COUNTY OF SAN BERNARDINO v. United States of America, Petitioner in Intervention and Appellant.*

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District Court of Appeal, Fourth District, California.

COUNTY OF SAN BERNARDINO, a body corporate and politic, Plaintiff and Respondent, v. HARSH CALIFORNIA CORPORATION, a California Corporation, Defendant, United States of America, Petitioner in Intervention and Appellant.*

Civ. 5949.

Decided: February 16, 1959

Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, John J. Crown, Dept. of Justice, Washington, D. C., Laughlin E. Waters, U. S. Atty., Edward R. McHale, Asst. U. S. Atty., Los Angeles, for appellant. Albert E. Weller, J. B. Lawrence, San Bernardino, for respondent.

This is an action to collect unsecured personal property taxes levied against defendant's possessory leasehold interest in a certain parcel of land consisting of 103.285 acres in the county of San Bernardino. The lease provides: a maximum term of 75 years; that defendant shall build and operate on said land 337 housing units for use by designated military or civilian personnel of the United States of America, which is hereinafter called intervener; that intervener may designate who shall be eligible as sublessee occupants, may declare certain occupants ineligible, whereupon defendant must eject such occupant; that defendant must pay all taxes even though such taxes may, with the consent of Congress, be on the interest of the United States; that intervener has the right to ultimate control of rentals to be charged occupants; that fire and police protection are, if available, furnished by intervener; that buildings and other improvements and fixtures become the property of intervener immediately on construction or attachment; that all disputes between defendant and intervener are subject to final decision by intervener's Secretary of the Navy; that all ores useful to atomic energy production are reserved to intervener; that lessee must carry full insurance on the buildings. Numerous other provisions for the most part follow the line of ordinary commercial leases. Apparently this building construction was under the authority of the National Housing Act, 12 U.S.C.A. § 1701 et seq. and was substantially financed with funds of intervener.

In 1956, following the decision of the United States Supreme Court in Offutt Housing Co. v. Sarpy County, 351 U.S. 253, 76 S.Ct. 814, 100 L.Ed. 1151, and the holding therein that the lessee's possessory interest is taxable, Congress amended the Housing Act of 1955. Such amendment provides, among other matters, that the interest of the lessees will be subject to local taxes, properly equalized, less payments made by intervener to local tax agencies with respect to such property and also less any money expended for facilities or services normally provided by such local taxing agencies.

By its petition and proposed answer in intervention, intervener alleges; that it has actually paid to local taxing agencies in which said land is located more money for facilities or services normally provided by such local taxing agencies than the amount of the total tax levied against said possessory interest; that said money so paid to the local taxing agencies was essentially in lieu of such taxes; that pursuant to the laws of the United States the Secretary of Defense of intervener did, by letter of August 13, 1957, notify the board of supervisors of plaintiff of his determination that the local taxes on defendant's possessory interest must be reduced by the sum of $27,759 in that said sum was paid by intervener to local taxing or other public agencies involved as in lieu money. It further appears that the total amount of the taxes levied by plaintiff is in the amount of $23,099.04 and that, therefore, intervener claims to have paid several thousand dollars more in lieu of taxes than the taxes themselves amount to. With its petition for permission to intervene intervener filed its proposed answer placing in issue vital parts of plaintiff's complaint. The order was first made granting the petition but later, on motion, that order was set aside and intervention refused. Intervener has appealed from the order refusing to permit intervention.

Code of Civil Procedure Section 387, insofar as it affects the matter here in controversy, reads as follows:

‘At any time before trial, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding.’

The section then goes on to provide that the intervener must take a position either with plaintiff or with the defendant, or adversely to both plaintiff and defendant. Code of Civil Procedure Section 389 provides that:

‘* * * when a complete determination of the controversy cannot be had without the presence of other parties, the court must then order them to be brought in * * *.’

Then follows a provision for an application by an interested party for intervention similar to the provisions of said section 387.

Our courts have held that the burden is on the intervener to present a pleading stating ‘facts sufficient, if true, to establish the right or interest which he claims.’ Moran v. Bonynge, 157 Cal. 295, 298, 107 P. 312, 314. It is further held by our courts that the interest which entitles a party to intervene must be in the suit as originally brought and he cannot broaden the scope of the proceeding by bringing in contentions that have their proper forum elsewhere. People v. Brophy, 49 Cal.App.2d 15, 34(18)(19), 120 P.2d 946.

The right of intervention is purely statutory and is not a matter of absolute right but rests in the sound discretion of the trial court. This court will not disturb the trial court's order unless it is satisfied that the trial court did not properly exercise its discretion. Faus v. Pacific Elec. Ry. Co., 134 Cal.App.2d 352, 355(1)(2), 285 P.2d 1017.

The general rule is that the interest referred to must be “of such a direct and immediate character that the intervener will either gain or lose by the direct legal operation and effect of the judgment.” Allen v. California Water & Tel. Co., 31 Cal.2d 104, 109(4), 187 P.2d 393, 395.

Numerous cases have been cited by counsel on both sides of this controversy giving examples of the application in individual instances of the rules hereinbefore set forth. Numerous other such cases are to be found throughout the decisions of California, but none cited nor any that this court has been able to discover involve a case in which a sovereign agency such as the intervener claims to have paid through ‘lieu money’ the very taxes the plaintiff seeks to recover from the defendant.

In the case at bar the intervener does so allege. It directly and unequivocally opposes the position of plaintiff and supports the position of the defendant. It further claims that it is the landlord of the defendant, the owner of the property the possessory interest to which is being taxed, and that any decision in this case that it has or has not paid the amount here sought to be recovered must inevitably affect the financial relationship between it and defendant, as well as in its dealings with the personnel of the armed forces. The question as to whether or not it did, in fact, pay the ‘in lieu’ money referred to, as well as whether or not any such ‘in lieu’ money was properly applied by plaintiff, and whether or not the Act by which Congress has sought to restrict taxes to be levied by a local taxing agency is valid in all its details, is a matter of immediate and vital concern and legal interest to intervener and are questions inherent in the case at bar.

None of the cases we have found appear to directly discuss the disjunctive second clause of the quoted portion of said Section 387. This clause, through application of the rule of ejusdem generis, must be interpreted to read ‘any person, who has an interest * * * in the success of either of the parties * * * may intervene * * * etc.’ (Emphasis ours.) This clause is not exactly synonymous with the words ‘interest in the matter in litigation.’ It is easily understandable that, as here, the intervener may well have an interest in both ‘the matter in litigation’ as well as the success of one of the parties while in other cases such interest might be separable. It is clear in the case at bar that the intervener ‘has an interest’ in the success of defendant.

Some point has been made in the briefs and in the oral argument respecting the sovereignty of the intervener. The property of a sovereignty cannot be taxed without the sovereignty's consent. P. I. Wilsey & Co. v. County of San Bernardino, 155 Cal.App.2d 145, 146(1), 317 P.2d 71. All Americans, of course, are aware that the first and primary sovereignty rests in the people of the state and that the federal government exists at the will and sufferance of the people of the various states as may be from time to time expressed through the United States Constitution. However, it is clear that among the various and sundry things in which a portion of that sovereignty has been confided to the federal government through the Constitution of our United States is the power and duty to provide for our army and navy, through them for the common defense of our country, and to do all things immediately necessary therefor. The housing of military and naval personnel is one of those immediately necessary things the federal government must do. In the course of doing this, Congress has been called upon frequently to recognize local taxation hardship by reason of federally owned property being nontaxable, and the local taxing agencies having nevertheless to furnish the local service which such non-leviable taxes would have supported. One of the most common of these is the public school, which often suffers because of large numbers of children coming into an area wherein armed forces establishments are located, without commensurate taxes for support of such schools.

As above noted, whether the Act providing for ‘in lieu’ money is valid in the particular details contained in the Congressional enactment here involved is one of the questions to be resolved in the action in which intervener seeks to participate. It is not before this appellate court at this time.

We think that in matters of this kind the courts ought to be realistic. While the question of sovereignty is not, in our opinion, involved, as such, nevertheless the manifold and complicated duties that fall on the shoulders of the federal government are such that where, as here, it reasonably asserts a direct interest in the very sum sought to be recovered, it ought to be permitted to intervene.

The order refusing intervention is reversed.

SHEPARD, Justice.

MUSSELL, Acting P. J., and STONE, J. pro tem., concur.

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