Hinesley, In re

• Decision Date: 16 May 1967
• Docket Number: No. 10334,10334
• Parties: In the Matter of the Revocation of the Motor Vehicle Used Car Dealers License of Gerald D. HINESLEY and L. W. Sanders, d/b/a Sanders-Hinesley Motor Sales.
• Court: South Dakota Supreme Court

Page 834

150 N.W.2d 834

82 S.D. 552

In the Matter of the Revocation of the Motor Vehicle Used

Car Dealers License of Gerald D. HINESLEY and L.

W. Sanders, d/b/a Sanders-Hinesley Motor

Sales.

No. 10334.

Supreme Court of South Dakota.

May 16, 1967.

Frank L. Farrar, Atty. Gen., F. A. Winans, Asst. Atty. Gen., Pierre, for appellant.

D. O. Dillavou, Deadwood, for respondent.

Woods, Fuller, Shultz & Smith, and J. B. Shultz and Timothy J. Nimick, Sioux Falls, for South Dakota Automobile Dealers Association, amicus curiae.

HANSON, Judge.

The Sanders-Hinesley Motor Sales of Sturgis was licensed to sell used motor vehicles. It was not licensed to sell new cars and was not a franchised new car dealer. On June 21, 1965 the Commissioner of Motor Vehicles suspended his dealer's license for a period of six months for selling new Ford automobiles under its used motor vehicle dealer's license. The dealer appealed to Circuit Court which reversed the order of the Commissioner and reinstated its license. In doing so the trial court held SDC 1960 Supp. 44.0211(2) unconstitutional. That question is now here on appeal by the Commissioner of Motor Vehicles. The disputed portion of SDC 1960 Supp. 44.0211(2) reads:

'That if the applicant desires to sell, solicit, or advertise the sale of new and unused motor vehicles, he must have a bona fide contract or franchise in effect with the manufacturer or distributor of the motor vehicle, or motor vehicles, he proposes to deal in.'

The trial court largely relied on the reasoning of Joyner v. Centre Motor Co., 192 Va. 627, 66 S.E.2d 469 and quoted therefrom as follows:

'The vice in and resultant unconstitutionality of this legislation is that it presupposes that unenfranchised dealers constitute a class who alone are capable of fraudulent and sharp practice, and that dealers who hold franchises are immune from and incapable of committing the wrongs and dishonest acts sought to be guarded against.

'However Bona fide the assertion that this legislation is for the public welfare, and though earnest effort be made to impart to it the appearance of fairness and equality, its sole effect is to discriminate against all unenfranchised dealers and grant and secure special privileges to those few who are enfranchised, and this is done without any resultant benefit or protection to the general public. * * * The classification made and the restrictions imposed foster and protect the commercial interests of the enfranchised dealers but the classification is unnatural and unreasonable and the restrictions are not in the interests of the public health, morals, safety or general welfare.'

Similar regulatory provisions in Nebraska and Ohio were struck down in Nelsen v. Tilley, 137 Neb. 327, 289 N.W. 388, 126 A.L.R. 729, and by the Cuyahoga County Court of Appeals in Ohio Motor Vehicle Dealers & Salesmen's Licensing Board v. Memphis Auto Sales, 103 Ohio 347, 142 N.E.2d 268. It should be noted, however, that each of these courts specifically recognize the authority of the legislature to enact regulatory measures governing the sale of new and used automobiles. Only the means of regulation was considered to be constitutionally offensive. Nelsen v. Tilley, supra, was decided in 1939. The Nebraska Court conditioned its opinion with the following pertinent observation:

'Liberty of contract and the right to use one's property as one wills are fundamental constitutional guarantees, but the degree of such guarantees must be determined in the light of social and economic conditions existing at the time the guaranty is proposed to be exercised, rather than at the time the Constitution was approved, otherwise legislative power becomes static and helpless to regulate and adjust to new conditions constantly arising. * * * The balance between due process and the police power is therefore more or less unstable, as it must necessarily keep pace with the economic and social orders. As the exercise of the police power increases to meet new conditions, the protection of the due process clauses must necessarily recede to a corresponding degree.'

Since 1939 the automobile industry has multiplied in size and complexity. The automobile has become a social and economic necessity furnishing means of transportation for nearly everyone in every walk of life. It has displaced most other means of local and long distance carriage. Multicar families with multi-car garages are common. The pickup has replaced the horse on farms and ranches. Motorized vehicles are now used by hunters and fishermen to reach remote areas, to take skiers up mountain slopes, and to carry weary golfers over the tortious torrain of their courses. A nationwide network of super highways has been constructed. Motels are replacing hotels. Highway and motor vehicle departments are fast becoming the largest units of state and local governments. Governmental regulation of every form has followed in the wake of such growth. The so-called automobile dealer franchise acts enacted by Congress and several states are perhaps the most far reaching. The federao act seeks to equalize the economic relationship between motor vehicle manufacturers and dealers by giving dealers a right of action for damages when a manufacturer has not used good faith in performing its obligations under a dealer franchise or in terminating it. State statutes generally require automobile manufacturers to obtain a license. Such license may be denied, suspended, or revoked by the state on numerous grounds including 'any act unfair to a dealer'. These acts have been held constitutional. See Anno. 7 A.L.R.3d 1173.

When considering the constitutionality of any statute there is a presumption of validity and no statute should be held unconstitutional 'unless its infringement of constitutional restrictions is so plain and palpable to admit of no reasonable doubt', State v. Black Hills Transportation, 71 S.D. 28, 20 N.W.2d 683. Furthermore, a court does not sit as a super-legislature to determine the wisdom of the legislation. State v. Nuss, 79 S.D. 522, 114 N.W.2d 633. The court went on to point out in the Nuss case that 'Although freedom of contract has traditionally been considered to be the general rule and economic restraint the exception, which could be justified only under exceptional circumstances, there is no longer much question concerning the broad discretion possessed by the legislature to regulate any and all business for the protection of the health, safety, morals, and general welfare of the people * * * the term affected with a public interest means 'no more than that an industry, for adequate reason, is subject to control for the public good.' Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed.2d 940; Olsen v. Nebraska, 313 U.S. 236, 61 S.Ct. 862, 85 L.Ed. 1305.' Beyond question therefore our legislature has authority under the police power to regulate the sale of motor vehicles for the protection and general welfare of the public. See Anno. in 57 A.L.R.2d on subject of 'Regulation or licensing of business of selling motor vehicles', p. 1265.

In adopting regulatory measures affecting the sale of motor vehicles 'the legislature may properly differentiate between dealers in new vehicles and dealers in used vehicles', 7 Am.Jur.2d, Automobiles and Highway Traffic, § 29, p. 619, also see Ring v. Mayor and Council of Borough of N. Arlington, 136 N.J.L. 494, 56 A.2d 744, aff. 1 N.J. 24, 61 A.2d 508, and 420 Broad Ave. Corp. v. Borough of Palisades Park, 137 N.J.L. 527, 61 A.2d 23. In considering whether an Oklahoma law regulating the practice of optometry violated the Equal Protection Clause of the Fourteenth Amendment by subjecting opticians to the regulatory system and exempting sellers of ready-to-wear glasses the U.S. Supreme Court said 'The problem of legislative classification is a perennial one, admitting of no doctrinaire definition. Evils in the same field may be of different dimensions and proportions, requiring different remedies. Or so the legislature may think. Tigner v. State of Texas, 310 U.S. 141, 60 S.Ct. 879, 84 L.Ed. 1124. Or the reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. Semler v. State Board of Dental Examiners, 294 U.S. 608, 55 S.Ct. 570, 79 L.Ed. 1086. The legislature may select one phase of one field and apply a remedy there, neglecting the others. A.F. of L. v. American Sash Co., 335 U.S. 538, 69 S.Ct. 258, 93 L.Ed. 222. The prohibition of the Equal Protection Clause goes no further than the invidious discrimination.' Williamson v. Lee Optical of Oklahoma, 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563.

The most recent case on the subject, Louisiana Motor Vehicle Com'n v. Wheeling French, 235 La. 332, 103 So.2d 464, upholds the constitutionality of a statute limiting the sale of new and used motor vehicles to dealers holding a bona fide contract or franchise with a manufacturer or distributor of new and unused motor vehicles. The court observed 'that the production,...