State ex rel. Danforth v. Independence Dodge, Inc.

• Decision Date: 02 April 1973
• Docket Number: No. KCD26024,KCD26024
• Citation: 494 S.W.2d 362
• Parties: STATE of Missouri ex rel. John C. DANFORTH, Attorney General, Plaintiff-Respondent, v. INDEPENDENCE DODGE, INC., a corporation, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 362

494 S.W.2d 362

STATE of Missouri ex rel. John C. DANFORTH, Attorney General, Plaintiff-Respondent, v. INDEPENDENCE DODGE, INC., a corporation, Defendant-Appellant.

No. KCD26024.

Missouri Court of Appeals, Kansas City District.

April 2, 1973.

Motion for Rehearing and/or Transfer Denied May 7, 1973.

Cedric Siegfried, Independence, for defendant-appellant.

Hohn C. Danforth, Atty. Gen., Jefferson City, Harold L. Lowenstein, Asst. Atty. Gen., Kansas City, for plaintiff-respondent.

Before DIXON, P.J., and SWOFFORD and WASSERSTROM, JJ.

WASSERSTROM, Judge.

The attorney general instituted this proceeding to enjoin defendant from acts alleged to be unlawful under the Merchandising Practices Act, Chap. 407, R.S.Mo., 1969, V.A.M.S. The trial court granted an injunction from which defendant now appeals. This appears to be the first case to reach any appellate court under this new statute, and therefore the questions here are of first impression.

The appeal presents four points upon which defendant seeks a reversal. The first assignment is that the court below had no jurisdiction because the attorney general did not make a Civil Investigation Demand. The second assignment challenges the Findings of Fact and the third assignment challenges the Conclusions of Law made by the trial court; these two assignments will be considered together. The final assignment of error is that the injunction relief granted was improper and unconstitutional.

I

Defendant's procedural argument is based upon its construction of § 407.100, and the interrelationship of that section with §§ 407.040 and 407.050. The first of those sections grants authority for the filing of this type of proceeding and provides:

'Whenever it appears to the attorney general that a person has engaged in or is engaging in any practice declared to be unlawful by sections 407.010 to 407.130 he may, after notice to such person, if such notice can be given in the manner provided in section 407.040, seek and obtain in an action in a circuit court an injunction prohibiting such person from continuing such practices or engaging therein or doing any acts in furtherance thereof. Such notice shall state generally the relief sought and be served in accordance with section 407.050 at least three days prior to the institution of such action.'

Under those provisions it is mandatory that a three-day notice be given to the proposed defendant before court action is actually commenced. The manner in which that notice is to be given is specified by reference to the provisions in § 407.040 relating to 'Civil Investigative Demands'. Although the notice required by § 407.100 is different from the Civil Investigative Demand authorized by § 407.040, the method of service is thus made identical for both. ¹

The attorney general here did give a three-day notice prior to filing suit, but he did not attempt to pursue any Civil Investigative Demand. Defendant contends the latter failure deprived the Circuit Court of any power to proceed. It argues that the legislature intended by referring in § 407.100 to the provisions of § 407.040, to require a Civil Investigative Demand under the latter section as a jurisdictional prerequisite to the filing of an injunction suit. We cannot agree. § 407.100 makes no such express requirement, and there is no reason to import such a requirement by implication.

The purpose of the Civil Investigative Demand procedure is to provide a form of pretrial discovery for the benefit of the attorney general. A comparison of the provisions of § 407.040, which creates this new procedure, with the Federal Antitrust Civil Process Act, 15 U.S.C.A. § 1312, reveals that our new Civil Investigative Demand proceeding is patterned after the parallel provisions of the Federal procedure which is also entitled 'Civil Investigative Demand'. The new procedure under § 407.040 is also similar to the pretrial discovery opportunities given to the Missouri Attorney General in antitrust cases under § 416.300, R.S.Mo.1969, V.A.M.S.

Under neither of those older Federal or Missouri provisions has it ever been intimated that the pretrial discovery had to be pursued as a necessary prerequisite to the filing of suit for coercive relief. On the contrary, it has always been considered that these provisions were intended for the benefit of the attorney general if he chose to use them, but that he is under no compulsion to do so. See Annotation 'Validity, Construction, and Application of Antitrust Civil Process Act', 10 A.L.R.Fed. 677. The same must be true of the procedure afforded to the attorney general under § 407.040. This section provides him with another tool in his litigative kit, similar to the various discovery methods traditionally available after suit is filed. The pretrial discovery can be used or not at the option of the State, and non-use by the State cannot give rise to any legitimate complaint by the defendant.

Defendant argues, however, that the construction sought by it is necessary so that a prospective defendant may have an opportunity to know that litigation is contemplated and to present to the attorney general his version of the dispute before adverse and possibly unjustified publicity has been incurred. The legislature has made provision to cover this contingency, without the necessity of the forced construction urged by the defendant. The whole purpose of § 407.010 is to provide three-day notice to a prospective defendant before the suit is filed, and during this three-day period he does have the opportunity to approach the attorney general and negotiate for either a dropping of the proceeding or the substitution of an assurance of voluntary compliance in accordance with the terms of § 407.030. Thus every prospective injunction defendant will have the opportunity for private discussion with the attorney general, without any necessity of a Civil Investigative Demand.

Moreover, defendant's argument proceeds on the assumption that a Civil Investigative Demand affords some sort of an opportunity for administrative hearing Not so. § 407.040 does not require the attorney general to hold a hearing of any kind, if affords no opportunity for the defendant to appear and be heard, and it provides for no formal findings by the attorney general as a result of his investigtion. As already stated, the Civil Investigative Demand procedure is entirely unilateral, and is intended solely for the benefit of the attorney general, not for the benefit of the defendant.

There flickers fitfully in defendant's argumentation two further fleeting contentions: (1) that the three-day notice was not sufficiently specific, and (2) that the manner of service of that notice did not comply with any of the four methods authorized by paragraph 4 of § 407.040. These contentions will not be considered because neither is specified in defendant's Points Relied On, as required by Rule 84.04(d), V.A.M.R. Furthermore, and more fundamentally, each of those complaints was waived by defendant's filing of answer without making either of those objections. ² This disposition of these points should not, however, be taken as an approval of the State's singularly uninformative three-day notice, which purports to state the charge against defendant and the relief sought by merely repeating the words of the statute; nor should this ruling be construed as approving the manner in which that notice purported to be served, by mailing it to defendant's registered statutory agent in St. Louis, whereas defendant's place of business was in Independence, Missouri.

II

Defendant's second and third assignments of error attack the trial court's Findings of Fact and Conclusions of Law to the effect that defendant committed unlawful merchandising practices in violation of § 407.020. ³ Those findings and conclusions relate to three separate sale transactions and also to an alleged general practice by defendant of turning back odometers.

Defendant's brief contains a detailed analysis and attack upon virtually every one of the findings and conclusions made by the trial court. It is neither necessary nor in order for us to pursue this approach. The precise correctness of those findings and conclusions are of relatively minor importance, since under Rule 73.01(d), this Court makes its own findings and reaches its own conclusions, giving due regard to the opportunity of the trial court to judge the credibility of witnesses. In keeping with that scope of review, we now turn to the evidence as to each of the violations alleged.

A. The Cox transaction. The first transaction as to which defendant is charged with fraudulent practices was the purchase by Mr. David E. Cox of a Dodge automobile in August, 1969. He called at the defendant's place of business in response to a newspaper advertisement and was shown a 1969 Monaco Dodge which, according to Cox, was represented to him as having been driven only by defendant's general manager, and as being a new car in every respect except that it had been driven a little over 3,000 miles. In reliance upon those assurances, Cox stated he bought the automobile. He immediately had difficulty. The car shimmied, got hot and the radiator boiled over; the air-conditioner did not work well; the driver's door did not close right; the speedometer would not operate; and the transmission leaked fluid out of both the front and rear seals. Cox then took in the car for repair. He also consulted an attorney who made demand upon defendant for indemnification.

Defendant then caused the car to be inspected by a Chrysler representative, and the inspection showed defects in the automobile which had apparently been caused by the car having been in a wreck. Visual inspection of the underside of the car showed the following written on the muffler and exhaust pipe: "69 Dodge Monaco, 9--50, do not sell'.

Contrary to the statements Cox testified were made to him by the defendant's salesmen, the actual facts were...