Can Maryland's Motor Vehicle Administration discipline a licensed wholesale car dealer for selling vehicles to retail buyers at an out-of-state auction?

Plain-English summary

Maryland's Motor Vehicle Administration asked the Attorney General whether it could discipline a wholesale-licensed car dealer, who is normally only allowed to buy, sell, or trade vehicles with other dealers or at auto auctions, for selling vehicles to ordinary retail buyers at auctions held in neighboring states. The question arose because some Maryland wholesale dealers were apparently doing exactly that, and the MVA wanted to know whether it could sanction the dealer's license, or whether only the other state's authorities could act.

The Attorney General concluded the MVA could not discipline the dealer for the out-of-state retail sale itself. Maryland's criminal jurisdiction generally only reaches conduct that occurs within its own borders, and while the MVA's licensing authority isn't limited by that same territorial rule in the abstract, the opinion found nothing in Maryland's wholesale dealer statute suggesting the legislature meant it to reach transactions that happen entirely in another state; the licensing scheme was built to protect "dealer accountability" in transactions occurring in Maryland, so a dealer selling out of state would instead answer to that other state's own dealer laws. But the opinion drew a sharp line around one different scenario: if the buyer was a Maryland resident who planned to title and register the vehicle in Maryland, the dealer still had to satisfy Maryland's title-transfer paperwork, tax-collection, and vehicle-inspection requirements, no matter where the actual sale took place, because those duties are tied to the vehicle's transfer into the Maryland titling system, not to the location of the sale.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here, including the current text of TR §15-305.1 and the related dealer licensing, title transfer, and inspection provisions.

Common questions

Could Maryland discipline a wholesale car dealer's license just for selling to retail buyers at an out-of-state auction?
No, according to this opinion. The Attorney General concluded Maryland's wholesale dealer licensing law was not intended to reach transactions occurring entirely outside Maryland, so the MVA could not sanction the dealer's license for that conduct alone, though the dealer could face consequences under the other state's own dealer laws.

Could Maryland criminally prosecute a wholesale dealer for an illegal retail sale that happened entirely in another state?
No. The opinion concluded Maryland's criminal jurisdiction generally extends only to conduct occurring within its own territorial boundaries, so a sale to a retail buyer that took place entirely in another state fell outside Maryland's power to prosecute, absent some Maryland-based act connecting to the scheme.

Did the dealer have to follow any Maryland rules if the out-of-state buyer was actually a Maryland resident?
Yes. The opinion concluded that if the buyer intended to title and register the vehicle in Maryland, the dealer still had to obtain a title application, collect and remit the required taxes and fees, and comply with Maryland's vehicle inspection requirements before transfer, regardless of where the underlying sale occurred, because those duties attach to bringing the vehicle into Maryland's titling system.

What if a Maryland dealer told a Maryland customer to cross state lines just to finish a sale that started in Maryland?
The opinion flagged this as a different, harder question it wasn't deciding: such conduct might be treated as part of a single transaction spanning state lines, potentially still subjecting the dealer to Maryland sanctions, rather than as a wholly out-of-state sale beyond Maryland's reach.

Background and statutory framework

Maryland created a special "wholesale dealer" license category under Chapter 639 of the Laws of Maryland 1985, allowing a dealer to buy, sell, or exchange vehicles only with another dealer or at an auto auction, and separately prohibiting a wholesale dealer from buying from, selling to, or exchanging vehicles with a retail buyer under TR §15-305.1(a)(1) and (a)(2). A violation of that retail-buyer restriction could trigger both license suspension or revocation and misdemeanor criminal liability. The opinion first confirmed, consistent with earlier informal advice, that sales at auto auctions are treated as wholesale (not retail) as long as neither the buyer nor seller in the transaction is a "retail" party, even though the specific fact pattern here, wholesale dealers selling to retail buyers at out-of-state auctions, was a different and previously unaddressed practice.

On criminal jurisdiction, the opinion applied the well-established principle that Maryland's criminal law generally reaches only conduct occurring within its territorial boundaries; because the crime defined by TR §15-305.1(a)(2) consists of the specific act of buying, selling, or exchanging a vehicle with a retail buyer, the location of that act, not any intended in-state consequence, determined jurisdiction, so a sale wholly completed in another state fell outside Maryland's criminal reach (subject to caveats the opinion flagged but did not resolve, like an interstate scheme with at least one Maryland-based overt act, or a dealer instructing a Maryland customer to cross state lines to complete a sale that began in Maryland).

On licensing sanctions, which aren't bound by the same territorial constitutional limits as criminal jurisdiction, the opinion still concluded the legislature had not intended TR §15-305.1(a)(2) to reach wholly out-of-state sales, because Maryland's dealer licensing scheme exists to foster "dealer accountability" specifically in transactions occurring in Maryland; a dealer selling in another state answers to that state's own dealer regulation instead. But the opinion distinguished Maryland's title-transfer and vehicle-inspection statutes, TR §§13-113, 13-812, and 23-106, which speak in terms of the vehicle's "transfer" rather than its "sale" and are triggered whenever a Maryland resident intends to title and register a vehicle in Maryland; because a licensed wholesale dealer remains a dealer licensed to sell vehicles in Maryland even when conducting a transaction elsewhere, the opinion concluded these transfer-related duties, obtaining a title application, collecting applicable taxes and fees, and complying with vehicle inspection requirements, followed the dealer regardless of where the underlying sale physically occurred, and a dealer's failure to meet them could still expose the dealer to licensing sanctions and a tax deficiency assessment.

Citations and references

Statutes:

• TR §15-302 (Transportation Article), requiring MVA licensure to conduct the business of a dealer
• TR §15-305.1(a)(1) and (a)(2), restricting wholesale dealers to transactions with other dealers or at auto auctions and barring retail-buyer transactions
• TR §15-109, TR §15-314(g), and TR §15-315(a)(4), authorizing license suspension or revocation for dealer licensing violations
• TR §27-101, making a violation of TR §15-305.1(a)(2) a misdemeanor
• TR §13-113(e) and TR §13-812, requiring title applications and tax collection on vehicle transfers to Maryland residents
• TR §23-106(a)(1) and (b)(2), requiring vehicle inspection before transfer except for dealer-to-dealer transfers
• TR §11-111 and TR §15-101(b), defining a licensed wholesale dealer as a dealer licensed to sell vehicles in Maryland
• CL §13-101(c) and (d) (Commercial Law Article), defining "consumer" for purposes of identifying a retail buyer

Cases:

• Goodman v. State, 237 Md. 64, 205 A.2d 53 (1964), Bowen v. State, 206 Md. 368, 111 A.2d 844 (1954), Frye v. State, 62 Md. App. 310, 489 A.2d 71 (1985), Urciolo v. State, 272 Md. 607, 325 A.2d 878 (1974), and Breeding v. State, 220 Md. 193, 151 A.2d 743 (1959), all cited for the principle that Maryland's criminal jurisdiction generally reaches only conduct within its territorial boundaries
• State v. Jones, 51 Md. App. 321, 443 A.2d 967 (1982), vacated on other grounds, 298 Md. 634, 471 A.2d 1055 (1984), cited on jurisdiction over an interstate series of acts with at least one Maryland overt act
• Maryland v. Dickson, 717 F. Supp. 1090 (D. Md. 1989), cited for a case where Maryland was the situs of an interstate scheme
• Pennington v. State, 308 Md. 727, 521 A.2d 1216 (1987), and Grindstaff v. State, 57 Md. App. 412, 470 A.2d 809 (1984), cited on jurisdiction based on in-Maryland results or effects of out-of-state acts
• Pike v. Bruce Church, Inc., 397 U.S. 137 (1970), cited on the Commerce Clause limits on state regulation of out-of-state conduct
• Automobile Trade Association v. Harold Folk Enterprises, 301 Md. 642, 484 A.2d 612 (1984), Detroit Automotive Purchasing Services v. Lee, 463 F. Supp. 954 (D. Md. 1978), and Aero Motors v. Administrator, Motor Vehicle Administration, 274 Md. 567, 337 A.2d 685 (1975), all cited on the purpose of Maryland's dealer licensing scheme as fostering accountability in Maryland consumer transactions

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1992/Volume77_1992.pdf (this opinion appears at printed page 216 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

VEHICLE LAWS

Dealers - Out-of-State Sales By Wholesale Dealers

                         January 14, 1992

Mr. W. Marshall Rickert
Motor Vehicle Administrator

   You have requested our opinion whether a wholesale dealer licensed

by the Maryland Motor Vehicle Administration ("MVA") may be
disciplined for selling vehicles to retail buyers in a neighboring state.

   For the reasons stated below, we conclude that, although a wholesale

dealer may be prosecuted by the other state if the sales violate that state's
laws, the dealer may not be disciplined by the MVA for these out-of-state
sales alone.1 However, a dealer who sells a vehicle to a resident of
Maryland and fails to perform certain statutory duties imposed on dealers
when transferring a vehicle may be disciplined for those violations.

                                  I

                Activities of Wholesale Dealers

    Section 15-302 of the Transportation Article ("TR" Article) provides

that a "person may not conduct the business of a dealer unless the person
is licensed" by the MVA. In Chapter 639 of the Laws of Maryland 1985,
the General Assembly created a new class of dealers, known as wholesale
dealers, who are licensed to sell vehicles on a wholesale basis only.

   A wholesale dealer licensed by the MVA may "buy a vehicle from,

sell a vehicle to, or exchange vehicles only with another dealer or auto
auction ... " TR §15-305.1(a)(1). Conversely, a wholesale dealer "may
not buy a vehicle from, sell a vehicle to, or exchange vehicles with a retail
buyer." TR §15-305.1(a)(2).

  A violation of TR §15-305.1(a)(2) may constitute grounds to

suspend or revoke the dealer's license. TR §§15-109(1), 15-314(g),
and 15-315(a)(4).2 A violation of TR §15-305.1(a)(2) is also a
misdemeanor. See TR §27-101.

    This office has previously given advice about one aspect of a

wholesale dealer's permissible activities. On April 22, 1991, Assistant
Attorney General Kathryn M. Rowe advised Senator William Amoss that
while a wholesale dealer may typically only engage in vehicle transactions
with other dealers, sales conducted at auto auctions are an exception to
this rule. Ms. Rowe advised that a dealer may purchase a vehicle from, or
sell a vehicle to, someone other than a dealer if the sale occurs at an auto
auction and the sale does not involve a "retail" buyer or seller. We agree
with this conclusion.

   When a vehicle dealer purchases a vehicle at auction, that sale is

clearly wholesale if the seller - for example, a secured creditor or an
insurance company - has taken ownership merely for the sake of engaging
in a further sale of the vehicle. Conversely, a wholesale dealer who buys
a vehicle from a "consumer," as defined in §13-101(c) and (d) of the
Commercial Law Article, has clearly purchased from a retail buyer. This
practice is prohibited by TR §15-305.1(a)(2).3

   Your opinion request focuses on a different practice. You indicated

that some wholesale dealers have apparently been selling vehicles at
auctions in one or more neighboring states to retail purchasers. You ask
whether a Maryland's State's Attorney or the MVA has authority to,
respectively, prosecute or sanction the dealer for these out-of-state
activities.

                                     II

                          Out-of-State Sales

A. Introduction

   Subtitle 3 of TR Title 15 generally describes a series of advertising,

sales, and licensing violations that would subject the licensee to either
administrative or criminal action. These provisions prohibit or require
specific activities by the dealer. For example, TR §15-312 prohibits a
dealer from engaging in certain sales techniques; TR §15-313 prohibits a
dealer from engaging in certain advertising practices; and TR §15-314
requires a dealer to comply with the licensing provisions of the Maryland
Vehicle Law and to conduct the dealer's business within the licensing
structure established under Title 15. TR §15-305.1(a)(2), prohibiting a
wholesale dealer from engaging in transactions with a retail buyer, is
another such licensing requirement.

B. Criminal Sanctions

   In our opinion, Maryland has no jurisdiction to enforce TR §15-

305.1(a)(2) through a criminal prosecution if all aspects of the prohibited
transaction occurred in another state. As a general matter, the State of
Maryland has criminal jurisdiction only over offenses committed within the
territorial boundaries of the State. See, e.g., Goodman v. State, 237 Md.
64, 67, 205 A.2d 53 (1964); Bowen v. State, 206 Md. 368, 375, 111 A.2d
844 (1954); Frye v. State, 62 Md. App. 310, 317, 489 A.2d 71 (1985);
State v. Jones, 51 Md. App. 321, 326-40, 443 A.2d 967 (1982), vacated
on other grounds, 298 Md. 634, 471 A.2d 1055 (1984). See generally
Urciolo v. State, 272 Md. 607, 636-40, 325 A.2d 878 (1974); Breeding v.
State, 220 Md. 193, 200, 151 A.2d 743 (1959).4

  The crime arising from a violation of TR §15-305.1(a)(2) is the act

of a wholesale dealer buying a vehicle from, selling a vehicle to, or
exchanging vehicles with a retail buyer. The situs of that act determines
the jurisdiction in which the crime occurred. If the sale or exchange
occurred in Maryland, Maryland has criminal jurisdiction; if it occurred in
another state, Maryland does not have criminal jurisdiction.

   This opinion should not be taken to suggest that Maryland may not

define a crime by reference to its intended results as well as specific acts.
See, e.g., Pennington v. State, 308 Md. 727, 521 A.2d 1216 (1987)
(jurisdiction conferred when acts in the District of Columbia resulted in the
obstruction of justice in Maryland) and Grindstaff v. State, 57 Md. App.
412, 470 A.2d 809 (1984) (jurisdiction conferred where duties sought to
be affected by a bribe paid out-of-state were to be performed in Maryland).
The crime in TR §15-305.1(a)(2) is defined solely in terms of specific
prohibited acts, however, without any mention of an intended result.

    Furthermore, we are not addressing the instance in which a

wholesale dealer suggests that a Maryland retail customer cross the State
line in order to complete a sale begun in Maryland. That action might well
be viewed as part of a series of acts spanning state boundaries and
subjecting the dealer to criminal sanctions in Maryland. See State v. Jones,
51 Md. App. at 330-40; 59 Opinions of the Attorney General 32 (1974).5

C. Licensing Sanctions

   For purposes of this opinion, we need not explore in the abstract

potential differences between the potential reach of this State's criminal
law enforcement, discussed in Part IIB above, and its administrative law
enforcement. Within broad constitutional limits, the State would not be
prohibited from imposing civil sanctions for out-of-state misdeeds by its
licensees. A state's prohibitory regulation does not violate the Commerce
Clause of the United States Constitution as long as the regulation is applied
even-handedly, its effects on interstate commerce are only incidental, and
the burden imposed on interstate commerce is not clearly excessive in
relation to the local benefits sought to be achieved. See generally, e.g.,
Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970).

   The issue presented by your inquiry, rather, is whether the

prohibition in TR §15-305.1(a)(2) reaches wholly out-of-state transactions.
We find no indication in its language or context to suggest that the General
Assembly meant to subject a wholesale dealer to license revocation or
suspension for a sales transaction occurring wholly out-of-state. The
licensing scheme required by the Maryland Vehicle Law is intended "to
foster dealer accountability in the context of consumer transactions."
Automobile Trade Association v. Harold Folk Enterprises, 301 Md. 642,
663-64, 484 A.2d 612 (1984); Detroit Automotive Purchasing Services v.
Lee, 463 F. Supp. 954, 957-58 (D. Md. 1978); Aero Motors v.
Administrator, Motor Vehicle Administration, 274 Md. 567, 579-81 and
590, 337 A.2d 685 (1975). In general, the "transactions" that invoke the
State's interest in "dealer accountability" are those that occur in Maryland.6
A person who engages in a vehicle sales transaction in another state is
accountable for compliance with the dealer licensing laws of that state.

    By contrast, the provisions of the Maryland Vehicle Law regulating

title transfers and inspections establish that the State does intend to require
compliance by a wholesale dealer with these statutory duties if the dealer
chooses to sell to a Maryland resident who is not a dealer, regardless of
where the sale occurs. If a retail buyer intends to title and register the
vehicle in Maryland, the dealer is required to obtain a title application from
the transferee, collect all taxes and fees owed the MVA, and otherwise
comply with the requirements in TR §§13-113(e) and 13-812. Further,
subject to certain exceptions, the dealer may transfer the vehicle only after
the vehicle has been approved by an inspection station licensed by the
Maryland State Police. TR §23-106(b)(2).7 This duty is not normally
imposed on a wholesale dealer, because in Maryland a wholesale dealer
may only transfer to another dealer and thus is not required to obtain an
inspection certificate before such a transfer. TR §23-106(a)(1). However,
a licensed wholesale dealer is a dealer licensed to sell vehicles in Maryland.
TR §§11-111 and 15-101(b). The duties imposed on a licensed dealer to
obtain an inspection certificate do not terminate at the State boundaries if
the transferor is a licensed dealer in this State and the transferee is a
resident of the State who intends to title and register the vehicle in
Maryland.8

   A dealer's failure to obtain the title application and to collect and

remit the tax due to the MVA may result in both a licensing sanction and
a deficiency assessment against the dealer. TR §§15-109(a), 15-315(a)(4),
and 13-812. The dealer's failure to comply with the inspection
requirements may also result in the MVA's suspending or revoking the
dealer's license. TR §15-109(2).

                                   III

                              Conclusion

   In summary, it is our opinion that a wholesale dealer may not be

disciplined by the MVA for the mere act of selling vehicles to retail buyers
in a neighboring state.9 Instead, the dealer would face charges under the
laws of the other state unless the dealer were licensed to engage in retail
sales there and otherwise complied with the other state's laws. However,
the dealer would be required to comply with the duties imposed by TR
§§13-113 and 23-106 if the transfer of the vehicle was to a person (other
than another dealer) who intends to title and register the vehicle in
Maryland.

                                            J. Joseph Curran, Jr.
                                            Attorney General

                                            Edward R. K. Hargadon
                                            Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice

1
But see note 6 below and accompanying text.

2
These provisions authorize licensing sanctions if a person "has violated
or is attempting to violate any provisions of" TR Title 15, has "willfully violate[d]
any of the dealer licensing laws," or "has failed to comply with any of the
provisions of the Maryland Vehicle Law relating to ... the sale of vehicles."

3
When the seller at an auction had originally purchased the vehicle to be
used as part of a business enterprise, the wholesale dealer would, in other contexts,
be deemed to have purchased from a "retail buyer," since the original purchase was
a retail sale. See §11-101(e) of the Tax-General Article (definition of "retail sale")
and Black's Law Dictionary 1478 (6th ed. 1990) (definition of "retail"). If the
Legislature's intent was to permit a wholesale dealer to purchase at auction under
these circumstances, the statute should be so clarified.

4
This opinion does not attempt to catalog all possible exceptions to this
general principle. For example, Maryland would not lack jurisdiction over a crime
consisting of an interstate series of acts, where at least one overt act takes place
within Maryland. See State v. Jones, 51 Md. App. at 339. Cf. Maryland v.
Dickson, 717 F. Supp. 1090, 1101 (D. Md. 1989) (evidence supported the
conclusion that Maryland was the situs of a scheme to roll back odometers even
though some actions may have taken place in other states).

5
See also note 4 above.

6
Depending on the particular facts, out-of-state practices might constitute
"untrustworthy[ness],... a practice of failure to perform contracts or ... fraud or bad
faith" or result in a conviction of a crime of moral turpitude. These circumstances,
even if they occurred in another state, may result in licensing sanctions under TR
§15-315(a)(1) or (2).

7
An inspection of the vehicle is not required if the transfer falls within the
exceptions provided in TR §23-106(b)(4) and (5).

8
Both TR §§13-113 and 23-106 speak to the "transfer," of the vehicle,
while TR §15-305.1 speaks to the "sale" of the vehicle. This difference in wording
is significant: While a vehicle sold in another state to a Maryland resident by a
Maryland licensed dealer does not involve the State of Maryland in the sale per se,
Maryland is nonetheless involved in the transfer of the vehicle since the transferee
will be required to submit an application for a title to the MVA. While a sale is part
of the transfer process, the transfer encompasses actions apart from, and in addition
to, the sale of the vehicle.

9
But see note 6 above and accompanying text.