Smith-Rice Heavy Lifts, Inc. v. Los Angeles County

• Decision Date: 21 November 1967
• Docket Number: SMITH-RICE,No. 2,2
• Citation: 63 Cal.Rptr. 841,256 Cal.App.2d 190
• Court: California Court of Appeals Court of Appeals
• Parties: HEAVY LIFTS, INC., Derrick Barge 7, Inc., and Smith-Rice BargeCo., Plaintiffs and Appellants, v. The COUNTY OF LOS ANGELES, Defendant and Respondent. Civ. 30256.

Page 841

63 Cal.Rptr. 841

256 Cal.App.2d 190

SMITH-RICE HEAVY LIFTS, INC., Derrick Barge 7, Inc., and Smith-Rice Barge No. 2 Co., Plaintiffs and Appellants, v. The COUNTY OF LOS ANGELES, Defendant and Respondent.

Civ. 30256.

Court of Appeal, Second District, Division 2, California.

Nov. 21, 1967.

Rehearing Denied Dec. 12, 1967.

Hearing Denied Jan. 17, 1968.

Graham, James & Rolph, Reed M. Williams and Don A. Proudfoot, Jr., Long Beach, for plaintiffs and appellants.

Harold W. Kennedy, County Cousel, and John D. Cahill, Deputy County Counsel, for defendant and respondent.

HERNDON, Associate Justice.

Plaintiffs appeal from that portion of the judgment which denies them recovery of ad valorem property taxes levied for the years 1962 and 1963 on certain 'derrick barges' owned by appellants. Appellants contend (1) that two of their barges were specifically exempted from all such taxes by the terms of article XIII, section 4 of the California Constitution; and (2) that in any event none of their barges was subject to tax assessment by the County of Los Angeles by virtue of Revenue and Taxation Code, sections 1139 and 1140.

Section 4 of article XIII reads as follows: 'All vessels of more than 50 tons burden registered at any port in this State and engaged in the transportation of freight or passengers shall be exempt from taxation except for state purposes'.

The indicated sections of the Revenue and Taxation Code provide as follows:

' § 1139. Except as otherwise provided in this article, when the owner or master of a taxable vessel gives written notice of its habitual place of mooring when not in service to the assessor of the county where the vessel is documented, the vessel shall be assessed only in the county where habitually moored.'

' § 1140. Vessels, except ferryboats, regularly engaged in transporting passengers or cargo between two or more ports and vessels concerning which notice of habitual place of mooring has not been given shall be assessed only in the county where documented.'

The determinative facts, insofar as they were not based upon express stipulation, are without essential conflict. Appellants' barges are vessels without means of self-propulsion on which large and powerful cranes have been affixed. An officer of the appellant corporations testified that 'the principal reason that the various companies employ * * * (our) barges is because of their capacity or ability to lift heavy weights with their cranes.' The barges are used to perform such heavy-lift services as dredging, laying pipe, construction work, lifting cargo and testing equipment. When the cranes located thereon are being operated, the barges remain motionless in the water. They are, however, occasionally moved between lifts if the next item to be lifted is then beyond the reach of their boom or if, after having lifted the item, the place of deposit is beyond such reach. In the latter case the material lifted is placed upon the deck of the barge until it has been shifted to a point permitting its deposit in the desired location.

It is stipulated that appellants' barges are vessels, (2) of more than 50 tons burden, and (3) are registered at a port in this state, i.e., San Francisco. Therefore, the controversy presented by appellants' first contention narrows to the question whether or not the above described activities constitute 'the transportation of freight' within the meaning of this expression in California Constitution, article XIII, section 4. The issue is narrowed even further by appellants' concession expressed in the following manner in their closing brief:

'Appellants do not contend that when the vessels were dredging, laying pipe, engaged in construction work, and testing equipment, they were transporting freight. But appellants do contend that the vessels were engaged in the transportation of freight when they were used for what respondent characterizes as 'lifting cargo'.'

Initially appellants had sought recovery of taxes paid on five of their barges, i.e., numbers 5, 7, 15, 16 and 17. ¹ However, at the commencement of the trial it was stipulated that barge number 5 was not engaged in the transportation of freight for hire at any time material to either the 1962 or 1963 assessment and barge number 15 was not so engaged in respect to the 1962 assessment. Following the court's pronouncement of judgment, but before entry thereof, it was further stipulated that barge number 15 should be deemed entitled to tax exemption for the year 1963. The reason given for this latter stipulation is that during this period 'the crane was removed from the barge and it was under lease by plaintiff to Garvin Tugboat and Salvage Company, and was being used in the hauling of rock and freight.' Judgment was entered as to these two barges in accordance with these stipulations.

The parties selected the sample periods January 1 through March 21 of 1962 and 1963 for the purpose of determining the questioned commercial use of the three remaining barges during the years in issue.

Based on this agreement, an exhibit was introduced into evidence that contained an enigmatic daily breakdown of the operations of each of the barges during the selected periods. In summarized form these Tables of Uses contained the following information:

                                        Days              Cargo      Cargo
                                        Used  Non-Cargo  (Carry)  (Non-Carry)
                                        ----  ---------  -------  -----------
                Derrick Barge   7-1962   24       5         7         15
                Derrick Barge   7-1963    9       5         3          1
                Derrick Barge  16-1962   23       8         4         12
                Derrick Barge  16-1963   28      13        10          5
                Derrick Barge  17-1963    9       2         6          2
                

The court concluded that barge number 17 was engaged in the transportation of freight in 1963 within the meaning of article XIII, section 4, and therefore was exempt from the tax imposed. Respondent has not appealed from this determination and we express no opinion on its propriety. The court held that the other barges were not engaged in the transportation of freight and were not exempt from taxation.

The only explanation of the material contained in this exhibit, or the anticipated use to be made thereof by the trial court, is found in the following quotation from the reporter's transcript:

'MR. WILLIAMS (counsel for appellants): Does the Court have the table of uses before it? THE COURT: Yes, I have it now. MR. WILLIAMS: I think a couple of comments would be in order with respect to what the table shows. As the Court will note there are laid out in column form and Mr. Cahill (counsel for respondent) and I have selected the period of January through March as a period to look at the uses of the derrick barges for the purpose of determining their overall use. The total number of days in which the derrick barges were used for hire or for compensation for any purpose are set forth in the first column entitled 'Days Used.' The second column of 'Non-Cargo,' indicates those days on which the barges were used for compensation for a period unrelated to the cargo activities. The third column is one which indicates the days on which the derrick barges were used for compensation, for cargo work and where the cargo was loaded onto the derrick barge and the derrick barge moved from one place to another with the cargo actually on board. The last column 'Non-Carry' indicates the days in which the derrick barges were used for cargo work for compensation where the derrick barge did not, itself, physically move with the cargo on board. Do you have anything you wish to add to that, Mr. Cahill? MR. CAHILL: No, I have nothing to add.'

The Supreme Court of California in Cedars of Lebanon Hospital v. County of Los Angeles, 35 Cal.2d 729, at page 734, 221 P.2d 31, at page 34, stated:

'Constitutional provisions and statutes granting exemptions from taxation are strictly construed to the end that such concession will be neither enlarged nor extended beyond the plain meaning of the language employed. (Citations.) * * * Such rule of strict construction governing property tax exemptions is distinguished from the rule of liberal construction applying in the determination of exemption qualifications under social security and unemployment compensation acts. (Citations.) Exemption provisions in statutes of the latter character will be liberally construed so as to effectuate their beneficient purpose to encourage and promote organizations seeking classification within the broad scope of the statutory language. (Citations.) This is not, however, the rule to be applied where exemption is claimed from General property taxation as provided in our state Constitution. Art. XIII, § 1, Watchtower Bible & Tract Soc., Inc. v. County of Los Angeles, 30 Cal.2d 426, 429, 182 P.2d 178.' (Emphasis added.)

The rule has long been established in California that a presumption exists in favor of the Validity of a tax assessment and that it is incumbent upon a person complaining thereof to prove a case showing the assessment was unauthorized by law. (Savings and Loan Soc. v. San Francisco, 146 Cal. 673, 678, 80 P. 1086; Western Union Telegraph Co. v. County of Los Angeles, 160 Cal. 124, 126--127, 116 P. 564; Utah Construction Co. v. Richardson, 187 Cal. 649, 654--655, 203 P. 401.) We have concluded that appellants failed to sustain their burden of proof in the instant case.

Neither the Table of Uses introduced as an exhibit nor the explanation thereof, quoted supra gives any indication of the nature of the barges' movements, or the distances involved in such movements when they were engaged in what is denominated 'Cargo (carry)' activities. The officer of appellant corporations who testified on their behalf did assert that 'during 1962 and 1963 cargo was transported from one port to another port within the State of California.' He did not indicate that such indefinitely described...