Mattson v. Contra Costa County

• Decision Date: 25 January 1968
• Citation: 258 Cal.App.2d 205,65 Cal.Rptr. 646
• Court: California Court of Appeals Court of Appeals
• Parties: Robert E. MATTSON, N. S. Mattson, E. G. Mattson, doing business as Matt-Sons, Plaintiffs and Respondents, v. COUNTY OF CONTRA COSTA, a political subdivision of the State of California, E. F. Wanaka, Emmett Hitchcock, Defendants and Appellants. Civ. 23975.

Page 646

65 Cal.Rptr. 646

258 Cal.App.2d 205

Robert E. MATTSON, N. S. Mattson, E. G. Mattson, doing business as Matt-Sons, Plaintiffs and Respondents, v. COUNTY OF CONTRA COSTA, a political subdivision of the State of California, E. F. Wanaka, Emmett Hitchcock, Defendants and Appellants.

Civ. 23975.

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

Jan. 25, 1968.

John A. Nejedly, Dist. Atty., County of Contra Costa, James H. Disney, Deputy Dist. Atty., County of Contra Costa, Martinez, for appellants.

William J. Betts, Betts & Deane, Concord, for respondents.

DEVINE, Presiding Justice.

The question is whether an agreement made between respondents, partners in the restaurant business, and the City of Concord relating to the use of property and the operation of refreshment services at the clubhouse at the municipal golf course creates a taxable possessory interest in respondents. Respondents sued to recover taxes paid under protest to the County of Contra Costa and recovered judgment in the amount of $151.53 for the tax period 1964--1965. The trial judge concluded that the agreement created a license only and not a possessory interest.

The agreement refers to respondents as concessionaires, and does not use the words 'lessees' or 'tenants.' But the descriptive words used are not controlling. ¹ (Beckett v. City of Paris Dry Goods Co., 14 Cal.2d 633, 96 P.2d 122.)

The agreement was made while the clubhouse was being built on land owned or partially leased by the city. It gives to respondents the exclusive right to serve food, beverages, confectionery, tobacco products, and the like for five years with first refusal to any new agreement on the same matters. Respondents are to pay five per cent of the gross receipts, less sales taxes, to the city. The agreement says that the city's percentage shall commence with the first day of the 13th month 'next following the month during which Concessionaires take possession of the restaurant and dining room area.'

A faithful performance surety bond must be posted by respondents; respondents must maintain workmen's compensation and liability insurance to cover damages arising from injuries to persons or property 'arising out of the operation of the concession.' Respondents must keep 'all premises operated by them' under the agreement in good order and repair, including plumbing and all glass on said premises. All necessary items for the business (utensils, etc.) and licenses are to be obtained by respondents. Utilities are paid for by the city.

Termination provision is this: the city council reserves the right at any time 'when the method of operation of said concession or the quality and character of service rendered by Concessionaires are not fully up to the requirements of this agreement or are not adequately meeting the needs of the public for reasons properly within the control of Concessionaires, or in case Concessionaires violate any of the terms of this agreement, to terminate this agreement, first giving thirty (30) days' notice, in writing, of its intention to do so. If the monthly payments covenanted to be made by the Concessionaires shall at any time during the term of this agreement become fifteen (15) days past due, the City, at its option, shall have the right to terminate this agreement. In the event of such cancellation, City agrees to pay Concessionaires the pro-rata cost for the remaining period of the agreement for equipment installed by Concessionaires, if Concessionaires so desire, and said equipment shall then become the property of the City of Concord.'

There are expressed certain terms relating to the operation of the restaurant and vending business. The restaurant must be open shortly before sunrise and remain open until shortly after sunset on all days when the golf course is open; the quality of food and service must be equal to that of the better neighboring restaurants; prices shall be reasonably comparable to those in restaurants in the City of Concord and at golf courses in the Bay Area, and price adjustments shall be submitted to the city manager; advertisements of particular foods or beverages are not permitted, and all advertisements are subject to the city manager's approval. If the city manager deems any operation to be detrimental, it shall be stopped; and if he deems equipment to be unsafe, it shall be withdrawn. Any employee who in the judgment of the city manager is objectionable shall be discharged immediately.

There was testimony, uncontradicted, about the actual operation of the enterprise. The kitchen and storeroom are possessed exclusively by respondents. One of the Mattson partners testified that the law requires that others than authorized personnel be barred from the kitchen area. ² The dining area is open to the public. Tables and chairs have been put there by respondents. These are used by customers, but golfers and others who are tallying scores, playing cards, or watching television may sit in the room although they may purchase nothing.

Several vending machines have been contracted for by respondents and placed by them in the dining and patio areas. This installation was known to the city manager although his express permission for it was not requested. The five per cent allotment is remitted from receipts from the machines.

Some of the improvements are particular or unique to respondents' operation and are not usable elsewhere.

'All property * * * not exempt * * * shall be taxed in proportion to its value.' (Cal.Const., art. XIII, § 1.) Among the species of property are possessory interests. "Possessory interests' means the following: (a) Possession of, claim to, or right to the possession of land or improvements, except when coupled with ownership of the land or improvements in the same person. (b) Taxable improvements on tax exempt land.' (Rev. & Tax.Code, § 107.)

We decide that the interest of respondents is possessory. It is more than a mere license. In arrangements of the general nature of the one before us, to which a unit of government is a party, almost inevitably there are some features of relative durability, independence, exclusiveness and fixedness, and others of relative impermanence, subjection to control and public participation. In each case, judgment must be made by examination of the agreement in its entirety. We find that a substantial balance of the factors is on the side of possessory interest. We shall discuss the salient factors.

1. The place. The kitchen area and the storeroom undoubtedly are in the exclusive possession of respondents. ³

Even though this effect follows partly from sanitation laws, it is the agreement which puts respondents into possession of the restricted area. The exclusive possession by respondents of the kitchen cannot well be considered as a wholly separate matter from the somewhat less exclusive dominion of the dining area, for the two are a unit for operating purposes. In fact, the dining area is less important than in the ordinary restaurant, because patrons receive their food and beverages at a counter and take them either to the tables, to a patio, or elsewhere outside the clubhouse.

The dining area is open to the public, not only to persons who are presently customers, but also to those who simply wish to remain there at leisure. Of course, every restaurant must be open to serve all patrons who are willing to pay. Besides, it does not seem to be a disadvantage to respondents to have the place available to potential patrons drawn to it by golf and its incidents or by television. Indeed, in one case cited by respondents, Wukaloff v. Malibou Lake Mountain Club, 96 Cal.App.2d 147, 214 P.2d 832 (not a tax case), one of the elements which brought about...