2019 New Mexico Statutes
Chapter 66 - Motor Vehicles
Article 4 - Licensing of Dealers and Wreckers
Section 66-4-7 - Dealers, wholesalers, distributors and auto recyclers; title service companies; dealers of motorcycles only; bond.

A. Before issuance of any dealer's license, wholesaler's license, distributor's license, auto recycler's license or title service company license, the applicant shall procure and file with the department a corporate surety bond in the amount of fifty thousand dollars ($50,000). An applicant for a dealer's license for motorcycles only shall procure and file with the department a corporate surety bond in the amount of twelve thousand five hundred dollars ($12,500). The corporate surety shall be licensed by the public regulation commission or a successor entity to do business in this state as a surety and the form of the bond shall be approved by the attorney general. The bond shall be payable to the state for the use and benefit of the purchaser and the purchaser's vendees, conditioned upon payment of any loss, damage and expense sustained by the purchaser or the purchaser's vendees, or both, by reason of failure of the title of the vendor, by any fraudulent misrepresentations or by any breach of warranty as to freedom from liens on the motor vehicle or motorcycle sold by the dealer, wholesaler, distributor, dealer of motorcycles only or auto recycler. The bond shall be continuous in form and limited to the payment of fifty thousand dollars ($50,000) in total aggregate liability on a dealer's license, wholesaler's license, distributor's license, auto recycler's license or a title service company license and twelve thousand five hundred dollars ($12,500) on a dealer's license for motorcycles only.

B. No applicant for a dealer's license, wholesaler's license, distributor's license or dealer's license for motorcycles only who files bond in the amount and form specified in Subsection A of this section shall be required to file any additional bond to conduct a business of wrecking or dismantling motor vehicles or motorcycles. Conversely, no applicant for an auto recycler's license who files bond in the amount and form specified in Subsection A of this section shall be required to file any additional bond to conduct a business of dealer, distributor, wholesaler or dealer of motorcycles only.

C. In lieu of the bond required in this section, the dealer, wholesaler, distributor, auto recycler or dealer of motorcycles only may elect to file with the department the equivalent amount of cash or bonds of the United States or New Mexico or of any political subdivision of the state.

D. The license of a dealer, wholesaler, distributor or auto recycler or of a title service company may be suspended or canceled if the dealer, wholesaler, distributor, auto recycler or title service company fails to have in effect the required bond or other security.

History: 1953 Comp., § 64-4-7, enacted by Laws 1978, ch. 35, § 220; 1981, ch. 361, § 19; 1983, ch. 238, § 1; 1998, ch. 48, § 13; 1999, ch. 122, § 7; 2005, ch. 324, § 17.

Cross references. — For definition of "division", see 66-1-4.4 NMSA 1978.

For the penalty for violation of this section, see 66-4-9 NMSA 1978.

The 2005 amendment, effective January 1, 2006, changed "wrecker of vehicles" to "auto recycler".

The 1999 amendment, effective July 1, 1999, in the section heading, inserted "title service companies"; In Subsection A, in the first sentence, inserted "license or title service company", in the third sentence substituted "public regulation" for "state corporation", and in the fifth sentence inserted "or a title service company license; and added Subsection D.

The 1998 amendment, effective July 1, 1998, in the section heading, deleted "house trailer dealers"; rewrote Subsection A; in Subsection B, deleted "house trailer dealer's license" following "license", deleted "house trailers" following "vehicles", deleted "of motor vehicles" in two places, and deleted "of motor vehicles, house trailer dealer"; and rewrote Subsection C.

Purpose of bond. — The bond, required by Section 66-4-7A NMSA 1978, covers fraudulent misrepresentations and omissions by the dealer during the sale of a vehicle. Rubio v. Bob Crow Chrysler-Plymouth-Dodge, 145 F. Supp.2d 1248 (D. N.M. 2001).

Purpose of bond. — The auto dealer's bond in Section 66-4-7 NMSA 1978 is to protect purchasers from failure of title and is applicable to other acts of alleged fraud or misrepresentation which cause a failure of title. Morey v. Miano, 141 F.Supp. 2d 1061 (D.N.M. 2001)

Conditions of payment. — The statute covers three separate conditions of payment: failure of title of the vendor, any fraudulent representations and breach of warranty as to freedom from liens. McAlpine v. Zangara Dodge, Inc., 2008-NMCA-064, 144 N.M. 61, 183 P.3d 946.

Where the surety had notice and an opportunity to defend its principal, but failed to do so, the surety is bound by default judgment against the principal. McAlpine v. Zangara Dodge, Inc., 2008-NMCA-064, 144 N.M. 61, 183 P.3d 946.

Bond was intended not only for protection of a purchaser of an automobile from the bonded dealer, but also a wholesale seller. Commercial Ins. Co. v. Watson, 261 F.2d 143 (10th Cir. 1958); superseded by statute McAlpine v. Zangara Dodge, Inc., 2008-NMCA-064, 144 N.M. 90, 183 P.3d 975.

Bond allows recovery of reasonable attorney's fees for appeal. — Under the surety's bond guaranteeing the payment of any loss or damages resulting from failure of title, purchaser is entitled to recover reasonable attorney fees for representation on appeal. Yoakum v. Western Cas. & Sur. Co., 1965-NMSC-127, 75 N.M. 529, 407 P.2d 367.

Bond does not cover fraud occurring long after title passed. — The bond is to protect against failure of title or fraud at the time of the purchase, and does not cover fraud occurring long after title has actually passed. Prince v. National Union Fire Ins. Co., 1965-NMSC-073, 75 N.M. 313, 404 P.2d 137.

Creditor unprotected by bond. — Where decedent automobile dealer could not obtain a license to do business as an automobile dealer or obtain a statutory dealer's bond and dealer's friend obtained bond and license for him, customer who gave car to dealer which he subsequently sold and then dealer died was not entitled to protection of statutory dealer's bond since customer was in reality a creditor unprotected by bond. Kerr v. Schwartz, 1970-NMSC-126, 82 N.M. 63, 475 P.2d 457.

Section not applicable. — This section is not applicable where a vehicle was intended to be collateral on a loan and not a purchase. Bennett v. Western Sur. Co., 1980-NMSC-108, 95 N.M. 13, 618 P.2d 357.

Fraud not consummated until after title hypothecated to bank. — Bonding company is liable under its policy on the ground that although it was not in force when possession and title to the car were fraudulently taken on January 16, 1957, and the surety bond was issued on the following January 21, and the bond would not be retroactive for frauds perpetrated prior to its effective date, though the fraud might have been conceived prior to the issuance of the bond, it was not consummated until after the title to the automobile was hypothecated to the bank and defendant received the proceeds of the loan some time after the effective date of the bond. Commercial Ins. Co. v. Watson, 261 F.2d 143 (10th Cir. 1958).

Noncompliance with title transfer provisions not failure of title. — The provisions refer to the duties of the dealer and transferee, but noncompliance therewith cannot be considered a failure of title, fraudulent misrepresentation, or breach of warranty as to freedom from liens on a motor vehicle. Prince v. National Union Fire Ins. Co., 1965-NMSC-073, 75 N.M. 313, 404 P.2d 137.

Fact that alleged principal was licensed automobile dealer under Section 64-8-1, 1953 Comp. (similar to Section 66-4-1 NMSA 1978) and had, likewise, procured the bond required by Section 64-8-6, 1953 Comp. (similar to this section), was considered favorably in determination that agency relationship existed. State v. DeBaca, 1971-NMCA-092, 82 N.M. 727, 487 P.2d 155.

Section did not apply to mobile homes. — Section 64-8-6, 1953 Comp. (similar to this section), did not apply to the purchase of mobile homes; its bond requirements applied only to the sale of motor vehicles, and a mobile home, being without motive power, could not be a motor vehicle within the meaning of Section 64-8-6, 1953 Comp. Lewallen v. Elmore Mobile Homes, Inc., 1976-NMCA-056, 89 N.M. 323, 551 P.2d 1370.