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Fenwick v. Kay American Jeep Inc.

Decided: September 5, 1975.

MILLICENT H. FENWICK, DIRECTOR OF THE NEW JERSEY DIVISION OF CONSUMER AFFAIRS, COMPLAINANT-RESPONDENT,
v.
KAY AMERICAN JEEP, INC., RESPONDENT, AND JOSEPH FRIEDMAN, T/A FRIEDMAN ASSOCIATES, RESPONDENT-APPELLANT



Kolovsky, Lynch and Allcorn. The opinion of the court was delivered by Allcorn, J.A.D. Kolovsky, P.J.A.D. (dissenting).

Allcorn

In July 1973, under the authority delegated to him to "promulgate such rules and regulations * * * as may be necessary" to "accomplish the objectives and to carry out the duties prescribed" by the Consumers Fraud Act, N.J.S.A. 56:8-1 et seq. , the Attorney General adopted a set of rules "concerning motor vehicle advertising practices." 5 N.J.R. 152 (2), 5 N.J.R. 290 (b); N.J.A.C. 13:45A-2.2. Among the motor vehicle advertising practices declared to be "unlawful" by those rules was the following (N.J.A.C. 13:45A-2.2(a)(2):

ii. The failure in any price advertisement to disclose * * *:

(4) The bona fide odometer reading of any specifically advertised * * * used car. * * *

So far as here pertinent, a "price advertisement" is defined as "any advertisement [of a motor vehicle] in which a specified price is stated". N.J.A.C. 13:45A-2.1.

Appellant Joseph Friedman owns and operates an advertising agency under the firm name Friedman Associates. Among his clientele during the period critical to this proceeding were some 30 to 35 separate retail automobile dealers, for whom he prepared and delivered to local newspapers for publication advertisements numbering an estimated "100 individual ads per day". The essential factual details to be included in the advertisements were supplied to Friedman Associates by the respective automobile dealers, from which the advertisements would be prepared by a member of the Friedman staff and then delivered by the latter to the newspaper for publication.

On December 14, 1973, there was published in the Newark Star Ledger , under the name of Kay American Jeep, an advertisement offering for sale a used motor vehicle for a stated price. The advertisement, concededly prepared by Friedman Associates on behalf of Kay, did not set forth the odometer reading of the advertised vehicle. As a result the Division of Consumer Affairs issued its complaint and notice of hearing to Kay American Jeep, charging a violation of N.J.A.C. 13:45A-2.2(a)(2)(ii)(4) in failing "to disclose the BONA FIDE Odometer reading of any specifically advertised * * * used motor vehicle" in "a price advertisement".

At the hearing held March 13, 1974 Mr. Friedman appeared in company with a representative of Kay American Jeep, both without counsel. After consenting to the joinder of himself as a party respondent to the proceedings, Friedman admitted to the hearing officer that the offending advertisement had been prepared by Friedman Associates; that the odometer reading of the advertised vehicle had in fact been furnished to Friedman Associates by Kay, and that the omission of the odometer reading from the advertisement

was due entirely to the oversight of Friedman Associates. The representative of Kay corroborated Friedman. No other witnesses were called by either side.

At the conclusion of the hearing the hearing officer found both Kay American Jeep and Mr. Friedman "guilty of violating the rule [regulation]", and by order of March 15, 1974 assessed a fine of $150 and $50 costs against them jointly and severally, and directed that each "thereafter cease and desist from failing to disclose in any price advertisement for a used motor vehicle * * * the bona fide odometer reading of said motor vehicle". The present appeal from that order has been taken by respondent Joseph Friedman.

It is the contention of the respondent Friedman that there can be no violation of the act or the implementing regulations in the absence of intent, and inasmuch as it is uncontroverted that the omission of the odometer reading was inadvertent, the finding and order of the Division must be reversed. The Division takes the position that the language of the act, as well as the policy underlying it, make manifest a legislative purpose to prohibit the proscribed conduct and impose liability without regard to intent.

Manifestly, the design of the Consumer Fraud Act is to protect the consumer against imposition and loss as a result of fraud and fraudulent practices by persons engaged in the sale of goods and services. Kugler v. Romain , 58 N.J. 522 (1971). The pertinent portion of the controlling section of that act is found in N.J.S.A. 56:8-2, and provides:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or with the subsequent performance of such person as aforesaid, whether or not any preson has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice; * * *

In the context of this language it is plain that, however the fraud or fraudulent conduct may be designated or characterized, if it consists of or rests upon "concealment, suppression, or omission of any material fact", the nondisclosure must be "knowing * * * [and] with intent that others rely" thereon. Ibid. As a consequence, the nondisclosure of a material fact unknowingly and by reason of inadvertence does not constitute an unlawful practice under the Act.

Notwithstanding this clear expression of legislative intent the dissent suggests that, by virtue of the authority delegated to the Attorney General to promulgate regulations, he may declare the unknowing and inadvertent nondisclosure of a material fact to constitute an "unconscionable commercial practice." The argument overlooks (and does not touch upon) the fact that such an interpretation would nullify absolutely and render completely meaningless the clause of the statute relating to fraud and fraudulent conduct arising out of the "knowing, concealment, suppression, or omission of any material fact." The phrase "unconscionable commercial practice" has no special properties. In consumer goods transactions "unconscionability must be equated with the concepts of deception, fraud, false pretense, misrepresentation, concealment and the like * * * stamped unlawful under N.J.S.A. 56:8-2." Kugler v. Romain, supra at 544.

The legislative history of the Consumer Fraud Act supplies further evidence of the intent of the Legislature. As originally introduced, the portion of the section with which we are here concerned provided (Senate Bill No. 199, ยง 2):

The act, use or employment of any deception, fraud, false pretense, misrepresentation, concealment, suppression, or omission of any material fact by any person in connection with the sale or advertisement of any merchandise, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice; * * *.

Significantly, the concealment, suppression or omission of any material fact was constituted an unlawful practice ...


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