Pajaro Val. Bank v. Santa Cruz County

• Decision Date: 13 September 1962
• Citation: 24 Cal.Rptr. 639,207 Cal.App.2d 621
• Court: California Court of Appeals Court of Appeals
• Parties: PAJARO VALLEY BANK, a California corporation, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking corporation, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant. MERCHANTS NATIONAL REALTY CORPORATION, a corporation, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant. The FARMERS AND MERCHANTS NATIONAL BANK OF SANTA CRUZ, a national banking association, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant. Civ. 20266-20269.

Page 639

24 Cal.Rptr. 639

207 Cal.App.2d 621

PAJARO VALLEY BANK, a California corporation, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant.

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking corporation, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant.

MERCHANTS NATIONAL REALTY CORPORATION, a corporation, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant.

The FARMERS AND MERCHANTS NATIONAL BANK OF SANTA CRUZ, a national banking association, Plaintiff and Respondent, v. COUNTY OF SANTA CRUZ, a body corporate and politic, Defendant and Appellant.

Civ. 20266-20269.

District Court of Appeal, First District, Division 3, California.

Sept. 13, 1962.

Hearing Denied Nov. 7, 1962.

William H. Card, County Counsel of the County of Santa Cruz, Santa Cruz, for appellant.

Stanley Mosk, Atty. Gen. of California, Dan Kaufmann, Asst. Atty. Gen., Ernest P. Goodman, John J. Klee, Jr., Deputies Atty. Gen., San Francisco, Amicus Curiae in support of the contentions of the appellant.

Edward D. Landels, Landels, Weigel & Ripley, San Francisco, for respondents, Pajaro Valley Bank and The Farmers and Merchants Nat'l Bank of Santa Cruz.

George H. Koster, San Francisco, for respondents, Bank of America Nat'l Trust and Savings Association, and Merchants National Realty Corp.

DEVINE, Justice.

Four cases have been consolidated, in three of which banks are respondents, and in the fourth, a realty owning corporation; and in all four cases the County of Santa Cruz is appellant. Respondents are plaintiffs in actions to recover taxes paid under protest. The question is whether certain safe-deposit boxes and their metal containers are taxable real property, as fixtures, or personal property and nontaxable, as the trial court found them to be.

The facts have been agreed upon. Pajaro Vally Bank is an independent bank operating in Watsonville, California. The safe-deposit boxes upon which an ad valorem property tax was imposed were purchased by Pajaro Bank from an independent distributor dealing in the sale of these boxes. These boxes come in containers called 'nests' which range in dimension two feet deep by two feet wide and from two feet to four feet in height. They vary in weight from 200 to 1,400 pounds each, depending on the size, and each nest contains from 6 to 84 individual boxes.

The boxes are contained in the bank vault, the same vault where other valuables are kept by the bank, although the vault is divided into sections: one section for safe-deposit boxes, the other section for the bank's coin and currency, securities and records.

In the Pajaro Bank are contained 51 nests, or a total of 2,006 boxes. These metal nests are stacked in tiers along the walls of the vault, reaching very close to the ceiling. For the sake of appearance the facing of the nests is trimmed by a polished metal frame. The trim is attached to the boxes except for the trim above the boxes, and this is attached to a movable partition wall which separates the compartment for safe-deposit boxes from another compartment in the vault. There is a false ceiling, of metal, above the section where the nest of boxes are, simply for the sake of appearance.

None of the boxes or nests is attached to walls, floor, or the ceiling or false ceiling of the vault, or, for that matter, to any part of the building, by means of cement, plaster, nails, bolts or screws. They merely rest on the floor or upon each other. Although the boxes are seldom moved, they can be removed easily on a dolly. Moving causes no damage to the building or vault. Several years prior to this suit, some of the bigger boxes, which were not as popular as smaller boxes for rental purposes, were moved from the compartment housing the safe-deposit boxes into the compartment housing currency, coins and bank documents.

The vault would be needed by the bank if it did not rent out safe-deposit boxes, and there would be no difference in construction except that the vault would not have to be so large.

The Farmers and Merchants National Bank of Santa Cruz has substantially the same physical arrangement for its safe-deposit boxes, except that the tiers of nests do not rest on the floor of the vault but on two-inch wooden frames. There is no attachment of any kind of the nests to the frames; gravity alone holds the nests in place. Recently, Farmers opened a new branch and supplied it with two nests from its main office. Removal was accomplished by placing the nests on a dolly and rolling them out of the vault. Not the slightest structural change or unfastening was needed, and no damage whatever was done to the vault.

Bank of America National Trust and Savings Association has paid taxes for safe-deposit boxes at its Main Branch at 1134 Pacific Avenue, Santa Cruz, where the bank owns the building; and Merchants Realty Corporation, owner of the building at 1240 Soquel Avenue, Santa Cruz, has paid taxes for the boxes there.

The bank purchases its safe-deposit boxes in carload lots and stores them in a warehouse. The boxes are similar to those used by the Pajaro Bank. When Bank of America opens up a branch, a specified number of boxes are brought over from the warehouse by trucks and left at the bank. From where the boxes are dropped, they are placed on a dolly and rolled into the vault where they are arranged in rows, side by side and on top of each other. Usually the boxes are raised from the ground and rest either on a metal stand or on pieces of two-inch by four-inch wood.

If the bank's officials decide that the vault contains more boxes than necessary, the unneeded boxes are taken out of the vault room and returned to the warehouse or delivered to another branch.

As in the Pajaro Bank, these boxes have strips and panels of light metal or plywood painted the same color as the vault area, which are used to give the appearance of evenness. These panels are attached either to the wall or to the boxes, but in no instance are they attached to the wall and to the boxes at the same time. Nor are these boxes attached to the vault or building in any other way.

The vault rooms themselves are integral parts of the bank and are so designed when the building is contemplated. Inside the vault separate compartments, connected by doorways, are planned with the idea of using one of these compartments for safe-deposit boxes. The rest of the compartments are used for other banking purposes.

The Main Office Branch was built in 1931. Since that time, 29 nests have been added to the compartment in the vault. In June of 1956, one nest was returned to the warehouse.

The East Branch was built in 1953. At that time seven nests were moved in from the former location of the East Branch. Since that time, 13 nests have been moved in from the warehouse. In Merchants Realty lease to Bank of America there is an agreement that the bank may remove the boxes from the property.

It is stipulated that prior to the assessment for 1959-1960, the boxes were not classified as real property by the assessor and that no change has been made which would now demand a different classification. It is stipulated that plaintiffs exhausted their administrative remedies.

Personal property of banks is exempt from local property taxation, but their real property is subject to such taxation. (Cal.Const. art. XIII, § 16.) In lieu of...