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

TITLE INSURANCE AND TRUST CO., Plaintiff and Respondent, v. COUNTY OF RIVERSIDE, et al., Defendants and Appellants.

No. E002223.

Decided: December 15, 1987

Gerald J. Geerlings, County Counsel, W.W. Miller, Chief Principal Deputy, and James J. Brzytwa, Deputy County Counsel, Riverside, for defendants and appellants County of Riverside and County of Merced. John K. Van de Kamp, Atty. Gen. and Timothy G. Laddish, Supervising Deputy Atty. Gen., for defendant and appellant State Bd. of Equalization. Adrian Kuyper, County Counsel and David R. Chaffee, Deputy County Counsel, Santa Ana, for amicus curiae County of Orange on behalf of defendants and appellants. Wyman, Bautzer, Rothman, Kuchel & Silbert, Allan B. Goldman, P.C., and Susan J. Williams, Los Angeles, for plaintiff and respondent Title Ins. and Trust Co. Ajalat & Polley, Charles R. Adjalat, Terry L. Polley and Richard J. Ayoob, Los Angeles, as amici curiae on behalf of plaintiff and respondent.


Does the acquisition of one corporation by another result in a “change of ownership” (Rev. & Tax Code, § 64, subd. (c)) 1 of the real property of the subsidiaries of the acquired corporation, so as to require a reassessment of that real property pursuant to Proposition 13? 2  The Riverside County Superior Court, in a coordinated proceeding involving one case from its court and another case from the Merced County Superior Court, ruled that no such change of ownership had occurred, and that Title Insurance and Trust Company (now Ticor Insurance Company of California, and hereinafter referred to as TI), the plaintiff subsidiary in question, was entitled to a refund of the excessive property taxes it had paid to Riverside and Merced Counties for the taxable year of 1980–81.   The defendants (the foregoing counties and the State Board of Equalization) appealed, and TI cross-appealed from the court's denial of its post-judgment motion to “correct” the judgment to provide for refunds for any post–1980–81 taxes paid as a result of the 1980–81 reassessment.

In an opinion filed April 15, 1987, originally certified for publication and later depublished, see infra, we affirmed the trial court's judgment, and held that section 64(c) does not apply to TI's real property;  that such property did not need to be reassessed, and that the court had properly denied TI's post-judgment motion for refunds.   Five days before our decision was filed, the third division of this district filed Sav-on Drugs, Inc. v. County of Orange (1987) 190 Cal.App.3d 1611, 236 Cal.Rptr. 100 (hereinafter Sav-on ), in which it held, in a significantly different factual and legal framework than the one presented in the case here, that section 64(c) does apply to the real property of the corporations in question.   The California Supreme Court denied review in Sav-on and granted review in the case here, then retransferred this case to us “for reconsideration in light of Sav-on.”   We have undertaken such reconsideration, and, because of the substantial factual and legal differences between Sav-on and the case here (see section II, infra ), we have concluded that Sav-on has no legal application to our case here.   Accordingly, we shall stand on the original majority opinion.


The following facts are not in dispute.

On July 27, 1979, Spicor, a wholly-owned subsidiary of Southern Pacific Company (SP), merged into Ticor, by the conversion of Spicor's shares of common stock into shares of common stock of Ticor.   As a result of the merger, Ticor became a wholly-owned subsidiary of SP.   TI, which had previously been a wholly-owned subsidiary of Ticor, remained a wholly-owned subsidiary of Ticor.

On October 26, 1979, the State Board of Equalization (the Board) issued Assessors' Letter No. 79/191, notifying county assessors throughout California that under section 64(c), supra, the acquisition of a corporation through stock transfer resulted in a change of ownership for both the parent company acquired and its subsidiaries, and therefore required a reappraisal of any real property owned by both the parent and the subsidiaries.

On November 5, 1979, the Board issued a letter to the county assessors of California, stating that the principles set forth in its foregoing October 26 letter should be applied to Spicor's merger with Ticor, and that “any real property owned by TICOR and all real property owned by subsidiaries of TICOR is subject to reappraisal by reason of a change of ownership under Revenue and Taxation Code, Section 64(c).   Among the corporations controlled by TICOR is Title Insurance and Trust Company.”

In April 1980, the Riverside County Assessor reappraised two parcels of real property (Parcel Nos. 215–131–001–6 and 215–131–002–7, more commonly known as, respectively, 3490 and 3444 Tenth Street, Riverside) owned by TI and situated in Riverside County.   The reappraisal was for the year 1980–81, and increased the total roll value of the properties from $663,640 to $825,400.   The basis of the reappraisal was that SP's acquisition of Ticor's stock had resulted in a change in ownership of TI's property.

On June 3, 1980, also reflecting the foregoing policy announcement by the Board, the Merced County Assessor reappraised a parcel of real property (Parcel No. 30–272–08, more commonly known as 525 West Twentieth Street, Merced) owned by TI and situated in Merced County.   The reappraisal was for the year 1980–81, and increased the roll value of the property from $165,750 to $220,000.

On September 12, 1980, TI filed applications to change the assessments on the foregoing properties with the Assessments Appeals Boards of Riverside and Merced Counties (the Boards).   The ground for the applications was that the corporate merger did not cause a change in the ownership of the properties in question, and that therefore there was no basis for the reappraisals.

On January 16, 1981, the Boards denied the applications, on the ground that they lacked jurisdiction to rule on the legal issue presented.

On December 8, 1980, and April 9, 1981, TI paid a total of $9,719 in taxes on the subject property in Riverside County, and a total of $2,282 in taxes on the subject property in Merced County.  $1,724 of the $9,719 and $562.80 of the $2,282 were as a result of the reassessments.

In July 1981, TI filed complaints in Riverside County Superior Court and Merced County Superior Court, for a refund of the $1,724 and the $562.80, respectively, and for declarations that section 64(c) either did not apply to real property owned by a corporate subsidiary of an acquired corporation, or, if it did, was unconstitutional.

In October 1982, the cases were coordinated, and the coordinated proceeding was assigned to the Riverside County Superior Court.

After trial to the court on a stipulated set of facts and submitted exhibits, the court ruled that:  (1) section 64(c) did not apply to subsidiaries of acquired corporations;  (2) the application of section 64(c) by the Board and the Counties of Riverside and Merced (the defendant counties) to TI's property was inconsistent with the intent of the Legislature;  and (3) the defendant counties should refund to TI the excessive taxes it had paid in the taxable year of 1980–81, with interest thereon.   Because of these rulings, the court did not consider the constitutionality of section 64(c).

Thereupon TI prepared a proposed judgment, which included an order for the Board to:  (1) advise all county assessors of the decision;  (2) countermand its October 26, 1979, and November 5, 1979, letters to the assessors (supra );  and (3) request the assessors to refund to TI any additional taxes it had paid due to the 1980 reassessment.   After a hearing, a judgment was filed in accordance with the court's ruling, and without including the foregoing directives as to the Board.

The following month, the defendant counties filed a motion to correct a clerical error in the judgment as to the amount of the tax refund Merced County owed to TI.   Thereupon TI filed a cross-motion to correct a clerical error in the judgment, to state, in the event the decision became final or were sustained on appeal, that the defendant counties should refund to TI the portion of taxes TI paid for the years after 1980–81 which resulted from the improper reappraisals the counties made for the year 1980–81.

After a hearing, the defendant counties' motion was granted, and TI's cross-motion was denied.   This appeal and cross-appeal followed.


Defendants contend:  (1) the trial court erred in ruling that section 64(c) did not require the reassessment of TI's real property;  and (2) section 64(c) is constitutional.   In its cross-appeal TI contends that the trial court erred in limiting TI's recovery to the excess taxes it had paid in the defendant counties in the taxable year of 1980–81.



 As noted, at the time it was applied to the acquisition here, (1) section 64(c) provided that when one corporation “obtains control, as defined in Section 25105, in any [other] corporation,” such control “shall be a change of ownership of property owned by the corporation in which the controlling interest is obtained” (italics added);  (2) section 25105 defines “control” as “[d]irect or indirect ownership or control of more than 50 percent of the voting stock of the taxpayer [corporation].”  (Italics added).

Without citing any authority, defendants contend that “indirect” in section 25105 applies to control of the subsidiaries of the acquired corporation, and that the inclusion of section 25105 in section 64(c) shows that the Legislature intended section 64(c) to apply to the property owned by those subsidiaries.   TI disagrees, contending that “indirect” in section 25105 applies only to control of the acquired corporation, and that the omission of any reference in section 64(c) to property owned by these subsidiaries of the acquired corporation, and the inclusion of such a reference in section 64(b),3 show that the Legislature indeed intended section 64(b ) to apply to such property, and section 64(c ) not to apply.   For the reasons stated below, we agree with TI.

First, defendants' interpretation of section 25105 as applied to section 64(c) is unwarranted by both the general principles of statutory construction, and the particular language of the statute.   Generally, “In the construction of a statute or instrument, the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted;  and where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all.”  (Code Civ.Proc., § 1858.)   “ ‘[C]ourts, in interpreting statutes levying taxes, may not extend their provisions, by implication, beyond the clear import of the language used, nor enlarge upon their operation so as to embrace matters not specifically included.   In case of doubt, construction is to favor the taxpayer rather than the government.’ ”  (Cal. Motor etc. Co. v. State Bd. of Equal. (1947) 31 Cal.2d 217, 223–224, 187 P.2d 745.)

Particularly, when section 25105 is incorporated into the relevant language of section 64(c), the following results:  “When a corporation ․ obtains ‘[d]irect or indirect ․ control of more than 50 percent of the voting stock of ’ any corporation ․ such [control] shall be a change of ownership of property owned by the corporation in which the controlling interest is obtained.”  (Italicized language is taken from section 25105.)

Applying the foregoing language to the merger here, TI's argument is that Southern Pacific would have acquired “indirect” control of TI only if, for example, Southern Pacific owned 100 percent of Spicor and Ticor, and Spicor and Ticor each acquired 50 percent (or even 26 percent) of the stock of TI, resulting in Southern Pacific's “indirect” control of more than 50 percent of the stock of TI.   Defendants' argument is that Southern Pacific did acquire “indirect” control of TI, by acquiring “direct” control of TI's parent, Ticor.   In other words, defendants' argument is not that Ticor's ownership of TI makes Ticor the owner of TI's real property, but that Ticor's ownership of TI makes Ticor and TI “acquired” corporations.   As defendants state at p. 20 of their opening brief:  “the corporate takeover by [Southern Pacific] resulted in the emergence of two acquired corporations, Ticor and TI.”  (Italics in original.)

We agree with TI that the Legislature's repeated use of the singular in section 64(c) (“the corporation in which the controlling interest is obtained”) (italics added), and omission of any reference to subsidiaries, support TI's interpretation that the word “indirect” applies to the manner of obtaining control of the stock of the initially-acquired or parent “corporation” (here, Ticor), and not, as appellants contend, to whether that corporation (Ticor) controls any additional corporations (such as TI) in a manner so as to enable those additional corporations to become acquired corporations.4

Defendants argue that by adopting TI's interpretation the trial court ignored section 25105, and in essence wrote the term “indirect” out of that statute.   Not so.   Both defendants' and TI's interpretations of “indirect” were presented at trial and argued at length.   The fact that the court accepted TI's interpretation of “indirect” and rejected defendants', does not mean that it ignored section 25105, or wrote the “indirect” out of the statute.

Moreover, the present wording of section 64, subdivision (e ), which was added by the Legislature in 1980, the year after the merger here, is consistent with TI's interpretation not with defendants'.   In 1980, subdivision (e) recited in relevant part:  “In order to assist in the determination of whether a change of ownership has occurred under subdivision (c), the Franchise Tax Board shall include a question in substantially the following form on returns for partnerships, banks and corporations ․ [¶]  If the corporation (partnership) owns real property in California, was control of the corporation (partnership) transferred or sold during the year?  ․ [¶]  If an entity answers ‘yes' to the above question, then the Franchise Tax Board will furnish the name and address of such entity to the State Board of Equalization.”   (Italics added.)

Subdivision (e) was amended once, in 1982, when the foregoing italicized portion was changed to recite:  “has cumulatively more than 50 percent of the voting stock (or more than 50 percent of total interest in both partnership capital and partnership profits) (1) been transferred by the corporation (or partnership) since March 1, 1975, or (2) been acquired by another legal entity or person during the year?”   In other words, and consistent with TI's interpretation, in 1982 the Legislature further defined “control” of a corporation to mean:  the accumulation (i.e., direct or indirect acquisition ) of more than 50 percent of its voting stock by one entity or person.   Defendants' interpretation of section 64(c) cannot be applied to the 1982 text of subdivision (e), and is inconsistent with the obvious purpose thereof, which is to furnish the name of the transferred or acquired “entity” to the Board of Equalization, so that the property of that entity can be reappraised.

Further, section 480.1, the reporting statute for section 64(c), which was added by the Legislature in 1981 (and, for our purposes, not modified thereafter) is also consistent with TI's interpretation.   Section 480.1 recites in relevant part:  “(a) Whenever there is a change in control of any corporation, partnership, or other legal entity, as defined in subdivision (c) of Section 64, a signed change of ownership statement as provided for in subdivision (b), shall be filed ․ with the board [of equalization] at its office in Sacramento.   The statement shall list all counties in which the corporation, partnership, or legal entity owns real property.  [¶] (b) ․ The information shall include, but not be limited to, a description of the property owned by the corporation, partnership, or other legal entity, the parties to the transaction, and the date of the ownership control acquisition.”  (Italics added.)

Significantly, there is no reference to corporate subsidiaries in any of the versions of section 64(e), section 64(c), or section 480.1.   Moreover, in 1980 the Legislature rejected an attempt to include such a reference in a proposed amended section 64, which was part of SB1260.   The proposed amendments to section 64(c) in SB1260 would have expanded the statute to read as follows:

“When a corporation, partnership, other legal entity or any other person, or affiliated group of persons acquires control, as defined in Section 25105, in any corporation through the purchase or transfer of corporate stock, such purchase or transfer of such stock shall be a change in ownership of property owned by the acquired corporation and all property owned by all entities in which the acquired corporation holds an ownership interest of 50 percent or more.   For purposes of this subdivision affiliated persons shall include, but not be limited to family members, related by blood or marriage, partners, joint venturers, corporations under common ownership or control or any of the foregoing.”  (Italics added.)

The proposed amendments were all rejected, and the final version of SB1260 contained no reference to section 64.   Because the proposed amendments included several changes in addition to the new language as to property of subsidiaries, the reason for the rejection of that particular language is speculative.   However, the introduction of the language supports TI's position, in that the introduction “created an inference that some members of the Legislature thought a change in the law necessary in order to [apply the statute to the property of subsidiaries].”  (Ambrose v. Cranston (1968) 261 Cal.App.2d 137, 144, 68 Cal.Rptr. 22.)

Moreover, it is also significant that the manner in which SB1260 would have amended section 64(c) to include the property of subsidiaries (by adding such property to the property of “the” acquired corporation) is consistent with TI's position (the “acquired” corporation is only the parent corporation), and inconsistent with appellants' (both the parent and its subsidiaries may be “acquired” corporations).

Otherwise, as noted, the Legislature's reference to the real property of subsidiaries in section 64(b), and the omission of any such reference in section 64(c), show that the Legislature did not intend subdivision (c) to apply to such property.  (City of Port Hueneme v. City of Oxnard (1959) 52 Cal.2d 385, 395, 341 P.2d 318.)

Defendants contend that their interpretation of section 64(c) is consistent with the Legislature's “ultimate control” theory of taxing corporately owned real property, because “[u]nder the ultimate control theory the substance of the transaction is examined to determine if the real control of an entity has been transferred or changed.”   However, defendants offer no convincing authority to support the application of this proposition to corporate subsidiaries, and there is nothing in the legislative history of section 64(c) which would justify such an application.

As to the legislative history, the reports of the 1978 Task Force on Property Tax Administration and the Assembly Revenue and Taxation Committee both referred to the “ultimate control” theory in terms of only one acquired corporation.5  Moreover, the Task Force recommended that the Legislature follow a “separate entity” rather than an “ultimate control” approach, because of:  (1) the administrative and enforcement problems of the “ultimate control” approach, and (2) the “ripple effect” hazards of ignoring the general “separate entity” laws affecting corporations.   Accordingly, although the Legislature decided to adopt the “ultimate control” approach, there is no indication that it intended to extend that approach to corporate subsidiaries, and it is evident that such an extension would lead to even greater administrative and “ripple effect” problems than those contemplated by the Task Force.

Defendants also contend that TI's interpretation would frustrate the intent of the Legislature, because, “[a]s a practical matter, a corporation negotiating for a takeover could prevent the reappraisal of its real property ․ simply by forming a wholly-owned subsidiary corporation to which it could transfer its real property prior to the takeover.”

However:  (1) Defendants concede that the foregoing scenario does not apply to the present case.

(2) The creation of a wholly-owned subsidiary in order to avoid an increase in property taxes may result in other, undesirable tax consequences (see, e.g. City of Los Angeles v. Olson Farms, Inc. (1983) 142 Cal.App.3d 527, 191 Cal.Rptr. 485, where the court upheld the imposition of a business license tax on activities between a corporation and its subsidiaries).

(3) If, as defendants argue, TI's “literal” interpretation of section 64(c) leaves a “loophole” in the statute which the Legislature intended to close, then, because we may not extend the provision of a tax statute nor construe it in favor of the government rather than the taxpayer (Cal. Motor etc. Co. v. State Bd. of Equal., supra, 31 Cal.2d 217, 223–224, 187 P.2d 745), it is the function of the Legislature, not of this court, to “insert what has been omitted.”  (Code Civ.Proc., § 1858, supra.)

In view of our decision that section 64(c) does not apply to TI's real property, we need not address its constitutionality.



As we noted in the introduction, we were directed by the California Supreme Court to reconsider our decision in light of Sav-on.   As we also noted, the facts and the legal issues in Sav-on were significantly different from those in the case here.   The facts recited in that case were:

“Jewel Companies, Inc. (Jewel) formed a wholly owned subsidiary, Jewel Development Company (JDC), which made a combined cash and stock tender offer for all the shares of the then existing Sav-on Drugs, Inc. (Sav-on).   Sav-on Realty, Inc. (Realty) was Sav-on's wholly owned subsidiary;  both corporations held title to real property.

“JDC initially bought 28.3 percent of Sav-on's issued shares for cash;  and on November 6, 1980, the shareholders of Jewel and Sav-on approved a merger whereby all the outstanding Sav-on common stock was exchanged for preferred stock in Jewel.1  Sav-on was merged into JDC on the same date, and appropriate filings were made with the California Secretary of State.   JDC then changed its name to Sav-on Drugs, Inc. (JDC/Sav-on).   JDC/Sav-on and its wholly owned subsidiary, Realty, are the plaintiffs in this action.”  Footnote 1 in the above-quoted excerpt reads:  “In a letter to the Internal Revenue Service requesting a ruling as to the federal tax consequences of the proposed merger, counsel representing Jewel, JDC, and Sav-on wrote, ‘The shares of Sav-on Common Stock then owned by Jewel and acquired through the Tender Offer, as well as all treasury shares of Sav-on, will be cancelled pursuant to the terms of the Agreement of Merger.   Upon consummation of the merger, [JDC] will, by operation of law and without any deed or other documents of transfer, succeed to the assets and liabilities of Sav-on.’  (Italics added.)   The merger agreement itself employs similar language.”  (Sav-on Drugs, Inc. v. County of Orange, supra, 190 Cal.App.3d 1611, 1615–1616, 236 Cal.Rptr. 100, emphasis added.)

The foregoing scenario reveals two crucial factual differences between Sav-on and the case here.   The first such difference is that in Sav-on the acquired corporation (Sav-on) disappeared in the merger when its stock was exchanged for stock in the acquiring corporation (Jewel), whereas in the case here the acquired corporation (Ticor) survived the merger.   Before the merger in Sav-on, Sav-on had had control over its subsidiary (Realty) through 100 percent ownership of Realty's stock.   After the merger Sav-on disappeared and Jewel acquired Sav-on's control over Realty by acquiring Sav-on's stock, and it was this acquisition by Jewel of Sav-on's stock which caused a change of ownership of Realty's real property pursuant to section 64(c).

However, no such change of ownership occurred in the real property of the acquired corporation's (Ticor's) subsidiary in the case here, because Ticor survived the merger, and thus retained its ownership, of and control over, TI.  (Justice Kaufman stated in his dissent in our original opinion that when SP acquired Ticor it also acquired Ticor's control over TI's real property by acquiring Ticor's 100 percent ownership of TI's stock.)   However, this statement applies to the facts in Sav-on, where Sav-on disappeared in the merger and Jewel acquired its stock, but does not apply to the facts in the case here, where TI survived the merger and SP did not acquire its stock.

Moreover, at oral argument in Sav-on, the attorney for Sav-on and Realty stated to the court that the parties had stipulated that Realty's stock was owned by JDC (in Sav-on the distinction between Jewel and JDC is not always maintained), and that there was “no question” that “J.D.C. ․ did control ․ Realty.”  (Emphasis added.)   At oral argument in the case here, however, the question of whether SP controlled TI was hotly disputed, with defendants arguing that SP's ownership and control of Ticor gave it a “practical, real world type of” ownership and control of TI, and TI arguing that section 64(c) did not apply to “real world” control, and, in any event, that defendants had offered no evidence of any such control.

The second crucial factual difference between Sav-on and the case here is that in Sav-on both the acquired parent (Sav-on) and its subsidiary (Realty) owned real property and challenged the reassessment thereof, whereas in the case here the only real property at issue was that of the acquired parent's (Ticor's) subsidiary (TI).

The legal consequences of the foregoing factual differences were that the central and only issue in the case here (apart from the cross-appeal) was whether the merger had resulted in SP's obtaining control of TI, and the central (although not the only) issue in Sav-on was not whether the merger had resulted in Jewel or JDC's obtaining control of Realty, which, as noted, had been conceded, but whether the merger (described by Sav-on and Realty's attorney at oral argument as a “triangular reorganization”) constituted a reorganization under section 64(b) (see fn. 3, supra ) or a change in ownership under section 64(c).

Reflecting this difference in the legal framework of the two cases, Sav-on's 12–page opinion includes 5 pages on the issue of whether subdivision (b) or (c) of section 64 applied to the merger of Sav-on and JDC, and less than 2 pages on the control issue as to Realty and Sav-on.   Moreover, the Sav-on court's resolution of the control issue as to Realty was based on the stipulated concession already noted.   As the court said:  “The real argument on this point [that Jewel and JDC had obtained controlling interest in Sav-on but not in Realty] appears to be that the specific statute, section 64, subdivision (c), does not apply with respect to property owned by Realty, despite plaintiffs' concession that control of Realty has passed from Sav-on to Jewel and JDC/Sav-on.   But the subdivision reads to the contrary:  ‘when a corporation ․ obtains control ․ in any corporation․’ ”  (Sav-on Drugs, Inc. v. County of Orange, supra, 190 Cal.App.3d 1611, 1622, 236 Cal.Rptr. 100, emphasis added.)

In other words, the control which is referred to in section 64(c) is the practical, real world control which “passed” from Sav-on to Jewel and JDC, and which the plaintiffs had conceded (JDC “did control” Realty, see supra.)   In the case here, however, TI had argued that, by surviving the merger, Ticor had retained this type of control over TI, and that defendants had offered no evidence that any such control had passed from Ticor to SP.

Defendants urge us to “apply the reasoning adopted in the Sav-on opinion” to the case here.   However, that reasoning (as to Realty) does not even remotely apply to the circumstances in the case here, where the factual issue of control was not conceded, and where the basis for such a concession (the disappearance of the acquired parent corporation in a merger) did not occur.   The issue of whether section 64(c) would apply to a subsidiary in the circumstances of the case here was not presented in Sav-on.   Accordingly, there is no “reasoning” in that case which could logically be applied to the case here.

As to any holding in Sav-on in regard to Jewel's control of Realty (we use the qualification “any” because TI contends that Sav-on's resolution of the issue is dicta, and not a holding),6 defendants argue that such holding should be applied in the case here “if the Sav-on facts are not meaningfully distinguishable.”  (Emphasis added.)   Or, as defendants phrased the issue at oral argument:  “Is there a holding in the Sav-on case which supports [our] position in the TI case?”   We have taken great pains to show that the facts in the two cases are “meaningfully distinguishable,” and therefore that there is no holding in Sav-on which supports defendants' position in the case here.

Otherwise, on the Supreme Court referral, generally, as Justice Kaufman wrote recently for this court in Gillaizeau v. Bank of America (1986) 179 Cal.App.3d 836, 224 Cal.Rptr. 914:  “We have no doubt the [California] Supreme Court could have itself issued a written opinion resolving the ․ issue ․  However, with all due respect, we are unaware of any authority authorizing the California Supreme Court to direct a Court of Appeal to dispose of in a specific manner an issue requiring the exercise of judicial discretion.   Indeed, we are confident that authority and the sound administration of justice dictate the contrary.  [Citations.]”  (Id., at p. 838, 224 Cal.Rptr. 914.)   In the present procedural posture of the case here, the “issue requiring the exercise of judicial discretion” is, as defendants have phrased it, whether the facts in Sav-on are “meaningfully distinguishable” from those here.   We have determined that they are, and therefore that Sav-on does not constitute authority which could or should affect the result we have reached.



 On the refund issue, the prayers in TI's complaints against defendant counties were limited to the excess taxes TI had paid in those counties on December 8, 1980, and April 9, 1981.   After trial, TI attempted to include a provision in the judgment whereby the Board would request any counties to which TI had paid any excess taxes because of the 1980 reappraisal to refund such taxes.   The attempt was unsuccessful, and the judgment was limited to the defendant counties and the taxable year of 1980–1981.   TI then filed a cross-motion, supra, requesting the trial court to modify the judgment to order the Board to request the defendant counties to refund to TI any excess taxes it had paid after 1980–81.

At the hearing on TI's cross-motion, Loyal E. Keir, the deputy county counsel who was representing the defendant counties, told the court that in the “normal course of events,” the ultimate decision in this case would be “binding” on the defendant counties, and, if the trial court's decision were affirmed, that the defendant counties would refund the post 1980–81 excess taxes to TI.   Mr. Keir further assured the trial court, as an officer of the court, that he would personally attend to any such refund, if he were “still around.”   The motion was denied.

On appeal, TI contends, without citing any authority, that the trial court erred in denying its foregoing prejudgment and post-judgment requests.   Defendants disagree, relying on Pacific Gas & Electric Co. v. State Bd. of Equalization (1980) 27 Cal.3d 277, 165 Cal.Rptr. 122, 611 P.2d 463, for the proposition that TI is required to follow the statutory administrative procedures to obtain any refunds which were not before the trial court.   We agree with defendants.

In Pacific Gas & Electric, three public utilities filed an action to compel the Board to adjust the assessment of their real property before they paid taxes thereon in over 50 counties.   The Supreme Court held that the action should be dismissed, and that the appropriate procedure would be for the utilities to pay the taxes, then to choose a target forum to litigate the alleged overpayment, and, “in the event they receive a favorable judgment invalidating the Board's decision, [obtain] refunds from the remaining counties through administrative procedures. (Rev. & Tax Code, § 5096 ).”  (Pacific Gas & Electric Co. v. State Bd. of Equalization, supra, 27 Cal.3d 277, 283, 165 Cal.Rptr. 122, 611 P.2d 463, italics added.)

Section 5096 recites in relevant part:  “On order of the board of supervisors, any taxes paid before or after delinquency shall be refunded if they were:  ․ [¶] (b) Erroneously or illegally collected.  [¶] (c) Illegally assessed or levied.”

Section 5097 recites in relevant part:  “(a) No order for a refund under this article shall be made, except on a claim.”   Significantly, subdivision (d) of section 5097, which applies “only to refunds of property taxes levied by the City of Fresno,” and “only through June 30, 1986,” eliminates the claim requirement “if a refund is ordered by a final decision of a court of competent jurisdiction ․ and the taxes paid were either ․ [e]rroneously or illegally collected, [or] [i]llegally assessed or levied.”   The limited application of subdivision (d) to refunds by the City of Fresno within a specific time period, persuades us that the Legislature did not intend a taxpayer in any other category to avoid the statutory claim procedures for obtaining refunds.

 Moreover, as to the post 1980–81 refunds from the defendant counties, even if those items were before the court in the general sense that they were discussed at the post-judgment hearing on TI's cross-motion, supra, the court undoubtedly, and correctly, believed, as a result of Mr. Keir's representation, that TI would not be prejudiced by the absence of any order for a refund.   Further, we are not persuaded by TI's argument that it will be “enormously prejudiced by having to incur substantial added expense” (italics added) in initiating and processing claims for refunds in the defendant counties for each year after 1980–81.

 Finally, because section 5142 provides that an action for refund may not be brought “unless a claim for refund has first been filed” (see also § 5140,infra ), TI's failure to file claims with the defendant counties for the years after 1980–81, would preclude it from obtaining a court order for refunds for those years.

 As to the refunds in counties other than the defendant counties, an issue which was not before the court in the pleadings or the evidence, TI acknowledges that it has already filed the claims in each of the remaining counties in which it has real property, and that many of those counties have entered into stipulations with TI to defer ruling on the claims until the present case is final.   Notwithstanding the above, TI argues that it is prejudiced by the omission of language in the judgment requiring the Board to “request” the counties to issue the refunds, because, if the language were included, “[a]t that point the counties will be free to act favorably upon [TI's] pending claims.”  (Italics added.)   The inference is that without such language, the counties would not be free to act favorably upon TI's claims, i.e., that the statutory refund procedure would, for some unexplained reason, be inadequate in this situation.   We reject such an inference, and “assume that the taxing authorities would follow the [court's] determination.”   (Schoderbek v. Carlson (1980) 113 Cal.App.3d 1029, 1038, 170 Cal.Rptr. 400.)

“[A] specific statutory refund procedure has been provided for taxpayers whose property has been improperly reassessed.  (Rev. & Tax Code, §§ 5096 [supra], 5140.[7 ])  And to compensate a taxpayer who has been wrongfully required to pay, interest will be awarded on the refunded money.  (Id., § 5150.)”  (Pacific Gas & Electric Co. v. State Bd. of Equalization, supra, 27 Cal.3d 277, 284, 165 Cal.Rptr. 122, 611 P.2d 463.)   TI has not provided us with any reason why the foregoing statutory procedure should not be followed here, or why that procedure would not afford it an adequate remedy.


The judgment is affirmed.


1.   At the time it was applied to the acquisition here, Revenue and Taxation Code section 64, subdivision (c) (hereinafter section 64(c)) recited:  “When a corporation, partnership, other legal entity or any other person obtains control, as defined in Section 25105, in any corporation, through the purchase or transfer of corporate stock exclusive of any shares owned by directors, such purchase or transfer of such stock shall be a change in ownership of property owned by the corporation in which the controlling interest is obtained.”  (Italics added.)Section 64(c) now recites:  “When a corporation, partnership, other legal entity or any other person obtains control, as defined in Section 25105, in any corporation, or obtains a majority ownership interest in any partnership or other legal entity through the purchase or transfer of corporate stock, partnership interest, or ownership interest in other legal entities, such purchase or transfer of such stock or other interest shall be a change of ownership of property owned by the corporation, partnership, or other legal entity in which the controlling interest is obtained.”Section 25105 recites:  “Direct or indirect ownership or control of more than 50 percent of the voting stock of the taxpayer shall constitute ownership or control for the purposes of this article.”Unless otherwise indicated, all further statutory references are to the Revenue and Taxation Code.

2.   Proposition 13, the Jarvis–Gann Amendment, was added to the California Constitution as Article XIIIA, by vote of the People on June 6, 1978.   Section 1 of Article XIIIA provides in relevant part:  “(a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property.”   Section 2 of Article XIIIA provides in relevant part:  “(a) The full cash value means the county assessor's valuation of real property as shown on the 1975–76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.”  (Italics added.)

3.   Section 64(b) recites in relevant part:  “(b) Any corporate reorganization, where all of the corporations involved are members of an affiliated group, ․ or any transfer of real property among members of an affiliated group shall not be a change of ownership․  [¶] For purposes of this subdivision ‘affiliated group’ means one or more chains of corporations connected through stock ownership with a common parent corporation if:  [¶] (1) One hundred percent of the voting stock, exclusive of any share owned by directors, of each of the corporations, except the parent corporation, is owned by one or more of the other corporations;  and [¶] (2) The common parent corporation owns, directly, 100 percent of the voting stock, exclusive of any shares owned by directors, of at least one of the other corporations.”  (Italics added.)

4.   In their opening brief, defendants argue that their interpretation is “crystal clear” from the “plain and simple words of ․ sections 64(c) and 25105.”   In their reply brief, defendants concede that TI's interpretation of those statutes is the “literal” one, albeit “formalistic,” “narrow” and “unreasonable.”

5.   The Task Force report recites in relevant part:  “Under the ‘ultimate control ’ theory, a change in ownership of real property belonging to a corporation would occur when a single shareholder gains majority control of the corporation through the purchase of shares.   Take a simple case.   John Doe, Inc., is a wholly owned corporation of John Doe.   It owns a grocery store.   George Smith buys all the shares of the corporation.   Under the ultimate control approach that would constitute a change in ownership of the grocery store.”  (Report of the Task Force on Property Administration, January 22, 1979, p. 45, italics on “ultimate control” in original, other italics added.)The Assembly Committee report recites, in relevant part:  “The majority-takeover-of-corporate-stock provision deviates from this general theory, and represents an ‘ultimate control’ rationale.   This provision was enacted out of a concern that, given the lower turnover rate of corporate property, mergers or other transfer of majority controlling ownership should result in a reappraisal of the corporation's property.”  (Staff to the Assembly Revenue and Taxation Committee, Revenue and Taxation Reference Book 1980, § I, p. 46, italics added.)

6.   TI's contention is supported by defendants' statement at oral argument that “The Sav-on court could have limited its decision to a holding that JDC, the middle corporation, obtained control over Realty.   But they have alternative holdings [which] involve the indirect control that Jewel obtained as well as the direct control that JDC obtained.”

7.   Section 5140 recites, in relevant part:  “The person who has paid the tax ․ may bring an action in the superior court against a county ․ to recover a tax which the board of supervisors of the county ․ has refused to refund on a claim filed pursuant to ․ this chapter.”

McDANIEL, Associate Justice.

CAMPBELL, P.J., and HEWS, J., concur.