Kugler v. Banner Pontiac-Buick, Opel, Inc.

• Decision Date: 28 September 1972
• Docket Number: PONTIAC-BUIC,OPE,INC
• Citation: 295 A.2d 385,120 N.J.Super. 572
• Parties: George F. KUGLER, Jr., Attorney General of New Jersey, Plaintiff, v. BANNERa New Jersey Corporation, Defendant.
• Court: New Jersey Superior Court

Page 572

120 N.J.Super. 572

295 A.2d 385

George F. KUGLER, Jr., Attorney General of New Jersey, Plaintiff, v. BANNER PONTIAC-BUICK, OPEL, INC. a New Jersey Corporation, Defendant.

Superior Court of New Jersey Chancery Division.

Sept. 28, 1972.

Joan Holleran Walsack, Deputy Atty. Gen., for plaintiff.

Thomas P. Ford, Jr., Nutley, for defendant (Citrino, Carella, Balsam & Ford, Nutley, attorneys).

STAMLER, J.S.C.

The question before the court is whether the Attorney General is precluded from bringing a consumer fraud action under N.J.S.A. 56:8--1 et seq. after defendant had been acquitted in municipal court of disorderly persons charges arising out of the same operative facts.

Defendant Banner Pontiac-Buick, Opel, Inc., a New Jersey corporation, is engaged in the business of selling new and used automobiles to the consuming public. Plaintiff, as Attorney General of New Jersey, filed a verified complaint under the Consumer Fraud Act, N.J.S.A. 56:8--1 et seq., against defendant. The complaint alleged that defendant had altered the odometer so that the vehicle purchased by a member of the consuming public was represented to have been driven less than 40,000 miles when in actuality the miles were in excess of 75,000. This was the fraud or deceptive practice charged. The relief demanded is: (a) a permanent injunction enjoining defendant from altering true odometer readings in cars thereafter sold or offered for sale to the consuming public; (b) restitution for the defrauded consumer; (c) an order revoking for an appropriate period defendant's motor vehicle dealer's license issued by the Division of Motor Vehicles under N.J.S.A. 39:10--9; (d) an order revoking for an appropriate period defendant's license to operate as a motor vehicle installment seller issued by the Commissioner of Banking in accordance with N.J.S.A. 17:16C2 and 4; (e) a monetary penalty of $2,000 in accordance with N.J.S.A. 56:8--13, and (f) costs for the State pursuant to N.J.S.A. 56:8--11.

An order to show cause was issued for summary hearing as provided by the Consumer Frauds Act in conformity with R. 4:67--1 et seq. Prior to the return day defendant filed an answer denying the alleged turnback of the odometer and additionally set up three separate defenses. Defendant demanded a trial by jury of 12. On the return day defendant moved to have the order to show cause discharged and the complaint dismissed relying on the separate defenses of Res judicata, collateral estoppel and the absence of jurisdiction in this court to enjoin what is asserted to be the violation of a criminal statute.

Prior to the filing of the complaint herein, defendant had appeared in municipal court to answer a charge that it had violated N.J.S.A. 2A:170--50.1 which declares that one who alters an odometer reading on a car is a disorderly person. Defendant was acquitted in municipal court. Plaintiff acknowledges that the activity there complained of arose out of the same operative facts which are now set forth in the case at bar.

If the Res judicata plea is tenable, it must be shown that there are identical causes of action.

Defendant was tried in the prior action under a statute which makes it a disorderly persons offense to misrepresent the mileage of a motor vehicle which is offered for sale. Such offense is below the grade of a misdemeanor. Although punishable in a summary manner and quasi-criminal, the procedural rules governing criminal prosecution apply. State v. Vaughner, 76 N.J.Super. 594, 185 A.2d 227 (App.Div.1962). The standard of proof to be carried by the State requires that each element be proven beyond a reasonable doubt. An acquittal, therefore, is only indicative of the fact that the prosecution was unable to meet this high burden of proof as to each and every element of the offense.

Turning now to the cause of action Sub judice, the complaint was filed under a separate statute, the Consumer Frauds Act, N.J.S.A. 56:8--1 et seq.

The statement on the bill sets forth clearly the intent of the Legislature The purpose of this bill is to permit the Attorney General to combat the increasingly widespread practice of defrauding the public. The authority conferred will provide effective machinery to investigate and prohibit deceptive and fraudulent advertising and selling practices which have caused extensive damage to the public. (L.1960, c. 39)

The legislative statement recognized a fact of present-day consumer life, namely that in the ever-expanding area of commercial transactions, the consuming public is exposed and subject to widespread practices of fraud and deception employed by unscrupulous merchants.

Defendant asserts that it is harassed wnen subject to disorderly persons charges, an administrative action by the Director of the Division of Motor Vehicles, and a consumer fraud complaint.

It is defendant's position that the three separate statutes under which the activity of defendant may be brought into question require that if defendant succeeds in the first action taken, defendant cannot be called upon to answer under either the second or third.

Our Supreme Court has frequently enunciated the general rule of statutory construction that in the absence of clear legislative direction to the contrary, a later statute will not be deemed to repeal or modify an earlier one, but all existing statutes pertaining to the same subject matter 'are to be construed together as a unitary and harmonious whole, in order that Each may be fully effective.' Clifton v. Passaic County Board of Taxation, 28 N.J. 411, 421, 147 A.2d 1, 6 (1958) (emphasis supplied).

In Kugler v. Romain, 58 N.J. 522, 279 A.2d 640 (1971), the Supreme Court reviewed the salutary purposes of the statute and urged trial courts to liberally interpret the concept of fraud so that the public purpose expressed in the legislative statement might be fully effected. In Kugler v. Koscot Interplanetary, Inc., 120 N.J.Super. 216, 293 A.2d 706 (Ch.Div.1972), Judge Mehler commented upon the obligations of the Attorney General as a plaintiff. The relief demanded under N.J.S.A. 56:8--2 in Koscot was similar to the relief sought herein. In Romain, supra, the Supreme Court, in referring to N.J.S.A. 56:8--8, which authorizes the Superior Court to grant injunctions or revoke licenses, succinctly pointed out that this section, when read together with the act which establishes the Office of Consumer Protection, indicates that 'the Legislature intended to confer on the Attorney General the broadest kind of power to act in the interest of the consuming public.' The Attorney General is authorized to file a complaint 'whether or not any person has in fact been misled, deceived or damaged thereby * * *' (N.J.S.A. 56:8--2). In addition to injunctive relief and power to revoke licenses, trial courts can order: a receiver be appointed (N.J.S.A. 56:8--2); restitution to the person defrauded (N.J.S.A. 56:8--9, 10); allowance of costs for the use of the State (N.J.S.A. 56:8--11); award of a monetary penalty (N.J.S.A. 56:8--13).

The present action is civil in nature and, unlike the municipal court action, requires plaintiff to prove his case only by a preponderance of the evidence. To preclude the State from attempting to meet the lesser burden required in a civil action simply because it did not meet the strict and much higher standard in the prior case would result in undermining the most important aim of the Consumer Fraud Act, the remedial aspect.

The injunction, receivership and revocation remedies are aimed at putting an end to the condemned fraudulent practice; restitution returns the injured consumer to Status quo; the monetary penalty and award of costs places the expenses of the proceedings on the shoulders of the perpetrator and not upon the taxpayer, who is a part of the consuming public for whose benefit the statute was enacted.

Defendant places great reliance on Coffey v. United States, 116 U.S. 436, 6 S.Ct. 437, 29 L.Ed. 684 (1886). There a judgment in a criminal case acquitting Coffey of evading a tax on distilled liquor was given Res judicata effect in an In rem action seeking forfeiture of his distilling equipment. Although Coffey was never expressly overruled, in later years it has been distinguished and criticized on numerous occasions. Professor Moore in 1B Federal Practice, § 0.418(3) at 2854, cites a number of the critical cases. Most adopt the rationale that penalties or forfeitures are remedial civil sanctions, and are not additional punishment for crime.

In Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917 (1938), the Supreme Court held that an acquittal of wilfully attempting to evade income tax did not bar the Commissioner of Internal Revenue from proceeding to recover a monetary judgment of additional tax for fraudulently attempting to evade payment of the income tax.

To assist in determining identity of causes of action it is important to note that the State, after the acquittal in municipal court, had no right of appeal. An unsuccessful plaintiff in an action under the Consumer Fraud Act has the right to appeal.

In the recent decision in State v. Ebron, 61 N.J. 207, 294 A.2d 1 (decided July 21, 1972), Justice Mountain adopted...