Request By:
The Honorable Stuart L. Adams, Jr.
Assistant Jefferson County Attorney
1129 Kentucky Home Life Building
Louisville, KY 40202
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Richard O. Wyatt, Assistant Attorney General
This letter is in response to your request for an official Opinion of the Attorney General regarding KRS 365.410 through KRS 365.480.
Specifically, you asked three questions
(1) Whether the letter from this office by H. Regina Cullen dated March 1, 1978, on this matter reflects the current opinion of the Attorney General?
(2) To whom business people should be referred to determine if they need a "going out of business" license, and whether the County Clerk is an appropriate official for such referral?
(3) What role does the County Attorney have in enforcing these statutes and what means of enforcement are available?
The statements in Ms. Cullen's letter of March 1, 1978, provide a basic summary of KRS 365.410 through KRS 365.480. However, since her letter was not an official opinion, and since some elaboration to her remarks appear necessary for clarification in general, we would like to make a broader statement. Also, you are referred to OAG 75-434 and OAG 69-61 for further information regarding these sections.
Any person proposing to conduct a sale using "trigger" words such as, but not limited to, "closing out sale," "liquidation sale," "lost our lease sale, " "forced to vacate sale," "fire sale," or "removal sale" induces a belief that upon disposal of the stock of goods on hand, the business will cease and discontinue at the premises where the sale is conducted and is required to comply with the provisions of KRS 365.410 through KRS 365.480.
These requirements apply whether the business has been established for a number of years or whether the business is a transient vendor simply setting up in a local motel for a sale of limited duration, as the statute makes no differentiation between them.
It should be noted, however, that most transient sellers will not be regulated by these sections. KRS 365.410(1) and (7) apply to "any sale . . . held in such a manner as to induce a belief that upon disposal of the stock of goods on hand, the business will cease and discontinue at the premises where the sale is conducted." Although a transient seller does induce a belief that at the end of the sale it will cease and discontinue business at the temporary premises where the sale is conducted, there is generally no induced belief that the duration of the sale is dependent upon the then present stock of goods. The limiting factor is generally time only, and should the first days of the sale be unexpectedly successful so that the stock required replenishing to meet the expected demands of the later sale days, the consumers would expect such replenishment be made. In fact, a prospective customer traveling an inconvenient distance to the sale location on the latter days would probably consider the seller's advertising to be misleading should his stock be totally depleted. Likewise, the consumers generally are not induced by such sellers to believe that the advertised sale will continue past the stated closing date even if the seller continues to have a high inventory.
A transient or temporary vendor must meet all the required conditions before he would be subject to licensure under KRS 365.410 et seq. A temporary or transient vendor is not exempt per se. It is possible that a seller could set up temporary operations for the purpose of selling only the inventory he presently had on hand and, consequently, could induce that belief by consumers. Such belief could be induced by using terms such as, but not limited to, "closing out sale," "liquidation sale," "lost our lease sale, " "forced to vacate sale," or other means. Also KRS 365.410 to KRS 365.480 would apply to such a transient or temporary seller if he held the sale "in such a manner as to induce a belief that the goods are being sold at a reduction in price due to damage by fire, smoke, water or otherwise"; or if he represented the sale to be an "insurance, bankruptcy, mortgage foreclosure, insolvent's, assignee's, executor's, administrator's, receiver's or trustee's sale." In such cases, the seller would be required to comply with the provisions of KRS 365.410 to KRS 365.480.
Regarding appropriate officials to advise business people regarding KRS 365.410 et seq. , there are several possibilities. The county clerk is responsible for administering these sections and for determining whether a license shall be issued (KRS 365.435). In the event the county clerk denies the license and appeal is made to the county judge/executive, the county attorney shall oppose the issuance (KRS 365.435). It would consequently appear that either or all of these three officials could reasonably be expected to provide the public with an explanation of the law they administer or enforce. The county clerk should seek any assistance needed to understand his duties from the county attorney (KRS 569.210(2)). Of course, the Consumer Protection Division of the Office of the Attorney General under KRS 367.150 also has the responsibility of cooperating with local officials and of providing consumer services such as helping consumers and business people understand their rights and duties.
Regarding the powers of the county attorney to enforce the provisions of KRS 365.410 to 365.480: making a false statement in the application provided for in KRS 365.410 to 365.480 is purjury punishable by imprisonment for not more than five years (KRS 365.992(1)); advertising a sale in violation of KRS 365.410 to 365.480 is a misdemeanor punishable by a fine of not more than $500.00 or imprisonment in the county jail for not more than six months, or both (KRS 365.992(2)); conducting a sale in violation of KRS 365.410 to 365.480 is a misdemeanor punishable by a fine of not more than $500.00 or imprisonment in the county jail for not more than six months or both (KRS 365.992(3)). The county attorney has the power to prosecute these violations under KRS 15.725(2) since they are misdemeanors and would be brought in distinct court (KRS 24A.110(2)). The only limitation of the county attorney's authority to enforce the provisions of KRS 365.410 to 365.480 in any instance is if the Attorney General has enforced these sections through a civil suit in the particular matter and has won a civil penalty award (KRS 365.480(2)). Unless a civil penalty has been assessed as a result of action brought by the Attorney General, the county attorney may proceed as he deems appropriate.
Your opinion request was quite broad and involves several statutes. We have covered the broad scope as well as provided what detail appeared necessary. Should your office wish still further elaboration on any point please specify.