CITY OF PASADENA v. LOS ANGELES COUNTY (1950)

The city of Pasadena is the owner of certain improvements on land in Los Angeles county outside the city's corporate limits. Whereas the true value of such improvements for tax purpose was $33,470 in 1945, the county assessor appraised them at $56,310 as of the first Monday in March that year and levied an assessment for the fiscal year 1945–46 in the sum of $2,387.02. The city duly paid that sum under protest and sought a review and adjustment thereof by the State Board of Equalization. After the board had denied its petition, the city demanded a refund by the county board of supervisors in the sum of $966.74 as an excess over the amount legally due. Its claim having been rejected by appellant, it filed this action to enforce payment thereof.

The complaint alleged that such improvements were constructed by plaintiff after it had acquired the water systems to replace improvements that were subject to taxation at the time of acquisition; that such improvements, replacing the improvements which were subject to taxation, are ‘hereinafter referred to as ‘replaced improvements”; the assessment values of the replaced improvements were fixed at their values as they existed on the lien date, to wit, the first Monday in March, 1945, ‘notwithstanding that said replaced improvements differed in character, being larger and more substantially constructed and were of much greater value than the improvement subject to taxation at the time of acquisition,’ and were to serve purposes of water distribution different from the purposes of the original improvements; the assessor should have placed values on said replaced improvements on the basis of their values on the lien date as though said replaced improvements were the same in size and character as the original improvements acquired by plaintiff rather than as they existed in the enlarged and improved form on the lien date; the true values of the improvements for taxation purpose on the lien date would have totaled $33,470.

Appellant having failed to answer after its demurrer to the complaint had been overruled, judgment was entered in favor of respondent, whence comes this appeal.

The sole issue requires an interpretation of section 1 of Article XIII1 of the constitution. That section provides for the taxation of property. But it requires judicial determination as to whether replaced improvements are assessable on the basis of their values as they existed on the lien date, or should have been assessed as though they were in the condition of the original improvements as they existed at the time of their acquisition by respondent.

The impact of the factual situation presented by the record upon the quoted passage of the Constitution presents a clearly defined issue readily to be resolved by the language of the section. That the water systems of a municipality lying outside its corporate limits are taxable was determined by the decision in City and County of San Francisco v. County of San Mateo, 17 Cal.2d 814, 819, 112 P.id 595. In that action the plaintiff had in 1930 purchased a water works situated in San Mateo County consisting of two reservoirs and a redwood flume. After the first year the city replaced the flume with a concrete lined canal of greater capacity than the flume, and constructed other improvements. In 1936 the county assessed a section of the old flume and levied a tax against the city in the sum of $583.30. The value assessed was the same as that assessed against the city's vendor. The tax was paid under protest and the court action followed to recover the sum. Judgment for the defendant was affirmed. The court held, 17 Cal.2d at page 819, 112 P.id at page 598, that the 1914 amendment to section 1 was to preserve for taxation the construction existing at the time of acquisition, also replacements and substitutes; those entirely new are exempt.

In the recent decision of City and County of San Francisco v. County of San Mateo, 36 Cal.2d 196, 222 P.id 860, 862, the city's exemption from taxation upon its additions and improvements was definitely determined. The city acquired submerged tide lands in San Mateo county and filled and improved them for an airport. Thereafter the county assessed the city at $684,625 on the basis of value for its new use. Having paid under protest the tax so levied, the city claimed exemption on the ground that it was an ‘improvement.’ On review the Supreme Court after analyzing the 1914 amendment of section 1 of Article XIII declared that ‘improvements of any character whatever constructed’ by the city are exempt. The obvious purpose was to permit as large an assessment on the property as its former owner paid at the time it was acquired by the city. ‘If any such addition or improvement was not there at the time of acquisition, it was not taxable thereafter.’

Applying this rule to respondent's water works, the additions to is pipelines are not taxable.

Judgments affirmed.

FOOTNOTES

FN1. Section 1 abridged to include the clauses here applicable with the 1914 amendment in italics: ‘All property * * * not exempt * * * shall be taxed in proportion to its value, to be ascertained as provided by law, or as hereinafter provided. * * * property * * * such as may belong to this State, or to any county * * * or municipal corporation within this State shall be exempt from taxation, except such lands and improvements thereon located outside of the county, city and county or municipal corporation owning the same as were subject to taxation at the time of the acquisition of the same * * * provided, that no improvements of any character whatever constructed by any * * * municipal corporation shall be subject to taxation. All lands or improvements thereon * * * not exempt from taxation, shall be assessed by the assessor * * * and said assessment shall be be subject to review, equalization and adjustment by the State Board of Equalization.’.  FN1. Section 1 abridged to include the clauses here applicable with the 1914 amendment in italics: ‘All property * * * not exempt * * * shall be taxed in proportion to its value, to be ascertained as provided by law, or as hereinafter provided. * * * property * * * such as may belong to this State, or to any county * * * or municipal corporation within this State shall be exempt from taxation, except such lands and improvements thereon located outside of the county, city and county or municipal corporation owning the same as were subject to taxation at the time of the acquisition of the same * * * provided, that no improvements of any character whatever constructed by any * * * municipal corporation shall be subject to taxation. All lands or improvements thereon * * * not exempt from taxation, shall be assessed by the assessor * * * and said assessment shall be be subject to review, equalization and adjustment by the State Board of Equalization.’

MOORE, Presiding Justice.

McCOMB and WILSON, JJ., concur.