American Motors Sales Corp. v. Peters

294 S.E.2d 764, 58 N.C. App. 684, 1982 N.C. App. LEXIS 2834, 1982 Trade Cas. (CCH) 65,174
CourtCourt of Appeals of North Carolina
DecidedSeptember 7, 1982
Docket8110SC514
StatusPublished
Cited by2 cases

This text of 294 S.E.2d 764 (American Motors Sales Corp. v. Peters) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Motors Sales Corp. v. Peters, 294 S.E.2d 764, 58 N.C. App. 684, 1982 N.C. App. LEXIS 2834, 1982 Trade Cas. (CCH) 65,174 (N.C. Ct. App. 1982).

Opinions

WEBB, Judge.

The first question we face is whether the appeal should be dismissed as premature. The petitioners appeal from an order denying a stay of the Commissioner of Motor Vehicles’ order which revoked the franchise that American Motors had given 421 Motor Sales to sell Jeeps. This order denying a stay did not dispose of the case and is interlocutory. Setter v. Annas, 286 N.C. 534, 212 S.E. 2d 154 (1975) held the granting of a preliminary injunction requiring the defendant to remove a gate on a private road in which the plaintiff claimed a right of way affected a substantial right and was appealable under G.S. 1-277. In this case, as in Setter, the petitioners were required to give up a right pending a hearing. We hold pursuant to Setter a substantial right of the petitioners was affected by the refusal to stay the court’s order which will work an injury to the petitioners if not corrected before an appeal from the final judgment. See Industries, Inc. v. Insurance Co., 296 N.C. 486, 251 S.E. 2d 443 (1979). We shall consider the appeal.

The Commissioner of Motor Vehicles acted under Article 12, Chapter 20 of the General Statutes in revoking the franchise of 421 Motor Sales. This Article provides in pertinent part:

“§ 20-305. Coercing dealer to accept commodities not ordered; threatening to cancel franchise; preventing transfer [687]*687of ownership; granting additional franchises; terminating franchises without good cause; preventing family succession. — It shall be unlawful for any manufacturer . . .
* * *
(5) To grant an additional franchise for a particular line-make of motor vehicle in a trade area already served by a dealer or dealers in that line-make unless the franchisor first advised in writing such other dealers in the line-make in the trade area; provided that no such additional franchise may be established in the trade area if the Commissioner has determined, if requested by any party within 30 days after receipt of the franchisor’s notice of intention to establish the additional franchise, and after a hearing on the matter, that there is reasonable evidence that after the grant of the new franchise, the market will not support all of the dealerships in that line-make in the trade area; trade areas are those areas specified in the franchise agreement or determined by the Motor Vehicle Dealers’ Advisory Board.
§ 20-301. Powers of Commissioner.
* * *
(b) The Commissioner shall have power to prevent unfair methods of competition and unfair or deceptive acts or practices.
(c) The Commissioner shall have the power in hearings arising under this Article to determine the place where they shall be held; to subpoena witnesses; to take depositions of witnesses; and to administer oaths.
* * *
§ 20-305.3. Hearing notice. — In every case of a hearing before the Commissioner authorized under this Article, the Commissioner shall give reasonable notice of each such hearing to all interested parties, and the Commissioner’s decision shall be binding on the parties, subject to the rights of judicial review and appeal as provided in Chapter 150A of the General Statutes . . . .”

[688]*688We believe G.S. 20-301 gives the Commissioner the power to prevent “unfair . . . acts or practices” and that granting a franchise in violation of G.S. 20-305(5) would be an unfair act or practice. The Commissioner has held a hearing and determined that the granting of the franchise by American Motors to 421 Motor Sales violated G.S. 20-305(5).

The petitioners contend the Superior Court of Wake County was in error for not staying the Commissioner’s order pending the outcome of the review. G.S. 150A-48 provides:

“At any time before or during the review proceeding, the person aggrieved may apply to the reviewing court for an order staying the operation of the agency decision pending the outcome of the review. The court may grant or deny the stay in its discretion upon such terms as it deems proper and subject to the terms of G.S. 1A-1, Rule 65.”

The petitioners argue the court abused its discretion in not staying the order for several reasons. They say first that the Commissioner does not have the power to issue an injunction. We find no merit in this argument because we do not believe the Commissioner issued an injunction. It is true that in the decretal portion of his order, he used the word “enjoin.” The order was not treated by any of the parties as an injunction, but as an order revoking the franchise agreement. The order was appealed to the Superior Court of Wake County for review as an order by a state agency.

The petitioners next contend that G.S. 20-305(5) violates Article I, Section 34 of the Constitution of North Carolina which provides:

“Perpetuities and monopolies are contrary to the genius of a free state and shall not be allowed.”

The petitioners argue that G.S. 20-305(5) is unconstitutional on its face as allowing monopolies, or unconstitutional as applied in this case because it granted a monopoly to Pennell. We cannot so hold. We believe American Motors could, without violating Article I, Section 34 of the North Carolina Constitution, give Pennell the exclusive right to sell Jeeps in the North Wilkesboro trade area. We do not believe it is granting a monopoly for the General Assembly to require American Motors to do what it could bargain [689]*689to do if it desires to execute a contract. See Mazda Motors v. Southwestern Motors, 36 N.C. App. 1, 243 S.E. 2d 793 (1978), modified in part on other grounds, 296 N.C. 357, 250 S.E. 2d 250 (1979) for a discussion of the unequal bargaining power between manufacturers and automobile dealers and the necessity for the General Assembly to aid the dealers. We are not dealing with an .agreement between competitors not to compete. We are dealing with a contract between a manufacturer and a dealer. The State has enacted legislation which gives automobile dealers some protection after they have made investments and taken other action, relying on contracts they have made. We believe the State has the power to do this.

We do not believe In re Hospital, 282 N.C. 542, 193 S.E. 2d 729 (1973) and State v. Ballance, 229 N.C. 764, 51 S.E. 2d 731 (1949) relied on by the petitioners are applicable. Our Supreme Court held in Hospital that the State did not have the power acting through a commission to deny a private corporation the right to build a hospital. In Ballance our Supreme Court held that the State could not under the police power require a license to engage in the business of photography. Neither of these cases deal with the situation we face in this case. We hold that the State can require that if an automobile manufacturer gives a franchise to a dealer to sell automobiles, that the manufacturer include in the terms of the franchise agreement the right that the dealer have an exclusive franchise in a certain trade area so long as the dealer abides by the terms of the franchise agreement.

The petitioners also contend the court erred in not granting a stay because Pennell had unclean hands.

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Related

Rockford-Cohen Group, LLC v. North Carolina Department of Insurance
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American Motors Sales Corp. v. Peters
294 S.E.2d 764 (Court of Appeals of North Carolina, 1982)

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Bluebook (online)
294 S.E.2d 764, 58 N.C. App. 684, 1982 N.C. App. LEXIS 2834, 1982 Trade Cas. (CCH) 65,174, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-motors-sales-corp-v-peters-ncctapp-1982.