Binding Declaratory Ruling of Dept. of Motor Vehicles, In re, 44104

• Decision Date: 10 November 1976
• Docket Number: No. 44104,44104
• Citation: 555 P.2d 1361,87 Wn.2d 686
• Parties: In re the BINDING DECLARATORY RULING OF the DEPARTMENT OF MOTOR VEHICLES. SALSTROM'S VEHICLES, INC., Respondent, v. STATE of Washington, DEPARTMENT OF MOTOR VEHICLES, Appellant.
• Court: Washington Supreme Court

Page 686

87 Wn.2d 686

555 P.2d 1361

In re the BINDING DECLARATORY RULING OF the DEPARTMENT OF

MOTOR VEHICLES.

SALSTROM'S VEHICLES, INC., Respondent, v. STATE of Washington, DEPARTMENT OF MOTOR VEHICLES, Appellant.

No. 44104.

Supreme Court of Washington, En Banc.

Nov. 10, 1976.

Slade Gorton, Atty. Gen., R. Timothy Oliver, Susan R. Martin, Asst. Attys. Gen., Olympia, for appellant.

Barney & McAdams, Robert L. McAdams, Seattle, for respondent.

Lycette, Diamond & Sylvester, John P. Lycette, Jr., John T. Petri, Seattle, for amicus curiae, Wash. State Auto. Dealers.

UTTER, Associate Justice.

The Department of Motor Vehicles appeals from a Superior Court judgment invalidating portions of the motor vehicles dealers' license statute, RCW 46.70. At issue is the constitutionality of provisions requiring dealers selling or brokering new or current-model vehicles with factory warranties to have a current service agreement with the vehicle manufacturer. We hold the challenged provisions constitutional and reverse the trial court judgment.

Respondent Salstrom's Vehicles is a Washington corporation engaged in the business of obtaining vehicles of all makes for private persons from new car dealers operating under franchise agreements with auto manufacturers. Respondent currently holds a vehicle dealer's license from appellant Department of Motor Vehicles, but is not franchised by any munufacturer. Respondent's customers are primarily individuals belonging to professional organizations. It does not maintain a stock of vehicles and does not operate a sales lot.

Prior to 1973, RCW 46.70.041 required an applicant for a vehicle dealer's license to submit a copy of a current service agreement with a manufacturer only if the applicant intended To sell vehicles with a factory warranty. Laws of 1967, 1st Ex. Sess., ch. 74, § 6. The service agreement must require the dealer-applicant to perform or arrange for the repair or replacement work required of the manufacturer by the factory warranty. See RCW 46.70.041(2) (e). In 1973 the legislature amended this section to require such a service agreement of applicants seeking 'to sell, to exchange, to offer, to broker, to auction, to solicit or to advertise' new or current model vehicles with factory warranties. ¹ This same amendment authorizes the revocation of a vehicle dealer's license if the dealer sells, exchanges, offers or brokers such vehicles with factory warranties and does not have a valid, written service agreement with the manufacturer. RCW 46.70.101(1)(a)(vii).

Customers of respondent receive factory warranties with the vehicles they purchase. However, respondent does not have a current service agreement with any manufacturer and does not maintain facilities to perform warranty work. It was undisputed that current service agreements can be obtained by other than franchised dealers only in very limited situations. Respondent has entered into written agreements with each of the many franchised dealers from which it obtains vehicles. These agreements recite that respondent is a 'distributor agent' for the franchised dealer and that vehicles will be warranted in the name of respondent's customers. Respondent's business conduct is not subject to the control of any franchised dealer.

Pursuant to RCW 34.04.080, respondent petitioned the Department of Motor Vehicles for a binding declaratory ruling as to the applicability of RCW 46.70.041 and .101 to respondent and the validity of those provisions as applied to respondent. In May 1974, appellant ruled that respondent was subject to these statutory provisions and that its vehicle dealer's license 'is subject to revocation in that (it) sells, exchanges, offers, brokers, auctions, solicits or advertises new or current-model vehicles to which factory new-vehicle warranties attach and (it) does not have a current written service agreement with the manufacturers of those vehicles.'

Respondent sought review of appellant's ruling in Superior Court. The court concluded as a matter of law that the challenged provisions did not apply equally to all members of the class of dealers selling new or current-model vehicles covered by manufacturers' warranties inasmuch as very few nonfranchised dealers could obtain the required service agreement and, therefore, the statute violated the equal protection and privileges and immunities clauses. The court also held that the act as amended in 1973 unconstitutionally delegated to manufacturers the power to determine the recipients of vehicle dealers' licenses in this state.

The trial court entered conclusions of law finding that respondent is a 'motor vehicle dealer' as defined by RCW 46.70.011(3)(a), ² and is engaged in 'brokering' new or current-model vehicles with factory warranties within the meaning of RCW 46.70.041(2)(e). The court further concluded that respondent was not an agent of the franchised dealers from which it obtains vehicles. No error is assigned to these conclusions of law and, hence, these issues will not be considered on appeal. ROA I--43; See Puget Sound Plywood, Inc. v. Mester, 86 Wash.2d 135, 141, 542 P.2d 756 (1975). See also RAP 12.1 (eff. July 1, 1976).

In Aetna Life Ins. Co. v. Washington Life & Disability Ins. Guaranty Ass'n, 83 Wash.2d 523, 528, 520 P.2d 162, 166 (1974), we reviewed the principles applicable to constitutional attacks on economic and business regulations:

(One) limitation upon our exercise of judicial review is the heavy presumption of constitutionality accorded a legislative act. . . . Every state of facts sufficient to sustain a classification which reasonably can be conceived of as having existed when the law was adopted will be assumed. . . . A statute's alleged unconstitutionality must be proven 'beyond all reasonable doubt' before it may be struck down.

These principles are more than rules of judicial convenience. 'They mark the line of demarcation between legislative and judicial functions.' Lenci v. Seattle, 63 Wash.2d 664, 668, 388 P.2d 926, 929 (1964).

Because the challenged portions of RCW 46.70 tend to promote the public welfare and bear a reaonable relation to the accomplishment of a proper purpose, the provisions are a valid exercise of the state's police power. See State v. Conifer Enterprises, inc., 82 Wash.2d 94, 96--97, 508 P.2d 149 (1973); Clark v. Dwyer, 56 Wash.2d 425, 353 P.2d 941 (1960), Cert. denied, 364 U.S. 932, 81 S.Ct. 379, 5 L.Ed.2d 365 (1961). The declared purpose of the legislature in adopting RCW 46.70 was to regulate and license vehicle manufacturers, distributors, dealers and salesmen 'in order to prevent frauds, impositions and other abuses upon (the state's) citizens and to protect and preserve the investments and properties of the citizens of this state.' RCW 46.70.005. In the present case, the trial court determined, in an unchallenged finding of fact, that the purpose of the current service agreement requirement of RCW 46.70.041 is to ensure that all purchasers receive a valid, enforceable warranty and, in an unchallenged conclusion of law, that this purpose is a proper objective for the exercise of the police power. This conclusion is undoubtedly correct. 'The concept of the public welfare is broad and inclusive.' Berman v. Parker, 348 U.S. 26, 33, 75 S.Ct. 98, 102, 99 L.Ed. 27 (1954). See also Village of Belle Terre v. Boraas, 416 U.S. 1, 9, 94 S.Ct. 1536, 39 L.Ed.2d 797 (1974). We have previously held that prevention of deception and fraud upon the consuming public is in the public interest. Reesman v. State, 74 Wash.2d 646, 651, 445 P.2d 1004 (1968).

Moreover, we can readily conceive of a state of facts which justifies the legislature's determination that the requirement of a current service agreement will further the purpose of the statute. The legislature may well have concluded that warranty work will more likely be performed, and performed well, if all vehicle dealers have agreed with the vehicle manufacturers that 'upon demand of any customer receiving a new vehicle warranty (the dealer will) perform or arrange for . . . the service repair and replacement work required of the manufacturer . . . by such vehicle warranty . . .' RCW 46.70.041(2) (e). Also, it was not disputed by the parties that manufacturer warranties normally change in some respect from year to year, affecting such matters as the items covered, where the service may be performed, and how the warranty may be transferred. Requiring a Current service agreement bears a reasonable relationship to the objective of insuring proper warranty service and protecting the investment of consumers. It is not a court's function to invalidate an economic regulation on the grounds that it will probaly be unsuccessful or is unwise. State v. Laitinen,77 Wash.2d 130, 133, 459 P.2d 789 (1969); Bayside Fish Flour Co. v. Gentry,297 U.S. 422, 428, 56 S.Ct. 513, 80 L.Ed. 772 (1936). 'we do not inquire whether this statute is wise or desirable, or 'whether it is based on assumptions scientifically substantiated' . . . Misguided laws may nonetheless be constitutional.' James v. Strange, 407 U.S. 128, 133, 92 S.Ct. 2027, 2031, 32 L.Ed.2d 600 (1972).

It may be contended that agreements between vehicle brokers and franchised dealers, such as those between respondent and the new car dealers in this case, would also achieve the purpose of the statute. The legislature, however, may have judged this safeguard inadequate. 'The question of the desirability and effectiveness of one method of control over the other . . . gives rise to a legislative choice rather than a judicial one.' Reesman v. State, supra, 74 Wash.2d at 653, 445 P.2d at 1009. It may be that the statute imposes a needless requirement.

But it is for the legislature, not the courts, to balance the advantages and disadvantages of the new requirement . . . (T)he law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand...