Campbell Chain Co. v. County of Alameda

• Decision Date: 23 October 1970
• Citation: 12 Cal.App.3d 248,90 Cal.Rptr. 501
• Court: California Court of Appeals Court of Appeals
• Parties: CAMPBELL CHAIN COMPANY OF CALIFORNIA, a California corporation, Nor-Cal Metal Fabricators, a California corporation, Skil Corporation, a Delaware corporation, and W. W. Grainger, Inc., an Illinois corporation, Plaintiffs and Appellants, v. COUNTY OF ALAMEDA, City of Union City, City of Oakland, and City of San Leandro, Defendants and Respondents. CAMPBELL REALTY OF CALIFORNIA, a California corporation, Harbison-Walker Refractories Company, a Pennsylvania corporation, and Nor-Cal Metals, a California corporation, Plaintiffs and Appellants, v. COUNTY OF ALAMEDA, City of Fremont, City of Union City, City of Oakland, and City of San Leandro, Defendants and Respondents. Civ. 26094, 26418.

Page 501

90 Cal.Rptr. 501

12 Cal.App.3d 248

CAMPBELL CHAIN COMPANY OF CALIFORNIA, a California corporation, Nor-Cal Metal Fabricators, a California corporation, Skil Corporation, a Delaware corporation, and W. W. Grainger, Inc., an Illinois corporation, Plaintiffs and Appellants, v. COUNTY OF ALAMEDA, City of Union City, City of Oakland, and City of San Leandro, Defendants and Respondents.

CAMPBELL REALTY OF CALIFORNIA, a California corporation, Harbison-Walker Refractories Company, a Pennsylvania corporation, and Nor-Cal Metals, a California corporation, Plaintiffs and Appellants, v. COUNTY OF ALAMEDA, City of Fremont, City of Union City, City of Oakland, and City of San Leandro, Defendants and Respondents.

Civ. 26094, 26418.

Court of Appeal, First District, Division 2, California.

Oct. 23, 1970.

Rehearing Denied Nov. 20, 1970.

Hearing Denied Jan. 21, 1971.

Stark, Simon & Sparrowe, by John F. Wells, John F. Banker, Merrill J. Schwartz, Oakland, for plaintiffs-appellants.

Richard J. Moore, County Counsel, Joseph R. Bingaman, Deputy County Counsel, County of Alameda, for defendants-respondents.

TAYLOR, Associate Justice.

In this consolidated matter, several corporate taxpayers sought to recover property taxes paid to respondents under protest (Rev. & Tax.Code, § 5138) for the 1966 tax year. The appeals are from two judgments of the superior court after a consolidated trial ¹ to review the action of the Alameda County Board of Supervisors, acting as a board of equalization (hereafter Board). Appellants contend that substantial evidence supports their assertion that the Alameda County Assessor (hereafter Assessor) applied different assessment ratios to different classes of property, in violation of the constitutional prohibition against unfair and discriminatory assessments, and that the Board erroneously excluded certain proffered evidence.

The basic facts are not in dispute. On the applicable tax date, March 1, 1966, the respective appellants were the owners of certain business personal property and commercial real property. ² Appellants stipulated that the appraisals of market value of their property made by the Assessor were correct as the fair market value of the different classes of property they owned, and that the 40 percent assessment ratio ³ was applied to the 'full cash value' of each class of property. The gist of their complaint for a reduction before the Board was that the Full cash value figure to which the 40 percent ratio was applied as a different percent of fair market value for each class of property. The Assessor indicated that the figure denominated as 'full cash value' was 100 percent of fair market value For business personal property, 70 percent of fair market value For commercial and industrial real property, and 54 percent of fair market value For residential real property. The Board determined that the use of different ratios for different classes of property to arrive at assessed values was proper, refused to admit into evidence at the equalization hearing the 1966 average assessment ratio for the county as determined by the State Board of Equalization, as well as the depositions of the Assessor and his deputy in charge of business inventories and equipment, and also rejected appellants' applications for a partial refund of the 1966 property taxes.

The trial court reviewed the record of the equalization hearing before the Board and accepted as an item of newly discovered evidence a form letter mailed by the Assessor. The court found that in applying an assessment ratio of 40 percent to the full cash value of appellants' business personal property and commercial real property, the Assessor acted without discrimination in respect to the several kinds of property involved, and without discrimination in respect to appellants and other taxpayers similarly situated, that the exclusion of the above mentioned evidence was not erroneous, and entered judgments in favor of respondents.

The parties concede that the questions presented must be resolved on the record made before the Board. The duty of determining the value of property and the fairness of the assessment is confined to the appropriate county board of equalization. The taxpayer has no right to a trial de novo in the superior court to resolve conflicting issues of fact as to the taxable value of his property (Bank of America National Trust & Savings Ass'n v. Mundo, 37 Cal.2d 1, 229 P.2d 345; County of San Diego v. Stiles, 268 Cal.App.2d 261, 263, 73 Cal.Rptr. 868; County of Los Angeles v. Tax Appeals Bd. No. 2, 267 Cal.App.2d 830, 73 Cal.Rptr. 469; Griffith v. County of Los Angeles, 267 Cal.App.2d 837, 73 Cal.Rptr. 773).

The applicable general principles are found in the state Constitution and the Revenue and Taxation Code. 'All property in the State (not exempt) * * * shall be taxed in proportion to its value, to be ascertained as provided by law, or as hereinafter provided.' (Cal.Const. art. XIII, § 1; and see Rev. & Tax. Code, § 201.) Prior to 1967, ⁴ section 401 provided, 'Except as provided in this part, all taxable property shall be assessed at its full cash value.' 'Value,' 'full cash value,' or 'cash value' means the amount at which property would be taken in payment of a just debt from a solvent debtor. The term 'full cash value' is deemed synonymous with 'market value' (De Luz Homes, Inc v. County of San Diego, 45 Cal.2d 546, 561--562, 290 P.2d 544). Nevertheless, the practice of assessment at a uniform fraction of full cash value, provided the latter remained the standard or basis of each assessment, is of long standing and has received judicial approval when subjected to attack on constitutional grounds (County of Sacramento v. Hickman, supra, 66 Cal.2d pp. 846--851, 59 Cal.Rptr. 609, 428 P.2d 602; A. G. Gilmore Co. v. County of Los Angeles, 186 Cal.App.2d 471, 475--476, 9 Cal.Rptr. 67).

The value of property for assessment purposes is to be determined by the county board of equalization on such basis as is used in regard to other property so as to make all assessments as equal and fair as is practicable (Cal.Const. art. XIII, § 9; Rev. & Tax.Code, §§ 1601--1615; and see §§ 1620--1629; Flying Tiger Line, Inc. v. County of L.A., 51 Cal.2d 314, 320, 333 P.2d 323; Universal Consol. Oil Co. v. Byram, 25 Cal.2d 353, 356, 153 P.2d 746; Schwarz v. County of Marin, 271 Cal.App.2d 120, 122, 76 Cal.Rptr. 207; Griffith v. County of Los Angeles, 267 Cal.App.2d 837, 841, 73 Cal.Rptr. 773). In order to carry out this principle, the assessor and the county board of equalization must apply the same ratio to market value uniformly within the county (County of Sacramento v. Hickman, supra; and Knoff v. City & County of San Francisco, 1 Cal.App.3d 184, 196, 81 Cal.Rptr. 683). This is tested by a comparison of the ratio of the assessed valuations to the market valuations of the subject properties with the ratio of the assessed valuations to the market valuations of all of the taxable property in the county (Schwarz v. County of Marin, supra, 271 Cal.App.2d pp. 122--123, 76 Cal.Rptr. 207).

Appellants first contend that their business personal property and commercial real property were assessed at a higher ratio than was property generally in the county. The uncontroverted evidence indicates and the trial court found that in 1966, in arriving at the assessed value, the Assessor established a value for real property which he called the fair market value. He then applied a discount to arrive at the full cash value: 30 percent for commercial real property, and 46 percent for residential real property. As to the business personal property, the Assessor did not start with market value, but the cost to the taxpayer and then applied a discount of 30 percent to arrive at the full cash value. After applying the discounts, the Assessor applied the assessment ratio of 40 percent to all three classes of property to arrive at the assessed value. Appellants contend that the application of the discounts was unlawful and discriminatory and that the 40 percent assessment ratio should have been applied to the fair market value of all three classes of property.

The reasons for the use of differential discounts, somewhat similar to those in the instant case, were explained by the court in Rittersbacher v. Board of Supervisors, 220 Cal. 535, 32 P.2d 135, at pages 543--544, 32 P.2d at page 139: 'It is the assessor's recognized duty to see that the valuation placed on the various kinds of property shall be in proportion to the worth of such properties. If it is proportional and all are treated alike, no one contends that the taxpayers must be charged a full hundred per cent, for such is not required by the law. It is also recognized that the assessment on personal property shall be on a basis which is fair to the owners of real property so that neither shall suffer to the advantage of the other.

'In dealing with the assessment of personal property the assessor is confronted with a difficult problem. In an endeavor to solve it he recognizes two general classes, viz.: 'business personal property' and 'personal property.' The former refers to that class of personal property owned and used in manufacture, commerce, and trade, and the latter to that class of personal property which represents the personal belongings of individuals, usually in their homes. With reference to a stock in trade it is obviously impracticable if not impossible to take an inventory and evaluate each article. The inventories of stocks of merchandise reflected on the books of the company are taken as indicative of their worth. This inventory is discounted 20 per cent and then 50 per cent is applied for assessment purposes. It is not pointed out by the plaintiffs, nor does it appear how or in what manner the discount so applied is as a matter of law unreasonable or unlawful. Conceding that 20 per cent is an arbitrary figure, some discount would appear to be necessary and...