RANCHO SANTA ANITA v. CITY OF ARCADIA (1941)

Plaintiff sued to recover taxes levied by the defendant for municipal purposes for the fiscal year 1937–8. The cause was tried on the second amended complaint to which the defendant had interposed a general and special demurrer. This was sustained without leave to amend, and the order recites that the plaintiff did not request such leave. The plaintiff's appeal from the judgment resulting from this order is based upon a bill of exceptions, and the main issue is whether the complaint states a cause of action.

It is the contention of appellant, as outlined in its pleading, that the taxes were illegally levied because the city failed to comply with the provisions of the Political Code requiring the adoption of a budget antecedent to the levy; that the taxes levied were aimed to produce a revenue far in excess of its needs for municipal purposes, and that the rates were fixed without regard to available cash and known incoming revenues; that a portion of the taxes was levied ostensibly to meet interest and principal on outstanding municipal bonds, but actually provided a revenue far in excess of the needs for those purposes and designed for purposes other than those contemplated by the law under which the bonds were issued.

The argument in support of the first contention presents a question of statutory construction. The defendant is a municipal corporation of the sixth class having no independent charter, and hence one governed by the general laws. Section 871 of the Municipal Corporations Act (Deering, Gen.Laws, Act No. 5233) provides that the city council “shall have the power, and it shall be its duty, to provide by ordinance a system for the assessment, levy and collection of all city taxes not inconsistent with the provisions of this chapter.” Acting under this authority the city of Arcadia, in 1913, adopted ordinance No. 33 in which section 68 reads as follows: “All provisions of Title IX of the Political Code of the State of California in regard to revenue and taxation which are not inconsistent with the provisions of this Ordinance shall apply to and govern all matters of revenue and taxation which are not herein specifically provided for, substituting where necessary the proper city officer for any county officer therein referred to.” In this connection the complaint alleges that there are no provisions of said ordinance inconsistent with the provisions of Title IX of the Political Code, that the city has continuously operated under the provisions of that title, and has not adopted any other ordinance or system contrary thereto. The respondent concedes these facts, but the parties differ on this question—whether the reference to Title IX of the Political Code is an adoption of the provisions of that title as they read in 1913, or whether it includes the amendments made in the intervening time. If the ordinance be interpreted as adopting the title with all its amendments it must be conceded that the complaint states a good cause of action.

Particular attention is directed to section 3714 of the code, which is a part of Title IX. The last amendment to that section prior to the adoption of the ordinance was in 1895. At that time it consisted of ten lines in the printed code. Since the adoption of the ordinance it has been amended five times until it has now reached six and one-half pages of printed matter covering a complete system for the preparation and adoption of an annual budget showing the probable revenues and required expenditures of each office and department. Subdivision five provides that the annual tax rate shall be fixed in such amount as will “raise the amount of the estimated expenditures as finally determined”; and that all taxes shall be levied in specific sums, and “shall not exceed the amount specified in the budget.” It is appellant's contention that the taxing body disregarded all these provisions of the amended section. Respondent concedes this but argues that it is bound by the provisions of the section as they read when the ordinance was adopted, and that none of the subsequent amendments are controlling.

A clear statement of the general rule of the effect of the adoption of a statute by reference is found in 59 Corpus Juris, p. 1060, reading: “As a rule the adoption of a statute by reference is construed as an adoption of the law as it existed at the time the adopting statute was passed, and therefore is not affected by any subsequent modification or repeal of the statute adopted. * A well-established exception to, or qualification of, the general rule exists, however, where the reference in an adopting statute is to the law generally which governs the particular subject, and not to any specific statute or part thereof; in such case the reference will be held to include the law as it stands at the time it is sought to be applied, with all the changes made from time to time, so far at least as the changes are consistent with the purpose of the adopting statute.” (Italics ours.) To the same effect see 25 R.C.L., p. 908; 23 Cal.Jur., p. 685; Sutherland, Statutory Construction, 2d Ed., p. 789.

The exception to the general rule was recognized in the early case of Kirk v. Rhoads, 46 Cal. 398, 402, which involved a provision of an act to incorporate the city of Sacramento reading: “All the provisions of law and force regulating elections * shall apply to the election of city officers.” It was held that each city election was to be governed by the general election laws as they existed at the time of the election, and not merely by those existing at the time the incorporating act was passed. In Ramish v. Hartwell, 126 Cal. 443, 446, 58 P. 920, the court had under consideration provisions of a street improvement act which declared that sales of lots upon delinquent assessments should be conducted “in all respects the same as are provided by law for the collection of delinquent State and county taxes.” St.1893, p. 33, § 5. The court held that the amendments to the general tax laws requiring sales to the state were so inconsistent with the street improvement act that they would entirely defeat its purposes. For that reason it was held that the adopting act included the tax statute as it read at the time of adoption, and not as amended. In Vallejo, etc., R.R. Co. v. Reed Orchard Co., 177 Cal. 249, 254, 170 P. 426, the rule and the exception stated are both recognized and approved. There the adopting statute referred specifically to section 1254 of the Code of Civil Procedure, and it was held not to have contemplated amendments to that section. Bolton v. Terra Bella Irr. Dist., 106 Cal.App. 313, 321, 289 P. 678, 682, involved section 3785b of the Political Code which authorized a tax deed whenever a sale had been made “in pursuance of section 3771 of this code.” The court reviewed numerous authorities on adoptive legislation and followed the rule of Ramish v. Hartwell, supra, in holding that, though a specific statute had been referred to, the entire purpose of the adopting statute would be defeated if the specific statute were to be held to have been adopted in haec verba. Many of these decisions rest on the question of legislative intent and that seems to be the purport of the decisions generally, that whether the adopted statute is referred to generally or specifically, the intention of the legislature as disclosed in the adopting statute is the basis upon which the decision must be made.

With this in mind we may turn to section 68 of the ordinance. It reads: “All provisions of Title IX of the Political Code of the State of California in regard to revenue and taxation which are not inconsistent with the provisions of this ordinance shall apply to and govern all matters of revenue and taxation which are not herein specifically provided for, substituting where necessary the proper city officer for any county officer therein referred to.” It makes all provisions of the title applicable which are not inconsistent. It includes the entire title, which in turn includes everything in the Political Code relating to revenue and taxation. The title begins with section 3607 and ends with section 3900a. It was first enacted in 1872 and has been amended at every regular session of the legislature since that date. The amendments to section 3714 requiring a budget are not inconsistent with any of the provisions of the ordinance. Hence the case does not call for any fine distinctions of judicial interpretation. There is no basis upon which a court could rule that the city council did not know of these periodical amendments to the code and that, knowing them not, it intended to take the whole title just as it read in 1913. For these reasons the conclusion follows that the ordinance contemplated that, in matters of revenue and taxation, the city was to be governed by the general rules found in the Political Code as experience and economic conditions required changes and modifications from time to time. The complaint alleges that none of the provisions of section 3714 of the Political Code was complied with, and for that reason alone it states a good cause of action. Otis v. Los Angeles County, 9 Cal.2d 366, 70 P.2d 633.

The respondent refuses to defend the special demurrer because appellant has not assumed the burden of attacking it. We have examined all the grounds urged, and we find no merit in them.

The pleading of the municipal ordinance, as in conformance with the terms of section 459 of the Code of Civil Procedure. The allegation that no other ordinance was in conflict with the one pleaded was not strictly a conclusion of law, but was a pleading of a fact as well. It was urged in this demurrer that the complaint contained several causes of action which had not been separately stated in that it pleaded thirty-two asserted irregularities and illegalities of the city council in computing, fixing and levying the taxes for eight named general and special funds. Generally speaking these irregularities all related to this asserted non-compliance with the provisions of section 3714 of the Political Code. The respondent freely confesses that “If that section, as it existed in 1937, when the disputed levies were made, is applicable to defendant, * it has ‘most flagrantly violated its mandate,’ because neither in the year in question or in any other year since this section was amended to include budget provisions has it ever made any pretense of following such budget provisions.” This being so, we are unable to perceive how the issue could be presented to the trial court any better by segregation of the complaint into separate causes of action for every one of the acts of non-compliance with the section. The applicability of this section is the meat of the litigation and that issue can be determined without useless and repetitious pleading.

The asserted grounds of ambiguity and uncertainty relating to the failure to plead the statute under which certain funds were created by the city, the unpaid principal and annual interest required on bonds and sinking funds issued and maintained by the city, and the balances existing in the various general and specific funds, all relate to matters which are primarily within the knowledge of the city and require no more specific pleading. Other grounds urged in the special demurrer relate to the form and manner of pleading the thirty-two asserted irregularities and admitted failures of the city council to comply with the terms of the code section. If any detail in the pleading of these irregularities is omitted, it is within the special knowledge of the respondent, and the charge of ambiguity and uncertainty is not well founded. For these reasons if the judgment appealed from is based upon the ruling upon the special demurrer it was a plain abuse of discretion upon the part of the trial court to sustain the demurrer without leave to amend. McCune v. Harris, 9 Cal.App.2d 719, 721, 50 P.2d 837; 21 Cal.Juris. 120.

The judgment is reversed.

NOURSE, Presiding Justice.

We concur: STURTEVANT, J.; SPENCE, J.