City of Modesto v. Modesto Irrigation Dist.

• Citation: 34 Cal.App.3d 504,110 Cal.Rptr. 111
• Court: California Court of Appeals
• Decision Date: 04 October 1973
• Parties: CITY OF MODESTO, Plaintiff and Respondent, v. MODESTO IRRIGATION DISTRICT et al., Defendants and Appellants. CITY OF MODESTO, Plaintiff and Respondent, v. TURLOCK IRRIGATION DISTRICT el al., Defendants and Appellants. Civ. 1700, 1701.

Page 111

110 Cal.Rptr. 111

34 Cal.App.3d 504

CITY OF MODESTO, Plaintiff and Respondent, v. MODESTO IRRIGATION DISTRICT et al., Defendants and Appellants.

CITY OF MODESTO, Plaintiff and Respondent, v. TURLOCK IRRIGATION DISTRICT el al., Defendants and Appellants.

Civ. 1700, 1701.

Court of Appeal, Fifth District, California.

Oct. 4, 1973.

[34 Cal.App.3d 505] Charles A. Legge, Bronson, Bronson & McKinnon, San Francisco, Warren F. Gant, Gant & Gant, Modesto, Ernest Geddes and Cook, Griffith & Geddes, Turlock, for respondents and appellants.

Elwyn L. Johnson, City Atty., and Bruce W. Liedstrang, Asst. City Atty., Modesto, for petitioner and respondent.

OPINION

GARGANO, Acting Presiding Justice.

Respondent, the City of Modesto, is a municipality operating under a home rule charter. Appellants, the Modesto and Turlock Irrigation Districts, are state agencies functioning pursuant to the provisions of the Irrigation District Law as set forth in division 11, commencing with section 20500 of the Water Code; they are presently distributing and selling electrical energy within the boundaries of the chartered city.

In 1970 respondent adopted a utility users' tax ordinance imposing a tax upon every person in the city who uses water, gas, electricity and telephone service; the tax, in the amount of five percent of the monthly or bi-monthly utility charge, is paid by the service user (the consumer), but must be collected by the service supplier. The districts refused to collect the tax and the city instituted this litigation in the court below to compel them to do so; the districts filed a joint appeal from the adverse judgments which followed.

Appellants do not, nor can they, deny that the city's utility users' tax is a valid exercise of a chartered city's power to tax for revenue purposes. (Rivera v. City of Fresno, 6 Cal.3d 132, 98 Cal.Rptr. 281, 490 P.2d 793.) Nor do they contend that the city's tax is an impermissible tax against state agencies for the privilege of distributing electricity to city consumers; the city's utility users' tax, unlike a sales tax levied by a city or county pursuant to the authority of the Bradley-Burns Uniform Local Sales and Use Tax Law (Rev. & Tax.Code, § 7200 et seq.) is a tax against the utility user, not the utility supplier. The appellants are arguing that they cannot be compelled to collect the city's tax because the ordinance, to the extent that it applies to them, impinges on the state's sovereignty over local entities; they assert that the collection requirement of the city ordinance is a regulation and that this regulation, if extended to state agencies, contravenes the almost universal rule throughout this country that the activities of the state and its agencies cannot be controlled or regulated by local entities in the absence of legislative consent. (Hall v. City of Taft, 47 Cal.2d 177, 302 P.2d 574; In re Means, 14 Cal.2d 254, 93 P.2d 105; Davidson County v. Harmon, 200 Tenn. 575, 292 S.W.2d 777; City of Charleston v. Southeastern Const. Co., 134 W.Va. 666, 64 S.E.2d 676.)

Appellants' contention runs counter to the doctrine of Stare decisis. The California Supreme Court has held that an irrigation district which manufactures, distributes and sells electrical energy, in competition with public service corporations, is engaged in a proprietary activity. (Yolo v. Modesto Irrigation Dist., 216 Cal. 274, 278, 13 P.2d 908.) The high court has also held that a city ordinance requiring utility companies supplying utility services within the city to collect the city's '. . . utility users' tax and remit to the city does not constitute forbidden or conflicting regulation of the utility.' (Rivera v. City of Fresno, Supra, 6 Cal.3d 132, 139, 98 Cal.Rptr. 281, 285, 490 P.2d 793, 797.) If a city operating under a home rule charter can compel a public utility to collect the city's utility users' tax without engaging in impermissible regulation in a field of regulation preempted by the state under the Constitution, and if an irrigation district which sells electrical energy within city boundaries in competition with public utilities is involved in a proprietary activity, how can it be argued plausibly that the collection requirement of respondent's ordinance, if applied to that proprietary activity, is regulation which impinges on the state's sovereignty.

Appellants argue that the Yolo decision is not authoritative because in that case the court was not concerned with the relationship between an irrigation district and a city; the issue was whether such a district was entitled to assert the defense of governmental immunity in a tort action.

The Yolo court did not limit the perimeters of its decision to governmental immunity. If anything, the court made it very clear that an irrigation district's main purpose is to develop, preserve and conserve water for the beneficial use of the inhabitants of the district and that in exercising the ancillary right to distribute and sell electrical energy, both within and without its boundaries, the district is '. . . 'engaged in a Purely proprietary enterprise additional to and not necessary for irrigation purposes . . .'.' (Emphasis added; Yolo v. Modesto Irrigation Dist., Supra, 216 Cal. 274, 279, 13 P.2d 908, 910.)

Appellants also argue that the rationale of the Yolo decision has been superseded by the 1943 enactment of sections 22116 and 22117 of the Water Code.

Section 22116 provides:

'All provisions of the California Irrigation District Act, and of all acts amendatory thereof and supplemental thereto, applying to irrigation shall, as codified in this division, also be so construed and enforced as to apply to electric power.'

Section 22117 provides:

'The officers, agents, and employees of districts have the same powers, duties and liabilities respecting electric power and the acquisition, operation, and control relating to it as they have respecting irrigation or districts.'

Sections 22116 and 22117 were derived from the statute of 1919 and subsequent amendments (Stats.1919, ch. 370, p. 778; Stats.1921, ch. 644, p. 1083; Stats.1923, ch. 300, pp. 629--630; Stats.1941, ch. 345, pp. 1600--1601) and language substantially similar to the...