Parr-Richmond Indus. Corp. v. Boyd

• Decision Date: 29 June 1954
• Docket Number: PARR-RICHMOND,Nos. 18625,18626,s. 18625
• Citation: 272 P.2d 16,43 Cal.2d 157
• Court: California Supreme Court
• Parties: INDUSTRIAL CORP. v. BOYD et al.

Page 16

272 P.2d 16

43 Cal.2d 157

PARR-RICHMOND INDUSTRIAL CORP. v. BOYD et al.

Nos. 18625, 18626.

Supreme Court of California, In Bank.

June 29, 1954.

Thomas M. Carlson, City Atty., Frederick Bold, Jr., Sp. Asst. to City Atty., Richmond, Francis W. Collins, Dist. Atty. of Contra Costa County, and Charles L. Hemmings, Deputy Dist. Atty., Martinez, for appellants.

Bronson, Bronson & McKinnon and John F. Ward, San Francisco, for respondent.

SPENCE, Justice.

Plaintiff brought two actions to recover taxes paid under protest on certain property in Richmond for the tax years 1948-1949 and 1949-1950. Revenue & Taxation Code, §§ 5136-5143. The cases were consolidated for trial, and it was stipulated that evidence would be produced only in the first case and that the judgment therein would govern the second case. The tax assessments by the county of Contra Costa and the city of Richmond followed the same pattern, the levy in each instance resting on the premise that title to the real property was vested in plaintiff on the first Monday in March of both years. Plaintiff, on the other hand, has consistently claimed that all it had on the respective tax dates was, as the trial court found, 'a qualified and contingent possessory interest in the form of a gratuitous and revocable right to possession'; that the assessment should have been made only against such possessory right, and not as if it held the whole beneficial interest. In line with plaintiff's admitted tax liability on its possessory interest in the property, respective judgments were entered against the county and the city reflecting the offset between the taxes paid by plaintiff under protest and the amounts assessable because of plaintiff's limited possessory right. From such judgments defendants appeal.

As grounds for reversal, defendants argue these points: (1) plaintiff's failure to seek relief from the board of equalization on the alleged improper assessments as preliminary to judicial review; (2) plaintiff's possession of equitable title in the property on the respective dates as justifying its liability for the full fee tax assessments; and (3) plaintiff's adjusted tax liability as a matter referable to the taxing authorities for determination in new assessment proceedings rather than subject to computation by the trial court in effecting an equitable offset. In the light of the record and applicable legal principles, defendants' objections are not well taken.

The property involved is known as Parcels 2 and 5 of the Richmond Shipyards, consisting of about 115 acres improved with various buildings, wharves, shipways and other structures used as part of a government shipyard during World War II. At the end of the war this property was placed under the control of the War Assets Administration for disposal as surplus property, and that agency on August 15, 1947, listed it with other property for sale and invited bids. The invitation required the bidder to declare the purpose for which he intended to use the property and stated that title would be conveyed by quitclaim deed without warranty express or implied. It also provided that the successful bidder shall 'assume responsibility for and agree to pay his share, prorated from * * * (the date of assumption of possession or the delivery of the formal instruments of conveyance), of all general and special real and personal property taxes which may have been or may be assessed thereon.' It further stipulated that a minimum of 20% of the purchase price should constitute the down payment; that the successful bidder could not make any sale or lease of the property for three years after the 'date of conveyance' without the government's consent; and that the invitation and bid under it should constitute the agreement between the parties, to be succeeded only by the formal instruments of transfer.

On August 15, 1947, Parr-Richmond Terminal Corporation, an affiliate of plaintiff, submitted conditional bids for both parcels, separately stating the amounts offered for the realty and the personal property thereon. Inasmuch as the tax issue here relates wholly to the realty ownership, only the bids relating thereto need be noted $320,000 for Parcel 2 and $125,000 for Parcel 5. One condition was that each parcel should be treated 'as a unit as to lands and buildings and personal property.' Another condition (Rider D) specified: 'This bid is also subject to the ability of bidder to procure a policy of title insurance in its name or in the name of its nominee * * * as of the date of the completion of this transaction, in the event of acceptance hereof, showing good and merchantable title to said property free and clear of any lien or encumbrance which would substantially affect its value.' Before bidding Parr had learned from a preliminary title report that the title was not then merchantable. It was also stipulated that the three-year restriction on sale or lease of the property, as stated in the invitation to bid, supra, would have to be waived or removed (Rider A).

The bids were rejected, not because of the conditions attached thereto but solely because the prices offered were not acceptable. The government made a counter-proposal of higher amounts, and after further negotiations the parties agreed on $500,000 for both parcels. The government's approval of the original bids, amended only as to the stated price, was expressed in its letter of September 23, 1947, and Parr indicated acceptance by signing a copy of the latter.

On January 21, 1948, the government's formal acceptance was communicated to Parr in a so-called 'letter of intent,' stating that 'under date of September 23, 1947, the War Assets Administration approved the sale to the Parr-Richmond Industrial Corporation of Parcels Nos. 2 and 5 * * * together with certain buildings, improvements, and personal property * * * in accordance with the terms and conditions of your offer of August 15, 1947, as amended * * *. The quitclaim deed as prepared will convey title as of 12:01 a. m. September 23, 1947.' This letter gave 'consent to the Parr-Richmond Industrial Corporation and/or the Parr-Richmond Terminal Company, as the case may be, to enter upon and use the land, buildings, improvements, and personal property, the title to which is being conveyed to you as of 12:01 a. m. September 23, 1947, for its account * * *' and also 'the immediate right to resell or lease, subject to the terms and conditions as specified in your offer of August 15, 1947, any or all of the land, buildings, improvements and/or personal property located on Parcels 2 and 5 without prior authorization from the War Assets Administration.' The letter also provided for the escrowing of the down payment: 'Your Company, in accepting this Letter of Intent, agrees, prior to entering into possession, to deposit with the * * * Title Company * * * the agreed upon initial payment of * * * $122,412.42 * * *' On January 30, 1948, Parr delivered a check in the stated amount to the title company, accompanied by a letter of instructions reading in part as follows: '* * * whichever corporation does take title, you are authorized to deliver to the War Assets Administration the sum of * * * $122,412.42 * * * upon their depositing with you a Quitclaim Deed duly executed by said War Assets Administration, which will vest merchantable title in favor of either Parr-Richmond Industrial Corporation or Parr-Richmond Terminal Company as such determination shall be made * * *. Upon receipt of this letter and the check enclosed herewith * * * will you please acknowledge receipt of same upon the copy enclosed herewith so that we may in turn hand it to the War Assets Administration as evidence of the fact that this money has been deposited with you in the above-numbered escrows.'

On January 31, 1948, Parr acknowledged and accepted the 'letter of intent.' During that same month Parr had taken possession of both parcels in accord with the letter's authorization, and on the first Monday in March of both 1948 and 1949 held possession thereunder. It was not until June 1, 1949, that title passed pursuant to two quitclaim deeds executed as of that date, acknowledged and delivered by 'the United States of America, acting by and through War Assets Administration,' to plaintiff as grantee one deed for each parcel. Each deed concluded with the statement 'This Quitclaim Deed, executed this 1st day of June, 1949, shall be considered effective as of the day and year first hereinabove written,' which was June 1, 1949 the date the government actually conveyed title, not September 23, 1947, as recited in the 'letter of intent.' The title company thereupon delivered to the government two deeds of trust dated and acknowledged on June 1, 1949 one for each parcel securing the balance of the purchase price. Thus the down payment was in escrow from January 30, 1948, to June 1, 1949 sixteen months.

As above noted, the government's invitation to bid required each bidder to specify the purposes for which he intended to use the property. The Parr bids stated that its purpose was development of the property as an industrial area, bringing in new industries by long-term leases and by sale. These declarations, plus Parr's insistence on the removal of the three-year restrictions against sales and leases, make it clear that a merchantable title was an indispensable requisite of Parr's intended purchase. To that point the trial court found that 'plaintiff's bid contemplated the long-term lease or sale of part or all of said realty to industrial firms desiring to locate in the city of Richmond, and * * * that purpose could not be achieved unless and until plaintiff could obtain a merchantable title to said realty; Rider D of plaintiff's bid recited the express condition of merchantable title, and went to the essence of plaintiff's conditional bid and the conditional agreement subsequently entered into between the U.S.A. and plaintiff.'

...