English v. County of Alameda

• Decision Date: 31 May 1977
• Citation: 70 Cal.App.3d 226,138 Cal.Rptr. 634
• Parties: Sharon J. ENGLISH et al., Plaintiffs and Appellants, v. COUNTY OF ALAMEDA et al., Defendants and Respondents, California Association of Homes for the Aging et al., Intervenors and Respondents. Civ. 38284.
• Court: California Court of Appeals Court of Appeals

Page 634

138 Cal.Rptr. 634

70 Cal.App.3d 226

Sharon J. ENGLISH et al., Plaintiffs and Appellants, v. COUNTY OF ALAMEDA et al., Defendants and Respondents California Association of Homes for the Aging et al., Intervenors and Respondents.

Civ. 38284.

Court of Appeal, First District, Division 2, California.

May 31, 1977.

As Modified June 15, 1977.

Hearing Denied July 28, 1977.

Russell Bruno, Oakland, for appellants.

Richard J. Moore, County Counsel, James E. Jefferis, Asst. County Counsel, County of Alameda, Oakland, for respondents.

Evelle J. Younger, Atty. Gen., Ernest P. Goodman, Asst. Atty. Gen., Edward P. Hollingshead, Deputy Atty. Gen., Sacramento, for respondent State Board of Equalization.

William J. Bush, Duane B. Garrett, Hanson, Bridgett & Marcus, San Francisco, for respondents Hospital Council of Northern California and California Hospital Assn.

Merrill J. Schwartz, Stark, Stewart, Simon & Sparrowe, Oakland, for respondent California Assn. of Homes for the Aging.

KANE, Associate Justice.

This is an appeal from a judgment denying a petition for a writ of mandate.

Petitioners (appellants) are resident citizen-taxpayers who brought this class action on behalf of themselves and all other taxpayers similarly situated. Respondents are the Assessors and Counties of Alameda, Contra Costa, Los Angeles, Marin, Orange, San Bernardino, San Diego, San Francisco, Santa Barbara, San Mateo and Santa Clara, and the State Board of Equalization. The Hospital Association of Northern California, the California Hospital Association, and the California Association of Homes for the Aging participate in the action as intervening parties.

The petition sought to compel respondents to identify, appraise and assess the tenancies or other possessory interests of certain employees and beneficiaries (i.e., hospital and college administrators, professors, doctors, nurses, aged persons) who occupy quarters or use property owned by tax-exempt colleges, universities, hospitals and other non-profit organizations. It was stipulated by the parties that each category of the above institutions is properly exempt from property taxation either under California Constitution ('Const.'), article XIII, section 4, subdivision (b) (formerly § 1c) and Revenue and Taxation Code ('Rev.Code') sections 214--214.9 (welfare exemption) or Const., article XIII, section 3, subdivision (e) (formerly § 1a) and Rev.Code, section 203 (college exemption). It was likewise stipulated that the occupancies or other property uses at issue are incidental to and reasonably necessary for the accomplishment of the charitable purposes upon which the exempt status of the property is predicated.

Based upon the stipulated facts, the trial court found that '2. (S)eparately definable property interests exist but are not subject to taxation as possessory interests, or otherwise, arising from the occupancy, by persons described in the stipulation of the parties, of property made exempt from ad valorem taxation pursuant to Section 4(b) (formerly Section 1c) of Article XIII of the California Constitution and Section 214 of the Revenue and Taxation Code (the welfare exemption).

'3. (S)eparately definable property interests exist but are not subject to taxation as possessory interests, or otherwise, arising from the occupancy, by persons described in the stipulation of the parties, of property made exempt from ad valorem taxation pursuant to Section 3(e) of Article XIII of the California Constitution (the present college exemption).

'4. In respect to property made exempt from ad valorem taxation pursuant to former Section 1a of Article XIII of the California Constitution (the former college exemption), which was repealed effective November (5), 1974, there was definable property interests subject to taxation, as possessory interests, arising from the occupancy, by persons described in the stipulation of the parties, of such college-exempt property; the imposition of assessments in respect to such property interests would be of no practical benefit to petitioners because of the insubstantiality or De minimis nature of the net tax revenues which would be realized.'

The trial court concluded that none of the persons described in the stipulation were subject to Ad valorem taxation by reason of their occupancy of either welfare or college exempt property, and accordingly denied the petition for mandate.

Thus, the fundamental issue is clearly in focus, namely whether a separate taxable property interest may be said to exist in property which is concededly entitled to either the welfare or college exemption when the use of the property is incidental to or reasonably necessary for the accomplishment of the exempt purpose.

Appellants contend that the conclusion reached by the trial court is erroneous, arguing that the occupancy or other use of tax exempt property by private individuals should be subject to Ad valorem taxation. Appellants' logic runs as follows: (1) unless otherwise provided by the Constitution or statute, as a general rule all property is taxable (Const., art. XIII, § 1); (2) possessory interests in land or improvements are a species of real property (Rev.Code, §§ 103--107; Kaiser Co. v. Reid (1947) 30 Cal.2d 610, 618), which are not explicitly exempted from taxation; (3) the occupancy or other use of the tax exempt property by the individuals described in the stipulation constitute separately definable possessory interests which substantially subserve an independent, private interest of the user or occupier (United States of America v. County of Fresno (1975) 50 Cal.App.3d 633, 638, 123 Cal.Rptr. 548); Ergo (4) such possessory interests as a matter of law ought to be made taxable to the private individuals, even if the property is properly exempt to the particular college, hospital or other charitable institution (cf. Mattson v. County of Contra Costa (1968) 258 Cal.App.2d 205, 65 Cal.Rptr. 646; McCaslin v. DeCamp (1967) 248 Cal.App.2d 13, 56 Cal.Rptr. 42; Rand Corp. v. County of Los Angeles (1966) 241 Cal.App.2d 585, 50 Cal.Rptr. 698; Kaiser Co. v. Reid, 30 Cal.2d 610, 184 P.2d 879; United States of America v. County of Fresno, both supra).

To put it in more basic terms, appellants advocate the adoption of a so-called dualuse theory under which property used for the exclusive purpose of tax-exempt charitable institutions would be excepted from taxation as to the institutions, but would be subject to an Ad valorem tax as to the private individuals who, while occupying or using the tax exempt property for the fulfillment of recognized charitable purposes, also utilize it for their own private end and benefit as well. In countering these arguments, respondents and intervenors maintain that the position advanced by appellants is totally unsupported by the Constitution and the statutes enacted pursuant thereto, and is in sharp conflict not only with the case law expanding on and interpreting the scope and meaning of the legislative enactments concerning the welfare and college exceptions, but also with the notion of 'exclusive use' as defined in established judicial opinions. Even more significantly it is contended that the eventual adoption of appellants' theory would fly directly in the face of a public policy which favors tax-exempt status for charitable institutions and would frustrate the very policy goal the promotion of which was intended by granting such exemption. We agree with respondents and intervenors and affirm the judgment for the reasons which follow.

Welfare Exemption: Since our primary task is to interpret the pertinent provisions of the California Constitution and the legislative enactments adopted pursuant thereto, initially we set out the general rules governing statutory construction. As emphasized time and again, the fundamental rule of statutory interpretation is to ascertain the intent of the Legislature so as to effectuate the purpose of the law (County of Alameda v. Kuchel (1948) 32 Cal.2d 193, 199, 195 P.2d 17). Statutes should be given a reasonable interpretation in accordance with the apparent purpose and intention of the lawmakers (Freedland v. Greco (1955) 45 Cal.2d 462, 467, 289 P.2d 463). The legislative intent may be ascertained not only by considering the words used, but also by taking into account other matters as well, such as the object in view, the evils to be remedied, the legislative history, public policy and contemporaneous administrative construction (Alford v. Pierno (1972) 27 Cal.App.2d 682, 688, 104 Cal.Rptr. 110; see also DiGiorgio Fruit Corp. v. Dept. of Employment (1961) 56 Cal.2d 54, 61--62, 13 Cal.Rptr. 663, 362 P.2d 487; Mudd v. McColgan (1947) 30 Cal.2d 463, 470, 183 P.2d 10; Estate of Jacobs (1943) 61 Cal.App.2d 152, 155, 142 P.2d 454). The rules concerning the interpretation of tax exemption enactments emphasize that constitutional provisions and statutes granting exemption from taxation as a general rule are strictly construed to the end that such concession will neither be enlarged nor extended beyond the plain meaning of the language employed. However, the rule of strict construction does not require that the narrowest possible meaning be given to the exempting language, for a fair and reasonable interpretation must be made of all laws with due regard for the ordinary acceptance of the language employed and the object sought to be accomplished. To put it tersely: Strict construction must still be a reasonable construction (Cedars of Lebanon Hosp. v. County of L.A. (1950) 35 Cal.2d 729, 734--735, 221 P.2d 31; Y.M.C.A. v. County of L.A. (1950) 35 Cal.2d 760, 767 221 P.2d 47; Fredericka Home v. County of San Diego (1950) 35 Cal.2d 789, 792, 221 P.2d 68; Church Divinity Sch. v. County of Alameda (1957) 152 Cal.App.2d 496, 502, 314 P.2d 209).

With these principles in mind, we first proceed to review the pertinent constitutional and statutory provisions. Const., article XIII, section 1,...