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283 Minn. 402

169 N.W.2d 37

State v. Saugen

Supreme Court of Minnesota

Decided May 23, 1969

Supreme Court of Minnesota · decided 1969-05-23

Key passage — most relied on by later courts

““The Saugen case is similarly a factually confined exception to the general rule. In Saugen , the fee owner of a liquor lounge sought to recover going-concern value when his entire fee was taken by the state. The court acknowledged that a liquor license, while an intangible property interest, is nevertheless a compensa-ble value where it is shown that the license cannot be transferred for use at another suitable location [footnote omitted]: “ ‘The present case is one where the way is open to award appellant compen sation for the going-concern value of the business. Here the condemnee was deprived of far more than the value of cold assets. The exercise of the right of eminent domain effectively destroyed appellant’s valid and unrevoked ability to continue to engage in the liquor business. The parties stipulated that absent the taking by the state, there was no evidence that appellant could not have continued to operate its lounge at the premises in question and that the appellant has gone out of the liquor business because it was unsuccessful in transferring its license to another location. It was unable to relocate because of the restricted liquor patrol limits and other peculiarities of the Minneapolis licensing situation. There is no problem here with a speculated loss because the going-concern value has been stipulated to be $17,500. Although a liquor license is a privilege visa-vis the licensing authorities, it has qualities of a property right as to third parties, and in”

quoted by 1 later decision, including Housing & Redevelopment Authority of the City of St. Paul v. Naegele Outdoor Advertising Co. of the Twin Cities

Relies on Kimball Laundry Co. v. United States · Mitchell v. United States · Arens v. Village of Rogers

Good law ✅— No negative treatment on recordhow we know

Decided 1969-05-23

How this case has been cited

Cited by 33 later decisions — most recently July 2009 · most notably REDEVELOP. AUTH., PHILA. v. Lieberman (1975), Kafka v. Montana Department of Fish, Wildlife & Parks (2008)

2 federal appellate · 31 state decisions

15019691970198019902000decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

Peterson, Justice

¶1(dissenting).

¶2It has been well settled until today that the condemnor in the permanent taking of property is not obligated to pay the condemnee for the loss of going-concern value of his business. This general rule has been sustained under U. S. Const. Amends. V and XIV. Mitchell v. United States, 267 U. S. 341, 45 S. Ct. 293, 69 L. ed. 644.1 Minn. Const, art. 1, § 13, despite prior opportunity to do otherwise, has not been construed differently. See, e. g., Hendrickson v. State, 267 Minn. 436, 127 N. W. (2d) 165. The condemnation statute, Minn. St. 117.02, subd. 2, contemplates no more than what is required by our constitution. Seabloom v. Krier, 219 Minn. 362, 18 N. W. (2d) 88.

¶3The majority opinion does two things, to both of which I respect*417fully dissent: (1) Its immediate result is to carve out an exception from the general rule for the benefit of a liquor licensee;2 and (2) its language seems to forecast judicial extension of statute to award unlimited compensation for the going-concern value in other cases.

¶4The basic premise for the result in this case is that the going-concern value of appellant condemnee’s liquor business was destroyed by the act of the state, as condemnor, a premise formulated from the parties’ stipulation that “there is no evidence that the condemnee could not have continued to operate its lounge at the premises in question.” I disagree with that premise. Appellant’s business was destroyed instead by act of the municipality, as licensor, in refusing to consent to its transfer to another location within the patrol limits. As the stipulation states, “the owner’s license expired inasmuch as he had been unsuccessful in transferring the license to another location and has subsequently gone out of the liquor business by virtue of that fact.’’’’ (Italics supplied.)

¶5Neither constitutional nor statutory basis exists for establishing the exceptional rule in this case. The general rule concerning the status of a liquor licensee’s interest is summarized in 9 McQuillin, Municipal Corporations (3 ed.) § 26.195:

¶6“There is no vested right to or under a liquor license. There is at most a privilege, personal in character, which, it has been said, is merely to do what otherwise would be, or could be made, an offense, and which is subject to changing regulations, and even to legislative cancellation. A liquor license or permit creates neither a contract nor a property right, and denial of it by a proper authority with discretion in the matter deprives an applicant of neither liberty nor property.” (Italics supplied.)

¶7Our own decisions are in harmony with this summary statement: *418Anderson v. City of St. Paul, 226 Minn. 186, 32 N. W. (2d) 538; George Benz Sons, Inc. v. Ericson, 227 Minn. 1, 34 N. W. (2d) 725; Sabes v. City of Minneapolis, 265 Minn. 166, 120 N. W. (2d) 871; Arens v. Village of Rogers, 240 Minn. 386, 61 N. W. (2d) 508, appeal dismissed, 347 U. S. 949, 74 S. Ct. 680, 98 L. ed. 1096.

¶8Whether the state should compensate the owner of a business for the loss of its going-concern value as a result of a taking by eminent domain — either in the circumstances of this case or in any case — is in my view a matter for legislative determination; and, absent compelling constitutional considerations presented by such legislative determination, this court should not substitute its own judgment of what may be the more appropriate result.

¶9I would affirm.

¶10 Kimball Laundry Co. v. United States, 338 U. S. 1, 69 S. Ct. 1434, 93 L. ed. 1765, 7 A. L. R. (2d) 1280, achieved a different result where the governmental taking was temporary rather than permanent. I do not understand the suggestion that Kimball has overruled Mitchell, for the narrow majority in the Kimball case was achieved only with the concurrence of Mr. Justice Rutledge, who clearly limited his concurrence to the fact of temporary taking and stated his adherence to the general rule where the taking of complete title is permanent. The situation in the instant case, of course, is like Mitchell and unlike Kimball.

¶11 The value of the liquor licensee’s business, it may be observed, is not so much the result of individual enterprise, but of his semimonopoly position “because of the restricted liquor patrol limits and other peculiarities of the Minneapolis licensing situation.”

¶12Rogosheske, Justice

(dissenting).

¶13I join Mr. Justice Peterson in his dissent and summarize the reasons as I see them for doing so. Even though the stipulated facts may make this case unique and its disposition by the majority arguably justified, I cannot agree that the going-concern value of licensed liquor premises should be compensable, absent legislative authorization because:

¶14The going-concern value of a liquor business, especially where the number and location is so rigidly limited as in this case, largely reflects the value of the license itself, rather than the good will built up by efficient operation and the attractiveness of the premises. Although under the system of licensing such appears to be inevitable, I cannot find justification for awarding compensation for the license for which a licensee is under no legal obligation to pay more than the license fee.

¶15Despite the stipulation, I find it impossible to accept the conclusion that the inability of appellant to relocate its business and ultimate destruction of the business was legally caused by the taking. The taking merely gave rise to the necessity to relocate, but it was the system and administration of licensing which was the direct and legal cause of the total loss of the going-concern value of the business.

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