SIWEL CO v. LOS ANGELES COUNTY ET AL (1944)

Plaintiff commenced this action to obtain a refund of sums which it had paid for assessments levied upon property which it owned in an assessment district, claiming that the taxes had been erroneously or illegally collected. A general demurrer was sustained without leave to amend and plaintiff has appealed from the judgment thereafter entered.

The assessments which are the subject of this litigation were levied by defendant City of South Gate under the provisions of the Acquisition and Improvement Act of 1925, St.1925, p. 849. This act was repealed in 1933, St.1933, p. 949, with a saving clause providing that the repeal did not affect any bonds or assessments theretofore levied in accordance with its provisions. Improvement bonds were issued under the act in 1929 and assessments were levied for the purpose of paying interest and installments of principal on the bonds from 1929 to 1937. Plaintiff paid the assessments levied from 1929 to 1933, inclusive, but allowed the assessments levied from 1934 to 1937, inclusive, to become delinquent. The outstanding bonds were purchased and cancelled by defendant County of Los Angeles in July, 1938, under the provisions of sections 1625.5, 1626 and 1627 of the Streets and Highways Code, St.1935, p. 342 and St.1937, p. 2401 and p. 161. Plaintiff demanded of defendant city that the outstanding assessments be cancelled but upon the city's refusal to cancel them plaintiff paid the assessments, amounting to $9,930.76, under protest and now seeks to recover this sum.

Plaintiff contends that the power to collect the assessments existed solely for the purpose of meeting the obligations on the bonds and that such power ceased to exist when the bonds were cancelled; that unless the assessments be refunded they will go to unjustly enrich the city. Defendants not only dispute these contentions but they assert that under the provisions of the statute according the right to claim a refund of taxes, Sec. 5096, Revenue and Taxation Code, St.1939, p. 1370, plaintiff has no right to demand a refund of the assessments as having been “erroneously or illegally collected.”

It is provided by section 41 of the Acquisition and Improvement Act that upon the making of the succeeding annual levies and their extension upon the tax rolls they shall be “collected and enforced in the same manner and by the same persons and at the same time and with the same penalties and interest as are other taxes for state and county purposes, or for municipal purposes.” Defendant city has delegated its function relative to the collection of taxes to defendant county. Section 41 in effect adopts the collection machinery of the general laws and upon the spreading on the general tax rolls of improvement assessments collection proceeds independently of the provisions of the Acquisition and Improvement Act.

Section 1626 of the Streets and Highways Code, under which defendant county acted, provides in part as follows: “Whenever as the result of the retirement, cancellation or redemption of bonds as in this section provided, the legislative body which conducted the proceedings for the issuance of such bonds by resolution duly passed determines that there is sufficient money in the interest and sinking fund or other proper fund to adequately provide for the retirement or payment of the penalties, interest and principal of all outstanding bonds of such district as the same are or shall fall due, such legislative body may, in its discretion, direct the cancellation or, if its taxes are collected through another legislative body it may in its discretion by resolution order such other legislative body to direct the cancellation of all or any portion of the unpaid taxes and assessments and the penalties thereon and the lien thereof levied or to be levied for the payment of such penalties, principal and interest. Such direction to cancel taxes shall be made to and the cancellation shall be made by the officer having control of the record thereof, with the written consent of the district attorney, county counsel, city attorney or other legal advisor of the legislative body directing the cancellation. Whenever only a portion of such taxes, assessments and liens are cancelled, it may be according to any uniform plan which in the discretion of such legislative body is deemed equitable. Where such property has been deeded to the State or other subdivision for such delinquent taxes or assessments a credit in similar amount shall be allowed upon the amount necessary to redeem.”

In the exercise of its discretion the Board of Supervisors of defendant county decided to purchase and cancel all of the outstanding bonds of the assessment district in question. The decision to purchase and cancel the bonds was not necessarily based upon the ground suggested by plaintiff, that the property owners were in distress, but it was also based upon the ground that the property was being rehabilitated for the public good so that it could be used to increase the general tax base. The legislative body of defendant city was given discretion by section 1626 to “direct the cancellation of all or any bonds or unpaid taxes and assessments” and in the exercise of that discretion decided against the cancellation of the assessments levied before 1938 against the property of plaintiff and others in the assessment district. A number of reasons are suggested for the propriety of the provisions giving the legislative body the right to exercise discretion in the matter of the cancellation of the assessments. It is sufficient to point out one of these reasons. In the district in question assessments for the period in question were paid by the owners of 9 percent of the property subject to the assessments. If cancellations of assessments are made all of the property owners must be treated alike. If the assessments levied prior to 1938 had been cancelled those who had been diligent in paying their assessments would have paid their proportion while a premium would have been placed upon refusal to pay assessments by others owning property in the district. In view of the various circumstances that could arise and have arisen in the matter of delinquent assessments the Legislature was justified in vesting in the legislative body discretion in regard to the cancellation of assessments. Additional force in the argument of defendants that the authority of the legislative body is discretionary rather than mandatory is to be found in the provision of the section that, to make it effective, the resolution of the legislative body must have the written consent of the city attorney or other legal advisor of the legislative body.

Plaintiff argues that discretion is vested in the legislative body only in cases where a part of the bonds are cancelled and that section 1626 does not cover a case where all of the bonds are cancelled. The section in question, however, contains no limitation before or after the word, bonds, and the court has no right to insert limiting words which were not placed in the statute by the Legislature. We are satisfied that the provisions of section 1626 are applicable to the present situation.

The statute by which the Acquisition and Improvement Act was repealed in 1933 contains a saving clause as follows: “Provided, however, that the repeal of said act as amended, shall not operate to divest, limit or prevent the legislative body which is authorized to conduct a proceeding under the provisions of said act, or any amendment thereof, from exercising all authority, power and jurisdiction and performing any or all of the functions, acts or duties imposed, prescribed or authorized by said act as amended, in any proceeding wherein the resolution of intention was adopted as provided in said act before January 1, 1933, nor shall said repeal be applicable to or affect in any way any bonds heretofore issued or authorized to be issued under said act or any assessment levied or required to be levied under said act; and for all purposes (except that no new proceeding can be begun thereunder after January 1, 1933), all of the authority, power and jurisdiction now conferred by said act and all of the provisions of said act are retained in full force and effect until all bonds issued under said act shall be fully paid and discharged.”

Plaintiff argues that it was the intention of the Legislature that the authority, power and jurisdiction of a city with relation to improvement proceedings under the act should cease upon the payment and discharge of the bonds. All parts of the paragraph in question should be reconciled and the legislative intent should be determined. The paragraph should be so construed as to give effect to all of its parts. Sec. 1858, Code of Civil Procedure. It is clear from a reading of the saving clause that it was the intention of the Legislature to provide that neither the bonds theretofore issued nor the assessments theretofore levied should be affected by the repeal. The failure to include in the final words of the clause a reference to the retention of power to enforce the payment of assessments theretofore levied should not be so construed as to defeat its main purpose.

We have seen that the assessments paid by plaintiff were validly levied and placed upon the tax roll, that the legislative body of defendant city had the authority within its discretion to cancel these assessments and that it exercised its discretion against their cancellation. Unless the statute violates some constitutional provision it follows that the collection of the assessments is enforceable.

The relief under which the bonds in question were cancelled was expressly authorized by the amendment to the Constitution of California adopted in 1936, Sec. 31c of Art. IV. The provision contained in section 31 of Article IV of the Constitution of California prohibiting the Legislature from giving power to a county to make a gift of public money to a municipal corporation is not violated by a refusal to refund the money paid by plaintiff. The contribution of the county will not be given to defendant city for its general use. Section 41 of the act provides that any money remaining in any acquisition and improvement district interest and sinking fund after all of the bonds of the district have been retired shall be used by the legislative body conducting the proceedings in repairing any public way in the district. An appropriate legal remedy will be open to the property owners in the district if at any time in the future an attempt should be made to make improper use of the fund. Plaintiff concedes that Wright Road, the improvement for which the bonds were used, is a highway of general county use and also concedes that a gift or contribution may be made to a city for the construction of a road for general county benefit.

We find no merit in plaintiff's contention that it will be unduly penalized or defendant city unjustly enriched if the refund is denied. Plaintiff has in fact been benefited by the cancellation of the bonds, for it has been relieved of assessments falling due after the date of the cancellation. Plaintiff has received the benefit of the assessments paid by 9 per cent of the property owners, who now in turn should receive the benefit of the assessments paid by plaintiff. All of the taxpayers in the district should be treated alike and all will be treated alike if all are required to pay the assessments which were levied before the cancellation of the bonds. All of the property owners will share fairly in the benefits resulting from the use of the surplus fund in repairing the public highways.

The judgment is affirmed.

W. J. WOOD, Justice.

MOORE, P. J., and McCOMB, J., concur.