MONHEIT v. CIGNA

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

MONHEIT v. CIGNA et al.

BERNARD v. MONHEIT et al.

No. 12730.

Decided: October 01, 1945

Rode, Burnhill & Rode and Lincoln Rode all of Oakland, for appellant. E. E. Grant, of San Francisco, for respondent.

The plaintiff, A. M. Monheit, brought this action to quiet title to several parcels of land in Alameda County. Included therein were two lots in the Las Palmas subdivision in Brooklyn Township; and the present appeal involves the title to those two lots. Plaintiff purchased the lots from the state as tax deeded lands, and his claim of title thereto was based on the deed issued to him by the state; whereas the defendant and cross-complainant, R. B. Bernard, claimed title to the lots under a deed issued to him as purchaser at a bond foreclosure sale held to foreclose liens imposed for street assessments. The cause was tried on a written stipulation of facts, and the trial court held in effect that each party was the owner of an interest in the lots subject to the rights of the other. Both parties appealed, but subsequently plaintiff's appeal was dismissed by this court in accordance with the provisions of Rule 17a of the Rules on Appeal for failure on the part of plaintiff, after having been given due notice, to file an opening brief. Such dismissal leaves for consideration only the appeal taken by the defendant and cross-complainant.

Briefly stated, the facts appearing from the written stipulation are these: Formerly the lots stood in the name of Antonio Cigna. He acquired the same in 1916. On August 3, 1927, two street improvement bonds were issued against the property, one against each lot; and the defendant and cross-complainant, R. B. Bernard, became the owner and holder of those bonds. They were issued pursuant to the provisions of part III of the Improvement Act of 1911, Stats.1911, p. 730, as amended. The term of each bond was fixed at five years from and after January 2, 1928, and the principal was made payable in five equal annual installments ending on January 2, 1933; furthermore the bonds provided that in the event of nonpayment of any installment the holder of the bonds was given the right to declare due the principal remaining unpaid and to cause the property to be sold to satisfy the bond lien. The general taxes levied against the lots for the fiscal year 1928–1929 were not paid, and pursuant to the provisions of section 3771 of the Political Code the lots were ‘sold to the State.’ There was no redemption within the statutory period allowed therefor, and on July 16, 1934, the lots were deeded to the state. Also, there was a failure to pay any of the annual installments due on the bonds, and on March 20, 1940, the defendant and cross-complainant, Bernard, as owner and holder of the bonds, demanded a sale of the property to satisfy the bond liens. However, before such sale was had, and on July 15, 1940, pursuant to the provisions of chapter VIIIa of title IX of part III of the Political Code, plaintiff purchased the lots from the state, as tax deeded lands, for the sum of $235, and received a deed thereto. Three months thereafter, and on October 16, 1940, the lots were sold to Bernard at bond foreclosure sale, his bid therefor being in the sum of $1,257.44. Certificates of sale were issued to him as such purchaser, and after a lapse of more than twelve months from the date of sale, to wit, on December 12, 1941, in conformity with the provisions of the 1911 street improvement act, as amended, the city treasurer issued and delivered to Bernard the deeds to the lots. The pertinent portions of the trial court's decree were: (1) That plaintiff was ‘the owner of all the right, title and interest acquired by the State’ in the lots by virtue of the deeds made to the state by the Tax Collector of Alameda County, but that such ‘rights of the plaintiff’ were subject to the rights of the defendant as purchaser of the property at the bond foreclosure sale; and (2) that the defendant was ‘the owner of the right, title and interest in said real property’ covered by the bond liens, but that such rights were ‘subject to the aforesaid rights of the plaintiff.’

Two primary questions are presented by the present appeal. First, did the deed to the state for the nonpayment of the delinquent 1928–1929 general taxes extinguish the street assessment liens covered by the improvement bonds? The question should be answered in the negative.

In 1934, at which time the lots were deeded to the state for nonpayment of delinquent taxes, section 3787 of the Political Code declared: ‘Such deed conveys to the state the absolute title to the property described therein, free of all encumbrances, except any lien for taxes levied for municipal, or for irrigation, reclamation, protection, flood control, public utility or other district purposes, or for special assessments which are collected on tax-rolls, and except any lien or assessment for other amounts which by law are collected upon tax-rolls by or for account of municipalities * * *.’ The portions of section 3787 just quoted were construed by the Supreme Court in the case of Neary v. Peterson, 1 Cal.2d 703, 37 P.2d 82, and it was held that the phrase ‘lien for taxes' as there used included liens for special assessments, and that said section, whether taken as it read before or after the amendment thereto in 1927, was broad enough to apply to the special assessment lien of a bond issued under the Improvement Act of 1911 and acts amendatory thereof.

The second primary question is this: Did the deed from the state to plaintiff as purchaser of tax deeded lands extinguish the street assessment liens covered by the improvement bonds? This question likewise should be answered in the negative. On July 15, 1940, on which date the lots were deeded by the state to plaintiff as purchaser of tax deeded lands, section 3836.1 declared as follows: ‘Except as against actual fraud, such deed, duly acknowledged or proved is conclusive evidence of the regularity of all proceedings, from the assessment of the assessor to the execution of such deed, both inclusive, and title to the property described therein will vest absolutely in the grantee free of all encumbrances of any kind existing before the sale, except; * * * (c) Any lien for direct assessments.’ Also, on July 15, 1940, section 3833.2 provided: ‘As used in this chapter, ‘direct assessment’ means an assessment levied by a district the bonds of which are secured by assessments levied on a particular parcel of land described in the bond.' The foregoing were the only sections in force at the time of sale of the lots by the state to plaintiff which defined the nature and extent of title conveyed by a deed from the state to the purchaser of tax deeded lands, and, as will be seen, such a deed did not have the effect of extinguishing the street assessment liens covered by improvement bonds.

It appears from the brief filed by plaintiff as respondent in the present appeal that his claim of absolute title to the lots is based upon the fact that in 1934, at which time the lots were deeded to the state for nonpayment of delinquent taxes, section 3897 of the Political Code provided that a deed issued by the state to a purchaser of tax deeded lands ‘shall convey title to the purchaser free and clear of all liens, taxes, assessments or encumbrances of any kind or character whatsoever levied or assessed or liened on the property which are due at the time of such sale so conveyed prior to the date of such sale * * *’; and he contends that the provisions of the above section are here controlling, citing Smith v. Addiego, 54 Cal.App.2d 230, 129 P.2d 953. There is no merit in the contention.

At the time the deed herein was issued by the state to plaintiff, section 3897 was no longer in effect. It was repealed in 1939, and in its place chapter VIIIa, title IX, part III, Political Code, entitled ‘Sale of Tax Deeded Lands,’ was enacted. The new chapter went into effect September 19, 1939, and it embodied certain amended Political Code sections relating to the sale of tax deeded lands. But the new chapter provided that if a Revenue and Taxation Code was adopted by the Legislature, the amendments to the Political Code set forth in the new chapter would be repealed at the time the Revenue and Taxation Code became effective. Stats.1939, sec. 27, p. 1922. The Revenue and Taxation Code was adopted and went into effect February 1, 1941, St.1939, p. 1274; so that this particular chapter embodying the amended Political Code sections relating to the sale of tax deeded lands was in effect from September 19, 1939, until February 1, 1941. That chapter embodied Political Code sections 3836.1 and 3833.2, hereinabove quoted, which dealt with the effect of deeds from the state to a purchaser of tax deeded lands. Plaintiff purchased the lots from the state as tax deeded lands and received his deed from the state therefor within that period of time, to wit, on July 15, 1940. That being so, Political Code sections 3836.1 and 3833.2 as embodied in the new chapter were controlling as to the nature and extent of the title conveyed by the state to plaintiff; and by those sections it was declared that ‘title to the property described therein will vest absolutely in the grantee free of all encumbrances of any kind existing before the sale, except: * * * (c) Any lien for direct assessments'; and that the term ‘direct assessments' meant liens covered by street assessment bonds.

Plaintiff contends, however, that in Smith v. Addiego, supra, the court held that the code section in force at the time the property is deeded to the state for nonpayment of delinquent taxes is controlling as to the effect of the deed issued by the state at the time of the sale of the property as tax deeded lands; and that, therefore, in the present case the provisions of section 3897 and not those of sections 3836.1 and 3833.2 were controlling as to the nature of the title acquired by plaintiff under his deed from the state. An analysis of the decision in that case shows that the court did not so hold. As therein pointed out, in 1938, at the time the property involved in that case was deeded by the state to the purchaser as tax deeded lands, there was but one statute in force dealing with the effect of a deed from the state to the purchaser, to wit, Political Code, section 3897, which declared that such a deed conveyed title to the purchaser ‘free and clear of all liens, taxes, assessments or encumbrances of any kind or character whatsoever levied or assessed or liened on the property * * *.’ And the court further pointed out that the same section was in force in 1935, at the time the property was deeded to the state for nonpayment of delinquent taxes and continuously thereafter up to and including the sale of the property by the state in 1938. Therefore, the court went on to hold that the provisions of section 3897 were controlling, saying (54 Cal.App.2d at page 237, 129 P.2d at page 957): ‘Our conclusion is that the provisions of section 3897, Political Code, as they read when the appellants' tax deeds were issued, and as they read in 1935 when the deed was made to the state, operated to extinguish the lien of the street improvement bonds.’ In the present case, however, the situation is entirely different. Section 3897 was in force at the time the property was deeded to the state; but it was not in existence at the time the property was sold by the state to plaintiff. It had been repealed prior thereto, so that at the time the property was sold by the state the only statutes in force defining the nature and extent of title conveyed by a deed issued by the state at such a sale were Political Code, sections 3836.1 and 3833.2; and, as shown, those sections provided for the survival of liens for street assessments covered by improvement bonds.

In two recent cases involving the question of tax titles, the decision rendered in Smith v. Addiego, supra, was apparently construed as holding that the statute in force at the time the property is deeded to the state is controlling as to the nature and extent of the title conveyed to a purchaser at the sale by the state of the property as tax deeded lands, regardless of the provisions of the law in force at the time of such sale. Campbell v. Woolner, 57 Cal.App.2d 511, 134 P.2d 822; Rostain v. Guggenheim, 63 Cal.App.2d 127, 146 P.2d 247. The latter case is based on the decision rendered in the former, and was decided by the same court. Assuming that such was the construction placed on the decision in Smith v. Addiego, we are unable, for the reasons hereinabove given, to agree to it.

Moreover, we are not in accord with those portions of the decisions in the two later cases above mentioned interpreting section 3836.1 of the Political Code and a portion of the decision rendered in Bray v. Jones, 20 Cal.2d 858, 129 P.2d 357. With regard to section 3836.1 the court said in Campbell v. Woolner, supra, 57 Cal.App.2d at page 514, 134 P.2d at page 824: ‘Under the decisions last referred to [Smith v. Addiego and Bray v. Jones], the law in force at the time the property here in question was deeded to the state, on August 2, 1940, is controlling and governs the rights of the parties to this action. At that time, section 3897 of the Political Code had been repealed and, while the Revenue and Taxation Act was not yet in effect, sections 3833.2 and 3836.1 had been added to the Political Code, effective as of September 19, 1939. (Stats.1939, chap. 529, p. 1917)’ The court then went on to say (57 Cal.App.2d at page 514, 134 P.2d at page 824): ‘Section 3836.1, thus added, provided that the deed from the tax collector to the state should convey a clear title free of all encumbrances except ‘(c) Any lien for direct assessments.’' (Italics added.)

An examination of chapter VIIIa of the Political Code, as enacted in 1939, Stats.1939, p. 1917, and of Article V of that chapter which embodies section 3836.1, shows, however, that the deed referred to in that section is the deed required to be given by the tax collector on behalf of the state to the purchaser at the time of the sale by the state of the tax deeded lands, and is not the deed given by the tax collector to the state at the end of the five-year period of redemption.

And in reviewing the decision in Bray v. Jones, supra, the court in Campbell v. Woolner, supra, stated in substance that it had been there held that the Political Code section as it read on the date of the deed to the state governed the sale to the purchaser from the state; whereas, as shown by the decision in Bray v. Jones, the court held that a sale by the state was governed by the law as it stood at the time of such sale.

For the reasons above stated we do not deem the foregoing portions of the decision in Campbell v. Woolner, supra, as here controlling.

The next major question presented by the appeal is whether, as Bernard contends, he acquired absolute title to the lots by virtue of the deeds issued to him as purchaser at the bond foreclosure sale, or whether, as the trial court held, plaintiff retained an interest in the property by virtue of the deeds issued to him as purchaser of tax deeded lands. We are of the opinion that the contention so made by Bernard should be sustained.

Section 75 of the Improvement Act of 1911, as in force from 1921 until 1937 (which covered the period of the levy of the assessment and the time the taxes became delinquent), provided as follows, Deering's General Laws, 1931, Act 8199: ‘The deed [to a purchaser at bond foreclosure sale], when duly acknowledged or proved, is primary evidence of the regularity of all proceedings theretofore had, and conveys to the grantee the absolute title to the lands described therein, as of the date of the expiration of the period for redemption, free of all encumbrances, except the lien for state, county and municipal taxes.’ (Italics added.) In 1937 section 75 was amended, St.1937, p. 1674, but the paragraph above quoted remained the same. Such amendment covered the time Bernard demanded a sale of the property to satisfy the lien of the bonds, the sale to him, and the issuance of the certificate of sale to him. In 1941 the street improvement act was incorporated into the Streets and Highways Code (in effect September 13, 1941 St.1941, p. 751 et seq.) and section 6555 of that code, which covered the time the deed was issued to Bernard, provided: ‘The deed of the treasurer, when duly acknowledged or proved, is primary evidence of the regularity of all proceedings theretofore had, and conveys to the grantee the absolute title to the lands described therein, as of the date of the expiration of the period for redemption, free of all encumbrances, except the lien for State, county and municipal taxes.’ (Italics added.) Therefore, it would appear that under all of the foregoing provisions Bernard acquired ‘absolute title’ to the land, free of all encumbrances, unless there was a continuation of the lien for state, county and municipal taxes after the property was deeded to the state, and this leads up to the final question as to when, if at all, the lien for state, county and municipal taxes was extinguished.

In this regard, it is said in 24 California Jurisprudence, at pages 219, 220: ‘The lien continues until the taxes are paid or the property sold for nonpayment thereof’; and ‘* * * a lien is extinguished by a valid sale to the state for delinquent taxes * * *.’ Section 3716 of the Political Code provided, from 1872 until 1931. ‘Every tax has the effect of a judgment against the person, and every lien created by this title has the force and effect of an execution duly levied against all property of the delinquent; the judgment is not satisfied nor the lien removed until the taxes are paid or the property sold for the payment thereof.’ (Italics added.) The foregoing section was in force at the time the property herein was sold to the state. In 1931 section 3716 was amended, St.1931, p. 144, by adding provisions to the effect that the lien shall cease at the end of 30 years and be conclusively presumed to have been discharged by payment, but the above-quoted provision remained the same. There was another amendment in 1933, but it has no bearing on the present case. Thus, at the time of the sale of the lots to the state, and the deed to the state, section 3716 read as above quoted. In 1939, St.1939, p. 2032, the section was recast and section 3716.1 was added. This amendment and the added section became effective the same as the other Political Code amendments hereinabove referred to—from September 19, 1939, until the Revenue and Taxation Code became effective in February, 1941. Consequently, they were in force at the time of the sale of the lots by the state to plaintiff. Section 3716 was amended to read: ‘Every tax has the effect of a judgment against the person, and every lien created by this title has the force and effect of an execution duly levied against the property subject to the lien.’ And the added section, 3716.1, provided: ‘Except as provided in section 3716.2 [cessation of lien after 30 years], the judgment is satisfied and the lien removed when, but not before, (a) the taxes are paid or legally canceled or, (b) for nonpayment of any taxes, the property is sold to a private purchaser or deeded to the State.’ (Italics added.)

By applying the provisions of section 3716, as in force at the time the lots were sold to the state, the lien for the taxes terminated at that time; or by applying the provisions of section 3716.1, in force at the time the lots were sold and deeded by the state to plaintiff, the tax lien terminated, at the latest, on the date of such sale. The lots were sold and deeded by the state to plaintiff on July 15, 1940; and the bond foreclosure sale, at which Bernard became the purchaser, did not take place until three months after the tax sale. It follows that since, at the latest, the tax lien was extinguished three months prior to the foreclosure sale, Bernard, as purchaser at the foreclosure sale acquired title to the lots, free and clear of any tax liens.

In accordance with the views herein expressed, those portions of the judgment declaring that the plaintiff and the cross-complainant each owned an interest in the lots subject to the rights of the other are reversed, with directions to re-enter judgment in favor of Bernard on the cross-complaint, adjudging him to be the sole owner of the property.

KNIGHT, Justice.

PETERS, P. J., and WARD, J., concur.