UNITED STATES BORAX CHEMICAL CORPORATION v. MITCHELL (1979)

OPINION

Appellants, members of the Kern County Board of Supervisors, appeal from a judgment of the superior court in favor of respondent United States Borax & Chemical Corporation (U. S. Borax) for $294,033.61, plus interest, representing taxes paid by U. S. Borax under protest following a purported “correction” by the Kern County Assessor to the final 1974 assessment roll.

In early 1974, the Kern County Assessor began preparing the assessment roll for the 1974-1975 fiscal year. As part of this process, Leon Moynier, a principal appraiser in the assessor's office, initiated procedures to assess the subject mineral interests held by U. S. Borax located in Kern County near Boron. The valuation of these interests in prior years had been made by Moynier's predecessor, Robert B. Campbell-Taylor.

Moynier prepared a worksheet dated “5/15/74” showing his proposed valuation of these mineral interests as $34,861,000. In arriving at this figure, the worksheet proposed to allow a total sum of $3,475,000 for replacement capital for the maintenance of the plant and equipment at Boron for the years 1974-1977, with no replacement capital allowance after 1977. A copy of this worksheet was given to U. S. Borax and Moynier discussed it with officials of the company.

U. S. Borax contended that the amount allowed by Moynier for replacement capital was insufficient and submitted a proposed worksheet with calculations to the assessor. This worksheet included figures for replacement capital at Boron of: 1974 $10,810,000; 1975 $17,047,000; 1976 $17,349,000; 1977 $11,043,000; 1978 $3,776,000 (for a total of $60,025,000 for the five years). It then indicated $3,776,000 per year for the remaining life of the property. The value of the subject mineral interests was thus calculated at $22,480,000.

Moynier submitted the figures from the worksheet of U. S. Borax for the assessment roll for an assessed value of the subject mineral interests of $5,620,000 (reflecting a full fair market value of $22,480,000). U. S. Borax received tax bills based on this assessment and made timely payments of both installments.

In February 1975, Campbell-Taylor noticed that the valuation of U. S. Borax's mineral interests was significantly reduced from what it had been in previous years. He brought this to the attention of Moynier and the Kern County Assessor and a “correction” was made on the assessment roll reflecting a full fair market value for the subject mineral interests of $34,292,800.

Pursuant to Revenue and Taxation Code section 4836, U. S. Borax formally protested any change in the 1974 assessment roll and a hearing was held before the Kern County Board of Supervisors. At this hearing Moynier testified that prior to being notified by Campbell-Taylor in February 1975, he did not realize there had been a significant reduction in the valuation of the subject mineral interests because he was not aware of the valuations for prior years. He further testified that he had intended to increase the capital replacement figure from $3,475,000, as reflected in his original worksheet, to about $60,000,000, but did not intend to allow for any capital replacement after the year 1977.

The Board of Supervisors upheld the assessor's correction of the “clerical error” on the assessment roll, and, after paying the increased tax resulting from the “correction” under protest, U. S. Borax initiated this action.

Revenue and Taxation Code section 4831, subdivision (a), provides:

“When it can be ascertained from an inspection of the property, the records of the assessee, or from the roll or any papers in the assessor's office what was intended, or what should have been assessed, defects in description or form or clerical errors of the assessor on the roll or other errors of the assessor not involving the exercise of judgment as to value which result in the entry on the roll of assessed values other than those intended by the assessor, or which result in the assessment of nonexistent improvements or personal property, may be corrected under this article at any time after the roll is delivered to the auditor and prior to the expiration of four years after the making of the assessment which is being corrected. If any such error is discovered as the result of an audit of a taxpayer's books and records, such error may be corrected at any time prior to the expiration of six months after the completion of the audit.” (Last sentence added in 1978.)

The purpose of this section is to provide the assessor with a means of correcting defects not involving the exercise of discretion after the assessment roll is completed and delivered to the auditor. It is before the assessment roll is completed that the assessor has broadest authority to alter proposed assessments; after this time, the assessor is frozen into a statutory mode of changing the assessment roll. (See Cal.Taxes (Cont.Ed.Bar 1978) Property Taxes, s 4.111, pp. 387-388.) The assessor has no jurisdiction to make changes in the assessment roll on his own authority once the roll has been delivered to the auditor, except to correct certain types of errors not involving the exercise of judgment as to value. (See Ehrman, Administrative Appeal and Judicial Review of Property Tax Assessments in California The New Look (1970) 22 Hastings L.J. 1, 12, fn. 76.)

In the instant case, the trial court was required to review the action of appellants pursuant to Revenue and Taxation Code section 4831 correcting the assessment of U. S. Borax. In conducting such a review, the trial court was required to determine if the action of the Board of Supervisors was “supported by the weight of the evidence.” (Rev. & Tax.Code, s 1611.5; see also Ehrman, Property Tax Appeals, supra, 22 Hastings L.J. at p. 20.)

Revenue and Taxation Code section 4831, subdivision (a), by its express terms allows for correction of “clerical errors of the assessor on the roll or other errors of the assessor not involving the exercise of judgment as to value which result in the entry on the roll of assessed values other than those intended by the assessor,” but only when it “can be ascertained from an inspection of the property, the records of the assessee, or from the roll or any papers in the assessor's office what was intended, . . .”

The last quoted provision was clearly intended by the Legislature as a limitation on the source material or evidence which could be considered in arriving at a determination of whether such errors exist in the first instance. (Southwest Land Co. v. Los Angeles Co. (1920) 46 Cal.App. 9, 14, 188 P. 575.)

In Southwest Land Co. v. Los Angeles Co., supra, 46 Cal.App. 9, 188 P. 575, the Board of Supervisors approved a change of the assessment roll pursuant to Political Code section 3881, the predecessor of Revenue and Taxation Code section 4831, which then read in pertinent part:

“ ‘clerical omissions or errors or defects in descriptions or defects in form in any assessment-book, when it can be ascertained from the assessment-book or from the assessor's maps or block-books, or from the list furnished by the property owner, what was intended to be assessed,’ or what should have been assessed, may, with the written consent of the district attorney, be supplied or corrected by the assessor at any time after the assessment was made, prior to the sale for delinquent taxes, . . ..”

Oral testimony of the assessor was presented to the effect that he had intended to value the property at $100,280 and had so instructed his clerk, but the clerk had erroneously entered the figure of $10,280 on the original tax roll. The court held:

“The validity of that change cannot be upheld unless the act of the clerk was a clerical error, nor unless the board was authorized to go beyond the data which appeared on the books, and take direct testimony proving that the assessor instructed his clerk to make an entry showing a valuation different from the valuation as actually entered. But this would be an assumption of authority in excess of the limitation prescribed by section 3881.” (Southwest Land Co. v. Los Angeles Co., supra, 46 Cal.App. at p. 13, 188 P. at p. 576.)

Speaking to the intent of the Legislature in amending Political Code section 3881 to read as quoted above, the court stated:

“. . . the manifest intention of the Legislature was to more narrowly define the terms of the grant of power, so that after equalization no changes might be made except those of a purely clerical or formal nature, relating to matters of description or form, and then not unless the fact that there was an error could be ascertained from the sources named.” (Southwest Land Co. v. Los Angeles Co., supra, 46 Cal.App. at p. 14, 188 P. at p. 577.)

In the present case, appellants concede that the only evidence presented to the Board of Supervisors of the types described in Revenue and Taxation Code section 4831 were the worksheet of Mr. Moynier dated “5/15/74” and the calculations submitted to Mr. Moynier by respondent in June 1974. Appellants further concede that no error is ascertainable from either document considered alone, but contend that when considered together and compared, one with the other, clerical error is shown. We disagree. A comparison of the two documents indicates only a difference in methods of calculating or allowing for capital investment deductions resulting in different valuations of the mineral interests held by respondent.

The fact that respondent's valuation appears on the assessment roll indicates that Mr. Moynier adopted respondent's method of calculation rather than his own, and nothing more. (See Kuhlemeier v. County of Los Angeles (1935) 2 Cal.2d 257, 40 P.2d 828.)

In an attempt to show the alleged error, appellants presented before the Board of Supervisors the testimony of Mr. Moynier and Mr. Campbell-Taylor as evidence of the assessor's intent, which matter is expressly proscribed by Revenue and Taxation Code section 4831. The trial court correctly declined to consider this evidence and properly limited its review to those sources listed in Revenue and Taxation Code section 4831.

Appellants argue, albeit, circuitously, that the testimony of Mr. Moynier and that of Mr. Campbell-Taylor was not offered to show the intent of the assessor “but to resolve the difference between the valuation calculated on Moynier's original worksheet and that shown on the assessment roll.” The only way that difference could be resolved to support appellants' position was to present extrinsic evidence that it was the assessor's intent not to allow the annual capital investment deduction for the years 1978 through 2003. This was the substance of the oral testimony by Moynier and Campbell-Taylor.

Appellants argue also that the oral testimony should have been considered by the trial court under the liberalization of the Parol Evidence Rule illustrated by Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968)69 Cal.2d 33, 69 Cal.Rptr. 561, 442 P.2d 641 and Delta Dynamics, Inc. v. Arioto (1968) 69 Cal.2d 525, 72 Cal.Rptr. 785, 446 P.2d 785. Appellants misconstrue both the Parol Evidence Rule and the basis of the trial court's ruling. The Parol Evidence Rule is not a rule of evidence, but rather an exclusionary rule of substantive law which, when applicable, makes inadmissible any extrinsic evidence offered to vary, add to, or contradict a legally effective written instrument such as a contract, deed or will. (Jefferson, Cal. Evidence Benchbook, s 32.1.)

The record is clear that the trial court declined to consider the oral testimony, not because of the Parol Evidence Rule, but, as stated in its notice of intended decision, by properly following the teaching of Southwest Land Co. v. Los Angeles Co., supra, 46 Cal.App. 9, 188 P. 575, that no testimony was admissible concerning what the assessor's intent might have been.

Appellants suggest that because in one portion of the trial court's findings of fact it states that no error was ascertainable from “either” of the two documents, the court must have committed error by considering the documents “individually” rather than “collectively.”

Fundamental principles of appellate review require that the findings of fact and conclusions of law of the trial court be considered as a whole and construed liberally in support of the judgment. (De Vrahnos v. George (1962) 203 Cal.App.2d 210, 221, 21 Cal.Rptr. 481; Mashon v. Haddock (1961) 190 Cal.App.2d 151, 167, 11 Cal.Rptr. 865.) With this in mind, it is clear that the findings of fact and conclusions of law do not support the conclusion that the court looked at the documents only individually, and not collectively.

Appellants further contend that the trial court erred in finding that U. S. Borax did not cause or contribute to the error which the assessor sought to correct because U. S. Borax had provided the figures used by the assessor in the original assessment entered on the roll. No authority is cited as to how this is relevant in an action pursuant to Revenue and Taxation Code section 4831. The section would appear to allow the correction of any error of a clerical nature ascertainable in the specified sources, whether that of the assessor or of the assessee. In any event, the trial court concluded the assessor intended to accept the calculations of U. S. Borax, and therefore a subsequent change as to value was an exercise of judgment and not a clerical function. The adoption of the assessee's calculations by the assessor “cannot reasonably be said to be a ‘clerical error’ on his part.” (Kuhlemeier v. County of Los Angeles, supra, 2 Cal.2d 257, 261, 40 P.2d 828, 830.)

Appellants' contention that a taxpayer is required to show he has paid more than is required “in good conscience and equity” has no application to an action under Revenue and Taxation Code section 4831. If a clerical-type error is ascertainable from the specified sources, a correction is allowed. If not, no correction can be made under Revenue and Taxation Code section 4831. The trial court found no “clerical” error, and this finding is supported by the record.

If the assessor's error is to the judgment of value of the property (whether the error is that of the assessor or of the assessee in failing to provide proper information to the assessor), the error can be corrected through the use of escape assessments. (See Rev. & Tax.Code, ss 531 et seq.; Cal.Taxes (Cont.Ed.Bar 1978) Property Taxes, ss 4.70, 4.74.) This was not the procedure used to modify the assessment roll in this case.

Correction of an error pursuant to Revenue and Taxation Code section 4831 requires only that the error be corrected “by the auditor, with the written consent of the county legal adviser.” (Rev. & Tax.Code, s 4834.)

However, changes in valuation pursuant to Revenue and Taxation Code section 531 require the taxpayer be given written notice personally or by mail (Rev. & Tax.Code, s 1605) and that the other procedures of the equalization process as set forth in Revenue and Taxation Code sections 1601 et seq. be followed.

Although the assessment is to be presumed valid (County of Ventura v. Channel Islands State Bank (1967) 251 Cal.App.2d 240, 245, 59 Cal.Rptr. 404), U. S. Borax met its burden below by showing that the increase of its assessment was not proper under Revenue and Taxation Code section 4831. The purported “correction” of the assessment roll and the increased tax resulting therefrom was therefore a nullity and invalid. (Birch v. Board of Supervisors (1923) 191 Cal. 235, 237, 215 P. 903; Savings and Loan Soc. v. San Francisco (1905) 146 Cal. 673, 676, 80 P. 1086.)

The judgment is affirmed.

FOOTNOTES

FOOTNOTE.  

BEST, Associate Justice.* FN* Assigned by the Chairperson of the Judicial Council.

GEO. A. BROWN, P. J., and HOPPER, J., concur.