Mission Valley East, Inc. v. County of Kern

• Court: California Court of Appeals
• Citation: 174 Cal.Rptr. 300,120 Cal.App.3d 89
• Parties: MISSION VALLEY EAST, INC., Petitioner and Respondent, v. COUNTY OF KERN et al., Defendants and Appellants. MISSION VALLEY EAST, INC., Petitioner and Respondent, v. COUNTY OF KERN et al., Defendants and Appellants. Civ. 4560, Civ. 4694.
• Decision Date: 03 June 1981

Page 300

174 Cal.Rptr. 300

120 Cal.App.3d 89

MISSION VALLEY EAST, INC., Petitioner and Respondent, v. COUNTY OF KERN et al., Defendants and Appellants.

MISSION VALLEY EAST, INC., Petitioner and Respondent, v. COUNTY OF KERN et al., Defendants and Appellants.

Civ. 4560, Civ. 4694.

Court of Appeal, Fifth District, California.

June 3, 1981.

As Modified on Denial of Rehearing June 30, 1981.

Ralph B. Jordan, County Counsel, Bakersfield, Lawrence E. Small, Fresno, Carol D. Brown, Bakersfield, and John Irby, Deputy County Counsel, Santa Barbara, for defendants and appellants

Marinos, Styn & Studebaker, Jeffrey N. Garland, San Diego, McCormick, Barstow, Sheppard, Coyle & Wayte and Marshall Whitney, Fresno, for petitioner and respondent.

OPINION

FRANSON, Associate Justice.

INTRODUCTION

We review two judgments granting peremptory writs of mandate ordering the appellant County of Kern (hereinafter County) to pay respondent Mission Valley East, Inc., the excess proceeds from the tax sales of seven parcels of real property. Respondent claims entitlement to the excess proceeds under Revenue and Taxation Code section 4675 which gives "(a)ny party of interest in the property at the time of the sale" the right to claim excess proceeds within a year after the sale. ¹ Respondent asserts that it is the assignee of the right to collect the proceeds by reason of quitclaim deeds acquired after the tax sales from the parties who were the record owners of the parcels at the time of the sale.

For the reasons to be explained, we have concluded that the quitclaim deeds did not effect a transfer of the right to collect the excess proceeds remaining after the tax sale; accordingly, we reverse the judgments.

FACTS

On February 25, 1977, the County's tax collector, acting as agent for the State Controller, caused to be sold at a public sale, the seven parcels which are the subject of these consolidated appeals. ² The excess proceeds from each of the sales were as follows: (1) the Berg parcel $670.52; (2) the first Houck parcel $672.80; (3) the second Houck parcel $681.57; (4) the Tufty parcel $1,335.27; (5) the MacManus parcel $553.83; (6) the Whelton parcel $3,452.55; and (7) the Lanyon parcel $1,418.29. None of these parcels were sold to respondent.

After the tax sale, respondent obtained quitclaim deeds from the prior owners of each parcel. Each of the quitclaim deeds provided that the former owner:

"do(es) hereby remise, release and forever quitclaim to MISSION VALLEY EAST, INC., a Corporation, and do(es) hereby transfer, assign and disclaim to grantee all rights as owner of said property both before and after the tax sale, in and to the following described real property ...."

Respondent thereafter filed claims with the County requesting the excess proceeds resulting from the sale of each of the seven parcels; the quitclaim deeds were filed in support of these claims. Each of the claims was timely filed within one year of the subject sales and each alleged that there were no other claimants.

Upon receipt of the claims from respondent, the County auditor-controller called the former owners and inquired into the facts and circumstances surrounding execution of the quitclaim deeds. After such investigation, the auditor-controller recommended that the County deny respondent's claims, which the County did on or about May 25, 1978.

The respondent then initiated the instant proceedings for writ of mandate. At the hearing in the superior court, the County sought to introduce declarations of two of the former landowners which recited that the grantors never intended to transfer by the quitclaim deeds any right to claim excess proceeds. Alden Houck's declaration recited that about two months after the tax sale, the Houcks received a letter from respondent's attorney David Neal which led the Houcks to believe that their interest in the subject properties was "almost worthless" and that Neal's client had purchased the Houck's property at the tax sale. The following is a quote from that letter:

"Tax Parcel Nos. 81-031-29-00-2 and 81-155-24-00-0 were sold at the tax sale in Kern County on February 25, 1977, and as you probably know there can be no redemption from a tax sale. However, there is some residual advantage to you and this is of interest to my client, Mission Valley East, Inc.

"Title companies will not insure title for one year unless the owner releases his interest and my client has authorized me to offer you $100.00 for a quitclaim and assignment of your remaining interest." (Emphasis added.)

Houck's declaration recited that as a result of the representations in Neal's letter, Houck signed the quitclaim to Mission Valley. Houck stated that he had no intent to assign excess proceeds thereby, and didn't even know he was entitled to claim excess proceeds.

A similar declaration by Adelaide M. Lanyon was also offered into evidence. Respondent objected to the introduction of both declarations on the ground that they were irrelevant. Both declarations were received by the court subject to a motion to strike. County argued that the declarations were relevant to show the intent of the grantor at least as to the three parcels formerly owned by the Houcks and Ms. Lanyon respectively. The trial court thereafter granted the motion to strike the declarations and the exhibits attached thereto (the letter from respondent's attorney) without an explanation of reasons for the ruling.

The court did receive, however, a declaration by Max Lichty, respondent's secretary/treasurer, which evidenced an intent on the part of respondent that the subject quitclaims would transfer the right to excess tax proceeds.

The court after two hearings on the petitions, entered findings of fact and conclusions of law. The court concluded that the County had a mandatory duty to distribute the excess proceeds pursuant to section 4675; that this section does not prohibit the assignment of the right to claim excess proceeds; that no specific words are required to effectuate a valid assignment of this right, and the language in the subject quitclaims was sufficient to manifest an intent to assign; that the grantors were parties of interest in the said properties at the time of the tax sale and respondent was an assignee of those parties of interest; and that respondent, as the sole claimant of the excess proceeds, was entitled to the excess proceeds from the sale of the subject parcels.

Judgments granting peremptory writs of mandate were entered in each of the actions and these timely appeals followed.

DISCUSSION

The pivotal issue before us is whether there was a valid assignment of the right to claim the excess proceeds from the tax sale. Revenue and Taxation Code section 4675 (fn. 1, ante ) defines who may claim excess proceeds as "part(ies) of interest in the property at the time of sale ...." (Emphasis added.) The statute further provides, in stating the order of priority of parties of interest:

"For the purposes of this article, parties of interest and their order of priority are:

" ...

" (b) Then, any person who would be established with title to all or any portion of the property sold by the state by redemption of such property immediately prior to the sale by the state." (Emphasis added.)

Appellant emphasizes the underscored language in the above quotations and argues that it excludes those parties who acquire their purported assignment after the tax sale. According to appellant only those parties who own the property before the sale and not their successors in interest may claim the proceeds. While appellant's argument is superficially persuasive, a careful scrutiny of the legislative history of the statute shows that appellant's interpretation violates the legislative intent of section 4675. The Legislature obviously did not deem the underscored language to be inconsistent with its intent to allow post-sale assignees to claim the right to excess proceeds, because when the Legislature amended the statute in 1978 to specify how post-sale assignments must be effectuated, ³ it did not delete the language on which appellant relies. The retention of this language in the statute after the provision on post-sale assignments was added shows that the Legislature did not intend the language in question to preclude assignments.

Our next inquiry is whether the Legislature's addition to the statute of a paragraph governing post-sale assignments in 1978 is supportive of appellant's argument that prior to the amendment post-sale assignees could not claim excess proceeds. The Legislative Counsel, in explaining the 1978 amendment, has stated:

"Under existing law, a party in interest in property which has been sold for delinquent property taxes who may claim the amount of the proceeds of the sale which exceed the amount of the taxes and certain costs may assign all or part of such interest, if such assignment describes the subject matter with sufficient particularity to identify the rights assigned. (P) This bill would specify that such party in interest ... may assign such interest only by a (written instrument stating that the right to claim excess proceeds is being assigned and indicating full disclosure)." (Stats.1978, ch. 1084, No. 10 West's Adv.Legis. Service, p. 3648.) ⁴

We believe the Legislative Counsel is correct that the purpose of the 1978 amendment was merely to regulate how post-sale assignments must be effectuated and not to bestow the right to make a valid assignment. Assignments could already be effectuated before the 1978 amendment as is evidenced by the following sentence from that amendment: "This paragraph shall apply only with respect to assignments on or after the effective date of this paragraph." This clearly implies that there could be assignments before the amendment's effective date, which did not have to comply with the new stricter requirements.

We also reject appellant's argument that the Legislature was manifesting its intent...