Rathke v. MacFarlane

Decision Date19 July 1982
Docket NumberNo. 81SA263,81SA263
Citation648 P.2d 648
PartiesEarl RATHKE, d/b/a Colorado Collectors Center, a sole proprietorship, Klaus Degler, d/b/a Rocky Mountain Coin & Stamp, a sole proprietorship, Jackie D. Willis, Inc., d/b/a Denver Gold & Silver Exchange, a Colorado corporation, Appellants, v. J. D. MacFARLANE, Attorney General of the State of Colorado, Dale Tooley, District Attorney for the 2nd Judicial District of the State of Colorado, andArthur G. Dill, Chief of Police of the City and County of Denver, Appellees.
CourtColorado Supreme Court

Sherman & Sherman, P.C., David M. Sherman, Edward H. Sherman, Denver, for appellants.

R. Dale Tooley, Dist. Atty., Second Judicial District, J. D. MacFarlane, Atty. Gen., Brook Wunnicke, Chief Appellate Deputy Dist. Atty., J. Stephen Phillips, First Asst. Atty. Gen., John Olsen, Deputy Dist. Atty., Denver, for appellees.

ERICKSON, Justice.

This is an appeal from the denial of a motion for a preliminary injunction by which the appellants, Rathke et al., (Rathke) sought to enjoin the appellees, the Attorney General of the State of Colorado et al., from enforcing section 18-16-101 et seq., C.R.S.1973 (1978 Repl. Vol. 8) (1981 Supp.). The trial court denied the motion on the ground that the appellants failed to establish the probability that the challenged statute was unconstitutional beyond a reasonable doubt. We affirm.

I.

The facts of this case are undisputed. The appellants are merchants in the City and County of Denver who are engaged in the business of buying and selling precious metals and stones, including gold and silver bullion, coins and currency, jewelry, and similar articles. They operate their businesses by buying such articles from members of the general public. In most instances, no purchase is consummated unless and until the appellants have simultaneously entered into an agreement, via teletype or other instantaneous communication method, for the resale of the article to a third party. Both purchases and resales are based upon the then-prevailing market rate for the metallic content of the item purchased, which is subject to hourly, daily, and monthly fluctuations. By teletype trade association rules, the sales are contingent upon delivery of the article to the new purchaser within 48 hours following the teletype sales commitment. Under this method, the appellants obtain a fixed profit on each article, which is the difference between the price at which they buy and the price at which they simultaneously commit to sell the article. As a result of this procedure, the appellants need not speculate on the precious metal market fluctuations but are able to immediately ascertain the amount of profit on each article bought and sold.

On May 22, 1981, section 18-16-101 et seq., C.R.S.1973 (1978 Repl. Vol. 8) (1981 Supp.), was enacted which regulates appellants' business by imposing holding period and recording requirements on certain purchases of "valuable articles." The legislative declaration set forth in section 18-16-101 provides:

"The general assembly hereby finds and determines that illicit traffic in stolen valuable articles is encouraged by the absence of any required record-keeping system by persons purchasing such valuable articles. The general assembly further finds that law enforcement officials are hindered in the identification and recovery of stolen valuable articles, and that law enforcement officials are hindered in the discovery and identification of persons selling stolen valuable articles due to the absence of such a required record-keeping system. Accordingly, it is the intent of the general assembly, by enacting this article, to aid law enforcement officials in the discovery and identification of sellers of stolen valuable articles and in the identification and recovery of stolen valuable articles by providing a mandatory record-keeping and reporting system by purchasers and by providing a holding period during which time such articles shall not be disposed of or altered in any manner. Local governments may adopt ordinances more strict than the provisions of this article."

Subsections 18-16-102(7)(a) and (b) define "valuable article" as:

"(a) 'Valuable article' means any tangible personal property consisting, in whole or in part, of precious or semiprecious metals or stones, whether solid, plated, or overlaid, including, but not limited to, household goods, jewelry, United States commemorative medals or tokens, and gold and silver bullion.

"(b) 'Valuable article' shall also include foreign currency when purchased for more than its face value or foreign currency exchange value."

The substantive provisions in the statute require purchasers of valuable articles to secure identification from the sellers before any purchase is made (section 18-16-103), and to record detailed information regarding each purchase in a permanent register which is subject to inspection by peace officers at any reasonable time (section 18-16-105). Section 18-16-106 requires purchasers to hold each valuable article, with certain exceptions, for thirty days from the date of purchase, and permits law enforcement officers to inspect the article at any time during the thirty-day period. In addition, section 18-16-107 requires purchasers to provide written records and reports of purchase transactions to local law enforcement agencies on a weekly basis, and section 18-16-104 prohibits the purchase of any valuable article from any person under eighteen years of age. Failure to comply with any of the provisions in the statute constitutes a class five felony.

On May 26, 1981, Rathke filed a complaint for a declaratory judgment, pursuant to C.R.C.P. 57, challenging the constitutionality of section 18-16-101 et seq. Concurrently, Rathke filed a motion for a temporary restraining order and a preliminary injunction to enjoin the threatened enforcement of the statute by the appellees. Rathke maintained that the statute would force him out of business primarily because the record-keeping requirements were prohibitively burdensome and because the thirty-day holding period would prevent him from buying gold and silver items in the usual fashion. The specific constitutional challenges asserted in the complaint included that: (1) the statute was unconstitutionally vague and indefinite; (2) it impermissibly sanctioned general and warrantless police searches of business premises, inventories, and records; (3) it violated due process as a taking of property without just compensation; (4) it was arbitrary, capricious, and confiscatory legislation in that it destroyed or impaired the appellants' property, livelihood, and businesses; and (5) it interfered with federal legislation and intruded into an area of exclusive jurisdiction of the federal government. At a hearing on May 29, 1981, the parties stipulated to proceed on the motion for a preliminary injunction.

The trial court determined that a preliminary injunction would issue only upon a showing that immediate irreparable injury would occur without injunctive relief; that there was no plain, speedy, and adequate remedy at law; and that there would be a reasonable probability of success on the merits of the case at trial. Because the court found that the bookkeeping regulations incident to section 18-16-101 et seq. were burdensome and that the holding requirement would financially impair Rathke's business operations, it concluded that a showing of immediate, irreparable injury was made. 1 Moreover, the court found that Rathke had no plain, speedy, and adequate remedy at law with respect to the protection of his constitutional rights. However, after recognizing that the test of unconstitutionality of a statute requires proof beyond a reasonable doubt, the trial court concluded that Rathke had not established the probability that the statute was unconstitutional. Accordingly, after a second hearing on June 2, 1981, the court denied the motion for a preliminary injunction.

Thereafter, Rathke filed a motion for reconsideration or, in the alternative, for a new trial. Following a hearing on June 18, 1981, the trial court denied the motion. On the same date, the court also denied Rathke's motion for a stay of judgment and for an injunction pending appeal. Rathke thereafter appealed the denial of the motion for a preliminary injunction to this Court. During the pendency of the appeal, Rathke filed a notice to set the claims for a declaratory judgment and a permanent injunction for a trial on the merits. In response, the appellees filed a notice of nonappearance for the setting on the ground that the trial court lacked continuing jurisdiction in the case because an appeal of the order denying the preliminary injunction had been perfected. Rathke thereafter filed a motion to set the matter for trial and, at a hearing on November 5, 1981, the trial court denied the motion. Consequently, during the pendency of this appeal, no trial has been held on the merits of this case. 2 Our review in this appeal is therefore limited to a determination of whether the district court abused its discretion in denying the motion for a preliminary injunction. 3 For the reasons expressed in this opinion, we affirm the decision of the trial court.

II.

Preliminary injunctive relief is an extraordinary remedy designed to protect a plaintiff from sustaining irreparable injury and to preserve the power of the district court to render a meaningful decision following a trial on the merits. See Mid-Fla Coin Exchange v. Griffin, 529 F.Supp. 1006 (M.D.Fla.1981). Because equitable relief in the nature of an injunction constitutes a form of judicial interference with continuing activities, the courts have generally been reluctant to grant such relief where "the actions complained of are those of departments of the executive and legislative branches of government, in the exercise of their authority." Plaquemines Parish Commission v. Perez, 379 So.2d 1373...

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