180 Cal. 18, L. A. 4600, San Pedro, Los Angeles & Salt Lake Railroad Co. v. City of Los Angeles

Docket Nº:L. A. 4600
Citation:180 Cal. 18, 179 P. 393
Opinion Judge:SHAW, Judge.
Party Name:SAN PEDRO, LOS ANGELES & SALT LAKE RAILROAD COMPANY (a Corporation), Respondent, v. CITY OF LOS ANGELES (a Municipal Corporation), Appellant
Attorney:Albert Lee Stephens, City Attorney, Jess E. Stephens, Assistant City Attorney, and Wm. P. Mealey, Deputy City Attorney, for Appellant. E. E. Bennett, A. S. Halsted and Dana T. Smith, for Respondent. Goodwin & Morgrage, Amicus Curiae.
Judge Panel:JUDGES: In Bank. Victor E. Shaw, J., pro tem. Sloss, J., Wilbur, J., Richards, J., pro tem ., and Angellotti, C. J., concurred. Melvin, J., dissenting. MELVIN
Case Date:February 25, 1919
Court:Supreme Court of California
 
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Page 18

180 Cal. 18

179 P. 393

SAN PEDRO, LOS ANGELES & SALT LAKE RAILROAD COMPANY (a Corporation), Respondent,

v.

CITY OF LOS ANGELES (a Municipal Corporation), Appellant

L. A. No. 4600

Supreme Court of California

February 25, 1919

APPEAL from a judgment of the Superior Court of Los Angeles County. Frank G. Finlayson, Judge.

Affirmed in part, reversed in part.

COUNSEL:

Albert Lee Stephens, City Attorney, Jess E. Stephens, Assistant City Attorney, and Wm. P. Mealey, Deputy City Attorney, for Appellant.

E. E. Bennett, A. S. Halsted and Dana T. Smith, for Respondent.

Goodwin & Morgrage, Amicus Curiae.

JUDGES: In Bank. Victor E. Shaw, J., pro tem. Sloss, J., Wilbur, J., Richards, J., pro tem ., and Angellotti, C. J., concurred. Melvin, J., dissenting.

OPINION

SHAW, Judge.

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[179 P. 394] The plaintiff is lessee of certain tide-lands situated in the city of Los Angeles and belonging to the state. The city assessed this leasehold estate and levied a tax thereon, which plaintiff paid under protest and in due time brought this action to recover the same. Judgment went for plaintiff, from which the defendant appealed.

On a hearing heretofore had of the case, it was considered in connection with L. A. No. 4504, entitled San Pedro, Los

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Angeles & Salt Lake R. R. Co. v. City of Los Angeles (Cal.), 179 P. 390, which, as to the power of the municipality to assess a leasehold estate in such property for the purpose of levying a tax thereon, involved the same questions. The latter case, however, had been before the court on a former appeal prosecuted by the plaintiff from a judgment in favor of the city upon sustaining its demurrer to the complaint, with the result that the judgment was reversed. (See San Pedro etc. R. R. Co. v. City of Los Angeles, 167 Cal. 425, [52 L. R. A. (N. S.) 991, 139 P. 1071] .) Upon going down of the remittitur the city was permitted to file an answer, and upon trial a judgment was entered in favor of the plaintiff, from which the city appealed. The hearing of the two cases thus considered together resulted in an affirmance of L. A. No. 4504, based solely upon the ground that the former decision thereof, as reported in 167 Cal. 425, [52 L. R. A. (N. S.) 991, 139 P. 1071], constituted the law of the case. As to the case now under consideration, however, the court took a different view of the question involved and reversed the judgment rendered against the city. Thereafter the petition of the city of Los Angeles, as appellant in L. A. No. 4504, for a rehearing was denied, thus finally disposing of the subject of litigation involved therein. A like petition for a rehearing was presented by the plaintiff in L. A. No. 4600, being the case now under consideration, which was granted upon the sole ground that the court had failed to consider the question as to the assessment made of certain alleged improvements upon the leasehold. By an order made granting said rehearing, the court restricted further argument to the question alone of the validity of the assessment of the alleged improvements. (See Minutes, Sept. 11, 1918, 56 Cal. Dec., No. 2969.)

The question to which the court on the former consideration of the case addressed itself and to which the chief argument of counsel was directed was whether the laws of this state authorize the taxation of leasehold interests in the tidelands of the state. Upon this point, holding that municipalities have such power, we adopt the opinion of Mr. Justice Sloss, filed at the former hearing of the appeal, which is as follows:

" That a leasehold interest is property is a proposition not open to dispute. 'The thing of which there may be ownership is called property.' (Civ. Code, sec. 654 .) Interests in real property are called 'estates.' (Civ. Code, sec. 701 .) They

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are classified by section 761 of the same code as (1) estates of inheritance, (2) estates for life, (3) estates for years, (4) estates at will. The interest of the plaintiff under the lease from the state is an estate for years. There may be ownership of such estate. It is, therefore, property.

" Is it property for the purposes of taxation? Our constitution declares (art. XIII, sec. 1): 'All property in the state except as otherwise in this constitution provided, not exempt under the laws of the United States, shall be taxed in proportion to its value, to be ascertained as provided by law. . .. The section exempts property belonging to the state, and certain other kinds of property, not including interests like the one here involved. With respect to all property not so exempted, the provision of the constitution that it shall be taxed in proportion to its value, to be ascertained as provided by law, is direct and mandatory. (Const., art. I, sec. 22 .) The provision for the taxation of all property not exempt is repeated in section 3607 of the Political Code.

" The constitutional provision is not self-executing. It imposes upon the legislature the duty of providing a mode whereby to ascertain the value of the property to be taxed. (McHenry v. Downer, 116 Cal. 20, 24, [45 L. R. A. 737, 47 P. 779.] See De Witt v. Hays, 2 Cal. 463, 468, [56 Am. Dec. 352] .) If, then, the legislature had not provided any mode for the assessment of leasehold estates, it might well be said, as was said in the former opinion, that [179 P. 395] such an estate is not 'property for the purposes of taxation' under our fiscal laws. But there does not appear to be any such deficiency in our revenue laws. Section 3617 of the Political Code declares that the term 'property' includes 'all matters and things, real, personal, and mixed, capable of private ownership,' and that the term 'real estate' includes 'the possession of, claim to, ownership of, or right to the possession of land.' A leasehold estate carries a right to the possession of the land lease. (Civ. Code, sec. 819 .) It is, therefore, real property within the above definition. Other sections of the Political Code provide for the listing of real property, the description and valuation thereof, and contain a complete scheme for the assessment of the property, and the levy and collection of the taxes. This scheme is as readily adaptable to an estate for years as to a freehold estate.

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" It is true that the code makes no specific provision for separate assessments of leasehold and reversion to the lessee and the owner of the fee, respectively. The usual procedure in this state, as elsewhere, has been to assess the entire value of the land to the owner of the reversion. Such assessment covers the value of the leasehold as well as of the reversionary interest, the sum of the two being comprised in the value of a complete ownership of the land. (Graciosa Oil Co. v. Santa...

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