Pacific Grove-Asilomar Operating Corp. v. County of Monterey

• Decision Date: 08 November 1974
• Docket Number: GROVE-ASILOMAR,No. 33117,33117
• Citation: 117 Cal.Rptr. 874,43 Cal.App.3d 675
• Court: California Court of Appeals Court of Appeals
• Parties: PACIFICOPERATING CORP., a California non-profit corporation, Plaintiff and Respondent, v. COUNTY OF MONTEREY et al., Defendants and Appellants. Civ.

Page 874

117 Cal.Rptr. 874

43 Cal.App.3d 675

PACIFIC GROVE-ASILOMAR OPERATING CORP., a California non-profit corporation, Plaintiff and Respondent, v. COUNTY OF MONTEREY et al., Defendants and Appellants.

Civ. No. 33117.

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

Nov. 8, 1974.

William H. Stoffers, County Counsel, Henry I. Jorgensen, Deputy County Counsel, Salinas, for defendants and appellants.

Robert W. Tuttle, Carmel, and Ehrman & Flavin, Monterey, for plaintiff and respondent.

CALDECOTT, Associate Justice.

Appellants, County of Monterey and City of Pacific Grove, appeal from a judgment in favor of respondent, Pacific Grove-Asilomar Corporation (Asilomar), awarding respondent a refund of taxes paid under protest.

Respondent is a nonprofit corporation organized under the laws of the State of California solely for the purpose of managing for and on behalf of the Department of Parks and Recreation, State of California, the real property and all improvements on the 'Asilomar Conference Grounds.' The real property and improvements are owned by the State of California.

The City of Pacific Grove (city), pursuant to an 'operating agreement' with the State of California (state), managed the conference grounds from 1956 to 1969.

On June 1, 1958, the city and Asilomar entered into an agreement providing for the operation of the conference grounds by Asilomar. In managing the property Asilomar collected all rents, charges, and fees for the use of conference facilities, controlling them to the extent permitted by the agreement, depositing them in the trust accounts required by said agreement, and using them, subject to budgeting controls of the state, to pay expenses and to construct new facilities on the grounds as provided in said agreement. As required under state regulations and the agreement, Asilomar determined what groups and individuals could use its conference rooms, halls, assembly rooms, living units, lodgings, residences, and restaurant, and for what periods of time, limited by policies on accommodations as set forth in applicable agreement. State agencies were allowed free use of the facilities but paid for living expenses of individual personnel at the conference grounds. Asilomar exercised management functions, including control over the hiring and firing of employees and buying of supplies. Asilomar initiated the preparation of price and fee schedules subject to approval by city and state. Asilomar carried out plans for new construction under a state master plan, hired architects, and submitted designs and plans for final approval by city and state. Asilomar let bids contracted for construction, accepted the work, and paid the contractors on all new construction on the grounds. Financing of construction came entirely from revenues of Asilomar, and no borrowing had been necessary.

On November 18, 1969, the city and state cancelled their 'operating agreement,' the city terminating its relationship with respondent and Asilomar Conference Grounds and assigning its interest in the 'concession agreement' to the state.

In order to clarify and establish permanently the new relationship between respondent Asilomar and state, on November 18, 1969, they orally agreed to new terms and conditions which were then finally reduced to a formal written management agreement, entitled 'Amendment No. 2 to Concession Agreement of June 1, 1958,' dated November 18, 1969. According to the new management agreement, its effective date was July 1, 1970. However, for the period November 18 to July 1, respondent and state fully intended that the terms and conditions of their new management agreement would nevertheless be binding upon them and govern their relationship during said period, which includes tax lien date March 1, 1970.

I

Appellants contend that the trial court erred when it permitted respondent to present evidence and testimony not presented to the county board of equalization. The court, in appellants' view, should have confined itself to a review of the record before the board.

Appellants' legal position is as follows: (1) the proceeding before the local board of equalization was a proceeding to determine whether or not the board overvalued respondent's property; (2) the case at bar is a case involving a review of their decision as established by Code of Civil Procedure section 1094.5; (3) the cases cited by Asilomar were cases in which courts had original jurisdiction, without initial resort to the local board. Simply put, appellants assert that the trial court should have treated this case as if it were brought pursuant to section 1094.5 of the Code of Civil Procedure.

Respondent contends that the issue here is not one of valuation, but one concerning whether a taxable possessory interest existed at all. This, they argue, is a question of law to be decided by the courts. Resort to the board of equalization is unnecessary and it is immaterial that respondent first resorted to the board.

Respondent's action below was an action to recover taxes erroneously and illegally collected, and not an action pursuant to section 1094.5 of the Code of Civil Procedure. An action may be brought against a county or city to recover property taxes paid by a taxpayer under protest. (Rev. & Tax.Code, § 5138.) The superior court has jurisdiction over such actions. (Rev. & Tax.Code, § 5138.)

If the action merely questions the propriety of the board of equalization's refusal to correct an erroneous assessment, the court cannot try de novo the question of any alleged overvaluation, but is limited to a consideration of the proceedings before the board. (Eastern-Columbia, Inc. v. County of L.A., 70 Cal.App.2d 497, 503--504, 161 P.2d 407; Glidden Company v. County of Alameda, 5 Cal.App.3d 371, 378--379, 85 Cal.Rptr. 88, 86 Cal.Rptr. 464.) Where the action involves a question of legality or constitutionality of the assessment and not a question of valuation, the court can try de novo the question presented to it. (Cf. Star-Kist Foods, Inc. v. Quinn, 54 Cal.2d 507, 6 Cal.Rptr. 545, 354 P.2d 1; County of Sacramento v. Assessment Appeals Bd. No. 2, 32 Cal.App.3d 654, 661, 108 Cal.Rptr. 434.)

'(W)hen a board of equalization purports to decide a question of law, or refuses to hear a case on the ground that it involves only a question of law to be decided by the courts, a taxpayer has the right to resort to the courts for determination of such question.' (Flying Tiger Line, Inc. v. County of L.A., 51 Cal.8d 314, 322, 333 P.2d 323, 325; A. F. Gilmore Co. v. County of Los Angeles, 186 Cal.App.2d 471, 476, 9 Cal.Rptr. 67.)

In sum, the law can be stated as follows: the superior court is confined to a review only of the record before the board if the issue before the court is one of valuation (Bank of America v. Mundo, 37 Cal.2d 1, 4, 229 P.2d 345). The taxpayer has no right to a trial de novo in the superior court to resolve conflicting issues of fact as to the taxable value of his property. (Supra, at p. 5, 229 P.2d 345.) If the issue involves valuation the taxpayer may not attack the determination of a board of equalization in court unless he has presented the question to the board. (Los Angeles, etc., Corp. v. Los Angeles, 22 Cal.App.2d 418, 424, 71 P.2d 282.) In cases involving only the question whether property is taxable, and where there is no question of valuation that the local board of equalization has special competence to decide, and where there is no dispute as to the facts and no possibility that action by the board might avoid the necessity of deciding the legal issue, recourse to the local board of equalization is not required. (Star-Kist Foods, Inc. v. Quinn, Supra, 54 Cal.2d at p. 511, 6 Cal.Rptr. 545, 354 P.2d 1.)

Appellants claim that the only issue before the board concerned valuation. They reason that because respondent's legal arguments result in a zero assessment, this means respondent is questioning valuation. The main issue before the board of equalization and before the trial court was whether a taxable interest existed at all. Respondent claimed that a taxable interest did not exist because they were merely agents of the state pursuant to a contract.

In Parr-Richmond Industrial Corp. v. Boyd, 43 Cal.2d 157, 272 P.2d 16, the question before the courts was whether an assessment levied against the whole ownership interest instead of against a limited possessory interest was illegal. The taxpayer argued that its protest was Not a claim of overvaluation of an owner's property calling for "(a) reduction in an assessment on the local roll," but rather a claim of illegality against assessments In toto as based on an erroneous ownership. (Supra, at p. 164, 272 P.2d at p. 21.) The court held that the issue presented was a question of law to be decided by the court.

The issue raised by respondent herein before the board of equalization and before the trial court is no different from that raised in the Parr-Richmond Industrial Corp. case. Here, as there, respondent taxpayer attacks an assessment as void because it does not own the property on which the tax demand was made. Rather, respondent claims to be an agent of a tax exempt entity.

Los Angeles, etc., Corp. v. Los Angeles, Supra, 22 Cal.App.2d 418, 71 P.2d 282, cited by appellants, is not in point. Appellants rely on the following language to support their assertion that the board's determination concerned a question of valuation. 'This lease is owned by appellant, it is property, and it falls within a taxable class. The assessor erroneously, under the pleading, assessed it at $500,540 when he should have assessed it at zero. In our judgment this constituted an overassessment of existing property and not an assessment of nonexistent property.' (Supra, at p. 424, 71 P.2d at p. 285.)

Appellants fail to note that the taxpayer in Los Angeles, etc., Corp. v. Los Angeles claimed that the county had made an erroneous assessment bacause the assessor...