Southern Service Co. v. County of Los Angeles

The plaintiff commenced an action under section 3804 of the Political Code to recover taxes alleged to have been illegally collected pursuant to an excessive tax rate adopted by the board of supervisors for the tax year 1933-1934. (See Otis v. Los Angeles County, 9 Cal. (2d) 366 [ 70 Pac. (2d) 633 ].) The plaintiff recovered a judgment for items aggregating $50.16. As to other items the court rendered judgment for the intervener, City of Los Angeles, and the defendant, County of Los Angeles. Both the plaintiff and the defendant, County of Los Angeles, have appealed from the judgment and the appeals are now pending in this court.

The present proceeding is a motion on behalf of the County of Los Angeles and the City of Los Angeles to dismiss the plaintiff’s appeal and for a direction to the trial court to dismiss the action on the ground that the same has abated by reason of the provisions of chapter 159, Statutes of 1939. The moving parties will be referred to as the defendants.

Chapter 159, approved May 16, 1939, is entitled: “An Act to Add Sections 3804.1, 3804.2 and 3804.3 to the Political

Section 1 adds section 3804.1 to the Political Code, reading as follows:

“No refund shall be made under section 3804 of this code, nor shall any action be hereafter commenced nor shall any action heretofore commenced be further prosecuted for the recovery, of any tax voluntarily paid which was levied prior to January 1, 1939, claimed to be erroneous or illegal, by reason of errors, omission or illegalities in preparing, transmitting, computing, determining or fixing the budget or tax rate or rates of any county, city and county, school district, municipal corporation or other public corporation, or political subdivision, in any case in which the taxes collected from such erroneous or illegal levy have been applied in the next or any succeeding fiscal year to reduce the tax levy for such year, or have been expended, appropriated, or applied for a public purpose. For the purposes of this section, the mere payment of a tax under protest shall not be deemed to constitute such payment an involuntary payment.”

Sections 3804.2 and 3804.3 also added to the Political Code by the new enactment provide for the time within which and the conditions under which claims for certain refunds of taxes may be filed; and the provisions thereof need not be specifically noted at this time. Sections 4806, 5097.3 and 5097.4 added to the Revenue and Taxation Code incorporate the language of sections 3804.1, 3804.2 and 3804.3 respectively added to the Political Code, to become effective only upon the adoption of a Revenue and Taxation Code by the 53d legislature. (Chap. 154, Stats, of 1939.)

In support of their motion the defendants have filed affidavits presenting further facts to establish the applicability of section 3804.1, namely, facts showing that the taxes collected from such erroneous or illegal levy have been applied in the next or a succeeding fiscal year to reduce the tax levy for such year, or have been expended, appropriated or applied for a public purpose. Upon the showing made the defendants are entitled to the relief sought by their motion, unless the provisions of section 3804.1 of the Political Code violate some provisions of the state or federal Constitutions.

The plaintiff paid the taxes herein involved prior to the date when they would have become delinquent. The payment was not made under protest. Subsequently the plaintiff filed its claim pursuant to section 3804 of the Political Code for a refund of that portion of the 1933-1934 tax payment claimed to have been excessive by reason of alleged errors in the preparation of the budget or the calculation of the tax rate, or both. The board of supervisors rejected the claim and the plaintiff filed its action thereon, which action was still pending when the legislature in 1939 added said section 3804.1 to the Political Code. The effect of that legislative action, pursuant to eases hereinafter cited, was to cut off the remedy to the plaintiff and to terminate the action herein unless the plaintiff had a vested property interest in or a contractual right to recover the claimed excessive portion of the taxes so paid.

It is the settled law of this state that illegal taxes voluntarily paid may not be recovered by the taxpayer in the absence of a statute permitting a refund thereof; and in the absence of such statute only illegal taxes paid under duress, coercion or compulsion are considered to have been involuntarily paid and therefore recoverable. (Brumagim v. Tillinghast, 18 Cal. 265 , 269, 271 [ 79 Am. Dec. 176 ]; Grimes v. County of Merced, 96 Cal. App. 76 , 81-83 [ 273 Pac. 839 ]; Maxwell v. San Luis Obispo County, 71 Cal. 466 [ 12 Pac. 484 ]. See, also, Brandt v. Riley, 139 Cal. App. 250 [ 33 Pac. (2d) 845 ], and cases hereinafter cited.)

The plaintiff concedes that the common law as to what constitutes an involuntary payment is the rule for the guidance of this court in determining whether the payment of the tax herein was voluntary or involuntary. The presence or absence of a written protest does not appear to be the distinguishing feature. That is, if the taxes were paid involuntarily, namely, “by means which amount to duress or

In Williams v. Corcoran, 46 Cal. 553 , 556, it was held that a threat to sell lands, made before the taxes had become delinquent, was idle and did not amount to coercion, citing Bucknall v. Story, supra, which approved and followed the rule of Brumagim v. Tillinghast, supra, to the effect that where there is no legal duress or coercion, the payment is voluntary.

In Bank of Woodland v. Webber, supra, the court held that the payment of a tax under protest was voluntary where the payment was made before delinquency.

Relying on the last cited case and the decision in Bucknall v. Story, supra, the court in the case of Bank of Santa Rosa v. Chalfant, 52 Cal. 170 , held that a threat to sell made before delinquency—the defendant not being armed with any authority real or apparent to carry out the threat—did not constitute legal duress and a payment of taxes made thereunder was a voluntary payment.

Consistently it was also so held in Wills v. Austin, 53 Cal. 152 , 180, and that payment of an illegal tax was voluntary even when made pursuant to the collector’s threat to add the five per cent penalty and to place the property on the delinquent list. A similar decision was handed down in the case of Merrill v. Austin, 53 Cal. 379 , while in De Fremery v. Austin, 53 Cal. 380 , the facts were held not to be controlled by the foregoing cases because payment of the tax was made after the delinquent list had been issued to the tax collector giving him authority to seize and sell the property.

The rule of Brumagim v. Tillinghast, supra, was considered as established in 1886 when it was followed in the case of Maxwell v. San Luis Obispo County, supra. Similar recognition of the rule appears in Meek v. McClure, supra; Younger v. Board of Supervisors, 68 Cal. 241 , 242 [ 9 Pac. 103 ] ; Cooper v. Chamberlain, 78 Cal. 450 [ 21 Pac. 14 ]; Dear v. Varnum, 80 Cal. 86 [ 22 Pac. 76 ]; Phelan v. San Francisco, 120 Cal. 1 [ 52 Pac. 38 ]; San Diego L. & T. Co. v. La Presa School Dist., 122 Cal. 98 [ 54 Pac. 528 ] ; Wheeler v. Ridenour, 149 Cal. 782 [ 87 Pac. 802 ] ; Warren v. City and County of San Francisco, 150 Cal. 167 [ 88 Pac. 712 ]; Justice v. Robinson, 142 Cal. 199 [ 75 Pac. 776 ] (see, also, Spencer v. City of Los Angeles, 180 Cal. 103 [ 179 Pac. 163 ]), and other cases, such as Hayes v.

The ease of Hellman v. City of Los Angeles, 147 Cal. 653 [ 82 Pac. 313 ], recognized that the foregoing was the general common-law rule which, however, has been abrogated by the adoption of sections 3804 and 3819 of the Political Code so as to permit recovery although the payments were voluntary in all those cases coming within the provisions of the code sections. Section 3819 of the Political Code, allowing an action to recover a refund of certain taxes paid under protest, was involved in the Heilman case. In that ease the court stated that the statute in derogation of the common-law rule was “befitting to this more enlightened age”. It is obvious, however, from the language of section 3804.1, adopted in 1939, that the legislature had before it facts which satisfied it that the motives of justice which prompted a previous legislature to create the remedy for refund of illegal taxes voluntarily paid do not apply where the illegality attached by reason of a miscalculation in the tax rate and the resulting collections effected a proportionate decrease in the tax rate in a subsequent year. In such a case every taxpayer in the district is proportionately affected and has an equal right to recover the portion of the tax which is excessive by virtue of the erroneous calculation, or, if uniformly the excess is not refunded, all are proportionately benefited by a decrease in the tax rate in a subsequent year. Therefore, to obtain an orderly and economic routine in the collection of taxes the legislature was prompted to correct an existing condition by withdrawing the application of the Political Code sections creating the right of refund, and expressly terminating all pending actions based thereon, except where the payments were involuntary in accordance with the common law adopted in this state. The withdrawal of the remedy in such cases does not contravene the policy exemplified in sections 3804 and 3819 of the Political Code, but in fact is consistent therewith. This is so for the reason that equality among taxpayers is maintained more uniformly and economi

The foregoing discussion and review leads to the conclusion that the plaintiff possessed no right or remedy pursuant to section 3804 of the Political Code which existed apart from the statute itself and which the legislature could not cut off by repeal. The general relationship of sovereign and taxpayer is not founded on nor does it create any contractual rights. (Perry v. Washburn, 20 Cal. 318 , 350; Spurrier v. Neumiller, 37 Cal. App. 683 [ 174 Pac. 338 ].) A right to a credit or refund of taxes is purely statutory. (Spurrier v. Neumiller, supra; Bell v. County of Los Angeles, 90 Cal. App. 602 [ 266 Pac. 291 ], citing Brooks v. County of Tulare, 117 Cal. 465 [ 49 Pac. 469 ].) The legislature may withdraw such a statutory right or remedy, and a repeal of such a statute without a saving clause will terminate all pend

In the ease before us, therefore, the legislature was acting within its constitutional powers when it withdrew the right to a refund of such illegal taxes and cut off the remedy by action including all pending actions, saving only the common-law right to a refund of taxes involuntarily paid.

The numerous cases upon which the plaintiff relies, such as Fall River Valley Irr. Dist. v. Mt. Shasta Power Corp., 202 Cal. 56 [ 259 Pac. 444 , 56 A. L. R. 264 ]; Callet v. Alioto, 210 Cal. 65 [ 290 Pac. 438 ] ; La Forge v. Magee, 6 Cal. 650 ;

No serious consideration may be accorded the contention that the foregoing stated principles do not apply herein because the 1939 act does not repeal section 3804 of the Political Code. True, the words of the 1939 statute are not expressly words of repeal without a saving clause, but the effect is the same in so far as the application of the principles is concerned when the legislature by apt expression has withdrawn the right and remedy in particular cases, including all pending actions based thereon. The legislature, no doubt having in mind the holding of this court in Krause v. Rarity, 210 Cal. 644 , 654, 655 [ 293 Pac. 62 , 77 A. L. R. 1327 ], expressly provided that the withdrawal of the right to refund in the particular class of illegal taxes specified should terminate all pending actions. Its expression in this respect is sufficient to accomplish the declared intent and purpose.

The foregoing likewise answers the contention, made in reliance upon such cases as Puterbaugh v. Gila County, 45 Ariz. 557 [ 46 Pac. (2d) 1064 ], and Frink v. Clark, (Iowa) 285 N. W. 681 , that the statute is invalid because it attempts to prohibit the courts from hearing pending actions and deprives them of jurisdiction. The statute does not so purport to do. In those cases, as well as other cases cited herein, it is recognized that the legislature may take away the right of action itself. The fact that the statute here involved does take away the right of action distinguishes it from the legislation involved in the cases relied upon by the plaintiff.

We conclude that the application of the provisions of chapter 159 of the 1939 statutes to terminate the action here pending violates none of the constitutional rights of guaranties invoked by the plaintiff.

It is also contended that chapter 159 of Statutes of 1939 does not apply herein because all of the taxes levied in the tax year involved have not been collected. The plaintiff urges that the words “the taxes collected’’ appearing in section 3804.1 of the Political Code as adopted by the legislature refer to all “the taxes’’ which have been levied. Inasmuch as the word “collected’’ must be given the force which the plain language implies, we must conclude that its employment to modify the word “taxes’’ is sufficient answer to the plaintiff’s contention.

The plaintiff also contends that the provisions of section 15 of article XIII of the California Constitution guarantees to it the right to maintain the present action to re

The foregoing disposes of all of the contentions raised by the plaintiff.

The additional factual showing by the defendants, which brings the present case within the provisions of said section 3804.1, and our conclusion that the 1939 enactment does not contravene any constitutional provision require that the motion to dismiss the appeal and to abate the action be granted. Accordingly, the appeal of the plaintiff herein is dismissed, and to accomplish the abatement of the pending action the

Waste, C, J., Gibson, J., Knight, J., pro tem., Spence, J., pro tem., and Curtis, J., concurred.

Carter, J., deeming himself disqualified, did not participate.

Rehearing denied. Edmonds, J., and Carter, J., did not participate.