B. Jeselshon, Inc. v. City of Atlantic City , 70 N.J. 238 ( 1976 )

The opinion of the Court was delivered by

Sullivan, J.

This appeal taken by auctioneers doing business in Atlantic City involves the validity of an ordinance adopted by that City to regulate auction sales.¹ In substance, the ordinance requires the auctioneer to refund in full the purchase price when demand is made within 72 hours after the purchase, provided the purchaser returns the article or merchandise to the place of purchase in the same condition as when purchased.² The trial judge upheld the validity of the ordinance finding it to be a proper exercise of police power. The Appellate Division affirmed. Plaintiffs appeal to this Court as of right. B. 2:2-1 (a) (1). We affirm.

The basic contention as to the invalidity of the ordinance is that it is in conflict with provisions of the Uniform Commercial Code regulating auction sales. It is also contended that the ordinance impairs the right to contract as well as the fundamental right to engage in the “lawful pursuit of private property,” is overly burdensome and creates confusion and uncertainty in the field of auction sales. Finally, it is arguéd that since the ordinance provides that a person violating its terms may be jailed for not more than 90 days or fined, or both, this constitutes imprisonment for debt.

There is no merit in any of these contentions. The penalty provision of the ordinance permitting the imposition of a jail term is for the public injury involved. It does not imprison for debt but rather penalizes the auctioneer who has offended against the right of the public to a refund of the purchase price upon proper demand and return of the goods. See State Board of Medical Examiners v. Kornreich, 136 N. J. L. 367 (Sup. Ct. 1947).

Nor is there any substance to the contentions that the ordinance impairs the right to contract, runs afoul of the fundamental right to engage in the “lawful pursuit of private property” and creates confusion and uncertainty in the field of auction sales. Contract rights and property rights are not absolute. Their exercise is always subject to the legitimate exercise of the police power. Inganamort v. Borough of Fort Lee, 62 N. J. 521 (1973).

Plaintiffs contend that auction and demonstration sales are now at the mercy of the whim and caprice of buyers, that plaintiffs cannot be certain that sales made by them are final until three days have elapsed and that this lack of finality affects credit adjusting, maintenance of inventory and the like. They also argue that the requirement of a sign giving notice of cash refunds within 72 hours of purchase is an invitation to buyer irresponsibility. However, we do not consider the restrictions and conditions imposed to be unduly burdensome. As heretofore noted, the right to do business is always subject to reasonable regulation in the public interest.

Another example of such regulation is our Retail Installment Sales Act of 1960, N. J. S. A. 17:16c-l et seq. Section 61.5 thereof specifically provides that any retail installment sale of goods or retail installment contract for the sale of goods (with certain exceptions) entered into at a place other than the place of business of the retail seller may, within a limited time, be rescinded by the buyer who shall be entitled to a refund of all money paid. In creating this absolute right of rescission, the Legislature declared it to be necessary for the protection of the consumers of this State. See also 15 U. S. C. A. § 1635 providing for the right of rescission under the Pederal Consumer Credit Protection Act.

By statute, N. J. S. A. 40:52-1 (i), municipalities may adopt ordinances to license and regulate auctioneers and their businesses and "make such regulations as the governing body of the municipality shall deem necessary, to protect the public against fraud at public auction sales.”

Here, the ordinance notes that the business of auction sales has been the subject of numerous complaints by persons who have allegedly been victimized, and that one of the main complaints has been the refusal of the operators to make restitution to persons who claim they have not received what they bargained for when making purchases.

Obviously the term “fraud” is used in the broad sense. Boardwalk auction sales are very sophisticated operations designed to attract the casual visitor and draw him into the contrived excitement of the moment. Not infrequently, the visitor realizes too late that he has purchased at an inflated price something he does not need or want and which is not what it was represented to be. However, as a practical matter, because of his visitor status there is little or nothing he can do about it. The remedial provisions of the ordinance are a prophylactic device directed at these abuses and serve to protect the public from this kind of “fraud.” See Wagman v. Trenton, 102 N. J. L. 492 (Sup. Ct. 1926).

Finally, we find no conflict between the ordinance in question and the Uniform Commercial Code. N. J. S. A. 12A:1-101 et seq. One section of the Code, N. J. S. A. 12A:2-328 deals with sale by auction. In pertinent part it provides that

(2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.

The argument made is that the ordinance herein conflicts with the finality of sale provision in this section. However, it is clear from the draftsman’s comment appended to the section that paragraph (2) was intended to resolve the question, as between the parties involved, of the finality of an auction sale when a bid is made while the hammer is falling. It is not intended to restrict the appropriate exercise of governmental authority over auction sales for the public good and welfare.

Other provisions of the Code dealing with “sale,” “passing of title,” “revesting,” “rescission” and “revocation of acceptance” likewise are intended to give certainty and stability to the law of commercial transactions. In this sense they do not purport to limit the proper exercise of police power in the public interest.

The provisions of N. J. S. A. 40:52-l which empower a municipality to adopt ordinances licensing auctioneers and to make such regulations as the municipality shall deem necessary “to protect the public against fraud at public auction sales” would have little meaning if plaintiffs’ argument were correct.

Our conclusion is that the ordinance is a reasonable restriction on the business of auction sales and is in all respects a lawful exercise of municipal power under N. J. S. A. 40:52-l.

Affirmed.

1 The ordinance also applies to sales made in demonstration places.

2 Section 2 of the ordinance requires that a sign be displayed stating “Cash refunds in full amount of purchase within 24 hours of demand made within 72 hours of purchase.”