Auraria Businessmen Against Confiscation, Inc. v. Denver Urban Renewal Authority

• Decision Date: 14 January 1974
• Docket Number: No. 26059,26059
• Parties: AURARIA BUSINESSMEN AGAINST CONFISCATION, INC., et al., Plaintiffs-Appellants, v. DENVER URBAN RENEWAL AUTHORITY, Defendant-Appellee.
• Court: Colorado Supreme Court

Page 845

517 P.2d 845

183 Colo. 441

AURARIA BUSINESSMEN AGAINST CONFISCATION, INC., et al Plaintiffs-Appellants, v. DENVER URBAN RENEWAL AUTHORITY, Defendant-Appellee.

No. 26059.

Supreme Court of Colorado, En Banc.

Jan. 14, 1974.

Jon L. Holm, Peter D. Willis, Denver, for plaintiffs-appellants.

Berge, Martin & Clark, William G. Berge, Paul C. Benedetti, Denver, for defendant-appellee.

LEE, Justice.

This appeal involves the application and constitutionality of the relocation payment provisions of the Urban Renewal Law, C.R.S.1963, 139--62--1, et seq., and the Relocation Assistance and Land Acquisition Policies Act, 1971 Perm.Supp., C.R.S.1963, 69--10--1, et seq.

Appellants sought to restrain the Denver Urban Renewal Authority (DURA) from further land acquisition activities in the Auraria urban renewal development, and to have declared unconstitutional sections of the statutes under which DURA was exercising its authority.

Appellants' ex parte motion for a temporary restraining order was granted by the trial court, which ordered that DURA refrain and desist from any activity relating to the acquisition of property within the Auraria urban renewal area. After a hearing on the merits, the court dissolved the restraining order and denied appellants' motion for a temporary injunction. The court found the statutes to be constitutional and denied the requested declaratory and injunctive relief. We affirm the judgment.

C.R.S.1963, 139--62--5(11), empowers urban renewal authorities '(t)o make reasonable relocation payments to or with respect to individuals, families and business concerns situated in an urban renewal area which will be displaced as aforesaid, for moving expenses and actual direct losses of property (except good will or profit) resulting from their aforesaid displacement for which reimbursement or compensation is not otherwise made including the making of such payments financed by the federal government.' It is appellants' position and they argue that by denying compensation for loss of goodwill or profit associated with the dislocation, the statute deprives them of property without due process of law and without just compensation, and discriminates against them as a class in violation of the Equal Protection clauses of the federal and state constitutions.

1971 Perm.Supp., C.R.S.1963, 69--10--4, authorizes a payment in addition to a condemnation award of a sum not to exceed $15,000 for homeowners to aid them in securing a comparable replacement dwelling. Section 69--10--5 provides for a like payment not to exceed $4,000 for tenants. Nowhere does this statute provide for a comparable payment for business owners whose businesses are dislocated. This, appellants contend, creates an illegal and unconstitutional classification in violation of the Equal Protection clauses.

The issues on this appeal as framed by the briefs are: First, may actions in eminent domain be enjoined? Second, are goodwill and profits compensable under eminent domain? And, third, do either of the above mentioned statutes create discriminatory or unjustified classifications without rational basis and thus deny appellants due process and equal protection of the law? We answer all questions in the negative.

I.

Appellants' argument that the court erred in denying injunctive relief flies in the face of the numerous decisions of this Court holding to the contrary. Colorado Springs v. Crumb, 148 Colo. 32, 364 P.2d 1053; Ambrosio v. Baker District, 139 Colo. 437, 340 P.2d 872; Glendale v. Denver, 137 Colo. 188, 322 P.2d 1053; Scanland v. Commissioners, 97 Colo. 37, 46 P.2d 894; Lavelle v. Julesburg, 49 Colo. 290, 112 P. 774. See also, Dunham v. Golden, 31 Colo.App. 433, 504 P.2d 360; Colorado Central Power Co. v. City of Englewood, 89 F.2d 233 (10th Cir. 1937). See generally, 6A Nichols, Eminent Domain § 28.22; 27 Am.Jur.2d Eminent Domain § 487. Constitutional objections to the eminent domain proceedings should be raised in those proceedings and be determined by the court In limine and not by way of a collateral injunction proceeding.

II.

As heretofore noted, C.R.S.1963, 139--62--5(11), authorizes urban renewal authorities to make reasonable relocation payments to or with respect to individuals, families and business concerns which will be displaced, for moving expenses and actual direct losses of property (except goodwill and profit) resulting from their displacement for which reimbursement or compensation is not otherwise made. This is in addition to the power to acquire property and make payment therefor under eminent domain as provided in C.R.S.1963, 139--62--5(6).

Appellants contend that the goodwill and profits have a definite value associated with the location of a business, which will be destroyed upon relocation. Since the statute denies them compensation for these losses, it deprives them of property without compensation or due process of law. Moreover, they argue that since the only people who have goodwill and profits are businessmen, the statute impermissibly discriminates against businessmen.

It is well-settled that the goodwill of a business, though not property in and of itself, has value and may form the subject matter of a sale. Lerner v. Stone, 126 Colo. 589, 252 P.2d 533; Herfort v. Cramer, 7 Colo. 483, 4 P. 896. Nevertheless, goodwill and profits traditionally have not been regarded as elements of just compensation under either the due process or just compensation clauses of the federal and state constitutions. See, e.g., Mitchell v. United States, 267 U.S. 341, 45 S.Ct. 293, 69 L.Ed. 644; State v. Woodham, 288 Ala. 608, 264 So.2d 166; Restaurants, Inc. v. City of Wilmington, 274 A.2d 137 (Del.Supr.); Verzani v. State Department of Roads, 188 Neb. 162, 195 N.W.2d 762. Compare Michigan State Hwy. Comm. v. L & L Concession Co., 31 Mich.App. 222, 157 N.W.2d 465 With Detroit v. Whalings, Inc., 43 Mich.App. 1, 202 N.W.2d 816. See generally, 2 Nichols, Eminent Domain § 5.76; 4 Nichols, Eminent Domain § 13.3; 27 Am.Jur.2d Eminent Domain §§ 285 and 287.

Although the rule has been criticized and in some jurisdictions severely limited or rejected, ¹ this Court has adhered to the view that changing the rule to correct supposed inequities is properly a matter of legislative action and not judicial declaration. Denver v. Tondall, 86 Colo. 372, 282 P. 191. We reaffirmed this rule in City and County of Denver v. Hinsey, 177 Colo. 178, 493 P.2d 348, where it was observed:

'The reasoning behind these cases is that the business itself is not being condemned and the business can be relocated elsewhere. Financial success in business is also too ephemeral and is tied to considerations involving the type of business which is being conducted, management, and a variety of other factors which are not tied to the land. * * *'

We do not construe section 139--62--5(11) as creating addititional elements compensable under our eminent domain laws. Rather, its purpose is to provide supplemental assistance for particular losses incurred by reason of dislocation, in an effort to reduce the burden falling on the property owner whose property is condemned. Our attention has not been directed to anything in the federal or state constitutions which mandates compensation for these losses incidental to the dislocation, including goodwill and business profits, and we regard the supplemental payments to be statutory grants. It was for the legislature in its discretion to declare what, if any, expenses and losses should be reimbursed by supplemental payments. We cannot say, as appellants argue, that the omission of supplemental payments for the loss of goodwill and profit in section 139--62--5(11) renders it unconstitutional. ²

III.

Appellants contend that the sections of the Urban Renewal Law and the Relocation Assistance act with which we are here concerned create discriminatory and unjustified classifications which deny appellants, as small businessmen, equal protection of the law. We view appellants' argument as falling far short of demonstrating unconstitutionality.

As before observed, the statutes grant relocation assistance for the purpose of minimizing hardship incurred from involuntary dislocation of homeowners, tenants and businesses under the eminent domain proceedings involved in slum clearance and urban renewal projects. It has not been shown that the statutes interfere with, limit or restrict any rights guaranteed by the constitution. Nor do we perceive that there is any constitutional right to relocation benefits or assistance. Appellants have not shown the classifications as being 'suspect,' such as would cast upon the state the heavy burden of justification by showing a compelling state interest. Graham v. Richardson, 403 U.S. 365, 91 S.Ct. 1848, 29 L.Ed.2d 534; Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600. Viewed in this aspect, the statutes are entitled to the usual presumption of constitutionality and the burden is upon appellants to show beyond a reasonable doubt the alleged unconstitutionality. San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16; Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491; Harding v. Industrial Commission, Colo., 515 P.2d 95.

Initially we do not perceive, as appellants argue, that the statutes deal with only one class of persons, that is, those who are displaced by an urban renewal authority, and that the different treatment of the businessman within the one class results in an invidious discrimination. Rather, the statutes classify the displaced persons into separate classes of homeowners, tenants, and businesses, and accord the same treatment to all alike within each class.

The validity of the general public purposes of the statutes--slum clearance and urban renewal, and relocation assistance--being assumed (Rabinoff v. District Court, 145 Colo. 225, 360 P.2d 114), it remains only to determine whether the...