I. GENERAL CONSIDERATION.

Law reviews. For article, "Appropriations of Water for a Preferred Purpose", see 22 Rocky Mt. L. Rev. 422 (1950). For article, "Eminent Domain in Colorado", see 29 Dicta 313 (1952). For article, "Proposed Eminent Domain Law for Colorado", see 29 Dicta 332 (1952). For note, "Expenses of Moving in Eminent Domain Cases", see 30 Dicta 269 (1953). For article, "Recent Development in Colorado Eminent Domain", see 27 Rocky Mt. L. Rev. 23 (1954). For comment on Russell Coal Co. v. Bd. of Comm'rs, 129 Colo. 330 , 270 P.2d 772 (1954), appearing below, see 27 Rocky Mt. L. Rev. 234 (1955). For comment discussing church condemnation, see 46 U. Colo. L. Rev. 43 (1974). For article, "Inverse Condemnation -- A Viable Alternative", see 51 Den. L.J. 529 (1974). For comment examining factors to be considered in making an election between trespass and inverse condemnation as remedies for uncompensated appropriation of land, see 52 Den. L.J. 645 (1975). For comment, "Water: Statewide or Local Concern? City of Thornton v. Farmers Reservoir & Irrigation Co., 194 Colo. 526 , 575 P.2d 382 (1978)", see 56 Den. L. J. 625 (1979). For comment, "People v. Emmert, 198 Colo. 137 , 597 P.2d 1025 (1979): A Step Backward for Recreational Water Use in Colorado", see 52 U. Colo. L. Rev. 247 (1981). For comment, "Bubb v. Christensen: The Rights of the Private Landowner Yield to the Rights of the Water Appropriator Under the Colorado Doctrine", see 58 Den. L.J. 825 (1981). For article, "Assemblage, Design and Construction for Real Estate Developments", see 11 Colo. Law. 2297 (1982). For article, "Introduction to a Condemnation Case", see 13 Colo. Law. 420 (1984). For article, "Mineral Ownership Under Highways, Streets, Alleys and Ditches", see 17 Colo. Law. 43 (1988). For comment, "Eminent Domain: A Case Comment -- Mountain States Legal Foundation v. Hodel", see 65 Den. U. L. Rev. 581 (1988). For article, "Home Rule, Extraterritorial Impact, and the Region", see 86 Den. U.L. Rev. 1271 (2009). For article, "Town of Telluride v. San Miguel Valley Corp.: Extraterritoriality and Local Autonomy", see 86 Den. U.L. Rev. 1311 (2009). For article, "Constitutional Home Rule and Judicial Scrutiny", see 86 Den. U.L. Rev. 1337 (2009). For article, "Telluride's Tale of Eminent Domain, Home Rule, and Retroactivity", see 86 Den. U.L. Rev. 1433 (2009). For comment, "Minority Interests, Majority Politics: A Comment on Richard Collins' 'Telluride's Tale of Eminent Domain, Home Rule, and Retroactivity'", see 86 Den. U.L. Rev. 1459 (2009).

Eminent domain provisions not in conflict with federal constitution. The eminent domain provisions of this state are not in conflict with the fourteenth amendment of the federal constitution. Pine Martin Mining Co. v. Empire Zinc Co., 90 Colo. 529 , 11 P.2d 221 (1932).

Each landowner holds his estate subject to the public necessity for the exercise of the right of eminent domain for public purposes, and he cannot evade this by any agreement with his neighbor, nor can his neighbor acquire a right from a private individual which imposes a new burden upon the public in the exercise of the right of eminent domain. Smith v. Clifton San. Dist., 134 Colo. 116 , 300 P.2d 548 (1956).

The authority to exercise the right of eminent domain for public uses is based upon the theory that property is granted the subject upon condition that it may be retaken to serve the necessities of the sovereign power. Tanner v. Treasury Tunnel Mining & Reduction Co., 35 Colo. 593, 83 P. 464 (1906); People ex rel. Watrous v. District Court, 207 F.2d 50 (10th Cir. 1953).

Right of condemnation has been restrained by constitutional limitations in the protection of individual property rights. Potashnik v. Pub. Serv. Co., 126 Colo. 98 , 247 P.2d 137 (1952); Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267 , 248 P.2d 732 (1952).

Both § 15 of art. II, Colo. Const., and this section protect an individual's vested rights and prohibit the taking thereof for public or private use without condemnation under proper proceedings and just compensation given therefor. Stuart v. County Comm'rs, 25 Colo. App. 568, 139 P. 577 (1914).

Condemnation right exists only under powers specifically granted by the general assembly or, in some cases, where the power to condemn specific property is provided by home-rule cities to which the general assembly has delegated its power in such matters. Colo. Cent. R.R. v. Allen, 13 Colo. 229 , 22 P. 604 (1889); Potashnik v. Pub. Serv. Co., 126 Colo. 98 , 247 P.2d 137 (1952); Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267 , 248 P.2d 732 (1952).

Power is vested in state. It is fundamental that the power of eminent domain is vested in the state of Colorado. Such power may not be exercised by a governmental subdivision or other entity unless the power has been delegated to it by the general assembly. Bd. of County Comm'rs v. Intermountain Rural Elec. Ass'n, 655 P.2d 831 ( Colo. 1982 ).

That the state constitution permits private property to be taken for certain specified uses is an implied declaration that such uses are so closely connected with the public interest as to be at least quasi public or, in a modified sense, affected with a public interest. Lamborn v. Bell, 18 Colo. 346 , 32 P. 989 (1893); Gibson v. Cann, 28 Colo. 499 , 66 P. 879 (1901); Ortiz v. Hansen, 35 Colo. 100 , 83 P. 964 (1905); Kaschke v. Camfield, 46 Colo. 60 , 102 P. 1061 (1909); Pine Martin Mining Co. v. Empire Zinc Co., 90 Colo. 529 , 11 P.2d 221 (1932).

Private property cannot be taken by government, except for public purposes. Pine Martin Mining Co. v. Empire Zinc Co., 90 Colo. 529 , 11 P.2d 221 (1932).

Taking of private property to be accompanied by compensation to owner. Pine Martin Mining Co. v. Empire Zinc Co., 90 Colo. 529 , 11 P.2d 221 (1932).

Takings questions present mixed issues of law and fact. An appellate court must defer to a trial court's factual determinations but reviews de novo the legal determination of whether something is for a public use. Carousel Farms Metro. v. Woodcrest, 2019 CO 51, 442 P.3d 402.

Effect of state agency's entry upon land without paying just compensation. When a state agency enters upon land or injures land without paying just compensation therefor, or without having commenced condemnation proceedings to ascertain the compensation due for the taking or injury, the act of the state agency is unauthorized and unlawful and is not the act of the state of Colorado. People ex rel. Watrous v. District Court, 207 F.2d 50 (10th Cir. 1953).

Remedy against state officer. The remedy for an unauthorized and unlawful taking of or injury to private land for public use without compensation by a state agency is against the state officer, individually, to prevent his unlawful act or for appropriate redress if it has been consummated. People ex rel. Watrous v. District Court, 207 F.2d 50 (10th Cir. 1953).

Municipal ordinance which imposed reasonable limitations on billboards on private property, thereby requiring modification of said billboards, did not constitute a taking for which just compensation must be paid. Nat'l Adver. v. Bd. of Adjustment of City & County of Denver, 800 P.2d 1349 (Colo. App. 1990).

"Private use" construed. The words "private use" do not mean a strictly private use, that is to say, one having no relation to the public interest. Lamborn v. Bell, 18 Colo. 346 , 32 P. 989, 20 L.R.A. 241 (1893); Gibson v. Cann, 28 Colo. 499 , 66 P. 879 (1901); Ortiz v. Hansen, 35 Colo. 100 , 83 P. 964 (1905); Kaschke v. Camfield, 46 Colo. 60 , 102 P. 1061 (1909); Pine Martin Mining Co. v. Empire Zinc Co., 90 Colo. 529 , 11 P.2d 221 (1932).

Exercise of eminent domain unrestricted by contract. Parties may not by contract between themselves restrict the exercise of the power of eminent domain. Smith v. Clifton San. Dist., 134 Colo. 116 , 300 P.2d 548 (1956).

Property owners of adjacent property cannot thwart a public improvement by the execution of restrictive covenants. Smith v. Clifton San. Dist., 134 Colo. 116 , 300 P.2d 548 (1956).

The holding and underlying reasoning of Smith v. Clifton San. Dist., 134 Colo. 116 , 300 P.2d 548 (1956), aren't limited to that case's particular facts and its holding broadly applies to any situation in which a restrictive covenant is interposed as an obstacle to a condemning authority's attempt to obtain property for public use through eminent domain. A restrictive covenant of this type isn't a compensable property interest for eminent domain purposes. Town of Monument v. State, 2018 COA 148 , 467 P.3d 1126.

Public service company is authorized to acquire by condemnation interests in real property from private owners, provided, inter alia, that the purpose for which the condemned property is sought is determined to be a public purpose. Shaklee v. District Court, 636 P.2d 715 (Colo. 1981).

Sanitation district empowered to condemn lands. A sanitation district is a body politic or corporate with power to condemn lands for proper purposes. Smith v. Clifton San. Dist., 134 Colo. 116 , 300 P.2d 548 (1956).

Landowner has right to sue trespasser with power of eminent domain. A landowner has a right to sue in trespass even though the trespasser may have the statutory power of eminent domain with respect to the land on which the trespass occurs. Ossman v. Mtn. States Tel. & Tel. Co., 184 Colo. 360 , 520 P.2d 738 (1974).

Inverse condemnation tried as if eminent domain proceeding. An inverse condemnation action is based on § 15 of art. II, Colo. Const. Since it is based on the "takings" clause of the state constitution, it is to be tried as if it were an eminent domain proceeding. Ossman v. Mtn. States Tel. & Tel. Co., 184 Colo. 360 , 520 P.2d 738 (1974); Hayden v. Bd. of County Comm'rs, 41 Colo. App. 102, 580 P.2d 830 (1978); Linnebur v. Pub. Serv. Co. of Colo., 716 P.2d 1120 ( Colo. 1986 ).

Mandamus. Mandamus cannot be used to compel the state to bring and prosecute proceedings in condemnation because mandamus would require affirmative action by the state in the exercise of its sovereign power of eminent domain. People ex rel. Watrous v. District Court, 207 F.2d 50 (10th Cir. 1953).

Doctrine of inseparability does not apply. If the legislature wanted to recognize the doctrine of inseparability, which is an exception to the general rule of recovery, it would have amended the statute to allow for the exception. Dept. of Transp. v. Marilyn Hickey Ministries, 129 P.3d 1068 (Colo. App. 2005), rev'd on other grounds, 159 P.3d 111 ( Colo. 2007 ).

General assembly enacted subsection (3)(a) to restrict the abilities of local governments to unjustly deprive property owners of their inalienable rights. JAM Rest., Inc. v. City of Longmont, 140 P.3d 192 (Colo. App. 2006).

Subsection (3)(a) is constitutional, does not violate the home rule amendment to the Colorado Constitution, and prevails over municipality's zoning ordinance as applied to landowner. Subsection (3)(a) enforces constitutionally protected property rights and prohibits the unconstitutional taking of private property without just compensation. Constitutionally protected property interests are a matter of statewide concern and must be treated uniformly throughout the state. While zoning regulations are typically a matter of local concern, subsection (3)(a) is not a zoning regulation. Rather, it prohibits the unconstitutional taking of property without just compensation. JAM Rest., Inc. v. City of Longmont, 140 P.3d 192 (Colo. App. 2006).

Because inalienable property rights are involved, both local and state concerns are implicated, and the constitution cannot be read to dictate the matter at issue as one of exclusively local concern. Although the amortization of sexually oriented businesses in a municipality may result in those businesses relocating to neighboring municipalities, there is no showing that this possibility will seriously impact residents outside the municipality. Thus, extraterritorial impact of zoning ordinance is not substantial. Although zoning regulations generally have little extraterritorial impact and are traditionally a matter of local concern, in consideration of the legislative declaration respecting subsection (3)(a) and the importance of protecting constitutionally based property rights, preventing the taking of private property without just compensation is a matter of statewide or, at least, mixed concern. JAM Rest., Inc. v. City of Longmont, 140 P.3d 192 (Colo. App. 2006).

To enforce property rights as mandated in the Colorado Constitution, statute prohibits local government from eliminating or terminating nonconforming uses that were lawful at their inception by amortization. Statute does not address whether amortization periods are reasonable. JAM Rest., Inc. v. City of Longmont, 140 P.3d 192 (Colo. App. 2006).

Subsection (3)(a) cannot be applied retroactively to negate a municipal ordinance that required a licensee to operate in an appropriately zoned area of the city. Absent legislative intent to the contrary, a statute is presumed to operate prospectively on transactions occurring after its effective date, rather than retroactively on transactions that have already occurred or on rights and obligations that existed before its effective date. Z.J. Gifts D-2, L.L.C. v. City of Aurora, 93 P.3d 633 (Colo. App. 2004).

Subsection (3)(a) applies to injunctions sought after its effective date. Because municipality did not seek to enforce zoning provisions of ordinance until after statute became effective, no retroactive application of statute occurred. JAM Rest., Inc. v. City of Longmont, 140 P.3d 192 (Colo. App. 2006).

Since the language in subsection (3)(a) does not specify an intent of the general assembly to apply the provision retroactively, the court will not attribute an intent to the general assembly to enact a statutory amendment controlling amortization of nonconforming uses that took place before the amendment was enacted. Z.J. Gifts D-2, L.L.C. v. City of Aurora, 93 P.3d 633 (Colo. App. 2004).

Giving the word "affect" its plain and ordinary meaning, § 18-4-515 does not change, alter, or lessen the requirements of articles 1 through 7 of this title in condemnation actions. San Miguel County Bd. of County Comm'rs v. Roberts, 159 P.3d 800 (Colo. App. 2006).

Giving the word "supersede" its plain and ordinary meaning, § 18-4-515 does not void, replace, supplant, or make unnecessary any provisions or requirements of articles 1 through 7 of this title in condemnation actions. San Miguel County Bd. of County Comm'rs v. Roberts, 159 P.3d 800 (Colo. App. 2006).

Section 18-4-515 may not be used in place of applicable condemnation procedures. There is no basis to conclude, however, that it does not apply or may not be used in support of or in conjunction with a contemplated condemnation proceeding. San Miguel County Bd. of County Comm'rs v. Roberts, 159 P.3d 800 (Colo. App. 2006).

The condemnation by a home rule municipality of property outside its territorial boundaries for open space and park purposes falls within the scope of the eminent domain power granted to such municipalities in this article. The eminent domain power granted to home rule municipalities in this article is not limited to the purposes specified in this section nor is the eminent domain power circumscribed when exercised extraterritorially. Rather, this article grants home rule municipalities the power to condemn property, within or outside of territorial limits, for any lawful, public, local, and municipal purpose. The extraterritorial condemnation of property need not be pursuant to a purpose that is purely local and municipal. As long as the condemnation is based on a lawful, public, local, and municipal purpose, it does not fall outside of the scope of this article merely because it potentially implicates competing state interests. Based upon statutory provisions authorizing statutory localities to condemn land for open space, parks, and recreation, as well as the traditional exercise of this power by the state's statutory and home rule municipalities, the extraterritorial condemnation of property for open space and parks is a lawful, public, local, and municipal purpose within the scope of this article. The condemnation of the landowner's property outside the territorial boundaries of the municipality was, therefore, lawful. Town of Telluride v. San Miguel Valley Corp.,185 P.3d 161 (Colo. 2008).

Subsection (4)(b) abrogates constitutional powers granted to home rule municipalities by this article. Accordingly, the statutory provision is unconstitutional with respect to home rule municipalities. Court's inquiry need not extend beyond the question of whether the statute purports to deny home rule municipalities powers specifically granted by the constitution. No analysis of competing state and local interests is necessary where a statute purports to take away home rule powers granted by the constitution. The legislature cannot prohibit the exercise of constitutional home rule powers regardless of the state interests that may be implicated by the exercise of those powers. Town of Telluride v. San Miguel Valley Corp.,185 P.3d 161 (Colo. 2008).

Subsection (4)(b) prohibits home rule municipalities from condemning property for parks and open space, thus denying them their constitutional power to condemn for any lawful, public, local, and municipal purpose. Subsection (4)(b) curtails the condemnation power in this article by limiting it to the enumerated purposes in this section and also by removing certain enumerated purposes from the list. Accordingly, subsection (4)(b) is an unconstitutional abrogation of the powers granted to home rule municipalities under this article. The general assembly has no power to enact a law that denies a right specifically granted by the constitution. Town of Telluride v. San Miguel Valley Corp.,185 P.3d 161 (Colo. 2008).

A municipality's use of great outdoors Colorado (GOCO) funds did not bar its exercise of eminent domain power to acquire easement rights over landowners' property. The municipality was not precluded from condemning the landowners' property because it used GOCO funds to pay for the costs related to planning or implementing a taking or construction on other portions of the land that were not at issue in the condemnation proceeding and evidence of funding was not relevant to the municipality's authority to condemn the landowners' land. Town of Silverthorne v. Lutz, 2016 COA 17 , 370 P.3d 368.

Applied in City of Englewood v. Weist, 184 Colo. 325 , 520 P.2d 120 (1974); City of Boulder v. Kahn's, Inc., 190 Colo. 90 , 543 P.2d 711 (1975).

II. JURISDICTION AND PROCEDURE IN CONDEMNATION.

A. In General.

Proceedings conducted strictly according to procedures in statute. Eminent domain proceedings are special statutory proceedings and are to be conducted strictly according to the procedures set out in the eminent domain statute. Bd. of Comm'rs v. Poundstone, 74 Colo. 191 , 220 P. 234 (1923); Ossman v. Mtn. States Tel. & Tel. Co., 184 Colo. 360 , 520 P.2d 738 (1974); Denver Urban Renewal Auth. v. Marshall Mfg. Co., 35 Colo. App. 227, 532 P.2d 746 (1975).

A federal district court with diversity jurisdiction can consider an inverse condemnation claim arising under the Colorado constitution and statutes providing a special judicial procedure for condemnation claims. SK Fin. SA v. La Plata County, Bd. of Comm'rs, 126 F.3d 1272 (10th Cir. 1997).

Statutory authority required. Even though the purpose for which the property is sought to be condemned is a "public use" within the meaning of Colo. Const., art. II, § 15, in the absence of express or necessarily implied statutory condemnation authority, private property may not be condemned. Bd. of County Comm'rs v. Intermountain Rural Elec. Ass'n, 655 P.2d 831 ( Colo. 1982 ).

Colorado rules of civil procedure applicable to this article. The Colorado rules of civil procedure apply to actions brought under the provisions of this article. Stalford v. Bd. of County Comm'rs, 128 Colo. 441 , 263 P.2d 436 (1953).

Constitutional objections to eminent domain proceedings should be raised in those proceedings and should be determined by the court in limine; not by way of a collateral injunction proceeding. Auraria Businessmen Against Confiscation, Inc. v. Denver Urban Renewal Auth., 183 Colo. 441 , 517 P.2d 845 (1974).

Matters which cannot be asserted in collateral suit. Matters which cannot be raised in an original condemnation proceeding cannot be asserted in a collateral suit. Ambrosio v. Baker Metro. Water & San. Dist., 139 Colo. 437 , 340 P.2d 872 (1959).

Names and addresses of appraisers to remain unknown to landowner. The owner of property sought to be condemned is not entitled to know the names and addresses of persons who made appraisals at the request of the condemning agency. Epstein v. City & County of Denver, 133 Colo. 104 , 293 P.2d 308 (1956).

Disclosure of appraisals could prejudice owners not parties to suit. Disclosure of appraisal values obtained by private owners not parties to the suit whose property has not yet been condemned could work to the prejudice of substantial rights of those private owners, since should parties who obtained independent appraisal reports reject the government's settlement offer and opt for trial, disclosure could be prejudicial to their rights. United States v. 25.02 Acres of Land, More or Less, 495 F.2d 1398 (10th Cir. 1974).

A condemning authority may exercise the power of eminent domain provided that the taking is necessary and the purpose for the condemnation is judicially determined to be a public use. Colorado law does not require a condemning authority to obtain development permits or approvals as a condition precedent to going forward with a condemnation proceeding; nor does it require the condemning authority to prove that immediate possession will not lead to irreparable damage to natural resources if permits and environmental impact statement (EIS) approval are denied and the project is not completed. Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170 (Colo. App. 2002).

In reviewing the condemning authority's finding that a proposed taking is for public use, the court's role is to determine whether the essential purpose of the condemnation is to obtain a public benefit, and the court must consider the physical conditions of the country, the needs of the community, and the character of the benefit that the projected improvement may confer upon the locality as well as the necessities for such improvement in the development of the resources of the state. Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170 (Colo. App. 2002).

The owners of the property to be condemned have the burden of proving that the taking is not for a public purpose. Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170 (Colo. App. 2002).

Where a taking would be to determine if it is possible that the condemned property could be used for a public use in the future, the taking is not for a public purpose. Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170 (Colo. App. 2002).

Trial court properly dismissed petition by county to condemn a portion of owner's property for use as a public road because county presented no valid public purpose for its condemnation of owner's property. Here, public purpose is to benefit private parties; a few, select members of the public will gain access to a private cemetery. Such a private benefit does not constitute a valid public purpose. Bd. of County Comm'rs v. Kobobel, 176 P.3d 860 (Colo. App. 2007).

Although an eminent domain valuation commission is empowered to make evidentiary rulings without consulting the supervisory judge, the judge's evidentiary rulings control and are binding on the commission. This remains true whether the judge rules on the evidentiary issue presented before or after the commission considers its admissibility. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2015 CO 57, 357 P.3d 179.

Although a trial judge who is overseeing a commission hearing need not affirmatively grant or deny a motion in limine to exclude evidence, if the judge does issue an explicit ruling, then the commission is bound by that ruling and may not deviate from it. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2015 CO 57, 357 P.3d 179.

If the judge has not ruled on the evidence, then the commission may do so without consulting her. But the judge is still the judge. Under subsection (2)(a), she is charged with deciding all questions and issues except the amount of compensation, and the commission must operate within the bounds of the judge's supervisory authority. Therefore, any implicit power in the commission to decide evidentiary rulings is necessarily subsidiary to judicial rulings and the commission has no power to alter those rulings unilaterally. This remains true even when the judicial rulings are made in limine. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2015 CO 57, 357 P.3d 179.

Evidence on project-funds sourcing is inadmissible in a condemnation proceeding. In an immediate possession hearing, a district court hears challenges to a public entity's condemnation based on an alleged lack of authority. During condemnation proceedings, district courts may not consider the source of the condemning authority's funds. Town of Silverthorne v. Lutz, 2016 COA 17 , 370 P.3d 368.

B. Question of Necessity.

Trial court's findings that corporation's 10-inch pipeline would serve a public purpose is supported by evidence in the record. Trial court's finding was based on testimony of corporation's counsel that pipeline was necessary to provide an adequate supply of oil products to meet the increased demand of the customers in the greater Denver metropolitan area. Evidence in the record indicates that the pipeline would permit continuous service to the corporation's existing Colorado customers as well as its out-of-state customers. Sinclair Transp. Co. v. Sandberg, 228 P.3d 198 (Colo. App. 2009), rev'd on other grounds sub nom. Larson v. Sinclair Transp. Co., 2012 CO 36, 284 P.3d 42.

Issue of necessity. The threshold issue of necessity, when properly raised in the pleadings, should be resolved before there is any trial as to the value of the land to be taken. Colo. State Bd. of Land Comm'rs v. District Court, 163 Colo. 338 , 430 P.2d 617 (1967).

Matter of necessity cannot be raised by merely denying allegation that the taking is necessary. Colo. State Bd. of Land Comm'rs v. District Court, 163 Colo. 338 , 430 P.2d 617 (1967).

As must plead facts evidencing fraud or bad faith. The matter of necessity cannot be raised by any conclusory pleading of fraud and bad faith, but only by pleading facts which, if true, would amount to fraud or bad faith. Colo. State Bd. of Land Comm'rs v. District Court, 163 Colo. 338 , 430 P.2d 617 (1967).

Proper matters for consideration in determining necessity of taking vary according to the circumstances of each particular case. Mortensen v. Mortensen, 135 Colo. 167 , 309 P.2d 197 (1957).

Matter of necessity of taking in condemnation is to be determined by court. Larson v. Chase Pipe Line Co., 183 Colo. 76 , 514 P.2d 1316 (1973).

Necessity involves taking property for intended purpose. The question of necessity involves the necessity of having the property taken for the purpose intended. Mortensen v. Mortensen, 135 Colo. 167 , 309 P.2d 197 (1957); Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170 (Colo. App. 2002).

Feasibility or financial success of enterprise precluded from inquiry of necessity. Whether or not an enterprise is feasible or practicable, and whether or not it will be a financial success, cannot be inquired into even by commissioners charged with the duty of determining the question of necessity; such questions are not for the determination of the court. Mortensen v. Mortensen, 135 Colo. 167 , 309 P.2d 197 (1957); Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170 (Colo. App. 2002).

Public agency's determination of necessity, absent fraud, is final. In the absence of fraud or bad faith, the determination by a public agency as to the need, necessity, and location of highways, or other public improvements, is final and conclusive and will not be disturbed by the courts. Colo. State Bd. of Land Comm'rs v. District Court, 163 Colo. 338 , 430 P.2d 617 (1967); Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170 (Colo. App. 2002).

The determination by the state of the necessity for a particular taking in the absence of a showing of bad faith is final and conclusive. Mack v. Bd. of County Comm'rs, 152 Colo. 300 , 381 P.2d 987 (1963); Arizona-Colorado Land & Cattle Co. v. District Court, 182 Colo. 44 , 511 P.2d 23 (1973).

Causing of greater than necessary loss evidence of bad faith. Where the taking of a particular easement by a private corporation would entail a great loss to the landowner which might readily be avoided, the court in limine may consider this factor in determining whether the corporation is acting in bad faith. Arizona-Colorado Land & Cattle Co. v. District Court, 182 Colo. 44 , 511 P.2d 23 (1973).

Easement serves public purpose by providing access to property in the state and therefore may be the subject of a condemnation. Bear Creek Dev. Corp. v. Dyer, 790 P.2d 897 (Colo. App. 1990).

No trial on compensation if necessity not shown. If the petitioner cannot establish necessity, there will then be no need for a trial on the issue of compensation. Colo. State Bd. of Land Comm'rs v. District Court, 163 Colo. 338 , 430 P.2d 617 (1967).

Duties of trial court, in absence of jury, include appointing the commissioners, administering the oath of office to them, fixing the time and place of their first meeting, instructing them in writing as to their duties, and, at the conclusion of the testimony, instructing them in writing as to the applicable and proper law to be followed by them in arriving at their ascertainment. Bd. of County Comm'rs v. Vail Assocs., 171 Colo. 381 , 468 P.2d 842 (1970).

Court shall upon request make rulings upon propriety of proofs and objections of the parties. Bd. of County Comm'rs v. Vail Assocs., 171 Colo. 381 , 468 P.2d 842 (1970).

Judge not to preside as in jury trial. The judge of the trial court shall not preside over the commission proceedings in the same manner as he is required to do in a jury trial. Bd. of County Comm'rs v. Vail Assocs., 171 Colo. 381 , 468 P.2d 842 (1970).

Unsupported report of commissioners not binding on court. A report of commissioners in eminent domain proceedings, unsupported by any findings and based on undisputed evidence, does not bind the court. Mortensen v. Mortensen, 135 Colo. 167 , 309 P.2d 197 (1957).

Award of expert witness fees. In eminent domain actions, the awarding of expert witness fees is a matter within the discretion of the trial court. City of Lakewood v. DeRoos, 631 P.2d 1140 (Colo. App. 1981).

Because the purpose of the taking was essentially to benefit the public, the taking satisfied the public use requirement of the state constitution and statutes, even if, at the time of the taking, there was an incidental public benefit. The state constitution requires that condemnation benefit the public but it doesn't prohibit a private party from incidentally benefitting from any particular condemnation. When a condemnation's benefits are essentially public, there is no constitutional violation. Carousel Farms Metro. v. Woodcrest, 2019 CO 51, 442 P.3d 402.

The plain language of subsection (1)(b)(I) only limits the transfer of condemned land to a private entity. Where there is no transfer and no private entity involved, this section is inapplicable. Carousel Farms Metro. v. Woodcrest, 2019 CO 51, 442 P.3d 402.

While the existence of a public purpose pursuant to subsection (2)(b) is always subject to judicial review, the necessity of an acquisition of a specific parcel of property may only be reviewed by a court upon a showing of bad faith. Thus, if bad faith is at issue, a court may look behind an entity's stated condemnation purpose and finding of necessity. City of Lafayette v. Town of Erie Urb. Ren., 2018 COA 87 , 434 P.3d 746.

Although condemnation to create an open space community buffer could be a proper public purpose, the petition to condemn land was motivated by bad faith. Specifically, the primary interest of the municipality in the subject property was to interfere with proposed commercial development undertaken by the town, which is not a lawful public purpose for the condemnation. City of Lafayette v. Town of Erie Urb. Ren., 2018 COA 87 , 434 P.3d 746.

III. DEFENSES AND REMEDIES.

Matters considered inappropriate for defense. In a condemnation proceeding, the expediency of the project or that condemnation might proceed in a way other than that proposed are not appropriate matters of defense. Ambrosio v. Baker Metro. Water & San. Dist., 139 Colo. 437 , 340 P.2d 872 (1959).

Injunction is not proper remedy to be accorded a defendant in a proceeding in eminent domain. Town of Glendale v. City & County of Denver, 137 Colo. 188 , 322 P.2d 1053 (1958); Ambrosio v. Baker Metro. Water & San. Dist., 139 Colo. 437 , 340 P.2d 872 (1959); Dunham v. City of Golden, 31 Colo. App. 433, 504 P.2d 360 (1972).

Doctrine of laches does not provide relief where defendant failed to show that improvements would be impacted by the easement or that the defendant suffered prejudice not covered by the compensation award. Minto v. Lambert, 870 P.2d 572 (Colo. App. 1993).

IV. ABANDONMENT OF PROCEEDING.

When condemnor may abandon action. Where a property owner has not changed his position in good faith reliance on a condemnation suit, the condemnor may abandon the action at any time prior to the time the rights of the parties are reciprocally vested. Piz v. Hous. Auth., 132 Colo. 457 , 289 P.2d 905 (1955).

Right to abandon condemnation proceeding may be relinquished or lost. The right to abandon condemnation proceedings may be relinquished by agreement or lost by estoppel. Piz v. Hous. Auth., 132 Colo. 457 , 289 P.2d 905 (1955).

V. JUST COMPENSATION.

A. Right to Compensation.

Basis for compensation is fairness. The constitutional requirement of just compensation derives as much content from the basic equitable principles of fairness as it does from technical concepts of property law. Upper Eagle Valley San. Dist. v. Carnie, 634 P.2d 1008 (Colo. App. 1981).

Right to compensation belongs to owner. The right to compensation for the value of land taken and damages to the residue occasioned by the taking is a personal one which belongs to the owner. Enke v. City of Greeley, 31 Colo. App. 337, 504 P.2d 1112 (1972); Upper Eagle Valley San. Dist. v. Carnie, 634 P.2d 1008 (Colo. App. 1981); Direct Mail Servs., Inc. v. Colo., 557 F. Supp. 851 (D. Colo. 1983 ), aff'd, 729 F.2d 672 (10th Cir. 1984).

Lessee not entitled to separate award for value of leasehold. Lessee is not entitled in the initial condemnation proceedings to establish the value of its leasehold interest independently of the value of the entire property and is not entitled to a separate award by the state for the value of its leasehold. City of Sterling v. Plains Inv. Co., 32 Colo. App. 115, 511 P.2d 512 (1973), rev'd on other grounds, 185 Colo. 238 , 523 P.2d 465 (1974); Direct Mail Servs., Inc. v. Colo., 557 F. Supp. 851 (D. Colo. 1983 ), aff'd, 729 F.2d 672 (10th Cir. 1984).

Property owners are not entitled to obtain the highest and best use of their property or to gain maximum profits from its use. Van Sickle v. Boyes, 797 P.2d 1267 ( Colo. 1990 ); Nat'l Adver. v. Bd. of Adjustment of City & County of Denver, 800 P.2d 1349 (Colo. App. 1990).

B. Amount of Compensation.

Landowner is entitled to be compensated for costs reasonably incurred by him in condemnation proceedings since to require a landowner to pay such costs would reduce the just compensation guaranteed by section 15 of art. II, Colo. Const. Dept. of Hwys. v. Kelley, 151 Colo. 517 , 379 P.2d 386 (1963).

"Just compensation" includes payment of costs. In condemnation proceedings, the landowner is entitled to compensation for all reasonable costs incurred. Expenses necessarily incurred by reason of the litigation are correctly viewed as such costs. City of Colo. Springs v. Berl, 658 P.2d 280 (Colo. App. 1982).

Property damage must affect some right or interest which the landowner enjoys and which is not shared or enjoyed by the public generally, in order to be compensable; the damage must be different in kind, not merely in degree, from that suffered by the public in general. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969); City of Lakewood v. DeRoos, 631 P.2d 1140 (Colo. App. 1981).

Owner must establish right to substantial compensation. Burden rests upon owner to establish by competent evidence his right to substantial compensation. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969); United States v. 25.02 Acres of Land, More or Less, 495 F.2d 1398 (10th Cir. 1974).

No vested right in public highway maintenance. No person has a vested right in the maintenance of the public highway in any particular place. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969).

Award includes damages that are incident of improvement. An award in an eminent domain proceeding includes all damages, present and prospective, that are the natural, necessary, or reasonable incident of the improvement, but an award does not include such damages as may arise from negligent or unskillful construction or use thereof. Ruth v. Dept. of Hwys., 153 Colo. 226 , 385 P.2d 410 (1963); Linnebur v. Pub. Serv. Co. of Colo., 716 P.2d 1120 ( Colo. 1986 ).

Right to compensation unchanged by nature of business. The nature of the business, which is situated upon land subject to condemnation, does not change the right of an individual to compensation. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969).

Factors considered in determining compensable taking of access rights. Factors to consider in determining whether or not there has been a compensable taking of access rights to a highway include whether the property is a single economic unit or consists of separate units with particular access needs, the use of the property, the location of improvements, the contiguity to the highway, the land's topography, and all pertinent characteristics of the property which may be relevant to its access needs. Shaklee v. Bd. of County Comm'rs, 176 Colo. 559 , 491 P.2d 1366 (1971).

Loss of view from property not compensable. Since a property owner has no right to have the traveling public pass his property, he has no right to have the traveling public afforded a clear view of his property, and loss of view from the property caused by the construction of a viaduct is not compensable. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969).

Goodwill and profits are not regarded as elements of just compensation under either the due process or just compensation clauses of the federal and state constitutions. Auraria Businessmen Against Confiscation, Inc. v. Denver Urban Renewal Auth., 183 Colo. 441 , 517 P.2d 845 (1974).

Owner compensated only for actual taking in pipeline condemnation. The rule in condemnation cases concerning pipelines is that the owner of the land will be compensated only to the actual extent of the estate taken. W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973).

Limitation on compensation for loss of access. An abutting landowner is entitled to compensation for limitation or loss of access only if the limitation or loss substantially interferes with his means of ingress and egress to and from his property. State Dept. of Hwys. v. Davis, 626 P.2d 661 (Colo. 1981).

So long as the landowner retains a reasonable means of access to and from his property partial loss of access is not compensable. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969); Shaklee v. Bd. of County Comm'rs, 176 Colo. 559 , 491 P.2d 1366 (1971).

There is no taking of private property which would be subject to compensation when a landowner's access rights to a state highway are limited to two access points of his own choosing. Shaklee v. Bd. of County Comm'rs, 176 Colo. 559 , 491 P.2d 1366 (1971).

Inconvenience is not substantial impairment of access. Inconvenience caused by the required use of a more circuitous route to gain access to property does not constitute substantial impairment of access. State Dept. of Hwys. v. Davis, 626 P.2d 661 (Colo. 1981).

Compensation is not permitted for damage caused by circuity of route where the properties involved were used for business purposes such as motels, restaurants, and gas stations, and where the inability of the traveling public to get to the property conveniently had, in effect, diminished the value of the business property. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969).

The diversion of traffic away from the property is a factor hardly separable from circuity of route since the diversion of traffic will inevitably have as its result circuity of route. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969).

Proof required for landowner's compensation for loss of access. In order for plaintiff to be compensated for loss of access it is incumbent upon her to establish to the satisfaction of the trial court that she no longer retains a reasonable means of access to and from her property and the general system of public streets. Troiano v. Colo. Dept. of Hwys., 170 Colo. 484 , 463 P.2d 448 (1969).

Trial judge determines reasonableness of landowner's access. The trial judge must determine in the first instance whether a landowner's right of access has been subjected to unreasonable control or limitation. Shaklee v. Bd. of County Comm'rs, 176 Colo. 559 , 491 P.2d 1366 (1971).

Fair market value of property taken is sole question in determining the value of property in an eminent domain action. Dillinger v. N. Sterling Irrigation Dist., 135 Colo. 95 , 308 P.2d 606 (1957).

In the case of a temporary taking, landowner is entitled to just compensation for fair rental value of property at its highest and best use, taking into consideration any existing land use restrictions, during the period of temporary taking. In determining fair rental value, the trial court and the jury must assume a free bargaining transaction between a hypothetical lessor and lessee. Changes in land use restrictions may only be considered if they probably could have occurred during the temporary taking period. Fowler Irrevocable Trust 1992-1 v. City of Boulder, 17 P.3d 797 (Colo. 2001).

Market value means the price property would bring if sold in the open market under ordinary and usual circumstances for cash, assuming that the owner is willing to sell and the purchaser willing to buy, but neither under any obligation to do so. Epstein v. City & County of Denver, 133 Colo. 104 , 293 P.2d 308, 55 A.L.R.2d 783 (1956).

Reasonable market value means the fair, actual cash market value of the property. It is the price the property could have been sold for on the open market, for cash under the usual and ordinary circumstances where the owner was willing to sell and the purchaser was willing to buy, but neither was under an obligation to do so. Goldstein v. Denver Urban Renewal Auth., 192 Colo. 422 , 560 P.2d 80 (1977); City of Aurora v. Webb, 41 Colo. App. 11, 585 P.2d 288 (1978).

Assessment of present market value. The present market value must be assessed in light of the most advantageous use to which the property may reasonably be applied. Goldstein v. Denver Urban Renewal Auth., 192 Colo. 422 , 560 P.2d 80 (1977).

Major factors for consideration in determining market value of real estate in condemnation proceedings are: (1) A view of the premises and their surroundings; (2) a description of the physical characteristics of the property and its situation in relation to points of importance in the neighborhood; (3) the price at which the land was bought, if sufficiently recent to throw light on present value; (4) the price at which similar neighboring land has sold at about the time of the taking; (5) the opinion of competent experts; (6) a consideration of the uses for which the land is adapted and for which it is available; (7) the cost of the improvements if they are such as to increase the value of the land; and (8) the net income from the land, if the property is devoted to one of the uses to which it could be most advantageously and profitably applied. United States v. 25.02 Acres of Land, More or Less, 495 F.2d 1398 (10th Cir. 1974).

Board is entitled to consider any competent evidence, apart from certain factors arising from the very fact of condemnation, which would be considered by a prospective seller or buyer as tending to affect the present market value of the land. Goldstein v. Denver Urban Renewal Auth., 192 Colo. 422 , 560 P.2d 80 (1977); City of Aurora v. Webb, 41 Colo. App. 11, 585 P.2d 288 (1978).

If sale not too remote. If not too remote in point of time, and if neither economic nor physical conditions have changed, voluntary prior sales of the subject property may be shown in evidence in eminent domain proceedings. Epstein v. City & County of Denver, 133 Colo. 104 , 293 P.2d 308, 55 A.L.R.2d 783 (1956).

Evidence of the price paid for similar property in a voluntary sale is admissible on the question of value of the property condemned, provided the properties sold are similar in locality and character to the property in question and not so far removed in point of time to make a comparison unjust or impossible. W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973).

Root consideration is whether comparable sale is sufficiently similar, in one or more aspects, to be probative of the fair market value of the property under consideration by the commission. Goldstein v. Denver Urban Renewal Auth., 192 Colo. 422 , 560 P.2d 80 (1977).

Best evidence of market value found in comparable sales. While the best evidence of market value is found in sales of comparable property. The determination is not limited to that consideration and other substantial facts and circumstances may have probative value. United States v. 25.02 Acres of Land, More or Less, 495 F.2d 1398 (10th Cir. 1974).

Determination of market value not limited to consideration of comparable sales; other substantial facts and circumstances may have probative value. United States v. 25.02 Acres of Land, More or Less, 495 F.2d 1398 (10th Cir. 1974).

In eminent domain proceeding, in calculating value of subject property as a waste transfer station, trial court correctly admitted evidence based upon the land residual method instead of the comparable sales method. Whether a comparable sale is sufficiently similar to be of probative value in determining the value of land taken is for the trial court or commission to determine in its discretion. Here, considering both parties' expert testimony, there was sufficient evidence in the record to support landowner's position that there were not sufficient comparable sales and that, in the absence of such sales, the only way to calculate the added value of the planned unit development and waste transfer permit approvals was to use the land residual method. The record also supports a finding that criteria outlined by the American institute of real estate appraisers for use of the land residual method were met. In upholding the use of the land residual method, court of appeals rejected city's arguments that use of this method impermissibly considers a speculative or prospective value, that income and profits from a waste transfer station could not be considered in valuing the land, and that use of this method violated the undivided basis rule. City of Englewood v. Denver Waste Transfer, L.L.C., 55 P.3d 191 (Colo. App. 2002).

Unexecuted written contract for sale of adjacent land inadmissible. Just as a mere offer to buy or sell property is not a measure of the market value of a similar property, so, too, a written contract for the sale of adjacent land has been held inadmissible, if the sale did not take place. United States v. 25.02 Acres of Land, More or Less, 495 F.2d 1398 (10th Cir. 1974).

Where compensation for less than value of fee simple held proper. Where pipeline company did not take fee title to property containing its easement, and the surface land remained unaffected, useful, and of substantial value, the compensation was properly less than the value for fee simple title to the entire area within which the pipe was located. W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973).

When purchaser confined to damages for subsequent taking. Where land is already burdened by an easement when a purchaser acquires title, he takes that land in that condition when he acquires title and is confined to damages for subsequent takings. Upper Eagle Valley San. Dist. v. Carnie, 634 P.2d 1008 (Colo. App. 1981).

Demolition costs. In determining the present market value of unimproved property, as reflected by a comparable sale, the addition of demolition costs to the purchase price of a comparable property which had improvements but which was purchased for use as undeveloped land is permissible. Goldstein v. Denver Urban Renewal Auth., 192 Colo. 422 , 560 P.2d 80 (1977).

Fixtures included in determination of landowner's compensation. Fixtures are a part of the realty for which compensation must be paid to the owner by the condemning authority. Denver Urban Renewal Auth. v. Steiner Am. Corp., 31 Colo. App. 125, 500 P.2d 983 (1972).

Reservations in deeds admissible to show value of condemned property. In an eminent domain proceeding, the trial court committed prejudicial error when it refused to allow a city to introduce into evidence certain reservations in deeds through which landowners acquired their record title in order to show diminution in value of the property taken, since actually, the deeds in question should have been admitted into evidence on the question of the value of the landowners' interest. City of Englewood v. Reffel, 173 Colo. 203 , 477 P.2d 361 (1970); E-470 Pub. Hwy. Auth. v. Jagow, 30 P.3d 798 (Colo. App. 2001), aff'd on other grounds, 49 P.3d 1151 ( Colo. 2002 ).

When nonexpert witness competent to testify as to value. A nonexpert witness called to testify as to value is said to have sufficient qualification if a resident, landowner, or farmer in the neighborhood. Baker Metro. Water & San. Dist. v. Baca, 138 Colo. 239 , 331 P.2d 511 (1958).

Defendant failed to show the easement causes significant damage because of depreciation of the value of property due to the impact on the property's "pristine" character. Minto v. Lambert, 870 P.2d 572 (Colo. App. 1993).

All evidence relevant to the determination of the present market value of condemned property is admissible, including evidence of the most advantageous potential future use of the entire property, even if the condemned property would need to be dedicated as part of annexation and rezoning of the entire property in the future. Palizzi v. City of Brighton, 228 P.3d 957 (Colo. 2010).

Evidence of the value of the condemned portion as a part of the whole is admissible and should be evaluated by the fact finder when determining just compensation. Palizzi v. City of Brighton, 228 P.3d 957 (Colo. 2010).

VI. SPECIFIC TYPES OF PROPERTY SUBJECT TO CONDEMNATION.

Types of property subject to condemnation unlimited. There are no limitations on the type of property that may be acquired by the state through condemnation proceedings for highway purposes. Mack v. Bd. of County Comm'rs, 152 Colo. 300 , 381 P.2d 987 (1963).

Using or enlarging ditch without owner's consent considered taking. Using or enlarging a ditch, without the owner's consent, was a taking or damaging of private property as would be appropriating the right-of-way therefor, in the first instance, but such taking or damaging could not be tolerated except upon payment, in a constitutional manner, of just compensation. Tripp v. Overocker, 7 Colo. 72, 1 P. 695 (1883).

Cemetery lands subject to condemnation. Cemetery lands, by virtue of their sacred nature, are not placed beyond the reach of the power of eminent domain; however, in the case of public cemeteries, such power to condemn must be given expressly or by necessary and reasonable implication. Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267 , 248 P.2d 732 (1952).

Church property can be taken by eminent domain for paramount public use. Pillar of Fire v. Denver Urban Renewal Auth., 181 Colo. 411 , 509 P.2d 1250 (1973).

Condemnation of flowage easements permitted. Denver is vested with ample authority to condemn flowage easements and channel improvement rights for transportation of diverted water to storage facilities. Toll v. City & County of Denver, 139 Colo. 462 , 340 P.2d 862 (1959).

Condemnor acquires surface and support of surface. When land is acquired by condemnation for a highway, the condemnor acquires not only what is understandably known as just the surface, but, by virtue of such condemnation, it acquires whatever is necessary for the support of that surface. Russell Coal Co. v. Bd. of County Comm'rs, 129 Colo. 330 , 270 P.2d 772 (1954).

Property already subject to existing public use can be condemned. Mack v. Bd. of County Comm'rs, 152 Colo. 300 , 381 P.2d 987 (1963).

Where overwhelming necessity shown. Where land is already devoted to a public use, it would be wholly unreasonable to permit it to be taken for another public use which would nullify and defeat the one to which it is already devoted, except in cases where the overwhelming necessities of the public were such that in order to serve their needs or supply their necessities, the taking of such property became necessary. Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267 , 248 P.2d 732 (1952).

Public waters, etc., not condemnable for sewage purposes. Public waters or beds or channels of public streams cannot be condemned for sewage purposes. City & County of Denver v. District Court, 140 Colo. 1 , 342 P.2d 648 (1959).

Counties lack authority to condemn for office space. The general assembly has not impliedly delegated the power of eminent domain to counties for the purpose of acquiring office space for authorized county purposes. Bd. of County Comm'rs v. Intermountain Rural Elec. Ass'n, 655 P.2d 831 (Colo. 1982) (decided prior to enactment of § 30-11-104 (2)).

VII. REVIEW BY SUPREME COURT.

Property owners may file writ of certiorari during stay of execution. Within a period of a stay of execution granted by a trial court, the owners of property being condemned, not having the right of review of an interlocutory order upon writ of error, may file an original action, by way of certiorari, in the supreme court, alleging that otherwise they were without remedy whatsoever to protect their property from seizure under an order of a district court, which they contended was without lawful authority. Lucas v. District Court, 140 Colo. 510 , 345 P.2d 1064 (1959).

I. GENERAL CONSIDERATION.

Law reviews. For comment on City of Thornton v. Farmers Reservoir & Irrigation Co., 194 Colo. 526 , 575 P.2d 382 (1978), appearing below, see 56 Den. L. J. 625 (1979). For article, "Access to Mineral Lands in Colorado", see 11 Colo. Law. 870 (1982).

Principal object of condemnation proceedings is to ascertain the price which a petitioner must pay for the land which he desires to acquire, and, until that determination is made by a board or jury and the same has been approved by a court, it cannot be said that the rights of the parties have become fixed or determined. Town of Glendale v. City & County of Denver, 137 Colo. 188 , 322 P.2d 1053 (1958).

Proceedings can only be instituted under particular statutes which warrant them. Colo. Midland Ry. v. Ruedi, 2 Colo. App. 202, 29 P. 1034 (1892).

This section contemplates institution of proceedings by one corporation against another as well as by a corporation of a public character against the property of a private individual. San Luis Land, Canal & Imp. Co. v. Kenilworth Canal Co., 3 Colo. App. 244, 32 P. 860 (1893).

Power not assertable by federal oil and gas lessee. The power of condemnation prescribed by this section may not be asserted by a federal oil and gas lessee. Coquina Oil Corp. v. Harry Kourlis Ranch, 643 P.2d 519 (Colo. 1982).

Power not assertable by owner of unpatented mining claim. Precious Offer. Mineral Exch. v. McLain, 194 P.3d 455 (Colo. App. 2008).

Good faith offer prerequisite to failure to agree upon purchase price. The prerequisite of a failure to agree upon the purchase price for the property sought to be condemned generally requires only that the condemning authority make a reasonable good faith offer to reach an agreement with the owner of the property for its purchase. City of Thornton v. Farmers Reservoir & Irrigation Co., 194 Colo. 526 , 575 P.2d 382 (1978); Bd. of County Comm'rs, v. Blecha, 697 P.2d 416 (Colo. App. 1985); City of Holyoke v. Schlachter Farms R.L.L.P., 22 P.3d 960 (Colo. App. 2001).

Where the negotiator for the plaintiff stated a price for land to the president of defendant association, who informed board of directors of offered price and all refused to accept it, this constituted failure to agree which was a condition precedent to jurisdiction of the trial court in a condemnation proceeding brought pursuant to this section. Old Timers Baseball Ass'n v. Hous. Auth., 122 Colo. 597 , 224 P.2d 219 (1950).

Requirement of good faith negotiations under this section is not a restriction on the court's subject matter jurisdiction but is merely an element of the claim for relief. Minto v. Lambert, 870 P.2d 572 (Colo. App. 1993).

Trial court did not err in finding that the good faith negotiation requirement under subsection (1) was satisfied. Here, record supports trial court's determination because: (1) Petitioner made two separate offers, both of which exceeded the appraisal, (2) respondents declined to accept either offer, although they had been afforded a reasonable time in which to do so, and (3) their only counteroffer was substantially greater than either of petitioner's offers and the only appraisal. Sheridan Redev. Agency v. Knightsbridge Land Co., 166 P.3d 259 (Colo. App. 2007).

Property owner has privilege of controverting petitioner's right to condemn. Kaschke v. Camfield, 46 Colo. 60, 102 P. 1061 (1909).

Thereafter, petitioner has burden to maintain right by proper proofs. When property owner controverts petitioner's right to condemn, the burden is upon the petitioner to maintain his right by proper proofs. Kaschke v. Camfield, 46 Colo. 60, 102 P. 1061 (1909).

Where owner fails to make contest, petitioner's right to condemn deemed admitted. Where the owner fails to make a contest, in the proper manner and at the proper time, the right in the petitioner to condemn will be deemed admitted, leaving the amount of damages to be awarded as the sole matter in dispute. Kaschke v. Camfield, 46 Colo. 60, 102 P. 1061 (1909).

Petitioner must prove failure to agree upon compensation for land taken. The burden of proof is upon the petitioner in a condemnation action to establish by competent evidence that there was a failure to agree upon the compensation to be paid for land sought to be taken or damaged. Stalford v. Bd. of County Comm'rs, 128 Colo. 441 , 263 P.2d 436 (1953); City of Thornton v. Farmers Reservoir & Irrigation Co., 194 Colo. 526 , 575 P.2d 382 (1978).

Failure to agree on compensation prerequisite to institution of proceedings. Failure to agree upon compensation to be paid for land sought to be taken or damaged is a condition precedent to the right to institute and maintain proceedings at all and is clearly jurisdictional. Mulford v. Farmers Reservoir & Irrigation Co., 62 Colo. 167 , 161 P. 301 (1916); Stalford v. Bd. of County Comm'rs, 128 Colo. 441 , 263 P.2d 436 (1953); Welch v. City & County of Denver, 141 Colo. 587 , 349 P.2d 352 (1960).

Effect of owner's silence or failure to propose counter offer. If the property owner remains silent or rejects the offer without making an acceptable counter-offer, a condemnation action may be instituted. City of Thornton v. Farmers Reservoir & Irrigation Co., 194 Colo. 526 , 575 P.2d 382 (1978).

Agreement precludes institution of proceedings. Where an agreement was reached between the state, which was the condemnor, and the city, which was the landowner, the state is not compelled to institute condemnation proceedings because, by enacting an ordinance authorizing the use of park lands for highway purposes, all was accomplished by condemnation proceedings. Welch v. City & County of Denver, 141 Colo. 587 , 349 P.2d 352 (1960).

Order for temporary possession not reviewable by writ of error. An order for temporary possession is interlocutory and not a final judgment or final determination of the action; thus are not reviewable by writ of error. Town of Glendale v. City & County of Denver, 137 Colo. 188 , 322 P.2d 1053 (1958).

Doctrines of claim preclusion and issue preclusion apply, and condemnees cannot revisit the valuation of the property acquired as determined in earlier condemnation proceedings in a subsequent civil action claiming a taking without just compensation. The issue of damages for the taking of the acquired property was actually and necessarily adjudicated in the prior condemnation proceeding where the condemnees had a full and fair opportunity to litigate the issue. Wall v. City of Aurora, 172 P.3d 934 (Colo. App. 2007).

Record supports trial court's determination that corporation engaged in good faith negotiations. Requirement of good faith negotiation under subsection (1) satisfied where condemning authority makes a reasonable good faith offer to reach an agreement with property owner and allows owner sufficient time to respond. Here, condemning authority made several offers, some of which exceeded properties' appraised values, landowners did not accept offers, although they had a reasonable time to do so, and landowners' counteroffers demanded substantially more than condemning authority's offers and properties' appraised values. Sinclair Transp. Co. v. Sandberg, 228 P.3d 198 (Colo. App. 2009), rev'd on other grounds sub nom. Larson v. Sinclair Transp. Co., 2012 CO 36, 284 P.3d 42.

Applied in Colo. Midlands Ry. v. Croman, 16 Colo. 381 , 27 P. 256 (1891); Town of Lyons v. City of Longmont, 54 Colo. 112 , 129 P. 198 (1912); Otero Irrigation Dist. v. Enderud, 122 Colo. 136 , 220 P.2d 862 (1950); Rabinoff v. District Court, 145 Colo. 225 , 360 P.2d 114 (1961); Buck v. District Court, 199 Colo. 344 , 608 P.2d 350 (1980); Direct Mail Servs., Inc. v. Colo., 557 F. Supp. 851 (D. Colo. 1983 ), aff'd, 729 F.2d 672 (10th Cir. 1984); Thornton Dev. Auth. v. Upah, 640 F. Supp. 1071 (D. Colo. 1986 ).

II. PROPERTY SUBJECT TO EMINENT DOMAIN.

A. Private Property.

Property held by corporation deemed private. Property held by public corporation which is not devoted to, or needed for, a public use, is as much private property as though held by an individual. Denver Power & Irrigation Co. v. Denver & R.G.R.R., 30 Colo. 204, 69 P. 568 (1902).

B. Way of Necessity.

Common-law way of necessity is easement founded upon implied grant. Where one party conveys property, he also conveys whatever is necessary to the beneficial use of that property by which it is assumed that, when a party conveys property, he also conveys whatever is necessary to the beneficial use of that property. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915); Minto v. Lambert, 870 P.2d 572 (Colo. App. 1993).

Way of necessity arises only in favor of grantee over grantor's land, and not over the lands of a stranger. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915).

Necessity does not create right, as it always originates in some grant or change of ownership. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915).

Section 14 of article II of the state constitution is a general inhibition against taking private property for private use without the consent of the owner, but with certain exceptions. The exceptions are constitutional grants of rights and powers not existing before the adoption of the constitution, namely, the right to take private property for private use, without the consent of the owner, in the instances therein enumerated. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915).

Private and public ways of necessity distinguished. Private ways of necessity differ from public ways of necessity only in the fact that they are private; private ways of necessity refer particularly to, and include, passageways or roadways which are indispensable to the practical use of the property for which they are claimed. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915).

Private ways of necessity are not limited to ways desired for agricultural, mining, milling, domestic, or sanitary purposes, as are those for reservoirs, drains, flumes, and ditches. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915); Childers v. Quartz Creek Land Co., 946 P.2d 534 (Colo. App. 1997), cert. dismissed, 964 P.2d 509 ( Colo. 1998 ).

When private corporation may condemn land for private way of necessity. A private corporation may condemn land for a private way of necessity where the nature of its business and the situation of its property require the way, and where, under like conditions, other persons not corporate may condemn. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915).

Courts may determine what constitutes private way of necessity in any particular case, unless restrained by the general assembly. Crystal Park Co. v. Morton, 27 Colo. App. 74, 146 P. 566 (1915).

Private way of necessity may be condemned when the need is reasonably necessary and the common law or other legal remedy does not provide a present enforceable legal right to an alternate mode of access that is reasonable and practical. Minto v. Lambert, 870 P.2d 572 (Colo. App. 1993).

State highway department cannot condemn property for a private way of necessity. Although state highway department has express statutory authority to condemn property for local service roads and for highway construction, the department has no statutory authority to "stand in the shoes" of a private landowner and condemn a private way of necessity which the landowner has the right to assert under this section. Dept. of Hwys. v. Denver & Rio Grande W.R., 789 P.2d 1088 (Colo. 1990).

The phrase "private ways of necessity" in subsection (3) does not include natural gas pipelines. Phrase is limited to passageways, such as paths, bridges, and tunnels, and roadways that provide legal access connecting landlocked property to a public road. Petitioners do not seek to condemn an easement to provide such access but rather to construct and maintain an underground natural gas pipeline and related equipment and facilities. As such, petition did not identify a purpose for which taking property is permitted under this section and section 14 of article II of the state constitution. Akin v. Four Corners Encampment, 179 P.3d 139 (Colo. App. 2007).

If the defendant pleads the existence of an alternate route of private access across property not owned by the defendant, defendant has the burden of establishing the existence of an acceptable alternate route and of proving that plaintiffs have the present enforceable legal right to use it. West v. Hinksmon, 857 P.2d 483 (Colo. App. 1992).

Defendant should be permitted to show that an alternate route across defendant's property exists that would be less damaging than that proposed by plaintiff. West v. Hinksmon, 857 P.2d 483 (Colo. App. 1992).

When a petitioner seeks to condemn private way of necessity for access to property it wishes to develop in the future, it must demonstrate a purpose for the condemnation that enables the trial court to examine both the scope of and necessity for the proposed condemnation, so that the burden to be imposed upon the condemnee's property may be ascertained and circumscribed through the trial court's condemnation order. Glenelk Ass'n v. Lewis, 260 P.3d 1117 (Colo. 2011).

Condemnor failed to articulate a concrete development proposal for the subject property nor did he sufficiently engage the county's land use approval process prior to initiating the condemnation proceeding. Record fails to clarify condemnor's intended use of the property or size of the planned road with sufficient specificity to allow trial court to analyze necessity of requested easement. Condemnor's failure to sufficiently articulate development plan prevented trial court from determining scope of proposed condemnation sufficiently to determine scope of burden to be imposed upon the property to be condemned. Given evidentiary shortcomings in the record, trial court correctly concluded that it could not determine whether particular way of necessity requested by condemnor was indispensable and, therefore, trial court correctly denied condemnor's request for immediate possession and dismissed the condemnation petition. Glenelk Ass'n v. Lewis, 260 P.3d 1117 (Colo. 2011).

Trial court's determination in declaratory judgment action brought under constitutional counterpart of subsection (3) of this section, § 14 of article II of the state constitution, that defendants failed to rebut plaintiff's showing of an entitlement to a private way of necessity is not clearly erroneous. Trial court held plaintiff may condemn private way of necessity across defendants' property pursuant to constitutional section. Trial court's determinations that plaintiff proved that a way of necessity is reasonably necessary and that defendants did not prove, in any concrete fashion, that plaintiff has either an alternate route of access or a present enforceable legal right to use one are not clearly erroneous. Tieze v. Killam, 179 P.3d 10 (Colo. App. 2007).

C. Property Devoted to Public Use.

Condemnation of property already devoted to public use limited. Property already devoted to a public use cannot be taken for another in such manner or to such an extent that the use to which it is devoted will be wholly defeated or superseded, except where a public exigency requires that it be taken. Denver Power & Irrigation Co. v. Denver & R.G.R.R., 30 Colo. 204 , 69 P. 568 (1902); Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267 , 248 P.2d 732 (1932).

Land already appropriated as a right-of-way by a railroad company cannot be taken for a reservoir site to an extent which would totally deprive the railroad company of its use, unless a public necessity requires that it be taken. Denver Power & Irrigation Co. v. Denver & R.G.R.R., 30 Colo. 204, 69 P. 568 (1902).

Property held for a public use may be taken under the exercise of the right of eminent domain for the same or a different public use, when such taking does not materially interfere with the uses for which it is already held. Colo. E. Ry. v. Union Pac. Ry., 41 F. 293 (D. Colo. 1890), writ of error dismissed, 54 F. 22 (8th Cir. 1893), writ of error dismissed, 163 U.S. 708, 16 S. Ct. 1207, 41 L. Ed. 310 (1895); Union P. R. R. v. Colo. Postal Tel. Cable Co., 30 Colo. 133, 69 P. 564 (1902), appeal dismissed, 191 U.S. 577, 24 S. Ct. 861, 48 L. Ed. 309 (1903).

City may not condemn property already dedicated to public use. Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267 , 248 P.2d 732 (1952).

III. THE PETITION.

A. Contents.

Petition to reflect property value or amount in controversy. The petition should show the value of the property sought to be taken or the amount involved in the proceeding. Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889).

Authority to condemn need not appear in petition. Kaschke v. Camfield, 46 Colo. 60, 102 P. 1061 (1909).

Definiteness required in description of condemned property. A petition that describes the right-of-way sought to be condemned with sufficient definiteness that any one versed in the nomenclature employed for the description of lands could locate it without any trouble, contains a sufficient description. Colo. Fuel & Iron Co. v. Four Mile Ry., 29 Colo. 90, 66 P. 902 (1901).

Although this section requires that a petition for condemnation provide a description of the property to be condemned and the purpose for which the property is to be condemned, it does not require the petitioner to provide a metes and bounds legal description of the property nor to specify the particular uses for which the property is to be condemned. Bly v. Story, 241 P.3d 529 (Colo. 2010).

Averments of shortest route practicable, etc., unnecessary. The petition for a way for an irrigating ditch, over the cultivated lands of another, need not aver that the way sought is the shortest and most direct route practicable, etc. Mulford v. Farmers' Reservoir & Irrigation Co., 62 Colo. 167, 161 P. 301 (1916).

Deficient petition to be dismissed. If the petitioner is unable to bring himself within the descriptio personae of some act from which he derives his rights, or if he fails to show that he is seeking to take private property and desires to ascertain its value in that proceeding, his petition must be dismissed. Colo. Midland Ry. v. Ruedi, 2 Colo. App. 202, 29 P. 1034 (1892).

Nature of easement. Unless the exact nature of an easement sought to be taken is fixed by law, petition must describe in detail the nature of the use to be made of the land so that the burden on the landowner can be accurately evaluated. State Dept. of Hwys. v. Woolley, 696 P.2d 828 (Colo. App. 1984).

Slope easement defined in State Dept. of Highways v. Woolley, 696 P.2d 828 (Colo. App. 1984).

B. Sufficiency.

Sufficient showing of public purpose in petition. In a proceeding to condemn a right-of-way for a telegraph line, a petition which alleges that petitioner is a corporation organized for the purpose of erecting and maintaining lines of magnetic telegraph in this state is sufficient to show that the line to be established is for public use. Union P.R.R. v. Colo. Postal Tel. Cable Co., 30 Colo. 133, 69 P. 564 (1902), appeal dismissed, 191 U.S. 577, 24 S. Ct. 861, 48 L. Ed. 309 (1903).

C. Parties.

Unknown interested parties. Where the names of interested parties are unknown, this section authorizes the institution of proceedings against the owner appearing of record or, if not known stating that fact; but this section does not and could not lawfully undertake to conclude the rights and transmute the title of the real owner without notice and having his day in court. Colo. E.R.R. v. Chicago, B. & Q. Ry., 141 F. 898 (8th Cir. 1905).

Shareholders necessary parties in mutual ditch corporation action. Pursuant to Rule 19, C.R.C.P. the district court should join as parties to a condemnation action those shareholders in a mutual ditch corporation whose water rights would be affected by the condemnation action of the defendant as of the date of the initiation of the condemnation action and all parties in interest. Jacobucci v. District Court, 189 Colo. 380 , 541 P.2d 667 (1975).

I. GENERAL CONSIDERATION.

Law reviews. For note, "The Real Property Interest Created In a Railroad Upon Acquisition of Its Right-of-Way", see 27 Rocky Mt. L. Rev. 73 (1954). For article, "La Plata Electric Association v. Cummins: A Radical Departure or a Consistent Interpretation of Pre-Existing Equities in Colorado Condemnation Law?", see 65 Den. U. L. Rev. 93 (1988).

Only such interest necessary to accomplish purpose passed. This article passes only such estate or interest in the lands as is reasonably necessary to accomplish the purpose had in view in the condemnation proceeding. Lithgow v. Pearson, 25 Colo. App. 70, 135 P. 759 (1913).

As a result of the 2008 legislative expansion of this section, subsection (4) prohibits a governmental entity from acquiring through condemnation a right to any mineral resource beneath real property that was itself acquired through condemnation for highway purposes except to the extent required for subsurface support. Prior to that expansion, subsection (4) did not prohibit such acquisition by the department of transportation. Dept. of Transp. v. Gypsum Ranch Co., 244 P.3d 127 (Colo. 2010).

Specific land description in order appointing commissioners not required. This section does not require that the land to be taken or damaged should be specifically described in the order appointing the commissioners. Williams v. Bd. of Comm'rs, 48 Colo. 541, 111 P. 71 (1910).

Trial judge is not required to preside at all commissioners' meetings. Bd. of County Comm'rs v. Vail Associates, 171 Colo. 381 , 468 P.2d 842 (1970).

Applied in Smith Canal or Ditch Co. v. Colo. Ice & Storage Co., 34 Colo. 485 , 82 P. 940 (1905); Boothroyd v. Bd. of Comm'rs, 43 Colo. 428 , 97 P. 255 (1908); Kern v. Minekime, 45 Colo. 378 , 101 P. 341 (1909); Hoover-Benninghoff v. Palisade, 48 Colo. 64 , 108 P. 983 (1910); United States v. O'Neill, 198 F. 677 (D. Colo. 1912 ); Keller v. Miller, 63 Colo. 304 , 165 P. 774 (1917); Rothwell v. Coffin, 122 Colo. 140 , 220 P.2d 1063 (1950); Potashnik v. Pub. Serv. Co., 126 Colo. 98 , 247 P.2d 137 (1952); Goldstein v. Denver Urban Renewal Auth., 192 Colo. 422 , 560 P.2d 80 (1977); Bd. of County Comm'rs v. Delaney, 41 Colo. App. 548, 592 P.2d 1338 (1978); Buck v. District Court, 199 Colo. 344 , 608 P.2d 350 (1980); State Dept. of Hwys. v. Pigg, 656 P.2d 46 (Colo. App. 1982).

II. THE PROCEEDINGS.

A. In General.

Parties entitled to presence at trial, cross-examination, etc. At the trial both parties are entitled to be present, to cross-examine witnesses and to object to the admission or exclusion of any and all documents offered in evidence. Routt County Dev. Co. v. Johnson, 23 Colo. App. 511, 130 P. 1081 (1913).

Petitioner may pay award or abandon proceedings. Under a judgment in condemnation the petitioner may pay the award and take title to the property, or he may abandon the proceedings and, thus, incur no liability for the sum awarded as the value of the property; and this is true even in cases where by virtue of the statute, he has obtained preliminary possession pending trial. Dolores No. 2 Land & Canal Co. v. Hartman, 17 Colo. 138, 29 P. 378 (1891).

Condemning party may discontinue proceedings at any time before the right of the property owner to compensation or damages has become complete, in the absence of a statutory provision showing a legislative intent to the contrary. Denver & N.O.R.R. v. Lamborn, 8 Colo. 380 , 8 P. 582 (1885); Denver & R.G.R.R. v. Mills, 59 Colo. 198 , 147 P. 681 (1915); Johnson v. Climax Molybdenum Co., 109 Colo. 308 , 124 P.2d 929 (1942).

Payment required for costs and damages recoverable upon abandonment. The privilege to so abandon the proceeding does not relieve the condemning party from the payment of such costs and damages as may be lawfully recovered. Denver & R.G.R.R. v. Mills, 59 Colo. 198, 147 P. 681, 1916E Ann. Cas. 985 (1915).

Landowner must recover damages in separate action. Damages occasioned by the occupancy and use of the land by the condemnor, where the condemnor discontinues the proceedings after gaining temporary possession of the property, must be recovered by the landowner in a separate action. Johnson v. Climax Molybdenum Co., 109 Colo. 308 , 124 P.2d 929 (1942).

Since landowner's action for damages improper for consideration in condemnation proceedings. The procedural requirement of the landowner having to seek recovery in a separate action arose from the fact that condemnor, after abandoning and discontinuing the proceedings, was relegated to the status of a trespasser ab initio, and the landowner's action for damages, of necessity, had to sound in tort and involved essentials, both in the pleading and trial thereof, not properly subjects for consideration in condemnation proceedings under this section. Johnson v. Climax Molybdenum Co., 109 Colo. 308 , 124 P.2d 929 (1942).

Condemnor has burden of maintaining his right by proper proofs, once the landowner has controverted the condemnor's right to condemn. Otero Irrigation Dist. v. Enderud, 122 Colo. 136 , 220 P.2d 862 (1950).

Property owner acquires no vested right to compensation awarded until condemnor has secured a vested right to the property condemned, and vice versa. City of Broomfield v. Walnut Creek Dev. Corp., 666 P.2d 1103 (Colo. App. 1982).

Scope of petitioner's showing in pleadings and proof. The petitioner is at liberty to show, by proper pleadings and proof that such title or claim is nothing more than the bare legal title, without any equity in the defendant, and that the damages are merely nominal, or that the defendant's estate is something less than the full legal and equitable interest, on account of the payment and acceptance of the compensation therefor, as pleaded; nothing in disparagement of defendant's title, unless fairly within the scope of the pleadings, could be properly admitted in evidence. Knoth v. Barclay, 8 Colo. 300, 6 P. 924 (1885); G.B. & L. Ry. v. Haggart, 9 Colo. 346, 12 P. 215 (1886); Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889).

Order violating constitution does not vitiate rest of proceedings. Whether an interlocutory order violates constitutional requirement of due process of law or not, it does not vitiate the rest of the proceedings for condemnation and, if in those proceedings, respondents have had notice and have had their compensation judicially ascertained, the case will not be reversed because of such order, unless it is shown that it has injuriously affected their rights upon the merits. Sternberger v. McClain v. People, 9 Colo. 190, 11 P. 85 (1886); San Luis Land, Canal & Imp. Co. v. Kenilworth Canal Co., 3 Colo. App. 244, 32 P. 860 (1893); Colo. Fuel & Iron Co. v. Four Mile Ry., 29 Colo. 90, 66 P. 902 (1901); Lavelle v. Town of Julesburg, 49 Colo. 290, 112 P. 774 (1911); Cont'l Mines Power & Reduction Co., 68 Colo. 129, 186 P. 910 (1920), appeal dismissed, 257 U.S. 617, 42 S. Ct. 95, 66 L. Ed. 399 (1921).

Issues pertaining to the government's right to take immediate possession of condemned property are properly part of eminent domain proceedings. Because the trial court had jurisdiction to decide issues pertaining to the department of transportation's right to take immediate possession of the property, it necessarily follows that the trial court also had jurisdiction to accept, interpret, and enforce a stipulation which resolved the dispute over such possession. Dept. of Transp. v. Auslaender, 94 P.3d 1239 (Colo. App. 2004).

Although an eminent domain valuation commission is empowered to make evidentiary rulings without consulting the supervisory judge, the judge's evidentiary rulings control and are binding on the commission. This remains true whether the judge rules on the evidentiary issue presented before or after the commission considers its admissibility. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2015 CO 57, 357 P.3d 179.

If the judge has not ruled on the evidence, then the commission may do so without consulting her. But the judge is still the judge. Under § 38-1-101 (2)(a), she is charged with deciding all questions and issues except the amount of compensation, and the commission must operate within the bounds of the judge's supervisory authority. Therefore, any implicit power in the commission to decide evidentiary rulings is necessarily subsidiary to judicial rulings and the commission has no power to alter those rulings unilaterally. This remains true even when the judicial rulings are made in limine. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2015 CO 57, 357 P.3d 179.

Trial judge has authority to instruct the commission to disregard evidence that the court finds to be irrelevant, despite the commission having deemed the evidence relevant and admissible during a hearing. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2015 CO 57, 357 P.3d 179.

B. Questions for Determination in Limine.

Questions for determination by court include: (1) Whether or not the petitioner belongs to the class of persons entitled to condemn; (2) whether or not the property sought to be taken belongs to the class of property that is subject to condemnation; (3) whether or not the purpose for which the property is sought to be taken is one for which condemnation is permitted; (4) whether or not the petitioner and the owner have been able to come to an agreement concerning a purchase of the land; and (5) whether or not the act authorizing the proceeding is constitutional. Pine Martin Mining Co. v. Empire Zinc Co., 90 Colo. 529 , 11 P.2d 221 (1932).

Court must determine necessity and purpose of taking land. The question of the necessity of taking land and property from the owner and the question as to whether or not the purpose for which the property is to be taken is a public one are questions which the court must answer because the correct answers are conditioned by rules of law of which the commissioners cannot have competent knowledge. Union P.R.R. v. Colo. Postal Tel. Cable Co., 30 Colo. 133, 69 P. 564 (1902), appeal dismissed, 191 U.S. 577, 24 S. Ct. 861, 48 L. Ed. 309 (1903).

Petitioner's entitlement to condemn. If a petitioner is not entitled to condemn a tract, or if a tract should not have been taken are matters for the court to settle in advance. Wassenich v. City & County of Denver, 67 Colo. 456, 186 P. 533 (1919).

Since a right-of-way shall not give the party condemning it any right, title, or interest to any vein, ledge, lode, or deposit in the premises so taken, the question of whether the petitioners were precluded from running a tunnel is a matter which, if proper to consider in condemnation proceedings, must be settled by the court. Colo. Fuel & Iron Co. v. Four Mile Ry., 29 Colo. 90, 66 P. 902 (1901).

Inability to agree is to be determined by court, Kaschke v. Camfield, 46 Colo. 60, 102 P. 1061 (1909).

Feasibility or financial success of enterprise not determinations for court in limine. Whether or not an enterprise is feasible or will be a financial success cannot be inquired into even by commissioners charged with the duty of determining the question of necessity for the project, and clearly such questions were not for the determination of the court in limine. Rothwell v. Coffin, 122 Colo. 140 , 220 P.2d 1063 (1950).

Nothing in subsection (1) purports to preclude a court from making determination before trial on the legal question of whether the phrase "private ways of necessity" includes ways for natural gas pipelines. This legal question is distinguished from factual question of necessity, that is, whether the way sought is "reasonably necessary" under the facts and circumstances of the case, which is one for the trier of fact. Akin v. Four Corners Encampment, 179 P.3d 139 (Colo. App. 2007).

Although a trial judge who is overseeing a commission hearing need not affirmatively grant or deny a motion in limine to exclude evidence, if the judge does issue an explicit ruling, then the commission is bound by that ruling and may not deviate from it. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2015 CO 57, 357 P.3d 179.

C. Power of Commissioners.

Language of subsection (2) is permissive and not mandatory. Bd. of County Comm'rs v. McClure Venture, 41 Colo. App. 524, 594 P.2d 585 (1978).

Province of board fixed by subsection (2). The province of the board of commissioners is fixed by the terms of subsection (2). Broadmoor Land Co. v. Curr, 142 F. 421 (8th Cir. 1905); Routt County Dev. Co. v. Johnson, 23 Colo. App. 511, 130 P. 1081 (1913).

Commissioner is combination of civil juror and judge. State Dept. of Hwys. v. Copper Mt., Inc., 624 P.2d 936 (Colo. App. 1981).

Commissioners to make all evidentiary decisions. The board of commissioners may seek the aid of the trial court in resolving the propriety of the proofs or objections of the parties; however, in the absence of the board's requesting such aid, the board will make all evidentiary decisions. City of Aurora v. Webb, 41 Colo. App. 11, 585 P.2d 288 (1978).

The commission was entitled to consider any competent evidence, including after sales which were comparable in character, close in time and in location, in ascertaining the present, reasonable market value of the condemned property at the date of the taking. State Dept. of Hwys. v. Town of Silverthorne, 707 P.2d 1017 (Colo. App. 1985), cert. dismissed, 736 P.2d 411 ( Colo. 1987 ).

Commissioners may not hold interviews with those not called as witnesses. Routt County Dev. Co. v. Johnson, 23 Colo. App. 511, 130 P. 1081 (1913).

Commissioners may not examine documents not produced at the hearing. Routt County Dev. Co. v. Johnson, 23 Colo. App. 511, 130 P. 1081 (1913).

Commissioners not required to determine questions of law. It was never intended that commissioners should be required to determine questions the solution of which depends upon the application of intricate questions of law such as would be presented by the trial of issues tendered by the answer of respondent. Sand Creek Lateral Irrigation Co. v. Davis, 17 Colo. 326, 29 P. 742 (1892); Siedler v. Seely, 8 Colo. App. 499, 46 P. 848 (1896); Thompson v. DeWeese-Dye Ditch & Reservoir Co., 25 Colo. 243, 53 P. 507 (1898); Gibson v. Cann, 28 Colo. 499, 66 P. 879 (1901); Colo. Fuel & Iron Co. v. Four Mile Ry., 29 Colo. 90, 66 P. 902 (1901); Union P.R.R. v. Colo. Postal Tel. Cable Co., 30 Colo. 133, 69 P. 564 (1902), appeal dismissed, 191 U.S. 577, 24 S. Ct. 861, 48 L. Ed. 309 (1903).

Section does not confer roving commission upon commissioners; therefore, the commissioners may not go into the highways and byways in quest of plats, documents, and printed matter. Routt County Dev. Co. v. Johnson, 23 Colo. App. 511, 130 P. 1081 (1913).

Effect of one commissioner's failure to view subject property. Failure of one of commission of three freeholders to view subject property does not vitiate the commission's ascertainment of value and the judgment entered thereon. Bd. of County Comm'rs v. McClure Venture, 41 Colo. App. 524, 594 P.2d 585 (1978).

Disqualification of commissioner. There is no Colorado law on the grounds for disqualification of a commissioner. State Dept. of Hwys. v. Copper Mt., Inc., 624 P.2d 936 (Colo. App. 1981).

Trial court did not err in failing to disqualify commissioner based on the "appearance of impropriety" disqualification standard applicable to judges. Trial court properly held that the applicable standard for disqualifying commissioners under subsection (1) is not "an appearance of partiality" but whether the commissioner was "in fact interested and partial". Practical considerations support the conclusion that the general assembly intended to require actual partiality for disqualifying commissioners. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2013 COA 168 , 369 P.3d 640, aff'd in part and rev'd in part on other grounds, 2015 CO 57, 357 P.3d 179.

In applying the actual bias standard, commissioner's affiliation with two fellow employees who had testified against condemning party as expert witnesses in other unrelated condemnation cases did not make her interested or partial. Thus, the trial court did not abuse its discretion in not disqualifying commissioner despite her affiliation. Reg'l Transp. Dist. v. 750 W. 48th Ave., LLC, 2013 COA 168 , 369 P.3d 640, aff'd in part and rev'd in part on other grounds, 2015 CO 57, 357 P.3d 179.

III. DEPOSITS.

A. In General.

Purpose of requiring deposit is to provide the landowner with security for the payment of compensation and damages ultimately awarded. City of Englewood v. Reffel, 34 Colo. App. 103, 522 P.2d 1241 (1974).

Preliminary deposit is not payment, nor part payment, until it is actually so applied. Dolores No. 2 Land & Canal Co. v. Hartman, 17 Colo. 138, 29 P. 378 (1891); Denver & R.G.R.R. v. Mills, 59 Colo. 198, 147 P. 681 (1915).

Deposit required must be sufficient to pay compensation due the landowner when the value of his land is determined by a board of commissioners or a jury as provided. Swift v. Smith, 119 Colo. 126 , 201 P.2d 609 (1948).

If the petitioner deposits a sum with the court sufficient to pay the compensation when it is later ascertained, the court may authorize the petitioner to take immediate possession of the property before a final evaluation of the property is made. E-470 Pub. Hwy. Auth. v. 455 Co., 997 P.2d 1273 (Colo. App. 1999).

Court acts as depositary of petitioner. In receiving the preliminary deposit, the court, or its proper officer, acts as the depositary of the petitioner until the deposit is actually applied to its ultimate purpose or is otherwise legally disposed of. Dolores No. 2 Land & Canal Co. v. Hartman, 17 Colo. 138, 29 P. 378 (1891); Denver & R.G.R.R. v. Mills, 59 Colo. 198, 147 P. 681 (1915).

B. Withdrawal of Deposits.

Withdrawals deemed provisional. Withdrawals from the sum deposited pursuant to subsection (6)(b) are provisional, not absolute. City of Englewood v. Reffel, 34 Colo. App. 103, 522 P.2d 1241 (1974).

If deposit withdrawn, petitioner's right of possession suspended. A preliminary deposit in a condemnation proceeding is essential to the petitioner's right of entry and possession and, if by any means, it is withdrawn before the final determination of the controversy, the petitioner's right of possession is suspended. Dolores No. 2 Land & Canal Co. v. Hartman, 17 Colo. 138, 29 P. 378 (1891); Denver & R.G.R.R. v. Mills, 59 Colo. 198, 147 P. 681 (1915).

Refund of excessive withdrawals. If approximation of value is shown to be grossly inflated, there is no justification for allowing the landowner to retain amounts previously withdrawn. City of Englewood v. Reffel, 34 Colo. App. 103, 522 P.2d 1241 (1974).

If courts refused to allow a refund when excessive amounts are withdrawn, the landowners would be unjustly enriched at the public's expense. City of Englewood v. Reffel, 34 Colo. App. 103, 522 P.2d 1241 (1974).

Order demanding landowner refund excess withdrawn not modification of judgment. Where a city in a second judgment succeeded in drastically reducing the amount of the landowners' award in an eminent domain proceeding, but the landowners had under the first judgment, and in accordance with subsection (6)(b), withdrawn a significant excess over the final award, an order of the court demanding a refund was not a modification of the judgment, but was an attempt to give effect to the judgment. City of Englewood v. Reffel, 34 Colo. App. 103, 522 P.2d 1241 (1974).

A deposit withdrawn with the parties' consent need not be immediately returned when the condemnation is abandoned and the award of damages arising from the abandonment is still pending. The withdrawing party may retain those funds until the condemnation damages proceeding is completed but must return any excess beyond the party's actual damages. Aurora Pub. Sch. v. Stapleton Gateway, 2020 COA 73 , 465 P.3d 142.

IV. DAMAGES.

Commissioners fix compensation payable to interested parties. The commissioners shall fix the compensation to be paid, not only to the owners, but to all parties interested in the lands taken, as well as all damages accruing to such owners or parties interested in consequence of the condemnation of the same. Hutchinson v. McLaughlin, 15 Colo. 492 , 25 P. 317 (1890); Swift v. Smith, 119 Colo. 126 , 201 P.2d 609 (1948).

Commissioners to consider highest and best use. The commissioners are not to view the property in its present status only, but rather, the present market value is to be assessed in light of the highest and best use to which the property can reasonably be applied. City of Aurora v. Webb, 41 Colo. App. 11, 585 P.2d 288 (1978).

Probability of upward rezoning. If a probability of upward rezoning exists, the commissioners may take evidence, under the comparable sales method of valuation, of sales of other property which has benefited by the more advantageous zoning status. City of Aurora v. Webb, 41 Colo. App. 11, 585 P.2d 288 (1978).

This state follows version of undivided basis rule. Where a lessor holds a fee simple subject to an encumbrance, such as a lease, this state follows the rule that the property must be valued on an undivided basis, but with some distinctions from the strict undivided fee rule. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Under undivided basis rule, parties have opportunity to agree on apportionment of award, thereby avoiding completely the difficult task of ascertaining the value of the separate interests. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Once the reasonable market value of property in an eminent domain proceeding has been established, the apportionment of that amount among claimants is of no concern to the condemnor. State Dept. of Hwys. v. Town of Silverthorne, 707 P.2d 1017 (Colo. App. 1985), cert. dismissed, 736 P.2d 411 ( Colo. 1987 ).

Undivided basis rule has effect of curbing excessive awards in that it simplifies and narrows the issues in the proceeding in which the condemnor has an interest. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Encumbrance adding or subtracting from fair market value not ignored. The undivided basis rule, as applied in Colorado and, as distinguished from the undivided fee rule adopted in some states, does not ignore the value which an encumbrance may add to or subtract from the fair market value of the property as a whole. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Contract rental adding to value relevant. The undivided basis rule contemplates that where a contract rental adds to the fair market value of the property, evidence of that rental is relevant in determining the compensation to be paid. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

If contract rental less than fair rent, latter relevant. Under the undivided basis rule, where a contract rental is less than the fair rental, the fair rental and not the contract rental is the relevant evidence on the issue of compensation. This assures a fair return for the property valued as a whole. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Condemnor need not pay for interest which was not lost by condemnees under the undivided basis rule. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Lessee's compensable rights in leasehold unaffected by lessor's settlement. Where lessee has compensable rights in leasehold, these rights are not affected by lessor's settlement with the condemnor. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Where lessee is party in interest, its compensation is affected by amount which condemnors must pay for entire property taken, and although it may have waived its right to present its own evidence of value, it did not waive its right to insist that the award be based on competent evidence and to cross-examine its source. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Stipulation not proper basis for award. Where a lessee, a party in interest, was not a party to a stipulation between the condemnors and the lessor, and objected to admissibility of the stipulation and asserted its right to cross-examine the appraisers, the stipulation is not a proper basis for the award. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

When interest on award accrues. Where the authorization to take possession of property is contingent on a deposit, the date of possession for purposes of entitlement to interest on the award is the date of deposit. Denver Urban Renewal Auth. v. Hayutin, 40 Colo. App. 559, 583 P.2d 296 (1978).

Procedure for determining the total value of the property. In a valuation hearing, the commission and the court properly refused to consider evidence of chain of title to the condemned street. State Dept. of Hwys. v. Town of Silverthorne, 707 P.2d 1017 (Colo. App. 1985), cert. dismissed, 736 P.2d 411 ( Colo. 1987 ).

I. GENERAL CONSIDERATION.

Law reviews. For article, "Some Problems of Severance Damage", see 29 Dicta 327 (1952). For article, "Inverse Condemnation -- A Viable Alternative", see 51 Den. L. J. 529 (1974). For article, "Status of Landowners Property Slated for Condemnation", see 14 Colo. Law. 1191 (1985).

Right of just compensation guarded. Section 15 of art. II, Colo. Const., guarantees just compensation to the owner when property is taken without his consent, and this right is jealously guarded. Lamborn v. Bell, 18 Colo. 346, 32 P. 989, 20 L.R.A. 241 (1893).

Subsection (2)(d) does not violate art. II, § 15, of the Colorado Constitution, which requires that landowners receive just compensation for property taken or damaged. When an award of compensation for property taken is reduced by the amount of special benefits pursuant to subsection (2)(d), the value of the payment received plus the value of the land still possessed by the landowner after the taking, enhanced by the special benefits, is equivalent to the value of the landowners property prior to the taking. Therefore, the landowner receives just compensation. E-470 Pub. Hwy. Auth. v. Revenig, 91 P.3d 1038 (Colo. 2004).

General compensation rules not strictly applied if result fundamentally unfair. The general rule that compensation is to be determined as of the date of the order of possession cannot be applied strictly if the result would be fundamentally unfair. Bd. of County Comm'rs v. Delaney, 41 Colo. App. 548, 592 P.2d 1338 (1978) (decided prior to 1979 amendment).

State has duty to assure just compensation. It is the duty of the state, in the conduct of an inquest by which the compensation is ascertained, to see that it is just, not merely to the individual whose property is taken, but to the public which is to pay for it. Williams v. City & County of Denver, 147 Colo. 195 , 363 P.2d 171 (1961).

Condemnation award is made in gross as a general rule. Vivian v. Bd. of Trustees, 152 Colo. 556 , 383 P.2d 801 (1963).

Claimants litigate right to assessed damages among themselves. When the damages are assessed for the taking of the property, it should be paid into court and the claimants can litigate the right thereto among themselves. Denver Power & Irrigation Co. v. Denver & R.G.R.R., 30 Colo. 204 , 69 P. 568 (1902); Vivian v. Bd. of Trustees, 152 Colo. 556 , 383 P.2d 801 (1963).

Landowner has burden to show property value and damages. In a proceeding to condemn property for public use, the burden is upon the landowner to show the value of the property or interest therein actually taken, as well as the damages, if any, to the residue of such property. Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889).

Petitioner has burden to show benefits, if any, as well as the burden of showing the necessity of the taking, where such matters are litigated. Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889).

Requirement to accept device to lessen damage prohibited. A landowner cannot be required to accept a structure or device of the petitioner, intended to lessen such damage, and which is no part of the improvement for which his land is taken. Von Richtofen v. Bijou Irrigation Dist., 52 Colo. 527, 125 P. 495 (1912).

Invalidity of award must be shown by anyone asserting it by clear and satisfactory evidence. Pub. Serv. Co. v. City of Loveland, 79 Colo. 216, 245 P. 493 (1926).

Value of land taken in condemnation proceeding should be determined as of date of city's possession and not as of the date of valuation hearing if condemnee did not seek damages to the remainder and had accepted a stipulated monetary amount upon condemnation. Therefore, condemnee was only entitled to the difference between the payment accepted and the fair market value of land at time of possession plus interest on the difference from the date of possession. City of Glendale v. Rose, 679 P.2d 1096 (Colo. App. 1983) (action commenced prior to 1979 amendment).

If the property is sought to be condemned under this procedure and if the court authorizes the condemning authority to take possession of the property prior to the valuation hearing, the ultimate award of compensation, based on the property, shall be determined as of the date the petitioner is authorized by the court to take possession. If, however, the condemning authority has not taken possession of the property prior to the valuation hearing, then the valuation date is the date of trial or hearing to assess compensation. Fowler Irrevocable Trust 1992-1 v. City of Boulder, 992 P.2d 1188 (Colo. App. 1999), aff'd in part and rev'd in part on other grounds, 17 P.3d 797 ( Colo. 2001 ).

Where the state takes possession prior to entering into a contract or receiving a court order, fair market value must be determined as of the date of possession. The Mill v. State Dept. of Health, 868 P.2d 1099 (Colo. App. 1993).

The plain language of the statute allows for the determination of true and actual value as of the date of possession. Where mining waste existed on the property as of the date the city took possession but was not discovered until after the city took possession, this section does not preclude the introduction of that information. City of Black Hawk v. Ficke, 215 P.3d 1129 (Colo. App. 2008).

Applied in Twin Lakes Hydraulic Gold Mining Syndicate v. Colo. M. Ry., 16 Colo. 1 , 27 P. 258 (1890); San Luis Land, Canal & Imp. Co. v. Kenilworth Canal Co., 3 Colo. App. 244, 32 P. 860 (1893); Lithgow v. Pearson, 25 Colo. App. 70, 135 P. 759 (1913); Pine Martin Mining Co. v. Empire Zinc Co., 90 Colo. 529 , 11 P.2d 221 (1932); Fishel v. City & County of Denver, 106 Colo. 576 , 108 P.2d 236 (1940); Rullo v. Pub. Serv. Co., 163 Colo. 99 , 428 P.2d 708 (1967); Denver Urban Renewal Auth. v. Marshall Mfg. Co., 35 Colo. App. 227, 532 P.2d 746 (1975); Hayden v. Bd. of County Comm'rs, 41 Colo. App. 102, 580 P.2d 830 (1978).

II. DAMAGES FOR PROPERTY ACTUALLY TAKEN.

A. In General.

Witnesses qualified to testify on property value. A witness may be sufficiently qualified to testify if he is a resident, landowner or farmer in the neighborhood, and is familiar with the value of the property. Bd. of Dirs. v. Calvaresi, 156 Colo. 173 , 397 P.2d 877 (1964).

Owner may testify as to his own estimate of value of his land. Bd. of Dirs. v. Calvaresi, 156 Colo. 173 , 397 P.2d 877 (1964).

Jury not required to accept owner's conclusions. Where the trial court allowed the owner to testify on his theory of value and past operations, the jury was certainly entitled to weigh the past history against the glowing future predicted, but was not required to accept the owner's conclusions. Ruth v. Dept. of Hwys., 145 Colo. 546 , 359 P.2d 1033 (1961).

Rejection of owner's estimate of value harmless error. The rejection of evidence, that defendant had stated, after the improvement was constructed, that he would not take $10,000 for his place, held, in view of testimony given by other witnesses for plaintiff, if error, to be harmless. Wiley Drainage Dist. v. Semmens, 80 Colo. 365, 250 P. 527 (1926).

Laying foundation for expert's cross-examination on property appraisals. Sufficient foundation for cross-examination of an expert as to appraisals of other property which he has made in the area is laid where it is shown: (1) That the appraisal is of a piece of property that he has determined to be comparable or involves similar property in the neighborhood of the condemned property; and (2) that the appraisal is not too remote in time. Bd. of County Comm'rs v. H.A. Nottingham & Sons, 36 Colo. App. 265, 540 P.2d 1126 (1975).

One of the few means a condemnee has to question the credibility of the condemnor's expert witness, other than by contradictory testimony by other witnesses, is to show that the expert has made other inconsistent appraisals of the comparable or of similar neighboring land at a time which is not too remote to provide a reasonable comparison. This line of cross-examination, while ostensibly used for the purpose of testing the witness's credibility, serves, in essence, to elicit additional affirmative evidence of the value of the comparable, and as such, it is relevant for purposes of determining the true value of the land used as a comparison. Bd. of County Comm'rs v. H.A. Nottingham & Sons, 36 Colo. App. 265, 540 P.2d 1126 (1975).

B. Measure of Compensation Allowed.

Compensation allowable is the difference in value of the property before and after the taking is complete. Denver & R.G.R.R. v. Griffith, 17 Colo. 598, 31 P. 171 (1892).

The compensation allowable is the price the property will sell for where there is a demand. Denver N.W. & P. Ry. v. Howe, 49 Colo. 256, 112 P. 779 (1910).

Elements of damages to condemned property such as the cost of restoration of property, estimate of replacement value, and related items are admissible only if they would have a bearing on and influence opinion as to value. Mack v. Bd. of County Comm'rs, 152 Colo. 300 , 381 P.2d 987 (1963).

Factors considered in determining proper measure of owner's recovery include: (1) Compensation for the land or property actually taken equal to the true and actual value thereof at the time of the appraisement; and (2) damages to the residue of the land or property not taken, equal to the actual diminution of its market value, if any, for any use to which the same may reasonably be put. City of Denver v. Bayer, 7 Colo. 113, 2 P. 6 (1883); Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889); Colo. M. Ry. v. Brown, 15 Colo. 193, 25 P. 87 (1890).

In arriving at the present value of the property taken and the damages, if any, to the residue, the jury has a right to consider its present condition, improvements, surroundings, and capabilities, and the present use of the land and any reasonable use in the future to which it may be adapted or to which it might be put. Bd. of County Comm'rs v. Noble, 117 Colo. 77 , 184 P.2d 142 (1947); Ruth v. Dept. of Hwys., 145 Colo. 546 , 359 P.2d 1033 (1961); Dept. of Hwys. v. Schulhoff, 167 Colo. 72 , 445 P.2d 402 (1968).

Market value of land. In determining the value of the land taken, the jury is to be governed by the land's market value at the time of the trial. Mulford v. Farmers' Reservoir & Irrigation Co., 62 Colo. 167 , 161 P. 301 (1916); Vivian v. Bd. of Trustees, 152 Colo. 556 , 383 P.2d 801 (1963).

Market value is the price which property will bring when offered for sale by one who desires but is not obliged to sell it, and is bought by one who desires it but is under no necessity to buy the property. Bd. of County Comm'rs v. Noble, 117 Colo. 77 , 184 P.2d 142 (1947); Vivian v. Bd. of Trustees, 152 Colo. 556 , 383 P.2d 801 (1963); Dept. of Hwys. v. Schulhoff, 167 Colo. 72 , 445 P.2d 402 (1968).

Just compensation excludes factors relating to public acquisition. Under the test of market value, just compensation cannot include any increment arising from the very fact of acquisition of the subject property because, if the land sold in the open market under ordinary and usual circumstances, factors relating to public acquisition would have to be excluded from consideration. Williams v. City & County of Denver, 147 Colo. 195 , 363 P.2d 171 (1961).

Just compensation is determined as of the date the petitioner is authorized by agreement, stipulation, or court order to take possession of the subject property and cannot include any increment arising from the very fact of acquisition or the intended use of the property. Wall v. City of Aurora, 172 P.3d 934 (Colo. App. 2007).

Amount of liens cannot be added to award. The award of the commission or the jury must reflect only the fair market value of the property taken and there cannot be added to the award as part of the fair market value the amount of liens which exist against the property. Dept. of Hwys. v. Kelley, 151 Colo. 517 , 379 P.2d 386 (1963).

Price paid for similar property in voluntary sale admissible evidence. Evidence of the price paid for similar property in a voluntary sale is admissible on the question of value of the property condemned, provided the properties sold are similar in locality and character to the property in question and not so far removed in point of time to make a comparison unjust or impossible. Dept. of Hwys. v. Schulhoff, 167 Colo. 72 , 445 P.2d 402 (1968); W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973); Bd. of County Comm'rs v. Evergreen, Inc., 35 Colo. App. 171, 532 P.2d 777 (1974); Loloff v. Sterling, 31 Colo. 102 , 71 P. 1113 (1903); Herring v. Platte River Power Auth., 728 P.2d 709 ( Colo. 1986 ).

Determination of property similarities rests in trial court's discretion. Whether condemned property and property voluntarily sold are sufficiently similar so that sale price would be aid to the jury in fixing the value of the property condemned rests largely in the sound discretion of the trial court which will not be interfered with unless abused. Dept. of Hwys. v. Schulhoff, 167 Colo. 72 , 445 P.2d 402 (1968); W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973); Herring v. Platte River Power Auth., 728 P.2d 709 ( Colo. 1986 ).

Evidence of value of individual lots in subdivision admissible. Where process of subdivision, platting, recording, and development had progressed to point where individual lots were available as separate units for sale, such land would have a higher market value than land which is merely currently suitable for sale as one tract to a single person who would in turn subdivide or develop the land for sale to others. Therefore, although the question for the jury is the fair market value of the tract as a whole, evidence as to the individual lot values would be both pertinent and necessary to a consideration of the highest and best use of the land. Bd. of County Comm'rs v. Evergreen, Inc., 35 Colo. App. 171, 532 P.2d 777 (1974).

When evidence of enhancement resulting from acquisition admissible. Although evidence relating to enhancement in value as a result of the acquisition of the subjected property is generally inadmissible, there are exceptional situations where the courts will admit evidence of enhancement resulting from an acquisition and they include cases where the location of the proposed project is indefinite or where there is a supplemental taking. Williams v. City & County of Denver, 147 Colo. 195 , 363 P.2d 171 (1961); City & County of Denver v. Smith, 152 Colo. 227 , 381 P.2d 269 (1963).

Speculative or prospective values are not admissible in arriving at the fair market value of the property. Ruth v. Dept. of Hwys., 145 Colo. 546 , 359 P.2d 1033 (1961); Dept. of Hwys. v. Schulhoff, 167 Colo. 72 , 445 P.2d 402 (1968).

Fair compensation does not include speculative values either lowering or raising the compensation to be paid. Williams v. City & County of Denver, 147 Colo. 195 , 363 P.2d 171 (1961).

Under some circumstances, evidence of a probable change in zoning may be admitted where such change is unrelated to the acquisition of the subject property, and where the change in zoning results from the taking of the subject property, it is not admissible. Williams v. City & County of Denver, 147 Colo. 195 , 363 P.2d 171 (1961).

Expert testimony as to value based on mere speculation is not competent. An expert opinion that relies upon an estimate of construction costs that the undisputed evidence demonstrated was not only unreliable, but was mere speculation is not legally competent evidence under C.R.E. 703. Farrar v. Total Petroleum, Inc., 799 P.2d 463 (Colo. App. 1990).

Uses available for adaptation of property considered. The use to which the property taken is subjected may be taken into consideration in determining the proper measure of damages recoverable by the owner of property. City of Denver v. Bayer, 7 Colo. 113, 2 P. 6 (1883); Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889); Colo. M. Ry. v. Brown, 15 Colo. 193, 25 P. 87 (1890).

The most profitable and advantageous use to which the property taken is adapted is the basis upon which fair compensation should be determined. Union Exploration Co. v. Moffat Tunnel Imp. Dist., 104 Colo. 109 , 89 P.2d 257 (1939).

If land is so situated that it is actually available for building purposes, its value for such purposes may be considered, even if it is used as a farm or is covered with brush and boulders. Dept. of Hwys. v. Schulhoff, 167 Colo. 72 , 445 P.2d 402 (1968).

It is improper, however, for the jury to consider an undeveloped tract of land as though a subdivision thereon is an accomplished fact, and such undeveloped property may not be valued on a per lot basis, the cost factor clearly being too speculative. Dept. of Hwys. v. Schulhoff, 167 Colo. 72 , 445 P.2d 402 (1968).

The value of lands taken is to be estimated not merely with reference to the use to which it is at the time applied, but with reference to uses to which it is plainly adapted; thus, the owner of lands having thereon an excavation for an irrigating ditch, never used for the purpose and long since abandoned by the person who made it, is entitled to the market value of the land, taking into account that this excavation is to be considered with reference to the purpose for which it is suited. Roberts v. Scurvin Ditch Co., 22 Colo. App. 120, 125 P. 552 (1912).

Special value for particular uses is to be considered in the assessment. Denver N.W. & P. Ry. v. Howe, 49 Colo. 256, 112 P. 779 (1910).

Contract rental adding to value relevant evidence. The undivided basis rule contemplates that where a contract rental adds to the fair market value of the property, evidence of that rental is relevant in determining the compensation to be paid. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Fair rental is relevant evidence if contract rental less than fair rental. Under the undivided basis rule, where a contract rental is less than the fair rental, the fair rental and not the contract rental is the relevant evidence on the issue of compensation. This assures a fair return for the property valued as a whole. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Rental value of land considered. The rental value of land is an element for the purpose of determining present market value. Vivian v. Bd. of Trustees, 152 Colo. 556 , 383 P.2d 801 (1963).

Rental of lands while in possession of petitioner is not allowable without evidence of rental value. Mulford v. Farmers' Reservoir & Irrigation Co., 62 Colo. 167, 161 P. 301 (1916).

Undivided basis rule. Where a lessor holds a fee simple subject to an encumbrance, such as a lease, the property must be valued on an undivided basis, but with some distinctions from the strict undivided fee rule. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Parties have opportunity to agree on apportionment of award under the undivided basis rule, thereby avoiding completely the difficult task of ascertaining the value of the separate interests. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Condemnor need not pay for interest not lost by condemnees under the undivided basis rule. Montgomery Ward & Co. v. City of Sterling, 185 Colo. 238 , 523 P.2d 465 (1974).

Injury to business on condemned land not element of just compensation. Injury to a business conducted upon lands taken does not constitute an element of just compensation because the business itself is not being condemned and can be relocated elsewhere. City & County of Denver v. Hinsey, 177 Colo. 178 , 493 P.2d 348 (1972).

Where income is derived from land itself, as in a farming or ranching operation, then an injury to a business conducted upon the lands may be considered in determining just compensation. City & County of Denver v. Hinsey, 177 Colo. 178 , 493 P.2d 348 (1972).

It is well settled that when land occupied for business purposes is taken by eminent domain, the owner is entitled to compensation only for the value of the land and improvements but not for the value of any business conducted thereon. Since rental trailers located on condemned land are personal property and were not themselves condemned, the commission's refusal to consider income from them was correct. Bd. of County Comm'rs v. HAD Enters., Inc., 35 Colo. App. 162, 533 P.2d 45 (1974).

Property deemed waste not valueless. Property is not to be deemed worthless because the owner allows it to go to waste, or to be regarded as valueless because he is unable to put it to any use, because others may be able to use it, and make it subserve the necessities or conveniences of life, and its capability of being made thus available gives it a market value which can be readily estimated. Colo. M. Ry. v. Brown, 15 Colo. 193, 25 P. 87 (1890); Roberts v. Scurvin Ditch Co., 22 Colo. App. 120, 125 P. 552 (1912).

No interest is allowable on unliquidated claim for damages, in the absence of contract or of statute providing therefor. Union Exploration Co. v. Moffat Tunnel Imp. Dist., 104 Colo. 109 , 89 P.2d 257 (1939).

When interest on award accrues. Where the authorization to take possession of property is contingent on a deposit, the date of possession for purposes of entitlement to interest on the award is the date of deposit. Denver Urban Renewal Auth. v. Hayutin, 40 Colo. App. 559, 583 P.2d 296 (1978).

Exemplary damages not allowed in condemnation proceeding. Absent a provision for exemplary damages, such damages are not to be allowed in a special statutory proceeding for condemnation. Ossman v. Mtn. States Tel. & Tel. Co., 184 Colo. 360 , 520 P.2d 738 (1974).

An inverse condemnation action is in the nature of a special statutory proceeding and is to be tried as if it were an eminent domain proceeding. Thus, the exemplary damages statute, which authorizes the award of exemplary damages in "all civil actions", is not applicable to an inverse condemnation action. Ossman v. Mtn. States Tel. & Tel. Co., 184 Colo. 360 , 520 P.2d 738 (1974).

Landowner entitled to costs reasonably incurred. A landowner is entitled to be compensated for costs incurred by him in condemnation proceedings, provided such costs are reasonably incurred, on the theory that to require the landowner to pay such costs would reduce the just compensation for the taking. Dept. of Hwys. v. Kelley, 151 Colo. 517 , 379 P.2d 386 (1963).

"Costs" means expenses necessarily incurred by reason of the litigation. Dept. of Hwys. v. Kelley, 151 Colo. 517 , 379 P.2d 386 (1963).

Attorney fees are not included within meaning of "costs" and are not recoverable in eminent domain proceedings. Dept. of Hwys. v. Intermountain Term. Co., 164 Colo. 354 , 435 P.2d 391 (1967).

Special improvement assessments against land taken are not "costs". Special improvement assessments against land taken by condemnation and paid by the landowner are not expenses necessarily incurred by reason thereof, and cannot be taxed as costs. Dept. of Hwys. v. Kelley, 151 Colo. 517 , 379 P.2d 386 (1963).

All evidence relevant to the determination of the present market value of condemned property is admissible, including evidence of the most advantageous potential future use of the entire property, even if the condemned property would need to be dedicated as part of annexation and rezoning of the entire property in the future. Palizzi v. City of Brighton, 228 P.3d 957 (Colo. 2010).

Evidence of the value of the condemned portion as a part of the whole is admissible and should be evaluated by the fact finder when determining just compensation. Palizzi v. City of Brighton, 228 P.3d 957 (Colo. 2010).

III. DAMAGES TO RESIDUE OF PROPERTY.

Measure of damages to residue is diminuation of market value. The measure of damages to the residue of property after an eminent domain taking is the diminution of the market value by reason of the taking. W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973).

Damages are awarded equal to the actual diminution of its market value, if any, for any use to which the same may reasonably be put. City of Denver v. Bayer, 7 Colo. 113, 2 P. 6 (1883); Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889); Denver & R.G.R.R. v. Griffith, 17 Colo. 598, 31 P. 171 (1892); Roberts v. Scurvin Ditch Co., 22 Colo. App. 120, 125 P. 552 (1912).

Damage to the residue after land taken is to be measured by the present difference between market value before and after taking, and includes all damages from the natural, necessary, and reasonable result of the taking. Mack v. Bd. of County Comm'rs, 152 Colo. 300 , 381 P.2d 987 (1963).

All damages, present and prospective, that are the natural, necessary, or reasonable result of the taking should be assessed, except such as may arise from negligent or unskillful construction. Denver City Irrigation & Water Co. v. Middaugh, 12 Colo. 434, 21 P. 565 (1889); Loloff v. Sterling, 31 Colo. 102, 71 P. 113 (1903); Farmers' Reservoir & Irrigation Co. v. Cooper, 54 Colo. 402, 130 P. 1004 (1913); Moffat v. City & County of Denver, 57 Colo. 473, 143 P. 577 (1914); Mulford v. Farmers' Reservoir & Irrigation Co., 62 Colo. 167, 161 P. 301 (1916).

Damage to residue includes all damages from the natural, necessary, and reasonable result of the taking. Mack v. Bd. of County Comm'rs, 152 Colo. 300 , 381 P.2d 987 (1963).

When a portion of a parcel of land is taken from a property owner in a condemnation proceeding, the landowner is entitled to recover all damages that are the natural, necessary, and reasonable result of the taking, as measured by the reduction in the market value of the remainder of the property. The property owner is entitled to present any relevant evidence concerning diminution of market value caused by the taking. If the evidence supports a finding that a diminution of market value has occurred, compensation must be awarded. La Plata Elec. Ass'n, Inc. v. Cummins, 728 P.2d 696 ( Colo. 1986 ); Bement v. Empire Elec. Ass'n, Inc. 28 P.2d 706 ( Colo. 1986 ); Herring v. Platte River Power Auth., 728 P.2d 709 (Colo. 1986).

Loss and inconvenience thereby occasioned may be considered in determining the proper measure of damages recoverable by an owner whose property has been taken. City of Denver v. Bayer, 7 Colo. 113, 2 P. 6 (1883); Colo. Cent. R.R. v. Allen, 13 Colo. 229, 22 P. 605 (1889); Colo. M. Ry. v. Brown, 15 Colo. 193, 25 P. 87 (1890).

Loss of means of access to premises considered. Where the premises sought are used by the landowner as the means of access to the premises not taken, the injury occasioned by the taking will, in this respect, be special to him, and he is entitled to compensation therefor. Lavelle v. Town of Julesburg, 49 Colo. 290, 112 P. 774 (1910).

Although it would seem difficult to establish the true or market value of access rights since they are not a commodity dealt in on a buying and selling market, the right of ingress and egress to and from a person's property adds or detracts from the property value and it would seem that the true value of such rights could only be found in the difference between the value of the land and its use for any and all kinds of purposes before the disturbance or destruction of such rights, and the value of the land minus any access or disturbed or inconvenient access to the highway. Boxberger v. State Hwy. Comm'n, 126 Colo. 526 , 251 P.2d 920 (1952).

Damage for loss beyond market value prohibited. The condemnor is not permitted to add an additional element of damage for loss of use beyond the market value. Vivian v. Bd. of Trustees, 152 Colo. 556 , 383 P.2d 801 (1963).

Costs of restoration are not allowed as a test for determining damages to residue occasioned by a taking in condemnation cases. W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973).

Evidence of aesthetic damage and damage for loss of view, which would result from construction of power line, is admissible in assessing damages to remainder since unsightliness or loss of view did not affect any other owner or public in a general way but did specifically affect remainder. La Plata Elec. Ass'n, Inc. v. Cummins, 703 P.2d 592 (Colo. App. 1985), aff'd, 728 P.2d 696 ( Colo. 1986 ).

Jury cannot consider general benefits. General benefits, which accrue to the residue of property after a condemnation by reason of the improvement, may not be considered by the jury in arriving at the market value of the residue after the taking. Mack v. Bd. of County Comm'rs, 152 Colo. 300 , 381 P.2d 987 (1963).

"Benefit". "Benefit", as used in eminent domain law, is not equivalent or interchangeable with "benefit" that arises out of special improvement. City of Englewood v. Weist, 184 Colo. 325 , 520 P.2d 120 (1974).

"Benefit" that justifies a special assessment tax is not the same "benefit" that must be calculated and deducted from a landowner's recovery in an eminent domain proceeding. City of Englewood v. Weist, 184 Colo. 325 , 520 P.2d 120 (1974).

General benefit cannot be set off against damages. General benefits that result to the owner in common with the public and other nearby owners cannot be set off against damages. W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973).

Special benefits that may be set off against damages are those benefits that accrue directly to the residue as a result of the construction of the improvement and that directly and particularly benefit that residue as opposed to benefitting the public generally. W. Slope Gas Co. v. Lake Eldora Corp., 32 Colo. App. 293, 512 P.2d 641 (1973); E-470 Pub. Highway Auth. v. 455 Co., 983 P.2d 149 (Colo. App. 1999), rev'd on other grounds, 3 P.3d 18 ( Colo. 2000 ).

Special benefits may generally be set off against a condemnation award but cannot be set off where the remaining property is subject to an assessment for those same benefits. E-470 Pub. Highway Auth. v. 455 Co., 983 P.2d 149 (Colo. App. 1999), rev'd on other grounds, 3 P.3d 18 ( Colo. 2000 ).

Trial court abused its discretion by granting landowners' motion in limine to exclude all evidence of special benefits accruing to the landowners' property as a result of the E-470 highway construction. The commissioners should have had the opportunity at trial to consider all parties' evidence of the special benefits accruing to the remaining property. Both the highway authority's and the landowners' appraisers agreed that construction of the E-470 conferred special benefits on the landowners' remaining property. By excluding this evidence of special benefits, the trial court effectively ensured that the landowners would recover in an amount greater than they suffered. E-470 Pub. Hwy. Auth. v. 455 Co., 3 P.3d 18 (Colo. 2000).

Whether the highway expansion fee is labeled as a "special fee" or a "special assessment", the mere existence of such fee is not, in and of itself, an adequate basis for excluding all evidence of special benefits for two reasons: (1) The fee is speculative; and (2) the fee does not charge for the same benefit as those the highway authority sought to introduce into evidence. E-470 Pub. Hwy. Auth. v. 455 Co., 3 P.3d 18 (Colo. 2000).

City's collection of special assessment tax not foreclosed. A city's failure to prove any benefit to the landowner's property in the section 38-1-101 proceeding does not foreclose the city from collecting a special assessment tax. The city is entitled to specially assess for the benefit accruing to the landowner's property by the construction of the special improvement. City of Englewood v. Weist, 184 Colo. 325 , 520 P.2d 120 (1974).

Record that included contradictory and conflicting evidence supported the trial court's determination that diminution, if any, of the value of condemnee's remaining property was de minimis even though condemnee testified that he was forced to sell his remaining lots low because the condemnation action could possibly result in a loss of privacy, an increased traffic flow, and an inability to construct a security gate at the entrance to the subdivision. Colo. Mtn. Prop. v. Heineman, 860 P.2d 1388 (Colo. App. 1993).

Trial court's refusal to award damages based on the purportedly lower sales prices of condemnee's lots is consistent with rule that compensation in a condemnation action is measured either at the time the petitioner is authorized to take possession or at the date of the trial or hearing in which compensation is assessed, particularly where the trial court, within its discretion, found that condemnee failed to meet the burden of establishing that claimed loss. Colo. Mtn. Prop. v. Heineman, 860 P.2d 1388 (Colo. App. 1993).

Trial court did not err in awarding nominal damages since the record supports its finding that there was not evidence presented of any additional cost of the roadway other than evidence of initial costs that were not associated with the subsequent grant of the access easement. Colo. Mtn. Prop. v. Heineman, 860 P.2d 1388 (Colo. App. 1993).

No unjust enrichment where the record shows that the development costs in building roadway would have been incurred by condemnee regardless of whether condemnor pursued his rights in condemnation. Colo. Mtn. Prop. v. Heineman, 860 P.2d 1388 (Colo. App. 1993).

I. GENERAL CONSIDERATION.

This section is mandatory. Denver & R.G.R.R. v. Stark, 16 Colo. 291, 26 P. 779 (1891); Otero Canal Co. v. Fosdick, 20 Colo. 522, 39 P. 332 (1895); Colo. Fuel & Iron Co. v. Four Mile Ry., 29 Colo. 90, 66 P. 902 (1901); Denver N.W. & P. Ry. v. Howe, 49 Colo. 256, 112 P. 779 (1910).

Section must be strictly construed. Pueblo v. Rudd, 5 Colo. 270 (1880); Rio Grande S. Ry. v. Knight, 1 Colo. App. 219, 28 P. 19 (1891).

Failure of verdict to include required contents deemed fatal. A failure to include in the verdict those things required by the section is fatal. Norris v. City of Pueblo, 12 Colo. App. 290, 55 P. 747 (1898).

Province of jury is to determine damages to be awarded the owner of the property taken. Colo. Fuel & Iron Co. v. Four Mile Ry., 29 Colo. 90, 66 P. 902 (1901); Tegeler v. Schneider, 49 Colo. 574, 114 P. 288 (1911).

The question of the necessity for taking for municipal purposes is not for the jury. Warner v. Town of Gunnison, 2 Colo. App. 430, 31 P. 238 (1892).

Submission of questions not required properly refused. Any attempt to submit to the jury any questions, save those which it is required to report upon, is properly refused. Colo. Fuel & Iron Co. v. Four Mile Ry., 29 Colo. 90, 66 P. 902 (1901).

When directions requiring additional evidence not prejudicial. Where the report of the commissioners, based upon the evidence presented, was in compliance with this section, the directions of the trial court requiring more evidence, to the extent, were surplusage not affecting the substantial rights of the parties, therefore, not prejudicial. Dept. of Hwys. v. Intermountain Term. Co., 164 Colo. 354 , 435 P.2d 391 (1967).

Respondent to show cash value of property. The burden rests upon the respondent to show by a preponderance of the evidence the present actual cash value of the property taken, as well as the damages, if any, resulting to the residue, but the burden of showing benefits, if any, accruing to the residue rests upon the petitioner. Bd. of County Comm'rs v. Noble, 117 Colo. 77 , 184 P.2d 142 (1947).

Petitioner to show benefits accruing to residue. The burden of showing benefits, if any, accruing to the residue rests upon the petitioner. Bd. of County Comm'rs v. Noble, 117 Colo. 77 , 184 P.2d 142 (1947).

When objection to report or verdict required. Any objection to the commissioners' report must be made when it is returned, before the commissioners are discharged. Evergreen Fire Prot. Dist. v. Huckeby, 626 P.2d 744 (Colo. App. 1981).

Objection to the form or substance of a verdict must be made at the time of its return, and before the discharge of the jury. Fort Lyon Canal Co. v. Farnan, 48 Colo. 414, 109 P. 861 (1910).

Applied in Searl v. Sch. Dist. No. 2, 133 U.S. 553, 10 S. Ct. 374, 33 L. Ed. 740 (1890); Pub. Serv. Co. v. City of Loveland, 79 Colo. 216, 245 P. 493 (1926); Wiley Drainage Dist. v. Semmens, 80 Colo. 365, 250 P. 527 (1926).

II. REQUIREMENT AS TO DESCRIPTION OF THE LAND TAKEN.

Description as land "tinted pink" on map insufficient. It is not a sufficient description to merely refer to the land as the land described in the petition, nor as the land "tinted pink" on the map. Norris v. City of Pueblo, 12 Colo. App. 290, 55 P. 747 (1898).

III. REQUIREMENT AS TO VALUE OF LAND TAKEN.

Verdict must state value of property taken for conformity. The verdict does not conform to the requirements of subsection (1)(b), where it does not state the value of the property actually taken. Sand Creek Lateral Irrigation Co. v. Davis, 17 Colo. 326, 29 P. 742 (1892).

Stating gross amount in verdict as value deemed noncompliance. Stating a gross amount as the value of the property taken to cover right-of-way and enlargement for a certain distance, certainly is not a compliance with subsection (1)(b), and neither can the other amounts assessed as damages to cover certain work and improvements be regarded as an ascertainment of the value of the property taken. Sand Creek Lateral Irrigation Co. v. Davis, 17 Colo. 326, 29 P. 742 (1892).

IV. REQUIREMENT AS TO AMOUNT AND VALUE OF BENEFITS TO RESIDUE.

Verdict must show consideration and determination of benefits question. The verdict must affirmatively show that the question of benefits was considered and determined; otherwise it was insufficient and must be vacated. Fort Lyon Canal Co. v. Farnan, 48 Colo. 414, 109 P. 861 (1910).

Where the verdict as to this matter was as follows: "That the amount and value of the benefits received by the defendants due to the construction of this ditch, is dollars", the question of the benefits was considered and passed upon, and benefits were nothing. Fort Lyon Canal Co. v. Farnan, 48 Colo. 414, 109 P. 861 (1910).

Verdict not fixing definite value to be rejected. A verdict not fixing any definite amount or value of the supposed benefit, in dollars, is to be rejected. Denver N.W. & P. Ry. v. Howe, 49 Colo. 256, 112 P. 779 (1910).

OFFICIAL COMMENT

1. The definition of "affiliate" is derived from § 101(2) of the Bankruptcy Code.
2. The definition of "asset" is substantially to the same effect as the definition of "assets" in § 1 of the Uniform Fraudulent Conveyance Act. The definition in this Act, unlike that in the earlier Act, does not, however require a determination that the property is liable for the debts of the debtor. Thus, an unliquidated claim for damages resulting from personal injury or a contingent claim of a surety for reimbursement, contribution, or subrogation may be counted as an asset for the purpose of determining whether the holder of the claim is solvent as a debtor under § 2 of this Act (numbered as section 38-8-103 in C.R.S.), although applicable law may not allow such an asset to be levied on and sold by a creditor. Cf. Manufacturers & Traders Trust Co. v. Goldman (In re Ollag Construction Equipment Corp.), 578 F.2d 904, 907-09 (2d Cir. 1978).
3. The definition of "claim" is derived from § 101(4) of the Bankruptcy Code. Since the purpose of this Act is primarily to protect unsecured creditors against transfers and obligations injurious to their rights, the words "claim" and "debt" as used in the Act generally have reference to an unsecured claim and debt. As the context may indicate, however, usage of the terms is not so restricted. See, e.g. §§ 1(1)(i)(B) (numbered as section 38-8-102 (1)(b)(II) in C.R.S.) and 1(8) (numbered as section 38-8-102 (9) in C.R.S.).
4. The definition of "creditor" in combination with the definition of "claim" has substantially the same effect as the definition of "creditor" under § 1 of the Uniform Fraudulent Conveyance Act. As under that Act, the holder of an unliquidated tort claim or a contingent claim may be a creditor protected by this Act.
5. The definition of "debt" is derived from § 101(11) of the Bankruptcy Code.
6. The definition of "debtor" is new.
7. The definition of "insider" is derived from § 101(28) of the Bankruptcy Code. The definition has been restricted in clauses (i)(C), (ii)(E), and (iii)(D) (clauses (a)(III), (b)(V), and (c)(IV) in C.R.S.), to make clear that a partner is not an insider of an individual, corporation, or partnership if any of these latter three persons is only a limited partner. The definition of "insider" in the Bankruptcy Code does not purport to make a limited partner an insider of the partners or of the partnership with which the limited partner is associated, but it is susceptible of a contrary interpretation and one which would extend unduly the scope of the defined relationship when the limited partner is not a person in control of the partnership. The definition of "insider" in this Act also differs from the definition in the Bankruptcy Code in omitting the reference in 11 U.S.C. § 101(28)(D) to an elected official or relative of such an official as an insider of a municipality. As in the Bankruptcy Code (see 11 U.S.C. § 102(3)), the word "includes" is not limiting, however. Thus, a court may find a person living with an individual for an extended time in the same household or as a permanent companion to have the kind of close relationship intended to be covered by the term "insider." Likewise, a trust may be found to be an insider of a beneficiary.
8. The definition of "lien" is derived from paragraphs (30), (31), (43), and (45) of § 101 of the Bankruptcy Code, which define "judicial lien," "lien," "security interest," and "statutory lien" respectively.
9. The definition of "person" is adapted from paragraphs (28) and (30) of § 1-201 of the Uniform Commercial Code, defining "organization" and "person" respectively.
10. The definition of "property" is derived from § 1-201(33) of the Uniform Probate Code (see section 15-10-201 (36) in C.R.S.). Property includes both real and personal property, whether tangible or intangible, and any interest in property, whether legal or equitable.
11. The definition of "relative" is derived from § 101(37) of the Bankruptcy Code but is explicit in its references to the spouse of a debtor in view of uncertainty as to whether the common law determines degrees of relationship by affinity.
12. The definition of "transfer" is derived principally from § 101(48) of the Bankruptcy Code. The definition of "conveyance" in § 1 of the Uniform Fraudulent Conveyance Act was similarly comprehensive, and the references in this Act to "payment of money, release, lease, and the creation of a lien or incumbrance" are derived from the Uniform Fraudulent Conveyance Act. While the definition in the Uniform Fraudulent Conveyance Act did not explicitly refer to an involuntary transfer, the decisions under that Act were generally consistent with an interpretation that covered such a transfer. See, e.g., Hearn 45 St. Corp. v. Jano, 283 N.Y. 139, 27 N.E.2d 814, 128 A.L.R. 1285 (1940) (execution and foreclosure sales); Lefkowitz v. Finkelstein Trading Corp., 14 F.Supp. 898, 899 (S.D.N.Y. 1936) (execution sale); Langan v. First Trust & Deposit Co., 277 App.Div. 1090, 101 N.Y.S.2d 36 (4th Dept. 1950), aff'd, 302 N.Y. 932, 100 N.E.2d 189 (1951) (mortgage foreclosure); Catabene v. Wallner, 16 N.J.Super. 597, 602, 85 A.2d 300, 302 (1951) (mortgage foreclosure).
13. The definition of "valid lien" is new. A valid lien includes an equitable lien that may not be defeated by a judicial lien creditor. See, e.g., Pearlman v. Reliance Insurance Co., 371 U.S. 132, 136 (1962) (upholding a surety's equitable lien in respect to a fund owing a bankrupt contractor).

Subparagraphs (i), (ii), and (iii) (paragraph (a), (b), and (c) in C.R.S.) provide clarification by excluding from the term not only generally exempt property but also an interest in a tenancy by the entirety in many states and an interest that is generally beyond reach by unsecured creditors because subject to a valid lien. This Act, like its predecessor and the Statute of 13 Elizabeth, declares rights and provides remedies for unsecured creditors against transfers that impede them in the collection of their claims. The laws protecting valid liens against impairment by levying creditors, exemption statutes, and the rules restricting levyability of interest in entireties property are limitations on the rights and remedies of unsecured creditors, and it is therefore appropriate to exclude property interests that are beyond the reach of unsecured creditors from the definition of "asset" for the purposes of this Act.

A creditor of a joint tenant or tenant in common may ordinarily collect a judgment by process against the tenant's interest, and in some states a creditor of a tenant by the entirety may likewise collect a judgment by process against the tenant's interest. See 2 American Law of Property 10, 22, 28-32 (1952); Craig, An Analysis of Estates by the Entirety in Bankruptcy, 48 Am.Bankr.L.J. 255, 258-59 (1974). The levyable interest of such a tenant is included as an asset under this Act.

The definition of "assets" in the Uniform Fraudulent Conveyance Act excluded property that is exempt from liability for debts. The definition did not, however, exclude all property that cannot be reached by a creditor through judicial proceedings to collect a debt. Thus, it included the interest of a tenant by the entirety although in nearly half the states such an interest cannot be subjected to liability for a debt unless it is an obligation owed jointly by the debtor with his or her cotenant by the entirety. See 2 American Law of Property 29 (1952); Craig, An Analysis of Estates by the Entirety in Bankruptcy, 48 Am.Bankr.L.J. 255, 258 (1974). The definition in this Act requires exclusion of interests in property held by tenants by the entirety that are not subject to collection process by a creditor without a right to proceed against both tenants by the entirety as joint debtors.

The reference to "generally exempt" property in § 1(2)(ii) (numbered as section 38-8-102 (2)(b) in C.R.S.) recognizes that all exemptions are subject to exceptions. Creditors having special rights against generally exempt property typically include claimants for alimony, taxes, wages, the purchase price of the property, and labor or materials that improve the property. See Uniform Exemptions Act § 10 and the accompanying Comment. The fact that a particular creditor may reach generally exempt property by resorting to judicial process does not warrant its inclusion as an asset in determining whether the debtor is insolvent.

Since this Act is not an exclusive law on the subject of voidable transfers and obligations (see Comment (8) to § 4 infra) (numbered as section 38-8-105 in C.R.S.), it does not preclude the holder of a claim that may be collected by process against property generally exempt as to other creditors from obtaining relief from a transfer of such property that hinders, delays, or defrauds the holder of such a claim. Likewise the holder of an unsecured claim enforceable against tenants by the entirety is not precluded by the Act from pursuing a remedy against a transfer of property held by the entirety that hinders, delays, or defrauds the holder of such a claim.

Nonbankruptcy law is the law of a state or federal law that is not part of the Bankruptcy Code, Title 11 of the United States Code. The definition of an "asset" thus does not include property that would be subject to administration for the benefit of creditors under the Bankruptcy Code unless it is subject under other applicable law, state or federal, to process for the collection of a creditor's claim against a single debtor.

ANNOTATION

"Creditor" includes persons with unlitigated claims against a defendant. Sands v. New Age Family P'ship, Ltd., 897 P.2d 917 (Colo. App. 1995).

The general assembly restricted the definition of "insider" under this act by substituting the word "means" in place of the word "includes" in the uniform act. Although the general assembly chose to change only one word--switching the word "includes" to "means"--the change in verbs has substantive implications. The terms "means" and "includes" are not necessarily synonymous. The natural distinction would be that where "means" is employed, the term and its definition are to be interchangeable equivalents, and that the verb "includes" imports a general class, some of whose particular instances are those specified in the definition. In re Blair, 594 B.R. 712 (Bankr. D. Colo. 2018).

Under the plain meaning of subsection (8), the term "insider" is restricted exclusively to those narrow categories of persons that are listed. The first category includes a "relative of the debtor". In re Blair, 594 B.R. 712 (Bankr. D. Colo. 2018).

A fiance does not qualify as a "relative of the debtor". In re Blair, 594 B.R. 712 (Bankr. D. Colo. 2018).

"Insider" includes spouses; therefore, the burden of proof lies with the creditor to prove each and every element of a fraudulent transfer under the statute before the debtor and spouse must come forward to prove their entitlement to the defense of good faith and reasonably equivalent value. In re Thomason, 202 B.R. 768 (Bankr. D. Colo. 1996).

"Obligation," not specifically defined in this section, is generally synonymous with "transfer" and includes the assumption by the debtor of a duty to transfer an asset as a fraudulent transfer, even though no actual transfer has as yet taken place. Sands v. New Age Family P'ship, Ltd., 897 P.2d 917 (Colo. App. 1995).

Neither "transfer" nor "obligation" refers to the creditor's claim against the debtor, but refers instead to the transaction by which the debtor sought to place assets beyond the reach of creditors. Sands v. New Age Family P'ship, Ltd., 897 P.2d 917 (Colo. App. 1995).

A transaction between a husband and wife is presumptively fraudulent. Nevertheless, the movant must still establish an intent to hinder, delay, or defraud. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

Debtor's transfers to his fiance and her company were not fraudulent transfers to an insider. Because the fianc had not married debtor, she did not qualify as a relative. Nor was the company she owned a relative of the debtor. In re Blair, 594 B.R. 712 (Bankr. D. Colo. 2018).

As to the other exclusive categories of "insiders" listed in subsection (8), neither the fiance nor her company qualified as "insiders" because neither was: (1) a partnership in which the debtor was a general partner; (2) a general partner in such a partnership; or (3) a corporation of which the debtor was a director, officer, or person in control. In re Blair, 594 B.R. 712 (Bankr. D. Colo. 2018).

Applied in Wilson v. Pauling, 457 F. Supp. 3d 965 (D. Colo. 2020).

OFFICIAL COMMENT

1. Subsection (a) (numbered as subsection (1) in C.R.S.) is derived from the definition of "insolvent" in § 101(29)(A) of the Bankruptcy Code. The definition in subsection (a) and the correlated definition of partnership insolvency in subsection (c) (numbered as subsection (3) in C.R.S.) contemplate a fair valuation of the debts as well as the assets of the debtor. As under the definition of the same term in § 2 of the Uniform Fraudulent Conveyance Act exempt property is excluded from the computation of the value of the assets. See § 1(2) supra. (numbered as section 38-8-102 (2) in C.R.S.) For similar reasons interests in valid spendthrift trusts and interests in tenancies by the entireties that cannot be severed by a creditor of only one tenant are not included. See the Comment to § 1(2) supra. (numbered as section 38-8-102 (2) in C.R.S.) Since a valid lien also precludes an unsecured creditor from collecting the creditor's claim from the encumbered interest in a debtor's property, both the encumbered interest and the debt secured thereby are excluded from the computation of insolvency under this Act. See § 1(2) supra (numbered as section 38-8-102 (2) in C.R.S.) and subsection (e) of this section (numbered as subsection (5) in C.R.S.).
2. Section 2(b) (numbered as section 38-8-103 (2) in C.R.S.) establishes a rebuttable presumption of insolvency from the fact of general nonpayment of debts as they become due. Such general nonpayment is a ground for the filing of an involuntary petition under § 303(h)(1) of the Bankruptcy Code. See also U.C.C. § 1-201(23), which declares a person to be "insolvent" who "has ceased to pay his debts in the ordinary course of business." The presumption imposes on the party against whom the presumption is directed the burden of proving that the nonexistence of insolvency as defined in § 2(a) is more probable than its existence. See Uniform Rules of Evidence (1974 Act), Rule 301(a). The 1974 Uniform Rule 301(a) conforms to the Final Draft of Federal Rule 301 as submitted to the United States Supreme Court by the Advisory Committee on Federal Rules of Evidence. "The so-called 'bursting bubble' theory, under which a presumption vanishes upon the introduction of evidence which would support a finding of the nonexistence of the presumed fact, even though not believed, is rejected as according presumptions too 'slight and evanescent' an effect." Advisory Committee's Note to Rule 301. See also 1 J.Weinstein & M.Berger, Evidence 301 [01] (1982).
3. Subsection (c) (numbered as subsection (3) in C.R.S.) is derived from the definition of partnership insolvency in § 101(29)(B) of the Bankruptcy Code. The definition conforms generally to the definition of the same term in § 2(2) of the Uniform Fraudulent Conveyance Act.
4. Subsection (d) (numbered as subsection (4) in C.R.S.) follows the approach of the definition of "insolvency" in § 101(29) of the Bankruptcy Code by excluding from the computation of the value of the debtor's assets any value that can be realized only by avoiding a transfer of an interest formerly held by the debtor or by discovery or pursuit of property that has been fraudulently concealed or removed.
5. Subsection (e) (numbered as subsection (5) in C.R.S.) is new. It makes clear the purpose not to render a person insolvent under this section by counting as a debt an obligation secured by property of the debtor that is not counted as an asset. See also Comments to §§ 1(2) (numbered as section 38-8-102 (2) in C.R.S.) and 2(a) supra (numbered as section 38-8-103 (1) in C.R.S.).

The requirement of § 550(b)(1) of the Bankruptcy Code that a transferee be "without knowledge of the voidability of the transfer" in order to be protected has been omitted as inappropriate. Knowledge of the facts rendering the transfer voidable would be inconsistent with the good faith that is required of a protected transferee. Knowledge of the voidability of a transfer would seem to involve a legal conclusion. Determination of the voidability of the transfer ought not to require the court to inquire into the legal sophistication of the transferee.

The presumption is established in recognition of the difficulties typically imposed on a creditor in proving insolvency in the bankruptcy sense, as provided in subsection (a) (numbered as subsection (1) in C.R.S.). See generally Levit, The Archaic Concept of Balance-Sheet Insolvency, 47 Am.Bankr.L.J. 215 (1973). Not only is the relevant information in the possession of a noncooperative debtor but the debtor's records are more often than not incomplete and inaccurate. As a practical matter, insolvency is most cogently evidenced by a general cessation of payment of debts, as has long been recognized by the laws of other countries and is now reflected in the Bankruptcy Code. See Honsberger, Failure to Pay One's Debts Generally as They Become Due: The Experience of France and Canada, 54 Am.Bankr.L.J. 153 (1980); J. MacLachlan, Bankruptcy 13, 63-64, 436 (1956). In determining whether a debtor is paying its debts generally as they become due, the court should look at more than the amount and due dates of the indebtedness. The court should also take into account such factors as the number of the debtor's debts, the proportion of those debts not being paid, the duration of the nonpayment, and the existence of bona fide disputes or other special circumstances alleged to constitute an explanation for the stoppage of payments. The court's determination may be affected by a consideration of the debtor's payment practices prior to the period of alleged nonpayment and the payment practices of the trade or industry in which the debtor is engaged. The case law that has developed under § 303(h)(1) of the Bankruptcy Code has not required a showing that a debtor has failed or refused to pay a majority in number and amount of his or her debts in order to prove general nonpayment of debts as they become due. See, e.g., Hill v. Cargill, Inc. (In re Hill), 8 B.R. 779, 3 C.B.C.2d 920 (Bk.D.Minn. 1981) (nonpayment of three largest debts held to constitute general nonpayment, although small debts were being paid); In re All Media Properties, Inc., 5 B.R. 126, 6 B.C.D. 586, 2 C.B.C.2d 449 (Bk.S.D.Tex. 1980) (missing significant number of payments or regularly missing payments significant in amount said to constitute general nonpayment; missing payments on more than 50% of aggregate of claims said not to be required to show general nonpayment; nonpayment for more than 30 days after billing held to establish nonpayment of a debt when it is due); In re Kreidler Import Corp., 4 B.R. 256, 6 B.C.D. 608, 2 C.B.C.2d 159 (Bk.D.Md. 1980) (nonpayment of one debt constituting 97% of debtor's total indebtedness held to constitute general nonpayment). A presumption of insolvency does not arise from nonpayment of a debt as to which there is a genuine bona fide dispute, even though the debt is a substantial part of the debtor's indebtedness. Cf. 11 U.S.C. § 303(h)(1), as amended by § 426(b) of Public Law No. 98-882, the Bankruptcy Amendments and Federal Judgeship Act of 1984.

ANNOTATION

The fair value balance sheet method for determining insolvency is essentially mandated for individuals. The Colorado Uniform Fraudulent Transfer Act method of determining insolvency mirrors the balance sheet test for insolvency under the federal bankruptcy code. The balance sheet test for insolvency requires that the court determine the fair value of the debtor's assets and the extent of its liabilities at the time of each contested transfer. In re Blair, 588 B.R. 605 (Bankr. D. Colo. 2018).

Subsection (2)'s presumption appears to be based only on a simple factual inquiry: At the time of the alleged fraudulent transfers, was the debtor paying its debts as they became due, or not? It is a factual question and not really the province for an expert analysis. No expert knowledge, skill, experience, training, or education seems needed to ascertain whether someone is paying their debts. In re Blair, 588 B.R. 605 (Bankr. D. Colo. 2018).

OFFICIAL COMMENT

1. This section defines "value" as used in various contexts in this Act, frequently with a qualifying adjective. The word appears in the following sections:
2. Section 3(a) (numbered as section 38-8-104 (1) in C.R.S.) is adapted from § 548(d)(2)(A) of the Bankruptcy Code. See also § 3(a) of the Uniform Fraudulent Conveyance Act. The definition in Section 3 is not exclusive. "Value" is to be determined in light of the purpose of the Act to protect a debtor's estate from being depleted to the prejudice of the debtor's unsecured creditors. Consideration having no utility from a creditor's viewpoint does not satisfy the statutory definition. The definition does not specify all the kinds of consideration that do not constitute value for the purposes of this Act--e.g., love and affection. See, e.g., United States v. West, 299 F.Supp. 661, 666 (D.Del. 1969).
3. Section 3(a) does not indicate what is "reasonably equivalent value" for a transfer or obligation. Under this Act, as under § 548(a)(2) of the Bankruptcy Code, a transfer for security is ordinarily for a reasonably equivalent value notwithstanding a discrepancy between the value of the asset transferred and the debt secured, since the amount of the debt is the measure of the value of the interest in the asset that is transferred. See, e.g., Peoples-Pittsburgh Trust Co. v. Holy Family Polish Nat'l Catholic Church, Carnegie, Pa., 341 Pa. 390, 19 A.2d 360 (1941). If, however, a transfer purports to secure more than the debt actually incurred or to be incurred, it may be found to be for less than a reasonably equivalent value. See e.g., In re Peoria Braumeister Co., 138 F.2d 520, 523 (7th Cir. 1943) (chattel mortgage securing a $3,000 note held to be fraudulent when the debt secured was only $2,500); Hartford Acc. & Indemnity Co. v. Jirasek, 254 Mich. 131, 140, 235 N.W. 836, 839 (1931) (quitclaim deed given as mortgage held to be fraudulent to the extent the value of the property transferred exceeded the indebtedness secured). If the debt is a fraudulent obligation under this Act, a transfer to secure it as well as the obligation would be vulnerable to attack as fraudulent. A transfer to satisfy or secure an antecedent debt owed an insider is also subject to avoidance under the conditions specified in Section 5(b) (numbered as section 38-8-106 (2) in C.R.S.).
4. Section 3(a) of the Uniform Fraudulent Conveyance Act has been thought not to recognize that an unperformed promise could constitute fair consideration. See McLaughlin, Application of the Uniform Fraudulent Conveyance Act, 46 Harv.L.Rev. 404, 414 (1933). Courts construing these provisions of the prior law nevertheless have held unperformed promises to constitute value in a variety of circumstances. See, e.g., Harper v. Lloyd's Factors, Inc., 214 F.2d 662 (2d Cir. 1954) (transfer of money for promise of factor to discount transferor's purchase-money notes given to fur dealer); Schlecht v. Schlecht, 168 Minn. 168, 176-77, 209 N.W. 883, 886-87 (1926) (transfer for promise to make repairs and improvements on transferor's homestead); Farmer's Exchange Bank v. Oneida Motor Truck Co., 202 Wis. 266, 232 N.W. 536 (1930) (transfer in consideration of assumption of certain of transferor's liabilities); see also Hummel v. Cernocky, 161 F.2d 685 (7th Cir. 1947) (transfer in consideration of cash, assumption of a mortgage, payment of certain debts, and agreement to pay other debts). Likewise a transfer in consideration of a negotiable note discountable at a commercial bank, or the purchase from an established, solvent institution of an insurance policy, annuity, or contract to provide care and accommodations clearly appears to be for value. On the other hand, a transfer for an unperformed promise by an individual to support a parent or other transferor has generally been held voidable as a fraud on creditors of the transferor. See, e.g., Springfield Ins. Co. v. Fry, 267 F.Supp. 693 (N.D.Okla. 1967); Sandler v. Parlapiano, 236 App.Div. 70, 258 N.Y.Supp. 88 (1st Dep't 1932); Warwick Municipal Employees Credit Union v. Higham, 106 R.E. 363, 259 A.2d 852 (1969); Hulsether v. Sanders, 54 S.D. 412, 223 N.W. 335 (1929); Cooper v. Cooper, 22 Tenn.App. 473, 477, 124 S.W.2d 264, 267 (1939); Note, Rights of Creditors in Property Conveyed in Consideration of Future Support, 45 Iowa L.Rev. 546, 550-62 (1960). This Act adopts the view taken in the cases cited in determining whether an unperformed promise is value.
5. Subsection (b) (numbered as subsection (2) in C.R.S.) rejects the rule of such cases as Durrett v. Washington Nat. Ins. Co., 621 F.2d 201 (5th Cir. 1980) (nonjudicial foreclosure of a mortgage avoided as a fraudulent transfer when the property of an insolvent mortgagor was sold for less than 70% of its fair value); and Abramson v. Lakewood Bank & Trust Co., 647 F.2d 547 (5th Cir. 1981), cert. denied, 454 U.S. 1164 (1982) (nonjudicial foreclosure held to be fraudulent transfer if made without fair consideration). Subsection (b) adopts the view taken in Lawyers Title Ins. Corp. v. Madrid (In re Madrid), 21 B.R. 424 (B.A.P. 9th Cir. 1982), aff'd on another ground, 725 F.2d 1197 (9th Cir. 1984), that the price bid at a public foreclosure sale determines the fair value of the property sold. Subsection (b) prescribes the effect of a sale meeting its requirements, whether the asset sold is personal or real property. The rule of this subsection applies to a foreclosure by sale of the interest of a vendee under an installment land contract in accordance with applicable law that requires or permits the foreclosure to be effected by a sale in the same manner as the foreclosure of a mortgage. See G.Osborne, G.Nelson, & D.Whitman, Real Estate Finance Law 83-84, 95-97 (1979). The premise of the subsection is that "a sale of the collateral by the secured party as the normal consequence of default . . . [is] the safest way of establishing the fair value of the collateral . . .." 2 G.Gilmore, Security Interests in Personal Property, 1227 (1965).
6. Subsection (c) (numbered as subsection (3) in C.R.S.) is an adaptation of § 547(c)(1) of the Bankruptcy Code. A transfer to an insider for an antecedent debt may be voidable under § 5(b) infra (numbered as section 38-8-106 (2) in C.R.S.).

4(a)(2) (numbered as section 38-8-105 (1)(b) in C.R.S.) ("reasonably equivalent value");

4(b)(8) (numbered as section 38-8-105 (2)(h) in C.R.S.) ("value ... reasonably equivalent);

5(a) (numbered as section 38-8-106 (1) in C.R.S.) ("reasonably equivalent value");

5(b) (numbered as section 38-8-106 (2) in C.R.S.) ("present, reasonably equivalent value");

8(a) (numbered as section 38-8-109 (1) in C.R.S.) ("reasonably equivalent value");

8(b), (c), (d), and (e) (numbered as section 38-8-109 (2), (3), (4), and (5) in C.R.S.) ("value");

8(f)(1) (numbered as section 38-8-109 (6)(a) in C.R.S.) ("new value"); and

8(f)(3) (numbered as section 38-8-109 (6)(c) in C.R.S.) ("present value").

If a lien given an insider for a present consideration is not perfected as against a subsequent bona fide purchaser or is so perfected after a delay following an extension of credit secured by the lien, foreclosure of the lien may result in a transfer for an antecedent debt that is voidable under Section 5(b) infra (numbered as section 38-8-106 (2) in C.R.S.). Subsection (b) does not apply to an action under Section 4(a)(1) (numbered as section 38-8-105 (1)(a) in C.R.S.) to avoid a transfer or obligation because made or incurred with actual intent to hinder, delay, or defraud any creditor.

OFFICIAL COMMENT

1. Section 4(a)(1) (numbered as section 38-8-105 (1)(a) in C.R.S.) is derived from § 7 of the Uniform Fraudulent Conveyance Act. Factors appropriate for consideration in determining actual intent under paragraph (1) (paragraph (a) in C.R.S.) are specified in subsection (b) (subsection (2) in C.R.S.).
2. Section 4(a)(2) (numbered as section 38-8-105 (1)(b) in C.R.S.) is derived from §§ 5 and 6 of the Uniform Fraudulent Conveyance Act but substitutes "reasonably equivalent value" for "fair consideration." The transferee's good faith was an element of "fair consideration" as defined in § 3 of the Uniform Fraudulent Conveyance Act, and lack of fair consideration was one of the elements of a fraudulent transfer as defined in four sections of the Uniform Act. The transferee's good faith is irrelevant to a determination of the adequacy of the consideration under this Act, but lack of good faith may be a basis for withholding protection of a transferee or obligee under § 8 infra (numbered as section 38-8-109 in C.R.S.).
3. Unlike the Uniform Fraudulent Conveyance Act as originally promulgated, this Act does not prescribe different tests when a transfer is made for the purpose of security and when it is intended to be absolute. The premise of this Act is that when a transfer is for security only, the equity or value of the asset that exceeds the amount of the debt secured remains available to unsecured creditors and thus cannot be regarded as the subject of a fraudulent transfer merely because of the encumbrance resulting from an otherwise valid security transfer. Disproportion between the value of the asset securing the debt and the size of the debt secured does not, in the absence of circumstances indicating a purpose to hinder, delay, or defraud creditors, constitute an impermissible hindrance to the enforcement of other creditors' rights against the debtor-transferor. Cf. U.C.C. § 9-311.
4. Subparagraph (i) of § 4(a)(2) (subparagraph (I) of section 38-8-105 (1)(b) in C.R.S.) is an adaptation of § 5 of the Uniform Fraudulent Conveyance Act but substitutes "unreasonably small [assets] in relation to the business or transaction" for "unreasonably small capital." The reference to "capital" in the Uniform Act is ambiguous in that it may refer to net worth or to the par value of stock or to the consideration received for stock issued. The special meanings of "capital" in corporation law have no relevance in the law of fraudulent transfers. The subparagraph focuses attention on whether the amount of all the assets retained by the debtor was inadequate, i.e., unreasonably small, in light of the needs of the business or transaction in which the debtor was engaged or about to engage.
5. Subsection (b) (subsection (2) in C.R.S.) is a nonexclusive catalogue of factors appropriate for consideration by the court in determining whether the debtor had an actual intent to hinder, delay, or defraud one or more creditors. Proof of the existence of any one or more of the factors enumerated in subsection (b) may be relevant evidence as to the debtor's actual intent but does not create a presumption that the debtor has made a fraudulent transfer or incurred a fraudulent obligation. The list of factors includes most of the badges of fraud that have been recognized by the courts in construing and applying the Statute of 13 Elizabeth and § 7 of the Uniform Fraudulent Conveyance Act. Proof of the presence of certain badges in combination establishes fraud conclusively--i.e., without regard to the actual intent of the parties--when they concur as provided in § 4(a)(2) or in § 5 (section 38-8-105 (1)(b) or in section 38-8-106 in C.R.S.). The fact that a transfer has been made to a relative or to an affiliated corporation has not been regarded as a badge of fraud sufficient to warrant avoidance when unaccompanied by any other evidence of fraud. The courts have uniformly recognized, however, that a transfer to a closely related person warrants close scrutiny of the other circumstances, including the nature and extent of the consideration exchanged. See 1 G. Glenn, Fraudulent Conveyances and Preferences § 307 (Rev. ed. 1940). The second, third, fourth, and fifth factors listed are all adapted from the classic catalogue of badges of fraud provided by Lord Coke in Twyne's Case, 3 Coke 80b, 76 Eng.Rep. 809 (Star Chamber 1601). Lord Coke also included the use of a trust and the recitation in the instrument of transfer that it "was made honestly, truly, and bona fide," but the use of the trust is fraudulent only when accompanied by elements or badges specified in this Act, and recitals of "good faith" can no longer be regarded as significant evidence of a fraudulent intent.
6. In considering the factors listed in § 4(b) (section 38-8-105 (2) in C.R.S.) a court should evaluate all the relevant circumstances involving a challenged transfer or obligation. Thus the court may appropriately take into account all indicia negativing as well as those suggesting fraud, as illustrated in the following reported cases:
   1. Whether the transfer or obligation was to an insider: Salomon v. Kaiser (In re Kaiser), 722 F.2d 1574, 1582-83 (2d Cir. 1983) (insolvent debtor's purchase of two residences in the name of his spouse and the creation of a dummy corporation for the purpose of concealing assets held to evidence fraudulent intent); Banner Construction Corp. v. Arnold, 128 So.2d 893 (Fla.Dist.App. 1961) (assignment by one corporation to another having identical directors and stockholders constituted a badge of fraud); Travelers Indemnity Co. v. Cormaney, 258 Iowa 237, 138 N.W.2d 50 (1965) (transfer between spouses said to be a circumstance that shed suspicion on the transfer and that with other circumstances warranted avoidance); Hatheway v. Hanson, 230 Iowa 386, 297 N.W. 824 (1941) (transfer from parent to child said to require a critical examination of surrounding circumstances, which, together with other indicia of fraud, warranted avoidance); Lumpkins v. McPhee, 59 N.M. 442, 286 P.2d 299 (1955) (transfer from daughter to mother said to be indicative of fraud but transfer held not to be fraudulent due to adequacy of consideration and delivery of possession by transferor).
   2. Whether the transferor retained possession or control of the property after the transfer: Harris v. Shaw, 224 Ark. 150, 272 S.W.2d 53 (1954) (retention of property by transferor said to be a badge of fraud and, together with other badges, to warrant avoidance of transfer); Stephens v. Reginstein, 89 Ala. 561, 8 So. 68 (1890) (transferor's retention of control and management of property and business after transfer held material in determining transfer to be fraudulent); Allen v. Massey, 84 U.S. (17 Wall.) 351 (1872) (joint possession of furniture by transferor and transferee considered in holding transfer to be fraudulent); Warner v. Norton, 61 U.S. (20 How.) 448 (1857) (surrender of possession by transferor deemed to negate allegations of fraud).
   3. Whether the transfer or obligation was concealed or disclosed: Walton v. First National Bank, 13 Colo. 265, 22 P. 440 (1889) (agreement between parties to conceal the transfer from the public said to be one of the strongest badges of fraud); Warner v. Norton, 61 U.S. (20 How.) 448 (1857) (although secrecy said to be a circumstance from which, when coupled with other badges, fraud may be inferred, transfer was held not to be fraudulent when made in good faith and transferor surrendered possession); W.T. Raleigh Co. v. Barnett, 253 Ala. 433, 44 So.2d 585 (1950) (failure to record a deed in itself said not to evidence fraud, and transfer held not to be fraudulent).
   4. Whether, before the transfer was made or obligation was incurred, a creditor sued or threatened to sue the debtor: Harris v. Shaw, 224 Ark. 150, 272 S.W. 2d 53 (1954) (transfer held to be fraudulent when causally connected to pendency of litigation and accompanied by other badges of fraud); Pergrem v. Smith, 255 S.W.2d 42 (Ky.App. 1953) (transfer in anticipation of suit deemed to be a badge of fraud; transfer held fraudulent when accompanied by insolvency of transferor who was related to transferee); Bank of Sun Prairie v. Hovig, 218 F.Supp. 769 (W.D.Ark. 1963) (although threat or pendency of litigation said to be an indicator of fraud, transfer was held not to be fraudulent when adequate consideration and good faith were shown).
   5. Whether the transfer was of substantially all the debtor's assets: Walbrun v. Babbitt, 83 U.S. (16 Wall.) 577 (1872) (sale by insolvent retail shop owner of all of his inventory in a single transaction held to be fraudulent); Cole v. Mercantile Trust Co., 133 N.Y. 164, 30 N.E. 847 (1892) (transfer of all property before plaintiff could obtain a judgment held to be fraudulent); Lumpkins v. McPhee, 59 N.M. 442, 286 P.2d 299 (1955) (although transfer of all assets said to indicate fraud, transfer held not to be fraudulent because full consideration was paid and transferor surrendered possession).
   6. Whether the debtor had absconded: In re Thomas, 199 F. 214 (N.D.N.Y. 1912) (when debtor collected all of his money and property with the intent to abscond, fraudulent intent was held to be shown).
   7. Whether the debtor had removed or concealed assets: Bentley v. Young, 210 F. 202 (S.D.N.Y. 1914), aff'd, 223 F. 536 (2d Cir. 1915) (debtor's removal of goods from store to conceal their whereabouts and to sell them held to render sale fraudulent); Cioli v. Kenourgios, 59 Cal.App. 690, 211 P. 838 (1922) (debtor's sale of all assets and shipment of proceeds out of the country held to be fraudulent notwithstanding adequacy of consideration).
   8. Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred: Toomay v. Graham, 151 S.W.2d 119 (Mo.App. 1941) (although mere inadequacy of consideration said not to be a badge of fraud, transfer held to be fraudulent when accompanied by badges of fraud); Texas Sand Co. v. Shield, 381 S.W.2d 48 (Tex. 1964) (inadequate consideration said to be an indicator of fraud, and transfer held to be fraudulent because of inadequate consideration, pendency of suit, family relationship of transferee, and fact that all nonexempt property was transferred); Weigel v. Wood, 355 Mo. 11, 194 S.W.2d 40 (1946) (although inadequate consideration said to be a badge of fraud, transfer held not to be fraudulent when inadequacy not gross and not accompanied by any other badge; fact that transfer was from father to son held not sufficient to establish fraud).
   9. Whether the debtor was insolvent or became insolvent shortly after the transfer was made or obligation was incurred: Harris v. Shaw, 224 Ark. 150, 272 S.W. 2d 53 (1954) (insolvency of transferor said to be a badge of fraud and transfer held fraudulent when accompanied by other badges of fraud); Bank of Sun Prairie v. Hovig, 218 F.Supp. 769 (W.D. Ark. 1963) (although the insolvency of the debtor said to be a badge of fraud, transfer held not fraudulent when debtor was shown to be solvent, adequate consideration was paid, and good faith was shown, despite the pendency of suit); Wareheim v. Bayliss, 149 Md. 103, 131 A. 27 (1925) (although insolvency of debtor acknowledged to be an indicator of fraud, transfer held not to be fraudulent when adequate consideration was paid and whether debtor was insolvent in fact was doubtful).
   10. Whether the transfer occurred shortly before or shortly after a substantial debt was incurred: Commerce Bank of Lebanon v. Halladale A Corp., 618 S.W. 2d 288, 292 (Mo.App. 1981) (when transferors incurred substantial debts near in time to the transfer, transfer was held to be fraudulent due to inadequate consideration, close family relationship, the debtor's retention of possession, and the fact that almost all the debtor's property was transferred).
7. The effect of the two transfers described in § 4(b)(11) (section 38-8-105 (2)(k) in C.R.S.), if not avoided, may be to permit a debtor and a lienor to deprive the debtor's unsecured creditors of access to the debtor's assets for the purpose of collecting their claims while the debtor, the debtor's affiliate or insider, and the lienor arrange for the beneficial use or disposition of the assets in accordance with their interests. The kind of disposition sought to be reached here is exemplified by that found in Northern Pacific Co. v. Boyd, 228 U.S. 482 (1913), the leading case in establishing the absolute priority doctrine in reorganization law. There the Court held that a reorganization whereby the secured creditors and the management-owners retained their economic interests in a railroad through a foreclosure that cut off claims of unsecured creditors against its assets was in effect a fraudulent disposition (id. at 502-05). See Frank, Some Realistic Reflections on Some Aspects of Corporate Reorganization, 19 Va. L.Rev. 541, 693 (1933). For cases in which an analogous injury to unsecured creditors was inflicted by a lienor and a debtor, see Jackson v. Star Sprinkler Corp. of Florida, 575 F.2d 1223, 1231-34 (8th Cir. 1978); Heath v. Helmick, 173 F.2d 157, 161-62 (9th Cir. 1949); Toner v. Nuss, 234 F.S. 457, 461-62 (E.D.Pa. 1964); and see In re Spotless Tavern Co., Inc., 4 F.Supp. 752, 753, 755 (D.Md. 1933).
8. Nothing in § 4(b) (section 38-8-105 (2) in C.R.S.) is intended to affect the application of § 2-402(2), 9-205, 9-301, or 6-105 of the Uniform Commercial Code. Section 2-402(2) recognizes the generally prevailing rule that retention of possession of goods by a seller may be fraudulent but limits the application of the rule by negating any imputation of fraud from "retention of possession in good faith and current course of trade by a merchant-seller for a commercially reasonable time after a sale or identification." Section 9-205 explicitly negates any imputation of fraud from the grant of liberty by a secured creditor to a debtor to use, commingle, or dispose of personal property collateral or to account for its proceeds. The section recognizes that it does not relax prevailing requirements for delivery of possession by a pledgor. Moreover, the section does not mitigate the general requirement of § 9-301(1)(b) that a nonpossessory security interest in personal property must be accompanied by notice-filing to be effective against a levying creditor. Finally, like the Uniform Fraudulent Conveyance Act this Act does not pre-empt the statutes governing bulk transfers, such as Article 6 of the Uniform Commercial Code. Compliance with the cited sections of the Uniform Commercial Code does not, however, insulate a transfer or obligation from avoidance. Thus a sale by an insolvent debtor for less than a reasonably equivalent value would be voidable under this Act notwithstanding compliance with the Uniform Commercial Code.

ANNOTATION

The Colorado Uniform Fraudulent Transfer Act (CUFTA) changes the common law rule that a claim of conspiracy to fraudulently convey property fails unless the claimant establishes a lien against the property transferred. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

The principle behind the "lien requirement" rule is that, until a creditor obtains a lien giving him or her vested or specific rights in the debtor's property, the debtor is legally free to do what he or she will with his or her property. However, modern fraudulent transfer law, like CUFTA, has dispensed with the lien requirement, focusing instead on the debtor's intent to frustrate the creditor once its claim is made known. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

A transfer in violation of CUFTA is a legal wrong that will support a conspiracy claim. A creditor who does not have a lien on the subject property is nevertheless entitled to assert a civil conspiracy cause of action against persons who participate in a fraudulent conveyance. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

For purposes of CUFTA, the intent of a transferee can be imputed to the debtor when the transferee is in a position to dominate or control the disposition of the debtor's property. Schempp v. Lucre Mgmt. Group, 18 P.3d 762 (Colo. App. 2000).

The transferee's intent is not interchangeable or synonymous with the debtor's intent. Schempp v. Lucre Mgmt. Group, 75 P.3d 1157 (Colo. App. 2003).

Nothing in this section indicates that the plaintiff's burden of proving fraudulent intent may be reduced by attaching a presumption of fraud to a transaction between a principal and an agent. Schempp v. Lucre Mgmt. Group, 75 P.3d 1157 (Colo. App. 2003).

Whether a debtor intended to hinder, delay, or defraud creditors is a question of fact. The movant has the burden of proving all elements of a fraudulent transfer before the debtor must come forward to prove his or her defenses. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

Evidence that transactions were in the ordinary course of business may negate the actual intent element of fraudulent transfer. Sender v. Mann, 423 F. Supp. 2d 1155 (D. Colo. 2006).

In determining whether a transfer is made with actual intent to defraud, CUFTA sets forth several factors, known as the "badges of fraud", from which an inference of fraudulent intent may be drawn. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

When these "badges of fraud" are present in sufficient number, they may give rise to an inference or presumption of an intent to defraud. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

Separate findings are not required on each of the "badges of fraud" in subsection (2) where the findings and the record make it clear that the court was aware of and considered many, if not all, of such factors. Silverberg v. Colantuno, 991 P.2d 280 (Colo. App. 1998).

"Reasonably equivalent value" is not the same as market value, although market value is an important factor to be used in the assessment. Silverberg v. Colantuno, 991 P.2d 280 (Colo. App. 1998).

Whether "reasonably equivalent value" has been received is a question of fact. What constitutes "reasonably equivalent value" for the transfer requires an analysis of all of the facts and circumstances surrounding the transaction. The standard of reasonably equivalent value implies a rule of reasonableness in light of the particular circumstances. Reasonable equivalence is not synonymous with market value, even though market value is an important factor to be utilized in the assessment. For purposes of the Colorado Uniform Fraudulent Transfer Act, equity looks to the substance of the transaction rather than its form. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

A transfer for which the transferor received no direct or indirect benefit cannot be considered reasonably equivalent value, even with the undisputed history of the transfers of the property back and forth between a husband and wife for zero dollars. Leverage Leasing Co. v. Smith, 143 P.3d 1164 (Colo. App. 2006).

Reserve asset was not unreasonably small and was therefore not constructively fraudulent under subsection (1)(b)(I). In dispute over real estate commission between real estate broker and judgment debtor, broker failed to show that debtor should have reasonably foreseen that its distribution of proceeds from real estate sale would create an unreasonable risk of insolvency. CB Richard Ellis, Inc. v. CLGP, LLC, 251 P.3d 523 (Colo. App. 2010).

In considering whether distribution of proceeds from real estate sale was constructively fraudulent under subsection (1)(b)(II), trial court applied the proper two-pronged test, consisting of both a subjective and an objective prong. In dispute over real estate commission between real estate broker and judgment debtor, trial court's finding that debtor did not have an intent or belief that it would be unable to pay entire commission addressed the subjective prong. With regard to the objective prong, trial court found that debtor's reserve asset was reasonable to pay its debts as they came due. CB Richard Ellis, Inc. v. CLGP, LLC, 251 P.3d 523 (Colo. App. 2010).

The failure to pay the taxes due results in a forfeiture of the original owner's interest in the property, by operation of law, to the state, which then grants title to the property to the holder of the lien free and clear of any other claims. Because the state transferred the tax deeds free of all prior interests, there was no transfer by a debtor, as is required to violate CUFTA. In re Grandote Country Club Co., 252 F.3d 1146 (10th Cir. 2001).

Where property was acquired through a regularly conducted tax sale subject to a competitive bidding procedure, the tax sale constitutes transfer for "reasonably equivalent value" under CUFTA. In re Grandote Country Club Co., 252 F.3d 1146 (10th Cir. 2001).

The recording of a mortgage is a transfer under CUFTA. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

Debtor's assets of between $785,000 and $800,000 were unreasonably small in relation to an allegedly fraudulent transfer under subsection (1)(b)(I) where the debtor was exposed to $2 million in liability. Tiger v. Anderson, 976 P.2d 308 (Colo. App. 1998).

A subsidiary's loan payments on behalf of its corporate parent are made in exchange for reasonably equivalent value if the subsidiary receives a benefit of the loan made to its parent. Ciccarelli v. Guaranty Bank, 99 P.3d 85 (Colo. App. 2004).

Applied in Vickery v. Evelyn V. Trumble Living Trust, 277 P.3d 864 (Colo. App. 2011); In re Blair, 594 B.R. 712 (Bankr. D. Colo. 2018); Wilson v. Pauling, 457 F. Supp. 3d 965 (D. Colo. 2020).

OFFICIAL COMMENT

1. Subsection (a) (numbered as subsection (1) in C.R.S.) is derived from § 4 of the Uniform Fraudulent Conveyance Act. It adheres to the limitation of the protection of that section to a creditor who extended credit before the transfer or obligation described. As pointed out in Comment (2) accompanying § 4 (section 38-8-105 in C.R.S.), this Act substitutes "reasonably equivalent value" for "fair consideration."
2. Subsection (b) (subsection (2) in C.R.S.) renders a preferential transfer--i.e., a transfer by an insolvent debtor for or on account of an antecedent debt--to an insider vulnerable as a fraudulent transfer when the insider had reasonable cause to believe that the debtor was insolvent. This subsection adopts for general application the rule of such cases as Jackson Sound Studios, Inc. v. Travis, 473 F.2d 503 (5th Cir. 1973) (security transfer of corporation's equipment to corporate principal's mother perfected on eve of bankruptcy of corporation held to be fraudulent); In re Lamie Chemical Co., 296 F. 24 (4th Cir. 1924) (corporate preference to corporate officers and directors held voidable by receiver when corporation was insolvent or nearly so and directors had already voted for liquidation); Stuart v. Larson, 298 F. 223 (8th Cir. 1924), noted 38 Harv.L.Rev. 521 (1925) (corporate preference to director held voidable). See generally 2 G. Glenn, Fraudulent Conveyances and Preferences 386 (rev. ed. 1940). Subsection (b) overrules such cases as Epstein v. Goldstein, 107 F.2d 755, 757 (2d Cir. 1939) (transfer by insolvent husband to wife to secure his debt to her sustained against attack by husband's trustee); Hartford Accident & Indemnity Co. v. Jirasek, 254 Mich. 131, 139, 235 N.W. 836, 389 (1931) (mortgage given by debtor to his brother to secure an antecedent debt owed the brother sustained as not fraudulent).
3. Subsection (b) (subsection (2) in C.R.S.) does not extend as far as § 8(a) of the Uniform Fraudulent Conveyance Act and § 548(b) of the Bankruptcy Code in rendering voidable a transfer or obligation incurred by an insolvent partnership to a partner, who is an insider of the partnership. The transfer to the partner is not vulnerable to avoidance under § 4(b) (section 38-8-105 (2) in C.R.S.) unless the transfer was for an antecedent debt and the partner had reasonable cause to believe that the partnership was insolvent. The cited provisions of the Uniform Fraudulent Conveyance Act and the Bankruptcy Act make any transfer by an insolvent partnership to a partner voidable. Avoidance of the partnership transfer without reference to the partner's state of mind and the nature of the consideration exchanged would be unduly harsh treatment of the creditors of the partner and unduly favorable to the creditors of the partnership.

ANNOTATION

The failure to pay the taxes due results in a forfeiture of the original owner's interest in the property, by operation of law, to the state, which then grants title to the property to the holder of the lien free and clear of any other claims. Because the state transferred the tax deeds free of all prior interests, there was no transfer by a debtor, as is required to violate the Colorado Uniform Fraudulent Transfer Act. In re Grandote Country Club Co., Ltd., 252 F.3d 1146 (10th Cir. 2001).

A collusive foreclosure under power of sale is a fraudulent conveyance. The fundamental element of a fraudulent conveyance is whether the debtor's estate is unjustly diminished. Megabank Fin. v. Alpha Gamma Rho, 841 P.2d 318 (Colo. App. 1992).

A chattel mortgage is collusive if it is a transaction intended to delay creditors and to prevent the property of the debtor coming to their use. Megabank Fin. v. Alpha Gamma Rho, 841 P.2d 318 (Colo. App. 1992).

A fraudulent conveyance results whether of real or personal property if, as a result of the debtor's operations on the title to his property, the creditor loses by reason of finding less to seize and apply to his claim; however, no injury can result from a sale of an asset at its fair value since the estate does not abate as a result of what was done. Megabank Fin. v. Alpha Gamma Rho, 841 P.2d 318 (Colo. App. 1992).

Trial court did not err in setting aside preferential transfers from a corporation to the corporation's sole officer, shareholder, and director, because the corporation was insolvent at the time of the transfers and transfer was made to a corporate insider. Morris v. Askeland Enter., Inc., 17 P.3d 830 (Colo. App. 2000).

Where property was acquired through a regularly conducted tax sale subject to a competitive bidding procedure, the tax sale constitutes transfer for "reasonably equivalent value" under the Colorado Uniform Fraudulent Transfer Act. In re Grandote Country Club Co., Ltd., 252 F.3d 1146 (10th Cir. 2001).

Debtors did not receive reasonably equivalent value in exchange for their tithes and contributions to their church, therefore, the transfers were avoided. In re Bloch, 207 B.R. 944 (D. Colo. 1997).

To succeed on a fraudulent transfer claim, a creditor must show that the debtor did not receive a reasonably equivalent value in exchange for the property. Schempp v. Lucre Mgmt. Group, LLC, 18 P.3d 762 (Colo. App. 2000).

"Reasonable equivalence" is not wholly synonymous with market value, even though market value is an important factor to be used in the assessment, and the determination of reasonably equivalent value requires analysis of all the facts and circumstances surrounding the transaction. Silverberg v. Colantuno, 991 P.2d 280 (Colo. App. 1998); Schempp v. Lucre Mgmt. Group, LLC, 18 P.3d 762 (Colo. App. 2000).

The standard of "reasonably equivalent value" implies a rule of reasonableness in light of the particular circumstances. Schempp v. Lucre Mgmt. Group, LLC, 18 P.3d 762 (Colo. App. 2000).

In considering whether judgment debtor's distribution of proceeds from real estate sale was constructively fraudulent, trial court applied proper test with regard to insolvency under subsection (1). In dispute over real estate commission between real estate broker and judgment debtor, trial court correctly concluded that debtor's reserve asset was sufficient and reasonable to keep it solvent despite the distribution. CB Richard Ellis, Inc. v. CLGP, LLC, 251 P.3d 523 (Colo. App. 2010).

OFFICIAL COMMENT

1. One of the uncertainties in the law governing the avoidance of fraudulent transfers and obligations is the difficulty of determining when the cause of action arises. Subsection (b) (subsection (2) in C.R.S.) clarifies this point in time. For transfers of real estate Section 6(1) (section 38-8-107 (1) in C.R.S.) fixes the time as the date of perfection against a good faith purchaser from the transferor and for transfers of fixtures and assets constituting personalty, the time is fixed as the date of perfection against a judicial lien creditor not asserting rights under this Act. Perfection typically is effected by notice-filing, recordation, or delivery of unequivocal possession. See U.C.C. §§ 9-302, 9-304, and 9-305 (security interest in personal property perfected by notice-filing or delivery of possession to transferee); 4 American Law of Property § 17.10-17.12 (1952) (recordation of transfer or delivery of possession to grantee required for perfection against bona fide purchaser from grantor). The provision for postponing the time a transfer is made until its perfection is an adaptation of § 548(d)(1) of the Bankruptcy Code. When no steps are taken to perfect a transfer that applicable law permits to be perfected, the transfer is deemed by paragraph (2) to be perfected immediately before the filing of an action to avoid it; without such a provision to cover that eventuality, an unperfected transfer would arguably be immune to attack. Some transfers--e.g., an assignment of a bank account, creation of a security interest in money, or execution of a marital or premarital agreement for the disposition of property owned by the parties to the agreement--may not be amenable to perfection as against a bona fide purchaser or judicial lien creditor. When a transfer is not perfectible as provided in paragraph (11), the transfer occurs for the purpose of this Act when the transferor effectively parts with an interest in the asset as provided in § 1(12) supra (section 38-8-102 (12) in C.R.S.).
2. Paragraph (4) requires the transferor to have rights in the asset transferred before the transfer is made for the purpose of this section. This provision makes clear that its purpose may not be circumvented by notice-filing or recordation of a document evidencing an interest in an asset to be acquired in the future. Cf. Bankruptcy Code § 547(e); U.C.C. § 9-203(1)(c).
3. Paragraph (5) is new. It is intended to resolve uncertainty arising from Rubin v. Manufacturers Hanover Trust Co., 661 F.2d 979, 989-91, 997 (2d Cir. 1981), insofar as that case holds that an obligation of guaranty may be deemed to be incurred when advances covered by the guaranty are made rather than when the guaranty first became effective between the parties. Compare Rosenberg, Intercorporate Guaranties and the Law of Fraudulent Conveyances: Lender Beware, 125 U.Pa.L.Rev. 235, 256-57 (1976).

An obligation may be avoided as fraudulent under this Act if it is incurred under the circumstances specified in § 4(a) (section 38-8-105 (1) in C.R.S.) or § 5(a) (section 38-8-106 (1) in C.R.S.). The debtor may receive reasonably equivalent value in exchange for an obligation incurred even though the benefit to the debtor is indirect. See Rubin v. Manufacturers Hanover Trust Co., 661 F.2d at 991-92; Williams v. Twin City Co., 251 F.2d 678, 681 (9th Cir. 1958); Rosenberg, supra at 243-46.

ANNOTATION

Rather than relying on date when deeds were recorded to determine when a transfer was made under subsection (1)(a)(I), court ordered remand proceedings regarding when transferee's interest in real property based upon possession or contract prevented would-be good faith purchaser from acquiring superior interest. Tiger v. Anderson, 976 P.2d 308 (Colo. App. 1998).

OFFICIAL COMMENT

1. This section is derived from §§ 9 and 10 of the Uniform Fraudulent Conveyance Act. Section 9 of that Act specified the remedies of creditors whose claims have matured, and § 10 enumerated the remedies available to creditors whose claims have not matured. A creditor holding an unmatured claim may be denied the right to receive payment for the proceeds of a sale on execution until his claim has matured, but the proceeds may be deposited in court or in an interest-bearing account pending the maturity of the creditor's claim. The remedies specified in this section are not exclusive.
2. The availability of an attachment or other provisional remedy has been restricted by amendments of statutes and rules of procedure to reflect views of the Supreme Court expressed in Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337 (1969), and its progeny. This judicial development and the procedural changes that followed in its wake do not preclude resort to attachment by a creditor in seeking avoidance of a fraudulent transfer or obligation. See, e.g., Britton v. Howard Sav. Bank, 727 F.2d 315, 317-20 (3d Cir. 1984); Computer Sciences Corp. v. Sci-Tek Inc., 367 A.2d 658, 661 (Del. Super. 1976); Great Lakes Carbon Corp. v. Fontana, 54 A.D.2d 548, 387 N.Y.S. 2d 115 (1st Dep't 1976). Section 7(a)(2) (section 38-8-108 (1)(b) in C.R.S.) continues the authorization for the use of attachment contained in § 9(b) of the Uniform Fraudulent Conveyance Act, or of a similar provisional remedy, when the state's procedure provides therefor, subject to the constraints imposed by the due process clauses of the United States and state constitutions.
3. Subsections (a) and (b) of § 10 of the Uniform Fraudulent Conveyance Act authorized the court, in an action on a fraudulent transfer or obligation, to restrain the defendant from disposing of his property, to appoint a receiver to take charge of his property, or to make any order the circumstances may require. Section 10, however, applied only to a creditor whose claim was unmatured. There is no reason to restrict the availability of these remedies to such a creditor, and the courts have not so restricted them. See, e.g., Lipskey v. Voloshen, 155 Md. 139, 143-45, 141 Atl. 402, 404-05 (1928) (judgment creditor granted injunction against disposition of property by transferee, but appointment of receiver denied for lack of sufficient showing of need for such relief); Matthews v. Schusheim, 36 Misc. 2d 918, 922-23, 235 N.Y.S.2d 973, 976-77, 991-92 (Sup.Ct. 1962) (injunction and appointment of receiver granted to holder of claims for fraud, breach of contract, and alimony arrearages; whether creditor's claim was mature said to be immaterial); Oliphant v. Moore, 155 Tenn. 359, 362-63, 293 S.W. 541, 542 (1927) (tort creditor granted injunction restraining alleged tortfeasor's disposition of property).
4. As under the Uniform Fraudulent Conveyance Act, a creditor is not required to obtain a judgment against the debtor-transferor or to have a matured claim in order to proceed under subsection (a) (subsection (1) in C.R.S.). See § 1(3) and (4) supra (section 38-8-102 (3) and (4) in C.R.S.); American Surety Co. v. Conner, 251 N.Y. 1, 166 N.E. 783, 65 A.L.R. 244 (1929); 1 G. Glenn, Fraudulent Conveyances and Preferences 129 (Rev.ed. 1940).
5. The provision in subsection (b) (subsection (2) in C.R.S.) for a creditor to levy execution on a fraudulently transferred asset continues the availability of a remedy provided in § 9(b) of the Uniform Fraudulent Conveyance Act. See, e.g., Doland v. Burns Lbr. Co., 156 Minn. 238, 194 N.W. 636 (1923); Montana Ass'n of Credit Management v. Hergert, 181 Mont. 442, 449, 453, 593 P.2d 1059, 1063, 1065 (1979); Corbett v. Hunter, 292 Pa.Super. 123, 128, 436 A.2d 1036, 1038 (1981); see also American Surety Co. v. Conner, 251 N.Y. 1, 6, 166 N.E. 783, 784, 65 A.L.R. 244, 247 (1929) ("In such circumstances he [the creditor] might find it necessary to indemnify the sheriff and, when the seizure was erroneous, assumed the risk of error"); McLaughlin, Application of the Uniform Fraudulent Conveyance Act, 46 Harv.L.Rev. 404, 441-42 (1933).
6. The remedies specified in § 7, like those enumerated in §§ 9 and 10 of the Uniform Fraudulent Conveyance Act, are cumulative. Lind v. O. N. Johnson Co., 204 Minn. 30, 40, 282 N.W. 661, 667, 119 A.L.R. 940 (1939) (Uniform Fraudulent Conveyance Act held not to impair or limit availability of the "old practice" of obtaining judgment and execution returned unsatisfied before proceeding in equity to set aside a transfer); Conemaugh Iron Works Co. v. Delano Coal Co., Inc., 298 Pa. 182, 186, 148 A. 94, 95 (1929) (Uniform Fraudulent Conveyance Act held to give an "additional optional remedy" and not to "deprive a creditor of the right, as formerly, to work out his remedy at law"); 1 G. Glenn, Fraudulent Conveyances and Preferences 120, 130, 150 (Rev.ed. 1940).

ANNOTATION

Section 38-8-109 (2) does not provide an additional remedy to creditors but instead limits the remedy provided under subsection (1)(a) of this section by limiting the creditor's recovery in an action to avoid a fraudulent transfer to the lesser of the adjusted value of the transferred asset or the amount of the creditor's claim. Because a bankruptcy trustee thus has the power to recover the same amount sought by the plaintiff creditor for the benefit of all creditors and because allowing individual creditors to file actions for recovery would interfere with the bankruptcy estate and the equitable distribution scheme dependent upon it, the plaintiff creditor lacked standing. Summers v. Perkins, 81 P.3d 1141 (Colo. App. 2003).

OFFICIAL COMMENT

1. Subsection (a) (subsection (1) in C.R.S.) states the rule that applies when the transferee establishes a complete defense to the action for avoidance based on Section 4(a)(1) (section 38-8-105 (1)(a) in C.R.S.). The subsection is an adaptation of the exception stated in § 9 of the Uniform Fraudulent Conveyance Act. The person who invokes this defense carries the burden of establishing good faith and the reasonable equivalence of the consideration exchanged. Chorost v. Grand Rapids Factory Showrooms, Inc., 77 F. Supp. 276, 280 (D.N.J. 1948), aff'd, 172 F.2d 327, 329 (3d Cir. 1949).
2. Subsection (b) (subsection (2) in C.R.S.) is derived from § 550(a) of the Bankruptcy Code. The value of the asset transferred is limited to the value of the levyable interest on the transferor, exclusive of any interest encumbered by a valid lien. See § 1(2) supra (section 38-8-102 (2) in C.R.S.).
3. Subsection (c) (subsection (3) in C.R.S.) is new. The measure of the recovery of a defrauded creditor against a fraudulent transferee is usually limited to the value of the asset transferred at the time of the transfer. See, e.g., United States v. Fernon, 640 F.2d 609, 611 (5th Cir. 1981); Hamilton Nat'l Bank of Boston v. Halstead, 134 N.Y. 520, 31 N.E. 900 (1892); cf. Buffum v. Peter Barceloux Co., 289 U.S. 227 (1932) (transferee's objection to trial court's award of highest value of asset between the date of the transfer and the date of the decree of avoidance rejected because an award measured by value as of time of the transfer plus interest from that date would have been larger). The premise of § 8(c) is that changes in value of the asset transferred that occur after the transfer should ordinarily not affect the amount of the creditor's recovery. Circumstances may require a departure from that measure of the recovery, however, as the cases decided under the Uniform Fraudulent Conveyance Act and other laws derived from the Statute of 13 Elizabeth illustrate. Thus, if the value of the asset at the time of levy and sale to enforce the judgment of the creditor has been enhanced by improvements of the asset transferred or discharge of liens on the property, a good faith transferee should be reimbursed for the outlay for such a purpose to the extent the sale proceeds were increased thereby. See Bankruptcy Code § 550(d); Janson v. Schier, 375 A.2d 1159, 1160 (N.H. 1977); Anno., 8 A.L.R. 527 (1920). If the value of the asset has been diminished by severance and disposition of timber or minerals or fixtures, the transferee should be liable for the amount of the resulting reduction. See Damazo v. Wahby, 269 Md. 252, 257, 305 A.2d 138, 142 (1973). If the transferee has collected rents, harvested crops, or derived other income from the use or occupancy of the asset after the transfer, the liability of the transferee should be limited in any event to the net income after deduction of the expense incurred in earning the income. Anno., 60 A.L.R.2d 593 (1958). On the other hand, adjustment for the equities does not warrant an award to the creditor of consequential damages alleged to accrue from mismanagement of the asset after the transfer.
4. Subsection (d) (subsection (4) in C.R.S.) is an adaptation of § 548(c) of the Bankruptcy Code. An insider who receives property or an obligation from an insolvent debtor as security for or in satisfaction of an antecedent debt of the transferor or obligor is not a good faith transferee or obligee if the insider has reasonable cause to believe that the debtor was insolvent at the time the transfer was made or the obligation was incurred.
5. Subsection (e)(1) (subsection (5)(a) in C.R.S.) rejects the rule adopted in Darby v. Atkinson (In re Farris), 415 F.Supp. 33, 39-41 (W.D.Okla. 1976), that termination of a lease on default in accordance with its terms and applicable law may constitute a fraudulent transfer. Subsection (e)(2) (subsection (5)(b) in C.R.S.) protects a transferee who acquires a debtor's interest in an asset as a result of the enforcement of a secured creditor's rights pursuant to and in compliance with the provisions of Part 5 of Article 9 of the Uniform Commercial Code. Cf. Calaiaro v. Pittsburgh Nat'l Bank (In re Ewing), 33 B.R. 288, 9 C.B.C.2d 526, CCH B.L.R. paragraph 69,460 (Bk.W.D.Pa. 1983) (sale of pledged stock held subject to avoidance as fraudulent transfer in § 548 of the Bankruptcy Code), rev'd, 36 B.R. 476 (W.D.Pa. 1984) (transfer held not voidable because deemed to have occurred more than one year before bankruptcy petition filed). Although a secured creditor may enforce rights in collateral without a sale under § 9-502 or § 9-505 of the Code, the creditor must proceed in good faith (U.C.C. § 9-103) and in a "commercially reasonable" manner. The "commercially reasonable" constraint is explicit in U.C.C. § 9-502(2) and is implicit in § 9-505. See 2 G. Gilmore, Security Interests in Personal Property 1224-27 (1965).
6. Subsection (f) (subsection (6) in C.R.S.) provides additional defenses against the avoidance of a preferential transfer to an insider under § 5(b) (section 38-8-106 (2) in C.R.S.).

Paragraph (1) (paragraph (a) in C.R.S.) is adapted from § 547(c)(4) of the Bankruptcy Code, which permits a preferred creditor to set off the amount of new value subsequently advanced against the recovery of a voidable preference by a trustee in bankruptcy to the debtor without security. The new value may consist not only of money, goods, or services delivered on unsecured credit but also of the release of a valid lien. See, e.g., In re Ira Haupt & Co., 424 F.2d 722, 724 (2d Cir. 1970); Baranow v. Gibraltor Factors Corp. (In re Hygrade Envelope Co.), 393 F.2d 60, 65-67 (2d Cir.), cert. denied, 393 U.S. 837 (1968); In re John Morrow & Co., 134 F.686, 688 (S.D.Ohio 1901). It does not include an obligation substituted for a prior obligation. If the insider receiving the preference thereafter extends new credit to the debtor but also takes security from the debtor, the injury to the other creditors resulting from the preference remains undiminished by the new credit. On the other hand, if a lien taken to secure the new credit is itself voidable by a judicial lien creditor of the debtor, the new value received by the debtor may appropriately be treated as unsecured and applied to reduce the liability of the insider for the preferential transfer.

Paragraph (2) (paragraph (b) in C.R.S.) is derived from § 546(c)(2) of the Bankruptcy Code, which excepts certain payments made in the ordinary course of business or financial affairs from avoidance by the trustee in bankruptcy as preferential transfers. Whether a transfer was in the "ordinary course" requires a consideration of the pattern of payments or secured transactions engaged in by the debtor and the insider prior to the transfer challenged under § 5(b) (section 38-8-106 (2) in C.R.S.). See Tait & Williams, Bankruptcy Preference Laws: The Scope of Section 547(c)(2), 99 Banking L.J. 55, 63-66 (1982). The defense provided by paragraph (2) is available, irrespective of whether the debtor or the insider or both are engaged in business, but the prior conduct or practice of both the debtor and the insider-transferee is relevant.

Paragraph (3) (paragraph (c) in C.R.S.) is new and reflects a policy judgment that an insider who has previously extended credit to a debtor should not be deterred from extending further credit to the debtor in a good faith effort to save the debtor from a forced liquidation in bankruptcy or otherwise. A similar rationale has sustained the taking of security from an insolvent debtor for an advance to enable the debtor to stave off bankruptcy and extricate itself from financial stringency. Blackman v. Bechtel, 80 F.2d 505, 508-09 (8th Cir. 1935); Olive v. Tyler (In re Chelan Land Co.), 257 F.497, 5 A.L.R. 561 (9th Cir. 1919); In re Robin Bros. Bakeries, Inc., 22 F.S. 662, 663-64 (N.D.Ill. 1937); see Dean v. Davis, 242 U.S. 438, 444 (1917). The amount of the present value given, the size of the antecedent debt secured, and the likelihood of success for the rehabilitative effort are relevant considerations in determining whether the transfer was in good faith.

ANNOTATION

Whether "reasonably equivalent value" has been received is a question of fact. What constitutes "reasonably equivalent value" for the transfer requires an analysis of all of the facts and circumstances surrounding the transaction. The standard of reasonably equivalent value implies a rule of reasonableness in light of the particular circumstances. Reasonable equivalence is not synonymous with market value, even though market value is an important factor to be utilized in the assessment. For purposes of the Colorado Uniform Fraudulent Transfer Act, equity looks to the substance of the transaction rather than its form. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

The time value of money does not constitute reasonably equivalent value in an equity-type Ponzi scheme, so a transfer of profits or interest is voidable. When an innocent investor has no guarantee of profit or the payment of interest, the debtor's fraudulent transfer of profits to the investor from the scheme does not satisfy an antecedent debt and is not a transfer of reasonably equivalent value. Lewis v. Taylor, 2018 CO 76, 427 P.3d 796.

Subsection (2) of this section does not provide an additional remedy to creditors but instead limits the remedy provided under § 38-8-108 (1)(a) by limiting the creditor's recovery in an action to avoid a fraudulent transfer to the lesser of the adjusted value of the transferred asset or the amount of the creditor's claim. Because a bankruptcy trustee thus has the power to recover the same amount sought by the plaintiff creditor for the benefit of all creditors and because allowing individual creditors to file actions for recovery would interfere with the bankruptcy estate and the equitable distribution scheme dependent upon it, the plaintiff creditor lacked standing. Summers v. Perkins, 81 P.3d 1141 (Colo. App. 2003).

The ordinary course of business defense is available only to insiders. Sender v. Mann, 423 F. Supp. 2d 1155 (D. Colo. 2006).

Because ranch was encumbered by valid liens that exceeded its value, it was not an asset under this article. Because ranch did not constitute an asset under this article, jury's verdict in favor of plaintiff on his fraudulent conveyance claim must be reversed. Bd. of Cty. Comm'rs v. Sportsmen's Ranch, 271 P.3d 562 (Colo. App. 2011).

OFFICIAL COMMENT

1. This section is new. Its purpose is to make clear that lapse of the statutory periods prescribed by the section bars the right and not merely the remedy. See Restatement of Conflict of Laws 2d § 143 Comments (b) and (c) (1971). The section rejects the rule applied in United States v. Gleneagles Inv. Co., 565 F.S. 556, 583 (M.D.Pa. 1983) (state statute of limitations held not to apply to action by United States based on Uniform Fraudulent Conveyance Act).
2. Statutes of limitations applicable to the avoidance of fraudulent transfers and obligations vary widely from state to state and are frequently subject to uncertainties in their application. See Hesson, The Statute of Limitations in Actions to Set Aside Fraudulent Conveyances and in Actions Against Directors by Creditors of Corporations, 32 Cornell L.Q. 222 (1946); Annos., 76 A.L.R. 864 (1932), 128 A.L.R. 1289 (1940), 133 A.L.R. 1311 (1941), 14 A.L.R.2d 598 (1950), and 100 A.L.R.2d 1094 (1965). Together with § 6 (section 38-8-107 in C.R.S.), this section should mitigate the uncertainty and diversity that have characterized the decisions applying statutes of limitations to actions to fraudulent transfers and obligations. The periods prescribed apply, whether the action under this Act is brought by the creditor defrauded or by a purchaser at a sale on execution levied pursuant to § 7(b) (section 38-8-108 (2) in C.R.S.) and whether the action is brought against the original transferee or subsequent transferee. The prescription of statutory periods of limitation does not preclude the barring of an avoidance action for laches. See § 10 (section 38-8-111 in C.R.S.) and the accompanying Comment infra.

ANNOTATION

This section's time limitation may be extended by an express agreement entered into voluntarily by both parties. Lewis v. Taylor, 2016 CO 48, 375 P.3d 1205.

To determine when the four-year statute of limitations under subsection (1)(a) began to run, court ordered remand proceedings to determine when the transfer was made under § 38-8-107 (1)(a)(I). Tiger v. Anderson, 976 P.2d 308 (Colo. App. 1998).

OFFICIAL COMMENT

This section is derived from § 11 of the Uniform Fraudulent Conveyance Act and § 1-103 of the Uniform Commercial Code. The section adds a reference to "laches" in recognition of the particular appropriateness of the application of this equitable doctrine to an untimely action to avoid a fraudulent transfer. See Louis Dreyfus Corp. v. Butler, 496 F.2d 806, 808 (6th Cir. 1974) (action to avoid transfers to debtor's wife when debtor was engaged in speculative business held to be barred by laches or applicable statutes of limitations); Cooch v. Grier, 30 Del.Ch. 255, 265-66, 59 A.2d 282, 287-88 (1948) (action under the Uniform Fraudulent Conveyance Act held barred by laches when the creditor was chargeable with inexcusable delay and the defendant was prejudiced by the delay).

ANNOTATION

The language of this section expressly permits parties to pursue other remedies, evincing the general assembly's intention not to abrogate preexisting common law claims and remedies by the enactment of the Colorado Uniform Fraudulent Transfer Act (CUFTA). Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

Since civil conspiracy provides damage remedies independent of those provided under CUFTA, the trial court did not err in imposing joint tort liability for conspiracy to convey property fraudulently. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

I. GENERAL CONSIDERATION.

Law reviews. For article, "Express Trusts in Colorado", see 10 Rocky Mt. L. Rev. 9 (1937). For article, "An Aspect of Estate Planning in Colorado: The Revocable Inter Vivos Trust", see 43 Den. L.J. 296 (1966). For note, "A Survey of Colorado Water Law", see 47 Den. L.J. 226 (1970). For article, "Signatures on Documents Affecting Title to Colorado Real Property -- Part III", see 12 Colo. Law. 447 (1983).

Statute of frauds only concerns making of contracts. Niernberg v. Feld, 131 Colo. 508 , 283 P.2d 640 (1955).

Statute of frauds is inapplicable to revocation of contracts. Niernberg v. Feld, 131 Colo. 508 , 283 P.2d 640 (1955).

Statute of frauds inapplicable to executed contracts. Sherman v. Randle, 79 Colo. 243, 245 P. 717 (1926).

Rescission of executing contract by parol agreement permitted. An executory contract involving title to, or an interest in, land may be rescinded by an agreement resting in parol. Niernberg v. Feld, 131 Colo. 508 , 283 P.2d 640 (1955).

Statute of frauds is inapplicable to equitable trusts. Page v. Clark, 40 Colo. App. 24, 572 P.2d 1214 (1977), rev'd on other grounds, 197 Colo. 306 , 592 P.2d 792 (1979).

Agreement restricting use of land is not within statute of frauds because it does not relate to an interest in land but merely to its use. Thornton v. Schobe, 79 Colo. 25, 243 P. 617 (1925).

Interest in deed of trust is not an interest in the underlying land. Since Colorado is a lien theory jurisdiction, statute of frauds does not bar suit on oral agreement to execute and deliver a mortgage upon real estate. Bigelow v. Nottingham, 833 P.2d 764 (Colo. App. 1991), rev'd on other grounds sub nom. Haberl v. Bigelow, 855 P.2d 1368 ( Colo. 1993 ).

Promissory note secured by a deed of trust for real property does not create an interest in land. Crown Life Ins. Co. v. Haag Ltd. P'ship, 929 P.2d 42 (Colo. App. 1996).

Settlement of accounts following partnership termination independent of status of realty. When the business of a partnership, organized to lease and operate a mine during a limited period for the sole purpose of making a profit through the extracting and marketing of ores therefrom, had been terminated in a suit brought by one of the partners to settle the partnership accounts and distribute the partnership profits and other assets, no interest in realty was involved, and, in such cases, the right to a settlement and distribution in no way depends upon the legal status of realty under the statute of frauds, therefore, this section is inapplicable to the right to a settlement and distribution. Meagher v. Reed, 14 Colo. 335, 24 P. 681 (1890).

A written conveyance from a partner who contributes real estate to a partnership is not required to convert the property into partnership property because the partnership statutes and the trust relationship between partners sufficiently protect partners from fraud. In re Estate of Grosboll, 2013 COA 141 , 315 P.3d 1284.

Partial performance removes contract from scope of statute. Where there is an accounting between parties when one party paid over half the profits from jointly owned land, there is such partial performance of a contract conveying a one-half interest in land as would remove the contract from the scope of the statute. Bushner v. Bushner, 134 Colo. 509 , 307 P.2d 204 (1957).

Method of use of land not subject to section. Method of use of land is not estate or interest in land, subject to this section. Thornton v. Schobe, 79 Colo. 25, 243 P. 617 (1925).

Profits on purchase and sale of land not an "estate or interest" in the land, subject to this section. Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890); Thornton v. Schobe, 79 Colo. 25, 243 P. 617 (1925).

Defense involves questions of fact and law. The defense of the statute of frauds involves questions of fact as well as law. Bushner v. Bushner, 134 Colo. 509 , 307 P.2d 204 (1957).

Proof of parol agreement prohibited absent fraud, accident, or mistake. In the absence of the elements of fraud, accident, or mistake, the grantor in an absolute conveyance is prohibited by the statute of frauds from setting up and proving a parol agreement, in which the grantee was to hold the land in trust for his benefit. Hall v. Linn, 8 Colo. 264, 5 P. 641 (1885); Bohm v. Bohm, 9 Colo. 100, 10 P. 790 (1885); Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890).

To exclude the operation of the statute on the ground of fraud where an oral agreement is alleged as a foundation of the trust, it must appear that the promise is used as a means of imposition or deceit; the promise may be received in evidence as one of the steps by which the fraud was accomplished. Bohm v. Bohm, 9 Colo. 100, 10 P. 790 (1885).

Unless the transaction was tainted with either actual or constructive fraud, trust could not be created by parol. Hodgson v. Fowler, 7 Colo. App. 378, 43 P. 462 (1896).

While Colorado recognizes that the intent to create a trust can be inferred from the nature of property transactions, the circumstances surrounding the holding of and transfer of property, the particular documents or language employed, and the conduct of the parties, the inference of an intent to create a trust must come from clear, explicit, definite, unequivocal, and unambiguous language or conduct. No finding of a trust is warranted as a matter of law where neither the language of the relevant documents nor the conduct of the parties satisfies this standard. Bishop & Diocese of Colo. v. Mote, 716 P.2d 85 (Colo.) (en banc), cert. denied, 479 U.S. 826, 107 S. Ct. 102, 93 L. Ed. 2d 52 (1986); In re Fairfield Pagosa, Inc., 97 F.3d 247 (8th Cir. 1996).

Applied in Farrand v. Beshoar, 9 Colo. 291 , 12 P. 196 (1886); Beulah Marble Co. v. Mattice, 22 Colo. 547 , 45 P. 432 (1896); Heron v. Weston, 44 Colo. 379 , 100 P. 1130 (1908); Griffith v. Sands, 84 Colo. 456 , 271 P. 191 (1928); Quelland v. Roy, 148 Colo. 316 , 365 P.2d 899 (1961).

II. EXPRESS TRUSTS.

Parol evidence cannot establish existence of express trust. Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890); Johnson v. Calnan, 19 Colo. 168, 34 P. 905, 41 Am. St. R. 224 (1893).

Parol evidence admissible to show truth of transaction. Where there is some written evidence showing the existence of a trust, the door is thereby opened to the admission of parol evidence to show the truth of the transaction. Johnson v. Calnan, 19 Colo. 168, 34 P. 905, 41 Am. St. R. 224 (1893).

Written evidence of trust required. It is not required by this section that a trust should be created by a writing, but that there should be evidence in writing, proving that there was such a trust; the proof may be made by letters and informal documents. Johnson v. Calnan, 19 Colo. 168, 34 P. 905 (1893); Waterbury v. Fisher, 5 Colo. App. 362, 38 P. 846 (1894), aff'd, 23 Colo. 256, 47 P. 277 (1896).

To constitute a valid express trust in relation to realty, the conditions thereof must, by virtue of the statute of frauds, be in writing. Armor v. Spalding, 14 Colo. 302, 23 P. 789 (1890).

III. RESULTING AND CONSTRUCTIVE TRUSTS.

Resulting and constructive trusts arise by operation of law upon the transaction of the parties. Kayser v. Maugham, 8 Colo. 232, 6 P. 803 (1885); McPherrin v. Fair, 57 Colo. 333, 141 P. 472 (1914).

A constructive trust is a creature of equity and springs from a desire to prevent the statute of frauds from being used as a shield which would allow a party to be unjustly enriched. Page v. Clark, 197 Colo. 306 , 592 P.2d 792 (1979); Ralston Oil & Gas Co. v. July Corp., 719 P.2d 334 (Colo. App. 1985).

Situations giving rise to resulting trusts. There are three situations in which the trust which arises is properly called a resulting trust: (1) Where an express trust fails in whole or in part; (2) where an express trust is fully performed without exhausting the trust estate; and (3) where property is purchased and the purchase price is paid by one person and at his direction the vendor conveys the property to another person. Page v. Clark, 197 Colo. 306 , 592 P.2d 792 (1979).

A trust in operation of law may occur where a trust is declared only as to part of the conveyance and nothing is said as to rest. Walker v. Bruce, 44 Colo. 109, 97 P. 250 (1908).

Statute of frauds does not prevent declaration of constructive trust nor does it prevent recovery of property delivered conditionally by one to himself and another as joint tenants in contemplation of marriage. In re Heinzman, 198 Colo. 36 , 596 P.2d 61 (1979).

If the conditions for imposing a constructive trust are present, such remedy will not be precluded by application of the statute of frauds. Ralston Oil & Gas Co. v. July Corp., 719 P.2d 334 (Colo. App. 1985).

Resulting trust in lands may be established by oral testimony. Knox v. McFarran, 4 Colo. 586 (1879); Kayser v. Maugham, 8 Colo. 232, 6 P. 803 (1885); Bohm v. Bohm, 9 Colo. 100, 10 P. 790 (1885); Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890); First Nat'l Bank v. Campbell, 2 Colo. App. 271, 30 P. 357 (1892), rev'd on other grounds, 22 Colo. 177, 43 P. 1007 (1896); Warren v. Adams, 19 Colo. 515, 36 P. 604 (1894); Berry v. French, 24 Colo. App. 519, 135 P. 985 (1898); Walker v. Bruce, 44 Colo. 109, 97 P. 250 (1908); O'Byrne v. McNeill, 90 Colo. 226, 7 P. 956 (1932).

Statute of frauds has no application to resulting trust, for such a trust is created by operation of law. Kayser v. Maugham, 8 Colo. 232 , 6 P. 803 (1885); Walker v. Bruce, 44 Colo. 109 , 97 P. 250 (1908); McPherrin v. Fair, 57 Colo. 333 , 141 P. 472 (1914); In re Doerfer's Estate, 100 Colo. 304 , 67 P.2d 492 (1937); Vandewiele v. Vandewiele, 110 Colo. 556 , 136 P.2d 523 (1943).

When constructive trust operates. It has been held that a constructive trust is the formula through which the conscience of equity finds expression; when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee. Page v. Clark, 197 Colo. 306 , 592 P.2d 792 (1979).

Where legal title to land has been fraudulently acquired, and is still held in fraud of the rights of another having a valuable interest in the premises, a trust by operation of law may be declared upon equitable terms. Learned v. Tritch, 6 Colo. 432 (1882); Kayser v. Maugham, 8 Colo. 232, 6 P. 803 (1885); Stewart v. Stevens, 10 Colo. 440, 15 P. 786 (1887); Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890); Walker v. Bruce, 44 Colo. 109, 97 P. 250 (1908).

Essence of constructive trusts seems to be fraud, deceit, or bad faith; no effort is made to include them in the intention of the contracting parties. Kayser v. Maugham, 8 Colo. 232, 6 P. 803 (1885).

Fraudulent conveyance prevents trust from resulting to grantor. No trust can result to grantor when conveyance is made for a colorable, illegal, or fraudulent purpose. First Nat'l Bank v. Campbell, 2 Colo. App. 271, 30 P. 357 (1892), rev'd on other grounds, 22 Colo. 177, 43 P. 1007 (1896).

Confidential relations sufficient to create constructive trust. Confidential relations between the parties are sufficient to create a constructive trust. Bohm v. Bohm, 9 Colo. 100 , 10 P. 790 (1885); Young v. Hinds, 68 Colo. 164 , 188 P. 739 (1920); Vosburg v. Knight, 71 Colo. 473 , 207 P. 1112 (1922); Herrick v. Woodrow-Shindler Co., 75 Colo. 363 , 226 P. 137 (1924); O'Byrne v. McNeill, 90 Colo. 226 , 7 P.2d 956 (1932).

Setting aside transaction for abuse of confidential relationship. If the existence of a confidential relationship has been established, a transaction may be set aside if that relationship has been abused. It is not necessary that the abuse of the confidential relationship be the procuring cause of the original conveyance, but rather the refusal to perform the promise to reconvey is itself a sufficient abuse of confidence to allow the conveyance to be set aside. Page v. Clark, 197 Colo. 306 , 592 P.2d 792 (1979).

IV. AUTHORITY OF AGENT.

Agency for sale of lands can be created only by writing. Springer v. City Bank & Trust Co., 59 Colo. 376, 149 P. 253, 1917A Ann. Cas. 520 (1911).

In the absence of written authority from a wife, the owner of real property, to her husband, authorizing it, a lease and option given by him on a part of the land was void under the statute of frauds. Simpson v. Nelson, 71 Colo. 490, 208 P. 455 (1922).

Written authority required to create power of attorney in fact. A contract and deed, executed by father, professing to act as attorney in fact for his daughter, were void under the statute of frauds, so far as the daughter was concerned, because he was not authorized in writing to execute the contract and deed. Clement v. Major, 1 Colo. App. 297, 29 P. 19 (1892); Hagerman v. Bates, 5 Colo. App. 391, 38 P. 1100 (1895), rev'd on other grounds, 24 Colo. 71, 49 P. 139 (1897); Newman v. Tibbitts, 27 Colo. App. 325, 149 P. 266 (1915), aff'd, 63 Colo. 74, 163 P. 720 (1917).

Ratification of signing of contract requires writing. In an action to enforce specific performance of a contract required by the statute of frauds to be in writing, where the statute of frauds was pleaded, ratification of the signing of the contract by one party for another could be shown only in writing. People's Mining & Milling Co. v. Cent. Consol. Mines Corp., 20 Colo. App. 561, 80 P. 479 (1905).

I. GENERAL CONSIDERATION.

Law reviews. For article, "Collateral Effects of the Statute of Frauds", see 13 Rocky Mt. L. Rev. 233 (1941). For note, "The Effect of 'Invalid' Leases", see 22 Rocky Mt. L. Rev. 305 (1950). For article, "The Interest of Landowner and Lessee in Oil and Gas in Colorado", see 25 Rocky Mt. L. Rev. 117 (1953). For article, "Trusts and Estates", see 30 Dicta 435 (1953). For article, "One Year Review of Agency, Partnerships and Corporations", see 40 Den. L. Ctr. J. 123 (1963). For article, "Signatures on Documents Affecting Title to Colorado Real Property -- Part III", see 12 Colo. Law. 447 (1983). For article, "Residential Tenancies, Lease to Eviction An Overview of Colorado Law", see 43 Colo. Law. 55 (May 2014).

Statute of frauds should operate as shield against fraud. Burnford v. Blanning, 189 Colo. 292 , 540 P.2d 337 (1975).

Section is for protection of vendor and not vendee, and the vendee cannot take advantage of it. Colo. Lumber, Land, & Imp. Co. v. Dustin, 38 Colo. 398 , 87 P. 1142 (1906); Gabarino v. Union Sav. & Loan Ass'n, 107 Colo. 140 , 109 P.2d 638 (1941); Boyer v. Karakehian, 915 P.2d 1295 ( Colo. 1996 ).

This section requires a contract for the sale of land or interest therein to be expressed in a writing signed by the selling or granting party, and such a contract must identify the parties to the transaction, the terms and conditions of the transaction, a description of the property, and the consideration. Luttgen v. Fischer, 107 P.3d 1152 (Colo. App. 2005).

When oral contract for land not considered void. An oral contract for the sale of land cannot be considered void so long as the vendor is willing to treat the contract as good; this rule applies where the vendee resists payment on a check given for the purchase price. Colo. Lumber, Land, & Imp. Co. v. Dustin, 38 Colo. 398 , 87 P. 1142 (1906); Gabarino v. Union Sav. & Loan Ass'n, 107 Colo. 140 , 109 P.2d 638 (1941); Houtchens v. United Bank of Co. Spgs., 797 P.2d 814 (Colo. App. 1990).

Where the oral contract is not void but voidable, a promise within the statute of frauds will serve as consideration for an enforceable promise by another. Colo. Lumber, Land, & Imp. Co. v. Dustin, 38 Colo. 398 , 87 P. 1142 (1906); Gabarino v. Union Sav. & Loan Ass'n, 107 Colo. 140 , 109 P.2d 638 (1941).

Statute of frauds furnishes rule of evidence, but not of pleading. Tucker v. Edwards, 7 Colo. 209, 3 P. 233 (1883); Garbanati v. Fassbinder, 15 Colo. 535, 25 P. 991 (1890); Ruth v. Smith, 29 Colo. 154, 68 P. 278 (1901).

Defense involves questions of fact and law. The defense of the statute of frauds involves questions of fact as well as law. Bushner v. Bushner, 134 Colo. 509 , 307 P.2d 204 (1957).

Unenforceable contract of the statute cannot be made indirectly enforceable by promising to execute a sufficient memorandum or otherwise to satisfy the requirements of the statute. Rupp v. Hill, 149 Colo. 48 , 367 P.2d 746 (1961).

Statute of frauds concerns making of contracts only; it does not apply to the matter of their revocation. Niernberg v. Feld, 131 Colo. 508 , 283 P.2d 640 (1955).

Executory contracts may be rescinded by mutual consent of parties thereto. Niernberg v. Feld, 131 Colo. 508 , 283 P.2d 640 (1955).

When parol gift of interest in realty deemed good in equity. A parol gift of an interest in real property is good in equity, as a rule, only when valuable improvements have been made in reliance on the gift, so that to refuse to enforce it is inequitable. Kendall v. Metroz, 65 Colo. 387, 176 P. 473 (1918).

Contract not evidenced by memorandum conveying title to omitted property. A written memorandum by the grantor agreeing to convey the legal title to his grantee who has purchased, paid for, and reduced to peaceable possession, property which by mistake was omitted from the original deed, does not evidence a contract for the sale of land within the meaning of this section. Ross v. Purse, 17 Colo. 24, 28 P. 473 (1891).

Grubstake agreements not within statute of frauds. Grubstake agreements may be either oral or written and are not within the statute of frauds. Smaller v. Leach, 136 Colo. 297 , 316 P.2d 1030 (1957), cert. denied, 356 U.S. 936, 78 S. Ct. 777 (1958).

Statute does not prevent declaration of constructive trust nor does it prevent recovery of property delivered conditionally by one to himself and another as joint tenants in contemplation of marriage. In re Heinzman, 198 Colo. 36 , 596 P.2d 61 (1979).

Estoppel as bar to statute of frauds defense. In order to estop vendors from asserting the statute of frauds as a defense, the vendee must have performed acts constituting substantial action or forbearance. Tripp v. Shelter Research Inc., 729 P.2d 1024 (Colo. App. 1986).

Estoppel not found. Tripp v. Shelter Research Inc., 729 P.2d 1024 (Colo. App. 1986).

A party making an oral promise respecting the title to real estate may not rely on the statute if the other party fails to assure that the oral agreement is reduced to writing because of the confidence engendered by the first party. The promisor will be treated in such case as a constructive trustee for the other party. Jarnagin v. Busby, Inc., 867 P.2d 63 (Colo. App. 1993).

In order to escape the bar of the statute of frauds, it was necessary for the plaintiffs to prove, among other things, that they reasonably reposed confidence and trust in the promisor at the time of the negotiations leading to the oral agreement at issue and that, but for such confidential relationship, such oral agreement would have been reduced to writing. Jarnagin v. Busby, Inc., 867 P.2d 63 (Colo. App. 1993).

Applied in Wolf v. Burke, 18 Colo. 264 , 32 P. 427, 19 L.R.A. 792 (1893); Thomas Realty Co. v. Guthrie, 71 Colo. 98 , 204 P. 330 (1922); Swaim v. Swanson, 118 Colo. 509 , 197 P.2d 624 (1948); Payne v. Cumming, 136 Colo. 244 , 315 P.2d 818 (1957); Hunt v. Pick, 240 F.2d 782 (10th Cir. 1957); Coulter v. Anderson, 144 Colo. 402 , 357 P.2d 76 (1960); Dolton v. Capitol Fed. Sav. & Loan Ass'n, 642 P.2d 21 (Colo. App. 1981); Great Falls Props., Inc. v. Prof'l Group, Ltd., 649 P.2d 1082 ( Colo. 1982 ); Nicol v. Nelson, 776 P.2d 1144 (Colo. App. 1989), cert. denied, 785 P.2d 917 ( Colo. 1989 ); Karakehian v. Boyer, 900 P.2d 1273 (Colo. App. 1994).

II. LEASES.

Verbal lease for year to begin in future valid. A verbal lease for the term of a year, to begin in the future, is valid. Sears v. Smith, 3 Colo. 287 (1877).

Lease of land for crop year not void. An oral lease of land for the crop year, made in June, 1943, where the crops to be planted would not mature until July or August, 1944, did not amount to a lease for a period longer than one year, and it is not void under this section. Northrup v. Nicklas, 115 Colo. 207 , 171 P.2d 417 (1946).

Time between making lease and taking possession cannot be counted. The time between the making of the lease and the time when the lessee is entitled to possession thereunder cannot be counted in computing the year as that is no part of the term. Northrup v. Nicklas, 115 Colo. 207 , 171 P.2d 417 (1946).

III. CONTRACTS FOR SALE OF INTEREST IN LAND.

Actual possession must be referable to contract. Actual possession in furtherance of an oral contract may be made the foundation for a decree of specific performance, but such possession must be referable to the contract. Rupp v. Hill, 149 Colo. 48 , 367 P.2d 746 (1961).

Trier of facts determines whether possession referable. Whether possession is referable to an oral contract rests upon circumstances, and should be resolved by the trier of the facts. Rupp v. Hill, 149 Colo. 48 , 367 P.2d 746 (1961).

Verbal agreements for profits and contracts for land may be independent. A verbal agreement to share the profits arising from the purchase and sale of real estate may be made independent of any contract for an interest in the land itself. Kayser v. Maugham, 8 Colo. 232, 6 P. 803 (1885); Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890).

Oral agreement for perpetual right-of-way constitutes easement. An oral agreement for a perpetual right-of-way over the premises of another constitutes an easement or interest in land and is within the statute of frauds. Whitsett v. Kershow, 4 Colo. 419 (1878); Ward v. Farwell, 6 Colo. 66 (1881); Stewart v. Stevens, 10 Colo. 440, 15 P. 786 (1887); Fetta v. Vandevier, 3 Colo. App. 419, 34 P. 168 (1893), aff'd, Vandevier v. Fetta, 20 Colo. 368, 38 P. 466 (1894); Laesch v. Morton, 38 Colo. 171, 87 P. 1081 (1906); Workman v. Stephenson, 26 Colo. App. 339, 144 P. 1126 (1914).

Agreement for joint benefit of several persons not within section. Agreement between two or more persons to explore the public domain and discover and locate lodes for the joint benefit of all is not within this section, and it is not necessary that it should be written. Murley v. Ennis, 2 Colo. 300 (1874); Meylette v. Brennan, 20 Colo. 242, 38 P. 75 (1894).

Statute inapplicable to extension of performance time of executing contract. The statute of frauds does not apply to an oral agreement to extend the time for performance of an executory contract. Poznik v. Urton & Co., 30 Colo. App. 475, 496 P.2d 1073 (1972), aff'd, 181 Colo. 15 , 506 P.2d 741 (1973).

Retention right in mine requires writing. Where one enters upon a mine previously discovered, and to which the discoverer has lost his right by failing to make the development required by the law; from the moment of commencing the labor of development with the bona fide purpose to complete it, and so appropriate the mine, the party has a possession in fact, and for the time being a right to retain that possession, and this right is, perhaps, such an interest in land as cannot be contracted for or disposed of without writing. Murley v. Ennis, 2 Colo. 300 (1874).

Subsequent oral modification unenforceable. A contract for the sale of land required to be in writing cannot be validly changed or modified as to a material condition, by a subsequent oral agreement, without more, so as to make the original written agreement, as orally modified, an enforceable obligation. Burnford v. Blanning, 189 Colo. 292 , 540 P.2d 337 (1975).

Exceptions to unenforceability of subsequent oral modification. Exceptions to general rule that contracts for sale of land cannot be modified by subsequent parol agreement include: (1) When subsequent oral agreement amounts to revocation of written contract; and (2) when party consents to, or requests postponement of, performance by other party which is for his benefit and other party has acted on such request or consent. Urton & Co. v. Poznik, 181 Colo. 15 , 506 P.2d 741 (1973).

Contracts for the sale of land can be modified by subsequent oral agreement if a party consents to or requests a postponement of performance by the other party which is for the requesting party's benefit and the other party has acted thereon. Colo. Inv. Servs., Inc. v. Hager, 685 P.2d 1371 (Colo. App. 1984).

When oral agreement not violative of statute. Where an oral modification agreed to by the parties has been performed, a contract which affects interests in real property may be modified as to a material condition by a subsequent oral agreement without violating the statute of frauds. Discovery Land & Dev. Co. v. Colorado-Aspen Dev. Corp., 40 Colo. App. 292, 577 P.2d 1101 (1977).

IV. NOTE OR MEMORANDUM.

Required contents of "note or memorandum". The "note or memorandum" required upon sale of real estate must show on its face or by reference to other writings: (1) The names of the parties, vendor, and vendee; (2) the terms and conditions of the contract; (3) the interest or property affected; and (4) the consideration to be paid therefor. Eppich v. Clifford, 6 Colo. 493 (1883); Micheli v. Taylor, 114 Colo. 258 , 159 P.2d 912 (1945).

Nexus required between writings. Where more than one writing is used to satisfy the requirements of the statute of frauds, some nexus between the writings must be shown. While the phrase "internal reference" is often used to describe the requisite nexus, it need not be in the form of express cross-references between the writings. Instead, the requirement may be satisfied by parol evidence where it is apparent that the memoranda referred to the same subject matter or transaction. Bennett v. Moring, 33 Colo. App. 390, 522 P.2d 741 (1974).

Business record qualifies as memorandum. "Church Roll and Record", a regular business record, although kept in a rather informal manner, qualifies as a memorandum capable of satisfying the statute of frauds. Bennett v. Moring, 33 Colo. App. 390, 522 P.2d 741 (1974).

V. COMPLETE PERFORMANCE AND PART PERFORMANCE.

Section is inapplicable when performance of contract is shown. Babcock v. Bouton, 85 Colo. 327 , 275 P. 908 (1929); Rupp v. Hill, 149 Colo. 48 , 367 P.2d 746 (1961); Ridgeway v. Pope, 163 Colo. 160 , 430 P.2d 77 (1967).

An oral contract for a one-fourth interest in the water of a spring, based on a valuable consideration, and which is performed by both parties, except as to the expenses that may arise in the future, is such a complete performance on both sides as will remove the bar of the statute. Vandewark v. Widman, 79 Colo. 82, 243 P. 622 (1926).

Full performance of a parol contract respecting the construction of an irrigating ditch and the right-of-way therefor takes the case out of the operation of the statute of frauds. Tynon v. Despain, 22 Colo. 240, 43 P. 1039 (1896).

Part payment and partial performance complies with section. A written receipt given as part payment reciting balance due, together with partial performance, is sufficient to overcome claim that contract violated this section. Tolley v. Fritsinger, 150 Colo. 440 , 374 P.2d 364 (1962).

Contracts enforceable where there is substantial part performance. Where there is substantial part performance, which would result in injustice, courts of equity will enforce contracts which otherwise might be unenforceable under the statute of frauds. Siler v. Inv. Sec. Co., 125 Colo. 438 , 244 P.2d 877 (1952).

Payment of profits from jointly owned land partial performance. Where there is an accounting between parties when one party paid over half the profits from jointly owned land there is such partial performance of a contract conveying a one-half interest in land as would take the contract from under the statute. Bushner v. Bushner, 134 Colo. 509 , 307 P.2d 204 (1957).

Money expended for labor and building materials sufficient part performance. Where persons expended from $1,200 to $1,500 in labor and materials in building their home on another's land in reliance on owner's consent, it is clearly apparent that there was sufficient part performance to overcome the defense of the statute of frauds. Zamboni v. Graham, 104 Colo. 23 , 88 P.2d 98 (1939).

Part performance may take the place of a writing under the statute of frauds and will permit enforcement of an otherwise unenforceable oral contract. Walk v. Miller, 650 P.2d 1286 (Colo. App. 1981); Ralston Oil and Gas Co. v. July Corp., 719 P.2d 334 (Colo. App. 1985); L.V. Cattle Co. v. Wilson, 714 P.2d 1344 (Colo. App. 1986); A & R Co. v. Union Air Transp., Inc., 738 P.2d 73 (Colo. App. 1987).

Standards used in determining part performance. Part performance consists of performing something required by the contract, such as the payment of rent, plus the taking of possession by the tenant and the installation of trade fixtures or other similar equipment of a type that is indicative of a long-term tenancy. A & R Co. v. Union Air Transp., Inc., 738 P.2d 73 (Colo. App. 1987).

A party relying on part performance to defeat a defense based on the statute of frauds must show that the partial performance is more consistent with the terms of the contract than with some other arrangement, such as a month-to-month tenancy or a tenancy at will. A & R Co. v. Union Air Transp., Inc., 738 P.2d 73 (Colo. App. 1987).

Mere possession of property is not substantial part performance if possession may be attributed to some arrangement other than the one under the alleged oral agreement. A & R Co. v. Union Air Transp., Inc., 738 P.2d 73 (Colo. App. 1987).

In many cases where part performance has been allowed to defeat a statute of frauds defense, either a tenant or a putative owner has taken possession of the premises and made extensive improvements or expenditures in preparing to occupy the property in reliance on an oral agreement. A & R Co. v. Union Air Transp., Inc., 738 P.2d 73 (Colo. App. 1987).

Evidence insufficient to prove part performance. Walk v. Miller, 650 P.2d 1286 (Colo. App. 1981); Tripp v. Shelter Research Inc., 729 P.2d 1024 (Colo. App. 1986).

I. GENERAL CONSIDERATION.

Law reviews. For article, "Part Performance and the Statute of Frauds in Colorado", see 2 Rocky Mt. L. Rev. 209 (1930). For article, "The Remedy of Specific Performance in Colorado Contracts", Part I, see 8 Rocky Mt. L. Rev. 15 (1935); Part II, see 8 Rocky Mt. L. Rev. 106 (1936).

Applied in Foster v. Caffey, 71 Colo. 171 , 204 P. 900 (1922); Sackett v. Rodeck, 75 Colo. 425 , 226 P. 295 (1924); Thornton v. Schobe, 79 Colo. 25 , 243 P. 617 (1925); Moschetti v. Santarelli, 82 Colo. 346 , 259 P. 515 (1927); Jutten v. Deeble, 88 Colo. 301 , 295 P. 496 (1931); French v. Mitchell, 92 Colo. 532 , 22 P.2d 644 (1933); Boyd v. McElroy, 105 Colo. 527 , 100 P.2d 624 (1940); Poznik v. Urton & Co., 30 Colo. App. 475, 496 P.2d 1073 (1972).

II. SPECIFIC PERFORMANCE.

Specific performance enforceable for part performance. Specific performance of an oral contract will be enforced in favor of one who has partly performed it. Van Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890); Knoff v. Grace, 68 Colo. 527, 190 P. 526 (1920).

Essential contract terms must be established to justify specific performance of parole contract. In order to justify the specific performance of a parol contract for the sale of land on the ground of part performance, it is necessary that all the essential terms of the contract must first be established by competent evidence and shown to be definite, certain, clear, and unambiguous. Mestas v. Martini, 113 Colo. 108 , 155 P.2d 161 (1944).

Where the purchaser of lands has partly performed under a verbal contract, he can recover for what he has done in pursuance of the oral agreement where the vendor insists upon the statute of frauds and refuses to perform. Colo. Lumber, Land, & Imp. Co. v. Dustin, 38 Colo. 398, 87 P. 1142 (1906); Drier v. Sherwood, 77 Colo. 539, 238 P. 38 (1925).

Sufficient consideration required for enforceability of agreement. An agreement, whether within or without the statute of frauds, must be founded upon a sufficient consideration before a court of equity will enforce it. Beulah Marble Co. v. Mattice, 22 Colo. 547, 45 P. 432 (1896).

Cause of performance other than contract alleged insufficient. What is fairly referable to some cause other than the contract as alleged will not be regarded as sufficient part performance to justify a decree of specific performance. Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890); Knoff v. Grace, 68 Colo. 527, 190 P. 526 (1920).

Requisites for rescission of oral contract for land purchase. Where a party has rendered services, or paid money, in consideration of an oral contract for the purchase of land, he cannot rescind such contract and recover for such services, or the money paid, unless the other party insists upon the statute of frauds, and refuses to perform it on his part. Colo. Lumber, Land, & Imp. Co. v. Dustin, 38 Colo. 398, 87 P. 1142 (1906).

Evidence of parol contract inadmissible where written contract alleged. In an action for specific performance of a contract to convey land, where the complaint alleges a written contract, evidence of a parol contract taken out of the statute of frauds by part performance is inadmissible to support the action. People's Mining & Milling Co. v. Central Consol. Mines Corp., 20 Colo. App. 561, 80 P. 479 (1905).

A trial court has discretion to grant the equitable relief of specific performance while the jury concurrently deliberates on the award of damages in cases where the damages are in no way contingent upon the trial court's equity decision. Soneff v. Harlan, 712 P.2d 1084 (Colo. App. 1985).

III. PART PERFORMANCE.

Part performance removes contract from bar of statute of frauds. Part performance of a contract removes it from the bar of the statute of frauds. Ridgeway v. Pope, 163 Colo. 160 , 430 P.2d 77 (1967).

Acts of part performance must be pursuant to verbal contract. Acts of part performance, such as will furnish a foundation for enforcing a verbal contract respecting land otherwise void under the statute of frauds, must be such as are done in pursuance, or according to the terms, of the contract, and which in some manner affect or change the relation of the parties in respect to the property whereby one of the parties would be defrauded if the contract were not enforced. Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890).

Absent agreement, no acts of part performance would exist. The part performance, which will bring a contract within the provisions of this section, must consist of an act or of acts which it clearly appears the performing party would not have done in the absence of the agreement or without a direct view to its performance. Horton v. Stegmyer, 175 F. 756, 20 Ann. Cas. 1134 (8th Cir. 1913); Brown v. Johanson, 69 Colo. 400, 194 P. 943 (1920).

Money expended for labor and building materials constitute part performance. Where persons expended from $1,200 to $1,500 in labor and materials in building their home on another's land in reliance on owner's consent, it is clearly apparent that there was sufficient part performance to overcome the defense of the statute of frauds. Zamboni v. Graham, 104 Colo. 23 , 88 P.2d 98 (1939); Hill v. Chambers, 136 Colo. 129 , 314 P.2d 707 (1957).

Actual possession and making improvements constitute sufficient part performance. The most important acts which constitute a sufficient part performance to authorize courts of equity to decree specific performance are actual possession, and the making of permanent and valuable improvements. Hunt v. Hayt, 10 Colo. 278, 15 P. 410 (1887).

Where the plaintiff solicited defendant to quit his ranch, move to town, take possession of, furnish, and conduct a hotel on certain premises, promising that if he would do so, he, plaintiff, would execute to him a lease of the hotel at a specified rent for a specified term of years, and the defendant complied with this request, removed from his ranch, assumed possession of, and furnished, the hotel, and paid rentals monthly for several months, such acts constitute a sufficient part performance to entitle defendant to specific performance of the contract lease. Adcock v. Lieber, 51 Colo. 373, 117 P. 993 (1911).

Mere possession will not be deemed part performance sufficient to justify such relief when it may fairly be referable to some other cause than the execution of the contract. Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890).

Plaintiff has burden of proof. In an action to compel defendant to execute a written lease to premises for a term of two years, the burden of proof was upon plaintiff to establish by a preponderance of the evidence that he and the defendant made an oral contract for a written lease of the premises for a period of two years and, that in reliance upon this contract, he had entered into possession and partly performed it. Kiter v. Owen, 115 Colo. 7 , 168 P.2d 254 (1946).

I. GENERAL CONSIDERATION.

Law reviews. For article, "The Remedy of Specific Performance in Colorado Contracts", Part I, see 8 Rocky Mt. L. Rev. 15 (1935); Part II, see 8 Rocky Mt. L. Rev. 106 (1936). For article, "One Year Review of Cases on Contracts", see 33 Dicta 57 (1956). For article, "Domestic Case Update", which discusses cases concerning antenuptial agreements, see 14 Colo. Law. 209 (1985).

Purpose of statute of frauds. The statute is to be invoked for the purpose of preventing the commission of a fraud. Walker v. Bruce, 44 Colo. 109, 97 P. 250 (1908).

Statute of frauds furnishes rule of evidence, but not of pleading. Tucker v. Edwards, 7 Colo. 209, 3 P. 233 (1883); Garbanati v. Fassbinder, 15 Colo. 535, 25 P. 991 (1890); Ruth v. Smith, 29 Colo. 154, 68 P. 278 (1901).

Plea of statute of frauds is personal privilege; if not pleaded, it will be regarded as waived. Benjamin v. Mattler, 3 Colo. App. 227, 32 P. 837 (1893).

Statute of frauds must be specially pleaded, if relied upon in defense. Benjamin v. Mattler, 3 Colo. App. 227, 32 P. 837 (1893); Schildt v. Topliss, 98 Colo. 464 , 56 P.2d 1328 (1936).

In an action upon an oral contract, the defense that it was an agreement to answer for the debt of another and void under this section because it is not in writing is not available to defendant unless the statute be pleaded. Hamill v. Hall, 4 Colo. App. 290, 35 P. 927 (1894); Cerrusite Mining Co. v. Steele, 18 Colo. App. 216, 70 P. 1091 (1902).

Unless contractual violation shown in complaint. Tucker v. Edwards, 7 Colo. 209, 3 P. 233 (1883); Hunt v. Hayt, 10 Colo. 278, 15 P. 410 (1887); Garbanati v. Fassbinder, 15 Colo. 535, 25 P. 991 (1890); Hamill v. Hall, 4 Colo. App. 290, 35 P. 927 (1894); Tynon v. Despain, 22 Colo. 240, 43 P. 1039 (1896).

Because the statute of frauds is a defense of which the defendant may or may not avail himself, and if he desires to take advantage thereof, unless the infirmity appears in the complaint, he must affirmatively plead it by answer and he must rely upon it at the trial. Hunt v. Hayt, 10 Colo. 278 , 15 P. 410 (1887); Pettit v. Mayhew, 43 Colo. 274 , 95 P. 939 (1908); Kingdom of Gilpin Mines, Inc. v. McNeill, 88 Colo. 44 , 291 P. 1036 (1930); Gage v. Young, 95 Colo. 130 , 33 P.2d 389 (1934).

Where the action alleges a contract price which does not appear in the writing relied upon, the writing is not sufficient to take the contract out of the statute of frauds. Howse v. Crumb, 143 Colo. 90 , 352 P.2d 285 (1960).

Where the contract sued upon is denied by the answer, the statute of frauds is available without being specially pleaded. Salomon v. McRae, 9 Colo. App. 23, 47 P. 409 (1896); Sch. Dist. No. 46 v. Johnson, 26 Colo. App. 433, 143 P. 264 (1914).

Part-performance exception applied in the case of an oral joint venture partnership agreement where performance by both parties was substantial and consistent with evidence of the terms of the joint venture. McCrea & Co. Auctioneers, Inc. v. Dwyer Auto Body, 799 P.2d 394 (Colo. App. 1989) (disagreeing with Sch. Dist. No. 46 v. Johnson).

Parol agreement to reduce contract to writing unenforceable. A parol agreement to reduce to writing a contract which is within the statute of frauds is unenforceable because a contract that is unenforceable by reason of the statute cannot be made indirectly enforceable by promising to execute a sufficient memorandum or otherwise to satisfy the requirements of the statute. Rupp v. Hill, 149 Colo. 48 , 367 P.2d 746 (1961).

Full performance by party makes void contract binding. Although a contract may have been void under the statute of frauds, nevertheless, if it has been fully performed by one of the parties, it is binding on the other party. Schust v. Perington, 169 Colo. 39 , 453 P.2d 599 (1969).

When statute not defense to action on loan agreement. The statute of frauds is not available as a defense to an action on a loan agreement where the agreement has been fully performed by plaintiff. Nissen v. Dews, 43 Colo. App. 228, 603 P.2d 966 (1979).

Valid contract not altered by void subsequent oral agreement. Subsequent void oral agreement cannot alter, revoke, or modify previous valid contract. Harvey v. Morey, 22 Colo. 412, 45 P. 383 (1896).

Action may be maintained in Colorado on a contract valid where made, notwithstanding it would be void under the Colorado statute of frauds, if made in Colorado. Wolf v. Burke, 18 Colo. 264, 32 P. 427 (1893).

Applied in Schilling v. Rominger, 4 Colo. 1 00 (1878); Little v. Dougherty, 11 Colo. 1 03 , 17 P. 292 (1887); Von Trotha v. Bamberger, 15 Colo. 1, 24 P. 883 (1890); Hill v. Groesbeck, 29 Colo. 161 , 67 P. 167 (1901); Hall v. Allen, 46 Colo. 355 , 104 P. 489 (1909); Yost v. Irwin, 53 Colo. 269 , 125 P. 526 (1912); Jones v. Ceres Inv. Co., 60 Colo. 562 , 154 P. 745 (1916); Jasper v. Bicknell, 68 Colo. 308 , 191 P. 115 (1920); Johnson v. Sanchez, 72 Colo. 514 , 212 P. 522 (1923); Enyart v. Orr, 78 Colo. 6 , 238 P. 29 (1925); Heuschkel v. Wagner, 78 Colo. 6 1, 239 P. 873 (1925); Clayton Coal Co. v. King, 108 Colo. 63 , 113 P.2d 672 (1941); Hoff v. Armbruster, 125 Colo. 198 , 242 P.2d 604 (1952); Lindsey v. Oregon-Washington Plywood Co., 287 F.2d 710 (10th Cir. 1961); Kodekey Elecs., Inc. v. Merchanex Corp., 486 F.2d 449 (10th Cir. 1973); World of Sleep, Inc. v. Seidenfeld, 674 P.2d 1005 (Colo. App. 1983); In re Frontier Airlines, Inc., 121 B.R. 386 (Bankr. D. Colo. 1990 ).

II. THE MEMORANDUM.

A. Form and Sufficiency.

Agreement must express all essential conditions of bargain to satisfy section. To satisfy this section, the agreement or memorandum must, either by its own terms or by reference to some other writing, express with reasonable certainty all the conditions and essential elements of the bargain. Salomon v. McRae, 9 Colo. App. 23, 47 P. 409 (1896).

Several writings read in connection show memorandum of agreement. Several writings of different dates may be read in connection to show a memorandum of an agreement. Beckwith v. Talbot, 2 Colo. 639 (1875), aff'd, 95 U.S. 289, 24 L. Ed. 496 (1877).

The contract, which the parties have made, may be gathered from letters which have passed in correspondence between them; it is not necessary that every paper should contain all the necessary elements of the contract which may be authenticated and established through the medium of letters and separate writings and documents, provided that they refer to each other and to the same persons and things, and that they manifestly relate to the same contract and transaction. Beckwith v. Talbot, 2 Colo. 639 (1875), aff'd, 95 U.S. 289, 24 L. Ed. 496 (1877); Crystal Palace Flouring Mills Co. v. Butterfield, 15 Colo. App. 246, 61 P. 479 (1900); McClurg v. Crawford, 209 F. 340 (8th Cir. 1913); S.C. Ins. Co. v. Fisher, 698 P.2d 1369 (Colo. App. 1984).

Notices of premium due sufficient memorandum. Where each year the company sent notices of the premium due, identifying the contract, the dates between which the premium operated making the contract effective and subscribed to by an agent whose authority was not questioned, this is a sufficient memorandum as required by this section to take the obligation out of the statute of frauds. Mass. Bonding & Ins. Co. v. Bd. of County Comm'rs, 100 Colo. 398 , 68 P.2d 555 (1937).

Agreement between finance company's officers and creditor sufficient memorandum. An agreement between officers of finance company and creditor, providing for a manager to operate the creditor's business subject to the supervision and control of the officers of the finance company, is a sufficient memorandum to prevent this section being a bar in action against finance company to recover for goods sold to the creditor. Colo. Fin. Co. v. B.F. Bennet Oil Co., 110 Colo. 1 , 129 P.2d 299 (1942).

Letter insufficient to bind wife to payment of husband's debt. Where Mrs. B., who on account of the illness of her husband was attending to his business, wrote to his creditor the following letter: "Mr. H. You will find enclosed $50, all I can raise at present. I hope to be able to give you more very soon. Please give me credit, and oblige. Mr. B. is home sick. Mary B.". The letter was insufficient, under this section, to bind her to the payment of her husband's debt. Bohm v. Hoffer, 2 Colo. App. 146, 29 P. 905 (1892).

Extrinsic oral evidence inadmissible to vary written contract terms. Extrinsic oral evidence is inadmissible to contradict, add to, subtract from, or vary the terms of a written contract, and the rule applies with greater force to contracts required by the statute of frauds to be in writing. Randolph v. Helps, 9 Colo. 29, 10 P. 245 (1885); Nesmith v. Martin, 32 Colo. 77, 75 P. 590 (1904).

B. The Signature.

Term "subscribed" is substitute for term "signed". Coon v. Rigden, 4 Colo. 275 (1878).

Letters referring to contract evidence of assent and subscription. Where a contract was signed by one party and retained by the other, letters subsequently written by the latter, to which the contract was clearly referred, are sufficient to show his assent, and to show that he subscribed the contract within the meaning of this section. Beckwith v. Talbot, 2 Colo. 639 (1875), aff'd, 95 U.S. 289, 24 L. Ed. 496 (1877).

Bills initialed by salesman did not constitute memorandum in writing. Where a salesman sold bills of goods on credit and indorsed the bills thus: "O.K. McR.", the latter letters being his initials, the indorsement did not constitute an agreement or memorandum in writing within the meaning of this section, and that parol evidence was inadmissible to show that, by a prevailing custom of the trade, it was intended by the indorsement that the salesman should be answerable to his employer for the default of the purchaser in making payment. Salomon v. McRae, 9 Colo. App. 23, 47 P. 409 (1896).

III. AGREEMENTS NOT TO BE PERFORMED WITHIN ONE YEAR.

Agreement not performed within one year invalid generally. An agreement that by its terms is not to be performed within one year from the making thereof shall be invalid or void unless the agreement or some note or memorandum thereof is in writing and signed by the party to be charged. Lucas v. Whittaker Corp., 335 F. Supp. 889 (D. Colo. 1971), aff'd, 470 F.2d 326 (10th Cir. 1972).

Subsection (1)(a) inapplicable where possibility of performance within year. Subsection (1)(a) does not apply to oral contracts which may not be performed within one year. It refers to contracts which by their affirmative terms exclude performance within that time. Woodall v. Davis-Creswell Mfg. Co., 9 Colo. App. 198, 48 P. 670 (1897); Clark v. Perdue, 70 Colo. 589, 203 P. 655 (1922); Lloyd v. Grynberg, 464 F.2d 622 (10th Cir. 1972).

Oral agreement not to engage in business for three years void. An agreement, not to engage in a certain business at, or near, a certain place for a period of three years, is an agreement not to be performed within one year, and under this section is void unless in writing. DeBord v. Holcomb, 13 Colo. App. 161, 57 P. 548 (1899).

Subsection (1)(a) is inapplicable to leases. Sears v. Smith, 3 Colo. 287 (1877).

Subsection (1)(a) has no application to parol leases or contracts relating to any interests in lands. Northrup v. Nicklas, 115 Colo. 207 , 171 P.2d 417 (1946).

Oral agreement for yearly payments not within section. An oral agreement as to yearly payments of interest on a promissory note was not within this section for the original contract; a note payable on, or before, 10 years from date, could have been performed within one year. Kuhlmann v. McCormack, 116 Colo. 300 , 180 P.2d 863 (1947).

Oral promise to pay debts upon inheritance not within section. A debtor's oral promise to pay his debts if he should inherit an interest in his father's estate, notwithstanding his discharge in bankruptcy, is not an agreement not to be performed within one year. Winbourn v. Crump, 77 Colo. 574, 238 P. 58 (1925).

Agreement whose performance is contingent upon happening not within section. An oral agreement, the performance of which is dependent upon the happening of a certain contingency, is not within the statute if the contingency is such that it may occur within one year; and this is true, although the contingency may not in fact happen until after the expiration of the year, and although the parties may not have expected that it would occur within that period. Winbourn v. Crump, 77 Colo. 574, 238 P. 58 (1925).

Modification of lease by parol for period less than one year. A modification of a written lease by parol for a period less than one year is not within the statute of frauds. Doherty v. Doe, 18 Colo. 456, 33 P. 165 (1893).

Computation of time. The year mentioned in subsection (1)(a) runs from the day when the agreement is made, and not from the day when the performance is to begin. Sch. Dist. No. 46 v. Johnson, 26 Colo. App. 433, 143 P. 264 (1914).

Oral agreement for at-will employment. Where defense of statute of frauds raised, neither partial performance nor payment of compensation deemed sufficient to avoid bar of statute as to enforcement of entire contract. Chidester v. E. Gas & Fuel Assoc., 859 P.2d 222 (Colo. App. 1992).

While part performance can take an oral agreement out of this section, such part performance must be fairly referable to no other theory besides that allegedly contained within the oral agreement. Nelson v. Elway, 908 P.2d 102 (Colo. 1995).

Where an oral agreement to sponsor sporting events for two seasons allowed a party to terminate the agreement after one season, the option to terminate may fairly be interpreted as an alternative way to perform the agreement; therefore, the agreement may be performed within one year, and the statute of frauds does not void the agreement. Prof'l Bull Riders, Inc. v. Autozone, Inc., 113 P.3d 757 (Colo. 2005).

IV. PROMISE TO ANSWER FOR THE DEBT OF ANOTHER.

Promise is considered original when given for promisor's benefit, rather than to secure credit for a third party debtor. Cramblit v. Chateau Motel, Inc., 28 Colo. App. 213, 472, P.2d 183 (1970).

A promise by one, for himself, to pay for services rendered to another, is an original promise, and binding without writing. Tuttle v. Welty, 46 Colo. 25, 102 P. 1069 (1909); Spelts v. Anderson, 67 Colo. 63, 185 P. 468 (1919).

Where one, to promote his own interest, promises to pay the debt of another, the transaction constitutes an original contract and is not within the statute of frauds. Spelts v. Anderson, 67 Colo. 63 , 185 P. 468 (1919); Moon v. Greenlee, 69 Colo. 482 , 195 P. 1100 (1921); Takamine v. Hirschfeld, 81 Colo. 501 , 256 P. 312 (1927); Ady v. Weicker Transf. & Storage Co., 97 Colo. 230 , 48 P.2d 807 (1935); Mayer Oil Co. v. Schnepf, 100 Colo. 578 , 69 P.2d 775 (1937).

An agreement by a debtor to pay his creditor's obligation to a third party has never been regarded as a collateral promise, but wherever it is entered into upon a sufficient consideration and is accepted by the party to whom the money is to be paid, it has always been deemed an original promise, and enforceable by the party who is entitled to its advantages. Thatcher v. Rockwell, 4 Colo. 375 (1878), aff'd, 105 U.S. 467, 26 L. Ed. 949 (1881); Mulvany v. Gross, 1 Colo. App. 112, 27 P. 878 (1891).

The promise of one person, though in form to answer for the debt of another, if founded upon a new and sufficient consideration, moving from the creditor and promised to the promisor, and beneficial to the latter, is not within the statute of frauds, and need not be in writing. Green v. Morrison, 5 Colo. 18 (1879); De Walt v. Hartzell, 7 Colo. 601, 4 P. 1201 (1884); Maxwell v. Dell, 11 Colo. 415, 18 P. 561 (1888); Mulvany v. Gross, 1 Colo. App. 112, 27 P. 878 (1891); Green v. Latcham, 2 Colo. App. 416, 31 P. 233 (1892); Fisk v. Reser, 19 Colo. 88, 34 P. 572 (1893).

Promise of the secretary of a corporation to pay a balance for printing stock certificates if printer "would go ahead" and print them, which he did is an original promise and not within the statute of frauds. Takamine v. Hirschfeld, 81 Colo. 501, 256 P. 312 (1927).

An oral promise is collateral and thus barred by the statute of frauds, if the leading object of the promise is to become a surety or guarantor on the debt of another; the promise is original when the performance of the agreement directly benefits the promisor. Idealco, Inc. v. Gunnin, 746 P.2d 69 (Colo. App. 1987).

An original oral promise will only be enforced if the accrual of the benefit to the promisor is contingent upon performance by the promisee. Idealco, Inc. v. Gunnin, 746 P.2d 69 (Colo. App. 1987).

Applicability of subsection (1)(b). A bank, which ignorantly pays money to the holder of an instrument upon the faith of a third person's statement that he knows the holder to be the payee and which is afterwards compelled to pay the amount to the true payee, may recover the sum from the third person in an action for damages occasioned by the deceit, and subsection (1)(b) cannot be invoked in behalf of the defendant in such case, because his liability does not grow out of any special promise to answer for the debt, default, or miscarriage of another, nor upon any agreement required to be in writing. Lahay v. City Nat'l Bank, 15 Colo. 339, 25 P. 704 (1890).

Part performance which will withdraw a promise covered by subsection (1)(b) from the statute must consist of acts from which it clearly appears that the performing party would not have done in the absence of the agreement. Masinton v. Dean, 659 P.2d 50 (Colo. App. 1982).

What is done as part performance must be consistent with no theory other than the oral agreement, otherwise it does not tend to prove the latter. Masinton v. Dean, 659 P.2d 50 (Colo. App. 1982).

To be binding collateral agreement must be in writing. An agreement, if it is not collateral, but in the nature of an original agreement to pay the debt of another, founded on a sufficient consideration received by the promisor himself, is not within the provisions of subsection (1)(b), and therefore, need not be in writing; but, if the agreement to answer for the debt of another be wholly collateral, it must be in writing. Thatcher v. Rockwell, 4 Colo. 375 (1878), aff'd, 105 U.S. 467, 26 L. Ed. 949 (1881); Fisk v. Reser, 19 Colo. 88, 34 P. 572 (1893).

Words importing collateral undertaking. The words, "we will see the articles paid for", or equivalent words, standing alone and uncontrolled by circumstances showing a contrary intent, import a collateral undertaking, and are within the statute of frauds. Wagner v. Hallack, 3 Colo. 176 (1877); Clayton Coal Co. v. King, 108 Colo. 63 , 113 P.2d 672 (1941).

Where the president of an insolvent bank presented to one of the directors, who was also a depositor, a release of his claim in the latter capacity, and to induce the execution thereof, said to the director: "You shall have your money out of the assets of the bank if this settlement goes through." "I will take the assets of the bank, and make the money out of them, and you shall have every nickel." "You shall have all your money back, with interest." These words were a promise to pay the debt of the bank and the oral agreement is void under subsection (1)(b). Freeman v. Hampton, 67 Colo. 90, 185 P. 251 (1919).

Where defendant said concerning lumber purchased by another: "If he doesn't pay for it, I will", this is not an original undertaking, but a collateral promise and within the statute of frauds. Seal v. Colo. Coal & Lumber Co., 79 Colo. 141, 244 P. 469 (1926).

Agreement within statute where object is to become guarantor to promisee. When the leading object of the promise or agreement is to become guarantor or surety to the promisee for a debt for which a third party is and continues to be primarily liable, the agreement, whether made before or after, or at the time with the promise of the principal, is within the statute of frauds and not binding unless evidenced by writing. Cramblit v. Chateau Motel, Inc., 28 Colo. App. 213, 472 P.2d 183 (1970).

Where plaintiff sold to a tenant goods and charged them upon his books to such tenant, a promise by the landlord to pay such account, made without consideration, was a promise to pay the debt of another within subsection (1)(b), and was not binding unless made in writing. Burson v. Bogart, 18 Colo. App. 449, 72 P. 605 (1903).

Full performance of promise by plaintiff removes matter from statute. Assuming that the alleged promises of the defendants amounted to a special promise to answer for the debt of another person, the full performance on the part of plaintiff of the acts required of him under the oral agreement would remove the case from the statute of frauds. Schust v. Perington, 169 Colo. 39 , 453 P.2d 599 (1969).

Promise to pay another's debt for consideration not within statute. Where one promises to pay the debt of another in consideration of money or property received from the debtor for the expressed purpose of paying the debt, the promise is not within the statute of frauds. Hughes v. Fisher, 10 Colo. 383 , 15 P. 702 (1887); Durkee v. Conklin, 13 Colo. App. 313, 57 P. 486 (1899); Cerrusite Mining Co. v. Steele, 18 Colo. App. 216, 70 P. 1091 (1902); McIntire v. Schiffer, 31 Colo. 246 , 72 P. 1056 (1903); Burson v. Bogart, 49 Colo. 410 , 113 P. 516 (1911); Argys v. McGlothlen, 130 Colo. 490 , 276 P.2d 983 (1954).

Where, after the plaintiff refused to sell supplies to a corporation lacking credit, the defendant then said: "Charge these things to me, and let the boys at the mine have what they need", the promise was original rather than collateral or of guaranty; hence, not within the statute. Redington v. Jenkins-McKay Hdwe. Co., 111 Colo. 363 , 141 P.2d 891 (1943).

Return to work on promise of payment of wages not within statute. Where oil drillers ceased work because of default of payment of their wages by the original contractor, and returned to work on the promise of officers of the owner company that the latter would see that their wages were paid, the promise is not within the statute of frauds. Mayer Oil Co. v. Schnepf, 100 Colo. 578 , 69 P.2d 775 (1937).

Promise to assume notes for purchase of property not within statute. Where defendants purchased property of plaintiffs incumbered by trust deed, and orally agreed to assume the notes secured thereby, such promise is not an agreement to answer for the debt of another person within the meaning of subsection (1)(b). Enos v. Anderson, 40 Colo. 395, 93 P. 475 (1907).

Payment of note in exchange for conveyance of property not within statute. A promise to a debtor to pay his debt in consideration of the conveyance of property to the promisor is not within the statute of frauds. Enos v. Anderson, 40 Colo. 395, 93 P. 475 (1907); Burson v. Bogart, 49 Colo. 410, 113 P. 516 (1911); United States Mining Corp. v. Fred Goble, Inc., 82 Colo. 59, 256 P. 1091 (1927).

Where, in exchange for property conveyed to her by her husband, the wife promised to pay off the husband's note, the agreement was nothing more than a promise to perform an obligation in consideration of which the lands were conveyed to her; this agreement constituted an original contract by the wife, not within the statute of frauds. Green v. Richardson, 4 Colo. 584 (1879); McIntire v. Schiffer, 31 Colo. 246, 72 P. 1056 (1903).

Where agreement not promise to pay another's debt. An agreement to place a person's name upon a settlement check is not a promise to pay the debt of another, although performance of the promise may result in the discharge of the debt of another. Davis v. Ciancio, 172 Colo. 54 , 470 P.2d 30 (1970).

Partnership, agreeing that a loan to one of partners would be a partnership debt, is a direct and not collateral agreement and does not come within the statute. Kelsey v. Munson, 198 F. 841 (8th Cir. 1912).

A contract, by which certain expert witnesses were to testify in behalf of the managing officers of a mining corporation in an action against them for sending fraudulent statements through the mail in regard to the values of its properties, is a direct promise to pay the stipulated fees and expenses of the corporation and is not a contract to answer for the debt, default, or miscarriage of another within this section. Lincoln Mt. Gold Mining Co. v. Williams, 37 Colo. 193, 85 P. 844 (1906).

Test for liability for debt of another. The test for whether one by an oral promise becomes liable for the debts of another is whether or not a promise has been made as a surety of the debtor or as an original undertaking by the promisor. Seal v. Colo. Coal & Lumber Co., 79 Colo. 141, 244 P. 469 (1926).

Debtor and creditor may sue for breach of promise. Upon the breach of a promise to pay the debt of another in consideration of money or property received from the debtor, not only the debtor himself, but the creditor, may sue, even though the promise is made to the debtor alone. Argys v. McGlothlen, 130 Colo. 490 , 276 P.2d 983 (1954).

Plaintiff has burden of establishing that oral promise asserted was original and unconditional and thus amounted to an assumption by defendant of the direct liability for goods thereafter furnished to third parties. Clayton Coal Co. v. King, 108 Colo. 63 , 113 P.2d 672 (1941).

Novation of a guaranty is an original agreement rather than a collateral agreement and thus not within the purview of the statute of frauds. Moffat County State Bank v. Told, 780 P.2d 11 (Colo. App. 1989), aff'd, 800 P.2d 1320 ( Colo. 1990 ).

V. AGREEMENT MADE UPON CONSIDERATION OF MARRIAGE.

Writing required for antenuptial agreement. Antenuptial agreements conveying lands are included in that class of contracts required by this section to be in writing and signed by the party to be charged therewith, as equity will not permit subsection (1)(c) to be made an instrument for the perpetration of a fraud. Moore v. Allen, 26 Colo. 197, 57 P. 698, 77 Am. St. R. 255 (1899).

Widow's violation of antenuptial contract manifested bad faith. Where an oral contract was entered into between a husband and wife before their marriage wherein it was agreed that their property rights should not be affected by the marriage, and subsequent to their marriage they executed a written agreement in which each waived and released all right to the property of the other, and where the husband left a will in which no provision was made for the widow who attempted to repudiate both contracts as void, her violation of the solemn contracts was a manifestation of bad faith and ought not to be tolerated. Remington v. Remington, 69 Colo. 206, 193 P. 550 (1920).

Where the trial court concluded, and it was undisputed, that the obligations at issue were not made upon consideration of the parties marriage, the oral agreement was removed from the statute of frauds provision under this section. In re Lemoine-Hofmann, 827 P.2d 587 (Colo. App. 1992).

I. GENERAL CONSIDERATION.

Law reviews. For comment on Daniel v. Surratt (cited below), see 9 Rocky Mt. L. Rev. 98 (1936). For article, "A Decade of Colorado Law: Conflict of Laws, Security, Contracts and Equity", see 23 Rocky Mt. L. Rev. 247 (1951).

Applicability of section limited. This section applies only to sales of chattels in possession of the vendor or under his control. Weiland v. Potter, 8 Colo. App. 79, 44 P. 769 (1896).

Section inapplicable where bailee possesses goods. This section is inapplicable where, prior to the sale, the vendor has placed the goods in possession of a bailee, and such bailee, being informed of the sale, agrees to hold them for the purchaser. Weiland v. Potter, 8 Colo. App. 79, 44 P. 769 (1896); Hendrie & Bolthoff Mfg. Co. v. Collins, 13 Colo. App. 8, 56 P. 815 (1899); Hendrie & Bolthoff Mfg. Co. v. Collins, 29 Colo. 102, 67 P. 164 (1901); Jones v. Mackenzie Bros. Wall Paper & Paint Co., 19 Colo. App. 121, 73 P. 847 (1903); Morrison v. McCluer, 27 Colo. App. 264, 148 P. 380 (1915).

Effect of proof of bona fide sale. A case is not taken out of the statute by proving that the sale was, in fact, bona fide. Bartell v. Griffin, 47 Colo. 569, 108 P. 171 (1910); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Party entitled to attack validity of property transfer. In an action of replevin for property claimed by the plaintiff under a sale to him by a third person, the defendant, who was neither a creditor of, nor a subsequent purchaser from, such third person, could not attack the validity of the transfer of the property between such third person and the plaintiff on the ground of no actual change of possession. Klug v. Munce, 40 Colo. 276, 90 P. 603 (1907).

One who is neither the purchaser of an animal, nor the creditor of the one who sold it, cannot object that a purchase asserted by another was not accompanied by a change of possession. Graves v. Davenport, 45 Colo. 270, 100 P. 429 (1909).

Review by supreme court. This section cannot be invoked for the first time in the supreme court on review. Hunt v. Hayt, 10 Colo. 278, 15 P. 410 (1887); Benjamin v. Matler, 3 Colo. App. 227, 32 P. 837 (1893); Hamill v. Hall, 4 Colo. App. 290, 35 P. 927 (1894); Tynon v. Despain, 22 Colo. 240, 43 P. 1039 (1896); Painesville Nat'l Bank v. Hannan, 64 Colo. 301, 171 P. 364 (1918).

Applied in Goodrich v. Michael, 3 Colo. 77 (1876); Finding v. Hartman, 14 Colo. 596 , 23 P. 1004 (1890); McCraw v. Welch, 2 Colo. 284 (1892); Goard v. Gunn, 2 Colo. App. 66, 29 P. 918 (1892); Anders v. Barton, 3 Colo. App. 324, 33 P. 142 (1893); Goff v. Landon, 5 Colo. App. 452, 39 P. 69 (1895); Singer Mfg. Co. v. Converse, 23 Colo. 247 , 47 P. 264 (1896); Stanley v. Citizens' Coal & Coke Col., 24 Colo. 103 , 49 P. 35 (1897); Singer Mfg. Co. v. Bohen, 31 Colo. 444 , 72 P. 1097 (1903); Austin v. Terry, 38 Colo. 407 , 88 P. 189 (1906); Israel v. Day, 41 Colo. 52 , 92 P. 698 (1907); Morsch v. Lessig, 45 Colo. 168 , 100 P. 431 (1909); Visbet v. Federal Title & Trust Co., 229 F. 644 (8th Cir. 1915); Goad v. Corrington, 61 Colo. 43 7, 158 P. 284 (1916); Best & Co. v. Wolf Co., 67 Colo. 42 , 185 P. 371 (1919); Case Threshing Mach. Co. v. Reminger, 77 Colo. 595 , 238 P. 63 (1925); Daniel v. Surratt, 97 Colo. 43 , 46 P.2d 903 (1935); Foster v. Howell, 122 Colo. 64 , 220 P.2d 717 (1950).

II. SUFFICIENT DELIVERY AND CHANGE OF POSSESSION.

Acts necessary to constitute sufficient delivery and change of possession depend in a great measure upon the nature and situation of the property. Crymble v. Mulvaney, 21 Colo. 203, 40 P. 499 (1895).

Determination of sufficient delivery. If there is a full surrender upon the part of the vendor and a full assumption on the part of the vendee of the control and dominion of the subject of the sale, the delivery is sufficient. Cook v. Mann, 6 Colo. 21 (1881); Wilcox v. Jackson, 7 Colo. 521, 4 P. 966 (1884); Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886); Sweeney v. Coe, 12 Colo. 485, 21 P. 705 (1889); Herr v. Denver Milling & Mercantile Co., 13 Colo. 406, 22 P. 770 (1889); Atchison v. Graham, 14 Colo. 217, 23 P. 876 (1890); Felt v. Cleghorn, 2 Colo. App. 4, 29 P. 813 (1892); Springer v. Kreeger, 3 Colo. App. 487, 34 P. 269 (1893); Crymble v. Mulvaney, 21 Colo. 203, 40 P. 499 (1895); Hugus & Co. v. Hardenburg, 19 Colo. App. 464, 76 P. 543 (1904).

Where, at the time of the sale, chattels were not in the physical possession of the vendor but were under his control, and where the sale was not accompanied by an immediate delivery to the bank, or any delivery, nor was it followed by an actual and continued change of possession of the things sold, the sale is void. Reed v. Ardway State Bank, 102 Colo. 266 , 78 P.2d 624 (1938).

This section requires the removal of the property sold from the custody and control of the vendor whenever removal is possible, notwithstanding any expense or hardship the removal may entail. Burchinell v. Weinberger, 4 Colo. App. 6, 34 P. 911 (1893); Crymble v. Mulvaney, 21 Colo. 203, 40 P. 499 (1895).

Requirements of change of possession. The vendee of chattels must take actual possession of the articles sold, and the possession must be open, notorious, unequivocal, and such as to apprise the community that the goods have changed hands or that the sale is void as to creditors of the vendor. Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886); Sweeney v. Coe, 12 Colo. 485, 21 P. 705 (1889); Lloyd v. Williams, 6 Colo. App. 157, 40 P. 243 (1895); Willis v. Roberts, 18 Colo. App. 149, 70 P. 445 (1902).

The necessity of clear, unequivocal, and unmistakable change of possession, and retention of such possession by the vendee, has been properly, fully, and clearly asserted by the supreme court. Cook v. Mann, 6 Colo. 21 (1881); Wilcox v. Jackson, 7 Colo. 521, 4 P. 966 (1884); Herr v. Denver Milling & Mercantile Co., 13 Colo. 406, 22 P. 770 (1889); Baur v. Beall, 14 Colo. 383, 23 P. 345 (1890).

The possession taken by a purchaser of personalty must be actual, continued, visible, open, notorious, unequivocal, and exclusive. Cook v. Mann, 6 Colo. 21 (1881); Davis v. Patterson, 69 Colo. 226, 193 P. 662 (1920); Acott v. Sterling Hdwe. & Implement Co., 74 Colo. 195, 219 P. 1073 (1923); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Sale void absent visible indicia of change of ownership. The sale of a stock of goods in a store is void as no indicia of a change of ownership were visible, where the sign of the former proprietor, who made the sale, was permitted to remain on the building, the vendor frequented the store after the sale and occasionally made sales of goods himself; therefore, the retention of the old sign amounted to a declaration to the public that the former proprietor was still proprietor of the store and it gave to the transaction an equivocal character. Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886).

Gift of automobile by parent to minor child void as to creditors. Gift of an automobile by a parent to a minor child residing with him, unaccompanied by delivery and continued change of possession, is void as to creditors. Wilcoxen v. Morgan, 2 Colo. 473 (1875); Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886); Bartell v. Griffin, 47 Colo. 569, 108 P. 171 (1910); Goad v. Corrington, 61 Colo. 427, 158 P. 284 (1916); Davis v. Patterson, 69 Colo. 226, 193 P. 662 (1920); Chavez v. Haynie, 75 Colo. 414, 225 P. 852 (1924).

Purchaser's placing goods in locked room constituted possession. Where a purchaser of goods obtained possession thereof, put them in a room over which the vendor had no control, locked them up, took the key away, leaving a notice on the door that the goods were his, his possession satisfied the requirements of this section. Conly v. Friedman, 6 Colo. App. 160, 40 P. 348 (1895).

Conditional sale not avoided by vendor's continued possession. Where a bill of sale is made under an oral agreement that it shall be delivered only upon the happening of a certain event, the sale, being conditional, is not avoided by the fact that the vendor continued in possession until performance of the condition. Roberts v. Hawn, 20 Colo. 77, 36 P. 886 (1894).

If conditional sale is rescinded, seller is bound to immediately take and keep actual and continued possession of the personalty in order to make the transaction available against the buyer's creditors. Coors v. Reagan, 44 Colo. 126, 96 P. 966 (1908).

Rights of subsequent purchaser taking with knowledge of prior transaction. Where a sale of chattels is completed as between the parties thereto, but the possession temporarily remains with the vendor, a subsequent purchaser who has knowledge of the prior transaction takes subject to the rights of the prior vendee. McKee v. Bassick Mining Co., 8 Colo. 392, 8 P. 561 (1885).

Evidence admissible to determine actual change of possession of goods. Where the issue is as to whether an actual change of possession of the goods took place, the books of the warehouse in which they were stored, at and after the time of the sale, are admissible to show whether or not there has been such a change. Springer v. Kreeger, 3 Colo. App. 487, 34 P. 269 (1893).

Concurrent or joint possession inadmissible. A concurrent or joint possession between buyer and seller is not admissible. Cook v. Mann, 6 Colo. 21 (1881); Wilcox v. Jackson, 7 Colo. 521, 4 P. 966 (1884); Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886); Atchison v. Graham, 14 Colo. 217, 23 P. 876 (1890); Donovan v. Gathe, 3 Colo. App. 151, 32 P. 436 (1893); Bartell v. Griffin, 47 Colo. 569, 108 P. 171 (1910); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Purchaser's exclusive possession is question of fact for jury. A question as to whether exclusive possession of the chattels sold was given to the purchaser is one of fact for the jury. Eversman v. Clements, 6 Colo. App. 224, 40 P. 575 (1895).

III. RIGHTS OF CREDITORS.

Recording of bill of sale not notice to creditors. The recording of a bill of sale, the law not requiring or authorizing the recording of such instruments, is no notice to creditors of the vendor. Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886); Sweeney v. Coe, 12 Colo. 485, 21 P. 705 (1889); Allen v. Steiger, 17 Colo. 552, 31 P. 226 (1892); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Rights of parties unaffected by transfer subsequent to sale. The rights of the parties are not at all affected by any transfer which may be made subsequent to the time of the sale, even though the transfer may occur before any actual levy on the goods by creditors who have sued out attachments or have issued executions. Cook v. Mann, 6 Colo. 21 (1881); Ray v. Raymond, 8 Colo. 467, 9 P. 15 (1885); Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886); Sweeney v. Coe, 12 Colo. 485, 21 P. 705 (1889); Atchison v. Graham, 14 Colo. 217, 23 P. 876 (1890); Allen v. Steiger, 17 Colo. 552, 31 P. 226 (1892); Felt v. Cleghorn, 2 Colo. App. 4, 29 P. 813 (1892); Burchinell v. Weinberger, 4 Colo. App. 6, 34 P. 911 (1893); Autrey v. Bowen, 7 Colo. App. 408, 43 P. 908 (1896); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Creditor may secure debt by mortgage on property sold. A bona fide creditor may, notwithstanding notice or knowledge of a sale fraudulent and void under this section, secure his debt by mortgage on the property thus sold. Allen v. Steiger, 17 Colo. 552, 31 P. 226 (1892).

Creditor's knowledge of fraudulent sale inmaterial. Knowledge of creditors of a sale which is fraudulent and void under this section is immaterial. Cook v. Mann, 6 Colo. 21 (1881); Bassinger v. Spangler, 9 Colo. 175, 10 P. 809 (1886); Allen v. Steiger, 17 Colo. 552, 31 P. 226 (1892); Lloyd v. Williams, 6 Colo. App. 157, 40 P. 243 (1895); Willis v. Roberts, 18 Colo. App. 149, 70 P. 445 (1902); Helgert v. Stewart, 20 Colo. App. 202, 77 P. 1091 (1904); Bartell v. Griffin, 47 Colo. 569, 108 P. 171 (1910); Davis v. Patterson, 69 Colo. 226, 193 P. 662 (1920); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

A sale, not accompanied by delivery and followed by actual and continued change of possession, is fraudulent and void as to creditors of the vendor, notwithstanding such creditors had actual notice of the sale. Helgert v. Stewart, 20 Colo. App. 202, 77 P. 1091 (1904); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Voluntary property transfer to creditor not void as to other creditors. A voluntary transfer by a debtor to one of his creditors of certain horses and mules and wagons used by the debtor at his sawmill, in trust to sell the same and to apply the proceeds in payment of certain preferred creditors, the balance being accepted by the assignee in settlement of his own claim, is not void as to other creditors under this section, where a bill of sale of the property was executed by the debtor, and delivered to the assignee, and formal possession of the property surrendered to the assignee one day, and the property removed by the assignee from the mill the next. Bailey v. Johnson, 9 Colo. 365, 12 P. 209 (1886).

I. GENERAL CONSIDERATION.

Law reviews. For article, "Reaching Fraudulent Conveyances and Equitable Interests of Debtors", see 27 Dicta 137 (1950). For article, "Property Law", see 32 Dicta 420 (1955). For article, "An Aspect of Estate Planning in Colorado: The Revocable Inter Vivos Trust", see 43 Den. L.J. 296 (1966). For article, "Deeds in Lieu of Foreclosure", see 15 Colo. Law. 394 (1986). For article, "Perils of Pre-Bankruptcy Planning: Transfers, Exemptions and Taxes", see 17 Colo. Law. 1513 (1988). For article, "Colorado's New Fraudulent Transfer Statutes", see 20 Colo. Law. 1815 (1991).

Object of this section is to protect all persons against conveyances made to hinder or defraud them of their lawful suits, damages, forfeitures, debts, or demands. Gregory v. Filbeck, 12 Colo. 379, 21 P. 489 (1888).

Injured party deemed creditor. One who has sustained a personal injury by the negligence or misconduct of another is a creditor of the offending party within the meaning of this section even though his claim has not been reduced to judgment. Thuringer v. Trafton, 58 Colo. 250, 144 P. 866 (1914); Chalupa v. Preston, 65 Colo. 400, 177 P. 965 (1918).

"Creditor" includes persons with unlitigated claims against a defendant. Sands v. New Age Family P'ship, Ltd., 897 P.2d 917 (Colo. App. 1995).

"Obligation" includes the assumption by the debtor of a duty to transfer an asset as a fraudulent transfer, even though no actual transfer has as yet taken place. Sands v. New Age Family P'ship, Ltd., 897 P.2d 917 (Colo. App. 1995).

Neither "transfer" nor "obligation" refers to the creditor's claim against the debtor, but refers instead to the transaction by which the debtor sought to place assets beyond the reach of creditors. Sands v. New Age Family P'ship, Ltd., 897 P.2d 917 (Colo. App. 1995).

Hindering and delaying construed. The hindering and delaying meant by this section as vitiating an assignment is that hindrance and delay intended to be produced by the assignor through covin and malice, or for his own benefit and advantage. Burr v. Clement, 9 Colo. 1, 9 P. 633 (1885).

By listing the elements of hindrance, delay, or fraud in the disjunctive, the statute implies that each is to have substantive consequences and a creditor need only show that the debtor acted with one of the three elements in mind to support a remedy. Yetter Well Serv., Inc. v. Cimarron Oil Co., Inc., 841 P.2d 1068 (Colo. App. 1992).

A wrongful withholding within the meaning of § 5-12-102 (1)(a) need not involve actual fraud or be tortious in nature. Section 38-10-117 provides that any conveyance made with the intent to hinder, delay, or defraud creditors is fraudulent. Stansbury v. Comm'r of Internal Rev., 102 F.3d 1088 (10th Cir. 1996); Scott v. Comm'r of Internal Rev., 236 F.3d 1239 (10th Cir. 2001).

Corporate executive of insolvent company liable as a transferee of assets for unpaid income taxes and the interest that accrued since the taxes became due. Transferee liable under subsection (1) because conveyance was made with the intent to hinder, delay, or defraud creditors, in this case, the internal revenue service. While structuring the sale of the assets of the insolvent company, corporate executive (transferee) obtained multiple opinions on the foreseeable tax consequences. Informed by those opinions and his corporate acumen, executive knowingly chose to take a calculated risk. Scott v. Comm'r of Internal Rev., 236 F.3d 1239 (10th Cir. 2001).

Conveyance to hinder and delay creditors is void only as to the creditor intended to be hindered or delayed. Lathrop v. Pollard, 6 Colo. 424 (1882); Italian-American Bank v. Lepore, 79 Colo. 466, 246 P. 792 (1926).

Transaction held to constitute conveyance with intent to hinder creditors. Love v. Olson, 645 P.2d 861 (Colo. App. 1982).

There was no evidence of intent to defraud, hinder, or delay creditors where the evidence showed that the transferee knew of a pending lawsuit against the transferor, but expected the transferor to win the lawsuit and continue as a going concern. Walk-In Med. Ctrs., Inc. v. Breuer Capital Corp., 778 F. Supp. 1116 (D. Colo. 1991).

Evidence that the transferee knew of a judgment against the transferor does not by itself show intent to defraud, hinder, or delay. Walk-In Med. Ctrs., Inc. v. Breuer Capital Corp., 778 F. Supp. 1116 (D. Colo. 1991).

A good-faith conveyance between family members based upon a pre-existing debt may permissibly operate as a preference of a relative's loan even though it results in delay or hindrance to other creditors. Erjavec v. Herrick, 827 P.2d 615 (Colo. App. 1992).

Fraudulent conveyance not void, but voidable. Fraudulent conveyances are not void ab initio in Colorado; they are voidable. The fraudulent transferee can convey good title to a bona fide purchaser for value. Appel v. Steamboat Ski Corp. (In re Smythe), 32 B.R. 736 (Bankr. D. Colo. 1983).

No conveyance may be adjudged "fraudulent" against creditors without proof that: (1) The transferor was insolvent at the time of the transfer, or was rendered insolvent thereby; (2) the purpose of the conveyance was to defeat, hinder, or delay creditors; (3) the transferor acted with fraudulent intent or with an intent to benefit or to secure an advantage to himself; and (4) the transferee knew of, or participated in, the transferor's intent. Yetter Well Serv., Inc. v. Cimarron Oil Co., Inc., 841 P.2d 1068 (Colo. App. 1992).

In order to state a claim under this section to set aside a fraudulent conveyance, a plaintiff need not first have a judgment against the debtor. Emarine v. Haley, 892 P.2d 343 (Colo. App. 1994).

Lis pendens appropriate. A proceeding to set aside a conveyance pursuant to this section falls within the type of action upon which a lis pendens pursuant to C.R.C.P. 105(f) may be recorded. Crown Life Ins. Co. v. April Corp., 855 P.2d 12 (Colo. App. 1993).

The three-year statute of limitations set forth in § 13-80-101 applies to suits brought under this section. In re Walden, 207 B.R. 1 (D. Colo. 1997).

Applied in Gutheil v. Polichio, 103 Colo. 426 , 86 P.2d 972 (1939); Mohler v. Buena Vista Bank & Trust Co., 42 Colo. App. 4, 588 P.2d 894 (1978); In re Carter, 4 B.R. 692 (D. Colo. 1980 ); Zimmerman v. Mozer, 10 B.R. 1002 (D. Colo. 1981 ); Appel v. Steamboat Ski Corp. (In re Smythe), 28 B.R. 882 (Bankr. D. Colo. 1983 ); Smith Office Serv., Inc. v. Kelley, 762 P.2d 791 (Colo. App. 1988).

II. VOID CONVEYANCES.

Fraud may be inferred from the facts and circumstances of each case. Grimes v. Hill, 15 Colo. 359, 25 P. 698 (1890); Innis v. Carpenter, 4 Colo. App. 30, 34 P. 1011 (1893); Helm v. Brewster, 42 Colo. 25, 93 P. 1101 (1908); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Intent of conveyance necessary determination. The necessary and material thing to bring a case within the protection of this section is not that the party invoking its aid should have an existing cause of action or demand at the time the conveyance is made, but that the grantor intended by such conveyance to hinder, delay, or defraud creditors or other persons in the manner set forth in this section. Gregory v. Filbeck, 12 Colo. 379, 21 P. 489 (1888).

While it is true that a fraudulent intent must be participated in by both parties, grantor and grantee, or mortgagor and mortgagee, when such is the case, the conveyance or mortgage is null and void. Livingston v. Swofford Bros. Dry Goods Co., 12 Colo. App. 331, 56 P. 355 (1898); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

A sale of property, though for a full consideration, may be void, if made by the owner with intent to hinder, delay, or defraud his creditors, and if the vendee participated in such intent. Helm v. Brewster, 42 Colo. 25, 93 P. 1101 (1908); Reithmann v. Godsman, 23 Colo. 202, 46 P. 684 (1896); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Intent need only be to hinder or delay payment. That the transferor did not intend to defraud his creditors will not defeat a suit to void a transfer as fraudulent. If the transferor's intent was merely to hinder or to delay the payment of his creditors, the transfer will be voided. United States v. Morgan, 554 F. Supp. 582 (D. Colo. 1982).

Burden of proof to show that a conveyance is honest and made in good faith for valuable consideration and without intent to hinder, delay, or defraud creditors is on the transferee and transferor. In re Genova v. Champion, 33 B.R. 930 (Bankr. D. Colo. 1983).

Once a bankruptcy trustee shows a family transfer, burden of proof shifts to the transferee and transferor to show that the transfer was honest and that there was no intent to defraud. Also, the burden of proof of solvency is upon the debtor and the transferee and not upon the trustee. In re Genova v. Champion, 33 B.R. 930 (Bankr. D. Colo. 1983).

Void transfer invalid even between parties. Where an attempted transfer by deed of a party's interest in property is set aside as an attempt to defraud creditors, it is invalid as between the parties to the deed. Park State Bank v. McLean, 660 P.2d 13 (Colo. App. 1982).

Conveyance intended to defraud future creditors void. A conveyance intended to defraud creditors, is voidable not only as to existing, but as to future, creditors. Gregory v. Filbeck, 12 Colo. 379, 21 P. 489 (1888); Fish v. East, 114 F.2d 177 (10th Cir. 1940); House v. Johnson, 19 Colo. App. 524, 76 P. 743 (1904).

Party need not have been existing creditor at the time the conveyance was executed in order to invoke the protection of this section. House v. Johnson, 19 Colo. App. 524, 76 P. 743 (1904); Fish v. East, 114 F.2d 177 (10th Cir. 1940).

Action by judgment creditor to set aside conveyance maintainable. A judgment creditor may maintain an equitable action to set aside a fraudulent conveyance of real property by the debtor, and enforce its judgment lien thereon. Hugo Nat'l Bank v. Ashworth, 84 Colo. 362, 270 P. 553 (1928).

Bar to money judgments implicit in remedy. Implicit in this remedy is a bar to any money judgments against the fraudulent transferor since awarding the judgment creditor a money judgment would amount to an increase in the judgment debt owed to the judgment creditor by the fraudulent transferor. Miller v. Kaiser, 164 Colo. 206 , 433 P.2d 772 (1967).

Equity court has inherent power to award actual damages. A court of equity has the inherent power to award actual damages under certain circumstances in order to accomplish the fulfillment of the equitable remedy. Miller v. Kaiser, 164 Colo. 206 , 433 P.2d 772 (1967); Morris v. Askeland Enter., Inc., 17 P.3d 830 ( Colo. 2000 ).

When fraudulent transferee held personally liable. Under special circumstances which generally involve some activity of the fraudulent transferee in causing the property involved to be depreciated in value while in his hands or causing the property, either wholly or in part, to be placed beyond the reach of the court, it is in equity's power to hold a fraudulent transferee personally liable. Miller v. Kaiser, 164 Colo. 206 , 433 P.2d 772 (1967).

Property statements and debtor's oral admission admissible as evidence. In an action to set aside alleged fraudulent conveyances, property statements and oral admissions of the debtor are properly admitted. Gallegos v. Lajara Livestock Loan Co., 73 Colo. 325, 215 P. 131 (1923). See Whitescarver v. Interstate Trust Co., 71 Colo. 416, 207 P. 81 (1922).

Transfer not fraudulent because value of the property transferred was worth a great deal less than the amount owed. In re Genova v. Triangle Truck Serv., Inc., 40 B.R. 513 (Bankr. D. Colo. 1984).

III. TRANSACTIONS BETWEEN HUSBAND AND WIFE.

The decisions interpreting this section hold that married parties may stand in the relationship of debtor and creditor. Erjavec v. Herrick, 827 P.2d 615 (Colo. App. 1992).

Bona fide loan transaction required. Although husband and wife may stand in the relationship of debtor and creditor, a bona fide loan transaction must be established. Love v. Olson, 645 P.2d 861 (Colo. App. 1982); Erjavec v. Herrick, 827 P.2d 615 (Colo. App. 1992).

Lien enforceable on payment for land. Where a debtor transferred real property to his wife without consideration, in fraud of a judgment creditor, and the wife sold and conveyed the property to another, the creditor can establish and enforce his lien on the money to be paid by the purchaser of the land. Hugo Nat'l Bank v. Ashworth, 84 Colo. 362, 270 P. 553 (1928).

Wife may be "creditor" within the protection of this section based upon a judgment obtained subsequent to the conveyance. Linker v. Linker, 28 Colo. App. 136, 470 P.2d 882 (1970).

Wife's action against husband to set aside conveyance maintainable. A wife can maintain an action to set aside a conveyance by her husband, made with fraudulent intent, so as to enable her to collect alimony awarded in a divorce suit against him, though the cause for such divorce did not arise until after the conveyance was made. Gregory v. Filbeck, 12 Colo. 379, 21 P. 489 (1888); Hanscom v. Hanscom, 6 Colo. App. 97, 39 P. 885 (1895); Hall v. Harrington, 7 Colo. App. 474, 44 P. 365 (1896); Ruffenach v. Ruffenach, 13 Colo. App. 102, 56 P. 812 (1899); Fahey v. Fahey, 43 Colo. 354, 96 P. 251 (1908).

Conveyance by husband to his wife is deemed fraudulent, without regard to intent, if the conveyance is made without fair consideration and if the husband is insolvent at the time of making such conveyance, or if, by reason of such conveyance, he is rendered unable to pay his existing debts. Harvey v. Harvey, 841 P.2d 375 (Colo. App. 1992).

Parties related or married have burden of proving innocence and integrity. In a transaction between relatives or those connected in marriage, the parties thereto have the burden of establishing its innocence and integrity. Helm v. Brewster, 42 Colo. 25, 93 P. 1101 (1908); Chalupa v. Preston, 65 Colo. 400, 177 P. 965 (1918).

When a conveyance by an insolvent debtor to his wife is attacked by a creditor of the former at the time of such conveyance, the husband and wife are required to clearly establish that the transaction is honest, and that there is no intent to thereby hinder and defraud such creditor. First Nat'l Bank v. Kavanaugh, 7 Colo. App. 160, 43 P. 217 (1895); Helm v. Brewster, 42 Colo. 25 , 93 P. 1001 (1908); United States v. Morgan, 554 F. Supp. 582 (D. Colo. 1982 ); Harvey v. Harvey, 841 P.2d 375 (Colo. App. 1992); Erjavec v. Herrick, 827 P.2d 615 (Colo. App. 1992); U.S. v. Schaeffer, 245 B.R. 407 (D. Colo. 1999 ).

When transactions between spouses are challenged under this section, husband and wife bear the burden of establishing that the conveyance was honest, made in good faith for a valuable consideration, and without intent to hinder and defraud creditors in the collection of their judgment. Erjavec v. Herrick, 827 P.2d 615 (Colo. App. 1992).

Evidence sufficient to support the inference and conclusion that husband and wife possessed fraudulent intent to hinder or delay creditor where husband and wife admitted intention to transfer property in anticipation of an adverse outcome in litigation in favor of another creditor and the resulting depletion of husband's estate. Erjavec v. Herrick, 827 P.2d 615 (Colo. App. 1992).

Conveyances wife made with intent to hinder or defraud creditors. In re Weyand, 33 B.R. 553 (Bankr. D. Colo. 1983).

Defense of laches denied. Where, after a fraudulent conveyance of a boardinghouse to the wife by a husband, the business was run in the same manner as before, and the wife devoted no more time nor money in improving the property and business than she would have done had the title remained in her husband, the delay of a creditor of the husband in recovering judgment and in instituting a creditor's suit to set the conveyance aside is not prejudicial to either the husband or wife, and hence laches is no defense to the bill. Dubois v. Clark, 12 Colo. App. 220, 55 P. 750 (1898); Morgan v. King, 27 Colo. 539, 63 P. 416 (1900); Farris v. Wirt, 16 Colo. App. 1, 63 P. 946 (1901); Helm v. Brewster, 42 Colo. 25, 93 P. 1101 (1908).

ANNOTATION

Law reviews. For article, "Joint Tenancy in Colorado", see 26 Dicta 313 (1949). For article, "Simple Devices for the Transfer of Assets Without Administration", see 27 Dicta 277 (1950). For article, "Ownership of Personal Property Accumulated During a Marriage", see 17 Colo. Law. 623 (1988).

Rights fixed and vested at creation of joint tenancy. The rights are fixed and vested in the joint tenants at the time of the creation of the joint tenancy under this section. Smith v. Greenburg, 121 Colo. 417 , 218 P.2d 514 (1950).

To create joint tenancy with survivorship rights, there must be specific language manifesting such intent; where the instrument is silent or ambiguous as to the nature of the joint estate created, it will be construed as creating a tenancy in common and not a joint tenancy, and, if legal relief is sought, the naked wording alone without meeting statutory requirements will be insufficient to create a joint tenancy. Chilson v. Reed, 154 Colo. 149 , 389 P.2d 87 (1964).

Where a husband, possessing corporate stock certificates issued in his name, indorses and delivers them to another with the request that new certificates be procured therefor naming his wife and himself as joint tenants with the right of survivorship and not as tenants in common, a joint tenancy was established. Eisenhardt v. Lowell, 105 Colo. 417 , 98 P.2d 1001 (1940).

Circumstances unnecessary for creation of joint tenancy in bank account. It is not necessary for a joint tenant donee to have knowledge of the creation of the account, to sign a signature card, or to deposit or withdraw funds from the account in order to establish a valid joint tenancy in a bank account. Estate of Barnhart, 194 Colo. 505 , 574 P.2d 500 (1978).

In order to set aside joint tenancy properly created, it is necessary to show that the joint tenancy was created purely for the convenience or a business necessity of the putative donor, and that no right of survivorship was intended. Estate of Barnhart v. Burkhardt, 38 Colo. App. 544, 563 P.2d 972 (1977), aff'd, 194 Colo. 505 , 574 P.2d 500 (1978).

Applied in Sacco v. Oxley, 402 F.2d 155 (10th Cir. 1968).

I. GENERAL CONSIDERATION.

Law reviews. For comment, "Colorado's Wrongful Withholding of Security Deposits Act: Three Litigious Shares in an Untested Law", see 49 Den. L.J. 453 (1973). For article, "The Colorado Security Deposit Act", see 50 U. Colo. L. Rev. 29 (1978).

Purpose of section. From a consideration of the language of the entire section, it is evident that the legislative purpose of this section is to assure that tenants will not be wrongfully deprived of their security deposits, and that if so deprived they will be entitled to adequate judicial relief. Ball v. Weller, 39 Colo. App. 14, 563 P.2d 371 (1977).

This section is designed to assist tenants in vindicating their legal rights and to equalize the disparity in power which exists between landlord and tenant in conflicts over relatively small sums. Martin v. Allen, 193 Colo. 395 , 566 P.2d 1075 (1977).

This section provides a court remedy against landlords who withhold security deposits willfully and wrongfully, and the tenant's attorney should be paid for the time necessary to prevail; absent reasonable attorneys' fees, the security deposit law would not be enforced. Mau v. E.P.H. Corp., 638 P.2d 777 (Colo. 1981).

Security deposit actually belongs to tenant; it is only security for the landlord. Turner v. Lyon, 189 Colo. 234 , 539 P.2d 1241 (1975).

Landlords not absolved from notice requirement. The last sentence in subsection (1) does not absolve landlords from the notice requirement; it merely permits them, upon proper notice, to apply deposits against unpaid rent. Heatherridge Mgt. Co. v. Benson, 192 Colo. 190 , 558 P.2d 435 (1976).

Justification for requiring tenants to notify landlords prior to claiming treble damages, attorneys' fees, and court costs is to give the landlord one last week to return the security deposit. Turner v. Lyon, 189 Colo. 234 , 539 P.2d 1241 (1975).

"Willful" defined. The term "willful" in subsection (3)(a) means "deliberate". Turner v. Lyon, 189 Colo. 234 , 539 P.2d 1241 (1975).

When retention "willful". If the landlord deliberately fails to return the security deposit during the additional seven-day period, the retention is logically "willful" under this section. Turner v. Lyon, 189 Colo. 234 , 539 P.2d 1241 (1975).

Wrongful withholding of deposit determined. Failure to return the deposit, coupled with failure to provide a tenant with statutorily mandated written statement of reasons for the retention, makes the withholding of a deposit wrongful. Martinez v. Steinbaum, 623 P.2d 49 (Colo. 1981).

Deposit not "wrongfully" held. Where respondent authorized petitioner in writing to retain that portion of his deposit equal to one month's rent, petitioner did not withhold that part of the deposit "wrongfully", within the contemplation of subsection (3)(a). Heatherridge Mgt. Co. v. Benson, 192 Colo. 190 , 558 P.2d 435 (1976).

Evidence of landlord's good faith. The discrepancy between the amount of a security deposit retained and the amount of actual damages proved by the landlord is important evidence of his good faith. Guzman v. McDonald, 194 Colo. 160 , 570 P.2d 532 (1977).

Tenant may not accelerate statutory time requirements. McAuliffe v. Rooney, 38 Colo. App. 137, 552 P.2d 1031 (1976).

Where the statutory notice was given within the one-month period allowed by subsection (1), and only nine days after the surrender of the key to the premises, and suit was commenced prior to the expiration of the additional seven-day period contemplated by the notice requirements of subsection (3)(a), award of treble damages is improper. McAuliffe v. Rooney, 38 Colo. App. 137, 552 P.2d 1031 (1976).

A restrictive endorsement, by which a landlord attempts to create a waiver of a tenant's right to legal recourse, is void under this section. Anderson v. Rosebrook, 737 P.2d 417 (Colo. 1987).

A tenant cannot be compelled to arbitrate a claim for violation of the wrongful withholding of security deposits act. The act creates a cause of action enforceable in Colorado courts; the enforceability of the statutory cause of action in a legal proceeding cannot be limited or waived by an arbitration agreement. Thus an arbitration provision that would waive this cause of action in favor of mandatory arbitration is unenforceable to the extent that it applies to an action brought under the act. Ingold v. AIMCO/Bluffs, L.L.C. Apartments, 159 P.3d 116 ( Colo. 2007 ).

Statute as basis for jurisdiction. Houle v. Adams State Coll., 190 Colo. 406 , 547 P.2d 926 (1976).

Applied in In re Quintana, 28 B.R. 269 (Bankr. D. Colo. 1983).

II. TREBLE DAMAGES AND ATTORNEYS' FEES.

Constitutionality of attorneys' fees provision. The legitimate aims of subsection (3)(a) supply a rational basis for the distinction between prevailing tenant-plaintiffs, who are entitled to attorneys' fees, and prevailing landlord-defendants, who are not, and therefore the provision is constitutional. Torres v. Portillos, 638 P.2d 274 (Colo. 1981).

Equality of opportunity to recover attorneys' fees is not a fundamental right, and therefore the rational relationship test, not the strict scrutiny test, is the appropriate standard for equal protection review. Torres v. Portillos, 638 P.2d 274 (Colo. 1981).

Entitlement to attorneys' fees. Tenants who are successful on appeal are entitled to an award of reasonable attorneys' fees. Martin v. Allen, 193 Colo. 395 , 566 P.2d 1075 (1977); Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

Attorneys' fees allowable include those incurred on appeal. Martinez v. Steinbaum, 623 P.2d 49 (Colo. 1981).

Attorney fees allowable include those incurred in resolving an issue as to the amount of reasonable attorney fees incurred in the underlying litigation and those incurred on appeal. Mau v. E.P.H. Corp., 638 P.2d 777 (Colo. 1981).

Rationale for award of attorney fees. The reason this section provides for an award of attorney fees is two-fold: (1) To insulate the award of damages from being substantially reduced by the fees; and (2) to encourage the private bar to enforce its provisions in actions which generally involve small amounts of money. Ball v. Weller, 39 Colo. App. 14, 563 P.2d 371 (1977); Torres v. Portillos, 638 P.2d 274 ( Colo. 1981 ).

Successful tenants are entitled to recover attorney fees for landlord's independent actions challenging rulings and fee awards in the underlying security deposit litigation. Mishkin v. Young, 198 P.3d 1269 (Colo. App. 2008).

Hearing to determine amount of attorneys' fees. When a successful plaintiff has requested attorneys' fees in his complaint, such an award is mandatory, and it becomes incumbent upon the trial court to hold a hearing to determine the amount of reasonable attorneys' fees to be awarded. Ball v. Weller, 39 Colo. App. 14, 563 P.2d 371 (1977); Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

Awarding fees without hearing error. The trial court erred in awarding attorneys' fees to respondent without a hearing on their reasonableness. Heatherridge Mgt. Co. v. Benson, 192 Colo. 190 , 558 P.2d 435 (1976).

Factors considered in determining of reasonable fee. If the fee requested is reasonable in light of community standards and the other criteria to be considered by the court, it is not appropriate for a court to take into consideration what a major client may pay the attorney on an hourly basis or the possible absence of overhead expenses comparable to those borne by lawyers in private practice. Mau v. E.P.H. Corp., 638 P.2d 777 (Colo. 1981).

When penalty provision attaches. If a landlord does not return a security deposit within the required time, the penalty provision of subsection (3)(a) attaches to that portion of the money wrongfully retained, plus attorneys' fees, and court costs. Turner v. Lyon, 189 Colo. 234 , 539 P.2d 1241 (1975); Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

Where landlord deliberately fails to return security deposit within the additional seven-day period following the tenant's notice to landlord of his intention to file legal proceedings, such retention is logically "willful" under subsection (3)(a) treble damages provisions. Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

The purpose of the seven-day notice provision in subsection (3)(a) is to give landlords one last week to avoid treble damages by returning the security deposit. Mishkin v. Young, 107 P.3d 393 (Colo. 2005).

A landlord may not avoid treble damages by accounting for a security deposit during the seven-day period established by subsection (3)(a). The seven-day period is beyond the statutory deadline of subsection (1) and, therefore, the landlord has already forfeited all rights to retain the deposit. Mishkin v. Young, 107 P.3d 393 (Colo. 2005).

Statutory liability of subsection (3)(a) may be offset by an award, if any, made to the landlord by counterclaim for damages caused by the tenant to the property, and the landlord has the burden of proving the claim by a preponderance of the evidence. Turner v. Lyon, 189 Colo. 234 , 539 P.2d 1241 (1975).

Treble damages action not "frivolous" merely because landlord wins. A treble damages action under subsection (3)(a) cannot be characterized as "frivolous" or "groundless", as used in § 13-17-101(3), merely because the landlord prevails on the merits of his defense. Torres v. Portillos, 638 P.2d 274 (Colo. 1981).

Prospective renter was not entitled to treble damages pursuant to this section since deposit paid for rental of condominium unit was not a security deposit but was instead prepayment of the entire rent for said unit. Mtn. Queen Condo. Ass'n v. Haan, 753 P.2d 1234 (Colo. 1988).

Statute of limitations. The treble damages provision of this section, being penal in nature, is governed by the one-year statute of limitations; however, the recovery of the actual security deposit and the award of attorneys' fees, being remedial in nature, are limited by the six-year statute of limitations. Carlson v. McCoy, 193 Colo. 391 , 566 P.2d 1073 (1977).