Hanks v. State Bd. of Equalization

• Citation: 229 Cal.App.2d 427,40 Cal.Rptr. 478
• Court: California Court of Appeals
• Decision Date: 31 August 1964
• Parties: Wanda Lee Knight HANKS, also known as Wanda Lee Knight, Petitioner and Appellant, v. STATE BOARD OF EQUALIZATION of the State of California, Defendant and Respondent. Civ. 27977.

Page 478

40 Cal.Rptr. 478

229 Cal.App.2d 427

Wanda Lee Knight HANKS, also known as Wanda Lee Knight, Petitioner and Appellant, v. STATE BOARD OF EQUALIZATION of the State of California, Defendant and Respondent.

Civ. 27977.

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

Aug. 31, 1964.

Hearing Denied Oct. 28, 1964.

Stanley Sapiro, Hollywood, for appellant.

Stanley Mosk, Atty. Gen., Dan Kaufmann, Asst. Atty. Gen., and, Richard S. Cohen, Deputy Atty. Gen., for respondent.

LILLIE, Justice.

This case is companion to Michels v. Watson, 2d Cal.App., 40 Cal.Rptr. 464. Plaintiff, a taxpayer and owner of a single family residence, filed a petition for writ of mandate to require defendant State Board of Equalization to increase assessment rolls of all counties of the state for 1962-63 and 1963-64 fiscal years, and all future years, to make them conform to full cash value. No oral proceedings other than argument were had in the trial court; however, introduced as Exhibit 1 was a release of the State Board of Equalization, dated September 11, 1962, setting out the average assessment levels of each county and showing statewide averages for 1960, 1961 and 1962, to be 22.6, 23.5 and 23.8% of true value, respectively. The trial court found that during 1960, 1961 and 1962, no assessed valuation in the state was at 100 per cent of full cash value and assessors throughout the state were using full cash value as a base or standard for assessments and were applying a ratio to full cash value in order to arrive at assessed valuation (Finding of Fact, No. I); and that defendant Board intends to leave assessment of property at a fraction or ratio of full cash value provided said fraction or ratio is consistent throughout the state as determined by defendant Board pursuant to Article I, Chapter 2, Part 3, Division 1, Revenue and Taxation Code (Findings Nos. III, IV). The court concluded that in performing its intercounty equalization functions and its statewide assessment functions, defendant Board did not act wilfully, arbitrarily or capriciously, and that the process of assessing property by the use of its full cash value as a standard or base and applying a common ratio to full cash value of the property does not violate constitutional or statutory provisions dealing with local assessments of property, equalization of local assessments, statewide assessments or intercounty equalization. Plaintiff appeals from the judgment entered in favor of defendant.

The sole issue is whether Article XIII, section 9, California Constitution, compels the State Board of Equalization to raise assessments to conform to full cash value. Appellant argues that all assessments for property tax purposes must be made at 100 per cent of market value, and that a uniform fraction or ratio of market value cannot be used either in the assessment or equalization process; and contends that defendant Board has a duty under the Constitution (Art. XIII, § 9) to cause the assessment rolls of each county of be raised to 100 per cent of market value. Defendant Board denies it has such a constitutional duty; it claims that under constitutional and statutory provisions in this state, property tax assessments may be made at a ratio or fraction of market value; and that in performing its intercounty equalization functions it is not required to raise or lower a county roll unless the fraction or ratio of the county is inconsistent with the statewide average as determined by it pursuant to sections 1815-1925, Revenue and Taxation Code. Its position is that if it follows this approach it will have equalized the valuation of the taxable property in the several counties and that assessments throughout the state will conform to the true value in money of property contained on the assessment rolls.

Applicable are the following constitutional and statutory provisions:

Article XIII, section 1, California Constitution, adopted in 1879 (previously contained in § 13, Art. XI, Constitution of 1849): 'All property in the State * * * shall be taxed in proportion to its value, to be ascertained as provided by law, or as hereinafter provided. * * *' Article XIII, section 9, creates a State Board of Equalization and constitutes the Boards of Supervisors of the several counties to be Boards of Equalization of their respective counties; and sets forth their powers and duties. It provides that it shall be the 'duty' of the State Board 'to equalize the valuation of the taxable property in the several counties of the State for the purposes of taxation,' and the 'duty' of the county boards 'to equalize the valuation of the taxable properly in the county for the purpose of taxation; provided, such state and county boards of equalization are hereby authorized and empowered * * * to increase or lower the entire assessment roll, or any assessment contained therein, so as to equalize the assessment of the property contained in said assessment roll, and make the assessment conform to the true value in money of the property contained in said roll; * * *' (Emphasis added.)

Article XI, section 12, in pertinent part provides: 'All property subject to taxation shall be assessed for taxation at its full cash value.' Similar, is section 401, Revenue and Taxation Code: 'Except as provided in this part, all taxable property shall be assessed at its full cash value.' Section 110, Revenue and Taxation Code, defines 'value,' 'full cash vaue,' or 'cash value' as being 'the amount at which property would be taken in payment of a just debt from a solvent debtor. * * *'

A review of the history and development of the law dealing with local property taxation reflects the early-established pattern of assessment of property for purposes of taxation and equalization of assessments in this state; it exists the same today--each county assessor makes the initial assessment, each county board equalizes assessments within the county, and the state board equalizes the assessment rolls among the counties. Appellant's basic argument is that since all assessment for property tax purposes must be made at 100 per cent of market value, a uniform fraction or ratio of market value cannot be used in the process of equalization of assessments.

Relative to the validity of the assessment process, we have held in Michels v. Wilson, that section 12, Article XI, California Constitution, does not prohibit the assessment of taxable property by a county at a uniform fraction or ratio of its full cash or market value. This conforms to the long-established practice of those charged with the administration of our revenue law, sanctioned by the legislature and recognized and accepted by our courts (see cases cited in Michels v. Wilson). Since 1872, first under section 3627, Political Code, then section 3627, and Article XI, section 12, California Constitution, and now under Article XI, section 12 and section 401, Revenue and Taxation Code, county assessors in this state have not assessed property for general tax purposes at 100 per cent of full cash value; it has been and now is their practice to determine the market value of the property subject to taxation and apply to that value a common ratio. (See annual report to the Governor by the State Board of Equalization, December 31, 1963.)

Our determination of the issue whether defendant Board has a constitutional duty to raise or lower county assessment rolls to make them conform to 100 per cent of full cash value, is controlled by Artice XIII, section 9, California Constitution. The State Board's duty to equalize the level of assessments in the various counties throughout the state is derived from section 9, Article XIII. (McDougall v. County of Marin, 208 Cal.App.2d 65, 70; Baldwin v. Ellis, 68 Cal. 495.) In 1879 this constitutional provision created the state and local boards of equalization and expressed their duties and powers. Thereunder, the State Board has the 'duty * * * to equalize the valuation of the taxable property in the several counties of the State for the purposes of taxation'; and is 'authorized and empowered * * * to increase or lower the entire assessment roll, or any assessment contained therein, so as to equalize the assessment of the property contained in said assessment roll, and make the assessment conform to the true value in money of the property contained in said roll, * * *.' Thus, the only expressed constitutional duty of the State Board is to equalize the valuation of taxable property in the counties of the state (Art. XIII, § 9). This duty is not set up in terms of equalizing at 100 per cent of market value, nor is the State Board's power to increase or lower the assessment roll so as to equalize the assessment and make it 'conform' to the true value in money of the property contained in the roll. If the State Board is required under Article XIII, section 9, to lower or raise a roll to 100 per cent of market value, as urged by appellant, why then is the State Board, in addition, separately but in the same constitutional provision, given the duty and power to equalize; for if 100 per cent of market value (true value in money) must be used, then euality and uniformity are automatically produced by raising or lowering rolls to 100 per cent of market value. Of what purpose then is the duty or power of the Board to equalize? It is exactly what the name implies--'to equalize the assessment of taxes in the several counties, so as to cause them to approximate as nearly as possible to the equality and uniformity enjoined by the Constitution.' (Savings and Loan Society v. Austin (1873), 46 Cal. 415, 473.) 'To equalize,' the court said in Wells Fargo & Co. v. Board of Equalization (1880), 56 Cal. 194, at page 196, 'is to make equal, to cause to correspond, or be like in amount of degree, as compared with something.' Moreover, if the language used in Article XIII, Section 9, and in Article XI, Section 12, was intended to mean that all...