Paul v. Los Angeles County Flood Control Dist.

• Decision Date: 14 February 1974
• Citation: 37 Cal.App.3d 265,112 Cal.Rptr. 274
• Court: California Court of Appeals Court of Appeals
• Parties: Bert H. PAUL, Jr., as Trustee for Inner Harbor Land Company, a corporation, Plaintiff and Respondent, v. LOS ANGELES COUNTY FLOOD CONTROL DISTRICT, Defendant and Appellant. Civ. 41542.

Page 274

112 Cal.Rptr. 274

37 Cal.App.3d 265

Bert H. PAUL, Jr., as Trustee for Inner Harbor Land Company, a corporation, Plaintiff and Respondent, v. LOS ANGELES COUNTY FLOOD CONTROL DISTRICT, Defendant and Appellant.

Civ. 41542.

Court of Appeal, Second District, Division 5, California.

Feb. 14, 1974.

John H. Larson, Acting County Counsel, Max E. Truex, Deputy County Counsel, Los Angeles, for defendant and appellant.

Wise, Kilpatrick & Clayton, Inc., and George E. Wise and William D. Easton, Long Beach, for plaintiff and respondent.

HASTINGS, Associate Justice.

This is an appeal by Los Angeles County Flood Control District, defendant, to a quiet title action brought by Bert H. Paul, Jr., as trustee for Inner Harbor Land Company. A judgment quieting title to plaintiff to a subsurface property was granted by the trial court.

FACTS

The trial court determined this case based on a stipulated set of facts which, in substance, are as follows: In 1919, Inner Harbor Land Company (IHLC) owned approximately two acres of land comprising fifteen lots (subject property), located in what is now known as improved Los Angeles river channel. In that year, the Los Angeles County Flood Control District (FCD) commenced an action for condemnation against IHLC to secure an easement on subject property for construction of walls, fences, embankments and excavations. An interlocutory judgment granting the easement was entered on September 16, 1920, and a final judgment was entered on November 3, 1927. The effect of the judgment was to convey use of the surface estate to FCD, with IHLC owning title in fee simple to the underlying mineral estate.

In 1920, the subject property was assessed for taxation, ¹ but there is no record indicating that IHLC ever paid this tax. The unpaid tax became a lien upon subject property on March 1, 1920. On June 30, 1921, subject property was marked 'Sold to the State' on the tax delinquent assessment list. ² There is no record of any taxes being assessed after 1920 on subject property. On February 27, 1926, IHLC's corporate powers were suspended for failure to pay its corporate franchise taxes to the state.

The state did nothing further to enforce its tax lien on subject property until July 2, 1951, when it executed 15 tax deeds conveying the property to itself. On September 29, 1952, the state sold and deeded subject property to FCD for a consideration of $1.00 for each of the 15 lots ($15.00 total). In May of 1964, FCD entered into a subsurface oil and gas lease respecting subject property with Pauley Petroleum Inc. ³ In 1966, IHLC's corporate powers were revived for the limited purpose of permitting it to wind up its corporate affairs. On April 24, 1969, IHLC filed this action to quiet title to subject property.

DISCUSSION

It will expedite an understanding of this case to briefly paraphrase the ultimate issue involved. It is as follows: The state has issued to itself a tax deed to real property on which no taxes were due and owing. The state seeks to validate this deed by invoking the statutory presumption that a tax deed is valid if not contested within a one-year period. Applicable to this novel case are the following code sections.

Section 2195 of the Revenue and Taxation Code ⁴ provides:

'After 30 years succeeding the time, heretofore or hereafter, when any tax becomes a lien, if the lien has not been otherwise removed, the lien ceases to exist and the tax is conclusively presumed to be paid. The official having charge of the records of the tax shall mark it 'Conclusively presumed paid."

Section 175 provides:

'All deeds heretofore and hereafter issued to the State of California or to any taxing agency, including taxing agencies which have their own system for the levying and collection of taxes, by reason of delinquency of property taxes or assessments levied by any taxing agency or revenue district, shall be conclusively presumed to be valid unless held to be invalid in an appropriate proceeding in a court of competent jurisdiction to determine the validity of said deed commenced Section 3521 provides:

within one year after the execution of said deed, or within one year after the effective date of this section, whichever be later. Such proceedings may be prosecuted within the time limits above specified in the manner and subject to the provisions of Sections 3618 to 3636 of this code.'

'A proceeding based on an alleged invalidity or irregularity of any deed to the State for taxes or of any proceedings leading up to the deed can only be commenced within one year after the date of recording of the deed to the State in the county recorder's office or within one year after June 1, 1941, whichever is later.

'Sections 351 to 358, inclusive, of the Code of Civil Procedure do not apply to the time within which a proceeding may be brought under the provisions of this section.'

The tax lien involved here attached to subject property on March 1, 1920 and constituted a valid lien on the property for 30 years. No action was taken by the state during the 30 years to remove its lien, or to otherwise protect its interest. The 30-year period ended March 1, 1950, but it was not until July 2, 1951 that the state executed its tax deeds to itself.

ISSUES ON APPEAL

FCD contends:

1. Revenue and Taxation Code sections 175 and 3521 control the disposition of the case and not Revenue and Taxation Code section 2195, relied upon by the trial court.

2. The court erred in concluding that the tax deeds containing due process violations, i.e., jurisdictional defects, may be attacked at any time.

ARGUMENT

1. FCD's first argument evolves as follows:

Sections 175 and 3521 are one-year statutes of limitation with section 175 containing a conclusive presumption that a tax deed is valid unless held to be invalid by a court proceeding within one year after execution of said deed; that section 2195 is a conclusive presumption that the taxes were paid; that where there is a conflict between statutes with conclusive presumptions, we must look to the reasons and intentions of the Legislature when the code sections were adopted and resolve the conflict, if possible, on the substantive reasons that would give one section preference over the other. Under this approach, it is argued that a mechanical application of section 2195 violates the legislative intent behind sections 175 and 3521 by preventing the state to deed property to itself after 30 years, even when the underlying tax has not been paid. We do not elaborate on the reasons behind the legislation ⁵ because the law applicable here does not require us to find the sections in conflict. The heart of this case is whether the tax deed is void on its face, and, if so, can it be attacked at any time, or are sections 175 and 3521 controlling.

It is axiomatic that if the deed is void it is because section 2195 renders it so. The section is unambiguous and mandatory in its direction. If, after 30 years, the lien has not been removed, the section states: '. . . the lien ceases to exist and the tax is Conclusively presumed to be paid. The official having charge of the records of the tax shall mark it 'Conclusively presumed paid. " (Emphasis added.) In substance, the trial court's conclusions of law where: (1) Prior to March 1, 1950, the tax lien had not been removed; (2) On said date the taxes were conclusively presumed paid per section 2195; (3) After that date the state had no interest in, or lien on, the subject property; (4) The July 2, 1951 tax deeds were predicated on liens no longer a charge upon the subject property and constituted a taking of private property without due process of law--a jurisdictional defect and therefore void; (5) Void deeds may be attacked at any time.

The trial court's reasoning is very persuasive.

The lien of a property tax exists only by virtue of statute. (Grant v. Cornell, 147 Cal. 565, 567, 82 P. 103; 46 Cal.Jur.2d, Taxation, § 230, p. 755.) And in 51 Am.Jur., Taxation, §§ 1010, 1014, are the following statements:

'Tax liens, their duration, extent, and priority, are creatures of the local constitutions and statutes; . . .

'Tax liens are not to be extended by implication or enlarged by judicial construction. A tax lien is a lien on property only so far as expressly made a lien by the statute. It exists and attaches only according to such terms and conditions as are prescribed by the statute creating it.

'. . . it is undoubtedly the general rule that the legislature may abolish or legislate out of existence a tax lien of any kind previously created by it in its favor . . . unless prevented from doing so by some special provision of the state constitution.' ⁶

Manifestly, the provision of section 2195 that the tax 'is conclusively presumed to be paid' removed the lien. Concomitant therewith is the well-settled general rule that, when taxes on property have been paid prior to a sale therefor, the tax sale proceedings are null and void and confer no title upon the purchaser. (51 Am.Jur., Taxation, § 1067.)

California is in accord with this majority principle. In Nutting v. Herman Timber Co., 214 Cal.App.2d 650, 29 Cal.Rptr. 754, five persons had owned forty acres of timber land. The County of Placer mistakenly included a description of the forty acres with 1,400 acres belonging to another. Taxes assessed against the forty acres had been paid by the five owners. Taxes assessed against the 1,400 acres had not been paid. The 1,400 acres were sold to the state for the tax lien. Plaintiff in the action had acquired the forty acres from the 5 previous owners. It was argued that the state acquired perfect title to the forty acres by its tax deed. In rejecting the contention, the court states at page 656, 29 Cal.Rptr. at pages 757--758:

'. . . the argument assumes the validity of a deed to the state, based not upon an actual tax delinquency but upon a double assessment made in error. The assumption is patently unsound. The deed to the...