City and County of San Francisco v. San Mateo County

Citation36 Cal.2d 196,222 P.2d 860
CourtUnited States State Supreme Court (California)
Decision Date20 October 1950

Dion R. Holm, City Attorney, A Dal Thomson, Public Utilities Counsel, San Francisco, for appellant.

Gilbert D. Ferrell, Dist. Atty., San Mateo County, Louis B. Dematteis, John A. Bruning, Asst. Dist. Attys., Keith Sorensen, Civil Deputy, and A. S. Whitmore, Associate Counsel, all of Redwood City, for appellees.

Harold W. Kennedy, County Counsel, John D. Maharg, Deputy County Counsel, Los Angeles, Fred N. Howser, Atty. Gen., James E. Sabine, Deputy Atty. Gen., Dixwell L. Pierce, F. S. Wahrhaftig, Sacramento, amici curiae.

SHENK, Justice.

The plaintiff brought this action against the county of San Mateo to recover an alleged illegal proportion of the 1946-1947 taxes levied against the city's airport in San Mateo county claimed as exempt under Article XIII, section 1, of the state constitution. The county's demurrer to the complaint was sustained without leave to amend. Judgment for the defendant followed. The city has appealed.

The complaint alleges in substance that beginning in 1930 the city acquired large tracts of marsh, tide and submerged lands in San Mateo county for the purpose of utilizing the site as an airport; that the city expended $6,753,529 in raising the level of the land by dredging and filling operations, and making provision for drainage and drainage control; that these operations were completed before the first Monday of March 1946; that prior thereto the county had assessed the land on the basis of its condition when acquired and at the sum of $100,785.00; that in 1946 the land was assessed at $684,625.00 on the basis of its value prepared for use as an airport; and that the city paid the full tax under protest claiming an exemption as to the portion representing the increase in the assessment. The complaint alleges illegality as to that portion because, it is claimed, the fill constitutes an 'improvement' and is therefore exempt under the constitutional provision. No proceeding was taken before the state board of equalization. The appeal presents two questions: (1) whether the raising of the level of the land by the filling operations was an improvement within the meaning of the constitution, and (2) whether the city should first have pursued the administrative remedy.

The first question presents a problem of public importance in the field of taxation under the constitutional amendment of 1914, and a decision thereon will serve as a guide generally to the taxing authorities of the state. Prior to 1914 section 1 of Article XIII of the constitution provided that property belonging to 'the United States, this state, or to any county or municipal corporation within this state shall be exempt from taxation.' In November 1914 the following was added to the exemption clause: '* * * except such lands and the improvements thereon located outside of the county, city and county, or municipal corporation owning the same as were subject to taxation at the time of the acquisition of the same * * * provided, that no improvements of any character whatever constructed by any county, city and county or municipal corporation shall be subject to taxation. All lands or improvements thereon, belonging to any county, city and county, or municipal corporation, not exempt from taxation, shall be assessed by the assessor of the county, city and county, or municipal corporation in which said lands or improvements are located, and said assessment shall be subject to review, equalization and adjustment by the state board of equalization.' (Emphasis added.)

The question of the taxability of the portion of the land designated as the fill is resolved by the language of the 1914 amendment. Thereunder the county has power to assess only those municipally owned lands or improvements that are not exempt from taxation. If the fill constitutes an improvement as contemplated by the constitutional amendment, it is to that extent exempt, and the county had no power to take it into consideration in making the assessment. In arguing the taxability of all portions of the land including the fill, the county refers to section 105(a) of the Revenue and Taxation Code. That section states that the term 'improvements' includes 'All buildings, structures, fixtures, and fences erected on or affixed to the land, except telephone and telegraph lines.' The county seeks to rest on the proposition that since land is land an addition thereto in the nature of a fill cannot be deemed to be an improvement in any sense. Reliance is placed on San Pedro etc., R. R. Co. v. City of Los Angeles, 180 Cal. 18, 179 P. 393. That case involved the taxability of a private leasehold of tidelands. Filled land between the shore line and the breakwater was on tideland. It was non-taxable as against the United States; and this court said it would be absurd to consider it as an improvement under a lease providing for the removal of improvements at the expiration of the lease. The court was there concerned with the meaning of the term 'improvements' under the code definition dealing with the taxation of private property interests. Such declarations are not controlling in the present case where the taxability of the city-owned property is dependent upon a special provision in the constitution. The sense in which words are used in that provision creating an exception to the general exemption from taxation of municipally owned property depends on the objective sought to be achieved. Rock Creek etc. Dist. v. County of Calaveras, 29 Cal.2d 7, 9, 172 P.2d 863.

The history and purpose of the amendment have heretofore been considered by this court. Pasadena v. County of Los Angeles, 182 Cal. 171, 187 P. 418; Turlock Irr. Dist. v. White, 186 Cal. 183, 198 P. 1060; City and County of San Francisco v. County of Alameda, 5 Cal.2d 243, 54 P.2d 462; City and County of San Francisco v. San Mateo County, 17 Cal.2d 814, 112 P.2d 595; Rock Creek etc. Dist. v. County of Calaveras, supra, 29 Cal.2d 7, 172 P.2d 863. Prior to the amendment property acquired by outside municipalities...

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