Metro Auto Auction v. Director of Revenue
| Decision Date | 25 March 1986 |
| Docket Number | No. 67180,67180 |
| Citation | 707 S.W.2d 397 |
| Parties | METRO AUTO AUCTION, et al., Plaintiffs-Respondents, v. DIRECTOR OF REVENUE, et al., Defendants-Appellants, Roy D. Blunt, Secretary of State, Intervenor. |
| Court | Missouri Supreme Court |
William L. Webster, Atty. Gen., Warren Weinstein, Asst. Atty. Gen., Jefferson City, for defendants-appellants.
Douglas Van Camp, Kelly Pool, Jefferson City, for plaintiffs-respondents.
Phillip K. Gebhardt, Asst. Atty. Gen., Jefferson City, for intervenor.
Plaintiffs, nine Missouri corporations operating wholesale automobile auctions in the state of Missouri, sought to enjoin the Director of Revenue from continuing the practice of enforcing section 407.536, RSMo Cum.Supp.1984, by investigating mileage readings submitted by immediate transferors of motor vehicles and placing a warning legend on certificates of title when the Director determines the application contains an incorrect odometer statement. The trial court enjoined the Director finding no statutory authority for this practice. The Director appealed and the Court of Appeals, Western District, affirmed the trial court on different grounds; the Court of Appeals enjoined the Director so long as the Director had not adopted his practice of enforcing section 407.536 by promulgating a rule under the Administrative Procedure Act. This Court granted transfer to determine the validity of the Director's practice of enforcing section 407.536. The trial court judgment is affirmed.
The Director contends: (1) plaintiffs have no standing because no legally protectable interest of the plaintiff has been affected, and (2) the Director should not be enjoined from carrying out his practice of enforcing section 407.536 because the legislature has authorized this practice under section 407.536, RSMo Cum.Supp.1984, and section 301.190.2, RSMo Cum.Supp.1984. Plaintiffs respond: (1) plaintiffs have standing because they suffered a legally protectable loss of income as a direct result of the Director's actions, and (2) the Director's practice should be enjoined because section 407.536 specifically limits the Director's authority to place the warning legend on the title to those cases where the inaccurate mileage is revealed by the immediate transferor of that vehicle.
Plaintiffs operate their auctions to facilitate the sale of motor vehicles by registered automobile dealers, leasing companies, and automobile manufacturers. Plaintiffs do not actually buy or sell automobiles but act as brokers in the transactions and receive commissions on the sales. The auctions are not open to the public generally.
The automobiles are sold to the highest bidder. The buyer then issues its check or sight draft to the auction company and after the auction company receives the title and odometer statement from the seller, it forwards those documents to the buyer and issues a check to the seller. Generally, plaintiffs are not in the chain of title of the vehicles sold at auction; however, selling dealers occasionally assign the titles to plaintiffs who in turn reassign the titles to the buyers, or plaintiffs will hold a title transferred in blank, known as an "open title."
Section 407.536 requires transferors of ownership of motor vehicles to place odometer readings on titles. The statute was enacted in 1977 but not enforced by the Director until 1982. Beginning in the fall of 1982, the Director began requiring applicants to state the mileage on the title. In addition, the Director began checking with remote owners of selected vehicles and with other sources to determine if the odometer statements submitted with the applications for transfer of title were accurate. The titles to be checked were selected on a random basis and on the judgment of the examiners. If the Director determined the odometer statement submitted by the seller of the vehicle was inaccurate, he would place the following legend on the new title issued by the Department of Revenue:
This is not the true and accurate mileage of this motor vehicle. Consult the documents on file with the Missouri Department of Revenue for an explanation of the inaccuracy.
Robert Gentle, President of Metro Auto Auction, testified that the warning legend on a title devalues the resale value of the vehicle $500 to $2000. He further testified that when a buyer of a motor vehicle at one of his auctions receives his new title from the Department of Revenue with the warning legend on it, the buyer will immediately contact the auction and demand a refund of money paid for the vehicle plus any expenses incurred. The auction will then contact the selling dealer and if the latter will not buy the automobile back, the auction will refuse to permit that dealer to use its auction in the future and will buy back the vehicle itself. Mr. Gentle testified that while in most instances the auction is not in the chain of title of the affected automobile, and thus under no legal compulsion to purchase it, buyers look upon the auctions as "guarantors" of the vehicles purchased there and require the auctions to repurchase such vehicles at the risk of losing that dealer's business. Mr. Gentle testified that the above situation had occurred five or six times out of some eight to ten thousand sales. Mr. Gentle also testified that he had experienced a decrease in volume of business of 25 percent because some dealers refused to use Missouri auctions because of the Director's policy.
The judgment of the trial court will be sustained unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).
The Director asserts plaintiffs have no standing to bring this action because the evidence did not show that plaintiffs' loss of business was the direct result of the Director's actions or that plaintiffs have demonstrated a legally protectable interest.
In order to have standing, a plaintiff must derive an actual and justiciable interest susceptible of protection. State ex rel. Williams v. Marsh, 626 S.W.2d 223, 227 (Mo. banc 1982). The doctrine of standing is related to the doctrine which prohibits advisory opinions. Id. The test for standing to contest legislative or administrative action is essentially the same. Palmer v. St. Louis City, 591 S.W.2d 39, 41 (Mo.App.1979). The party seeking relief must demonstrate that he has a specific and legally cognizable interest in the subject matter of the administrative action and that he has been directly and substantially affected thereby. Id.
The evidence supports the trial court's finding that plaintiffs have standing because the conduct of the Director has reduced plaintiffs' volume of business and income and will continue to do so in the future if the Director is permitted to continue his enforcement practice of section 407.536. Plaintiff Metro Auto Auction demonstrated a specific interest that was directly and substantially affected when Mr. Gentle testified that the auction had repurchased vehicles receiving the warning legend on their titles and that the auction would no longer deal with sellers who refused to repurchase these devalued vehicles they had put up for auction. Although under no legal obligation to repurchase these vehicles, Metro does so pursuant to sound business practice. Therefore, this Court concludes that the Director's practice directly resulted in Metro repurchasing devalued vehicles it had no interest in owning and suffering a loss of the business of sellers who refused to repurchase the vehicles.
The Director argues that plaintiffs have no legal right to sell vehicles with odometers that have been rolled back. While odometer fraud is unlawful, section 407.511, et seq., RSMo Cum.Supp.1984, the interest claimed by the plaintiffs is not in selling vehicles with rolled-back odometers. Plaintiffs claim an interest in protecting their businesses from loss of income and are asking the courts to determine whether the action of the Department of Revenue has been authorized by the legislature. Thus, the specific and legally cognizable interest that plaintiffs seek to protect is that their business interests not be violated by unauthorized action of the Department of Revenue.
The Director contends the trial court erred in enjoining him from using, for the purpose of section 407.536, information obtained from sources other than the immediate transferor or from placing the statutory legend on the certificate of title when he finds inaccuracies because sections 407.536 and 301.190.2 give him this authority.
This Court must first determine what powers are given the Director of Revenue under section 407.536. That section reads as follows:
407.536. Odometer mileage to be shown on title, when--previously untitled vehicles, procedure for--incorrect mileage on odometer, procedure for.--1. Any person transferring ownership of a motor vehicle previously titled in this or any other state shall do so by assignment of title and shall place the mileage registered on the odometer at the time of transfer above the signature of the transferor. The notarized signature of the transferor below the mileage shall constitute an affidavit of mileage. If the true mileage is known to the transferor to be different from the number of miles shown on the odometer or the true mileage is unknown, an affidavit from the transferor shall accompany the assignment of title which shall contain all facts known by the transferor concerning the true mileage of the motor vehicle. That affidavit shall become a part of the permanent record of the motor vehicle with the Missouri department of revenue. The department of revenue shall place on all new titles issued after September 28, 1977, a box titled "mileage at the time of transfer."
2. Any person transferring the ownership of a motor vehicle previously...
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