City of Los Angeles v. Mono County

Decision Date08 April 1959
Citation51 Cal.2d 843,337 P.2d 465
CourtCalifornia Supreme Court
PartiesCITY OF LOS ANGELES et al., Appellants, v. COUNTY OF MONO, Respondent. Sac. 6886.

Roger Arnebergh, City Atty., Gilmore Tillman, Chief Asst. City Atty. for Dept. of Water and Power, A. H. Driscoll, Asst. City Atty., and O. M. Lloyd, Deputy City Atty., Los Angeles, for appellant.

N. Edward Denton, Dist. Atty., Bridgeport, Morris M. Doyle, John N. Hauser, McCutchen, Thomas, Matthew, Griffiths & Greene, McCutchen, Doyle, Brown & Enersen, San Francisco, and Verne Summers, Bishop, for respondent.

PER CURIAM.

Plaintiffs (hereinafter referred to as the 'city') brought two actions to recover taxes paid under protest to defendant (hereinafter referred to as the 'county'). Before paying the taxes, the city made appropriate application to the State Board of Equalization for relief from the assessments, but the board denied any relief. One of the actions was to recover taxes paid on two hydroelectric generating plants and appurtenant works on the Owens River, a transmission line, and a dam on Rush Creek; the other to recover alleged excessive and discriminatory taxes on approximately 20,000 acres of land in Mono County. The actions were consolidated for trial, and a trial de novo was ordered as to several issues set out in pre-trial orders. Judgment was rendered denying the city any relief. This appeal is from said judgment.

Appeal Relating To Hydroelectric Plants, Transmission Line and Dam

In 1933 the city purchased two power plants located in the Owens River Gorge in Mono County. They were known as Adams Main and Adams Auxiliary and had a combined generating capacity of 7,400 kilowatts. The plants were 'run of the stream' units and until the completion of the Long Valley Dam in 1940 could operate only during the part of the year when the natural flow of the Owens River provided sufficient water.

The Adams plants were located in the east half of section 16 and were taxable when acquired. The city owns all the land in the gorge, but all except the east half of section 16 was purchased from the federal government and was not taxable at the time of acquisition.

At the upstream end of the gorge the city constructed Long Valley Dam, which created a reservoir of some 183,465 acrefeet known as Crowley Lake. The reservoir provides regulation for the flow of the Owens River. The reservoir impounds not only the waters of the Owens River but also waters of a foreign watershed, Mono Basin, which are diverted from the natural watershed and conducted to Crowley Lake by a system of aqueducts and tunnels. The right to divert these waters had been acquired by the city prior to 1941. Through the addition of this foreign water supply, the average flow available into Crowley Lake was increased from 230 second-feet, the natural flow of the Owens River, to 405 second-feet.

In 1948 the city commenced construction of a three-plant hydroelectric generating system in the gorge. Two of these plants are located in Mono County, and the third is in Inyo County at the foot of the gorge. Each unit can generate 37,500 kilowatts of power. The trial court in its findings refers to these three plants and appurtenant works as the Gorge System.

After completion of the three new plants in the gorge, it was possible to operate the Adams plants only by diverting water from the new facilities, which were designed to utilize the entire flow of water available in the gorge. There were various methods whereby water could be diverted from the Gorge System to one or the other of the Adams plants, and vice versa. However, all these possibilities involved loss of water from the Gorge System and a consequent reduction of its efficiency. There was testimony to the effect that any loss of water from the Gorge System resulted in a substantial economic loss to the city.

The city had planned to abandon the Adams plants upon the completion of the new facilities. Steps were taken to put them out of service and retire them permanently. However, prior to the completion of this plan the city decided to return them to use. The trial court found that the rescission of the retirement of the Adams plants was carried out by the city in an attempt to avoid taxation of the new facilities by the county, and not because the Adams plants had any actual or potential utility. The Adams plants were not operated after the completion of the new plants until the time of the commencement of this litigation, and were operated then only intermittently. Extensive repairs were required at that time to place them in operating condition. Expert witnesses testified that after the construction of the new facilities the Adams plants were without value as standby plants or for any other purpose. The county began to tax the new plants when they were completed.

The city purchased a dam on Grant Lake in 1934. The dam was subject to taxation at the time of acquisition. It impounded the waters of Rush Creek and created a reservoir with a capacity of 10,000 acre-feet. The reservoir had previously supplied water for irrigation. In 1941 the city constructed a new dam (New Grant Lake Dam) a short distance downstream from the old dam. The reservoir created by the new dam has a capacity of 47,500 acre-feet. When the new dam was completed, the old dam was breached and became submerged. The old dam was assessed and taxed until the 1954-1955 tax year. Thereafter the county taxed the new dam. The trial court found that the new dam replaced the old dam.

At the time the new plants were constructed the city also constructed a transmission line which connected the new plants to the Los Angeles system. The taxability of this line was not rasied before the State Board of Equalization. In the trial court the city's complaint alleged that the line was tax exempt and that it was erroneously assessed and taxed. These allegations were denied by the county.

The pre-trial orders limited the issues to be tried. Although the pre-trial orders are somewhat generally stated, it is evident from discussions had during the trial that they were designed to limit the issues to whether the Gorge plants in Mono County and the New Grant Lake Dam were replacements or new improvements. The new transmission line was not to be in issue.

The taxation of municipally-owned property is governed by article XIII, section 1, of the California Constitution, which provides in part: '* * * property * * * such as may belong * * * to any * * * municipal corporation within this State shall be exempt from taxation, except such lands and the improvements thereon located outside of the * * * municipal corporation owning the same as were subject to taxation at the time of the acquisition of the same by said * * * municipal corporationf same by said * * * municipal corporation; any character whatever constructed by any * * * municipal corporation shall be subject to taxation.'

Article XIII, section 1, formerly granted a blanket exemption to all municipal property, wherever located and whenever acquired. By 1941 Los Angeles and San Francisco had acquired extensive property holdings in the mountain counties of Mono, Inyo and Tuolumne. It became apparent that those counties faced an ever-increasing diminution of their tax base as the holdings of foreign municipalities increased. Therefore, in 1914, the constitutional provision was amended to read as quoted above. Protection of the tax position of those counties in which municipalities acquire property for the operation of various municipal projects has long been judicially recognized as the purpose of the amendment. City of Long Beach v. Bd. of Supervisors, 50 Cal.2d 674, 677(3), 328 P.2d 964; City of Pasadena v. County of Los Angeles, 37 Cal.2d 129, 132(2), 230 P.2d 801; City and County of San Francisco v. County of San Mateo, 36 Cal.2d 196, 199, 222 P.2d 860; Rock Creek Water Dist. v. County of Calaveras, 29 Cal.2d 7, 9(2), 172 P.2d 863; City and County of San Francisco v. San Mateo County, 17 Cal.2d 814, 818(2), 112 P.2d 595; City and County of San Francisco v. County of Alameda, 5 Cal.2d 243, 245(2), 54 P.2d 462; City of Pasadena v. County of Los Angeles, 182 Cal. 171, 174, 187 P. 418.

The permission to tax granted by article XIII, section 1, has been construed to include not only improvements subject to taxation when acquired but also replacements and substitutes for these improvements. City and County of San Francisco v. San Mateo County, supra, 17 Cal.2d at page 819, 112 P.2d at page 597. In the event a replacement is made, it is taxed at its fair market value, and not that of the improvement that was replaced. City of Pasadena v. County of Los Angeles, supra 37 Cal.2d at page 134, 230 P.2d at page 803. On the other hand, it is specifically stated in article XIII, section 1, that new improvements constructed after acquisition are not taxable.

The issue in this case, then, is clearly drawn: Are the Gorge System plants and the New Grant Lake Dam replacements for improvements subject to taxation when acquired by the city, or are they new improvements? We believe they are replacements and thus taxable by the county.

Looking first at the hydroelectric plants, it is readily apparent that the Gorge System replaced the Adams plants. The Gorge System was designed to utilize the entire flow of available water. Testimony of expert witnesses demonstrated that...

To continue reading

Request your trial
27 cases
  • Marshall v. Marshall
    • United States
    • California Court of Appeals
    • February 15, 1965
    ...of the issues. Issues not designated in the pretrial conference order are no longer issues in the case. (City of Los Angeles v. County of Mono (1959) 51 Cal.2d 843, 847, 337 P.2d 465; Feykert v. Hardy (1963) 213 Cal.App.2d 67, 74, 28 Cal.Rptr. 510; County of Kings v. Scott (1961) 190 Cal.Ap......
  • Michael Todd Co. v. Los Angeles County
    • United States
    • United States State Supreme Court (California)
    • May 17, 1962
    ...the action of the board' (McClelland v. Board of Supervisors (1947) 30 Cal.2d 124, 129(1), 180 P.2d 676; accord, City of Los Angeles v. County of Mono (1959) 51 Cal.2d 843, 851(7-8), 337 P.2d 465; De Luz Homes, Inc. v. County of San Diego (1955), supra, 45 Cal.2d 546, 564(16), 290 P.2d 544,......
  • City and County of San Francisco v. County of San Mateo, A057765
    • United States
    • California Court of Appeals
    • October 18, 1993
    ...and water rights by Los Angeles and San Francisco in the mountain counties of Mono, Inyo and Tuolumne. (City of Los Angeles v. County of Mono (1959) 51 Cal.2d 843, 848, 337 P.2d 465.) In 1968 the voters adopted a new constitutional provision establishing a formula for assessing such propert......
  • Amador County v. State Bd. of Equalization
    • United States
    • California Court of Appeals
    • February 16, 1966
    ...time the public entity acquired ownership, but also replacements and substitutes for those improvements. (City of Los Angeles v. County of Mono, 51 Cal.2d 843, 848, 337 P.2d 465; City and County of San Francisco v. County of San Mateo, 17 Cal.2d 814, 819, 112 P.2d 595.) The taxpayer's unila......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT