PEOPLE v. City of San Mateo, a municipal corporation, Defendant and Respondent.*

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

PEOPLE of the State of California, acting by and through the Department of Public Works, Plaintiff, v. PENINSULA TITLE GUARANTY COMPANY, a corporation, Defendant, Arthur Bros., a partnership composed of James H. Arthur and Noel L. Arthur, Defendant and Appellant, City of San Mateo, a municipal corporation, Defendant and Respondent.*

Civ. 16411.

Decided: October 26, 1955

Schofield, Hanson & Jenkins, Thomas M. Jenkins, San Francisco, for appellant Arthur Brothers. Arthur J. Harzfeld, City Atty. Frank W. Rose, Asst. City Atty., San Mateo, for respondent City of San Mateo.

In this eminent domain proceeding brought to acquire in fee for highway purposes a parcel of land belonging to the defendants James H. and Noel L. Arthur, the condemner soon after filing the complaint took possession, required the owners to leave, removed all buildings, and started construction of the highway.

Later, but before trial and judgment, the City of San Mateo in consummation of proceedings under the Municipal Improvement Act of 1913, Deering Act No. 5215, now Streets and Highways Code, sections 10000–10609, initiated 14 months prior to the filing of the complaint herein, levied a special benefit assessment upon this land.

The judgment in condemnation awarded $25,500 to the Arthurs and to the tax collector of the city ‘as their interets may appear,’ and the condemner paid the money into court. Subsequently, the court ordered that the amount of the assessment, $612.20, be paid to the city therefrom.

The Arthurs have appealed from that order, claiming that title passed to the state as condemner when it took possession, leaving no private interest in this property to which the city's levy could attach; hence, no basis for an award to the city.

Appellants make an eloquent plea for relief from the burden of this special benefit assessment. Although levied before trial, it was not levied until four months after the date of issuance of summons (April 20, 1953), the date as of which the value of the property taken was determined, the trial having commenced less than one year from that date.1

The argument is that the value which the property had on April 20th did not and could not include the enhancement of value caused or to be caused by the proposed public improvement which was reflected by the assessment subsequently levied.2

From this it seems to follow that appellants have suffered a double deprivation: (1) compensation measured by the earlier lower value of the property; (2) reduction thereof in the amount of the enhancement in value as measured by the amount of the assessment.

Appellants seek relief from the latter element of deprivation by urging that we declare the assessment void upon the theory that title passed from them to the state when the state took possession, leaving no private property interest to which the subsequent levy could attach.

However much this plea might tend to move us were this a matter of first impression, there is nothing that we as an intermediate court of appeal can do about it. Relief, if found merited, whether it take the form of voiding such an assessment or of augmenting the eminent domain award by the amount of the assessment, could be accorded only by a higher court; perhaps only by the Legislature.

Our Supreme Court holds that title in eminent domain does not pass upon the taking of possession under the proviso of section 14 of Article I of the state Constitution. Metropolitan Water Dist. of Southern California v. Adams, 16 Cal.2d 676, 107 P.2d 618. In so ruling, the court observed that the Constitution authorizes possession upon the giving of adequate security prior to ascertainment of the amount of compensation (there can be no ‘taking’ without just compensation having ‘first’ been made to or paid into court for the owner),3 prior to determination of the question whether there is a public necessity for the taking (if found in the negative, the proceeding terminates), and prior to the time when the plaintiff may abandon the proceeding (timely notice of abandonment terminates the proceeding, ‘except in those rare instances in which the condemner is estopped from availing itself of the right of abandonment’). 16 Cal.2d at page 679, 107 P.2d at page 620. See also City of Los Angeles v. Tower, supra, 90 Cal.App.2d 869, 875–876, 204 P.2d 395. Brick v. Cazaux, 9 Cal.2d 549, 554, 71 P.2d limitation that title does not pass until the trial court by its final order of condemnation (after the ‘payments have been made’) describes the property and the purposes of the condemnation, and a copy of the order is filed with the county recorder. Code Civ.Proc. § 1253; Brick v. Cazaux, 9 Cal.2d 549, 554, 71 P.2d 588.

This does not mean that the landowner yields possession of the proprety without a right to compensation. He is entitled to receive the value of the use. He gets it later instead of in advance or currently. In Metropolitan Water Dist. of Southern California v. Adams, supra, 16 Cal.2d 676, 679–682, 107 P.2d 618, he received it in the form of interest upon the value of the property as determined by the judgment in condemnation, interest at 7% from the date of taking possession to the date of entry of the judgment.4

The conclusion seems irresistible that the taking of possession pursuant to the sanction of the proviso of section 14 of Art. I of the Constitution does not accelerate the passing of the title (in this case, title in fee) sought to be taken. That can not occur ‘without just compensation having been first made to, or paid into court for, the owner.’

In two of the cases upon which appellants rely, there is language which does seem to suggest that the taking of possession marks the passing of title, but examination of the facts in each case shows that upon taking possession the condemner destroyed or virtually destroyed the property. In such a case the condemner would be unable to restore the property to the owner upon abandomnent of the proceeding. We refer to People v. Joerger, 12 Cal.App.2d 665, 55 P.2d 1269, and People v. Klopstock, 24 Cal.2d 897, 151 P.2d 641. Timber land was involved in the Joerger case. The condemner, upon gaining possession, cleared the brush, cut the timber (200 trees two feet to three feet in diameter, each), and cut, graded, and filled to the extent of removing and filling 41,634 yards of dirt, bringing in 4,228 yards of rock. ‘It was agreed by the parties that by reason of such work, the physical character of the land was so changed that it would have been impossible to restore said land to its original condition.’ At page 667 of 12 Cal.App.2d at page 1270 of 55 P.2d. That was a virtual destruction of the property, which should estop the condemner from abandoning the proceeding.5

In the Klopstock case an asphalt plant was destroyed by the condemner upon taking possession. A tenant had erected the plant and had the right to remove it within 30 days of demand by the landlord for surrender of possession. On February 23, 1940, the condemner filed its complaint and on the same day obtained an order for immediate possession. Thereafter it took possession and ‘on July 23, 1940, completely wrecked and destroyed the * * * asphalt plant and appurtenances, which stood in the path of the proposed highway project.’ 24 Cal.2d at page 900, 151 P.2d at page 642. The question was whether assignees of the tenant were entitled to participate in the award. The answer was ‘Yes,’ because the tenant's right in this particular property existed at the time of issuance of the summons and nothing that later happened destroyed that right except that upon destruction of the plant it became solely a right to compensation for the thing taken. In that sense there was a ‘taking’ prior to judicial ascertainment of the necessity of the taking and prior to determination of the amount of ‘just compensation’ to be paid. But that is not our case.

The mere fact that in our case the condemner removed buildings and commenced highway construction upon taking possession, does not enable a reviewing court to conclude, as a matter of law, that the condemner thereby destroyed the property as in the Klopstock case or virtually destroyed it as in the Joerger case. The record herein is silent as to the size or nature of the buildings removed or the character and extent of the highway construction consummated. For aught that appears, this property could be readily restored to its former condition by removal of the highway work and reconstruction of the buildings. Every act of possession by a condemner pending suit involves the power to make some changes; without such power, the possession sanctioned by the Constitution would be purposeless and meaningless. In some instances, as in the Klopstock and the Joerger cases, those changes are so extensive it would be inequitable to allow the condemner later to disavow a public necessity for the taking or to abandon the suit. Upon the record, ours is not such a case. Moreover, the record furnished us does not indicate that at the trial appellants opposed the questioned order upon the theory that the state had destroyed or virtually destroyed the property and was thereby estopped from abandoning its acquisition or adduced evidence that would support such a contention.

Specific authority for payment of a special assessment out of an eminent domain award is furnished by City of Los Angeles v. Superior Court, 2 Cal.2d 138, 39 P.2d 401, which upheld the condemner-city's contention that it had the right, under § 1248, subd. 8 of the Code of Civ.Proc., to withhold the amount of a special benefit assessment which had become a lien but was not yet due. It became a lien nearly two years after suit filed ana only twelve days before entry of judgment. The condemner did not take possession pending suit but, as we have seen, that is not significant in determining when title passes. The landowner contended, without avail, that it is unjust and inequitable to cut down the award by the amount of an assessment levied after the date as of which the value of the property was determined, claiming that a value so determined does not reflect the putative enhanced value contributed by the proposed public work for which an assessment is later levied.

We note, in passing, that appellants have cited cases in other states which tend to support their theory. Those cases reflect statutory provisions which differ from our Constitution and statutes. Thus, In re Mayor, etc., of City of New York, 40 App.Div. 281, 58 N.Y.S. 58, 60 Involved a statute which declared that ‘the actual appropriation’ (the taking of title) occurred upon the filing of the complaint in condemnation. See analysis in City of Los Angeles v. Los Angeles Pacific Co., 31 Cal.App. 100, 116–117, 159 P. 992. In Fishel v. City and County of Denver, 106 Colo. 576, 108 P.2d 236, the property was deemed appropriated for a public purpose upon the making of an order for possession and taxes were prorated as of that date. Independent-Consolidated School Dist. No. 27 of Mower County v. Waldron, Minn., 63 N.W.2d 555, holds that in Minnesota title passes when the award is paid or secured but rlates back to the date of filing of the award.6 Those holdings are not, of course, operative in California.

Appellants further contend that the city's remedy, if any, was under section 1252.1 of the Code of Civil Procedure and that failure to file thereunder precludes relief.

That section (enacted by Chapter 1792 of the Statutes of 1953, p. 3573, effective September 9, 1953, repealed by Chapter 1229 of the Statutes of 1955, p. 2242, effective September 7, 1955) had to do merely with ‘ad valorem taxes on the property being condemned’ including ‘ad valorem special assessments levied and collected in the same manner as other taxes.’

The special benefit assessment in question was levied pursuant to the provisions of the Municipal Improvement Act of 1913, Deering Act No. 5215, codified as sections 1000–10609 of the Streets and Highways Code by Chapter 192 of the Statutes of 1953, p. 1176, effective September 9, 1953.

Such an assessment is not levied on the ad valorem basis, nor is it levied in the same manner as other taxes. The initial resolution describing an improvement proposed under this act directs the appropriate board or officer to prepare plans and specifications, an estimate of cost, a diagram showing the proposed assessment district and a ‘proposed assessment of the total amount of the cost and expenses of the proposed improvement upon the several subdivisions of land in said district in proportion to the estimated benefits to be received by such subdivisions, respectively, from said improvements', Act No. 5215, § 2, subd. 4, now Streets and Highways Code, § 10204, subd. e. Subject to such modifications as are made during the subsequent proceedings, this becomes the assessment ultimately levied, Act 5215, §§ 7 and 8, now Streets and Highways Code, §§ 10401–10407. In case of delinquency the tax collector sells separately each delinquent parcel 'or so much thereof as shall be necessary to realize the amount assessed against the same,’ together with penalties and costs and a 50 cent fee for certificate of sale, Deering Act 5215, § 9, now Streets and Highways Code, § 10413. Manifestly, this bears no resemblance to an ‘ad valorem’ tax or asessment, nor is it collected ‘in the same manner’ as taxes.

The order appealed from is affirmed.

FOOTNOTES

1.  The Legislature has provided that the value of the property at the date of issuance of summons ‘shall be the measure of compensation for all property to be actually taken’ when the issue is tried within one year of that date; if tried later, unless the delay is caused by the defendant, the value of the property at the date of the trial is the measure of compensation. Code Civ.Proc. § 1249. It is well established that the Legislature has power so to provide. City of Pasadena v. Porter, 201 Cal. 381, 388–389, 257 P. 526, 53 A.L.R. 679, and cases there cited. It also been determined that the date thus prescribed (issuance of summons or commencement of trial) is not affected (postponed or accelerated) if, as here, the condemner takes possession under sanction of the proviso of section 14 of Art. I of the state Constitution. City of Los Angeles v. Tower, 90 Cal.App.2d 869, 871–872, 204 P.2d 395.

2.  In theory at least, a special improvement assessment is based upon the enhancement in value which has accrued or will accrue to the land, caused by the improvement. See cases collected in 19 Cal.Jur. 187–188, Mun.Corp., § 507. It is not necessary that the improvement which is supposed to confer the benefit be completed prior to the assessment. Davies v. City of Los Angeles, 86 Cal. 37, 47, 24 P. 771; Hayne v. City & County of San Francisco, 174 Cal. 185, 190–191, 162 P. 625.

3.  The Legislature has imposed the further limitation that title does not pass until the trial court by its final order of condemnation (after the ‘payments have been made”) describes the property and the purposes of the condemnation, and a copy of the order is filed with the county recorder. Code Civ.Proc. § 1253; Brick v. Cazauz, 9 Cal.2d 549, 554, 71 P.2d 588. Whether that title might, under appropriate circumstances, relate back to the date when the ‘payments' were made, we need not and do not undertake to determine.

4.  When the owner receives just compensation for the condemner's use pending suit, it conceivably would be fair to require him to pay taxes currently assessed, but not necessarily fair to require him to pay assessments levied for permanent improvements yet to be constructed.

5.  It is true that the court in the Joerger case did say that the taking of possession effects a transfer of title, and cited two early Supreme Court decisions as so holding. But we read those early decisions as holding merely that entry into possession is a ‘taking’ of a temporary, limited estate somewhat akin to a leasehold, not the taking of title in fee or of a permanent easement. See Davis v. San Lorenzo R. Co., 47 Cal. 517, 522–523, and Steinhart v. Superior Court, 137 Cal. 575, 579, 70 P. 629, 59 L.R.A. 404. However, in view of the special circumstances of the Joerger case, the virtual destruction of the property, the result reached in that case seems entirely reasonable and sound.

6.  Illustrations of other methods of dealing with taxes and assessments are furnished by cases collected in notes in 45 L.R.A.,N.S., 451, and 79 A.L.R. 116, and supplements to the latter.

FRED B. WOOD, Justice.

PETERS, P. J., and BRAY, J., concur.