UNIVERSAL CONSOL OIL CO v. BYRAM COUNTY TAX COLLECTOR

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District Court of Appeal, Second District, Division 3, California.

UNIVERSAL CONSOL. OIL CO. v. BYRAM, COUNTY TAX COLLECTOR.

LONG BEACH HARBOR OIL CO. v. BYRAM, COUNTY TAX COLLECTOR.

Civ. 13680, 13681.

Decided: June 25, 1943

J. H. O'Connor, Co. Counsel, S. V. O. Prichard, Asst. Co. Counsel, and A. Curtis Smith, Deputy Co. Counsel, all of Los Angeles, for appellant. Faries & McDowell and W. Sumner Holbrook, Jr., all of Los Angeles, for respondents.

Plaintiffs Universal Consolidated Oil Company and Long Beach Harbor Oil Co. filed applications with the Los Angeles County Board of Equalization for reduction of valuations placed by the assessor upon certain of their oil leases in the Long Beach Harbor–Wilmington field; their applications were denied and they brought the present actions to enjoin collection of the taxes and to have the court revalue the leases for taxation purposes. The actions were consolidated for trial, separate judgments were entered in favor of plaintiffs and defendant county has appealed therefrom. The appeals are presented upon one record and present identical questions.

Universal has a three–acre lease which the assessor valued at $417,740, and a six–acre lease which was valued at $359,500; Long Beach Harbor Oil Co. has a two–acre lease which was assessed at $305,400. The values fixed by the judgment were, respectively, $222,000, $62,000, and $175,000.

The briefs discuss at length two of the grounds urged for reversal, first, that the court erred in trying de novo the questions which were before the board for decision, and, second, the claimed insufficiency of the evidence either at the hearing before the board or upon the trial to show illegality.

The question of plaintiffs' right to a trial de novo and the one as to the sufficiency of the evidence to show circumstances under which denial of the applications would be constructively fraudulent have been set at rest by findings to the effect that the board did not decide plaintiffs' applications upon the merits but intentionally failed and refused to consider the evidence given in support of plaintiffs' applications, and in disregard thereof expressly, intentionally, deliberately and wilfully withheld decision of the questions of fact in issue. The basis of these findings was that the board acted under the erroneous belief that plaintiffs' applications did not make an issue of alleged overvaluations of the leases but presented only a question of law which the court would have to decide. The findings that the board gave no consideration to the evidence and rendered no decision thereon, in our opinion, have support in the evidence. When the applications came on for hearing, testimony was taken before Supervisors Jessup, Hauge, and McDonough, and the matter was taken under advisement. It was brought up at a later meeting, when the above named and also Supervisors Ford and Smith were present, neither of whom had attended the hearing nor heard the testimony. Two other applications were before the board at that time, namely, those of Signal Oil & Gas Company, No. 268, and Long Beach Oil Development Company, No. 269. At this meeting the following proceedings were had:

“Chairman Jessup: Signal Oil & Gas Company No. 268 and Long Beach Oil Development Company, No. 269.

“Mr. McDonough: This is a possessory interest?

“Mr. Ford: I was not in on this.

“Mr. Smith: 1–2 and 5

“Mr. McDonough: This is in the same situation as Signal.

“Mr. Smith: Yes.

“Mr. McDonough: They are both alike.

“Mr. Smith: Signal Oil & Gas Company and the Universal Oil Company and Long Beach Oil Company.

“Mr. McDonough: There is a legal question involved here.

“Mr. Smith: I think they appeared only to protect their rights in court and made very little showing and I think we should deny it.

“Mr. McDonough: Well, I still think we should have an opinion of the County Counsel attached to the application for the advice of the Board and also in the event it is pursued in court.

“Mr. Smith: It is in court right now.

“Mr. McDonough: Let's set it aside for a moment.

“Mr. Smith: I made a statement during the hearing.

“Chairman Jessup: Now, on the Signal Oil & Gas Company, No. 268, Long Beach Oil Development Company No. 269, Universal Oil Company No. 1020, and Long Beach Harbor Oil Company No. 1021.

“Mr. McDonough: Mr. Boller is here.

“Mr. Boller: Yes.

“Mr. McDonough: Now, these oil applications that we heard, they indicated that the applications show a contractor's lease with the land owners for the purpose of drilling of wells.

“Mr. Boller: Yes, on Signal Oil & Gas and Long Beach Oil Development Company.

“Mr. Smith: Universal and Long Beach Harbor Oil Company were similar.

“Mr. Boller: I think the two were the only ones Mr. Holmes handled.

“Mr. McDonough: Holmes appeared for––

“Mr. Boller: For Signal Oil & Gas Company and the Long Beach Oil Development Company.

“Mr. Smith: Didn't you make a statement at the time of the hearing that they were here appearing in regard to protecting their rights.

“Mr. Boller: That was as to the Signal Oil & Gas and the Long Beach Oil Development Company only.

“Mr. Smith: The other two would be the same.

“Mr. Boller: There is no question but what that is so on the two cases Mr. Holmes presented.

“Mr. Smith: I move that the Long Beach Oil Development Company––

“Mr. McDonough: Wait a minute, I want to ask Mr. Boller would it help the case any if it was referred to the County Counsel.

“Mr. Boller: No.

“Mr. Smith: Move that it be denied.

“Mr. Boller: On the Long Beach Oil Development Company the application was for cancellation and was heard in the same hearing and is to be acted upon by the Board of Supervisors.

“Mr. McDonough: That is another application on a case coming to us.

“Mr. Boller: You have answered on that.

“Mr. Smith: I move that the Signal Oil & Gas Company be denied.

“Chairman Jessup: So ordered.

“Mr. Smith: I move that the Long Beach Harbor Oil Company be denied and Universal Oil Company No. 1020 be denied.

“Chairman Jessup: So ordered.

“Mr. Smith: That these four be denied.

“Chairman Jessup: So ordered.

“Mr. McDonough: On these matters it is a legal question to be determined by the Court rather than a matter of equalization.

“Mr. Boller: It is essentially so in the Signal Oil & Gas Company and the Long Beach Oil Development Company cases. It seems to me the others were factual in their showing.

“Mr. Smith: It is the same thing, they have a lease and are being assessed on their interests. They have a contract and are being assessed as though it were a lease. They are protecting their interest and in case the Long Beach Oil Development Company and the other one should win in court, these people are in the same position.

“Mr. Boller: Their agreement is not as carefully drawn up with the thought of not being taxable as a lease.

“Mr. Smith: Yes, the resumé they attach is exactly the same.

“Mr. Boller: I didn't look at them.

“Mr. McDonough: The basis is the determination of a legal question rather than an appeal on a question of equalization.

“Mr. Boller: It is so as to Signal and the Long Beach Oil Development Company.”

From the foregoing partial transcript of the hearing, which was in evidence at the trial, it appears that two members of the board stated their understanding to be that they were passing upon four applications which raised only a question of law and no questions of valuation. In spite of the advice given by a deputy county counsel that plaintiffs' cases were factual, they persisted in the belief that all four were alike and that if the claimants Signal Oil & Gas Company and Long Beach Oil Development Company should prevail in court upon a point of law which they raised, plaintiffs also would prevail upon the same ground, which appears to have been that under the particular form of contract they held they should not have been assessed at all. Plaintiffs had made no such contention. At this meeting Supervisor Ford did not participate. Supervisors Smith and McDonough expressed their views as we have stated, and Supervisors Jessup and Hauge remained silent throughout the discussion. No reference was made to the evidence that had been taken on plaintiffs' applications nor to the factual questions involved. As we construe the findings they mean that the trial judge deemed the silence of those members who said nothing in denial of the statements of Supervisors Smith and McDonough as an acquiescence therein and that the board as a whole acted under a mistake of fact as to the nature of the proceeding depending upon plaintiffs' applications and as to the matters which it was called upon to decide.

In view of the extensive evidence which three of the members had heard, a reasonable explanation of the mistake would be that the members of the board present at the second meeting did not associate plaintiffs' applications then brought up for action with the ones upon which the evidence had been taken. Plaintiffs' counsel were not notified that the applications would be considered at this meeting, and they were not present. The confusion in the minds of the members was so definite that the attempted explanation by the deputy county counsel appears to have made no impression upon them. But whatever may have been the cause of the mistake, the record, when it speaks affirmatively, shows that the board acted under a serious mistake of fact.

Plaintiffs were entitled to a judicial determination, from a consideration of the evidence as to the true value of their leaseholds. Bandini Estate Co. v. Los Angeles, 1938, 28 Cal.App.2d 224, 82 P.2d 185; County of Los Angeles v. Ransohoff, 1937, 24 Cal.App.2d 238, 74 P.2d 828; Southern Pac. Land Co. v. San Diego Co., 1920, 183 Cal. 543, 191 P. 931; Blinn Lumber Co. v. County of Los Angeles, 1932, 216 Cal. 474, 482, 14 P.2d 512, 84 A.L.R. 1304; Birch v. Orange County, 1921, 186 Cal. 736, 200 P. 647. It is not to be questioned that had such a determination been made it would have been binding upon the court unless the adjudication by the board was shown to have been so wilfully erroneous and arbitrary as to work a constructive fraud upon plaintiffs. But here there was no adjudication as to the facts in issue and no consideration of the evidence or the merits of the applications, although the testimony offered by plaintiffs at the hearing, if believed reliable, would have justified a reduction of the assessments. The decision of the board was that it had nothing to decide. The consequences of this failure to act were just as disastrous to plaintiffs' cases as would have been the board's refusal to take jurisdiction of the proceeding or to accord plaintiffs a hearing.

Appellants' contention that there can be no trial de novo to review a decision of a board of equalization upon a re–examination of assessments fixed by the assessor is reasoned from the fact that it is the action of the board that is under review, and that the motives of the members and the validity of their acts must be judged from a consideration of what was before them and which alone could have furnished a basis for their decision. But this rule can have no application where there was no adjudication or attempted adjudication by the board of the one issue that plaintiffs raised, namely, as to the taxable value of their properties. Plaintiffs introduced at the trial new theories and supporting evidence to prove error in the methods followed by the assessor. We are not intimating that this was a proper procedure in the attempt to prove constructive fraud. But we are not considering the question of constructive fraud with relation to any decision made by the board upon the evidence before it or with relation to the motives of the members of the board. Neither are we considering a mistake on the part of the board in the decision of questions of fact nor intimating that we could do so. The board simply failed to function and its failure to render a decision left the whole proceeding as incomplete as if the applications had been denied without a hearing or without receiving evidence offered by the applicants.

As it was established that the board gave no consideration to the evidence and rendered no decision upon the facts in issue, it must follow that there was a denial of due process of law. See cases cited supra. In that event, or from the mere fact that there had been no adjudication by the board as to valuations, the court was free to try the question of valuation de novo, as it did.

It would serve no purpose to discuss the extensive and technical evidence given before the board and the voluminous evidence at the trial. There were opposing theories and methods of valuation used by the assessor's engineer who testified upon each occasion, and plaintiffs' expert witnesses. Testimony was given at the trial by plaintiffs' witness Williams, admittedly competent to give his opinion as to values, and his valuations as to each of the leaseholds was considerably lower than the amounts found by the court to be the true values. The court was fully warranted in accepting them in preference to the ones expressed by the witnesses for appellant. The findings as to values are therefore conclusive on appeal.

We find no error in the record which would call for a reversal of either judgment.

The judgments are affirmed.

SHINN, Acting Presiding Justice.

PARKER WOOD, J., and BISHOP, Justice pro tem., concur.