State ex rel. Cordray v. Midway Motor Sales, Inc.

[Cite as State ex rel. Cordray v. Midway Motor Sales, Inc., 122 Ohio St.3d 234, 2009-Ohio-

2610.]

THE STATE EX REL. CORDRAY, APPELLEE, v. MIDWAY MOTOR SALES, INC. ET

AL.; GENERAL MOTORS ACCEPTANCE CORPORATION, APPELLANT.

[Cite as State ex rel. Cordray v. Midway Motor Sales, Inc.,

122 Ohio St.3d 234, 2009-Ohio-2610.]

Motor vehicle sales — R.C. 4505.06(C)(1) — Certificates of title — Odometer

disclosures — R.C. 4549.46(A) does not impose strict criminal liability —

Previous-owner exception.

(No. 2008-1451 — Submitted April 7, 2009 — Decided June 10, 2009.)

APPEAL from the Court of Appeals for Franklin County,

No. 07AP-744, 2008-Ohio-2799.

______________________

SYLLABUS OF THE COURT

1. R.C. 4549.46(A) incorporates the odometer disclosure requirements set forth

in R.C. 4505.06 and is not a strict-liability statute. Liability can be

imposed only if it is established that the defendant knowingly violated the

statute.

2. The previous-owner exception found in R.C. 4549.46(A) applies to a transferor

regardless of when a previous owner tampered with the odometer.

__________________

O’CONNOR, J.

{¶ 1} This appeal involves the construction of R.C. 4549.46(A).

Appellant, General Motors Acceptance Corporation (n.k.a. GMAC, LLC), asserts

that R.C. 4549.46(A) is a not a strict-liability statute, because strict liability

cannot be reconciled with the mandatory odometer disclosure affidavit

promulgated pursuant to statute by the registrar of motor vehicles, which requires

a knowledge-based certification of the odometer reading. Appellant alternatively

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argues that even if R.C. 4549.46(A) is held to be a strict-liability statute, the

previous-owner exception in R.C. 4549.46(A) does not contain a temporal

requirement and is therefore available to GMAC.

{¶ 2} Conversely, appellee, Richard Cordray, attorney general of Ohio,1

contends that R.C. 4549.46(A) plainly indicates a purpose to impose strict

liability. Appellee further maintains that the previous-owner exception applies

only when the tampering party owned the vehicle at the time it tampered with the

odometer.

{¶ 3} We hold that R.C. 4549.46(A) incorporates the odometer

disclosure requirements set forth in R.C. 4505.06 and is not a strict-liability

statute. Liability can be imposed only if it is established that the defendant

knowingly violated the statute. We further hold that the previous-owner

exception found in R.C. 4549.46(A) applies to a transferor regardless of when a

previous owner tampered with the odometer.

{¶ 4} We therefore reverse the judgment of the court of appeals and

remand this matter to the trial court for further proceedings consistent with this

court’s opinion.

Relevant Background

{¶ 5} Midway Motor Sales, Inc. purchased vehicles from General

Motors Corporation for sale or lease at its dealership.2 General Motors issued the

manufacturer’s certificate of origin in Midway’s name, thereby making Midway

the owner of the vehicles. Midway leased a fleet of these vehicles to Modern

Building Supply, Inc. under lease agreements with specified mileage limits, which

were typically 30,000 miles.

1. This suit was filed by former Attorney General Jim Petro, and the appeal to this court named

Attorney General Nancy Rogers as appellee before she was succeeded by Attorney General

Richard Cordray.

2. Midway was a codefendant in this action but subsequently filed for bankruptcy. Midway is not

a party to this appeal.

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January Term, 2009

{¶ 6} GMAC is a financial institution that extends wholesale floor-plan

financing to automobile dealers such as Midway. Pursuant to its agreement with

GMAC, Midway thereafter assigned the Modern Building Supply lease

agreements and sold the leased vehicles to GMAC. GMAC never had possession

of the vehicles.

{¶ 7} Unbeknownst to GMAC, Midway and Modern Building Supply

had entered into secret lease arrangements allowing Modern Building Supply

significantly greater mileage limits than specified in the lease agreements

assigned to GMAC. As a result, the leased vehicles had mileage in excess of the

30,000-mile limit at the end of the lease periods. In an apparent effort to conceal

the excess mileage from GMAC, Midway retrieved the leased vehicles at the end

of the lease periods and altered the odometers on the vehicles.

{¶ 8} Without knowing that the odometers had been tampered with,

GMAC sold the vehicles at dealer-only auctions. In order to transfer ownership

of each car, GMAC was required to complete an odometer disclosure affidavit to

certify the amount of mileage on the vehicle. GMAC completed the required

odometer disclosure affidavits for the vehicles by using the mileage amounts

disclosed on the lessee’s written odometer disclosure statements. GMAC relied

upon the accuracy of the lessee’s disclosure statements and had no knowledge that

the odometers had been altered.

{¶ 9} After many of the leased vehicles had been sold at auction, GMAC

discovered that Midway had tampered with the odometers. GMAC reported this

information to the attorney general. GMAC complied with the attorney general’s

requests for information and assisted in the investigation into Midway’s conduct.

GMAC also implemented a remediation plan and compensated the owners of the

affected vehicles by either buying each vehicle back or paying a monetary

adjustment for the mileage discrepancy.

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{¶ 10} The attorney general commenced this lawsuit in the Franklin

County Court of Common Pleas against Midway and GMAC pursuant to the

authority vested in him by the Consumer Sales Practices Act, R.C. Chapter 1345,

and the Odometer and Rollback Disclosure Act, R.C. 4549.41 et seq. The

attorney general asserted several claims against both Midway and GMAC.

Pertinent to the instant appeal, the attorney general alleged that GMAC had

violated R.C. 4549.46 by failing to provide the true odometer disclosures required

by R.C. 4505.06. GMAC denied the allegations and filed a counterclaim alleging

abuse of process and seeking a declaratory judgment regarding the rights and

obligations of GMAC and the attorney general under R.C. 4549.46.

{¶ 11} The attorney general moved for summary judgment against GMAC

with regard to his allegation that GMAC had violated R.C. 4549.46. The trial

court granted the attorney general’s motion for partial summary judgment. The

trial court held that R.C. 4549.46 is a strict-liability statute and that GMAC’s lack

of knowledge of the odometer tampering was therefore irrelevant. The trial court

further held that the previous-owner exception relieves a transferor from strict

liability only if the tampering occurred before the transferor’s ownership.

{¶ 12} GMAC appealed to the Tenth District Court of Appeals, and the

court affirmed the trial court’s judgment. State ex rel. Rogers v. Midway Motor

Sales, Inc., 10th Dist. No. 07AP-744, 2008-Ohio-2799. Relying on its own

precedent and that from various Ohio appellate courts holding that R.C. 4549.46

is a strict-liability statute, the court rejected GMAC’s arguments to the contrary.

Id. at ¶ 17. The court further noted that if its interpretation of R.C. 4549.46 as a

strict-liability statute was misguided, the resolution rested with this court or the

legislature. Id. With regard to the previous-owner exception in R.C. 4549.46, the

Tenth District adopted the trial court’s holding that the exception is triggered only

when the odometer tampering occurred before the transferor’s ownership of the

vehicle. Id. at ¶ 23–29.

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January Term, 2009

{¶ 13} The case is now before us on our acceptance of a discretionary

appeal. State ex rel. Rogers v. Midway Motor Sales, Inc., 119 Ohio St.3d 1485,

2008-Ohio-5273, 894 N.E.2d 1243.

Analysis

A. Construction of R.C. 4549.46(A)

{¶ 14} Initially, we are called upon to decide whether R.C. 4549.46(A) is

a strict-liability statute. The attorney general and the lower courts rely on Flint v.

Ohio Bell Tel. Co. (1982), 2 Ohio App.3d 136, 2 OBR 150, 440 N.E.2d 1244, and

its progeny for the proposition that R.C. 4549.46 is a strict-liability statute. The

Flint court did not consider the issue presented herein, namely, whether R.C.

4549.46(A) incorporates the knowledge element in the odometer disclosure

affidavit that is prescribed by the registrar in accordance with R.C. 4505.06(C)(1).

We hold that it does and thus distinguish Flint.

{¶ 15} The primary goal in construing a statute is to ascertain and give

effect to the intent of the legislature. State v. Hairston, 101 Ohio St.3d 308, 2004-

Ohio-969, 804 N.E.2d 471, ¶ 11. In interpreting a statute, this court has held that

“the intent of the law-makers is to be sought first of all in the language employed,

and if the words be free from ambiguity and doubt, and express plainly, clearly

and distinctly, the sense of the law-making body, there is no occasion to resort to

other means of interpretation.” Slingluff v. Weaver (1902), 66 Ohio St. 621, 64

N.E. 574, paragraph two of the syllabus.

{¶ 16} We find that the language of R.C. 4549.46(A) is plain and

unambiguous. R.C. 4549.46(A) governs Ohio odometer violations and provides

as follows: “No transferor shall fail to provide the true and complete odometer

disclosures required by section 4505.06 of the Revised Code.” R.C. 4549.46(A)

clearly incorporates R.C. 4505.06 in that it requires a transferor to make the

odometer disclosure required by R.C. 4505.06. Our focus therefore shifts to what

type of odometer disclosure is required by R.C. 4505.06.

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{¶ 17} R.C. 4505.06(C)(1) contains the following directive to the

registrar: “The registrar shall prescribe an affidavit in which the transferor shall

swear to the true selling price and, except as provided in this division, the true

odometer reading of the motor vehicle.”

{¶ 18} The affidavit prescribed by the registrar contains the following

language:

{¶ 19} “I (we) certify to the best of my (our) knowledge that the odometer

now reads , miles and is the actual mileage of the vehicle unless one of

the following statements is checked.

{¶ 20} “ The mileage stated is in excess of the mechanical limits.

{¶ 21} “ The odometer reading is not the actual mileage.”

{¶ 22} Thus, the affidavit calls for a knowledge-based certification of the

odometer reading. The affidavit is printed on the back of the certificate of title

and is the only means available for disclosing an odometer reading. A transferor

is required to use the registrar’s affidavit.

{¶ 23} The odometer disclosure affidavit was created in accordance with

the statutory authority bestowed upon the registrar by R.C. 4505.06. An

administrative regulation issued pursuant to statutory authority has the force and

effect of law. State ex rel. Cuyahoga Cty. Hosp. v. Bur. of Workers' Comp.

(1986), 27 Ohio St.3d 25, 28, 27 OBR 442, 500 N.E.2d 1370. Conversely, a

regulation is invalid if it is not authorized: an administrative rule cannot add or

subtract from a legislative enactment. See, e.g., Hoffman v. State Med. Bd., 113

Ohio St.3d 376, 2007-Ohio-2201, 865 N.E.2d 1259, ¶ 17. The registrar did not

promulgate a rule that adds to or subtracts from the Odometer Rollback and

Disclosure Act. Rather, a legislative enactment empowered the registrar to

prescribe the odometer disclosure affidavit. The affidavit therefore has the force

and effect of law.

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January Term, 2009

{¶ 24} The affidavit complies with the statutory directive. At no time

since the inception of the affidavit has the General Assembly repudiated the

affidavit by enacting legislation directing the removal of the knowledge element

from the form. It is not the judiciary’s province to nullify the statutorily

prescribed affidavit. Therefore, we hold that the affidavit created by the registrar

has the force and effect of law and is an extension of R.C. 4505.06 that is

explicitly incorporated in R.C. 4549.46(A).

{¶ 25} The odometer disclosure affidavit authorized by R.C. 4505.06

relates to and is incorporated into R.C. 4549.46(A). Because we are faced with

two related statutory provisions, R.C. 4549.46(A) and 4505.06 must be read in

pari materia. Maxfield v. Brooks (1924), 110 Ohio St. 566, 144 N.E. 725,

paragraph two of the syllabus. In reading statutes in pari materia and construing

them together, this court must give a reasonable construction that provides the

proper effect to each statute. Id. All provisions of the Revised Code bearing

upon the same subject matter should be construed harmoniously unless they are

irreconcilable. Couts v. Rose (1950), 152 Ohio St. 458, 461, 40 O.O.482, 90

N.E.2d 139.

{¶ 26} In construing R.C. 4549.46(A) and the registrar’s affidavit

promulgated pursuant to R.C. 4505.06(C)(1), we find that the harmonious

construction of the provisions is that the legislature intended for transferors to be

liable only for knowing violations of the odometer disclosure statute. Any other

reading of the two statutes cannot be reconciled. In fact, if we were to read the

statutes any other way, the odometer disclosure affidavit would be rendered

meaningless.

{¶ 27} We therefore hold that the plain language of R.C. 4549.46(A),

through its incorporation of R.C. 4505.06, clearly indicates a purpose to impose

liability only for knowing violations of R.C. 4549.46(A). Because the meaning of

the statute is evident from the plain language of R.C. 4549.46(A), it is

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unnecessary to resort to other means of interpretation such as legislative history,

public policy, or other provisions of the Odometer Rollback and Disclosure Act.

{¶ 28} This result is consistent with this court’s precedent analyzing

whether a criminal statute imposes strict liability. The General Assembly

established the test for determining strict criminal liability in R.C. 2901.21(B).3

That statute provides: “When the section defining an offense does not specify any

degree of culpability, and plainly indicates a purpose to impose strict criminal

liability for the conduct described in the section, then culpability is not required

for a person to be guilty of the offense.”

{¶ 29} In determining whether a statute imposes strict liability, this court

holds: “It is not enough that the General Assembly in fact intended imposition of

liability without proof of mental culpability. Rather the General Assembly must

plainly indicate that intention in the language of the statute.” State v. Collins

(2000), 89 Ohio St.3d 524, 530, 733 N.E.2d 1118.

{¶ 30} As set forth above, R.C. 4549.46(A) specifies the degree of mental

culpability by virtue of the affidavit prescribed by the registrar pursuant to R.C.

4505.06(C)(1). Therefore, there is no absence of a mental state to indicate strict

liability because the mental state of a knowing odometer disclosure is

incorporated into the statute by the statutorily required affidavit.

{¶ 31} For the reasons stated above, we hold that R.C. 4549.46(A) is not a

strict-liability statute and that liability can be imposed only for a knowing

odometer disclosure violation.4

B. Previous-Owner Exception to Liability Under R.C. 4549.46(A)

3. Although the attorney general has pursued only civil liability against GMAC in this case, a

violation of R.C. 4549.46 is a felony of the fourth degree. R.C. 4549.46(D). Thus, the test for

strict criminal liability is applicable here.

4. Based upon our holding that R.C. 4549.46(A) is not a strict-liability statute, it is unnecessary to

address GMAC’s proposition relating to entrapment.

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{¶ 32} The next issue for our consideration is whether the previous-owner

defense in R.C. 4549.46(A) is available regardless of whether the previous owner

was the owner of the vehicle at the time the odometer tampering occurred. We

find that it is.

{¶ 33} An exception to liability under R.C. 4549.46 is set forth in the

second sentence of subsection (A) of the statute, which states the following:

{¶ 34} “The transferor of a motor vehicle is not in violation of this

division requiring a true odometer reading if the odometer reading is incorrect due

to a previous owner's violation of any of the provisions contained in sections

4549.42 to 4549.46 of the Revised Code, unless the transferor knows of or

recklessly disregards facts indicating the violation.”

{¶ 35} The Tenth District admittedly disregarded the plain and ordinary

meaning of this exception to liability. State ex rel. Rogers v. Midway Motor

Sales, Inc., 10th Dist. No. 07AP-744, 2008-Ohio-2799, ¶ 26. The appellate court

essentially rewrote the statute based upon its view that the legislature could not

have intended the result that a transferor is absolved of liability when a prior

owner altered an odometer, but not where a third party altered an odometer, even

though in either scenario the act took place during the transferor’s ownership. Id.

We disagree.

{¶ 36} As noted above, the rule is that “the intent of the law-makers is to

be sought first of all in the language employed, and if the words be free from

ambiguity and doubt, and express plainly, clearly and distinctly, the sense of the

law-making body, there is no occasion to resort to other means of interpretation.”

Slingluff v. Weaver, 66 Ohio St. 621, 64 N.E. 574, at paragraph two of the

syllabus. The language employed in the previous-owner exception is plain and

unambiguous. There is no temporal requirement for a transferor to qualify for the

previous-owner exception. Such a requirement plainly does not exist in the

statute. Therefore, there is no occasion for the court to resort to other means of

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interpretation. This court would invade the province of the legislature and violate

separation of powers if it rewrote the statute to include a requirement that the

previous owner be the owner of the vehicle at the time of the odometer tampering.

See Arbino v. Johnson & Johnson, 116 Ohio St.3d 468, 2007-Ohio-6948, 880

N.E.2d 420, ¶ 21. This court will not engage in such a practice and leaves it to the

General Assembly to rewrite the statute if it deems it necessary.

{¶ 37} We therefore hold that the previous-owner exception found in R.C.

4549.46(A) applies to a transferor regardless of when a previous owner tampered

with the odometer.

Conclusion

{¶ 38} For the foregoing reasons, we hold that R.C. 4549.46(A)

incorporates the odometer disclosure requirements set forth in R.C. 4505.06 and is

not a strict-liability statute. Liability can be imposed only if it is established that

the defendant knowingly violated the statute.

{¶ 39} We further hold that the previous-owner exception found in R.C.

4549.46(A) applies to a transferor regardless of when a previous owner tampered

with the odometer.

{¶ 40} Accordingly, we reverse the judgment of the court of appeals and

remand this matter to the trial court for further proceedings consistent with this

court’s opinion.

Judgment reversed

and cause remanded.

MOYER, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL,

LANZINGER, and CUPP, JJ., concur.

__________________

Richard Cordray, Attorney General, Benjamin C. Mizer, Solicitor General,

Stephen P. Carney, Deputy Solicitor, and David M. Dembinski and Teresa A.

Heffernan, Assistant Attorneys General, for appellee.

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January Term, 2009

Carpenter, Lipps & Leland, L.L.P., Michael H. Carpenter, Jeffrey A.

Lipps, and Angela M. Paul Whitfield, for appellant.

Dreher Tomkies Scheiderer, L.L.P., Darrell L. Dreher, and Vanessa A.

Nelson, urging reversal for amici curiae American Financial Services Association

and Association of Consumer Vehicle Lessors, National Automobile Dealers

Association, and Ohio Automobile Dealers Association.

______________________

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