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Court of Appeal, First District, Division 2, California.

Richard HAMAN et al., Plaintiffs and Appellants, v. COUNTY OF HUMBOLDT and Wallace Martin, Tax Collector of the County of Humboldt, Defendants and Respondents.

Civ. 28443.

Decided: November 30, 1971

Mathews, Traverse & McKittrick, Eureka, for appellants. Raymond W. Schneider, County Counsel, Charles P. Selden, Deputy County Counsel, Eureka, for respondents.

Plaintiffs are fishermen residing in California, whose boats, federally registered in Oregon or Alaska, were assessed for taxation in 1968 by respondents at the 24 percent level generally applied to personal property in the County of Humboldt. But purporting to act under Revenue and Taxation Code, section 227, the assessor, after determining the actual cash value of all other boats in the fishing fleet, those federal registry and documentation were in California ports, reduced their assessments to one percent.

Plaintiffs paid taxes aggregating $5,230.07. Their taxes computed upon the one percent formula, if applicable, would have been $248.50. Having paid under protest, they seek to recover the difference, asserting violation of their constitutional right to equal protection of the laws. (Cal.Const. art. I, §§ 11, 21; U.S.Const. amend. 14, § 1.)

Other constitutional issues are of public concern, and necessary to complete decision of this appeal. (Cf. Bayside Timber Co. v. Board of Supervisors (1971) 20 Cal.App.3d 1, 6, 97 Cal.Rptr. 431.)

The County Board of Equalization refused to make any reduction or other changes in the assessments made for each of plaintiffs' vessels because the vessels were not documented at a California port as of the 1968 lien date.

The respondents state, ‘Our only contention is that these boats are not documented in a port of California and therefore do not qualify for the tax treatment under Revenue and Taxation Code Section 227.’

That section was enacted in 1967, and provides: ‘A documented vessel, as defined in Section 130, shall be assessed at one percent (1%) of its full cash value only if: (a) The port of documentation is in this state. (b) The vessel is engaged or employed exclusively: (1) In the taking and possession of fish or other living resource of the sea for commercial purposes, or (2) In instruction or research studies as an oceanographic research vessel.’

Appellants contend that they have been singled out for discriminator taxation, by operation of Revenue and Taxation Code, section 227; and that thereby they have been denied the equal protection of the laws. Respondents do not contend that assessment of, and hence taxing of, appellants' fishing boats 24 times as much as those registered at a California port, is not discriminatory in fact. The major issue is the validity of section 227 itself.

The mandate of California Constitution, article XIII, section 10, as of the tax date in question, was that all property is to be assessed where situated.

Revenue and Taxation Code, section 1138, provides: ‘Vessels documented outside of this State and plying in whole or in part in its waters, the owners of which reside in this State, shall be assessed in this State.’

While appellant Hunter Offshore Enterprise is an Oregon corporation, it concededly is the alter ego of Gilbert A. Hunter, living in Bayside, California. The master and crews of the corporation's four boats concerned living in Eureka and operated the boats of Eureka.

Respondent county in its brief states, ‘the legal situs of ocean-going vessels for purposes of taxation is in their home port, and for such purpose they are deemed to be in such place and taxable only within the state where such place is situated. Sayles v. Los Angeles County (1943) 59 Cal.App.2d 295, 138 P.2d 768.’ If that is so, appellants all were taxed illegally and have been illegally denied the tax refunds sought.

But such a rule has not been promulgated by either the United States Supreme Court nor ours. The decisional perimeter stops short of that statement.

The tax situs of personal property such as a boat may be at the domicile of the owner, under the long-established assumption that where that where the owner is, there his personal property will be also. (Star-Kist Foods, Inc. v. Byram (1966) 241 Cal.App.2d 313, 50 Cal.Rptr. 381.)

As of the tax lien date, the first day in March 1968 (Rev. & Tax.Code, § 2192), there was only a 1/366th chance that any given boat utilized in fishing on the high seas actually would be situated within the taxing jurisdiction. (Cf. Rev. & Tax.Code, § 404.)

Hence, the tax situs of the fishing vessels registered elsewhere may be determined to be the actual residence of those owning, claiming, possessing or controlling the vessel on the date, or by the fact that the property had an established permanent situs. (Cf. Brock & Co. v. Board of Supervisors (1937) 8 Cal.2d 286, 289, 65 P.2d 791.) Appellants' testimony adequately established that both of such conditions were present here.1

The fishing boats in question were not engaged in interstate commerce, nor yet in foreign commerce, both of which are forbidden to United States fishing vessels. All were navigated through state waters into the high seas, from which they returned into state waters with their catch. Thus tax problems related to interstate carriers or foreign carriers are not involved. (Cf. Scandinavian Airlines System, Inc. v. County of Los Angeles (1961) 56 Cal.2d 11, 14 Cal.Rptr. 25, 363 P.2d 25.) The fishing vessels of appellants might deliver fish to ports than in Humboldt County. There is no specific claim that they did so in the tax year 1968. If apportionment was necessary (cf. Flying Tiger Line, Inc. v. County of L. A. (1958) 51 Cal.2d 314, 333 P.2d 323), it has been waived by failure to assert it (Star-Kist Foods, Inc. v. Byram, supra, 241 Cal.App.2d 313, 319, 50 Cal.Rptr. 381).

All of the boats concerned are part of a fishing fleet, operating on the high seas off the Oregon and California coasts. All of the appellants are licensed as commercial fishermen by the State of California. All boats of the fleet, including the plaintiffs', during the tax year delivered fish to Eureka canneries, pursuant to previous orders. Some of plaintiffs' boats delivered fish also in other ports, depending upon where the fish were taken.

The defendants stipulated, and evidence was convincing, that there was no manner nor thing in the way plaintiffs' boats are operated which differed from the operation and activities of California registered boats. No intrinsic physical differences between the two groups of fishing boats themselves was asserted. Plaintiff Krasch's boat was registered in Alaska. Federal registration (46 U.S.C. § 18) of all other boats of the plaintiffs herein was in Oregon.

No claim is made that the states of federal registry made any levy on any of these boats in 1968, although they had in previous years. No constitutional exemption is claimed.2

To state taxing authorities, the federal registration of a fishing boat is only evidentiary. Registration3 is required to be made with the collector of the district wherein is located the port to which it belongs (46 U.S.C. § 17) ‘which port shall be deemed to be that at or nearest to which the owner, if there be but one, or if more than one, the husband or acting and managing owner of such vessel, usually resides.’ (46 U.S.C. § 17; cf. County of Los Angeles v. Craig (1940) 38 Cal.App.2d 58, 100 P.2d 818.)

‘Usual residence,’ of course, fixes domicile and therefore, the state of registry may accept the registration as fixing domicile and hence establishing taxability of the vessel there.4

Respecting Revenue and Taxation Code, section 227, respondents urge that the Legislature's classification will not be overthrown by the courts unless palpably arbitrary. It is said that a classification is not invalid under equal protection standards, if any set of facts that can reasonably be conceived would sustain the distinction. But a stricter standard is applied to testing suspect classifications, or involving fundamental interests, than as to those not suspect nor involving fundamental interests. (Estate of Horman (1971) 5 Cal.3d 62, 75, 96 Cal.Rptr. 433, 485 P.2d 785.)

Considerable liberality has been afforded to classification, where the issue has been whether an enactment was or was not a special, rather than a general law. But since taxation is in invitum, a compulsory burden placed on the individual for the common good, a fundamental interest is involved. (People v. Mahoney (1939) 13 Cal.2d 729, 739, 91 P.2d 1029.)

Where his burden is made 24 times as much as that imposed upon his fellows in relation to their comparable property, it certainly is suspect.

Nothing inherent in such registry out of state appears to justify an assessment 24 times as great as that imposed upon other entirely comparable boats, operating side by side for the same purposes. Burdens imposed upon federally licensed fishing boats pro tanto hamper the fisheries. Unequal burdens on instrumentalities of interstate commerce are illegal, although nondiscriminatory local taxation is permitted. (Gloucester Ferry Co. v. Pennsylvania (1884) 114 U.S. 196, 217, 5 S.Ct. 826, 29 L.Ed. 158; People v. Alaska Pacific S. S. Co. (1920) 182 Cal. 202, 207, 187 P. 742.) By analogy, discriminatory local taxation upon fishing boats is prohibited to the states. (Toomer v. Witsell (1948) 334 U.S. 385, 395–396, 398, 403, 68 S.Ct. 1156, 92 L.Ed. 1460.)

The trial court found ‘the Legislature could have reasonably intended to ease or eliminate the burden of county tax assessors in California to determine if vessels documented outside of California were taxable locally. * * * There may be other reasonable explanations for the enactment of § 227 of the Revenue and Taxation Code.’

In other words, those registered from the port of Eureka were easier to catch. Administrative convenience is not a valid reason for the discriminatory classification. (Estate of Legatos (1969) 1 Cal.App.3d 657, 662, 81 Cal.Rptr. 910 (hg. den.), and cases cited.) The court's finding has no evidence in the record to support it and the section itself rebuts it. The burden on the assessor is not abated; he is required to determine the actual cash value of all boats with a local tax situs; and only afterward is he to reduce the valuation to one percent as provided in section 227 as to the boats of California registry. All fishing boats can be identified by the state fishing licenses granted, and the local cannery contracts they have. The certificate of registration at the point of registry is required to be carried on the boat, and can be seen there, if the data it contains is pertinent and productive to valuation. The taxpayers themselves are to furnish their statement of taxable property to the assessor. (Rev. & Tax. Code, § 441; Cal.Const., art. XIII, § 8.) They are to completely reveal their taxable personal property (Rev. & Tax. Code, §§ 442, 445) as of the first day in March (Rev. & Tax. Code, § 2192) and the assessor may require an affidavit as to residence (Rev. & Tax. Code, § 453). Making of a false statement is a misdemeanor (Rev. & Tax. Code, § 461), and so is a refusal to make available information regarding their property (Rev. & Tax. Code, § 462).

The real purpose of section 227 is more evident, that of favoring the local registered owner. (Cf. County of Los Angeles v. Craig, supra, 38 Cal.App.2d 58, 100 P.2d 818; Smith-Rice Heavy Lifts, Inc. v. County of Los Angeles, supra, 256 Cal.App.2d 190, 197, 63 Cal.Rptr. 841.) But in actuality registered owners are not more local than any resident nonregistered owner whose property also has a tax situs in the county. Under similar circumstances, local taxes have been held to violate the privileges and immunities clause. (Lassen County v. Cone (1887) 72 Cal. 387, 14 P. 100.)

The disparity here is so gross it is palpably arbitrary and discriminatory, with no distinction of substance to support different treatment. The statute on its face intends the arbitrary discrimination. (Cf. Wheeling Steel Corp. v. Glander (1949) 337 U.S. 562, 69 S.Ct. 1291, 93 L.Ed. 1544.) Thus, equal protection of the laws is denied. (Cf. Millbrook Farm v. Watson (1968) 264 Cal.App.2d 512, 517–518, 70 Cal.Rptr. 745, citing Snowden v. Hughes (1944) 321 U.S. 1, 9, 64 S.Ct. 397, 88 L.Ed. 497.)

It is obvious that where a tax is levied upon property that requires valuation, inequality of taxation is produced as surely by inequality of valuation as by inequality in the rate of tax. (Los Angeles etc. Co. v. County of L. A. (1912) 162 Cal. 164, 168, 121 P. 384; Dawson v. County of Los Angeles (1940) 15 Cal.2d 77, 98 P.2d 495; Gottstein v. Gray (1944) 66 Cal.App.2d 587, 152 P.2d 742.)

As our Supreme Court has said, in another connection, ‘In making this distinction the Legislature rested squarely, though mistakenly, on its power to classify ‘personal property.'5 There is no suggestion of a legislative finding that the distinction reflects actual differences in the value of the interests involved, and no such finding could reasonably be made. * * *’ (Forster Shipbldg. Co. v. County of L. A. (1960) 54 Cal.2d 450, 458, 6 Cal.Rptr. 24, 28, 353 P.2d 736, 740.)

‘But the Legislature cannot set aside the constitutional provision declaring that ‘[a]ll property * * * shall be taxed in proportion to its value’ (Art. XIII, § 1) by requiring the assessment of property at less than its full cash value.' (Eisley v. Mohan (1948) 31 Cal.2d 637, 645, 192 P.2d 5, 10.)

The assessments levied and taxes imposed by Humboldt County are for county and city purposes.

In the tax year, California Constitution, article XI, section 12, provides that ‘Except as otherwise provided in this Constitution, the Legislature shall have no power to impose taxes upon counties, cities, towns or other public or municipal corporations, or upon the inhabitants or property thereof, for county, city, town, or other municipal purposes, but may, by general laws, vest in the corporate authorities thereof the power to assess and collect taxes for such purposes.

‘All property subject to taxation shall be assessed for taxation at its full cash value.'6 (Emphasis added.)

In chartered cities, such as Eureka, the assessment and collection of taxes is a municipal affair, and pro tanto, removed from control of the Legislature. (Cal.Const., art. XI, § 5, formerly Cal.Const., art. XI, § 8; Century Plaza Hotel Co. v. City of Los Angeles (1970) 7 Cal.App.3d 616, 87 Cal.Rptr. 166; City of Glendale v. Trondsen (1957) 48 Cal.2d 93, 98, 308 P.2d 1.)

It is therefore apparent under Revenue and Taxation Code, section 227, that whereas the assessor in the first instance performs his duty,7 a direction by the Legislature to abate this figure fixing one percent of full cash value as the basis for taxation of California registered boats, violates the constitutional requirement of then article XI, section 12; and the Legislature thereby abrogates to itself a taxing function for local purposes, in further contravention of article XI, section 12.8 Constitutional requirements in regard to taxation are mandatory. (McClelland v. Board of Supervisors (1947) 30 Cal.2d 124, 128, 180 P.2d 676, cert. den. 332 U.S. 823, 68 S.Ct. 164, 92 L.Ed. 399.)

For this reason, and the others heretofore advanced, we conclude that the provision for one percent assessment is invalid as to boats, documented in California, in Humboldt County. The court found, ‘9. The Humboldt County Assessor in 1968 assessed each of the plaintiffs' vessels at twenty-four percent (24%) of the market value of each boat.’

Article I, section 21, of the California Constitution provides, ‘No special privileges or immunities shall ever be granted which may not be altered, revoked, or repealed by the Legislature; nor shall any citizen, or class of citizens, be granted privileges or immunities which, upon the same terms, shall not be granted to all citizens.’

Reduction of the assessed actual cash value to one percent is a special privilege granted to one class of citizens which upon the same legally comparable facts has been denied to appellant citizens.

The statute which operates to require a tax payment of 24 times as much as those similarly situated, upon the same actual cash value, and upon boats similarly operating, produces unlawful discrimination and want of equal protection of the laws. (U.S.Const. amend. 14, § 1; Cal.Const., art. I, §§ 11, 21.)

The taxpayers who appealed to the Board of Equalization are not precluded from raising issues of law here, since the Board of Equalization ruled solely on a question of law. (Flying Tiger Line, Inc. v. County of L. A., supra, 51 Cal.2d 314, 322, 333 P.2d 323.)

Taxpayer Krasch, whose boat was registered in Alaska, did not appeal to the Board of Equalization, and is therefore barred from recovering the excess taxes paid on his property. (Security-First Nat. Bk. v. County of L. A. (1950) 35 Cal.2d 319, 321, 217 P.2d 946; Stenocord Corp. v. City etc. of San Francisco (1970) 2 Cal.3d 984, 988, 88 Cal.Rptr. 166, 471 P.2d 966.)

In Sioux City Bridge v. Dakota County (1922) 260 U.S. 441, 445–446, 43 S.Ct. 190, 67 L.Ed. 340, the leading case, the Supreme Court held that intentional and arbitrary assessment of the property of one owner, at its true value pursuant to the state Constitution and laws, while all other property of like nature is systematically assessed much lower, denies that owner the equal protection of the laws, under the Fourteenth Amendment. Equality of burden being the paramount principle, it was held such an owner is entitled to have his assessment reduced to the common level, where practically or legally reassessment of the undervalued property is not possible by judicial proceeding; although such reduction departs from the requirements of the statute. (Simms v. County of Los Angeles (1950) 35 Cal.2d 303, 217 P.2d 936; Security-First Nat. Bk. v. County of L. A., supra, 35 Cal.2d 319, 321, 217 P.2d 946.)

Assessment under the provisions of Revenue and Taxation Code, section 227, being deliberate and intentional, and arbitrary, the constitutional principle of the Sioux City case entitles plaintiffs to the relief sought.

The Judgment is affirmed as to appellant Krasch. As to the remaining appellants, the judgment is reversed, with directions to enter judgment for them, as prayed. They shall receive their costs on appeal.



1.  The United States Supreme Court, in cases including St. Louis v. The Ferry Company (1870) 78 U.S. (11 Wall.) 423, 20 L.Ed. 192; Morgan v. Parham (1872) 83 U.S. (16 Wall.) 471, 21 L.Ed. 303; Old Dominion Steamship Co. v. Virginia (1905) 198 U.S. 299, 25 S.Ct. 686, 49 L.Ed. 1059; Ayer & Lord Co. v. Kentucky (1906) 202 U.S. 409, 26 S.Ct. 679, 50 L.Ed. 1082; and Southern Pacific Co. v. Kentucky (1911) 222 U.S. 63, 32 S.Ct. 13, 56 L.Ed. 96, indicated that the place of enrollment was immaterial in state taxation, if by reason of their operations, the actual residence of the owners, etc., it could be said that a tax situs had acquired in addition to, or to the exclusion of, the domicile established by registry and enrollment.In Ott v. Mississippi Barge Line (1949) 336 U.S. 169, 69 S.Ct. 432, 93 L.Ed. 585, over a vigorous dissent, those cases were overruled as to interstate commerce. (Consult also, Standard Oil Co. v. Peck (1952) 342 U.S. 382, 72 S.Ct. 309, 96 L.Ed. 427.) Though vessels were registered in an Ohio port, they were out of Ohio most of the taxable year, engaged in interstate commerce. Even though there was domicile through registry in Ohio, the Ohio ad valorem property tax was held invalid because not fairly apportioned between the commerce carried on in Ohio, and in upriver ports. Based upon that decision, in Scandinavian Airlines System, Inc. v. County of Los Angeles (1961) 56 Cal.2d 11, 30, 14 Cal.Rptr. 25, 36, 363 P.2d 25, out California Supreme Court stated as a settled California principle: ‘Ocean-going vessels, plying international waters, engaged in either interstate or foreign trade, even when owner by residents or citizens or this country, may not be taxed by any jurisdiction other than of their home port * * *.’ (Consult: Star-Kist Foods, Inc. v. Byram, supra, 241 Cal.App.2d 313, 50 Cal.Rptr. 381; cf. Olson v. San Francisco (1905) 148 Cal. 80, 82 P. 850; California etc. Co. v. City & County (1907) 150 Cal. 145, 88 P. 704; Smith-Rice Heavy Lifts, Inc. v. County of Los Angeles (1967) 256 Cal.App.2d 190, 63 Cal.Rptr. 841; cf. Martinac v. County of San Diego (1967) 255 Cal.App.2d 175, 177–178, 63 Cal.Rptr. 64.)

2.  A constitutional exemption of vessels from taxation is found in California Constitution, article XIII, section 4, which pertains to vessels of over 50 tons burden engaged in transportation of freight or passengers. This does not apply to commercial fishing boats despite the fact that they transport their own cargoes of fish. (Dragich v. Angeles (1939) 30 Cal.App.2d 397, 399, 86 P.2d 669; Crivello v. County of San Diego (1942) 50 Cal.App.2d 713, 123 P.2d 899.) It was held applicable where the ‘passengers' were sport fishermen, carried to the fishing banks. (Alalunga Sport Fishers, Inc. v. County of San Diego (1967) 247 Cal.App.2d 663, 666–667, 55 Cal.Rptr. 875.) Of course, the boats must be of the required tonnage to secure exemption.

3.  ‘Registered’ includes ‘enrolled’ and ‘licensed.’ (Kiessig v. County of San Diego (1942) 51 Cal.App.2d 47, 51–52, 124 P.2d 163.)Registry at a home port, under federal law, serves not only to fix the nationality of the fishing vessel, but the certificate granted empowers the vessel and its owner to engage in fishing the high seas (46 U.S.C. §§ 263, 325). The registration is a vehicle by which the United States can enforce its laws for inspection for vessels, navigation and its customs laws. (46 U.S.C. § 364.) Registry in Oregon or California ports is within the same federal collector's district (46 U.S.C. § 293).The form of enrollment is prescribed by 46 U.S.Code section 259. The name and residence of the owner or owners is required to be given, as well as of the master, and ship measurement and nautical classification. The owner is required to be a United States citizen. The form of license is prescribed by 46 U.S.Code section 263.

4.  Oregon did not tax any of these vessels in 1968, despite registry at Coos Bay.

5.  California Constitution, article XIII, section 14, amended in 1933, conferred such power for taxation by the state. The same constitutional amendment proposed by Senate Constitutional Amendment No. 30 (Stats.1933, ch. 63, p. 3072) added to then article XI, section 12, the requirement that as to local taxation property must be assessed at its full cash value. (Estate of Simpson (1954) 43 Cal.2d 594, 602, 275 P.2d 467; Northwestern Mut. Life Ins. Co. v. Johnson (1936) 8 Cal.2d 42, 46, 63 P.2d 814; cf. Smith-Rice Heavy Lifts, Inc. v. County of Los Angeles, supra, 256 Cal.App.2d 190, 199, 63 Cal.Rptr. 841.) Each section has its application. When it was urged that article XI, section 12, inhibited the Legislature from enactment of the Motor Vehicle License Fee Act, the court specifically refrained from passing upon their interrelationship (Ingels v. Riley (1936) 5 Cal.2d 154, 164–165, 53 P.2d 939) and the Constitution was amended in 1938 to permit state taxation of vehicles and distribution of proceeds to the local agencies. (Cal.Const., art. XXVI) to avoid the constitutional restrictions of article XI, section 12; and article XI, section 12, was amended to indicate that ‘Except as otherwise provided in this Constitution,’ the Legislature cannot levy a tax for municipal purposes.

6.  The constitutional requirement is not violated, where pursuant to the paramount consideration of equality, the assessments are on a uniform fractional percentage of ‘full cash value.’ (Michels v. Watson (1964) 229 Cal.App.2d 404, 40 Cal.Rptr. 464, reviewing the tax history and the authorities; County of Sacramento v. Hickman (1967) 66 Cal.2d 841, 852, 59 Cal.Rptr. 609, 428 P.2d 593, citing inter alia, Rittersbacher v. Board of Supervisors (1934) 220 Cal. 535, 543–544, 32 P.2d 135.)

7.  The duties of the assessor are summarized in County of Sacramento v. Hickman, supra, 66 Cal.2d 841, 846, 59 Cal.Rptr. 609, 428 P.2d 593.

8.  Pro tanto, in contravention of article XI, section 5, and any applicable freeholders' charter. (Eureka City Charter amendments, Stats. 1917, § 43, subpara. 54, p. 1750; Stats. 1949, § 77, p. 2932.) Under charter provisions, freeholders' charter cities like Eureka, in levying taxes, may adopt and utilize valid county assessment and tax collection procedures, which thereby become those of such city (cf. Los Angeles County v. Superior Court (1941) 17 Cal.2d 707, 713, 112 P.2d 10; Doctors General Hospital v. County of Santa Clara (1961) 188 Cal.App.2d 280, 289, 10 Cal.Rptr. 423) and all cities are authorized to do so: Government Code, section 51500 et seq. The county assessments thereupon become those of the city: Government Code, sections 51504, 51334, 51544. (Consult also: Rivera v. City of Fresno (1971) 6 Cal.3d 132, 135, 98 Cal.Rptr. 281, 490 P.2d 793; Forster Shipbldg. Co. v. County of L. A. (1960) 54 Cal.2d 450, 6 Cal.Rptr. 24, 353 P.2d 736.)

DAVID, Associate Justice.* FN* Assigned by the Chairman of the Judicial Council.

TAYLOR, P. J., and KANE, J., concur.

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