Puget Sound Power & Light Co. v. Cowlitz County

• Decision Date: 19 July 1951
• Docket Number: No. 31610,31610
• Citation: 234 P.2d 506,38 Wn.2d 907
• Court: Washington Supreme Court
• Parties: PUGET SOUND POWER & LIGHT CO. v. COWLITZ COUNTY et al.

Page 907

38 Wn.2d 907

234 P.2d 506

PUGET SOUND POWER & LIGHT CO. v. COWLITZ COUNTY et al.

No. 31610.

Supreme Court of Washington en Banc.

July 19, 1951.

Rehearing Denied Oct. 4, 1951.

Holman, Mickelwait, Marion, Prince and Black, Seattle, for appellant.

Smith Troy and C. John Newlands, Olympia, Bogle, Bogle and Gates, Max Kaminoff, Seattle, Amici Curiae, for respondent.

DONWORTH, Justice.

This action was brought to recover 1949 personal property taxes paid under protest to the county treasurer of each of the five counties named as defendants.

Five separate causes of action (one as to each county) were set forth in the complaint. The attorney general, appearing for the five counties, demurred to the complaint on the ground that it failed to state a cause of action as to any of the defendants.

After argument, the trial court in a written opinion upheld the position taken by the attorney general and later entered an order sustaining the demurrer. The taxpayer elected to stand on its complaint and the trial court dismissed the action. From this judgment of dismissal the present appeal has been prosecuted.

With the exception of the date of sale and the amount of taxes paid under protest, each of the five causes of action contained the same allegations, which may be summarized as follows:

Appellant is a corporation which is, and for many years has been, engaged in business in this state as an electric light and power company. It owns operating properties situated in several counties which were assessed as a unit by the tax commission in the year 1948, as a basis for computing the 1949 taxes payable thereon. The total assessed value of appellant's entire personal operating property as so assessed was equalized by the state board of equalization in August, 1948, and the equalized value was thereafter apportioned to the respective counties in which the property was located. On or about September 3, 1948, the tax commission certified to the respective county assessors the equalized assessed value apportioned to each county and the taxing districts situated therein.

Thereupon, each county assessor entered the operating personal property located in his county on the 1949 personal property tax rolls in appellant's name as owner. This was not done prior to September 3, 1948.

In October, 1948, the respective boards of county commissioners levied taxes for the year 1949 upon all taxable property in their county (including appellant's personal operating property) in order to raise revenue for state, county and other taxing district purposes. This levy was in each instance certified to the county assessor who computed the taxes and extended the amounts thereof upon the tax rolls. The tax rolls were certified and delivered to the county auditor who delivered them to the county treasurer. The latter proceeded to collect the 1949 taxes in accordance therewith.

Appellant sold its personal operating properties in each of the five counties to certain public utility districts on the following dates, respectively:

To P.U.D. No. 1 of Cowlitz County--May 21, 1948

To P.U.D. No. 1 of Mason County--May 25, 1948

To P.U.D. No. 1 of Lewis County--September 22, 1948

To P.U.D. No. 1 of Pacific County--September 22, 1948

To P.U.D. No. 1 of Grays Harbor County--September 29, 1948.

Appellant's basis for claiming that the taxes involved were and are unlawfully collected by each of the five counties is stated in the last paragraph of each cause of action as follows: 'Under the constitution and laws of the State of Washington the said personal operating property of plaintiff, upon conveyance thereof to said Public Utility District No. 1 of Cowlitz County, became exempt from taxation, and from and after the date of such conveyance the taxing officers of the State of Washington and of the County of Cowlitz were without any power or authority to take any further steps whatsoever having for their object the assessment of said property or the levy or collection of any tax thereon for the year 1949 and any tax levied or attempted to be levied upon said property for said year was and is unlawful and same never became a lien upon said property or upon any other property and was and is uncollectible from this plaintiff by any means whatsoever. Nevertheless, in order to avoid possible penalties for non-payment thereof and possible seizure and distraint of other property of plaintiff located in the State of Washington to enforce collection of said taxes, plaintiff, on or about May 29, 1949, paid to the County Treasurer of Cowlitz County the full amount of the taxes so levied for the year 1949 upon the said personal operating property of plaintiff located in Cowlitz County, such payment being made under written protest setting forth the grounds upon which such tax is claimed to be unlawful substantially as hereinabove set forth.'

The single question presented is whether the personal property described in the complaint was subject to taxation in view of the following provision of the fourteenth amendment of our state constitution which was adopted in November, 1930: 'Property of the United States and of the state, counties, school districts and other municipal corporations * * * shall be exempt from taxation.'

The trial court's decision upholding the tax was based on our cases of Puyallup v. Lakin, 45 Wash. 368, 88 P. 578, and Puget Sound Power & Light Co. v. City of Seattle, 117 Wash. 351, 201 P. 449, 207 P. 689, which will be discussed later in this opinion.

Appellant takes the position that, since the constitutional provision makes no distinction between real property and personal property, the rule applied in State v. Snohomish County, 71 Wash. 320, 128 P. 667, to the exemption of real property should be applied here to personal property and that the two cases above cited upon which the trial court relied should be distinguished.

The decision here depends on whether the taxation process had been completed on the respective dates on which title to the personal property passed from appellant to the various public utility districts. It is conceded that no levy had been made by the county commissioners in any instance until after the sale was consummated and title had vested in the public utility district.

The procedure prescribed by statute for assessing property for purposes of taxation is substantially the same as it was in 1907 when the tax involved in State v. Snohomish County, supra, was imposed. The valuation date is now January first of the year before the taxes are payable, Rem.Rev.Stat. (Sup.), § 11112, whereas it was formerly March first.

In the case last cited, the state had purchased certain lands for a reformatory, the title to one parcel passing to the state on May 8, § 1907, and the other on August 9, 1907. The question for decision was whether real estate which was in private ownership on the assessment date (March 1, 1907), but was owned by the state when the taxes were levied in October, 1907, could be subjected to the payment of those taxes. Since this is the leading decision on the subject of the present controversy, we quote from the opinion rather extensively:

'But we are not relegated solely to this general principle. It is the public policy of this state, as declared both by constitutional provision and by statutory enactment, that property belonging to the nation, state, any school district, county or municipal corporation, shall be exempt from taxation. State Const., art. 7, § 2; Rem. & Bal. Code, § 9098. This being premised, let us examine the statute prescribing the lien for taxes in the light of the general process of taxation in order to determine whether, either expressly or by implication, the taxes for 1907 ever became a lien upon the property in question. The statute declaring the lien is as follows:

"The taxes assessed upon real property shall be a lien thereon from and including the 1st day of March in the year in which they are levied until the same are paid, but as between a grantor and grantee such lien shall not attach until the first Monday of February of the succeeding year. The taxes assessed upon personal property shall be a lien upon all the real and personal property of the person assessed from and after the date upon which such assessment is made, and no sale or transfer of either real or personal property shall in any way affect the lien for such taxes upon such property.' Rem. & Bal. Code, § 9235. 'It will be noted that this section contemplates a levy as well as an assessment in according the lien for a real estate tax, while as to personal property taxes the word 'assessment' alone is used. It will also be noted that this section does not expressly nor by necessary implication authorize a lien for taxes upon state property, at any time nor upon any condition. Such a lien can therefore be sustained only upon the theory that it attached as a complete and subsisting lien prior to the passing of the property into public ownership. The attachment of the lien here provided for, as and from March 1st in the year of the levy, presupposes that a valid levy as affecting the particular property can and will be made by following the general taxation law developing a valid tax.

'As pointed out by Judge Donworth in United States v. Pierce County, (D.C.) 193 F. 529, an examination of the many sections of that law makes it clear that March 1st is arbitrarily taken as the beginning of the taxation year. The process of taxation is initiated on that day by the assessor then beginning the valuation of all property in the county, fixing the valuation of each property as of that date. The work of valuation necessarily covers a considerable period of time. As the next step in the process, the board of equalization meeting in August revises the assessment as made by the assessor. Thereafter in September, and as another step in the process, the corporate authorities of the cities, towns, and school...