Petition for Writ of Certiorari — Art Neon Co. v. City & County of Denver

Supreme Court, U

FILE

LIBRARY ~*

BUPRE i= COURT, U. 8. we 1S i

IN THE

Supreme Court of the Anited States

October Term, 1973

No #87 15939

ArT NEON Co., et al.,

Petitioners,

vs.

Tue City AND CounTY OF DENVER, et al.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

Alan A. Armour

HOFFMAN, GOLDSTEIN, ARMOUR

& LoNNQUIST, P.C.

1234 Bannock Street

Attorneys for Petitioners

Page

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Reasons for Granting the Writ

I. An Important Question of Federal Law Which

Has Not Been But Should Be Decided by This

Court Is Present in This Case .............. 7

II. The Court of Appeals Has Decided a Federal

Question in Conflict with Applicable Decisions of

po PPPOE TTT Tree rere 11

TABLE OF AUTHORITIES

Cases

Almota Farmers Elevators Warehouse Co. v. United

Se EE EE cu GG ec ce cc kaeaeee dee vewe 11

Baltimore v. Mano Swartz, 299 A.2d 828 .......... 8

Buchanan v. Warley, 245 U.S. 60, 74 (1917)........ 9

City of Akron v. Chapman, 116 N.E.2d 697 ........ 8

City of Corpus Christi v. Allen, 254 S.W.2d 759 ..... 8

City of Los Angeles v. Gage, 274 P.2d 34 .......... 8

E. B. Elliott Adv. Co. v. Metropolitan Dade County,

ee Bi oR e Fo. ) errr 10

Grant v. City of Baltimore, 129 A.2d 363 .......... 8

Page

Hoffman v. Kinealey, 389 S.W.2d 745 ............ 9

Jones v. City of Los Angeles, 294 P.14............ 8

Livingston Rock and Gravel Co. v. County of Los

SE, BE ES ob bv oc cccceccdseevecdves 8

Lynch v. United States, 292 U.S. 571 ............ 9

National Advertising Co. v. County of Monterey,

She as 6G Adee ae SUNS ROe Shs ees 8

National Board of YMCA v. United States,

Pe es Os PERM he nec de sckbcdccessceee 9

O’Connor v. City of Moscow, 202 P. 2d 401 ........ 8

Olson v. United States of America, 292 U.S. 246 ..... 12

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 ...... 12

State ex. rel. Dema Realty Co. v. McDonald,

PEE 5b 60460556 4K as E NECN SOOOS 64S 8

United States v. Dickinson, 331 U.S. 745 .......... 12

United States v. Miller, 317 U.S. 369 .............. 12

Federal Statutes

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Pe ME UUPREEE 60 ssi chew nsdeds seed sucess 3

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Other Authorities

Revised Municipal Code of the City and County of

PE, SURI ESD eves vacceseecsewsseeesss 2-3

IN THE

Hupreme Court of the Anited States

October Term, 1973

No.

ART NEON Co., et al.,

Petitioners,

vs.

THE CiTy AND COUNTY OF DENVER, et al.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

Petitioners respectfully pray that a writ of certiorari issue

to review the judgment and opinion of the United States

Court of Appeals for the Tenth Circuit entered in this

matter on November 29, 1973, and to which a Petition For

Rehearing was denied January 17, 1974.

OPINIONS BELOW

The judgment of the Court of Appeals of November 29,

1973 which is herein sought to be reviewed is reported at

488 F.2d 118 and is reprinted in separate appendix to

this Petition, p. 15. The opinion of the United States

ee ae TFOLDE

—

District Court for the District of Colorado entered on

April 4, 1973, is reported at 357 F.Supp. 466 and is also

reproduced in the appendix at p. 27.

JURISDICTION

The judgment of the Court of Appeals was entered on

November 29, 1973. Petition For Rehearing was timely

filed and was denied on January 17, 1974. The jurisdiction

of this Court is invoked pursuant to 28 U.S.C. §1254(1).

QUESTION PRESENTED

When the lawful use, enjoyment, and ownership of pri-

vate property is made unlawful and nonconforming by

amendment of zoning ordinances, may the zoning authority

also require the destruction of such property without pay-

ment of just compensation to the owner?

CONSTITUTIONAL AND ORDINANCE

PROVISIONS INVOLVED

This case involves that portion of the Fifth Amendment

to the Constitution of the United States which provides as

follows:

“...nor shall private property be taken for public

use without just compensation.”

This case further involves §613.5-5(4) Revised Municipal

Code of the City and County of Denver, which is reduced

verbatim at p. 17 of the appendix as it is contained

in the opinion of the United States District Court at 357

F.Supp. 466, 469, 470.

STATEMENT OF THE CASE

The jurisdiction of the United States District Court was

sai aes

originally invoked in this case pursuant to 28 U.S.C.

§1331(a). This was a suit brought by four Denver area

electric sign companies and four businessmen attacking,

among other things, the validity of §613.5-5(4) of the Re-

vised Municipal Code of the City and County of Denver.

An additional business entity intervened in this suit during

its pendency. Disputed sections of the ordinance will be re-

ferred to herein as the “sign code,” and in essence, said

ordinances require destruction of all nonconforming sign

uses within the City and County of Denver. A “noncon-

forming use” is a use which is not a permitted use by any

after-enacted ordinance. What was lawful and conforming

becomes unlawful and nonconforming upon passage of such

ordinances by the municipal legislative body.

The “sign code” was enacted on March 19, 1971 and

requires that all sign uses made nonconforming by the

passage of the ordinance be terminated. This ordinance

made in excess of 70 percent of all Denver signs noncon-

forming. The crux of the controversy involved the require-

ment of destruction of nonconforming uses by a theory

known as “amortization.” The theory of “amortization” is

simply that the owner of the “nonconformance” is given a

certain amount of time in which to continue to maintain

the nonconformance. At the expiration of the designated

time, he must destroy his use and give up his property

without compensation. The municipality takes the position

that the time period allowed to continue the nonconform-

ance is not the equivalent to compensation to the owner

for the destruction of his property. The taking and destruc-

tion of nonconformances is decreed in accordance with a

schedule based on replacement cost of the use in question

under the Denver ordinance scheme. Any use which costs

outtens

the following amount to replace was terminated in the

following time:

Replacement Cost Time Before Destruction

$ 0-$ 3,000.00 2 Years

$ 3,001 -$ 6,000.00 3 Years

$ 6,001 - $15,000.00 4 Years

$15,001 or over 5 Years

In addition, the ordinance terminated all uses with chang-

ing light effects, revolving, or rotating features within

thirty (30) days after the passage of the ordinance on

March 19, 1971!

The Evidence

Petitioners produced evidence that proved that the signs

which they had built, owned, and serviced prior to

the passage of the ordinance on March 19, 1971, were all

erected pursuant to a permit issued by the City and County

of Denver, for which a fee was paid (Vol. I-A, pp. 17-18).

Each of the uses in question were lawful, permitted uses

at the time of passage of the Denver sign ordinance; and

Petitioners had, in reliance on prior ordinances, invested

large sums of money. Most signs in Denver are leased for

periods of time varying from 3 to 10 years, although many

were owned by individual businessmen (Vol. I-A, p. 19).

Most of the owners of signs were not yet touched by the

provisions of the ordinance at the time of trial and appeal.

The lessor sign companies ordinarily made a small profit

during the initial lease period (usually 5 years), but the

real profit was derived from renewal (Vol. I-A, p. 21).

The lessee gets a better lease rate during the renewal period,

thus giving him an incentive to renew, and raising some

/ ey — 9

a ye

proprietary interest in the original lease term (Vol. I-A

pp. 21-22). The trial court found as a fact that these non-

conforming signs were not adaptable for use elsewhere,

that salvage value does not equate removal costs, thus the

“sign code” destroyed property without any possible usage

thereafter.

Signs were not detrimental to public safety and the trial

court so found. The City produced expert opinion evidence

to justify the “sign code” on an environmental basis. This

expert, Stuart L. Udall, former Secretary of the Interior,

testified that the City of Denver could eliminate signs

immediately by paying just compensation or in a period

of time by allowing a sufficient period of “amortization”!

(Vol. III-B, pp. 16, 17, 18.) Evidence further showed

that Petitioners lawfully invested substantial sums of money

in the manufacture and erection of signs and in the leasing

of signs, and the trial court so found. The court also found

that market value of the lessees’ businesses would be

diminished if the signs were removed; and as to most of the

signs involved, the ordinances prohibited any use, rather

than merely restricting the type or extent of use of the signs.

The evidence further showed that there was no relationship

between replacement costs and unexpired leasehold terms

and further showed that the remaining life of the signs in

question extended far beyond the allowable time for “amor-

tization” (Vol. I-B, pp. 9, 10). It was undisputed that

“amortization” deprived Petitioners of valuable years of

future use of income-producing property (Vol. II, pp. 113-

117). The evidence also showed that Petitioner sign com-

panies and the business entity Petitioners who leased their

signs had established contractual relationships exceeding

the term of the time allowed by the ordinance for termina-

tion; thus as an adjunct to the issues, the ordinance in

— vo

question impaired the obligation of thousands of contracts

(Vol. I-B, pp. 121, 122). Petitioners established that the

economic loss vested upon them by the application of the

ordinance exceeded $1,450,000.00 (Vol. II, p. 126). In

the City and County of Denver alone there are thousands

of nonconforming uses involving many different kinds of

property. Signs are but one small segment of nonconform-

ing use property. The evidence showed generally that the

“sign code” was enacted to promote aesthetic considera-

tions and had no relationship to the public health, safety,

morality, or general welfare.

The Rulings Below

The United States District Court ruled (357 F.Supp.

466; appendix p. 15) that the ordinances in question

were violative of the protections of the Fifth Amend-

ment of the Constitution of the United States and were

unconstitutional. The trial court found that the Denver

ordinances attempted to accomplish a taking of property

without payment of just compensation and further con-

cluded that the scheme for termination for nonconforming

uses involving different time periods based on replacement

costs was likewise invalid, but generally concluded that the

theory of “amortization” was proper in principle. The court

held that Denver could terminate nonconformances by

“amortization” and that if the “amortization” period was

reasonable in length, it was a form of payment of just

compensation. The court then proceeded to determine as a

fact based on the evidence that the City’s scheme for sign

destruction did not justly compensate Petitioners in this

case, or in other words, the periods of time involved were

not sufficient just compensation.

The United States Court of Appeals for the Tenth Circuit

DOR rote Coe ee te ee y Se aD Pe Oe ME wy eNOS

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=

reversed. This court agreed with the trial judge that the

varying periods of time allowed keyed to replacement costs

were improper. This court held, however, contrary to the

trial court’s finding of fact, that the five year amortization

was reasonable and did not rule on whether or not the amor-

tization was a taking of Petitioner’s property without just

compensation. The Court of Appeals further expressly held

that the thirty (30) day destruction of the revolving, rotat-

ing, and changing light effect uses was valid and overturned

the trial court’s express finding of fact that there was no

relationship of these signs to traffic safety.

REASONS FOR GRANTING THE WRIT

I.

AN IMPORTANT QUESTION OF FEDERAL LAW

WHICH HAS NOT BEEN BUT SHOULD BE DECIDED

BY THIS COURT IS PRESENT IN THIS CASE.

The validity of the radical new theory of “amortization”

as the equivalent of the “just compensation” provided by

the Fifth Amendment of the United States Constitution

should be reviewed by this Court. The elimination of non-

conformances has long been a cherished goal of zoners and

planners throughout the United States. As municipal gov-

ernmental structures proliferate, the pressure to cause the

citizenry to conform to what is deemed proper and good

and wise by the municipal legislative body and their profes-

sional staff is vastly increased. The zoning and planning

zealots have long searched for a methodology to impose

their aesthetic views upon the inhabitants of the munici-

pality, but, due to cost and priorities of allocation of public

tax funds, have been unable to give practical effect to their

desires. The amortization scheme has recently come to the

forefront of the municipal horizon, and promises to be a

Vee ee en eee CSS el ga ai

se on

total panacea for the problems of the zoners and planners.

The beauty of “amortization” in their view is that it will

eliminate the nonconformance without cost. The economic

loss under this scheme must be borne wholly by the owner

of the nonconformance.

The approval of “amortization” by the courts has to date

been mostly in the area of noxious nuisance oriented uses

such as junkyards, rendering plants, and concrete plants.

City of Los Angeles vs. Gage, 274 P.2d 34; Livingston

Rock and Gravel Co. vs. County of Los Angeles, 272 P.2d

4; State ex. rel. Dema Realty Co. vs. McDonald, 121 So.

613. There are also numerous contrary decisions holding

termination of nonconformances invalid. City of Akron vs.

Chapman, 116 N.E.2d 697 (junkyard); City of Corpus

Christi vs. Allen, 254 S.W.2d 759 (auto wrecking yard);

Jones vs. City of Los Angeles, 294 P. 14 (nursing home);

and O’Connor vs. City of Moscow, 202 P.2d 401 (pool

hall). The most recent applications of amortization :have

been in the area of signs.

Signs do not find a great deal of favor among environ-

mentalists, but only the business community seems to favor

their use. The vast majority of court decisions involve

billboards or so-called third party advertising. Grant v.

City of Baltimore, 129 A.2d 363; National Advertising

Co. v. County of Monterey, 464 P.2d 33. The present case

involves on-premise electric business identification signs.

This is one of the few cases involving such ordinances,

although a few have been heard. Baltimore v. Mano Swartz,

299 A.2d 828.

As one might expect in the evolution of a new theory,

the cases have proceeded from elimination of noxious uses,

to elimination of near-nuisances, to elimination of bill-

shane ace sey

—_ yn

boards, to elimination of on-premises business identification

signs, to the result in this case, to-wit: A municipality may

eliminate any nonconforming use without payment of com-

pensation! The right of citizens to use a specific noncon-

formance, whatever it may be, is taken by the sign code,

and the continued use of their property in a certain fashion

is prohibited.

The right to use property as a constitutionally protected

right has been repeatedly affirmed by this Court. Buchanan

vs. Warley, 245 U.S. 60, 74 (1917); National Board of

YMCA vs. United States, 395 U.S. 85, 92 (1969). The

acquisition, enjoyment and alienation of property are basic

rights under 42 U.S.C. 1983 (Civil Rights Act). Valid

contracts are property which is protected by the Fifth

Amendment. Lynch v. United States, 292 U.S. 571.

The justification for amortization is allegedly based in

the police power; however, it seems difficult to reconcile

the destruction of property only after varying periods of

time, from two to five years on this theory. If police power

permits destruction of private property without just com-

pensation, then surely it may be done immediately. The

leading case to date on the subject expressed this philosophy

in voiding an amortization ordinance. Hoffman v. Kinealey,

389 S.W.2d 745. This case contains a collection of most of

the existing authority on the subject of amortization. The

court there reasoned that implicit in the amortization

technique itself is the proposition that by the expedient of

postponing the taking, objectionable unconstitutionality

is overcome. This court adopted the stance that it would be

a strange and novel doctrine indeed which would approve

a municipality taking private property for public use with-

out compensation so long as it was not too valuable and

the taking not too soon.

POAT RS PG TE Oe ae

— we

The trial judge treated this case as a Fifth Amendment

case and determined that there was an uncompensated tak-

ing. The Court of Appeals completely ignored the Fifth

Amendment problems and said the ordinance was reason-

able. The opinion is merely a social treatise showing the

court’s view of signs. The opinion is wrong and is a tragedy

for the owners of private property everywhere.

The federal courts have not really considered the subject

of amortization prior to this case. It was briefly mentioned

in the case of E. B. Elliott Adv. Co. v. Metropolitan Dade

County, 425 F.2d 1141 (Sth Circ. 1970), but the instant

case is the only head-on decision on the subject in the

federal courts. The Congress of the United States considered

this general subject before passage of 23 U.S.C. §131

(Highway Beautification Act), but concluded that just

compensation for billboard removal was a necessity. A plan

for such payment is included in the Act. Petitioners submit

that if this court waits for a conflict in circuits or delays

decision of this controversy, then hundreds of millions of

dollars in value of private property will be destroyed and

the rights of the owners of that property will be terminated

forever. Future decision of this controversy will not help

these property owners.

There are now in excess of seven hundred municipalities

which have virtually copied the Denver Sign Code. This is

not a state-by-state problem, but is national in scope; it

involves all nonconforming property. We submit that this

court should determine whether or not amortization is or is

not a taking of private property for a public use without

just compensation.

PO POIORS ER

a J] —

Il.

THE COURT OF APPEALS HAS DECIDED A FED-

ERAL QUESTION IN CONFLICT WITH APPLI-

CABLE DECISIONS OF THIS COURT.

The decision of the Court of Appeals, that amortization

of any nonconforming use is reasonable and does not re-

quire compensation, ignores all previous decisions of this

Court. The Court of Appeals observed that the case of

Almota Farmers Elevator & Warehouse Co. v. United

States, 409 U.S. 470, was not helpful because it related to

eminent domain. This case was one of the keystones of the

decision of the trial judge who is an eminent scholar on this

subject. This shows the great disparity in approach to this

case by the judges who considered the issues here. Under

the opinion of the Court of Appeals, it will be necessary for

each new municipal legislative effort to eliminate some

supposedly undesirable use without cost to be brought

before the Circuit Court for its approval or disapproval as

to “reasonableness.” Will “reasonableness” depend upon

whether or not the object to be eliminated is environ-

mentally acceptable or whether it appeals to the court? The

“reasonableness” test imposed by the Court of Appeals has

no standards. It will not assist the municipal legislative

body to know to what lengths they may go in legislating

away citizens’ rights, nor will it help those whose property is

eliminated. The observations of the Circuit Court, that the

amortization is part of an over-all zoning plan thus it is

reasonable, are not helpful. How is decision of the question

of whether or not an ordinance takes property without

just compensation or is a lawful exercise of the police power

aided by statements that the ordinance is part of an over-all

zoning plan? Would an ordinance prohibiting free speech

be made valid if it was included in a zoning plan?

a= 12 —

The sign code destroys signs based on “replacement

cost.” It does not consider market value or future useful

life. The property of Petitioners here was useful and had

substantial useful life beyond the periods allowed. If the

reasoning of the Court of Appeals is permitted to stand,

then one may erect a sign with a valid permit for which one

paid a fee and have that sign destroyed 30 days later. One

may erect a sign which can be made nonconforming at the

next meeting of the municipal legislative body. The deci-

sions of this court do not approve the decision of the Court

of Appeals here. United States vs. Dickinson, 331 W. 745;

Olson vs. United States of America, 292 U.S. 246; United

States vs. Miller, 317 U.S. 369.

Justice Holmes, in Pennsylvania Coal Co. v. Mahon,

260 U.S. 393, observed:

“.. . The protection of private property in the

Fifth Amendment . . . provides that it shall not

be taken for [public] use without compensation

. ... When this seemingly absolute protection is

found to be qualified by the police power, the

naturai tendency of nature is to extend the quali-

fication more and more until at last private prop-

erty disappears. But that cannot be accomplished

in this way under the Constitution of the United

States....

“We are in danger of forgetting that a strong

public desire to improve the public condition is

not enough to warrant achieving the desire by a

shorter cut than the constitutional way of paying

for the change.” (Emphasis supplied. )

On either ground hereinbefore stated, the Court of Ap-

—_ 13—

peals’ decision is wrong and should be reviewed by this

Court because of the national implications involved.

CONCLUSION

WHEREFORE, Petitioners respectfully pray that a writ

of certiorari be granted.

Respectfully submitted,

Alan A. Armour

HOFFMAN, GOLDSTEIN, ARMOUR

& LONNQUIST, P.C.

1234 Bannock Street

Denver, Colorado 80204

Attorneys for Petitioners

PLT SIO FH OR te a i

Oe ee gees

niga

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

No. 73-1404 — NOVEMBER 1973 TERM

ArT NEon Co., ADVANCE NEON CoO.,)

Epcon, INc., GORDON NEON Co., MLG

Corp., d/b/a Mini-Rates Rent-A-Car,

MICHAEL T. THomase, d/b/a Colonial

Manor Motel, RiTE-Lite Suppty Co., and

Super Druc Co., Appeal From The

United States

Appellees, wad

vs. . For The District

of Colorado

THE CiTy AND COUNTY OF DENVER, a mu-| (DC. # C-3427)

nicipal corporation, and ANTHONY H.

JANSEN,

Appellants,

Gump GLiass Co.,

Intervenor-Appellee. |

Earl T. Thrasher, Denver, Colorado (Max P. Zall, and

Robert M. Kelly, Denver, Colorado, with him on the Brief),

for Appellants.

Alan A. Armour, of Hoffman, Goldstein, Armour &

Lonnquist, P.C., Denver, Colorado, for Appellees.

Davis, Graham & Stubbs, Denver, Colorado, and Gibson,

Dunn & Crutcher, Los Angeles, California, on the Brief

for Amicus Curiae, Combined Communications Corpora-

tion.

on than

Before SETH and Doy Le, Circuit Judges, and TALBOT

SmiTH, District Judge*.

SETH, Circuit Judge.

The City and County of Denver, Colorado, and Anthony

H. Jansen, the defendants, appeal from the judgment of the

United States District Court for the District of Colorado,

which held that portions of the Denver Municipal Code re-

lating to zoning, and more particularly to nonconforming

signs, violate the Fifth Amendment of the United States

Constitution. Enforcement of the provisions was enjoined.

The action was commenced by Art Neon Co., other sign

companies, and retail businesses seeking to have portions of

the zoning ordinance declared invalid.

Denver is a municipal corporation organized as a “home

rule” city, and defendant, Anthony H. Jansen, is the City

Zoning Administrator charged with the enforcement of the

zoning ordinances, of which Denver Rev. Mun. Code

§ 613 (1971), the “Permitted Signs” section with which we

are here concerned, is a part.

Plaintiffs-appellees, Art Neon Co., Advance Neon Co.,

Gordon Neon Co., and Epcon, Inc. are engaged in fabri-

cating, installing, repairing, leasing, and selling neon, steel,

and plastic signs and other advertising displays in Denver.

Other appellees are owners or operators of businesses in

Denver which lease and have had installed on their premises

outdoor advertising signs from appellee sign companies

and others. Two appellees own their own signs.

It is apparent from the foregoing that the appellees are

connected in a variety of ways with “outdoor advertising,”

*Of the Eastern District of Michigan, sitting by designation.

ow 17 —

and direct their attack on provisions for termination of non-

conforming signs in the “Permitted Signs” section of Den-

ver’s Zoning Ordinance, Rev. Mun. Code § 613 (1971),

and particularly sections 613.5-.5(4) and .5(4) (a) thereof,

which provide:

“.5-4. Termination of Non-Conforming Signs.

* * * * *

“,.5-5(4). By Amortization. The right to

maintain a non-conforming sign shall terminate

in accordance with the following schedule:

Any sign which on

the date the sign Shall be terminated

became non-conform- within the following

ing would cost the period after the sign

following amount became non-conform-

to replace: ing:

Oe NE hve cu dsdascecees 2 years

See OD cc ccsccsavreda 3 years

Ge OO BID 6 icc ccescusse 4 years

ESIOOE OF MAUD 2. ccc ccaces 5 years

“.5-5(4)(a). The right to maintain a flash-

ing, blinking, fluctuating, animated or portable

sign shall terminate within 30 days after such

sign became non-conforming.”

It appears that the effective date of the “Permitted Signs”

section of Denver’s Zoning Ordinance was March 19, 1971,

and that thereafter the appellees’ outdoor advertising signs

became, in varying respects, “nonconforming.” They com-

menced this suit asserting that the “Permitted Signs” sec-

tion was in violation of various provisions of the United

States Constitution, including Article I, § 10 (impairment

—

of the obligation of contracts), Amendment V (deprivation

of property without due process of law and taking of pri-

vate property for public use without compensation),

Amendment I (restriction on freedom of expression), and

Amendment XIV, § 1 (deprivation of equal protection of

the laws and of property without due process of law).

After considering whether to abstain from hearing the

case, and instead to allow the courts of the state of Colo-

rado to first pass on the claims presented, the district

court decided to hear only one issue. This was:

“Whether the requirement that certain exist-

ing signs owned by plaintiffs be terminated over

the periods prescribed by the ordinance is a valid

exercise of the municipal police power or an un-

constitutional taking of private property without

compensation having been made therefor; or is

an unconstitutional impairment of the obligation

of certain contracts relating to the leasing of

signs owned by plaintiffs.” 357 F.Supp. at 467.

The district court, relying on United Mine Workers v.

Gibbs, 383 U.S. 715, and Reetz v. Bozanich, 397 U.S. 82,

declined to exercise pendent jurisdiction over the state law

claims and held that these “myriad problems should be left

for state court determination.” 357 F.Supp. at 467. As to

the issue above stated, the trial court held “. . . that the

present Denver ordinance does not provide for the payment

of just compensation.” The court further ruled that the pro-

visions relating to nonconforming signs were in violation of

the Fifth Amendment and enjoined enforcement.

The zoning control sought to be exercised by Denver

over signs is through a classification according to types

which may be displayed in various zoning districts. Signs

a

are not prohibited, but a close limitation is placed on the

types permitted. The provision of the ordinance which

is in issue is a part of a city wide zoning plan under which

the typical property use controls are established. There is

no doubt that a general zoning ordinance may be enacted

by the City of Denver. Such ordinances are a proper exer-

cise of the police power. Village of Euclid v. Ambler Realty

Co., 272 U.S. 365; Gorieb v. Fox, 274 U.S. 603: Green v.

Castle Concrete Co., 509 P.2d 588 ( Colo.).

As to the scope of police power generally, the Court in

Berman v. Parker, 348 U.S. 26, said:

“, .. An attempt to define [the police power’s]

reach or trace its outer limits is fruitless, for each

case must turn on its own facts...

“Public safety, public health, morality, peace

and quiet, law and order — these are some of the

more conspicuous examples of the traditional ap-

plication of the police power to municipal affairs.

Yet they merely illustrate the scope of the power

and do not delimit it.”

Zoning ordinances, including provisions relating to signs,

are basically prospective in their application, and this as-

pect presents no serious problems today. However, there

are usually nonconforming uses which present substantial

problems. These uses are necessarily inconsistent with the

purposes of zoning, Wasinger v. Miller, 388 P.2d 250

(Colo.), and are not intended to be perpetual. Thus there

usually comes a time when such exceptions are sought to

be ended. These terminations are in further exercise of the

police power, and are sought to be accomplished in several

ways. See City of Los Angeles v. Gage, 274 P.2d 34 (Cal.).

=

The ordinance here requires that nonconforming signs

must be removed or brought into conformance within a

specified period of time after they become nonconforming.

This is referred to as “amortization,” but in reality it is no

more than notice to the owner and user of the sign that

they have a period of time to make whatever adjustments

or other arrangements they can. This is probably not a

proper use of the word “amortization,” and so used it

contains no connotation of compensation or a requirement

therefor. This method is generally regarded as a proper

exercise of the police power, although there are strong

opinions to the contrary. Some of the more recent cases

which have considered the issue include E. B. Elliott Ad-

vertising Co. v. Metropolitan Dade County, 425 F.2d 1141

(5th Cir.); Markham Advertising Co. v. Washington, 439

P.2d 248 (Wash.).

The decision to terminate nonconforming uses, and the

method to be used, is made by the appropriate legislative

body. It is reached by a comparison or balancing of the

burden or loss which will be placed on the individual by

the ordinance with the public good sought to be achieved.

See Hadacheck v. Sebastian, 239 U.S. 394; Board of Super-

visors v. Miller, 170 N.W.2d 358 (Iowa). Such a legis-

lative decision under the police power is prima facie a valid

factual determination. The parties attacking such an ordi-

nance have to meet a heavy burden. See Green v. Castle

Concrete Co., 509 P.2d 588, and Board of County Comm’rs

v. Simmons, 494 P.2d 85 (Colo.).

It is obvious that in the balancing process some loss or

burden will fall on a sign owner or user. It is not required

that the nonconforming property concerned have no value

at the termination date. The plan need not be so con-

structed. The many and varied valid exercises of police

—

power in other areas so demonstrate the impact on the in-

dividual. See Goldblatt v. Hempstead, 369 U.S. 590; United

States v. Central Eureka Mining Co., 357 U.S. 155; Hada-

check v. Sebastian, 239 U.S. 394; Mugler v. Kansas, 123

U.S. 623. The legislative determination must only meet the

test of “reasonableness,” that is, the plan for termination

must be “reasonable.” Standard Oil Co. v. Marysville, 279

U.S. 582; National Advertising Co. v. Monterey, 464 P.2d

33 (Cal.). This is not a test of concept of “just compensa-

tion.” The Court in United States v. Central Eureka Mining

Co., 357 U.S. 155, said: “[T]he mere fact that the regula-

tion deprives the property owner of the most profitable use

of his property is not necessarily enough to establish the

owner’s right to compensation.” And further in Miller v.

Schoene, 276 U.S. 272: “[W]here the public interest is

involved preferment of that interest over the property in-

terest of the individual, to the extent of its destruction, is

one of the distinguishing characteristics of every exercise

of the police power which affects property.”

In the application of the reasonableness test to the leg-

islative determination, the courts have used a variety of

factors, and combinations thereof. These include the nature

of the nonconforming use, the character of the structure,

the location, what part of the individual’s total business is

concerned, the time periods, salvage, depreciation for in-

come tax purposes, and depreciation for other purposes,

and the monopoly or advantage, if any, resulting from the

fact that similar new structures are prohibited in the same

area. Where signs are concerned, the courts usually also

mention the fact that the use is also of public streets since

the message is directed to the passerby.

When these factors are applied to the portion of the Den-

ver ordinance here concerned, we must conclude that it is

ons 92 xe

basically reasonable. The “amortization” method has been

established by the authorities as a proper method to termi-

nate nonconforming uses. It is clearly applicable to signs

and is an aspect of the balancing of the public good against

individual harm as part of the city’s overall zoning plan

and ordinance.

In this connection, the opinion in St. Louis Poster Ad-

vertising Co. v. St. Louis, 249 U.S. 269, is very significant.

The ordinance there concerned regulated the size and loca-

tion of billboards. Reliance was therein placed on Cusack

Co. v. Chicago, 242 U.S. 526, which dealt with an outright

prohibition of billboards “in residence districts of a city,”

242 U.S. at 530, rather than a city wide regulation as in

the case at bar. But the St. Louis case in permitting the full

scope of the ordinance leads us to also hold that the Den-

ver “Permitted Signs” ordinance, City and County of

Denver, Rev. Mun. Code §§ 613.5-5(4) and 5(4)(a)

(1971), is a valid, reasonable, nonarbitrary, and nondis-

criminatory enactment under that city’s police powers. It

does not deprive the users of advertising signs, whether

they be lessees or owners, of such use. It does not force the

concerns which manufacture and supply such signs to termi-

nate their businesses. It does, however, closely regulate the

types of signs which may be used and, as we have held, this

is proper.

There is, however, a portion of the ordinance which we

cannot hold to be reasonable. This is the provision for

different periods of amortization for signs having different

“replacement” costs measured at the date they become non-

conforming. The plaintiffs have attacked the validity of

these categories. The replacement cost of the signs is not

related to any of the relevant factors in the reasonableness

tests, and presents no valid basis for different treatment of

heir perce

a, eae

different signs ranging from three to five years. It has no

bearing on the landowner’s problem, nor on the sign own-

ers’ situation nor on the city’s position. The most that can

be said for replacement cost is that it could indicate, as of

the date used, the size or complexity of a sign, but this is

no real help. When the categories so constructed are re-

moved, we are left with the five-year maximum period for

removal of all nonconforming signs in the ordinance, and

this period, as we have stated, is a valid one. The ordinance

with the remaining five-year time limit is thus valid.

The ordinance contains a special category (.5-5(4) (a) )

which states in part: “The right to maintain a flashing,

blinking, fluctuating, animated, or portable sign shall termi-

nate within 30 days after such sign became non-conform-

ing.” This we hold to also be a reasonable regulation. The

balancing relates to such signs in a somewhat different way

in that the apparent movement created by the sign can be

stopped and the signs brought into conformity without de-

stroying entirely the usefulness of the sign. Certainly its

effectiveness is much diminished, and its value reduced, but

when this is compared to the extreme character of these

signs, with the demonstrated relationship to safety, we must

hold the method and the time to be reasonable.

The matter of preemption by the Federal Highway Beau-

tification Act, 23 U.S.C. § 131, or by the Colorado High-

way Sign Act, Colo. Rev. Stat. § 120-5-28, has been argued

by the parties, but we find no such preemption. Nor do

we find therein any example or standard binding in any

way on the city.

The parties have also discussed the case of Almota Farm-

ers Elevator & Warehouse Co. v. United States, 409 U.S.

470, as it relates to improvements on leaseholds. The Court

a

in its opinion states the issue therein decided concerns

valuations in eminent domain proceedings. The case is very

significant in that field, but in our view of the legal concepts

here involved, it is not helpful.

On the impairment of contracts issue urged by the plain-

tiffs, the question is addressed to a legitimate end and the

measures taken are reasonable and appropriate to that end.

Home Building & Loan Ass’n v. Blaisdell, 290 U.S. 398.

As the opinion of the Court pointed out in the same case:

“... [Where the protective power of the State

is exercised in a manner otherwise appropriate in

the regulation of a business it is no objection that

the performance of existing contracts may be frus-

trated by the prohibition of injurious practices.

* * %+« %&£

“In all such cases the question becomes, there-

fore, one of reasonableness, and of that the leg-

islature is primarily the judge.”

We have already held that the ordinance is a reasonable

one in other aspects, and it does not, under Article I, §

10(1) of the United States Constitution, impair the obliga-

tion of contracts.

Much has been written about the distinctions between

governmental acts which are within the police power and

those which are within just compensation requirements un-

der eminent domain. It will not serve any useful purpose to

add to the literature on the subject. Like so many subjects,

it makes some difference where you start into the problem

or where you get hold of it initially. The section here chal-

lenged is part of the city’s zoning ordinance, and is part of

the aim or purpose of zoning. It is not much different from

a on

the provisions prohibiting changes in nonconforming struc-

tures, or prohibitions against use if once discontinued, and

similar limitations on the use of property. These prohibi-

tions are also an established part of zoning and generally

upheld. Zoning from its inception has been grounded as a

legislative function on the police power, and has been so

sustained by the courts. The particular issue before us of

elimination of nonconforming uses is well within an overall

zoning plan which is not challenged, and the legislative body

has decided it is an essential part thereof. It is of general

application under a plan adjusted to different conditions in

each zone, and not directed to particular tracts or signs. It

is a bona fide use restriction. The challenged provision does

not prohibit the use of signs, but requires conformance to

specified types in specified places. Further in view of the

traditional place where such regulations are found, the fact

this subject is an integral part of zoning to accomplish its

legitimate purposes, and the broad nature of its application

leads us to place the issue in the police power category and

not in eminent domain as the trial court apparently did.

The judgment of the trial court is REVERSED, and the

case is REMANDED for further proceedings in accordance

with this opinion.

a ee

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Art NEON Co., ADVANCE NEON Co.,

Epcon, INc., GORDON NEON Co., MLG

Corp., d/b/a Mini-Rates Rent-A-Car,

MICHAEL T. THOMASE, d/b/a Colonial

Manor Motel, RiTe-Lite Suppiy Co., and

Super Druc Co.,

Plaintiffs,

7 CIVIL ACTION

NO. C-3427

TuHeE City AND COUNTY OF DENVER, a mu-

nicipal corporation, and ANTHONY H.

JANSEN,

Defendants,

and

Gump Giass Co.,

Intervenor-. |

Hoffman, Goldstein & Armour, by Alan A. Armour,

Attorney at law, Denver, Colorado, for Plaintiffs and In-

tervenor; Max P. Zall, City Attorney, and Earl T. Thrasher,

Assistant City Attorney, Denver, Colorado, for Defendants;

Lawrence A. Wright, Jr., Richard F. Mauro, and Howard

B. Gelt, Attorneys at law, Denver, Colorado, for Amici

Curiae Consumers; and Davis, Graham & Stubbs, by Rich-

ard P. Holme, Attorney at law, Denver, Colorado, and

Gibson, Dunn and Crutcher, by Theodore B. Olson, At-

torney at law, Los Angeles, California, for Amicus Curiae

Combined Communications Corporation.

_— oe

MEMORANDUM OPINION

WINNER, Judge

Following submission of comprehensive pretrial briefs,

this case was tried to the Court. Thereafter, long post trial

briefs were filed, and the case is ready for determination

by this opinion which contains the findings and conclusions

required by Rule 52.

Plaintiffs’ complaint makes a hydra-headed attack on the

validity and constitutionality of the sign code of the City

and County of Denver. [Revised Municipal Code, Sec. 613,

and, more particularly, Sec. 613.5 of the Code.] Some of

plaintiffs’ claims raise questions we deem to arise only

under the Constitution of the United States; some argue

provisions of both state and federal constitutions, while

others are directed at case law and the Constitution of the

State of Colorado. By order of March 24, 1973, the Court

limited the issues it would try to those arising only under

the Constitution of the United States, and, although plain-

tiffs urged that there is pendent jurisdiction to try other

claims, we ruled that under the principles of United Mine

Workers v. Gibbs (1966) 383 U.S. 715, and Reetz v. Bo-

zanich (1970) 397 U.S. 82, myriad problems should be

left for state court determination. We accepted the follow-

ing phraseology by the city of the question the Court should

determine:

“Whether the requirement that certain existing

signs owned by plaintiffs be terminated over the

periods prescribed by the ordinance is a valid

exercise of the municipal police power or an un-

constitutional taking of private property without

compensation having been made therefore; or is

an unconstitutional impairment of the obligation

—

of certain contracts relating to the leasing of

signs owned by plaintiffs.”

By supplementary order of July 18, 1972, it was ex-

plained that included within the issues which might be

determined was “the question of equal protection as that

question applies to the differing amortization periods [con-

tained in the ordinance].”

Thus, the constitutional question we today decide is im-

portant, but the question decided is narrow, and many of

plaintiff's challenges of the ordinance are not resolved.’

Perhaps we should mention a few of the many things we do

not decide.

(1) The city says that some of the signs exist

under revocable permit to use city-owned

property. We decide nothing having to do

with this contention of the city nor do we

decide anything arising under plaintiffs’

claim that the city is estopped to enforce

revocability of any permits. This is a prob-

lem for the state courts.

(2) The city says that a sign of Michael T.

Thomase, d/b/a Colonial Motel exists un-

der a special dispensation and that it is not

affected. We make no determination con-

cerning this.

(3) The right of the city to prohibit the erection

of any or all future advertising signs is not

before us, and we make no decision as to

the validity or invalidity of any such ordi-

1These matters are left for state court determination.

_~_

nance which may or may not be enacted in

the future, although we recognize that there

is much authority for upholding such pro-

hibitions.

(4) We decide no questions concerning the rea-

sonableness of the regulations as they relate

to the type of business involved, the zone in

which the sign is located, the comparable

heights of signs in various zones, differen-

tiations between free standing and attached

signs and various other types of claimed in-

equality between signs.

(5) We make no decision as to the validity of the

sign code under state law.

(6) We make no determination as to whether

the code draws arbitrary distinction between

various signs.

Moreover, we do not quarrel with nine of the ten “legal

principles” argued by the city. We accept as truisms these

“legal principles” stressed in the city’s brief: —

1. Denver’s charter permits the city to enact

zoning ordinances.

2. In adopting zoning ordinances, Council

may divide the city into districts.

3. Classification within various zone districts

is permitted, and outdoor advertising is a type of

business subject to separate classification and

regulation.

4. Zoning ordinances are to be construed as a

whole.

PMS

au 3]

5. Ordinances are presumptively constitu-

tional.

6. If constitutionality is debatable, the ordi-

nance should be upheld.

7. If there is a reasonable factual basis on

which the ordinance can be found valid, a court

should assume that the legislative body acted on

the basis of those facts [unless the record affirma-

tively shows that another factual basis was re-

lied upon].

8. Many cases hold, and the Colorado Su-

preme Court has held that under Colorado law

non-conforming uses may be terminated if a

reasonable amortization period is allowed. [The

underlying reasoning of these cases is that con-

stitutionally just compensation may be provided

by amortization.]

9. Non-conforming uses should be made con-

forming as rapidly as is reasonably possible.

We do not agree with the city’s tenth “legal principle”

that a plan of amortization is the only way in which just

compensation can be paid for required termination of non-

conforming uses. Lamm v. Volpe (1971) 10 Cir. 449 F.2d

1202, infra, 23 U.S.C. §131 and 1963 C.R.S. 120-5-28 (2),

all dispose of this “legal principle.” The Colorado stat-

ute provides:

“The division of highways may remove any non-

conforming advertising device and may acquire

all real and personal property rights pertaining to

the nonconforming advertising device by gift, pur-

chase agreement, exchange, or eminent domain.

—

All proceedings in eminent domain shall be con-

ducted as may be provided by law. The division

of highways may adopt appraisal concepts and

acquisition procedures which are appropriate to

the evaluation and removal of nonconforming ad-

vertising devices.”

If the city wishes to adopt an ordinance similar to the

Colorado statute or similar to the federal Highway Beauti-

fication Act, no Fifth Amendment question can arise under

such an ordinance. The case is before us only because the

city wants to force destruction of the signs without cash

outlay on its part and because it insists on paying the com-

pensation it admits is due only by way of an amortization

scheme instead of paying compensation the way the state

and federal governments do. As we shall see before this

opinion is concluded, the only real question is, “Who is to

pick up the tab for beautification of the city resulting from

the tearing down of the advertising signs?” The state and

the federal government think that the taxpayers must pay

the piper. The city says that the sign companies have to

bear the loss.

Before entering upon a discussion of this fundamental

question, it is necessary that we dispose of a preliminary

argument advanced by the city. The city says that three of

the plaintiffs and an intervenor have failed to establish

jurisdictional amount. In effect the city argues that proof

by these parties at time of trial would not justify an eminent

domain award in excess of $10,000.00, but this isn’t the

test of amount in controversy. St. Paul Mercury Indemnity

Co. v. Red Cab Co. (1938) 303 U.S. 283. The evidence

established that these parties made a good faith claim that

they will be damaged by more than $10,000 in a given year

as a result of the enforcement of the ordinance, and that is

—_—

all that is required. The evidence abundantly meets the test

of Ronzio vy Denver & R.G.W.R. Co. (1940) 10th Cir.

116 F.2d 604:

“In determining the matter in controversy, we

may look to the object sought to be accomplished

by the plaintiffs’ complaint; the test for determin-

ing the amount in controversy is the pecuniary

result to either party which the judgment would

directly produce.”

In support of its jurisdictional amount argument, the

city almost concedes that the evidence at the time of the

preliminary injunction hearing was sufficient to establish

jurisdictional amount, but then counsel say, “We know of

no rule of law whereby the evidence offered by these parties

in an application for preliminary injunction carries forward

to a hearing on the merits of the case.” Rule 65 (a) (2)

enunciates such a rule:

“.. . any evidence received upon an application

for a preliminary injunction which would be ad-

missible upon the trial on the merits becomes a

part of the record on the trial and need not be

repeated upon the trial.”

Jurisdictional amount was proven as to all parties, and

with the question of jurisdictional amount out of the way,

we come to the merits of the case. The important parts of

the challenged ordinance are:

“Sec. 613-5. Nonconforming Signs.

“ 5-1. Declaration of Public Policy.

It is reasonable that a time limit be placed upon

the continuance of existing nonconforming signs.

An amortization program permits the owner to

SS ee

— oa

plan during a period when he is allowed to con-

tinue the nonconforming signs while at the same

time assuring that the District in which the non-

conforming signs exist will eventually benefit

from a substantial uniformity of permanent signs.

“,5-2. Definition of Nonconforming Signs.

A nonconforming sign shall be any sign which:

“5-2(1). On the effective date of this ordinance

was lawfully maintained and had been lawfully

erected in accordance with the provisions of any

prior zoning ordinance but which sign does not

conform to the limitations established by this ordi-

nance in the District in which the sign is located;

or

“5-2(2). On or after the effective date of this

ordinance was lawfully maintained and erected in

accordance with the provisions of this ordinance

but which sign, by reason of amendment to this

ordinance after the effective date thereof, does

not conform to the limitations established by the

amendment to this ordinance in the District in

which the sign is located.

“5-3. Continuance of Nonconforming Signs.

Subject to the termination hereinafter provided,

any nonconforming sign may be continued in

operation and maintained after the effective date

of this ordinance; provided, however, that no such

sign shall be changed in any manner that in-

creases the non-compliance of such sign with the

provisions of this ordinance established for signs

in the District in which the sign is located; and,

provided, further, that the burden of establishing

a

a sign to be nonconforming under this Section

rests entirely upon the person or persons, firm or

corporation claiming a nonconforming status for

a sign.

“5-4. Termination of Nonconforming Signs.

“.5-4(1). By Abandonment. Abandonment of a

nonconforming sign shall terminate immediately

the right to maintain such sign.

“'5-4(2). By Violation of the Ordinance. Any

violation of this ordinance shall terminate imme-

diately the right to maintain a nonconform-

ing sign.

“.5-4(3). By Destruction, Damage or Obsoles-

cence. The right to maintain any nonconforming

sign shall terminate and shall cease to exist when-

ever the sign is damaged or destroyed, from any

cause whatsoever, or becomes obsolete or sub-

standard under any applicable ordinance of the

municipality to the extent that the sign becomes

a hazard or a danger.

“ 5-5(4). By Amortization. The right to main-

tain a nonconforming sign shall terminate in

accordance with the following schedule:

“Any sign which on the

date the sign became = Shall be terminated

nonconforming would within the following

cost the following period after the sign

amount to replace: became nonconforming:

o 7 y | Seeererrerre errs

— @ 5 fae

§ 3! ere

Re OE UD oc tiv cc tos ceeses

—

“.5-5(4) (a). The right to maintain a flashing,

blinking, fluctuating, animated or portable sign

shall terminate within 30 days after such sign

becomes nonconforming.”

Whether this ordinance amounts to a permissible use of

the police power or amounts to a taking requiring the pay-

ment of just compensation under the Fifth Amendment is

not a question of easy determination. As was said in United

States v. Central Eureka Mining Co. (1958) 357 US. 155.

“Traditionally, we have treated the issue as to

whether a particular governmental restriction

amounted to a constitutional taking as being a

question properly turning upon the particular

circumstances of each case. See, Pennsylvania

Coal Co. v. Mahon, 260 U.S. 393. In doing so,

we have recognized that action in the form of

regulation can so diminish the value of property

as to constitute a taking. E.g., United States v.

Kansas City Ins. Co., 339 U.S. 799; United States

v. Causby, 328 U.S. 256. However, the mere fact

that the regulation deprives the property owner of

the most profitable use of his property is not nec-

essarily enough to establish the owner’s right to

compensation.”

The difference between a permissible exercise of the po-

lice power and a taking requiring compensation was dis-

cussed by Judge Barrett in Lamm v. Volpe (1971) 10 Cir.

449 F. 2d 1202. It was there contended that the Tenth

Amendment prohibited Congress from enacting the High-

way Beautification Act [23 U.S.C. §131]. The Court held

that Lamm had no standing and that the question was

moot because the State of Colorado had adopted legisla-

—

tion meeting the requirements of the Highway Beautifica-

tion Act. However, in the course of the opinion it was said:

“Lamm has introduced several bills in the Colo-

rado Legislature which he believes would provide

effective control of outdoor advertising through

exercise of the state police power in lieu of just

compensation. Although he does not specifically

identify to the police power relied upon, we as-

sume here that his bills declared outdoor adver-

tising adjacent to certain highways a public

nuisance, subject to destruction or abatement as

injurious to public safety. We recognize that

police power is a matter of legislative prerogative.

In this field the legislature has wide discretionary

powers. It includes everything essential to public

safety, health, and morals. Cottrell Clothing

Company v. Teets, 139 Colo. 558, 342 P. 2d

1016 (1959). Police power should not be con-

fused with eminent domain, in that the former

controls the use of property by the owner for the

public good, authorizing its regulation and de-

struction without compensation, whereas the

latter takes property for public use and compen-

sation is given for property taken, damaged or

destroyed. Chicago B. & Q. Railway v. State of

Illinois ex rel. Drainage Comm’rs., 200 U.S.

561, 26 S. Ct. 341, 50 L. Ed. 596 (1906);

Appeal of White, 287 Pa. 259, 134 A. 409

(1926); Annot., 53 A.L.R. 1215 (1928).

“Here the power of regulation has not been pre-

empted by the Congress. But that begs the point.

The Congress has clearly determined that the

‘taking’ of outdoor advertisements adjacent to

—

federal-aid highways required ‘just compensa-

tion.’ The Tenth Amendment has been construed

‘as not depriving the national government of

authority to resort to all means for the exercise

of a granted power which are appropriate and

plainly adapted to the permitted end.’ United

States v. Darby, 312 U.S. 100, 124, 61 S. Ct.

451, 462, 85 L. Ed. 609 (1941)... .”

Lamm v. Volpe does not pass on the question before us —

the question of whether advertising signs can be eliminated

without payment of compensation except as amortization

may represent just compensation. The case simply points

up that Lamm wanted to adopt the approach used here by

the City rather than the method used by the federal govern-

ment in the Highway Beautification Act and the method

subsequently adopted by the State of Colorado. Although at

time of trial the City made a half-hearted attempt to show

that the ordinance was passed in the interest of public

safety, the unsupported conclusions of its witness were

totally destroyed by the testimony of plaintiffs’ expert,

and there was no believable testimony that the ordinance is

in any way related to public safety. In fact, the City fell

back on an environmental approach and it relied on its

expert, Stuart L. Udall, former Secretary of the Interior, and

a lawyer who is “presently involved in environmental plan-

ning,” Mr. Udall testified:

“.. The visual environment obviously is a very

important component, and the environment of

course as we understand it now is the science of

inter-relating all this bundle of things that we

used to consider separately, and obviously the

visual part of the environment, the appearance of

a city, for example, whether we’re talking about

a= 39

the natural beauty of a city or the inter-relation-

ship between the natural beauty and those activi-

ties of man which alter that environment. This is

obviously a very important component of the en-

vironment... .

“_. . The visual aspect of a community of a region

is obviously a very important element of the en-

vironmental planning that indeed encompasses

the total environment. It has to involve itself

in policy with regard to signs, with regard to

graphics, with regard to the mix between the

natural world and the man activities that are

involved. So, of course, when you narrow this to

the subject of signs as an element of the environ-

ment, the question of uses becomes a critical

question.”

Although Mr. Udall suggested that city beautification is

a public concern of quite recent origin, it was recognized

by the Supreme Court almost twenty years ago in Berman

v. Parker (1954) 348 U.S. 26. Justice Douglas there said:

“If those who govern the District of Columbia

decide that the Nation’s Capital should be beauti-

ful as well as sanitary, there is nothing in the

Fifth Amendment that stands in the way.”

But Justice Douglas added:

“The rights of these property owners are satisfied

when they receive that just compensation which

the Fifth Amendment exacts as the price of the

taking.”

Justice Douglas and Mr. Udall see eye to eye on the sub-

ject, because Mr. Udall’s testimony continued:

—40 —

[He testified that he was familiar with the High-

way Beautification Act and that he participated

in its formulation.]

“I think in the beginning, within the administra-

tion, once it was decided that this should be

added as a major amendment to the entire State

Highway Act of 1956, the question of how this

could be accomplished was widely discussed and

there really were two alternatives that you have

if a government desires to eliminate undesirable

signs, and one is immediate condemnation and

payment — full payment for the value of what is

taken. The other is some kind of a scheme of

amortization, and these two were discussed and

considered initially, and the plan that Congress

finally adopted was a taking, and outright pay-

ment.

“THE COURT: Let me interrupt a minute, Mr.

Udall, and see if I follow you. Do you feel as an

expert in the field that signs can be taken under

either of two alternative methods; first a method

of immediate condemnation with the payment of

just compensation? Or, in the alternative, a de-

layed taking which permits an amortization of the

investment? ”

“THE WITNESS: I think these clearly are the

two alternatives, yes.

“THE COURT: So, that if a community, if a

government elects to follow the second alterna-

2As will be discussed later, the impromptu use of the word “investment”

was inartful. The phrase “fair market value” should have been used in-

stead of “investment.”

—_—

tive, the validity of that election is dependent

upon the sufficiency of the amortization pro-

vided, isn’t that true?

“THE WITNESS: Where [whether] it’s reason-

able, yes.” *

In Rabinoff v. District Court (1961) 145 Colo. 225,

360 P. 2d 114, Judge Doyle [with Judge McWilliams con-

curring] quoted with approval some of the same language

we have quoted from Berman v. Parker, and in Rabinoff

mention is made of the fact that the Colorado Constitution

differs in its language from the Fifth Amendment and this

is one of the reasons we did not abstain on the Fifth Amend-

ment claim.

Accordingly, we have no difficulty in concluding that if

the citizens of the City and County of Denver wish to elim-

inate some or all signs, they may do so if they are willing

to follow the procedures required of the federal govern-

ment under the Highway Beautification Act, the procedures

adopted by the State of Colorado, and procedures said by

their own special counsel-expert witness to be necessary.

In other words, a legislative determination that the elim-

ination of signs is in furtherance of an aesthetic public pur-

pose is entirely proper, and the only question which re-

mains is whether the Denver ordinance provides for the

payment of whatever just compensation the Fifth Amend-

ment demands. As a corollary to this question is the de-

termination of whether the ordinance is a regulation en-

3Admittedly, Mr. Udall was testifying as an expert on the law at this point,

but it came out during his direct examination as an expert for the city,

and we regard his statement of position as being in effect a statement of

position made by “special counsel”—especially when his contract of em-

ployment by the city is studied.

a. vo

acted under the city’s police power, thereby eliminating

necessity for the payment of any compensation.

Volumes have been written on the subject, and the courts

have been unable to formulate or agree upon any precise

rule to distinguish between a permissible regulation and an

impermissible taking. We follow the mandate of United

States v. Central Eureka Mining Co., supra, to ascertain the

particular facts of our case.

We reiterate that the Denver ordinance by its terms pretty

much contradicts the City’s argument that no compensation

is required, because the ordinance does not attempt to im-

pose an immediate prohibition on any signs. It sets up an

amortization schedule keyed to cost of replacement, and,

under the decided cases, this is a recognition that some com-

pensation is owed. Under Denver’s ordinance, a sign which

would cost $3,000 to replace must be torn down in two

years, while a sign which would cost $15,001 to replace can

remain standing five years. The ordinance ignores the actual

investment of the owner, it ignores the market value of the

sign, and it ignores the extent to which a particular owner

has recaptured either his investment or the sign’s market

value, just as it disregards the length of the unexpired lease-

hold term. It fails in these respects in the face of the follow-

ing facts which were proven at trial:

1. There is no correlation between signs and public safety

or accidents, nor was there any proof that signs cause acci-

dents. The proof was to the contrary.

2. Most signs are leased for five year terms, and approx-

imately three-fourths of the leases are renewed for an addi-

tional term or terms. Although the lessor sign companies

attempt to make a small profit during the initial leasehold

term, the real profit is derived from the renewals, and, addi-

= yoo

tionally, the lessee gets a better deal during the renewal

term. Thus, both parties have a business incentive to renew.

3. There is a market for the sale of sign leases, and sales

prices of sign leases include an increment of the probability

of renewal of the lease.

4. All signs, over varying periods of time, become ob-

solete, and when they do, they are removed.

5. Almost without exception, the signs are not adaptable

for use elsewhere, and typically, the salvage value of a

sign which must be removed does not equal removal cost.

6. Physical depreciation of signs is minimal. This is

evidenced by the fact that the Assessor of the City and

County of Denver does not permit depreciation of signs for

property tax purposes. [The City offered no evidence that

the Assessor will change his position even as to signs which

must be destroyed under the ordinance.]

7. Every sign in Denver was erected under a permit

charged for and issued by the City.

8. In the opinion of most people, many signs and their

proliferation are garish eyesores, but due to oddities in the

ordinance, some of the most aesthetically offensive signs

remain perfectly legal under the ordinance.

9. Flashing, blinking, fluctuating or animated signs are

typically the most expensive, but, except for aesthetic con-

siderations, the evidence failed to establish any reason they

should be removed sooner than other signs. Additionally,

the evidence established the fact that because of the design

of such signs, their utility is greatly diminished or destroyed

if the movable characteristics of such signs are eliminated.

If the blinking, flashing or animation is shut off, the func-

tion of the signs would be severely impaired, and the

cul ainn

leases between the parties would be effectively terminated,

because the lessee would not be receiving that which he

bargained for.

10. Plaintiffs lawfully invested substantial sums of

money in the manufacture and erection of signs or in the

leasing of signs erected on their premises.

11. In many instances, the market value of the lessees’

businesses will be diminished if the signs are removed.

12. As to most of the signs, the ordinance prohibits any

use rather than merely restricting the type or extent of use

of the signs.

13. Because they are custom made, there is no other

location within or without the City and County of Denver

at which the signs can be used.

14. There is no relationship between replacement cost

and unexpired leasehold term, and there is but limited re-

lationship between replacement cost and either market

value or useable life. There is a relationship between in-

vestment and replacement cost, but they are a far cry from

being identical.

Defendants initially urge that because of the presump-

tive constitutionality of any legislative act we must search

for some rationale which will support constitutionality and

they stress that we cannot substitute our judgment for that

of City Council. They cite cases such as Baum v. Denver,

147 Colo. 104, 363 P. 2d 688, Bird v. City of Colorado

Springs, ___Colo.___., 489 P. 2d 324, Standard Oil Com-

pany v. City of Marysville, 279 U.S. 582, and Goldblatt v.

Town of Hempstead, 369 U.S. 590. These cases support and

we agree with these broadly stated legal principles. Here, de-

fendants elected to try to support the constitutionality of the

>

ordinance on their environmental theory, and their own

expert testified that just compensation in one form or an-

other is required. Moreover, we say again that the ordinance

itself demonstrates Council’s determination that compen-

sation by way of amortization is necessary. As stated in de-

fendants’ brief, the case “involves no more and no less than

a determination, within the scope of permissible judicial

review, of whether the amortization periods provided by the

ordinance are reasonable.” No presumption of constitution-

ality and no deference to legislative wisdom will bail out the

ordinance if it in fact effects a taking without the payment

of just compensation.

Starting from defendants’ simplified statement of the

case; i.e., the statement that the case involves the single

question of whether the amortization periods are reason-

able, we refer at once to an annotation in 22 A.L.R. 3rd

1134, entitled “Validity of Provisions for Amortization

of Nonconforming Uses.” A review of the cases there dis-

cussed demonstrates that with only a few exceptions, reas-

onable amortization periods have been held to eliminate

need for the payment of just compensation. This seems to

be the rule in Colorado. Service Oil Co. v. Rhodus (1972)

____Colo , 500 P. 2d 807. Probably no case has been

more frequently cited in support of the constitutionality of

required amortization of non-conforming uses than Naegele

Outdoor Advertising Co. v. Village of Minnetonka (1968)

(Minn.) 162 N. W. 2d 206. There, the village required the

removal of all non-conforming billboards within three years.

Naegele limited its attack to a contention that the ordinance

was unconstitutional on its face, and the question of whether

it was unconstitutional in its application, which is included

in our case, was not there presented. The ordinance was

upheld, and the Minnesota Court said:

—

“Plaintiff cannot successfully challenge this ordi-

nance as unconstitutional on its face unless it

would be unconstitutional as applied to the prop-

erty interests of every billboard owner. The un-

derlying issue in making this determination must

therefore be whether the amortization period pro-

vided by the statute is reasonable. If the value of

plaintiff's property interest was extinguished be-

fore the running of the 3-year period, there would

be no taking, or if the value of freedom from new

competition for the statutory period equalled the

value of the property interest remaining at the

end of the period, there would be just compensa-

tion for the taking. In either case, the length of

the amortization period is reasonable and the or-

dinance therefore is constitutional. Moreover,

since several conceivable applications of the ordi-

mance are reasonable, it is not unconstitutional

by its terms. The question then becomes one of

the unconstitutional application of the ordinance

in a given case, and the burden is on plaintiff to

establish that the ordinance, as applied, is uncon-

stitutional. Plaintiff, however, has based its chal-

lenge on the argument that the ordinance is un-

constitutional on its face and has introduced little

or no evidence that the 3-year amortization

period is unreasonable as applied.

“Finally, plaintiff claims that it was deprived

of its property interest in the leases themselves.

If a property right is taken for a public use,

compensation by payinent of its fair market value

is required. In the case of a taking of a lease-

——

hold interest, this amount ‘is the fair rental

value of the premises less the amount of the rent

for the remainder of the term.’ In re Assessment

for Widening Third Street in St. Paul, 176 Minn.

389, 390, 223 N.W. 458.

“Ten of the leases in question are oral and

amount to no more than month-to-month ten-

ancies. The value of such a leasehold is limited

to the rental value of the premises for 30 days

less the rent payment for that period. Riebs v.

Milwaukee County Park Comm., 252 Wis. 144,

31 N.W. 2d 190. The other 8 leases are written

and vary in length from 1 to 10 years. However,

plaintiff has offered no evidence on the fair

market value of any of these leases at the end of

the statutory amortization period. Thus, it is im-

possible for us to say that there has been such a

taking of a valuable property interest from plain-

tiff as to render this application of the ordinance

unconstitutional.”

Here, of course, plaintiffs have presented evidence on the

subjects not decided by Naegele, and, as we shall discuss

later, the Minnesota Court’s definition of market value of

a leasehold does not square with present Fifth Amendment

law. Moreover, in Naegele, all billboards were treated alike,

' while here amortization periods vary with cost of replace-

ment. The uncontradicted expert testimony in this case

was to the effect, and we find, that there is no conceivable

economic or accounting theory which lengthens or shortens

the amortization period on the basis of replacement cost of

a sign. The Internal Revenue Service would give short shrift

to any such contention, and so do we. Carried to its inev-

itable illogical conclusion, owners of small homes would

— poe

have to get out without payment for their houses at the end

of two years, but owners of more expensive homes couldn’t

be thrown out for five years. Highways could be built

through residential areas, and the smaller homeowners

could be thrown out in two years, but owners of luxury

homes could stay put for five years, albeit none of the

owners would ever be paid a dime for their homes.

Amortization is but a function of depreciation, and a

smaller house of equivalent construction doesn’t depreciate

more rapidly than does a larger one, and neither does a

smaller sign built from the same materials as a larger one

depreciate in 2/5ths of the time it takes a more expensive

one to wear out. These comments we make not in

support of any equal protection determination, but, rather

we make them as illustrative of the manifest unreasonable-

ness of the amortization schedules in the Denver ordinance,

even if amortization be held to be a type of payment of just

compensation.

With this caveat to the ordinance’s varying allowable

amortization periods tied to replacement costs, we mention

that without extended discussion by the Court, a five year

amortization period for all nonconforming signs was upheld

in E. B. Elliott Advertising Co. v. Metropolitan Dade

County (1970) 5 Cir. 425 F. 2d 1141. The Court held

that elimination of signs was in furtherance of a permissible

legislative determination of public purpose [a determination

we have already made in this case], and in addressing itself

to the Fifth Amendment question, the court said:

“The final issue presented by this appeal is

whether Ordinance No. 63-26 deprives the appel-

lants and others of their class of their property

without just compensation contrary to the due

a S

process requirements of the Fourteenth Amend-

ment. See Panhandle E. Pipe Line Co. v. State

Highway Comm., 294 U.S. 613, 55 S. Ct. 563,

79 L. Ed. 1090 (1935).

“Ordinance No. 63-26 was enacted on July 2,

1963, and provides that nonconforming signs may

continue to be maintained until March 1, 1968,

thus providing an amortization period of five

years. In Standard Oil Co. v. City of Tallahassee,

N.D. Fla. 1949, 87 F. Supp. 145, aff’d. 5 Cir.

1950, 183 F. 2d 410, cert. den. 340 U.S. 892,

71 S. Ct. 208, 95 L. Ed. 647, it was held a zoning

ordinance requiring the discontinuance of a non-

conforming use after the expiration of a five-year

amortization period did not constitute a depriva-

tion of property without due process of law.

Accord, Naegele Outdoor Adv. Co. v. Village of

Minnetonka, Minn. 1968, 162 N.W. 2d 206; City

of Seattle v. Martin, 1959, 65 Wash. 2d. 541,

342 P. 2d 602; Grant v. Mayor and City Coun-

cil of Baltimore, 212 Md. 301, 129 A. 2d 363

(1957); City of Los Angeles v. Gage, 1954, 127

Cal. App. 2d 442, 274 P. 2d 34. Therefore, the

requirement contained in the ordinance that all

nonconforming signs be removed by March 1,

1968, does not constitute a taking of property for

which compensation must be given under the

Fourteenth Amendment.”

At time of trial, we thought that E. B. Elliott Advertising

Co., supra, Was persuasive authority for upholding an or-

dinance which would require removal of all non-conforming

signs at the end of a five year period, but E. B. Elliott Ad-

vertising Co., supra, was decided and our trial was held

—

before January 16, 1973, the date on which Almota Farmers

Elevator & Warehouse Co. v. United States,___U.S

was decided.‘ Our trial date thinking stemmed from the

evidence that almost all sign leases were for a five year

period and from a belief that the leasehold term fixed

the measure of compensation. Colloquy in the record

shows that we so understood United States v. Petty Motor

Co. (1945) 327 U.S. 372. We understood Petty

Motor Co. as did the four dissenting Justices in Almota

Farmers Elevator and Warehouse Company, where, speak-

ing for the dissent, Justice Rehnquist said:

“In United States v. Petty Motor Co., supra, the

Government acquired by condemnation the use

of a structure occupied by tenants in possession

under leases for various unexpired terms. The

Court held that the measure of damages for con-

demnation of a leasehold is the value of the ten-

ant’s use of the leasehold for the remainder of the

agreed term, less the agreed rent. The Court con-

sidered the argument, essentially the same raised

by petitioner here, that a history of past renewal

of the leases to existing tenants creates a com-

pensable expectancy, but held that the right to

compensation should be measured solely on the

basis of the remainder of the tenant’s term under

the lease itself. 327 U.S., at

380. In so deciding, the Court stated:

‘The fact that some tenants had occu-

pied their leaseholds by mutual con-

4Both also antedated Shulter v. United States (1973) 10 Cir. 470 F. 2d

1143.

—_ oe

sent for long periods of years does not

add to their rights. Emery v. Boston

Terminal Co., 178 Mass. 172, 185, 59

N.E. 763 [per Holmes, C. J.]:

‘ “Tt appeared that the owners had been

in the habit of renewing the petitioners’

lease from time to time. . . . Change-

able intentions are not an interest in

land, and although no doubt such in-

tentions may have added practically to

the value of the petitioners’ holding,

they could not be taken into account in

determining what the respondent

should pay. They added nothing to the

tenants’ legal rights, and legal rights

are all that must be paid for. Even if

such intentions added to the saleable

value of the lease, the addition would

represent a speculation on a chance,

not a legal right.”’ 327 U.S., at 390

n. 9.

“The holding in Petty was consistent with a long

line of cases to the effect that the Fifth Amend-

ment does not require, in a taking of a property

interest, compensation for mere expectancies of

profit, or for the frustration of licenses or con-

tractual rights which pertain to the land, but

which are not specifically taken and which are

not vested property interests. Omnia Commer-

cial Co. v. United States, 261 U.S. 502, 510

(1923); Sinclair Pipe Line Co. v. United States,

287 F. 2d 175, 178 (Ct. Cl. 1961); Chicago, M.,

St. P. & P. R. Co. v. Chicago, R. I. & P. R. Co.,

—

138 F. 2d 268, 270-271 (CA8 1943), cert. de-

nied, 320 U.S. 804 (1944).”

Because of our misunderstanding of Petty Motor Co., it

was with reluctance that we permitted testimony concerning

the probability of renewal; that such probability is traded

in the marketplace and is subject to market value determi-

nation. It is fortunate that we did permit the testimony, be-

cause the majority in Almota Farmers Elevator and Ware-

house Company held:

“In view of this conflict in the circuits, we granted

certiorari, 405 U.S. 1039, to decide an important

question of eminent domain law: ‘Whether, upon

condemnation of a leasehold, a lessee with no

right of renewal is entitled to receive as com-

pensation the market value of its improvements

without regard to the remaining term of its lease

because of the expectancy that the lease would

have been renewed.

SC EDSCSEEEOBVWAPOASI COD Cee ee reef O24 22 68 8S

“The Fifth Amendment provides that private

property shall not be taken for public use with-

out ‘just compensation.’ ‘And “just compensa-

tion” means the full monetary equivalent of the

property taken. The owner is to be put in the

same position monetarily as he would have occu-

pied if his property had not been taken.’ United

States v. Reynolds, 397 U.S. 14, 16 (footnotes

omitted). See also United States v. Miller, 317

U.S. 369, 373. To determine such monetary

equivalence, the Court early established the con-

cept of ‘market value’: the owner is entitled to the

fair market value of his property at the time of

— =

the taking. New York v. Sage, 239 U.S. 57, 61.

See also United States v. Reynolds, supra, at 16;

United States v. Miller, supra, at 374. And this

value is normally to be ascertained from ‘what

a willing buyer would pay in cash to a willing

seller.’ United States v. Miller, supra, at 374. See

United States v. Virginia Electric and Power

Co., 365 U.S. 624, 633.

“By failing to value the improvements in place

over their useful life — taking into account the

possibility that the lease would be renewed as well

as the possibility that it might not — the Court of

Appeals in this case failed to recognize what a

willing buyer would have paid for the improve-

ments. If there had been no condemnation, Al-

mota would have continued to use the improve-

ments during the renewed lease term, or if it sold

the improvements to the fee owner or to a new

lessee at the end of the lease term, it would have

been compensated for the buyer’s ability to use

the improvements in place over their useful life.

“United States v. Petty Motor Co., 327 U.S. 372,

upon which the Government primarily relies,

does not lead to a contrary result. The Court did

indicate that the measure of damages for the con-

demnation of a leasehold is to be measured in

terms of the value of its use and occupancy for

the remainder of the lease term, and the Court

refused to elevate an expectation of renewal into a

compensable legal interest. But the Court was not

dealing there with the fair market value of im-

provements. Unlike Petty Motor, there is no ques-

—

tion here of creating a legally cognizable value

where none existed, or of compensating a mere in-

corporeal expectation. The petitioner here has

constructed the improvements and seeks only

their fair market value. Petty Motor should not

be read to allow the Government to escape pay-

ing what a willing buyer would pay for the same

eoeeeeeeeeeereeeeeeeeeeeevreeeeeeeeeeeeeene

“At the time of the taking in this case, there was

an expectancy that the improvements would be

used beyond the lease term. But the Government

has sought to pay compensation on the theory

that at that time there was no possibility that the

lease would be renewed and the improvements

used beyond the lease term. It has asked that

the improvements be valued as though there were

no possibility of continued use. That is not how

the market would have valued such improve-

ments; it is not what a private buyer would have

paid Almota.

“*The constitutional requirement of just com-

pensation derives as much content from the basic

equitable principles of fairness, United States v.

Commodities Trading Corp., 339 U.S. 121, 124

(1950), as it does from technical concepts of

property law.’”

Almota emphatically holds that market value’ over the

useful life of the improvements is the test. Almota rejects

the unexpired leasehold term as the measure of value, and

™Market value” is the established test in the law, and the court’s reference

at time of trial to an owner’s “investment” was inadvertent.

—

it demands that the provable value of a probability of re-

newal must be paid for. Read in the way most favorable

to upholding its constitutionality, the Denver ordinance

by its terms uses “replacement cost” as the measure of value,

and, based on the record made, it may vaguely relate the

amortization period to unexpired leasehold term, but it cer-

tainly does not permit amortization over useful life. If

Almota means what we think it says, even the longest amor-

tization permitted under the Denver ordinance does not

approach compensating the owners for the value of the

signs over their useful life, even if amortization is said to

be permissible compensation. Therefore, whatever may

have been the law before 1973, after Almota, it must be

held that the amortization provided by the Denver ordi-

nance does not meet the Fifth Amendment’s requirement

for the payment of just compensation.’ Legislative rough

approximations of just compensation won’t do.

Almota effectively disposes of this case,’ but additional

comments are in order. The hairline distinction between

permissible regulation and compensable taking is fully dis-

cussed in the majority and dissenting opinions in City of St.

Paul v. Chicago, St. Paul, Minneapolis and Omaha Railway

Company (1969 8 Cir.) 413 F. 2d 762. The majority held

that a height restriction on future buildings which could be

erected on the railroad’s lands was permissible. The major-

ity said, inter alia:

®Just what overall effect Almota has on the constitutionality of amortiza-

tion of non-conforming uses we leave for another day and, we hope,

another court.

‘Amicus Consumers for Better Signs and Plan Metro Denver distinguishes

Almota on the ground that it was an eminent domain case, and, says

Amicus, Almota is therefore inapplicable. We do not subscribe to the

theory that the applicability of the Fifth Amendment is governed by the

nomenclature or form of the action.

—= 56 —

“Neither constitutional provision interposes a

barrier to the imposition of restrictions on the use

of private property if a zoning ordinance is en-

acted pursuant to a valid exercise of the police

power. Goldblatt v. Town of Hempstead, 369

ie

“The test is whether the enactment falls within

that power is one of reasonableness.

“The zoning ordinance will be sustained unless

its ‘* * * provisions are clearly arbitrary and

unreasonable, having no substantial relation to

the public health, safety, morals, or general

welfare.

2-96 6 S08. 62.8 O19 SO 2S. 6 2A 6 S.6 6S OOOH 66 4 8:4. 2 SE SO

“The mere fact that the ordinance seriously

depreciates the value of the complainants’ prop-

erty is not enough to establish its invalidity.

Goldblatt v. Town of Hempstead, supra at 594,

82 S. Ct. at 990, American Wood Products Co.

v. City of Minneapolis, 21 F. 2d 440, 444 (D.

Minn. 1927) (J. Sanborn), aff'd, 35 F. 2d 657

(8th Cir. 1929); Kiges v. City of St. Paul, 62

N.W. 2d at 369. Nor can it be invalidated on the

grounds that aesthetic considerations will be fur-

thered if it is permitted to stand. Berman v.

Parker, 348 U.S. 6,....

“No evidence was offered at trial to show: that

the ordinance was designed to restrict competi-

tion, compare, Pearce v. Village of Edina, 263

Minn. 553, 118 N.W. 2d 659, 671, n. 1 (1962);

or that the railroads acquired the property with

the expectation that it would be used in the man-

—

ner they now seek, compare, Alexander v. City

of Minneapolis, 267 Minn. 155, 125 N.W. 2d

583, 585 (1963); or that the railroads cannot

continue to use their property as they have in

the past.”

Judge Mehaffey filed a vigorous dissent. He said:

“The majority opinion is erroneously based first

on the mistaken assumption that there is no ‘tak-

ing’ of appellees’ property, and hence no viola-

tion of the mandate of the Fifth Amendment that

‘* * * nor shall private property be taken for

public use, without just compensation,’ and

Artical 1, § 13 of the Minnesota Constitution

which provides that ‘private property shall not

be taken, destroyed or damaged for public use

without just compensation therefor, first paid or

secured.’ The Supreme Court has long and con-

sistently held that governmental restrictions can

so diminish the value of property as to constitute

a taking. In United States v. Central Eureka

Mining Co., 357 U.S. 155, 168, 78 S. Ct. 1097,

1104, 2 L. Ed. 2d 1228 (1958), the Court said:

‘Traditionally, we have treated the

issue as to whether a particular govern-

mental restriction amounted to a con-

stitutional taking as being a question

properly turning upon the particular

circumstances of each case. * * * Jn

doing so, we have recognized that ac-

tion in the form of regulation can so

diminish the value of property as to

constitute a taking.’ ” [Emphasis by

the Court]

=

The dissenting opinion then distinguishes the cases on

which the majority relied [and in large part they are the

cases urged by the City here] and Judge Mehaffey expressed

the strong view that the St. Paul ordinance effected a taking.

On rehearing, to consider the effect, if any, of Indiana Toll

Road Commission v. Jankovich, 379 U.S. 487, the judges

adhered to their earlier views. We do not think that even the

views of the majority in City of St. Paul are particularly

supportive of the City’s contentions here. A reading of the

opinions in that case convinces that the ordinance was up-

held because reasonable uses of the property by the rail-

road company remained, and the St. Paul ordinance re-

stricted only the type of use instead of prohibiting all use

as does the Denver sign ordinance. In Jankovich, the Su-

preme Court held that the writ of certiorari had been

improvidently granted for the reason that the decision of

the Indiana Supreme Court was based upon state rather

than federal constitutional grounds. The Indiana Court

held that an ordinance of the City of Gary limiting the

height of improvements in airway approach lanes to 18

feet was a taking which required the payment of compen-

sation, and in dismissing the writ of certiorari, Justice

White said:

“The Indiana Supreme Court had before it a

case in which the effect of the ordinance was to

establish a maximum height of 18 feet for struc-

tures on respondent’s land. Although it recognized

that zoning regulations may be upheld as a rea-

sonable exercise of the police power ‘where the

owner of property is merely restricted in the use

and enjoyment of his property’ 244 Ind. at 581,

193 N.E. 2d at 240-241, the court held that a

taking requiring compensation—rather than

—

mere regulation— was effected here because

‘the City of Gary has attempted, by the passage

of the ordinance under consideration, to take and

appropriate to its own use the ordinary usable

air space of property adjacent to the Gary

Airport.’ ”

Justice White said that no opinion was expressed as to

the constitutionality of the ordinance under the Fifth

Amendment, and we do not quote the case as an expression

of any such view. However, his opinion does make the

distinction we deem applicable — the distinction between

a restriction on type of use and a prohibition against any

reasonable use [and in our case a prohibition against any

use at all.] Where the ordinance does no more than to

reasonably restrict uses, leaving available other uses, it

properly can be said to be within the police power and

payment of compensation is not required. Where the ordi-

nance prohibits any use or where it prohibits all reasonable

uses, there is a taking, and the Fifth Amendment comes into

play and demands the payment of just compensation. The

Denver ordinance is in the second category, and, unless

payment of just compensation is provided for, the ordinance

must fall.

An illustration of the distinction between restrictions on

the use of property and orders for the destruction of prop-

erty can be drawn from the current public debate over the

environmental problem of air pollution caused by automo-

biles. There is much grumbling over threatened gasoline

rationing which would curtail the use of automobiles, but,

assuming, arguendo, that such a regulation would be a

valid exercise of the police power permitting reasonable

restrictions on the use of automobiles, the same cleanliness

of the air could be more expeditiously obtained by ordering

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the destruction of fifty percent of the automobiles in the

country." The general public would immediately cry out

that such a command was unconstitutional under the Fifth

Amendment as an uncompensated taking. The Denver ordi-

nance is no less unconstitutional just because it is aimed

at sign companies instead of drawing bead on the public

at large.

The headon collision between claims of police power

and constitutional protections is as old as is our country.

Just so long as their own property is not the object of attack,

zealots are eager to bring about their ends through police

power claims, but the limitations on the accomplishment of

such righteous desires has never been better expressed than

in the words of Justice Holmes in Pennsylvania Coal Co.

v. Mahon (1922) 260 U.S. 393:

“. . . The protection of private property in the

Fifth Amendment . . . provides that it shall not be

taken for [public] use without compensation. .. .

When this seemingly absolute protection is found

to be qualified by the police power, the natural

tendency of nature is to extend the qualification

more and more until at last private property dis-

appears. But that cannot be accomplished in this

way under the Constitution of the United

States. ...

“We are in danger of forgetting that a strong pub-

lic desire to improve the public condition is not

enough to warrant achieving the desire by a

shorter cut than the constitutional way of paying

for the change.” [emphasis supplied. ]

8Under the theory of Denver’s ordinance, Vegas would have to be de-

stroyed in two years, Impalas in three years, Oldsmobiles in four years

and Cadillacs in five years.

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Perhaps [and we do not pass on the question] if City

Council wishes, or if a majority of the people of the City

wish, all or any part of the signs in Denver can be eliminated.

But, if so, they can be eliminated only in accordance with

the requirements of the Fifth Amendment, and the pro-

hibitions against shortcuts mentioned by Justice Holmes

are still enjoined by the Constitution. At best, if City Coun-

cil wishes, or if a majority of the people of the City wish,

all or any part of the signs in Denver can be eliminated by

an ordinance which provides for the payment of “the full

monetary equivalent of the property taken (which includes)

what a willing buyer would have paid . . . for the buyer’s

ability to use the improvements over their useful life.”

Almota Farmers Elevator & Warehouse Co. v. United States

(1973) U.S. ___.. Denver’s signs can be eliminated

if Denver is willing to provide for such elimination in the

way the federal government and the state has so provided.

Whether Denver wants to incur this expense is a decision

City Council and the taxpayers must make.

We do not hold that immediate full payment in cash is

necessarily the only possible solution. We hold only that

the present Denver ordinance does not provide for the pay-

ment of just compensation. Whether a constitutional ordi-

nance which does not require a cash payment of just com-

pensation can be devised, we leave to the ingenuity of the

City. Our decision today is limited to the existing ordinance

which is all that is before us. Sec. 613.5-5(4) and Sec.

613-5-5(4)(a) are violative of the protections of the Fifth

Amendment of the Constitution of the United States, and

they are unconstitutional.

With this determination, we do not reach the other con-

stitutional questions presented, because we should not re-

solve “constitutional questions unless their answers are in-

== 62 —

dispensable to the disposition of the cause before us.”

Stefanelli v. Minard, 342 U.S. 117. See, also, Peters v.

Hobby, 349 U.S. 331, United States v. Spector, 343 U.S.

169, and Toomer v. Witseil, 334 U.S. 385.

Plaintiffs seek injunctive relief against the enforcement

of Sec. 613.5-5(4)(a) of Denver’s Revised Municipal

Code. A preliminary injunction against the enforcement of

that section was granted on December 9, 1971, and that

preliminary injunction is made permanent. As to the

remaining portions of Sec. 613.5-5(4), of the Revised Mu-

nicipal Code of the City and County of Denver, plaintiffs

ask only declaratory relief, and this memorandum opinion

sets forth the findings and conclusions supportive of the

declaratory judgment requested. Plaintiffs are directed to

submit an appropriate form of declaratory judgment within

10 days of the date of this opinion, which judgment shall

include a declaration that Denver’s Revised Municipal

Code, Sec. 613.5-5(4) and Sec. 613.5-5(4)(a) are viola-

tive of the Fifth Amendment of the Constitution of the

United States because they attempt to accomplish a taking

of property without the payment of just compensation.

Plaintiffs and Intervenor shall be awarded their costs.

Amicus shall bear their own costs.

Dated at Denver, Colorado, this 4th day of April, 1973.

FRED M. WINNER,

United States District Judge