Killingsworth v. West Way Motors, Inc.

• Decision Date: 30 December 1959
• Docket Number: No. 6518,6518
• Citation: 87 Ariz. 74,347 P.2d 1098
• Parties: Clyde KILLINGSWORTH, as Superintendent of the Motor Vehicle Division, Arizona State Highway Department, Defendant, Arizona Automobile Dealers Association, a corporation, Intervener, Appellants, v. WEST WAY MOTORS, INC., an Arizona corporation, Appellee.
• Court: Arizona Supreme Court

Page 1098

347 P.2d 1098

87 Ariz. 74

Clyde KILLINGSWORTH, as Superintendent of the Motor Vehicle Division, Arizona State Highway Department, Defendant Arizona Automobile Dealers Association, a corporation, Intervener, Appellants, v. WEST WAY MOTORS, INC., an Arizona corporation, Appellee.

No. 6518.

Supreme Court of Arizona.

Dec. 30, 1959.

Robert Morrison, Atty. Gen., and Harmon S. Puckett, Asst. Atty. Gen., for Clyde Killingsworth.

Snell & Wilmer, and Perry M. Ling, Phoenix, for Arizona Automobile Dealers Ass'n.

Parker & Muecke, Phoenix, for appellee.

PHELPS, Chief Justice.

This is an appeal from a summary judgment entered by the trial court in favor of plaintiff-appellee against defendant and intervener, appellants. The parties will hereinafter be designated as plaintiff, defendant, and intervener.

The facts are that plaintiff who had been engaged in the used car business in the City of Phoenix for a substantial period of time prior to October 4, 1956, made application to defendant, the duly appointed, qualified and acting superintendent of the Motor Vehicle Division of the Arizona State Highway Department, for a license as a new motor vehicle dealer under the provisions of A.R.S. §§ 28-303 and 28-1304. The defendant denied said application, and plaintiff, pursuant to A.R.S. § 28-1304, subd. E made application for a hearing which was granted and thereafter defendant again denied said application, and as required by said statute made findings of fact and conclusions of law in his final order denying said application.

Thereupon, plaintiff brought the instant action in the superior court challenging the constitutionality of the statute and the rules and regulations under the provisions of which defendant acted in denying plaintiff's application for said license. After issues were formed intervener obtained permission to intervene as a party defendant and filed its answer and joined with defendant in praying that the order of defendant denying plaintiff's application be affirmed.

Both the intervening defendant and plaintiff thereafter filed motions for summary judgment. Having heard counsel as to the law upon a stipulation that the facts were as alleged in the complaint, and being fully advised in the premises, the court granted plaintiff's motion for summary judgment and denied intervener's motion therefor. Defendant and intervener prosecute this appeal.

The trial court based its judgment for the plaintiff on the ground that A.R.S. § 28-1301, paragraph 2, and Rules 16 and 17 (General Orders No. 50 and 51) of the Arizona Highway Department, Division of Motor Vehicles, '* * * are of no force and effect insofar as they require that the applicant have 'an established place of business' or be enfranchised or otherwise authorized by any manufacturer of new motor vehicles to sell its new motor vehicles.' The court did not expressly state what portion of the Constitution has been violated. In fact, it did not state in its judgment that the Constitution had been violated.

Plaintiff contends that A.R.S. §§ 28-1301, 1302, 1303, 1304 and 1311, and A.R.S. §§ 28-202 and 28-303, and Rules and Regulations Nos. 16 and 17 (General Orders No. 50 and 51) are violative of the provisions of Article 2, Section 13 of the Arizona Constitution, A.R.S., and Section 1 of the Fourteenth Amendment to the Constitution of the United States; and that they further violate Article 4, part 2, section 19, subsection 13, and the due process clause of Article 2, section 4 of the Arizona Constitution.

It is our view that there is no merit whatever to the claim that the Legislature was without power to invest the superintendent of the motor vehicle division of the State Highway Department to make such rules and regulations within and not inconsistent with the language of the statute as he deemed necessary to efficiently discharge those duties, and that A.R.S. § 28-202 is constitutional. Whether Rules 16 and 17 involved herein are in aid of the enforcement of the provisions of such statute will be hereinafter discussed.

We are also of the view that A.R.S. § 28-303 prescribing the information to be contained in an application for a certificate of title to a motor vehicle, trailer or semitrailer is a proper legislative function in the exercise of the police powers of the state. It is universally conceded by all courts that the Legislature does have such power even over a legitimate business if it is of such a nature that it is susceptible to abuse so long as such legislation is reasonable and not arbitrary and bears a reasonable relation to the purpose of its enactment. The measure of its police powers is always commensurate with public necessity. Edwards v. State Board of Barber Examiners, 72 Ariz. 108, 231 P.2d 450. Because of the magnitude of the motor vehicle industry and the opportunity for the perpetration of fraud in the transfer of title to both new and used cars, we are of the view that said section does not contravene any portion of either the state or federal constitution cited to us.

The provisions of A.R.S. Paragraph 7 of Subsection A, § 28-303 and Subsection B, § 28-303, supra, insofar as applicable to the instant case provide that the application for a certificate of title shall contain the following:

'7. If the application is for a certificate of title to a new vehicle, the date of sale by the manufacturer or dealer to the person first operating the vehicle. (Emphasis ours)

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'B. The application for a certificate of title to a new vehicle shall be accompanied by a certificate from the manufacturer showing the date of sale to the dealer or person first receiving it from the manufacturer, the name of the dealer or person and a description sufficient to identify the vehicle, and certifying that the vehicle was new when sold. If sold through a dealer, the dealer shall certify that the vehicle was new when sold to the applicant.'

The above requirements are not only reasonable but they meet an imperative need of the public therefor.

The provisions of A.R.S. § 28-1301 is devoted exclusively to definitions of terms and present a more serious question. Section 28-1301 reads as follows:

'2. 'Established place of business' means a permanent enclosed building or structure owned either in fee or leased with sufficient space to display two or more motor vehicles of a kind and type which the dealer is licensed to sell and which is devoted principally to the use of a motor vehicle dealer in the conduct of the business of the dealer. In the case of a used motor vehicle dealer, trailer dealer or semi-trailer dealer an established place of business need not be a permanent building or structure or part thereof, but may be a vacant lot or part thereof, but the term shall not mean or include a residence, tent, temporary stand or temporary quarters or permanent quarters occupied pursuant to a temporary arrangement. In the case of a motor dealer or wrecker an established place of business means a permanent site or location at which the business of a motor dealer or wrecker is or will be conducted.'

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'5. 'Motor vehicle dealer' means a new motor vehicle dealer or a used motor vehicle dealer.

'6. 'New motor vehicle dealer' means a person who buys, sells, exchanges or offers or attempts to negotiate a sale or exchange of any interest in, or who is engaged in the business of selling, new motor vehicles or used motor vehicles taken in trade on new motor vehicles.

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'8. 'Used motor vehicle dealer' means a person, other than a new motor vehicle dealer, who buys, sells, exchanges or offers or attempts to negotiate a sale or exchange of any interest in, or who is engaged in the business of selling, used motor vehicles.'

It will be observed that A.R.S. § 28-1301, paragraph 2, defines an established place of business as it applies to the sale of new cars to mean

'* * * a permanent enclosed building or structure owned either in fee or leased with sufficient space to display two or more motor vehicles of a kind and type which the dealer is licensed to sell and which is devoted principally to the use of a motor vehicle dealer in the conduct of the business of the dealer. * * *'

Whereas, an established place of business as it applies to a used car dealer need not be a permanent building or structure but may be a vacant lot or part thereof without any requirements of ownership or of an interest in said lot.

As we stated above legislative regulation in the exercise of the police power must have some relation to the purpose sought to be achieved and it must result from public necessity. Appellants claim in their briefs that the purpose of the above requirement was to insure permanency and stability in the business of selling new cars. This, they claim would enable those who purchase cars from such dealers to redress any wrong they may have suffered at the hands of such dealers as it would have the effect of eliminating the fly-by-night dealer. Does the requirement that the new car dealer shall own in fee or lease a building with space sufficient to display two or more motor vehicles of a kind or type he is licensed to sell, add to his permanency or his stability or reliability any more than if he had no room at all for a display of his cars, but did own in fee the lot of a value of five, ten, twenty or fifty thousand dollars on which he conducted his business? If it does not, then there is no reasonable relationship between the requirement that a dealer must have a building on the premises containing a display room for at least two new cars of the type he is selling and the alleged purpose of the legislation. If it bears no relation to the purpose sought to be achieved, the restriction is arbitrary, discriminatory, and unlawful.

Would the mere fact that such a building was on the premises if leased from month to month evidence greater stability, reliability and permanency in the business of the dealer than...