Tuolumne County v. State Bd. of Equalization

Citation24 Cal.Rptr. 113,206 Cal.App.2d 352
PartiesCOUNTY OF TUOLUMNE, Plaintiff and Appellant, v. STATE BOARD OF EQUALIZATION et al., Defendants and Respondents, CITY AND COUNTY OF SAN FRANCISCO, Real Party in Interest and Appellant. Civ. 70.
Decision Date01 August 1962
CourtCalifornia Court of Appeals

George A. Huberty, San Andreas, for appellant.

Dion R. Holm, City Atty., John Elmer Barricklo, Public Utilities Counsel, McMorris M. Dow and Orville I. Wright, Deputy City Attys., for real party in interest and appellant.

Harold Raines, John B. Reilley and Frank E. Howard, Oakland, as amici curiae on behalf of real party in interest and appellant.

Stanley Mosk, Atty. Gen., Dan Kaufmann, Asst. Atty. Gen., Edward P. Hollingshead, Deputy Atty. Gen., Sacramento, for respondents.

STONE, Justice.

The County of Tuolumne, pursuant to article 13, section 1, of the California Constitution, assessed appropriative water rights located in that County but owned by the City and County of San Francisco. The assessment was reviewed, equalized and adjusted by the State Board of Equalization. Tuolumne County, dissatisfied with the decision, sought a writ of mandate in the superior court of that County, pursuant to section 1094.5, Code of Civil Procedure, praying that the original assessment be restored. Further, Tuolumne sought a court review of the proceedings had before the Board of Equalization. An alternative writ of mandate was issued and after the matter was heard, the court ordered the alternative writ discharged, the petition for writ of mandate denied, and Tuolumne to correct its assessment rolls in compliance with the decision of the Board of Equalization. Both County of Tuolumne and City and County of San Francisco have appealed from the judgment of the superior court.

San Francisco's filings for the right to appropriate water in Tuolumne County originally were located at various points along streams in the Tuolumne watershed. The water was actually diverted, however, at five locations within the County. At these points of diversion San Francisco constructed facilities for the storage and release of water, and for the hydroelectric generation of power. For the assessment year 1960-61 Tuolumne assessed the water rights exercised at each of the five points of diversion, and the following assessments were entered upon the tax rolls of Tuolumne County:

'A. The right to divert water to storage by means of O'Shaughnessy Dam located in the NW 1/4 of Section 16, TIN, R20E, MDB & M.

                Code Area  Assessed Value
                ---------  --------------
                  54:00      2,492,000     Vol. 2, p. 83
                

'B. The right to divert water to storage by means of Eleanor Dam located in the NW 1/2 of Section 3, TIN, R19E, MDB & M.

                Code Area  Assessed Value
                ---------  --------------
                1/2 54:00     420,350      Vol. 2, p. 83
                1/2 54:03     420,350      Vol. 2, p. 94-A
                

'C. The right to divert water to storage by means of Cherry Dam located in the NE1/4 of Section 5, TIN, R19E, MDB & M.

                Code Area  Assessed Value
                ---------  --------------
                  54:04       607,000      Vol. 2, p. 95
                  74:12       607,000      Vol. 2, p. 75
                

'D. The right to divert water at the intake of Early Intake Powerhouse, known as Lower Cherry Aqueduct, the point of rediversion of waters stored in Eleanor and Cherry Dam and a point of direct diversion for waters accruing to Cherry Creek which includes Eleanor water located within the SW 1/4 of Section 31, TIN, R19E, MDB & M.

                Code Area  Assessed Value
                ---------  --------------
                1/2 54:00     239,200      Vol. 2, p. 83
                1/2 74:05     239,200      Vol. 2, p. 20
                

'E. The right to divert water at the intake of Hetch Hetchy Aqueduct, the point of rediversion of waters stored in Hetch Hetchy Reservoirs and the point of direct diversion from the Tuolumne River located in the NE 1/4 of Section 11, TIN, R18E, MDB & M.

                Code Area  Assessed Value
                ---------  --------------
                  54:00      1,037,000     Vol. 2, p. 83"
                

San Francisco made timely application to the Board of Equalization for a review of the appropriative water right assessments, as provided in article 13, section 1, of the Constitution. At the Board hearing, San Francisco and Tuolumne introduced evidence by way of testimony and exhibits concerning the location and value of the appropriative water rights. Following the hearing the Board issued its notice of decision, by which it reduced assessments A, B, D and E to zero, and approved or left unchanged assessment C. Tuolumne then commenced proceedings in the superior court for a review of the Board's decision. The superior court approved the decision of the Board, and Tuolumne and San Francisco both appealed.

The first question to be determined is whether the appropriative water rights in Tuolumne County owned by San Francisco are taxable under the provisions of article 13, section 1, of the Constitution. The pertinent part of this section provides:

'* * * that property * * * such as may belong to * * * any county, city and county, or municipal corporation within this State shall be exempt from taxation, except such lands and the improvements thereon located outside of the county, city and county or municipal corporation owning the same as were subject to taxation at the time of the acquisition of the same by said county, city and county, or municipal corporation; provided, that no improvements of any character whatever constructed by any county, city and county or municipal corporation shall be subject to taxation. All lands or improvements thereon, belonging to any county, city and county or municipal corporation, not exempt from taxation, shall be assessed by the assessor of the county, city and county or municipal corporation in which said lands or improvements are located, and said assessment shall be subject to review, equalization and adjustment by the State Board of Equalization.'

Whether San Francisco's appropriative water rights are taxable rests upon the words 'as were subject to taxation at the time of the acquisition of the same by said county.' Tuolumne places a construction on article 13, section 1, which is novel, but since it misconstrues the import of the language just quoted, it is erroneous. It is argued that the purpose of the amendment is to permit taxation of any property acquired by one county in another county which would have fallen into private hands and become taxable had the outside county not acquired it. In its closing brief Tuolumne asserts:

'If the water rights had not been taken up by the City, or some other public corporation, they certainly would have been taken and used by private concerns or individuals and would have contributed immeasurably to the tax base of Tuolumne County.'

In considering this argument, it is difficult to call to mind any kind of property that wouldn't be 'taken up' by private interests if not acquired by a county or some political subdivision. Under Tuolumne's construction of the amendment, all property acquired in one county by another county would be taxable. Such an interpretation leaves the words 'as were subject to taxation at the time of the acquisition of the same by said county,' absolutely meaningless. Without the quoted language the amendment would subject all foreign-owned county property to taxation. Since the language is clear and unambiguous, Tuolumne's construction of the amendment must be rejected. Only that property which was 'subject to taxation at the time' it was acquired comes within the purview of article 13, section 1. (Emphasis added.)

Turning now to the property assessed, we find that an appropriative water right is considered an interest in real property and taxable by the county in which the right is exercised, that is, the county in which the water is diverted. (Waterford Irrigation Dist. v. County of Stanislaus, 102 Cal.App.2d 839, 228 P.2d 341; North Kern Water Storage Dist. v. County of Kern, 179 Cal.App.2d 268, 3 Cal.Rptr. 636.) Even though water rights are considered real property for tax purposes, the question before us is whether county-owned water rights located within another county are taxable by reason of article 13, section 1, of the Constitution. Under direction of this amendment the determination must rest upon the nature of the property right at the time it was acquired, that is, whether the right acquired was taxable in the hands of the predecessor of the county.

Analyzing San Francisco's water rights sought to be taxed by Tuolumne in the light of article 13, section 1, we learn from the record that none had ripened into appropriative water rights when acquired. They were then mere filings for the right to appropriate water. Further, the filings acquired were of three kinds: first, filings made directly by San Francisco acting in its corporate capacity; second, filings made by Mayor Phelan of San Francisco and City Engineer Manson; third, filing right purchased from one Hall and from Sierra Water Co.

The filings made by San Francisco as a political entity were acquired directly from the State government and without question they are exempt from taxation. Tuolumne contends that the Phelan and Manson filings were private property and subject to taxation at the time of acquisition. However, Phelan and Manson filed, not for themselves, but on behalf of San Francisco; they never asserted ownership in themselves. We have judicial precedent for this assertion in a Supreme Court decision, Meridian, Ltd. v. City & County of San Francisco, 13 Cal.2d 424, 90 P.2d 537, 91 P.2d 105, which delineates the history and the nature of the water rights of San Francisco in Tuolumne County. These are the same water rights we are considering, and at page 432, 90 P.2d at page 540, the Court had this to say:

'In 1901 the City and County of San Francisco started a project for the storage and diversion of the waters of the Tuolumne river for the use of the city and other localities adjacent to San Francisco bay. It has become known as the Hetch...

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