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District Court of Appeal, Fourth District, California.


Civ. 3083.

Decided: February 19, 1943

Alfred Siemon, of Bakersfield, for appellants. Borton, Petrini, Conron & Borton, Thos. Scott, Dist. Atty., and Oran W. Palmer, all of Bakersfield, for respondents.

This is an appeal from a judgment after a general demurrer to the complaint was sustained without leave to amend.

The defendant water district was organized under the Municipal Water District Act of 1911, as amended. Stats. 1911, p. 1290; Deering's Gen.Laws, Act 5243. The complaint alleges that on June 24, 1942, the board of directors of this district passed a motion in which the amount necessary to be raised by taxation was estimated at $25,000 and the secretary was instructed to forthwith furnish said estimate to the board of supervisors under the provisions of section 3714 of the Political Code; that on August 14, 1942, said board of directors passed a motion fixing at $25,000 the amount necessary to be raised by taxation for said district, fixing the tax rate at 10¢ on each $100 of assessed valuation on taxable property in the district, certifying these facts to the board of supervisors, and directing that board to levy and collect said tax at the time and in the manner required by law; that on August 24, 1942, this action was certified to the board of supervisors for the purpose of requiring that board to levy such a tax; that said district did not at any time comply with the provisions of section 3714 of the Political Code and did not file or present to the board of supervisors or any county official any itemized estimate or statement showing probable receipts or expenditures of the district for the fiscal year; and that on August 31, 1942, the board of supervisors, without any proceedings having been taken other than those just referred to, included within the county tax levy and levied for the fiscal year 1942 a special tax of 10¢ on each $100 of valuation on all property within the district.

It was further alleged that the district had on hand a surplus of about $8,000; that it had no obligations except current obligations which did not exceed $1,000; that said district has never acquired any water service or distribution system and has never been engaged in operating any business as a public utility; that the district has no bonded debt; that it has not entered into any contract for the purpose of acquiring any water system or other property; and that the board of directors of the district had incurred no obligations which would reasonably require the expenditure of $25,000. It is also alleged that the defendant county auditor will, unless he is restrained by order of the court, compute and enter in the assessment books of the county the special tax so levied, along with other taxes levied; that if said tax is computed and entered it will become a part of the total tax on all property in the district and it will then be impossible to pay the lawful tax levied without also paying said unlawful special tax; that the plaintiffs are owners of property in the district; that unless the defendant auditor is restrained from including such unlawful tax in his computation of the tax upon the assessment rolls a multiplicity of suits will result; and that plaintiffs have no plain, adequate and speedy remedy at law but will suffer great and irreparable damage unless the defendant auditor is thus restrained. The prayer of the complaint is that the proceedings for the levy of this tax be annulled, that the special assessment thus levied be canceled, and that the defendant county auditor be restrained and enjoined from computing and entering such special tax on the assessment roll, and for other and further equitable relief.

It is recited in the judgment that the appellants requested the court, in the event it sustained the demurrer, to sustain the same without leave to amend. The appellants state in their brief that the main object of the action is to have it adjudged that the tax thus levied for this district is unlawful and void and to enjoin the county auditor from computing and entering that tax.

The appellants first contend that under the provisions of the Municipal Water District Act of 1911 such a district has no power to cause taxes to be levied except for the purpose of paying obligations which then exist, that contemplated obligations of any character may not be provided for in advance and that it follows, from the allegations of the complaint that this district had no existing obligations, that this tax is void. Section 12 of the act provides, among other things, that such a district shall have power to acquire and operate water systems, to exercise the right of eminent domain and borrow money and incur indebtedness. Subdivision 9 thereof gives the power “to cause taxes to be levied for the purpose of paying any obligation of the district.” Subdivision 10 gives the power “to make contracts, to employ labor, and do all acts necessary for the full exercise of the foregoing powers.” Section 1 of the act includes among the granted powers such as are “necessarily implied.” The purpose of the act is to permit the formation of such districts and to enable them to operate water works systems. The operation of such a business would necessarily require, among other things, the hiring of labor, the purchase of materials and supplies, and the making of repairs and extensions. It would hardly be reasonable to assume that it was the intention of the Legislature to require that all of these things, and many other acts which may become necessary, must be done upon a credit basis and must have taken the form of accrued obligations before any provision for meeting such necessary expenses may be made. We think the power to provide from year to year for the raising of funds to meet expenses reasonably to be anticipated during the fiscal year is necessarily implied from the language used in the act.

It is next contended that the purported levy for this district is void for noncompliance with section 3714 of the Political Code, which contains what is commonly called the budget provisions. That section, so far as material here, provides that on or before July 10, in each year the person in charge of any district “excepting irrigation and reclamation and any other district where a tax levy for such district is not carried on the regular county * * * assessment–roll” shall file with the county auditor an itemized estimate showing both the probable revenues of the district from sources other than taxation during the fiscal year and expenditures required by such district for the same period, with certain explanatory statements. It then provides, in brief, for the making up of a preliminary budget, for a hearing on the same after notice to be commenced on or before August 20 of each year, for the final adoption of the budget not later than August 30 of each year and for the levy of taxes not later than September first of each year. It appears from the complaint which was here filed that these provisions were not complied with. No such itemized estimates or statements were ever furnished by the board of directors of this district and the bare statement that $25,000 is required, with a direction to levy a tax of 10¢ on each $100 valuation of taxable property within the district, was not given to the board of supervisors until August 24, after the date fixed for the consideration of preliminary budgets theretofore prepared and noticed. In Ryan v. Byram, 4 Cal.2d 596, 51 P.2d 872, 875, the court said:

“We agree with petitioner that, under the provisions of section 3714, supra, [Pol.Code] the board must adopt a budget as a condition precedent to a valid tax levy. We further agree with petitioner that a levy based on items not included within a previously approved and adopted budget is invalid to the extent that it includes items not part of the budget. * * *

“Applying the rules of construction to section 3714, supra, we are of the opinion that the provisions for preparing a preliminary budget; for its printing and publication; for the giving of notice and the holding of hearings; and for the adoption of a budget before the tax rate is fixed are all for the benefit of the taxpayer, are mandatory, and that, if any of these steps had been omitted, the tax levy would be invalid.”

The principles thus announced are applicable here. The allegations of the complaint being admitted by the demurrer for our purposes it follows that since the provisions of section 3714 of the Political Code were not complied with the levy of this assessment for the purposes of this district was invalid. There is no merit in respondents' contention that section 3714 of that code is inapplicable because the respondent district as a revenue producing utility district is relieved from complying with section 3714 by the provisions of subdivision (1) of section 3714b. Subdivision (1) of section 3714b relates only to districts the tax levies for which are not carried upon the regular county assessment roll and that subdivision has no application to the district here in question, the tax levies of which are carried upon the regular county assessment roll.

While the tax levied here, in question, is invalid because the provisions of section 3714 of the Political Code were not complied with it does not necessarily follow that the judgment should be reversed. As the appellants point out in their briefs the main object of the action, as brought, is to enjoin the county auditor from computing and entering this tax for the reason that the levy was made in an unlawful manner. The only injunction asked for is to restrain the county auditor from computing and entering such special tax on the assessment. Aside from the general considerations affecting the right of a taxpayer to enjoin the levying of a tax, it would appear that the act of the county auditor here sought to be enjoined has already been done. The matter has become moot insofar as the only injunctive relief asked for is concerned, and a reversal of the judgment insofar as the county auditor is concerned would afford no relief to the appellants. There was also a prayer that the special assessment thus levied for this district, which by now will have been included on the general assessment roll of the county and probably in part collected, should be canceled and annulled. Assuming that the portion of the tax which represents this special assessment could now be segregated and canceled, the complaint, as drawn, is not sufficient for that purpose since, among other things, it does not contain allegations offering to pay those portions of the taxes as finally entered on the assessment roll which are legal and justly due. See Charles v. City of Crescent City, 14 Cal.2d 234, 93 P.2d 129; DeMille v. County of Los Angeles, 25 Cal.App.2d 506, 77 P.2d 905. Further assuming that some amendment to the complaint might now be made which would entitle the appellants to some form of equitable relief, we are faced with the fact that the appellants themselves requested that the demurrer, if sustained, be sustained without leave to amend. It would seem to follow that, under the facts as here presented, the appellants are not entitled to a reversal of the judgment and that they must be left to their legal remedies or to another equitable action if they can bring themselves within its requisites.

The judgment is affirmed.

BARNARD, Presiding Justice.

MARKS and GRIFFIN, JJ., concurred.