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District Court of Appeal, Third District, California.

PEOPLE of the State of California, Plaintiff and Respondent, v. Orval LUCAS and Elwood Woodburn, individually and doing business under the name and style of L & W Lumber Company; Bruce L. Codding and Virginia Codding, Defendants and Appellants.*

Civ. 9785.

Decided: February 26, 1960

Bronson, Bronson & McKinnon, San Francisco, and Falk & Falk, Eureka, for appellants. Stanley Mosk, Atty. Gen., by James E. Sabine, Asst. Atty. Gen., and Edward P. Hollingshead, Deputy Atty. Gen., for respondent.

This is an appeal from a judgment in favor of the People of the State of California in an action to recover damages for waste to tax-deeded land and to compel an accounting from appellants of the rents, issues and profits received by them from the tax-deeded real property during the period of time it was tax-deeded to the state.

The facts are not in dispute. They are as follows: On June 3, 1948, the real property in question was deeded to the State of California for delinquent county taxes for the year 1942–1943. The deeds were recorded on July 7, 1948, and the property was vested in the state from July 7, 1948, until June 22, 1956.

On August 10, 1953, while the title to the property remained in the state, Bruce L. Codding and Virginia B. Codding, as sellers, made an agreement to sell to Orval Lucas and Elwood Woodburn, as buyers, all of the merchantable Douglas fir and pine timber on the property, warranting that there was a minimum of 2,000,000 feet of fir and pine thereon. Pursuant to the agreement, the buyers thereafter cut and removed 812,851 feet of timber, the contract price of which was $6,502.80. Cutting of timber stopped after a Mr. Bohannon of the State Controller's office advised the buyers that the taxes had not been paid on the property.

This action was commenced on March 30, 1955, and on June 22, 1956, the property was redeemed in full.

It is admitted that all of the cutting and removal of timber was done after the recording of the tax deed to the state on July 7, 1948, and prior to the redemption on June 22, 1956.

The complaint alleges two causes of action. The first alleged that the cause of action is brought pursuant to section 3441 of the Revenue and Taxation Code. It is predicated upon waste to the tax-deeded land by the cutting and removing of the timber. The second cause of action is alternative to the first and is based upon sections 3651 et seq. of the Revenue and Taxation Code. It prays for an accounting and recovery of all rents, issues and profits paid to or received by the appellants.

In addition to the findings based upon the above stipulated facts, the trial court found that the cutting and removal of the timber was in violation of section 3441 of the Revenue and Taxation Code and tended to permanently impair the value of the property; that respondent had been damaged in the amount of $6,502.80, no part of which had been paid. Judgment was entered accordingly.

It is appellants' contention that the redemption of the property extinguished any cause of action which may have existed. Therefore the decisive question is whether the state, after the redemption of the property, had a right to recover damages from the redemptioners for acts committed by them upon the property, tending permanently to impair the value of the tax-sold property, during the time the state was the owner of the property. The state bases its right to recover on the provisions of sections 3441 and 3651 of the Revenue and Taxation Code. Section 3441 provides, in part:

‘Every person who does any act tending permanently to impair the value of tax sold property or tax deeded property * * * is liable for any damages sustained by the State because of his act. Such acts include * * * the removal, destruction, or cutting of any improvements or timber. * * *’

And section 3651 of the Revenue and Taxation Code provides:

‘After the recording of the deed to the State, the State has exclusive power through the Controller to rent tax-deeded property and to receive all proceeds arising in any manner from the property except proceeds from a transaction terminating the right of redemption, if the right of redemption has not been terminated, or from a sale of a parcel of tax-deeded property.’

In People v. Maxfield, 30 Cal.2d 485, 183 P.2d 897, the state claimed the rents which it charged were received from certain real estate during the period between the date of the tax deeds made by the county of Los Angeles because of delinquencies and the time of the redemptions of the properties. A demurrer to the state's complaint was sustained without leave to amend and judgment of dismissal was entered. On appeal the Supreme Court held that the complaint stated a cause of action and reversed the judgment. There the redemptioners contended that upon payment of the tax delinquency all rights of the state, including that to collect accrued rents and profits, ceased. They further contended that ‘[t]his is the construction which must be given to the quoted statutes, * * *, when they are read in conjunction with sections 4112 and 4107 of the Revenue and Taxation Code which provide: ‘On request of the redemption officer, the Controller shall issue a receipt which may be recorded in the recorder's office like a deed. This record has the same effect as a deed or reconveyance of the interest conveyed by the sale or deed to the State.’ (Sec. 4107.) ‘On redemption, the deed becomes null and any interest acquired by virtue of the sale to the State ceases.’ (Sec. 4112.)' In answering these contentions the court said at pages 487, 488 of 30 Cal.2d, at page 898 of 183 P.2d:

‘The deed to the state, executed pursuant to the statutory requirements, conveys absolute title, free of all encumbrances, except certain specified liens. (Revenue & Taxation Code, sec. 3520.) It is not the same title as that of a private purchaser, because the purpose of the conveyance is not the acquisition of the property but the collection of the taxes. Anglo California Nat. Bank of San Francisco v. Leland, 9 Cal.2d 347, 353, 70 P.2d 937. However, the only difference between the state's title and that of a private purchaser is the privilege of redemption. ‘Upon the execution of the deed (to the State) the property owner forfeited all rights in the property except the privilege of redeeming it at any time before the state disposed of it.’ Mercury Herald Co. v. Moore, 22 Cal.2d 269, 273, 138 P.2d 673, 675, 147 A.L.R. 1111. The state's title is absolute, but subject to defeasance should the former owner exercise his privilege of redemption. The tax collector's receipt, authorized by section 4107 of the Revenue and Taxation Code, which is recorded ‘like a deed’, is a reconveyance of an absolute title owned by the state and issues upon the performance of all conditions necessary for redemption.

‘Rights incident to ownership of property conveyed to the state are expressly provided for by the Revenue and Taxation Code. These include the right to possession (sec. 3653); the right to rent or lease and receive the proceeds from the property (secs. 3651 and 3655); the right to exact an accounting of the proceeds of the property (sec. 3652); the right to bring an action of unlawful detainer or ejectment (sec. 3654); and the right to sell the property at public auction to the highest bidder (sec. 3476). These rights are no more limited than those of an individual who has title to real property. They cease upon the transfer of title but certain rights, such as that to rents and profits which accrued during the period of ownership, are personal and do not pass with the deed nor cease to be actionable upon the conveyance of the property. Under section 4112 of the Revenue and Taxation Code the tax deed is not void from the beginning but only upon redemption; the state's interest in the land then ceases because title has passed to the redemptioner. At that time the right to possession of the land, and to lease or rent and receive the proceeds, is at an end. So also is the right to sell the property at public auction. But a right of action which accrued during the period of ownership is not terminated by the redemption; the state is in the same position as that of an individual who conveys land to which he has title.’

We have concluded that what was said in the Maxfield case, supra, is controlling in the instant case. The two cases are essentially the same, the only difference being the means by which the parties acquired the proceeds from the property. In the Maxfield case, supra, it was rent. Here it is from the sale of timber. Here, as in the Maxfield case, supra, the right of action accrued during the period of ownership by the state and was not terminated by the redemption. Upon execution of the deed to the state, the property owners forfeited all rights in the property except the privilege of redeeming it at any time before the state disposed of it. Furthermore, the action was commenced more than a year prior to the redemption.

However, appellants rely upon certain dictum found in Merchants Finance Corporation v. Kuchel, 83 Cal.App.2d 579, 585, 189 P.2d 513, wherein the former owner of the property, who had not yet exercised his right of redemption, sought to enjoin the state from remitting to the county treasurer the amount of damages paid to it for the practical destruction of the improvements upon the property which had been deeded to the state for delinquent taxes. That case is neither in point nor controlling in the instant case. There the court specifically refrained from deciding the question in issue.

The judgment is affirmed.

WARNE, Justice pro tem.

VAN DYKE, P. J., and SCHOTTKY, J., concur.

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