METROPOLITAN WATER DIST OF SOUTHERN v. RIVERSIDE COUNTY

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District Court of Appeal, First District, Division 1, California.

METROPOLITAN WATER DIST. OF SOUTHERN California v. RIVERSIDE COUNTY.*

Civ. 11904.

Decided: April 09, 1942

James H. Howard, Arthur A. Weber, Ray W. Bruce, Charles C. Cooper, Jr., and Donald M. Keith, all of Los Angeles, for appellant. Earl Redwine, Dist. Atty., and William O. Mackey, Chief Deputy Dist. Atty., both of Riverside, for respondent.

Appeals from judgments of the Superior Court of Riverside County in suits brought by the plaintiff district against the defendant county, under the provisions of sections 3804 and 3819 of the Political Code, to recover taxes previously paid under protest.

The Metropolitan Water District of Southern California was organized under the Metropolitan Water District Act, Deering's General Laws, Act 9129, Stats. 1927, p. 694, for the purpose of developing, storing and distributing water for domestic and municipal uses and purposes. In the performance of its functions, it has acquired and devoted to such uses and purposes certain real property situated in the county of Riverside. This property is outside the boundaries of the district and was subject to tax by the county at the time it was acquired by the district. The county has levied and collected taxes upon the property, which the district paid under protest and now seeks to recovering General demurrers to plaintiff's complaints were sustained by the trial court and judgments were entered for the defendant.

The question involved is whether or not property of a metropolitan water district, located outside of its boundaries, and which was subject to tax at the time it was acquired by the district, is taxable by the county in which such property is located, under the provisions of section 1, article XIII of the State Constitution. It is virtually agreed between the parties that the determination of this question depends upon whether the Metropolitan Water District is a municipal corporation within the meaning of said constitutional section, as contended by the defendant, or is not such, as contended by the plaintiff.

Section 1, article XIII of the Constitution provides that property “such as may belong to the United States, this State, or 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 * * *.” (Italics ours.) The taxes in question here were imposed upon the assumption that the Metropolitan Water District is a municipal corporation, and having acquired lands in Riverside County which were subject to taxation by the county at the time of their acquisition, comes within the exception above set forth.

It seems to be conceded that if the Metropolitan Water District is not a municipal corporation within the meaning of this constitutional provision, it is such a state agency as to entitle its property to be exempt from taxation, under that portion of the above constitutional provision which exempts property of the state, and because of what is referred to in Turlock Irr. Dist. v. White, 186 Cal. 183, at page 189, 198 P. 1060, at page 1063, 17 A.L.R. 72, and cases there cited as “the implications in favor of the exemption of public property.”

An interpretation of the words “municipal corporation” under this particular constitutional section has been made in two cases. In Turlock Irrigation District v. White, 1921, 186 Cal. 183, 198 P. 1060, 1061, 17 A.L.R. 72, the Supreme Court determined that an irrigation district, while it is a “quasi–municipal corporation” and even a “public corporation for municipal purposes,” is not a municipal corporation within the meaning of this constitutional section. The court calls attention to the argument sent out to the voters of the state when the amendment to the Constitution which contains the section in question here was being submitted for vote, and points out that, in that argument, the voters were informed that the amendment was necessary to protect the counties against municipalities of the type of San Francisco and Los Angeles, which were acquiring large areas in the other counties, which areas could not be taxed by the counties in which they were situated unless the exception to exemption from taxation provided in the new section was adopted. And said the court, “It is apparent that the term ‘municipal corporation’ was thus presented to the people as synonymous with such corporations as Los Angeles and San Francisco; that is to say, as municipal corporations in the strict technical sense.” The court further pointed out that the nature of irrigation, swanp land, drainage, levee and reclamation districts has been a matter of judicial investigation and interpretation in a number of California, as well as other cases, and that it had been held that they were public corporations for municipal purposes, but not municipal corporations.

In Laguna Beach County Water District v. Orange County, 1939, 30 Cal.App.2d 740, at page 743, 87 P.2d 46, at page 48, in which case a hearing was denied by the Supreme Court, the court applied this same rule to a county water district saying, “It is thoroughly settled that among such organizations, irrigation districts, drainage districts, utility districts, and other similar organizations, are not municipal corporations, but public agencies exercising governmental functions and that, under the theory that their properties are in effect properties of the state, they are not subject to taxation. Sec. 85, 24 Cal.Jur. 102, and cases cited. It must also be true that districts organized under special legislative enactments cannot be municipalities for their legality has long been recognized (Argyle Dredging Co. v. Chambers, supra, [[[[40 Cal.App. 332, 181 P. 84]) and the Constitution provides (art. 11, sec. 6) that ‘corporations for municipal purposes shall not be created by special laws * * *.’ It is true that none of these districts are identical in manner of organization and powers possessed. Nor are they precisely similar to county water districts. However, the right of eminent domain and the right of taxation is common to many of them, including county water districts. While our courts have not ruled on the precise question before us, there are several comments in cases which constitute expressions of judicial opinion on the nature of county water districts. The Supreme Court, in Coachella Valley Water Dist. v. Stevens, 206 Cal. 400, 274 P. 538, described a county water district as a governmental agency exercising governmental powers. In Morrison v. Smith Bros., Inc., 211 Cal. 36, 293 P. 53, it was said that a county water district was a public corporation that may be called a quasi–municipal corporation. In Galt County Water Dist. v. Evans, 10 Cal.App.2d 116, 51 P.2d 202, 203, county water districts were defined as ‘public corporations inferior in power and scope to a municipal corporation’.” The decision then continues, 30 Cal.App.2d at page 746, 87 P.2d at page 50, “We have already concluded that a county water district does not fall within the technical definition of a municipal corporation. As the Supreme Court held that the term ‘municipal corporation’ was used in the 1914 amendment to section 1 of article 13 of the Constitution in that technical sense, and no other, it follows that the property of plaintiff lying outside of its boundaries cannot be taxed under the provisions of that section.”

The lower court in this case completely ignored the fact that the term “municipal corporation” as used in the constitutional provision involved here had already been interpreted in the Turlock Irrigation District and Laguna Beach cases, and treated the question practically as one of first impression. Respondent likewise asks the court, in spite of the holding in these two cases, to follow the dissenting opinion of Justice Sloane in the Turlock case. Justice Sloane's decision agreed with the majority that the purpose of the constitutional amendment was to prevent counties and municipalities from going into other counties and taking from their tax rolls property from which such counties were collecting taxes at the time the property was acquired by the foreign county or municipality. But Justice Sloane contended that it is unreasonable to interpret the Constitution in such a manner that extensive irrigation districts could be permitted to do this very thing. Here the respondents argue that it is likewise unreasonable to interpret the Constitution as permitting municipalities to unite in a metropolitan water district and thereby take from the tax rolls of another county property which the Constitution prohibits them from so taking as individual municipalities. Both Justice Sloane, in his dissenting opinion in the Turlock case, and the respondent here, contend that the real purpose of the constitutional amendment was to prevent abuses threatened, and likely to recur, from permitting private lands subject to taxation in one jurisdiction to be taken over for public uses by other communities and by depriving the territory in which the lands are situated of the revenue from this taxation, thus throw part of the burden of such public use upon territory not benefited by it, and that there could be no possible reason or justification for protecting these outside jurisdictions from the invasion of cities in search of water storage and distribution and leaving them exposed to precisely the same invasion by irrigation districts outside their territory, or, as say the respondents, by allowing municipalities which could not do it singly, to join together in a metropolitan district and accomplish the same result.

There is much to be said for this argument and for Justice Sloane's statement that (186 Cal. at page 193, 198 P. at page 1064, 17 A.L.R. 72), “The direct object of the amendment was to protect and conserve the revenues of the invaded territory, and with that object in view it can make no difference whether the public use acquired is by a city or county, or some other public corporation exercising municipal functions.” However, this court is bound by the interpretation given in the majority opinion in the Turlock case, and by the decision in the Laguna Beach case.

Respondent attempts to avoid the applicability of the cases above mentioned and many others which hold that districts such as irrigation, reclamation and county water partake of the character of state agencies and are not municipal corporations in the strict or technical sense, by claiming that there is some fundamental difference between a metropolitan water district and these other agencies, and that because of its broad powers it is a municipal corporation even though the others may not be. However, there is no fundamental difference between a county water district, such as was under consideration in the Laguna Beach case, and a metropolitan water district. In re Orosi Public Utility District, 196 Cal. 43, 235 P. 1004, determined that a public utility district is a public agency or quasi–municipal corporation, rather than a municipal corporation, and it would be difficult to classify a metropolitan water district as being in any different category in this respect from a public utility district. In fact in Morrison v. Smith Bros., Inc., 211 Cal. 36, at page 43, 293 P. 53, at page 56, the court, in holding a public utility district to be a quasi–municipal corporation, stated that the Metropolitan Water District Act is closely patterned on the County Water District and Public Utility District Acts, and permits “the creation of a district which, for all practical purposes, is the same as” the public utility district there in question. In Metropolitan Water District v. Whitsett, 215 Cal. 400, at page 407, 10 P.2d 751, it was held that its general objects and purposes were not municipal affairs.

In a case decided prior to the Laguna Beach case, Metropolitan Water District of Southern California v. Superior Court of Riverside County, 1934, 2 Cal.2d 4, 37 P.2d 1041, 1042, an action brought to determine if the superior judges of Riverside County were disqualified to sit in condemnation cases brought by the district in their county, the district alleged in its petition that it was a municipal corporation. The court there distinguished this type of district from such public agencies as irrigation, levee, swamp land and drainage districts, calling petitioner “a public or municipal corporation” and stating that it more closely resembles a municipal corporation than it does a state agency. While it referred to the district as a municipal corporation it really classified it as a quasi–municipal corporation. In that case the disqualification of the judges depended upon the question of whether the metropolitan water district was included in the term “public agency” as used in section 170, Code of Civil Procedure. While generally speaking, the words “public agency” are broad enough to include a water district, or even a municipality, still the court felt that for the purposes of that act, the words when considered with their context “irrigation, reclamation, levee, swamp land or drainage district, or any public agency,” referred to public agencies of the type of “irrigation, reclamation, levee, swamp land or drainage districts,” rather than public agencies of the type of cities or quasi–municipal corporations.

In the last–mentioned case, the court was not considering the question of actually what type of entity the Metropolitan District of Southern California was, as between a public corporation for municipal purposes or a quasi–municipal corporation on the one hand and a city or town on the other but merely whether the district came within the designation “or any public agency” in that one particular act. It assumed, because the district so alleged, that it was a municipal corporation. It then pointed out that, in any event, for the purposes of the particular act, such a district “more closely resembles a municipal corporation than it does a state agency such as irrigation and reclamation districts” and that because the legislature in the sentence then under construction only referred to irrigation, reclamation, levee, swamp land or drainage districts, it did not intend to embrace by the words “or any public agency” districts of the metropolitan water district type. For the purposes of that section and that case, it didn't make any difference whether the metropolitan water district was a municipal corporation, or a quasi–municipal corporation or a public corporation for municipal purposes. The later Laguna Beach case, having in mind another question entirely, held the view that a county water district which, as we have pointed out, is similar to a metropolitan water district, was more of the type of the irrigation and drainage districts than a municipal corporation, being “public agencies exercising governmental functions and that, under the theory that their properties are in effect properties of the state, they are not subject to taxation.” 30 Cal.App.2d at page 743, 87 P.2d at page 48.

There is an apparent conflict in the decisions concerning the character of the districts of the type of the plaintiff and of even the irrigation, reclamation and drainage district type. In some cases they have been held to be of the public or state agency type, in others of the municipal or quasi–municipal type. An examination of the particular act or statute under consideration in the particular case discloses that the conflict is more apparent than real. In each case the court was determining the status of the particular district for the purposes of that particular act or case, rather than as a broad, general description or designation. There are many cases holding that districts of the type of plaintiff are quasi–municipal corporations and have many municipal powers. In the construction of section 1 of article XIII of the Constitution, the courts in the Turlock and Laguna Beach cases could very well have held that the words “municipal corporation” included quasi–municipal corporations or public corporations for municipal purposes. But they didn't do so. They held that in the argument sent to the voters the only type of public bodies discussed other than counties which are expressly mentioned in the section, were cities. Even the term “municipal corporation” appearing in the constitutional amendment was not mentioned in the argument but only the word “city.” They then held that insofar as section 1 of article XIII was concerned, the voters had in mind only cities as exclusive of any other type of municipal corporation. Under this holding, it makes no difference whether or not a metropolitan water district is a municipal corporation or only a quasi–municipal corporation or a public corporation with municipal powers. In any event, it is not a city or town, nor is it “synonymous with such corporations as Los Angeles and San Francisco; that is to say, as municipal corporations in the strict technical sense.” Turlock Irrigation District v. White, supra, 186 Cal. at page 185, 198 P. at page 1061, 17 A.L.R. 72.

It may be anomalous that for certain purposes, such as liability for torts, qualifications of judges to try condemnation cases, or the consideration of certain statutes, metropolitan water districts are treated in the same category as municipalities (using the word in its technical sense, meaning cities), and yet for the purposes of taxation be placed in some other category. But, by reason of the determination of the question already made by the holding that the electors, in adopting the constitutional amendment, employed the term in a narrow, technical sense which excluded public corporations and quasi–municipal corporations and included only cities, the matter has already been decided.

The judgment is reversed, and the trial court is instructed to overrule the demurrer of defendant.

BRAY, Justice pro tem.

PETERS, P. J., and KNIGHT, J., concurred.