N.J. Used Car Trade Ass'n v. Magee.

Decision Date07 October 1948
Docket NumberNo. 158/342.,158/342.
Citation61 A.2d 751
CourtNew Jersey Superior Court

Syllabus by the Court.

1. Selling used cars is a legitimate business. Plaintiffs, having for many years been duly licensed to engage in that business, are entitled to the constitutional safeguards in the continuance of their business.

2. Although a state may, in the exercise of its police power, pass legislation for the purpose of protecting and regulating public health, public safety, public morals and general welfare, including public convenience or the general prosperity, the means adopted must be reasonably adapted to the accomplishment of that end, and must not be arbitrary or oppressive. The legislation must bear a real and substantial relation to the public health, safety, morals, or some other phase of general welfare. A regulation which in effect denies or unreasonably curtails the common right to engage in a lawful business cannot be sustained under the Fourteenth Amendment.

3. The restrictions imposed by P.L. 1946, c. 136, s 15, R.S. 39:10-19 N.J.S.A., are an unreasonable clog upon the conduct of plaintiffs' used car businesses and bear no reasonable relation to the lawful objects of the legislation. The statutory requirement of a permanent building with not less than 1,000 square feet of space to be used principally for the servicing and display of motor vehicles, and properly equipped for such servicing, has no relation to the public health, morals, or general welfare; imposes an arbitrary restriction upon the use of land, and constitutes an unreasonable and hence unlawful interference with the ownership of private property and the conduct of business.

4. To require, as the statute in question does, that a used car dealer install equipment requisite for the servicing of motor vehicles, is to compel him to engage in a service occupation which is not necessarily incidental to the conduct of his business. To attach such a condition to the continuance of his used car dealer's license is not within the lawful province of the Legislature.

5. It is well established in this state that a statute must establish a sufficiently basic standard, a definite and certain policy and rule of action, for the guidance of the agency created to administer a law. In the statute under consideration (P.L. 1946, c. 136) no plan or standard is found to guide or control the Commissioner of Motor Vehicles; indeed, the standards for administrative action are so indefinite as to constitute an unlawful delegation of legislative power.

6. Plaintiffs filed applications for renewal of their used car dealers' licenses, using forms prescribed by the Commissioner of Motor Vehicles which contained an agreement to comply with the statute. To accept defendant's contention that plaintiffs thereby waived the provisions of the act and are now estopped from attacking it would be an extension of the doctrine of waiver and estoppel contrary to equity and public policy. Defendant Commissioner may compel performance of constitutional statutory mandates, but not of unconstitutional provisions. It would be inequitable, if not illegal, for the defendant to revoke a used car dealer's license for failure to perform an act, the performance of which the defendant has no lawful authority to demand.

Class action by the New Jersey Used Car Trade Association, a corporation of New Jersey, and others against Arthur W. Magee, Commissioner of Motor Vehicles of the state of New Jersey, to enjoin revocation of plaintiffs' motor vehicles dealers' licenses and dealers' registrations for failure to comply with provisions of the Motor Vehicle Certificate Ownership Law.

Judgment entered restraining defendant's from revoking plaintiffs' licenses.

Henry Gottfried, of Newark (Milton M. & Adrian M. Unger, of Newark, of Counsel), for plaintiffs.

Walter D. Van Riper, of Trenton, and John J. Kitchen, of Woodbury, for the State.

FREUND, Judge.

The facts in this case have been stipulated. This is a class action brought by five plaintiffs against the Commissioner of Motor Vehicles, inter alia, to enjoin the revocation of their motor vehicle dealers' licenses and dealers' registrations for failure to comply with the provisions of Section 15 of Chapter 136 of the Laws of 1946, R.S. 39:10-19, N.J.S.A., on the ground of unconstitutionality.

The plaintiffs are New Jersey Used Car Trade Association, a non-profit corporation having a membership of approximately 300 used car dealers; William Grohman, who for the past five or six years has sold only trailers; and three other individuals, Platt, Pennington and Mauro, dealers selling used cars from vacant lots. It is alleged that there are some 1,500 used car dealers in New Jersey and the Commissioner has notified about 300 of them of the proposed revocation of their licenses for the same non-compliance with the aforesaid statute. This suit is brought by plaintiffs on their own behalf and on behalf of all others similarly situated. It is, therefore, precisely the kind of a class action contemplated by Rule 3:23-1 governing Civil Practice in the Superior Court.

Involved in the litigation is the constitutionality of Chapter 136 of the Laws of 1946, known as the ‘motor vehicle certificate of ownership law’ and particularly Sections 15 and 16 thereof. R.S. 39:10-19 and 20, N.J.S.A. The pertinent provisions of Section 15, R.S. 39:10-19, N.J.S.A., provide ‘No person shall engage in the business of buying, selling or dealing in motor vehicles in this State, unless he is authorized to do so under the provisions of this chapter. The commissioner (of Motor Vehicles) may, upon application in such form as he prescribes, license any proper person as such dealer. No person * * * shall be eligible to receive a license (unless) each applicant for a license shall at the time such license is issued have established and maintained, or, by said application shall agree to establish and maintain, within ninety days after the issuance thereof, a place of business consisting of a permanent building not less than one thousand square feet in floor space located in the State of New Jersey; to be used principally for the servicing and display of motor vehicles with such equipment installed therein as shall be requisite for the servicing of motor vehicles in such manner as to make them comply with the laws of this State and with any rules and regulations made by the Commissioner of Motor Vehicles governing the equipment, use and operation of motor vehicles within the State.’

Section 16, R.S. 39:10-20, N.J.S.A., provides that the Commissioner may suspend or revoke the license of a dealer for failure to maintain such a permanent building and equipment as described in the preceding section.

The Commissioner of Motor Vehicles, pursuant to the provisions of the statute, has directed the plaintiffs and a large number of used car dealers who carry on their business from lots without permanent buildings and equipment as provided in the statute, to appear before him to show cause why their licenses should not be revoked and he threatens in the enforcement of the statute to revoke their licenses for non-compliance. The plaintiff, Grohman, who deals only in trailers, has a building with the required 1,000 square feet of floor space on two floors, but he has been threatened with revocation of his license, because the area is not on one floor.

Plaintiffs challenge the constitutionality of the statute on several grounds, but it will suffice for us to consider but two, as follows: (1) that the requirements impose unlawful restraints upon the use of private property and the conduct of legitimate business and that it is an unconstitutional exercise of the state's police power...

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