STERLING REALTY CO v. RELFE (1942)

This is an action brought by the plaintiff to obtain a decree quieting its title to seventy–five separate parcels of land in the City and County of San Francisco. The complaint was in the ordinary form of an action to quiet title. The City and County, Department of Public Works, and W. H. Worden as director of the Department of Public Works, filed an answer, and asked that any decree rendered should provide that the properties involved be held subject to certain easements of the City and County of San Francisco. The defendants Emily Relfe and Federal Construction Company, a corporation, filed a separate answer. They interposed numerous denials to the allegations contained in the complaint and pleaded a large amount of new matter. The trial court made findings in favor of the defendants and from the judgment entered on those findings the plaintiff has appealed.

In 1918, San Francisco adopted an ordinance known as Street Improvement Ordinance, being Ordinance No. 4720, New Series. On the 21st day of June, 1926, the Board of Public Works passed a resolution expressing its intention to recommend to the board of supervisors many improvements to be made to a number of streets, avenues, lanes, etc., located in the Sunset District and known as Golden Gate Heights. Thereafter such proceedings were had that the said improvements were duly constructed in accordance with the provisions of said ordinance. In that connection assessments were duly made, contracts were let, materials were furnished, and the work was done and was thereafter duly and regularly accepted. As a part of said proceedings bonds were executed on February 4, 1928. One bond was issued against each separate parcel of land. The Federal Construction Company became the owner and holder of said bonds. Each bond provided for semi–annual payments of interest and a part of the principal. Payments were made down to and including August 4, 1937. Pursuant to the terms of said bonds and on the 4th day of February, 1933, there became due and payable the eleventh semi–annual installment of principal on said bonds and the tenth semi–annual payment of interest. Said installments were not paid and no subsequent installments were paid. On March 5, 1937, Federal Construction Company served written demands on the Department of Public Works of the City and County of San Francisco to give notice and advertise a sale of the lots described in said bonds. Said notice was duly given, and said lots were duly sold to Emily Relfe. Thereafter the Department of Public Works made, issued and delivered to defendant Emily Relfe one original certificate of sale covering each and all of the parcels of land described in plaintiff's complaint. The original certificate was duly recorded in the office of the county recorder and a duplicate copy was filed in the office of the Department of Public Works. The certificate of sale was in appropriate form referring to said Street Improvement Ordinance of 1918, describing the parcels sold, and containing the name of defendant Emily Relfe as the purchaser.

As stated above in its complaint the plaintiff claimed to be the owner in fee of all of the lots and it alleged that the defendants' claim was without any right whatsoever and that they had no estate, right, title, interest or lien whatsoever in or to said lands. The sale above mentioned involved seventy–eight parcels of land. Three of the parcels were redeemed and at this time the plaintiff makes the claim that the Department of Public Works issued to the purchaser one certificate whereas it should have issued seventy–eight certificates, and that the one certificate is void.

The point is not a new one in this state. In Stege v. City of Richmond, 194 Cal. 305, 228 P. 461, after the sale was made the lots were grouped. For example, lots 23, 24 and 25 of Block M were grouped and sold as one item. After examining into the point the court held that the certificate was invalid. It did not hold that it was void.

However, the fact that the certificate in the case at bar was invalid is not determinative of this action. The defendant alleged and the trial court found that the plaintiff has not offered in its complaint, nor at any time or at all, to pay the reasonable value of the street improvements constructed by defendant Federal Construction Company. That omission is fatal to the right of the plaintiff to come into a court of equity and ask for relief.

In Stege v. City of Richmond, supra, at 194 Cal. page 318, 228 P. at page 466 the court said: “But the fact that the sale of appellants' property was invalid would not necessarily entitle the appellants to a decree quieting their title under the circumstances here shown. By appropriate proceedings the council acquired jurisdiction to order the work performed. In fact, all the proceedings leading up to and including the issuance of the bonds were valid. The work has been performed and the lands have been benefited by the improvements and the expenditure incident thereto. The plaintiffs in this equitable action seek to relieve the lands from the burden of the assessment for such benefits without paying or offering to pay their just portion of the cost of the improvements.” Then, after citing a number of authorities, the court continued as follows: “The later case of Hayne v. San Francisco, 174 Cal. 185, 162 P. 625, was an action to quiet title. The defendant asserted a lien on the land by virtue of certain special assessments levied to pay the costs of the construction of a tunnel. The plaintiffs did not pay or offer to pay the assessments. The court said: ‘As we find the assessment to be valid, the property of the plaintiffs is justly liable for its due proportion thereof. In such cases the plaintiff is not entitled to any relief in a court of equity unless he shall pay, or offer to pay, the amount actually due upon the assessment against his property. As was said in Ellis v. Witmer, 134 Cal. [[[[249] 253, (66 P. [301] 303), “This being the case they cannot successfully invoke the assistance of a court of equity against the irregularities in the sale complained of, unless on the condition of paying what is due from them. Here no such condition has been imposed by the court, nor is there an offer in the complaint to pay what is due. The plaintiffs were therefore not entitled to relief.” ’ ” It follows that the plaintiff was not entitled to relief in a court of equity.

In reply to the point last stated the plaintiff says: “The question of doing equity upon which respondent (Federal Construction Company) dwells is really not involved. As appellant brings out in its opening brief herein, there is no contention on the part of appellant that the defendant Federal Construction Company should receive nothing for its work and labor done and materials furnished in the making of the improvements mentioned in the answer of defendant and respondent herein, but it is the contention of appellant that the particular sale heretofore made is void by reason of the single certificate of sale evidencing the proceedings and that such certificate of sale should be set aside. There is no question that proceedings may be brought to foreclose the lien of the assessment itself, but appellant should be afforded the opportunity to redeem one or two or any or all of the parcels of land sold under the improvement bonds as it may see fit.” Those statements are incorrect statements of fact and also of conclusions of law. In its complaint the plaintiff challenged all rights of the Federal Construction Company. After putting that company to its defense in this proceeding the plaintiff now asserts that it is claiming only that the certificate was void. Merely because it has reduced the extent of its claim does not bring it within the rule that he who seeks equity must do equity. Professor Pomeroy says: “The meaning is, that whatever be the nature of the controversy between two definite parties, and whatever may be the nature of the remedy demanded, the court will not confer its equitable relief upon the party seeking its interposition and aid, unless he has acknowledged and conceded, or will admit and provide for, all the equitable rights, claims, and demands justly belonging to the adversary party, and growing out of or necessarily involved in the subject–matter of the controversy.” 1 Pomeroy's Eq.Jur., sec. 385. As shown above the certificate was not “void,” it was invalid. If in good faith the plaintiff desired to redeem, all it had to do was to make the proper tender. If thereafter the defendants had not delivered to it a certificate in proper form the courts would have compelled them to do so. If a proper certificate had not been issued in the first instance the courts would have ordered the first certificate cancelled and a proper one issued in its place. Cohn v. Federal Construction Co., 171 Cal. 547, 552, 153 P. 916.

The eleventh installment of principal and the tenth installment of interest upon each of the bonds involved became due and payable on the 4th day of February, 1933. The Board of Public Works made its demand under the power of sale on March 7, 1937, over four years after those installments fell due. Later the sale was had for all installments remaining due and unpaid, including those mentioned above. The plaintiff complains that the sale was made for an excessive amount––that said two installments were barred. As herein recited the plaintiff never at any time made any offer to do equity. In this proceeding to quiet title it is not entitled to present the point. Ephraim v. Nevada & California Land & Live Stock Co., 9 Cir., 282 F. 610. On page 612 of 282 F. the court said: “It is fundamental that in such a case the complainant must offer to do that which is equitable. The offer is obligatory, notwithstanding that the statute of limitations may have run against the debt. Upon these principles the authorities are in accord. 5 R.C.L. 664. * * * Burns v. Hiatt, 149 Cal. 617, 87 P. 196, 117 Am.St.Rep. 157.” See, also, 16 Cal.Jur. 600.

The plaintiff asserts that in a proceeding properly conducted under the provisions of the Street Improvement Ordinance two liens are created, (1) the lien of the assessment and (2) the lien of the bonds. It then argues that the doctrine quoted from Stege v. City of Richmond, supra, is inapplicable in the case at bar. That argument is not convincing. An examination of the case cited shows that there, as here, the record shows the same facts as to the number of the liens. The examination also shows that in the Stege case, as in this case, there was no excess of jurisdiction and that the proceedings down to and including the issue of the bonds was regular and that the number of certificates and the application of the statute of limitations were merely incidental matters. To attack either of the two questions last mentioned in a court of equity it is clear that a plaintiff must first do, or offer to do, equity.

The judgment appealed from is affirmed.

STURTEVANT, Justice.

NOURSE, P. J., and SPENCE, J., concurred.