Cochran v. Board of Supervisors

• Decision Date: 26 September 1978
• Citation: 149 Cal.Rptr. 304,85 Cal.App.3d 75
• Court: California Court of Appeals Court of Appeals
• Parties: Gerald D. COCHRAN, Assessor of Del Norte County, Plaintiff and Appellant, v. BOARD OF SUPERVISORS OF DEL NORTE COUNTY, Sitting as the Del Norte County Board of Equalization, Defendant and Respondent; MILLER REDWOOD COMPANY, a corp., Rellim Redwood Company, a corp., Stimson Lumber Company, a corp., Harold A. Miller, Jane S. Miller, Joanne Miller Lilley, Prudence Miller, Achsah Jane Miller Graham, Darrell H. Schroeder, and Theodore Lilley, Jr., Real Parties in Interest. Civ. 42109.

Page 304

149 Cal.Rptr. 304

85 Cal.App.3d 75

Gerald D. COCHRAN, Assessor of Del Norte County, Plaintiff and Appellant, v. BOARD OF SUPERVISORS OF DEL NORTE COUNTY, Sitting as the Del Norte County Board of Equalization, Defendant and Respondent;

MILLER REDWOOD COMPANY, a corp., Rellim Redwood Company, a corp., Stimson Lumber Company, a corp., Harold A. Miller, Jane S. Miller, Joanne Miller Lilley, Prudence Miller, Achsah Jane Miller Graham, Darrell H. Schroeder, and Theodore Lilley, Jr., Real Parties in Interest.

Civ. 42109.

Court of Appeal, First District, Division 1, California.

Sept. 26, 1978.

Leland H. Jordan, Bagshaw, Martinelli, Corrigan & Jordan, San Rafael, for plaintiff and appellant.

Thomas S. Owen, County Counsel, Crescent City, Pillsbury, Madison & Sutro, San Francisco, for defendant and respondent and real parties in interest.

NEWSOM, Associate Justice.

This is an appeal by the Assessor of Del Norte County after denial of his petition for a writ of mandamus in the Del Norte County Superior Court.

The case arises under the following circumstances.

On April 1 and 2, 1976, the Del Norte County Board of Supervisors (hereafter "Board"), sitting as a board of equalization, held hearings on the applications of Harold A., Jane S. and Prudence M. Miller, Joanne M. and Theodore Lilley, Achsah J. Graham, Darrell H. Schroeder, and Miller Redwood Co. (hereinafter "applicants") for a reduction in the escape assessments made by the assessor on land to which variously they hold record title. The assessment was based upon the assessor's conclusion that the lands owned by applicants should have been valued as separate tracts, and, as such, would have been both valued and taxed more highly. As appears in greater detail below, the Board disagreed, and its views were sustained by the trial court, leading to the present appeal.

I.

A perusal of the record reveals that the individual applicants are closely related: Harold and Jane Miller are husband and wife; Prudence Miller, Achsah Graham and Joanne Lilley are their daughters; Theodore Lilley is Joanne's husband; and Darrell Schroeder, though unrelated by blood or marriage to the other applicants, is a key employee of the family lumber enterprise. Miller Redwood Company and Rellim Redwood Company are wholly owned subsidiaries of Stimson Lumber Company, and the individual applicants together own at least 90 percent of the stock of Stimson.

The subject lands are owned of record by the applicants in a variety of combinations. Tracts are held individually by Harold A. Miller, Jane S. Miller, Joanne M. Lilley, Achsah Jane Graham, and Miller Redwood Co. The remaining tracts are held by groups: Harold A., Jane S., Prudence and Achsah Miller are one; Harold A. Miller, Theodore Lilley and Darrell H. Schroeder another; and Harold A. Miller and Darrell H. Schroeder form the third group.

A web of contractual rights binds the tracts together. Rellim has the right to cut timber on all tracts, and title to the timber thereon once the trees are felled. Its parent company, Stimson, has the right of first refusal to purchase any of the lands on the death of the owner. Stimson also has, by virtue of a shareholders' agreement, an option to purchase stock sold by any shareholder, and, if it declines, that right inures to the benefit of individual shareholders in proportion to their ownership.

Indeed, it is fair to say that the applicants have bound themselves in such a manner that no one of them is free to deal with his land except in the manner set forth in these numerous contracts.

II.

An important preliminary consideration on this appeal is the scope of our review. Plaintiff's contentions are grounded in his interpretation of title 18, section 41 of the California Administrative Code, which provides in pertinent part

"In determining the timber to be valued as a unit, there shall be combined those parcels having:

(1) The same legal ownership. Timber sale contracts shall not be included in the unit.

(2) Commercial timber production as a dominant use.

(3) Geographical and physical conditions which permit similar treatment and economic removal of the timber to a common processing center. The typical practices of timberland owners and timber purchasers shall be used as a guide to indicate the geographical areas which are suitable for inclusion in the unit. Parcels shall not be excluded from the unit because they are outside the county, or because they are eligible for assessment under section 423.5 of the Revenue and Taxation Code."

The rule then goes on to provide in essence for a lower valuation process on larger tracts, based upon the notion that larger timber units require a longer harvest.

Referring to these provisions the Board readily found as was virtually uncontested that criteria two and three were established. The central issue, therefore, was whether the lands had the "same legal ownership." The Board found, in "Finding of Fact No. 8," that the applicants met the Same legal ownership test, since they were conducting a family timber business as a partnership. Moreover, the Board found that, irrespective of rule 41, the fair market value of the subject land would be maximized if the land were treated as a unit.

We accordingly are confronted at the outset with the question of what weight should be given the Board's findings in this respect. Since the supervisors, sitting as an equalization board, pursuant to article XIII, section 16, of the California Constitution, exercise quasi-judicial powers, we consider that their factual determinations are entitled on appeal to the same deference due a judicial decision, i. e., review under the substantial evidence standard. (Strumsky v. San Diego County Employees Retirement Assn. (1974)11 Cal.3d 28, 35-36, 112 Cal.Rptr. 805, 520 P.2d 29; Westlake Farms, Inc. v. County of Kings (1974) 39 Cal.App.3d 179, 182-185, 114 Cal.Rptr. 137.) The Board's conclusions of law, however, are subject to independent reassessment. (Georgia-Pacific Corp. v. County of Butte (1974) 37 Cal.App.3d 461, 473-474, 112 Cal.Rptr. 327.)

Our view of finding No. 8 is that it is a conclusion of law rather than of fact; the conclusion being that, using the valuation factors stipulated, the lands should be valued as a unit under rule 41. The interpretation of that rule, the meaning of the phrase "same legal ownership" and the strictness with which all three criteria are to be applied are all in our view legal, not factual, questions, and in the discussion which follows, will be reviewed De novo. Factual conclusions, on the other hand, will be reviewed in the context of the substantial evidence rule, and under well-established legal principles we will decline in every instance to substitute our view of factual matters for that of the Board.

III.

A primary factual finding by the Board is that the applicants' timber operations constituted a partnership. A partnership is "an association of two or more persons to carry on as co-owners a business for profit." (Corp. Code, § 15006, subd. (1).) This definition has been amplified and rephrased as requiring a community of interest in the business and a sharing of profits and losses. (Swofford v. Industrial Acc. Com. (1953) 121 Cal.App.2d 400, 401, 236 P.2d 129; Nelson v. Abraham (1947) 29 Cal.2d 745, 749, 177 P.2d 931.)

The rules for determining the existence of a partnership are set forth in Corporations Code section 15007. In relevant part, they provide that co-ownership of any sort and profit-sharing are factors tending to establish partnership. A written agreement is not necessary. (Smalley v. Baker (1968) 262 Cal.App.2d 824, 838, 69 Cal.Rptr. 521; Perelli-Minetti v. Lawson (1928) 205 Cal. 642, 647, 272 P. 573.) The intent of the parties as revealed in the terms of their agreement is, of course, a crucial factor in determining whether a partnership exists, as are the conduct of the parties and the surrounding circumstances. (Constans v. Ross (1951) 106 Cal.App.2d 381, 386-387, 235 P.2d 113; Lyon v. MacQuarrie (1941) 46 Cal.App.2d 119, 124-125, 115 P.2d 594.) If, using these criteria, a partnership were to be found, it would not be disproved by a finding of unequal duties, contributions or distribution of profits. (Ibid.)

The burden upon one seeking to prove a parol partnership is proof by clear and convincing evidence a standard which, however, applies only in the trial forum. Appellate review is limited to...