BRILL v. LOS ANGELES COUNTY (1939)

The several plaintiffs in these five cases sued to recover taxes paid under protest. From a judgment for defendants on the pleadings in each case the plaintiffs have appealed, and have by stipulation consolidated all cases for hearing upon the briefs filed in the Steehler case. The single question presented for decision is whether it is necessary under the provisions of the Los Angeles city charter to present a claim to the city as a condition precedent to the maintenance of an action to recover municipal taxes paid under protest.

The taxes were assessed and collected by the proper officials of the County of Los Angeles pursuant to authority theretofore delegated by the city under provisions of article 11 of section 6 of the Constitution. They were paid under protest conformably with the provisions of section 3819 of the Political Code, and thereupon transmitted to the city, as required by section 16 of article 11 of the Constitution. The actions to recover such taxes were brought against both county and city, but no demand for payment was filed with the city for payment. It is the city's position in this litigation that such demand is required by section 376 of its charter.

An understanding of the question involved requires the quotation of these constitutional and statutory provisions.

Section 6 of article 11 of the Constitution reads in part: “Cities and towns * may, by charter provision or amendment, provide for the performance by county officers of certain of their municipal functions, whenever the discharge of such municipal functions by county officers is authorized by general laws or by provisions of a county charter framed and adopted by authority of this Constitution.” Section 16 of the same article reads: “All moneys, assessments, and taxes belonging to or collected for the use of any county, city, town, or other public or municipal corporation, coming into the hands of any officer thereof, shall immediately be deposited with the treasurer, or other legal depositary, to the credit of such city, town, or other corporation, respectively, for the benefit of the funds to which they respectively belong.”

Section 3819 of the Political Code read when this litigation arose, in part as follows: “At any time after the assessment-book has been received by the tax collector, and the taxes have become payable, the owner of any property assessed therein, * may pay the same to the tax collector under protest, * and when so paid under protest, the payment shall in no case be regarded as voluntary payment. And such owner may at any time within six months after such payment bring an action against the county, in the superior court, to recover back the tax so paid under protest.”

Section 376 of the Los Angeles City Charter reads: “No suit shall be brought on any claim for money or damages against the City of Los Angeles * until a demand for the same has been presented, as herein provided, and rejected in whole or in part.”

Section 2 of the charter provides that the city “shall have the right and power, subject to the restrictions in this charter contained, * to transfer * functions of the city government” to approximate functions of the state or county government.

Section 342 of the charter provides: “Until otherwise provided by ordinance, the city shall continue to use, for purposes of municipal taxation, the county system of assessment and tax collection *.” (All italics ours.)

The ordinance enacted in conformity with these provisions (No. 40302) transfers to the county officials the power of assessment and collection of “taxes levied for municipal purposes” and the sale and redemption of property in cases of nonpayment.

The contentions of the respondents briefly stated are that the city delegated to the proper officials of the county the power to assess and collect its municipal taxes, thereby making these officials special agents of the city. That it did not and could not make the county its agent for any purpose, and that, therefore, the city alone has power to defend, compromise, or pay a judgment for refund of taxes collected by these agents in its behalf. Upon this premise the city accords to the county officials so selected the power to assess and collect and the power to receive payment under protest, but the city insists that any suit to recover taxes so paid must be brought against the municipality subject to the restrictions of the charter relating to presentation of claim for payment.

This contention finds full support in the early case of Farmers etc. Bank v. City of Los Angeles, 151 Cal. 655, 91 P. 795, which involved the precise question arising out of a like provision of an earlier charter of the city. There the Supreme Court, after reviewing numerous cases of the same nature, said that it was the policy of the law as declared in these cases that [page 796] “the public corporation shall always be given an opportunity to pay before being subjected to an action upon any money demand”. As to the application of the charter condition requiring demand before suit to cases involving the recovery of taxes paid under protest the court said, pages 658–659, 91 P. page 797: “The policy of the law applies as well to them as to other demands against a city, and the reasons for the rule when applied to such a claim are as cogent as when applied to any other claim.” And further, “Assuming that the charter provision [adopting the county system of taxation] should be read as making it [Section 3819 of the Political Code] applicable, it must be construed subject to the provisions of the charter as to claims and demands against the city.” (Italics ours.)

The rule of the Farmers Bank case is so directly in point that it must control our decision here. Appellants argued that it has been overruled or so distinguished that it is no longer an authority. This position cannot be maintained. They cite Keyes v. San Francisco, 177 Cal. 313, 173 P. 475, as one case which has rejected the rule. That case involved a provision of the San Francisco charter which merely required that demands must be approved by the supervisors before paid. The court expressly held that this was far from the “sweeping provisions” of the Los Angeles Charter. In this connection the court said, pp. 318, 319, 173 P. page 477: “Respondent cites no case in which it has been held that these provisions of the charter apply to a claim for the repayment of taxes paid under protest. Geimann v. Board of Police Com'rs, 158 Cal. 748, 112 P. 553, the only decision referred to arising under the present charter of San Francisco, was an action by policemen for salaries alleged to be due them. Such demands are specifically named in the charter and are clearly within the sections above quoted, but bear no resemblance to the claim in controversy. Neither can any reliance be placed upon such sweeping provisions as were considered in Farmers' and Merchants' Bank v. City of Los Angeles, 151 Cal. 655, 91 P. 795, and the cases there discussed. McCann v. Sierra County, 7 Cal. 121; People v. Board of Supervisors, 28 Cal. 429; Alden v. Alameda County, 43 Cal. 270; Rhoda v. Alameda County, 52 Cal. 350; Bigelow v. Los Angeles, 141 Cal. 503, 75 P. 111. The cases against the city of Los Angeles turned upon the following section of the charter: ‘No suit shall be brought upon any claim for money or damages against the city of Los Angeles, * until a demand for the same has been presented as herein provided, and rejected in whole or in part. *’ The other cases cited were decided upon the basis of section 24 of the County Government Act (Stats.1855, p. 51) which was repealed by the Political Code. See Lehn v. San Francisco, 66 Cal. 76, 4 P. 965. Section 24 provided that: ‘No person shall sue a county in any case, for any demand, unless he or she shall first present his or her claim or demand to the board of supervisors' for allowance, and the same shall be rejected in whole or in part. Manifestly the sections of the San Francisco charter on the subject of prior demand are not of the sweeping and all-inclusive character of the provisions just quoted.” (Italics ours.)

Appellants cite Birch v. Orange County, 186 Cal. 736, 200 P. 647, as overruling the Farmers Bank Case. We do not so construe it. That was an action to recover taxes under section 3819. The county contended that demand should have been made under section 4075 of the Political Code. The court merely held that the latter section did not purport to declare what demands should be presented, but prescribed the method by which certain claims should be itemized and presented. In commenting on the Farmers Bank Case the court said that the decision was in pursuance of an express declaration that no suit should be brought until a demand had been made. It was said, page 744, 200 P. page 650: “Under earlier decisions in this state the same rule was applied in suits against a county, but these decisions were under a statute which expressly required such presentation to be made to the board of supervisors in all cases before action could be maintained. McCann v. Sierra County, 7 Cal. 121; Alden v. Alameda County, 43 Cal. [270] 272; Rhoda v. Alameda County, 52 Cal. 350; Keyes v. San Francisco, 177 Cal. 313, 319, 173 P. 475. We have no such sweeping requirement at the present time which would hold against a reasonable implication under a special statute to the contrary.” Here it should be noted that both of these decisions have been nullified by the amendment to section 4075 of the Political Code in 1931, St.1931, p. 197, declaring that no action shall be brought on any claim unless demand has first been made.

Finally appellants cite Spencer v. Los Angeles, 180 Cal. 103, 179 P. 163, to the same purpose. But there is less comfort in that than in either of the others. The Spencer Case was a suit to recover a special assessment under a street opening act. On the question at issue the court said, page 119, 179 P. page 170: “It has been decided, and must now be considered as settled, that where the charter of a city provides that demands must be presented to its council or some officer of the city for approval or rejection, and that no payments can be made nor suit be brought thereon until after such presentation and rejection, that the cause of action does not accrue until such presentation has taken place.”

From the foregoing it is obvious that the Farmers Bank Case has not been overruled and that, until overruled, it must be taken as settled law that where the charter or statute requires a demand before suit is filed, such demand is a condition precedent to the action. Cases adhering to the rule are: Crim v. San Francisco, 152 Cal. 279, 281, 92 P. 640; Geimann v. Board of Police Com'rs, 158 Cal. 748, 752, 112 P. 553; Douglass v. Los Angeles, 5 Cal.2d 123, 130, 53 P.2d 353; Dryden v. Board of Pension Com'rs, 6 Cal.2d 575, 580, 59 P.2d 104; and many others which need not be cited.

We cannot, at this late date, argue the question of the intention of the charter framers in the enactment of section 376. It is beside the question that that section appears under the chapter relating to “Finance”. It is identical, in so far as the question here is concerned, with the section which was held applicable to this class of cases in the Farmers Bank Case. This section having been so construed before the adoption of the present charter, the settled rules of decision require the holding that the framers of the present charter enacted this section in the light of the prior judicial construction.

Appellants argue that the rule should not be applied to this case because when the city adopted “the county system” of taxation it waived all charter provisions including section 376. The respondent replies that there was a limited delegation of power in section 342 of the charter which reads: “Until otherwise provided by ordinance the city shall continue to use, for purposes of municipal taxation, the county system of assessment and tax collection.” The system thus continued was that outlined in section 52 of the 1917 charter which was not self executing but required a delegation by municipal ordinance subject to all the “restrictions and limitations” provided in the charter. Section 2 of the present charter. The only ordinance brought to our attention which effects this purpose delegates to the county officials the limited power of assessment and collection of the municipal taxes, and the power to act in the sale and in the redemption of property sold for non-payment. Nowhere does it appear that the city delegated to any county official its important function of determining whether litigation against it should be compromised or contested, or its right to appear and defend in case of contest.

The following principles are well settled: The right to sue a chartered city is statutory, but the right of the city to defend itself against suit comes from the Constitution. These rights have been reasserted by the Los Angeles charter in section 2. They are rights which cannot be delegated to any other body, officer, or individual. Section 13 of article 11 of the Constitution. This power to delegate is strictly limited by the Constitution. Prior to 1914, sections 12 and 13 of this article explicitly prohibited the delegation of the power to assess or collect municipal taxes to anyone other than the corporate authorities of the municipality. By the amendment in that year to section 6 of the same article a city was authorized to delegate to county officials “certain of their municipal functions, whenever the discharge of such municipal functions by county officers is authorized by general laws or by the provisions of a county charter”.

We can find no provision in the charter of The City of Los Angeles which delegates to the county or to any of its officials the right to defend a civil suit on behalf of the city. There is no provision in the charter of Los Angeles county, or in any general statute, which authorizes it to so appear and defend. Neither section 3804 nor section 3819 of the Political Code cover the subject. They authorize the board of supervisors to order the refund of taxes illegally collected, and permit the taxpayer to sue where a refund is denied, but no general law authorizes the county officers to appear and defend, compromise, or settle any litigation against the municipal corporation. This is a constitutional right enjoyed by all incorporated municipalities, a right which has not been abrogated or limited by any of these enactments.

We may thus summarize: The city, in adopting the “county system of taxation”, delegated to the proper county officials the power to levy, assess, and collect taxes for municipal purposes, and to make refunds thereof under certain circumstances. The city has at no time delegated to the county its right to appear and defend in civil actions. Such right is inherent and cannot be delegated under existing laws. Under section 16 of article 11 of the Constitution the county officials collecting these taxes for the city, as ex officio agents and officials of the city for that purpose, are required to pay the proceeds forthwith to the city treasury. They then become the property of the city, subject to the “lien” of the protest upon payment. The right to recover is nevertheless a right to be asserted against the city and the validity of the adverse claim is a matter which the city may litigate. The statutes do not provide for the enforcement of such a judgment against the city when the county alone is sued and the county alone is adjudged liable. This conclusion is compelled by the terms of section 6 of article 11 of the Constitution which permit the delegation of municipal functions to county “officials”, but not to the county. These officials thereupon become officials of the city for the limited purposes contained in the delegation. Thus, when section 3819 permits the taxpayer to sue the “county” it means to sue upon a claim for which the county is liable. If section 3819 is to be construed as permitting suit against the county alone to recover money paid into the city treasury and thus becoming the property of the city, then the code section is, to that extent, unconstitutional as taking the property of the city without due process. If the section is to be construed as merely permitting a suit against the proper defendant, whether city or county, then it must be read in harmony with the charter restrictions as to maintenance of actions against the city. If the taxpayer does not sue the city and the latter comes in voluntarily and then raises the bar of the charter section, there might be a different result as pointed out in Southern Service Co. v. Los Angeles, Cal.Sup., 82 P.2d 397. Rehearing granted. But when the taxpayer sues the city, seeking an enforceable judgment against it, the city has the inherent right to defend. In such a case all the decisions written support the view that the requirement for a prior demand and an opportunity to pay, settle, or compromise, is a condition precedent.

Since all the parties agree that this is the only question to be determined on these appeals, the judgments are each affirmed.

NOURSE, Presiding Justice.

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