September 25, 1995
Mr. John Leaston Director, Purchase & Contract Administration Building Raleigh, N.C. 27603-8003
RE: Advisory Opinion: Applicability of North Carolina Motor Vehicle Dealer Licensing Laws to Motor Vehicle Dealers Who Contract with the State of North Carolina.
Dear Mr. Leaston:
This letter is in response to a request for an advisory opinion as to whether the State of North Carolina and its political subdivisions may accept bids or contract with out-of-state motor vehicle dealers who are not licensed in this state. Upon review and analysis of the dealer licensing laws found in Article 12 of N.C.G.S. Chapter 20, it is concluded that out-of-state dealers who contract directly with the State of North Carolina and its political subdivisions are not required to be licensed under Article 12 when participating in transactions with the State or its political subdivisions.
G.S. 20-285 provides, "The General Assembly finds and declares that the distribution of motor vehicles in the State of North Carolina vitally affects the general economy of the State and the public interest and the public welfare, and in the exercise of its police power, it is necessary to regulate and license motor vehicle manufacturers, distributors, dealers, salesmen, and their representatives doing business in North Carolina, in order to prevent frauds, impositions and other abuses upon its citizens and to protect and preserve the investments and properties of the citizens of this State."
The stated purpose is to protect the citizens of the state by regulating those who sell vehicles and not those who buy them. The fundamental rule of statutory construction is that the intent of the legislature controls. That intent is determined, "not only from the express language used, ‘but also from the [provision’s] nature and purpose, and the consequences which would follow its construction one way or another.’" Buford v. General Motors Corp., 339 N.C. 396, 409, 451 S.E.2d 293, 300 (1994). Another rule of statutory construction is that laws are made for the government of citizens and not the State itself. Therefore, a statute will not ordinarily bind the State unless the State is expressly mentioned therein. Yancey v. Highway Commission, 222 N.C. 106, 22 S.E.2d 256 (1942). Davidson Co. v. City of High Point, 85 N.C. App. 26, 354 S.E.2d 280 (1987).
Unlike citizens who may go out of state to purchase vehicles if they wish, the State must deal within its boundaries. Historically, the practice of the State has been to entertain bids from unlicensed out-of-state bidders which has allowed the State to obtain the lowest available prices for vehicles. This has resulted in substantial financial savings to the State. Additionally, it has allowed the State to deal directly with manufacturers and dealers of specialized vehicles who may not have dealerships established in North Carolina.
The exercise of police powers by a state is necessarily an infringement on freedoms of action, and are restricted to matters affecting the health, safety and welfare of its citizens in order to "secure them against the consequences of ignorance and incapacity as well as of deception and fraud." In re Guess, 327 N.C. 46, 52, 393 S.E.2d 833, 836 (1990). The State has the ability to protect itself in its business dealings by virtue of controlling the bidding process and establishing the terms and conditions of the contracts, including but not limited to the inclusion of performance bonds, choice of governing laws, terms and conditions of delivery and could if deemed necessary require bidders to be licensed in this state. The State is also in a better position than an individual to investigate those with whom it deals and has the resources to protect itself against possible frauds and abuses. It is inconceivable that the legislature considered it necessary to protect the State from vendors with whom it deals in the same manner that it protects the public at large. Therefore, it is reasonable to assume that the legislature did not intend to protect the State as an entity, but only the citizenry in enacting this law.
Based on the statement of purpose provided by the legislature, Article 12 of Chapter 20 was not intended to restrict or prohibit the State from dealing with unlicensed dealers or manufacturers.
MICHAEL F. EASLEY Attorney General
Andrew A. Vanore, Jr.
Chief Deputy Attorney General
Reginald L. Watkins Senior Deputy Attorney General
Hal F. Askins Special Deputy Attorney General