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New Jersey Used Car Trade Association v. Magee

Decided: October 7, 1948.


Civil action.

Freund, J.s.c.


[1 NJSuper Page 375] 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) 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). The pertinent provisions of section 15, (R.S. 39:10-19), 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 of 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), 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 and deprives plaintiffs of their property without due process of law, and (2) that the statute fails to set up any definite standards of conduct and constitutes an unlawful delegation to an administrative authority.

First: The business of selling used cars is a legitimate business and plaintiffs having been for many years duly licensed to engage in that business are entitled to the constitutional safeguards in the continuance of their business, for, as Mr. Justice Oliphant, then Chancellor, said in Kravis v. Hock , 136 N.J. Law 161, (E. & A. 1947), "The right of a person to work in trade or business is as much a property right as that of a licensed physician to practice his profession." It is apparent that the effect of the enforcement of section 15 would be to drive out of business those used car dealers who carry on their trade or business from lots. A statute having such an effect is in clear violation of both the Federal and State Constitutions.

The problem confronting the court in the instant matter is not new. The application of the ...

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