Laganclli, 042016 SCAGO, AGO 2003

• Case Date: April 20, 2016
• Court: South Carolina

John F. Laganclli AGO 2003 No. 2003 South Carolina Attorney General Opinions State of South Carolina Office of the Attorney General April 20, 2016          John F. Laganclli          Acting Executive Director          South Carolina Department of Motor Vehicles          P.O. Box 1498          Blythewood, SC 29016          Alan Wilson, Attorney General          Dear Mr. Laganclli:          We are in receipt of your opinion request asking "whether motor vehicles may be sold by retail auction to members of the public." In particular, your request letter explains the Department of Motor Vehicles ("the Department") "has historically understood the transfer of motor vehicles to be legally accomplished only by four methods," specifically:

(1) the sale of a vehicle by a licensed dealer:

(2) the sale of a vehicle by a wholesaler to another licensed wholesaler or dealer;

(3) the sale of a vehicle between licensed dealers or wholesalers or certain other specifically named entities as conducted by a wholesale auction as regulated by. S.C. Code Ann. §§ 56-5-510 el. seq., and

(4) with certain specifically enumerated exceptions, the sale of a vehicle by an individual who acquired the vehicle for individual use. with the limitation that any person selling or attempting to sell of more than five vehicles in a calendar year must be deemed a dealer or a wholesaler pursuant to S.C. Code Ann. §§56-15-10(h)(4).

See Request Letter at p.l (emphasis in original). In support of this conclusion, you cite Section 56-15-10"s definitions section, specifically subsection (h) and further note that Sections 56-15-310(A) and 56-15-330. both of which address various aspects of dealer licensing, suggest that an entity conducting a retail auction would need to be licensed and have a principal place of business at the location where the vehicles in question are sold. In light of this understanding, you ask the following questions:

(1) [Assuming exceptions set forth in Section 56-15-10(h)(1) through (3) and (5) do not apply,] may an auction firm set up a retail auction inviting members of the general public, as set forth in the attached solicitation, to exchange motor vehicles by auction, consistent with the requirements of Chapter 15 of Title 56, where neither the auction, hotel or any other participant is required to get a license under Chapter 15 of Title 56?

(2) Regardless of the answer to 1.) above, if a licensed dealer sponsors or attends an auction at a site that is not the dealer's licensed location, and the dealer displays his own inventory, does the dealer violate the display requirements of Section 56-5-310 or the place of business requirements of Section 56-15-330 or both?

(3) Regardless of the answer to 1.) above, if a licensed dealer who sponsors an auction at a site that is not the dealer's licensed location, and the dealer seeks to sell or effect the sale of vehicles not in his own inventory, does the dealer violate the display requirements of Section 56-5-310 or the place of business requirements of Section 56-15-330 or both?

See Request Letter at 5. Our response follows.          Law/Analysis          1. Application of Title 56, Chapter 15's Dealer Licensing Provisions to Retail Auctions          Operating under the assumption that Section 56-15-10(h)(1)-(3) as well as Section 56-15-10(h)(5) do not apply, you ask: "may an auction firm set up a retail auction inviting members of the general public ... to exchange motor vehicles by auction, consistent with the requirements of Chapter 15 of Title 56, where neither the auction, hotel or any other participant is required to get a license under Chapter 15 of Title 56." Because an auction company meets Section 56-15-10's definition of the phrase "motor vehicle dealer" in that it is an entity that "sells or attempts to effect the sale of any motor vehicle" we believe, consistent with the position of the Department of Motor Vehicles, that an auction company inviting members of the general public to exchange motor vehicles by auction without a dealer's license does so in violation of Title 56, Chapter 15's licensing requirements.          As an initial matter, we find it important to note that this Office, like South Carolina's courts, will "typically defer[] to the administrative agency charged with the enforcement of a statute in question." Op. S.C. Att'y Gen., 2004 WL 736929 (March 23, 2004) (citing Dunton v. South Carolina Board of Examiners in Optometry, 291 S.C. 221, 353 S.E.2d 132 (1987); Faile v. South Carolina Employment Security Commission, 267 S.C. 536, 230 S.E.2d 219 (1976)). In fact, in our March 23, 2004 opinion citing this provision, this Office, asked to interpret Section 56-15-10(h)'s definition of a "dealer" in a similar circumstance, explained that because the administrative agency's interpretation of this provision was reasonable, we would, as a matter of policy, defer to the agency's position. Op. S.C. Att'y Gen., 2004 WL 736929 (March 23, 2004) (concluding an administrative agency's interpretation of Section 56-15-10(h) requiring an individual subleasing parking spaces to third parties for the purpose of selling vehicles to obtain a dealer license was a reasonable interpretation of Section 56-15-10(h)). Here, as detailed below, we find your construction of Section 56-15-10 reasonable and therefore, consistent with our prior opinions, defer to your position on this issue.          Section 56-15-10(h) of the South Carolina Code explains, with limited exception,^[1] that a "[d]ealer" or "motor vehicle dealer" is "any person who sells or attempts to effect the sale of any motor vehicle" S.C. Code Ann. § 56-15-10(h) (2015 Supp.) (emphasis added). Further, Section 56-15-10(1) defines the term "sale" as "the issuance, transfer, agreement for transfer, exchange, pledge, hypothecation, mortgage in any form, whether by transfer in trust or otherwise, of any motor vehicle or interest therein or of any franchise related thereto; and any option, subscription or other contract, or solicitation, looking to a sale, or offer or attempt to sell in any form, whether spoken or written." S.C. Code Ann. § 56-15-10(1) (2015 Supp.) (emphasis added). Additionally, Section 56-15-10(n) defines the word "person" as, among other things, "a natural person, corporation, partnership, trust or other entity . . . ." S.C. Code Ann. § 56-15-10(n) (2015 Supp.) (emphasis added). Finally, Section 56-15-310(A) of the Code states inter alia, "[b]efore engaging in business as a dealer or wholesaler in this State, a person first must make application to the Department of Motor Vehicles for a license." S.C. Code Ann. § 56-5-310(A) (2015 Supp.). Thus, the law is clear that a "dealer" must "make application to the Department of Motor Vehicles for a license" prior to "engaging in business[.]" S.C. Code Ann. § 56-5-310(A).          Applying these definitions to your question, it appears an auction company that sells or attempts to sell a motor vehicle is clearly subject to Title 56, Chapter 15's licensing restrictions. In particular, there is no question an auction company, which according to the circular referenced in your request letter is a corporation, meets Section 56-15-10(n)'s expansive definition of the word "person." See S.C. Code Ann. § 56-15-10(n) (defining a person as, among other things, a "corporation"). Likewise, there is no question such a corporation sells motor vehicles under Section 56-15-10(1)'s equally expansive definition of the...