Louisiana Motor Vehicle Commission v. Wheeling Frenchman

• Decision Date: 26 May 1958
• Docket Number: No. 43966,43966
• Citation: 103 So.2d 464,235 La. 332
• Parties: LOUISIANA MOTOR VEHICLE COMMISSION v. The WHEELING FRENCHMAN et al.
• Court: Louisiana Supreme Court

Page 464

103 So.2d 464

235 La. 332

LOUISIANA MOTOR VEHICLE COMMISSION v. The WHEELING FRENCHMAN et al.

No. 43966.

Supreme Court of Louisiana.

May 26, 1958.

Rehearing Denied June 27, 1958.

Ellis, Lancaster, Daly & King, Wm. J. Daly, Frank B. Ellis, New Orleans, for plaintiff-appellant.

Jack P. F. Gremillion, Atty. Gen., M. E. Culligan, Asst. Atty. Gen., L. K. Clement, John E. Jackson, Jr., New Orleans, for defendant-appellant.

Provosty, Sadler & Scott, LeDoux R. Provosty, Alexandria, Davidson, Meaux, Onebane & Nehrbass, J. J. Davidson, Jr., Lafayette, Theus, Grisham, Davis & Leigh, Monroe, Wm. D. Brown, Monroe, Plauche & Stockwell, Oliver P. Stockwell, Lake Charles, Richardson & Richardson, H. H. Richardson, Bogalusa, Jones, Walker, Waechter, Poitevent & Denegre, George Denegre, Joseph Bernstein, New Orleans, amicus curiae.

Robert J. Pitard, Arthur L. Ballin, New Orleans, for defendant, appellant and appellee.

McCALEB, Justice.

This case involves the constitutionality of certain provisions of the Louisiana Motor Vehicle Commission Law, R.S. 32:1251--1260, as amended by Act 586 of 1956. That law has for its purpose the regulation of the distribution and sale of motor vehicles in the State of Louisiana, it being declared in R.S. 32:1251 that such sales affect the general economy of the State and the public interest and public welfare and, therefore, it is necessary to license motor vehicle manufacturers, distributors and dealers to prevent frauds, impositions and other abuses upon the citizens and avoid undue control of the independent motor vehicle dealer by the motor vehicle manufacturer and distributive organizations and to prevent false and misleading advertisements, unfair practices by motor dealers and unfair competition between them.

R.S. 32:1252 contains the definitions of the terms, words and phrases used in the legislation and paragraph (2) thereof defines a motor vehicle dealer as follows:

"Motor Vehicle Dealer' means any person, firm, association, corporation or trust not excluded by paragraph (3) of this section who holds a bona fide contract or franchise in effect with a manufacturer or distributor of new or unused motor vehicles, and a license under the provisions of this Act, and such duly franchised and licensed motor vehicle dealers shall be the sole and only persons, firms, associations, corporations or trusts entitled to sell, publicly solicit and advertise the sale of new and unused motor vehicles as such.'

By R.S. 32:1253 a Motor Vehicle Commission is created, its powers and duties fixed and the appointment and qualifications of its members, terms of office, organization, etc. provided for.

R.S. 32:1254 pertains to unauthorized acts of the persons affected by the legislation and further provides for application to be made to the Commission for the issuance of a license to do business in conformity with the law, it being prescribed that the application shall contain such information as the Commission deems necessary to enable it to fully determine the qualifications and eligibility of the applicant; that the Commission shall also require information relative to the applicant's financial standing, his business integrity, whether he has an established place from which he conducts his business and such other pertinent information consistent with the safeguarding of the public interest and public welfare. Respecting the licensing of motor vehicle dealers, it is essential that the application be accompanied by the filing with the Commission of a bona fide contract of franchise in effect between the applicant and a manufacturer or distributor of the new and unused motor vehicle or vehicles proposed to be distributed and satisfactory evidence must also be furnished that applicant maintains ample space in the building or structure where his established business is conducted for the display of new and unused motor vehicles together with adequate facilities for the repair and servicing of motor vehicles and the storage of new parts and accessories for same.

R.S. 32:1255 provides the grounds for which applications for license may be denied or a license previously issued revoked or suspended and R.S. 32:1256 sets forth the procedure available to any person aggrieved by the action of the Commission, providing for a hearing and for review by the courts.

R.S. 32:1257 prescribes the penalties for violation of the Act; R.S. 32:1258 declares that the provisions of the Act shall be cumulative to existing laws and R.S. 32:1260 contains a severability clause.

R.S. 32:1259 provides for the construction to be given the Act. It declares:

'Nothing in this act shall be construed to prohibit the sale of a new and unused motor vehicle by any private individual or automobile dealer, other than motor vehicle dealer as herein defined; provided however that only a motor vehicle dealer as herein defined shall have the right to publicly offer or register a motor vehicle as 'new and unused."

This suit was brought by the Louisiana Motor Vehicle Commission against Jules Bistes, doing business as 'The Wheeling Frenchman' and others,¹ whom it is charged are selling new and unused cars in violation of the provisions of R.S. 32:1259 in that these cars are being publicly offered for sale as 'new and unused' despite the fact that the defendants have no licenses as motor vehicle dealers as defined by R.S. 32:1252(2) and it is prayed, among other things, that an injunction issue against them prohibiting further violation of the law. The Commission also assails the constitutionality of the provision of R.S. 32:1259, which permits the sale of a new and unused motor vehicle by any private individual or automobile dealer who has not qualified under the Act, provided that such person shall not publicly offer it as a new or unused vehicle.

Bistes, who, as explained in footnote No. 1, is the principal defendant, filed several procedural exceptions to plaintiff's petition and specially pleaded the unconstitutionality of the entire Motor Vehicle Commission Law on the grounds (1) that it attempts to create a monopoly in contravention of the Fourteenth Amendment to the Constitution of the United States and Section 14 of Article 19 of the State Constitution; (2) that it confers a special privilege not founded upon reasonable and natural classifications in contravention of the due process clause of the State Constitution (Section 2 of Article 1); (3) that, in denying to him and others similarly situated the right of selling new automobiles, as such, the law is discriminatory and therefore violative of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, and (4) that the Legislature has illegally delegated its legislative power to private motor vehicle manufacturers in providing as a condition precedent to the issuance of a motor dealer's license the applicant must have a bona fide contract with a manufacturer appointing him as a dealer for its cars.

In addition, Bistes filed an answer in which he admitted that he does business in the City of New Orleans under the trade name of 'The Wheeling Frenchman' but denied, either generally or for lack of information, all other allegations of plaintiff's petition.

After a trial on the issues thus formed by the pleadings, the district judge found that the evidence overwhelmingly established that Bistes was advertising new and unused automobiles for sale in violation of the terms of R.S. 32:1259 but he denied plaintiff the relief prayed for, being of the opinion that the proviso contained in R.S. 32:1259, which restricted the right to publicly offer for sale or register a motor vehicle as 'new and unused' to licensed motor vehicle dealers, constituted an arbitrary, unreasonable and, therefore, unconstitutional discrimination which denied defendant and others similarly situated an equal protection of the law. In arriving at this conclusion, the judge resolved that the Legislature, in defining a motor vehicle dealer in R.S. 32:1252 (2) to be one who holds a bona fide contract or franchise with an automobile manufacturer or distributor of new and unused automobiles, had unlawfully delegated to these private manufacturers and distributors the right of determining who shall or shall not be a motor vehicle dealer and, consequently, this prerequisite of enfranchisement by the manufacturer being unconstitutional, there was left no reasonable basis for the prohibition as to advertisement set forth in the proviso of R.S. 32:1259. But, noting that the legislation contained a severability clause, the judge deduced that other parts of the statute, which he found to be constitutional, could be separated from the objectionable part without destroying the legislative intent and ruled that, since Bistes might be able to qualify for a motor vehicle dealer's license under the statute with the removal therefrom of the provision respecting the necessity of a manufacturer's or distributor's enfranchisement, he should be enjoined from selling new and unused cars until he qualified with the Commission.

Subsequently, a rehearing was granted on the application of all interested parties and, after further consideration, the original decree was reinstated. In his reasons for this action, the judge reiterated his conviction that the requirement of a contract or franchise with a manufacturer or distributor, in order to qualify as a motor vehicle dealer of new and unused cars, operated as an unlawful delegation of legislative power to the manufacturers and added that it, moreover, effected an arbitrary and discriminatory classification, as between persons similarly situated, which gave to one group an economic advantage over the other, stifling competition by creating a monopoly.

Both plaintiff and defendant have appealed from the judgment insofar as it adversely affects them. The Attorney General has also appealed.

Initially, it is proper to dispose of plaintiff's claim...