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nearly as may be achieved. In particular,
in an action by the Attorney General under
section 17535 a trial court has the inherent
power to order, as a form of ancillary relief,
that the defendants make or offer to make
restitution to the customers found to have

been defrauded. (Citations omitted; emphasis
added.)

Id. at 1402. See also, Annot., 55 ALR 3d 198 and Annot., 59

ALR 3d 1222.

Appellants concede, and we recognize, that a court has the inherent power, ancillary to its general equity jurisdiction, to order restitution in an appropriate case, see, Securities & Exchange Com'n v. Golconda Mining Co., 327 F.Supp. 257 (S.D. N.Y. 1971); however, they contend that the State must prove that persons were actually defrauded and suffered injury as a result of the misrepresentations made. Respondents contend that they need only prove that a violation of NRS 207.171 has occurred, without more, and cite NRS 207.173 which provides in part, "it is sufficient ... that any statement referred to in NRS 207.171 has a tendency to deceive or mislead the public because of its false or deceptive or misleading character even though no member of the public is actually deceived or misled by such statement." We are constrained to agree with appellant Landex's argument. County, 552 P.2d 760 (Cal. 1976), the California Supreme Court, dealing with an action brought by a district attorney under legislation similar to NRS 207.171 et seq., stated:

In People v. Superior Court of Ventura

Both complaints seek restitution to the
investors. . . .The People . . . are still
required to prove that restitution is appro-
priate even though civil penalties may also be

• appropriate in the absence of such proof.
Citations omitted; emphasis added.)

Id. at 763. See also, Kugler v. Romain, 279 A.2d 640 (N. J. 1971).
The comparatively limited proof required to establish

false or deceptive advertising contrasts sharply with that necessary to prove actionable fraud. To establish fraud there must be proven:

[1] A false representation made by the defen-
dant, [2] knowledge or belief on the part of the
defendant that the representation is false--or,
that he has not a sufficient basis of information
to make it, [3] an intention to induce the plaintiff
to act or to refrain from acting in reliance upon
the misrepresentation, [4] justifiable reliance
upon the representation on the part of the plain-
tiff in taking action or refraining from it, and
[5] damage to the plaintiff, resulting from such
reliance

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Lubbe, supra, at 599, 540 P.2d at 117; accord, Ach v. Finkelstein, 70 Cal.Rptr. 472 (1968). Viewing the question most favorably

to respondents, the first three elements have been proven; however, we find no evidence on elements four and five. Under our decision today, as to false advertising, no purchaser need be produced, or even exist. However, relative to the proposition of actionable fraud, the record does not reveal who, if any, of the some nine hundred purchasers were recipients of the deceptive advertising. Not a single purchaser of a "MMR" parcel was produced at trial, and there is not a shred of evidence showing reliance upon the false, deceptive, or misleading presentations. Similarly, no evidence was proffered showing that all buyers were similarly situated, and, therefore, what amounts are owed to each. Because of like evidentiary voids we do not know whether reliance by the purchasers is provable, as some purchasers may have known, as a result of their knowledge and experience, that the representations were false or misleading. Even more fundamentally, no purchaser or representative of a class was joined as a party to the proceeding, and for this reason alone restitution was not an available remedy. More precisely, the court was without the power to enter a judgment ordering an offer of restitution or, correspondingly, reconveyances. Compare, United States v. Parkinson, 240 F.2d 918 (9th Cir. 1956); see also, Kugler, supra (by reason of a price unconscionability common to all transactions, all of the sales contracts were held invalid and unenforceable); Jayhill, supra (holding that as a form of ancillary relief to the

attorney general suit, a court may award restitution to all purchasers shown to have been defrauded).

Although Nevada is a "notice pleading" state, our practice is not so liberal as to permit recovery in these circumstances. The court below erred in ordering restitution.

4. Twenty Violations of NRS 207.170.

Appellants next challenge the award of civil penalties, contending that the wording of NRS 207.170 "clearly establishes that it is the act of publication and not the extent of that advertising which determines whether one violation, or a number of violations, of false advertising has been committed." They argue that here only one violation of NRS 207.171 occurred, referring to NRS 207.174 which states in part: "As used in this section, the term 'each violation' includes, as a single violation, a continuous or repetitive violation arising out of the same act." The same act" language requires that there be separate acts involved before a person can be charged with more than one violation of NRS 207.171.

In the instant case, the court found that the statements complained of were made, initially, by a person giving a podium speech to a group of approximately twenty persons in a Reno "hospitality room." It was further established that immediately thereafter various sales representatives of Landex approached each potential investor individually and made certain misrepresentations used as a partial basis of the complaint. It is essentially appellants' contention that since the alleged misrepresentations were made to the group, there is only one violation. We do not agree.

In Jayhill, supra, the court interpreted similar statutory language and determined the number of violations by the number of victims. There, the defendant made twentyfive separate misrepresentations to each customer in their door-to-door sales of encyclopedias. The Jayhill court

imposed the maximum penalty of $2,500 for each violation and

rejected the contention that a violation occurs with each misrepresentation, irrespective of the number of victims. Compare, State v. Ralph Williams' N.W. Chrysler Plymouth, 553 P.2d 423 (Wash. 1976) (adopting the one violation per each misrepresentation rule).

In Jayhill, the court described the purpose behind California's false advertising provisions as follows:

The

'The new civil remedy was added because the injunction
and misdemeanor provisions of the old law were
not adequate to stop false advertising rackets.
injunction is little more than a cease and desist
order. The guilty party keeps his gains and is
merely ordered not to defraud people in the same
way again. Criminal prosecutions are seldom under-
taken because juries tend to be reluctant to apply
criminal sanctions in white-collar crimes and be-
cause it is difficult for outsiders to fix responsi-
bility in the modera corporate structure.'

507 P.2d at 1404 n. 3.

Appellants argued that should we follow the Jayhill rationale, and if the alleged misrepresentations had been printed in a newspaper, they would be liable for violations numbering in the thousands. The Jayhill court was faced with, and, like this court, not concerned with that possibility. The probable impact of the podium presentations, followed by the one-to-one confrontations, is much greater than would be similar statements contained in a newspaper or magazine. On this record, we do adopt the one-violation-per-customer rule announced in Jayhill.

The judgments appealed from are wholly affirmed, with the exception of that portion ordering Landex to offer restitution to its purchasers, which restitutionary order is reversed.

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(Exhibit B)

THE REGULATION OF LAND SALES IN NEVADA

by

Thomas L. Stringfield

Prepared for
MCGEORGE SCHOOL OF LAW
Nevada Law - Professor Rohwer

May 1, 1976

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