Consumers Holding Co. v. Los Angeles County

• Decision Date: 29 May 1962
• Citation: 204 Cal.App.2d 234,22 Cal.Rptr. 106
• Parties: CONSUMERS HOLDING CO., a corporation, Appellant, v. The COUNTY OF LOS ANGELES, a body politic, and N. O. Bakken, dba Bakken Plumbing (herein sued as Doe 6), Respondents. Civ. 25611.
• Court: California Court of Appeals Court of Appeals

Page 106

22 Cal.Rptr. 106

204 Cal.App.2d 234

CONSUMERS HOLDING CO., a corporation, Appellant, v. The COUNTY OF LOS ANGELES, a body politic, and N. O. Bakken, dba Bakken Plumbing (herein sued as Doe 6), Respondents.

Civ. 25611.

District Court of Appeal, Second District, Division 4, California.

May 29, 1962.

Rehearing Denied June 14, 1962.

Hearing Denied July 25, 1962.

Martin L. Abrams, El Monte, for appellant.

Harold W. Kennedy, County Counsel, David M. Ager, Deputy County Counsel, by A. R. Early, Deputy County Counsel, for respondent Los Angeles County.

Potter & Creim, Pasadena, for respondent Bakken.

BALTHIS, Justice.

This is an eminent domain proceeding by which the plaintiff State of California acquired certain real property from defendant Consumers Holding Co. (which held title to the property and which is sometimes hereinafter referred to as 'appellant') pusuant to a stipulated judgment providing for a total award of $205,500.00. Certain defendants having an interest in the property stipulated with the owner as to their respective shares in the award. However, as to two defendants, County of Los Angeles and N. O. Bakken, doing business as Bakken Plumbing (hereinafter referred to as Bakken), there was no agreement with appellant as to their respective shares in the award. The determination of the respective rights of these two defendants in the award was made by the court sitting without a jury pursuant to section 1246.1, Code of Civil Procedure, and from the judgment rendered appellant (the owner of the property) appeals.

Having paid the total award into court the state as condemnor is no longer involved in the proceeding and is not an interested party on the appeal.

The facts applicable to the claims of both defendants (County of Los Angeles and Bakken) are as follows:

Prior to the filing of the action appellant was constructing an apartment building on the property involved. On February 18, 1959, the California Highway Commission adopted a resolution declaring that the public interest and necessity required the acquisition of the subject property. On February 27, 1959, the state filed its complaint in eminent domain, summons was issued and service was made on appellant. After service appellant ceased construction.

Upon the trial pursuant to section 1246.1, Code of Civil Procedure, the court found that the County of Los Angeles had a valid tax lien for the sum of $1,526.23, that Bakken had a mechanic's lien in the sum of $1,499.70, that said defendants (County of Los Angeles and Bakken) were entitled to share in the award deposited in court in the amounts specified.

In view of the fact that the appeal taken by appellant (as owner) as to the shares of the award given to defendants County of Los Angeles and Bakken presents entirely different issues as to each defendant, they will be discussed separately.

Appeal as to that portion of the judgment in favor of the County of Los Angeles.

The special facts on this part of the appeal show that prior to the filing of the eminent domain action the state through its Division of Highways wrote a letter to appellant on January 7, 1959. In this letter reference was made to the fact that construction on the property was in progress and that 'The State is prepared to make an appraisal and purchase the property as soon as possible, provided you stop construction immediately.' Thereafter on January 23, 1959, the state wrote a second letter to appellant saying 'Request is made again that you stop construction immediately * * *. If this is not complied with, we will initiate a condemnation action immediately in order to stop construction.'

As above mentioned the action was filed, summons issued and the papers served on appellant on February 27, 1959, and at that time appellant ceased construction.

Appellant then tendered possession to the state but there is no evidence or finding that such tender was accepted.

There was no order made for possession and there is no evidence or finding that there was any physical 'taking' of the property by the state before entry of the final order of condemnation on December 19, 1960.

The amount of the taxes found due the County of Los Angeles ($1,526.23) was ascertained by taking the amount of taxes past due for prior years and adding an amount for current taxes (1960-1961). Current taxes were prorated to the date of said final order of condemnation (December 19, 1960).

Both the statutory and the case law of this state establish that real property, the subject of an action in eminent domain by a public agency, is not exempt from taxation until the date title is divested from the owner or there is a physical 'taking' of the property by the condemnor.

Section 4986 of the Revenue and Taxation Code (as it existed on the dates here involved and prior to the 1961 amendments) provides for the cancellation of taxes where property is acquired by the state, county or other public agency. The section provides for proration of current taxes as follows: 'The date of such proration shall be at the time title was transferred to, or possession was taken by, the public agency, whichever time the court determines to have first occurred.'

In the instant case the trial court determined that the current taxes should be prorated to the date when title was transferred to the state by the final order of condemnation.

Appellant contends that the effect of the letter received from the Division of Highways, together with the filing of the action on February 27, 1959, compelled the owner (appellant) to cease construction. Appellant then argues that the state exercised a right to take possession of and use the land and premises sought to be condemned and that this was the taking of constructive possession of the property.

If possession of the property is taken by the condemnor prior to the transfer of title, then the date of the taking of actual physical possession is the important date as far as taxes or assessment liens are concerned and not the date of an order for possession.

In People ex rel. Department of Public Works v. Peninsula Title Guar. Co., 47 Cal.2d 29, 301 P.2d 1, the eminent domain action was filed on April 20, 1953, and on the same date an order was made authorizing immediate possession. On June 21, 1953, the owners were required to vacate and the state commenced the removal of buildings and the construction of an overpass thereon. Thereafter, on August 19, 1953, an assessment lien was recorded by the city against the property. The final judgment of condemnation was entered December 2, 1953. The trial court held the assessment lien was effective because title to the property did not pass until the judgment was entered. This was reversed by the Supreme Court, the court holding that an 'effective' taking of the property occurred when physical appropriation was made. The court said (47 Cal.2d 29, 35, 301 P.2d 1, 5): 'In the present case the effective 'taking' by the condemnor is advanced from the time of the award to the time of appropriation of the property, that is, June 21, 1953, which was prior to the time of the levy.'

It is to be noted that in the above case the court used the date of 'appropriation' of the property by the state and not the date of the order authorizing immediate possession.

In People v. Watkins, 175 Cal.App.2d 182, 189, 345 P.2d 960, the court held that the mere issuance of an order for immediate possession does not divest the owner of title, nor in itself constitute a 'taking' and whether there is a physical 'taking' is a factual question to be decided by the trial court.

In People v. Joerger, 12 Cal.App.2d 665, 671, 55 P.2d 1269, 1272, the rule is clearly stated: 'It thus appears that where there is no prior physical 'taking,' the property is deemed to have been 'taken' when title is divested, as possession follows the title. Where there has been a prior physical 'taking,' the subsequent divestiture of title is merely a confirmation of the original 'taking."

In City of Long Beach v. Aistrup, 164 Cal.App.2d 41, 46, 330 P.2d 282, 285, the court said: 'When a condemnor obtains and order for possession of property sought to be condemned prior to judgment and actually takes possession of the property, evicting the owners therefrom, such action constitutes a 'taking' as of the date the condemnor goes into actual possession.'

Generally, where the taxes become a lien prior to the passage of title or prior to the time title is deemed to have passed to the condemnor by a 'physical taking,' they are to be deducted from the award. (State of California v. Clyne, 175 Cal.App.2d 204, 208, 345 P.2d 474.)

In view of the fact that in the instant case there was neither an order made for immediate possession nor any physical possession taken by the state, appellant is compelled to argue...