AN ACT Relating to vessel dealers and manufacturers; adding a new chapter to Title 88 RCW; repealing RCW 88.02.060; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds and declares that the distribution and sale of vessels in the state of Washington vitally affects the general economy of the state and the public interest and the public welfare, and that in order to promote the public interest and the public welfare, and in the exercise of its police power, it is necessary to regulate and license vessel manufacturers and dealers doing business in Washington in order to prevent fraud, impositions, and other abuses upon its citizens and to protect and preserve the investments and properties of the citizens of this state.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Department" means the department of licensing which shall administer and enforce this chapter.

(2) "Director" means the director of the department of licensing.

(3) "Distributor" means any person, firm, association, corporation, or trust, resident or nonresident, who in whole or in part offers for sale, sells, or distributes any new and unused vessel to a vessel dealer in this state.

(4) "Manufacturer" means any person, firm, association, corporation, or trust, resident or nonresident, who manufactures or distributes or assembles new and unused vessels or who in whole or in part offers for sale, sells, or distributes any new and unused vessels to a vessel dealer in this state and includes the term "distributor."

(5) "Vessel" means every watercraft used or capable of being used as a means of transportation on the water, except:

(a) Seaplanes;

(b) Vessels used as a ship's lifeboat;

(d) Vessels under sixteen feet in length.

(6) "Vessel dealer" means any person, firm, association, corporation, or trust, not excluded in this section, engaged in the business of buying, selling, exchanging, offering, brokering, leasing with an option to purchase, auctioning, soliciting, or advertising the sale of new or used vessels. A vessel dealer also means a vessel manufacturer for the purpose of licensing. The term "vessel dealer" does not include:

(a) Receivers, trustees, administrators, executors, guardians, or other persons appointed by, or acting under a judgment or order of any court; or

(b) Public officers while performing their official duties; or

(d) Any person engaged in an isolated sale of a vessel in which that person is the registered or legal owner, or both, thereof; or

(e) Any person, firm, association, corporation, or trust, engaged in the selling of vessels of a type not required to be titled or registered in this state; or

(f) Any person who is not in the vessel business, but rather acquires a vessel dealer registration to avoid paying registration fees on a vessel which that person owns.

NEW SECTION. Sec. 3. It is unlawful for any vessel dealer or vessel manufacturer to engage in the vessel business in this state without first obtaining and holding a current license as provided for in this chapter. A distributor shall not be required to have a vessel manufacturer license as long as the vessel manufacturer so represented is properly licensed as a vessel dealer under this chapter.

NEW SECTION. Sec. 4. A vessel dealer or vessel manufacturer shall apply for a license by submitting to the department an application in such form as the department may prescribe. A separate license is required for each business location.

NEW SECTION. Sec. 5. (1) Every application from a vessel dealer or a vessel manufacturer for a vessel dealer license shall contain the following information to the extent it applies to the applicant:

(a) Proof as the department may require concerning the applicant's identity, including but not limited to fingerprints, the honesty, truthfulness, and good reputation of the applicant for license including any partners of a partnership or officers of a corporation making the application;

(b) The applicant's form and place of organization;

(d) Whether the applicant has been adjudged guilty of a crime which directly relates to the business for which the license is sought and the time elapsed since the conviction if less than ten years, or whether the applicant has suffered any judgment within the preceding five years in any civil action involving fraud, misrepresentation, or conversion and in the case of a corporation or partnership, all officers or partners; and

(e) Any other information the department may reasonably require.

(2) Every application for a vessel dealer's license shall contain the name or names of the makes and models of new vessels the dealer or manufacturer intends to sell, and each manufacturer of each new vessel's name and address.

(3) If the applicant is a manufacturer, the application for licensure shall contain the following information to the extent it is applicable to the applicant:

(a) The name and address of the principal place of business of the applicant and, if different, the name and address of the Washington state representative of the applicant;

(b) The name or names under which the applicant will do business in the state of Washington;

(d) The name or names of the makes and models of vessels that the licensee manufacturers;

(e) The name or names and address or addresses of resident employees or agents to provide service or repairs to vessels located in the state of Washington and names and addresses of all retail outlets in this state; and

(f) Any other information the department may reasonably require.

NEW SECTION. Sec. 6. Every application for license shall be retained by the department for a period of three years and shall be confidential information for the use of the department, the attorney general, or the prosecuting attorney only: PROVIDED, That upon a showing of good cause therefor, any court in which an action is pending by or against the applicant or licensee may order the director to produce and permit the inspection and copying or photographing the application and any accompanying statements.

NEW SECTION. Sec. 7. After the completed application has been satisfactorily filed and the fee paid, the department shall, if no denial proceeding is in effect, issue the vessel dealer's license on the basis initially of staggered expiration dates, and thereafter on the basis of annual expiration dates.

NEW SECTION. Sec. 8. (1) The fees for original licenses issued to vessel dealers and manufacturers under this chapter shall be one hundred dollars.

(2) The fee for annual renewal of any vessel dealer license issued to a vessel dealer or vessel manufacturer under this chapter shall be fifty dollars.

(3) The fee for the transfer to another location or change of name of any license issued under this chapter shall be twenty-five dollars: PROVIDED, That only a single twenty-five dollar fee shall be charged if both a location and a name change are applied for at the same time.

(4) All fees collected under this chapter shall be turned into the state treasury and credited to the general fund.

NEW SECTION. Sec. 9. (1) The license of a vessel dealer shall be effective for a twelve-month period and may be renewed by filing with the department, before the expiration thereof, an application containing such information as the department may require to indicate any material change in the information contained in the original application.

(2) The department may require proof that the applicant for an original or the renewal of a vessel dealer's license consist of, but not be limited to, the following documents to continue business operations as a vessel dealer:

(a) Employment security account number if the applicant has employees;

(b) Labor and industry account number if the applicant has employees;

(d) Secretary of state incorporation license if the applicant is incorporated;

(e) Copies of local business licenses if required by the local government wherein the applicant does business; and

(f) Copies of federal income taxes.

(3) In the event that license expiration dates need to be altered to effect staggered licensing, the department shall prorate license fees.

NEW SECTION. Sec. 10. (1) The department shall, upon request, issue vessel dealer display decals to licensed vessel dealers for display upon vessels in lieu of ordinary registrations issued pursuant to chapter 88.02 RCW. The fee for each vessel registration display decal shall be twenty-five dollars.

In the event that a vessel dealer display decal is lost or destroyed, the person to whom it was issued may obtain a duplicate upon the furnishing of proof in the form of a notorized affidavit of that fact and upon payment to the department of a fee of ten dollars.

(2) Vessel dealer and vessel manufacturer display decals may be used:

(a) To demonstrate vessels held for sale when operated by a prospective customer holding a dated demonstration permit, and shall be carried in the vessel at all times it is being operated by any such individual;

(b) On vessels owned or consigned for sale that are in fact available for sale by the firm when demonstrated, for the purposes of the vessel business, by an officer of the corporation, a partner, a proprietor, or by a bona fide employee of the firm, if a card so identifying any such individual is carried in the vessel at all times it is so operated; and

(3) Vessel dealer display decals shall not be used for any purpose other than specifically authorized by this chapter or any rules adopted under it.

NEW SECTION. Sec. 11. A manufacturer of vessels shall supply with each vessel a manufacturer's statement of origin or other document of origin as required in RCW 88.02.070.

NEW SECTION. Sec. 12. Except as otherwise provided in this chapter, the director may by order deny, suspend, or revoke the license of any vessel dealer or vessel manufacturer, or in lieu thereof or in addition thereto, may by order assess, in accordance with chapter 34.04 RCW, civil penalties not exceeding one thousand dollars per violation if the director finds that the order is in the public interest and:

(1) In the case of a vessel dealer or vessel manufacturer, the applicant or licensee, or any partner, officer, or owner:

(a) Was the holder of a license issued under this chapter, which was revoked for cause and never reissued by the department, or which license was suspended for cause and the terms of the suspension have not been fulfilled, or which licensee was assessed a civil penalty and the assessed amount has not been paid;

(b) Has been adjudged guilty of a crime that directly relates to the business for which the license is sought and the time elapsed since the adjudication is less than ten years, or is suffering any judgment within the preceding five years in any civil action involving fraud, misrepresentation, or conversion. For the purposes of this section, adjudged guilty means, in addition to a final conviction in either a state or municipal court, an unvacated forfeiture of bail or collateral deposited to secure a defendant's appearance in court, the payment of a fine, a plea of guilty, or a finding of guilt regardless of whether the sentence is deferred or the penalty is suspended;

(c) Has knowingly or with reason to know made a false statement of a material fact in the application for license or any data attached thereto, or in any matter under investigation by the department. In addition to or in lieu of any other sanction imposed by the director under this chapter for unauthorized use of a vessel dealer display decal, the director may order that any or all such display decals issued under this chapter be confiscated for such period as the director deems appropriate, and in addition to, or in lieu of any other sanction the director may impose a monetary penalty not exceeding twice the amount of excise tax that should have been paid to register properly the vessel at the time of the violation. Such monetary penalty assessment shall be in addition to any fees owing to properly register the vessel;

(d) Refuses to allow representatives or agents of the department to inspect during normal business hours all books, records, and files maintained within this state; or

(e) Fails to pay any civil penalty assessed by the director under this section within ten days after the assessment becomes final.

(2) In the case of a vessel dealer or vessel manufacturer, the applicant or licensee, or any partner, officer, employee, or agent:

(a) Has defrauded or attempted to defraud the state, or a political subdivision thereof, of any taxes or fees in connection with sale or transfer of a vessel; or

(b) Has engaged in practices inimical to the health or safety of the citizens of the state of Washington, including but not limited to failure to comply with standards set by the state of Washington or by the federal government pertaining to the construction or safety of vessels.

NEW SECTION. Sec. 13. For the purpose of any investigation or proceeding under this chapter, the director or any officer designated by the director may administer oaths and affirmation, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records that the director deems relevant or material to the inquiry.

In the case of contumacy by, or refusal to obey a subpoena issued to, any person, any court of competent jurisdiction, upon application by the director, may issue to that person an order requiring the person to appear before the director, or the officer designated by the director, to produce documentary or other evidence touching the matter under investigation or in question. The failure to obey an order of the court may be punishable by contempt.

NEW SECTION. Sec. 14. A vessel dealer shall complete and maintain for a period of at least five years a record of the purchase and sale of all vessels purchased or sold by the dealer which records shall consist of:

(1) The vessel hull identification number and the last registration document of any used or remanufactured vessel;

(2) A description of the vessel;

(3) The name and address of the person from whom purchased;

(4) The name of the lienholder, if any;

(5) The name and address of the purchaser;

(6) Agreements relating to consigned vessels;

(7) Trust accounts, statements, contracts, receipts, and deposits; and

(8) Any additional information the department may require.

Such record shall be maintained separate and apart from all other business records of the dealer and shall be available for inspection by the director or the director's authorized agent during normal business hours.

NEW SECTION. Sec. 15. The director may make any reasonable rules consistent with this chapter for its enforcement and operation.

NEW SECTION. Sec. 16. It shall be a misdemeanor for any person to violate any of the provisions of this chapter and the rules adopted under it.

NEW SECTION. Sec. 17. Each of the following acts or practices is hereby declared to be unlawful:

(1) For any vessel dealer to refuse to furnish, upon request of a prospective purchaser, the identity of the previous owner of any used vessel offered for sale;

(2) For a dealer, having taken an instrument or cash on deposit from a purchaser before the delivery of the bargained-for vessel, to commingle the on deposit funds with assets of the dealer instead of holding the on deposit funds as trustee in a separate trust account until the purchaser has taken delivery of the bargained-for vessel. The failure, immediately upon receipt, to endorse on deposit instruments to such a trust account, or to set aside on deposit cash for deposit in such trust account, and the failure to deposit such instruments or cash in the trust account by the close of banking hours on the day following receipt thereof is evidence of intent to commit this unlawful practice. For the purpose of the manufacture of a vessel that does not already exist, a vessel dealer or vessel manufacturer may release on deposit funds from trust upon the written agreement of the customer;

(3) For a vessel dealer to remove or alter the hull identification number (HIN) on any vessel, or fail to affix a hull identification number assigned by the department;

(4) For a vessel manufacturer to encourage, aid, abet, or teach a vessel dealer to sell vessels through any false, deceptive, or misleading sales or financing practices including but not limited to those practices declared unlawful in this section;

(5) For a vessel dealer to fail to have a written agreement with the consignor of a vessel.

NEW SECTION. Sec. 18. Whenever it appears to the director that any vessel dealer, vessel manufacturer, firm, or person selling a vessel has engaged in or is about to engage in any act or practice constituting a violation of this chapter or any rule adopted under it, the director may issue an order directing the person or firm to cease and desist from continuing the act or practice. Reasonable notice of and opportunity for a hearing shall be given. The director may issue a temporary order pending a hearing, the temporary order shall remain in effect until ten days after the hearing is held, unless the order is not upheld, and shall become final if the person or firm to whom notice is addressed does not request a hearing within fifteen days after receipt of notice.

NEW SECTION. Sec. 19. The director may refer such evidence as may be available concerning violations of this chapter or rules adopted under it to the attorney general or the proper prosecuting attorney, who may in the attorney's discretion, with or without such a reference, in addition to any other action that might be commenced, bring an action in the name of the state against any person to restrain and prevent the doing of any act or practice prohibited or declared unlawful under this chapter.

NEW SECTION. Sec. 20. In the enforcement of this chapter, the attorney general or any prosecuting attorney may accept an assurance of compliance with this chapter from any person deemed in violation of it. Any such assurance shall be in writing and be filed with and subject to the approval of the superior court of the county in which the alleged violator resides or has his or her principal place of business, or in Thurston county.

NEW SECTION. Sec. 21. All provisions of this chapter shall be liberally construed to the end that tax evasion or commission of fraud or misrepresentation in the sale, barter, or disposition of vessels in this state may be prohibited and prevented, and irresponsible, unreliable, or dishonest persons may be prevented from engaging in the vessel business and reliable persons may be encouraged to engage in the business of selling, bartering and otherwise dealing in vessels in this state.

NEW SECTION. Sec. 22. Section 19, chapter 7, Laws of 1983 and RCW 88.02.060 are each repealed.

NEW SECTION. Sec. 23. Sections 1 through 21 of this act shall constitute a new chapter in Title 88 RCW.

NEW SECTION. Sec. 24. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.