Farmers & Merchs.' Bank of L.A. v. City of Los Angeles

This is an action brought by plaintiff, a banking corporation, to recover from the city of Los Angeles the sum of $4,235.96, alleged to have been paid by plaintiff under protest for illegal taxes for the fiscal year 1902-1903. A general demurrer for want of facts sufficient to constitute a cause of action was interposed to the complaint and overruled. An answer denying certain allegations of the complaint having been filed, the cause was tried, and judgment went for plaintiff. Defendant appeals upon the judgment-roll.

It is contended that the complaint is fatally defective because it fails to aver that before the commencement of the action plaintiff presented any claim or demand for the amount sought to be recovered, or any portion thereof, to the city council of defendant.

The complaint of plaintiff contained no allegation whatever as to the presentation of any such 'claim or demand to the city council, or anything to show that the matter was in any way brought to the attention of that body before suit, except in so far as it was presented to it sitting and acting as a board of equalization on an application for the reduction of the assessment.

The freeholders’ charter of the city contains the following provisions in the matter of claims and 'demands:—

“Sec. 208. All claims and demands whatever against the city of Los Angeles, except interest on bonds and bonds of the

funded debt, shall be paid only on demands as herein provided for.

“Sec. 209. Said demands . . . shall be presented to the council on forms and blanks to be provided by the city clerk, and shall be referred to its committee on finance. The said committee shall, by indorsement thereon, approve or reject the same, in whole or in part. The council shall then consider the said demands and the action of said committee thereon, and shall, if the same be just and legal, approve the same; or may, if it so determine, approve in part or' reject the whole. . . .

“Sec. 216. No payment can be made from the city treasury, or out of the public funds of said city, unless the same be specially authorized by law or this charter, nor unless the demand which is paid be audited as in this charter provided. . . .

“Sec. 222. No suit shall be brought upon any claim for money or damages against the city of Los Angeles, . . . until a demand for the same has been presented as herein provided, and rejected in whole or in part. . . . ”

Under provisions of law of this character, it has always been held in this state that the presentation of a demand in the manner provided was a necessary prerequisite to the maintenance of a suit against a public corporation to recover money, and that a complaint containing no such allegation fails to state a cause of action. In McCann v. Sierra Co., 7 Cal. 121 , it was held in an action for damages for trespass that under a law providing that “no person shall sue a county in any case, for any demand, unless he .or she shall first present his or her claim to the board of supervisors for allowance, . . . ” it was essential to plaintiff’s recovery that the complaint contain an averment of presentation of the claim. The point was made in that case that the section only applied to actions ex contractu, but the court held it applicable in all cases, and held the intention of the legislature to have been to prevent the revenue of the county from being consumed in litigation, by providing that an opportunity of amicable adjustment should be first afforded to the county, before it could be charged with the costs of a suit. In People v. Supervisors, 28 Cal. 429 , it was declared that a claimant has no cause of action against a county for the recovery of money until

While it is true, so far as we have discovered, that the question has never been discussed in connection with a claim for the recovery of taxes paid under protest, we can perceive no material difference between such a claim and claims of the character considered in some of the decisions above cited. Such claims are often settled and paid when presented, and the presumption is that they always will be so paid, if they are just. The policy of the law applies as well to them as to-

It is doubtful whether section 3819 of the Political Code, relating to the recovery by suit of taxes paid under protest, is applicable to the city of Los Angeles. It is in terms limited to the matter of state and county taxes. Section 46 of the city charter, providing that “the mode and manner of collecting such municipal taxes, and enforcing such tax lien, and the proceedings thereafter, shall substantially be the same as the mode and manner at the time prescribed by law for the collection of state and county taxes in said county,” does not necessarily make the provisions of section 3819 of the Political Code applicable. Although this section, enacted several years after the adoption of the Los Angeles charter, was placed in the chapter entitled “Collection of Property Taxes,” it, strictly speaking, has nothing to do with the mode and manner of collecting taxes or enforcing the tax lien or with the “proceedings thereafter,” within the meaning of those words in the above provision. But, assuming that the charter provision should be read as making it applicable, it must be construed subject to the provisions of the charter as to claims and demands against the city. Such a construction would require presentation of the claims before suit. A provision practically the same as section 3819 of the Political Code was contained in an ordinance adopted by the city council of Los Angeles. If we assume that the provision must be construed as authorizing suit without any prior presentation of the claim to the city council, the ordinance provision must necessarily be held void because in conflict with the superior charter provisions. We do not think, however, that it must be so construed. It may very reasonably be construed as simply giving a legal claim against the city, to be presented to the city council before suit in the same manner that all other claims are required to be presented.

The making of the application for the reduction of the assessment by plaintiff to the city council sitting as a board of equalization, prior to .the payment by it of the money sought to be recovered, was of course not the presentation of any claim or demand so far as the alleged cause of action here involved was concerned.

There is no force in the contention that the council could not have allowed the claim, because the action of the board of equalization in refusing to reduce the assessment was conclusive as to the validity of the assessment. As to matters concerning which the action of such a board is conclusive, there is no power of review anywhere, even in an action to' recover the tax paid under protest, and plaintiff’s contention in this regard would leave it without any remedy whatever.

It cannot be held that the making-of a proper demand here would have been a vain and useless thing, and, therefore, was not required. We are satisfied that the city council had jurisdiction to allow the claim if properly presented. The fact that the board of equalization had several months before refused to reduce the assessment does not conclusively establish that the city would not have allowed the claim, but however that may be, the presentation of the claim or demand is, under the charter, a prerequisite to suit.

We can see no escape from the conclusion that the complaint, by reason of its failure to allege a presentation of a claim to the city council, must be held insufficient to support the judgment.

The judgment is reversed and the cause remanded, with leave to plaintiff to amend its complaint within such time as may be allowed therefor by the trial court.

I dissent, and am off opinion that the judgment ought to be affirmed.

This is an action brought by plaintiff, a banking corporation, to recover from the city of Los Angeles the sum of $4,235.96 alleged to have been paid by plaintiff under protest for illegal taxes for the fiscal year 1902-1903. Judgment went for plaintiff, and from the judgment defendant appeals.

Defendant demurred to the complaint upon the sole ground that it does not state facts sufficient to constitute a cause of action. It did not demur upon any special ground, nor did it interpose any pleading in the nature of a plea in abatement. The general demurrer was overruled, and defendant filed an answer in which some of the material allegations of the complaint were denied. A jury was waived, and the court made findings covering all the issues. No motion for a new trial was made. There is no bill of exceptions or statement, and therefore there is no evidence before us, and no point as to any error committed at the trial. All the points made by appellant for a reversal arise upon the general demurrer, appellant contending that the complaint does not state a cause of action.

The material facts as alleged in the complaint and found by the court which are necessary to be here stated, and which must on this appeal be taken as true, are briefly these: In April, 1902, plaintiff gave to the city assessor of the city of Los Angeles a verified statement in due form of all the personal property which it owned, possessed, or controlled at twelve o’clock m. on the first Monday of March, 1902. This statement showed that all the money which plaintiff had on said first Monday was $200,492.70, and the court found that “said statement was true and correct, and the plaintiff did not have in its possession or under its control any other, further or different sum of money.” But plaintiff, in addition to its general banking business, had, on adjoining premises, a safe-deposit department which was entirely distinct fi;om its general banking business, and from other vaults in which it kept money received from its general depositors; that on said first Monday of March, 1902, the defendant, by its treasurer, had in vault No. 19 of said safe-deposit department the sum of $352,997.38 of the moneys belonging to the

From the foregoing it is entirely clear that the plaintiff had, upon the real merits, a most just cause of action against the defendant. To allow the city to retain money paid by plaintiff as taxes on the city’s own property would be to violate any admissible conception of what is right and just. Indeed, defendant makes no pretense of a defense on the merits, but defends only on the ground that the complaint is fatally defective.

The main contention of appellant on the general demurrer, and the only one that really calls for much discussion, is that the complaint is fatally defective because it fails to aver that before the commencement of the action respondent presented any claim or demand for the amount sought to be recovered to the city council of appellant, which demand, appellant contends, was made necessary by sections- 208, 209, and 222 of the city charter. Section 208 is as follows: “All claims or demands whatever against the city of Los Angeles, except

It is apparent that this defense, founded upon a want of averment of demand, is, in the extreme sense, technical; it seeks to avoid a just judgment by taking refuge behind a general provision of law not intended for such purpose. But while it is true that a technical defense cannot be ignored, and must be maintained, when it blocks the way of obtaining a judgment on a meritorious cause of action by an obstacle so complete that it cannot be surmounted, or circumvented, or in any manner evaded, still the general rule is,—as stated by Baldwin, J., in Roland v. Kreyenhagen, 18 Cal. 457 , — that courts are justified in “regarding mere technicalities as obstacles to be avoided, rather than as principles to which effect is to be given in derogation of substantial rights.” A court will not maintain such a technicality unless there is no way of escaping it, unless it effectually closes every avenue through which the just judgment could be reached; and we do not think that the technical defense here under discussion is of that character.

Respondent makes numerous answers to appellant’s contention,—as, for instance, that the point of want of averment of demand cannot be reached by a general demurrer, but should have been presented by special demurrer or plea in abatement; that an involuntary trust was created against the city which rendered a demand unnecessary; that the veri

The contention of the appellant that the passage of said ordinance by the city council relative to the repayment of taxes under protest was ultra, vires and void is not maintainable. The city had full power over the assessment and collection of municipal taxes, and such power included the manner of collecting them under protest. The authority to refund is clearly an incident to the power to collect. The provision as to paying under protest is a salutary one and beneficial to both parties; if the protested tax is finally held to be good 1he municipality is not retarded in the collection of its revenue, and if it is held to be illegal the protestant has a remedy without running the hazard of losing his property by a refusal to pay in the first instance.

There is no merit in the contention that the taxes sought to be recovered were not paid under duress, and that the payment was therefore voluntary. The common-law rule as to distress of person or property does not apply to a statute expressly giving the right to pay under protest. (Stewart v. County of Alameda, 142 Cal. 660 , 662, 663, [ 76 Pac. 481 ], and cases there cited; Western Ranches v. Custer County,

The judgment appealed from should be affirmed.

Henshaw, J., and Lorigan, J., concurred.