McCaslin v. DeCamp

• Decision Date: 20 January 1967
• Citation: 56 Cal.Rptr. 42,248 Cal.App.2d 13
• Court: California Court of Appeals Court of Appeals
• Parties: Lewis V. McCASLIN et al., Plaintiffs and Appellants, v. F. L. DeCAMP et al., Defendants and Respondents. Civ. 668.

Page 42

56 Cal.Rptr. 42

248 Cal.App.2d 13

Lewis V. McCASLIN et al., Plaintiffs and Appellants, v. F. L. DeCAMP et al., Defendants and Respondents.

Civ. 668.

Court of Appeal, Fifth District, California.

Jan. 20, 1967.

C. Ray Robinson and William T. Ivey, Jr., Merced, for appellants.

Frederick W. Reyland, Jr., County Counsel, Clayton M. Ham, Johnathan H. Rowell, and T. W. Martz, Deputy County Counsel, Modesto, for respondents.

GARGANO, Justice.

Plaintiffs Central California Irrigation District, a tax-exempt public agency (hereafter referred to as the district), and Lewis V. McCaslin (hereafter referred to as McCaslin) commenced this action by filing a complaint in the Superior Court of Stanislaus County against the assessor, the tax collector and the board of supervisors of said county, to declare void a possessory interest assessment made by the assessor, to enjoin collection of the resulting tax levied against this interest and to enjoin the defendants from making similar assessments in the future. According to the allegations of the original complaint, the district, on the first Monday of March 1965, owned a single-family residence which was occupied by district employee McCaslin and his family. McCaslin was paying the district a monthly rental for the use and occupancy of this residence, and claimed no interest therein 'other than as a tenant on a month-to-month basis.' In 1965 McCaslin was assessed as the owner of a possessory interest in this residence, and a tax was levied against his possessory interest. The defendants demurred to the plaintiffs' complaint and the demurrer was sustained with leave to amend. Plaintiffs then filed a first amended complaint, omitting therefrom the allegations that McCaslin paid the district a monthly rental for the premises and that he claimed no interest therein 'other than as a tenant on a month-to-month basis.' (They merely alleged that McCaslin claimed no interest in the property.) They further alleged that McCaslin occupied the residence at the district's request in connection with his duties as a district employee, and that the district court terminate his occupancy without notice. Defendants' demurrer to the first amended complaint was sustained without leave to amend. Accordingly, judgment was granted in favor of the defendants and the plaintiffs appealed.

In support of the trial court's ruling sustaining their demurrer without leave to amend, defendants contend that the facts alleged in the plaintiffs' first amended complaint disclose that McCaslin had a possessory interest in the district's property in 1965 when the assessment was made, and that at best plaintiffs are complaining of an erroneous (but not void) assessment. They therefore, argue that if McCaslin was dissatisfied with the assessment he should have appealed for relief (pursuant to the provisions of Chapter 1, Division 1, Part 3, commencing with section 1601 of the Revenue and Taxation Cdde) to the board of supervisors of Stanislaus County sitting as the county board of equalization; and since the complaint fails to allege that he did so, it does not state a cause of action for the judicial relief requested. It is the general rule that a taxpayer seeking judicial relief from an erroneous assessment must exhaust his remedies before the administrative body empowered initially to correct the error before seeking judicial review. (Security-First Nat. Bk. v. County of L.A., 35 Cal.2d 319, 217 P.2d 946; 340 U.S. 891, 71 S.Ct. 207, 95 L.Ed. 646 (cert. den.).)

Plaintiffs urge, however, that McCaslin did not have a taxable interest, possessory or otherwise, in the district's property in 1965 (and that the complaint so indicates); consequently plaintiffs' sole contention is that the possessory interest assessment made by the defendant county assessor was totally void. Thus, plaintiffs readily admit that McCaslin did not apply for relief to the county board of equalization. They simply assert that McCaslin was not required to do so because the general rule relied upon by defendants is inapplicable where, as here, the assessment is against non-existent property. As stated in Star-Kist Foods, Inc. v. Quinn, 54 Cal.2d 507, 510, 6 Cal.Rptr. 545, 546, 345 P.2d 1, 2:

'* * * Prior application to the local board of equlalization has not been required, however, in certain cases where the facts were undisputed and the property assessed was tax- exempt (Brenner v. City of Los Angeles, 160 Cal. 72, 79--80, 116 P. 397; Parrott & Co. v. City & County of San Francisco, 131 Cal.App.2d 332, 342, 280 P.2d 881), outside the jurisdiction (see Kern River Co. v. County of Los Angeles, 164 Cal. 751, 755--756, 130 P. 714), or nonexistent (see Pacific Coast Co. v. Wells, 134 Cal. 471, 473, 66 P. 657; Associated Oil Co. v. County of Orange, 4 Cal.App.2d 5, 9, 11, 40 P.2d 887).'

Consequently, the only question presented in this appeal is whether the facts alleged in the plaintiffs' complaint disclosed that McCaslin had a possessory interest in the district's property as defendants contend, or whether said facts indicate that he had no taxable interest therein as plaintiffs contend.

It is clear that leasehold and similar possessory interests in tax-exempt land or improvements are taxable property rights under the California Revenue and Taxation Code (Revenue and Taxation Code sections 103, 104, 107). Furthermore, the validity of such assessments has long been upheld by the appellate courts of this state. (State of California v. Moore, 12 Cal. 56; People v. Shearer, 30 Cal. 645; L. E. White Lumber Co. v. Mendocino County, 177 Cal. 710, 171 P. 799; Kaiser Co. v. Reid, 30 Cal.2d 610, 184 P.2d 879; Hammond L. Co. v. County of Los Angeles, 104 Cal.App. 235, 285 P. 896.) In fact, in Tilden v. County of Orange, 89 Cal.App.2d 586, 587--588, 201 P.2d 86, the court, in discussing the assessment of possessory interests, had this to say:

'The general rule is that there can be but one assessment of the entire estate in real property, which assessment includes the value of both the estate for years and the remainder or reversion, and the mortgagor or lessor of the real estate is liable for the taxes thereon. Graciosa Oil Co. v. County of Santa Barbara, 155 Cal. 140, 143, 99 P. 483, 20 L.R.A.,N.S., 211; Central Manufacturing District v. State Board of Equalization, 214 Cal. 288, 293, 5 P.2d 424. There is an exception to the rule where the reversion is exempt from taxation, as where the land is owned by the State or a municipality. In such case the possessory right in the public land is private property and may be assessed for purposes of taxation to the person in possession. San Pedro, etc., R.R. Co. v. City of Los Angeles, 180 Cal. 18, 23, 179 P. 393. The possession itself of public lands and the improvements thereon is a valuable property interest and is assessable. Kaiser Co. v. Reid, 30 Cal.2d 610, 618, 184 P.2d 879.

'Where there is a lease of land owned by the State or municipality, the reversion being exempt from taxation, the usufructuary interest alone is subject to tax in proportion to its value; * * *'

As we have indicated, plaintiffs do not dispute the county's power to assess possessory interests. To the contrary, they admit in their brief that 'it is clear that when property owned by a tax-exempt agency is Rented or leased to an individual, the estate of the private tenant or lessee may be assessed and taxed.' Thus, plaintiffs' own admission is determinative of the issues presented in this appeal. This follows for they alleged in their original verified complaint that McCaslin paid the district a monthly rental for the use and...