which may have been furnished to a licensee by the DMV and has the right to inspect all other pertinent documents.

After a trial, the memorandum decision of the trial court was filed, which stated: 'It is the opinion of the Court that judgment should be rendered in the above entitled action declaring that (the DMV) does not have authority pursuant to Vehicle Code § 320 to inspect and take possession of plaintiffs' business records and documents which are not the property of the Department of Motor Vehicles. Section 410.00 of the Regulations of (the DMV) is, as to such records without statutory authority. The (DMV) does have authority to inspect and take possession of records pursuant to the authority of Vehicle Code § 11714(c), but such authority is limited to the books and forms specified in said § 11714(c).'

Judgment was entered in favor of plaintiffs conforming with the memorandum decision.

STATEMENT OF FACTS

In April or March of 1975, the DMV requested that Great Western Auto Auctions, Incorporated, doing business as Bay Cities Auto Auction, deliver to it certain documents relating to plaintiffs' transactions in the sale and purchase of vehicles. Plaintiffs' attorney advised them that they were required to deliver only certain information to the DMV in the absence of a subpoena or a search warrant. Plaintiffs advised the DMV of their position. After a period of negotiations between the DMV and plaintiffs, the parties decided that the controversy presented an issue of statutory construction and the instant action was commenced.

Bay Cities Auto Auction, Incorporated (hereinafter Bay Cities) is engaged in the business of wholesale auctioning of automobiles to automobile dealers. When Bay Cities sells an automobile it records and sends to the DMV the make, model and year of the vehicle, as well as the identification number, the license and the odometer mileage. When a dealer brings its cars to Bay Cities, it will give Bay Cities 'a signed-off title, which is an open title' and tell Bay Cities the minimum amount it will accept for a vehicle. This latter information is not transmitted to the DMV and Bay Cities regards this information as confidential.

In 1976 Bay Cities sold between 16,000 and 18,000 cars. Because of the volume of business done by Bay Cities, it would be a disruption to the business to have to locate information regarding a particular vehicle.

Henry Hoover, a supervising investigator for the DMV, testified that during the course of an investigation he would inspect any document that would have to do with the purchase or sale of a vehicle. This would include cancelled checks, salesmen's vouchers used to determine commissions, stock record books that show when a vehicle is received in stock and when it leaves, internal repair orders and rental agreements. Hoover stated that the information supplied by a dealer to the DMV is not a sufficient amount of information he feels he needs in order to do his job. When Hoover inspects the records of a dealer, he does so with the permission of the dealer or he obtains a search warrant or a subpoena.

1) The power of inspection claimed by appellant exceeds the authority granted by statute.

The DMV argues that sections 320 and 1651 of the Vehicle Code ¹ provide ample authority for the adoption of the regulations in the California Administrative Code, title 13, sections 410.00 and 410.01. Plaintiffs on the other hand assert that the power of inspection given to the DMV in California Administrative Code, title 13, sections 410.00 and 410.01 exceeds the authority granted to the DMV by statute. ²

The regulations provide: 'Pertinent records of a licensed dealer which must be open to inspection pursuant to Vehicle Code Section 320 are those records maintained in the regular course of business insofar as those records are directly concerned with the purchase, sale, rental or lease of a vehicle.

'(a) Unless otherwise specified by statute, all business records relating to vehicle transactions shall be retained by the dealership for a period of not less than three years.

'(b) When, for any reason, a dealership terminates business, all departmental report of sale books, along with all permits, licenses, special license plates and registration indicia therefor, and all vehicle salesman's licenses in possession of the dealership shall be surrendered to the department.' (Cal.Admin.Code, tit. 13, § 410.00.)

The regulations further provide: 'A vehicle dealer may, at his option, maintain the business records of the dealership at the office of the principal place of business; or if the dealer has a branch location(s), records peculiar to that branch may be maintained either at such branch location or at the principal place of business. Upon approval of the Department, the records may be maintained at a business location other than as required in this section, provided a written instrument is filed with the department describing such other location and granting the department authorization to inspect the records thereat.' (Cal.Admin.Code, tit. 13, § 410.01.)

3] Before discussing whether these regulations find support in the Vehicle Code, a few well established principles should be reviewed. An administrative agency's construction of a statute, since it is charged with the enforcement of that statute, is entitled to great weight. (Morris v. Williams (1967) 67 Cal.2d 733, 748, 63 Cal.Rptr. 689, 433 P.2d 697; Holloway v. Purcell (1950) 35 Cal.2d 220, 226, 217 P.2d 665, cert. den. 340 U.S. 883, 71 S.Ct. 196, 95 L.Ed. 641.) However, the DMV is an administrative agency created by statute and, as such, it only possesses the powers that are conferred on it by statute. (People v. Harter Packing Co. (1958) 160 Cal.App.2d 464, 467, 325 P.2d 519.) Therefore, an administrative agency has no authority to enact rules or regulations which alter or enlarge the terms of legislative enactments. (California Sch. Employees Assn. v. Personnel Commission (1970) 3 Cal.3d 139, 144, 89 Cal.Rptr. 620, 474 P.2d 436; Morris v. Williams, supra.)

Section 1651 gives the director of the DMV the authority to 'adopt and enforce rules and regulations as may be necessary to carry out the provisions of this code relating to the department.' Section 1651 further provides: 'Rules and regulations shall be adopted, amended, or repealed in accordance with the Administrative Procedure Act, commencing with Section 11370 of the Government Code.' Section 11373 of the Government Code provides: 'Except as provided in Section 11409 (not applicable to the dispute in the instant case), nothing in this chapter confers authority upon or augments the authority of any state agency to adopt, administer, or enforce any regulation. Each regulation adopted, to be effective, must be within the scope of authority conferred and in accordance with standards prescribed by other provisions of law.'

Section 11374 of the Government Code provides: 'Whenever by the express or implied terms of any statute a state agency has authority to adopt regulations to implement, interpret, make specific or otherwise carry out the provisions of the statute, no regulation adopted is valid or effective unless consistent and not in conflict with the statute and reasonably necessary to effectuate the...