1991

Fredericksburg Auto Auction, Inc. v. Department of Motor Vehicles

Supreme Court of Virginia

242 Va. 42, 406 S.E.2d 23

In 1988, the legislature created a Motor Vehicle Transaction Recovery Fund, currently Va. Code § 46.2-1527.1, to compensate victims of fraud committed by car dealers, including wholesale auto auctions. The statute required annual fees and one-time assessment fees. Three wholesale auction dealers filed for injunctive relief alleging several grounds, including that the statute was in violation of Article I, § 11 of the Constitution of Virginia, because of taking private property without due process, and for a private purpose. The trial court held the statute constitutional and dismissed the case. The Supreme Court affirmed. Because odometer fraud often occurred at the auctions, valid exercise of the police power was not a taking within the meaning of the Constitution. This was true even when the regulation imposed some economic burden on property. All citizens hold property subject to the proper exercise of police power for the common good. In those circumstances, no taking occurs, even if substantial economic loss results.

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