LOS ANGELES COUNTY v. JONES (1939)

The County of Los Angeles seeks the issuance of the writ of mandamus to compel the respondent, as its county surveyor, to spread a reassessment upon the real property in districts Nos. 32, 40 and 240 in said county pursuant to the Assessment Bond Refunding Act of 1933 (Stats. 1933, p. 1915, as amended).

The petition shows that Acquisition and Improvement District No. 32 was organized under the Acquisition and Improvement Act of 1925 (St.1925, p. 849). Bonds were issued on April 4, 1937, in the sum of $48,151.94, bearing interest at seven per cent annually. The bonds represented the cost of installation of an ornamental street lighting system. District No. 40 is a special improvement district organized also under the act of 1925, for the same class of improvements. Bonds of that district were issued on the same date in the sum of $34,864.06, bearing interest at seven per cent. Similarly under the 1925 act, district No. 240 was organized for the purpose of installing a sanitary sewage system and to meet the cost thereof. Bonds of that district were issued on February 3, 1930, in the sum of $170,086.83, with an interest rate of six per cent.

The board of supervisors of the county of Los Angeles instituted the original proceedings in each instance. On January 18, 1938, the board of supervisors determined that the public interest, convenience and necessity required the refunding of the bonds of all three districts in one proceeding pursuant to the provisions of section 31 of the 1933 refunding act as amended by Statutes of 1937, page 2370, at page 2381.

The proceeding progressed to the point where, after due demand by the board, the respondent county surveyor refused to make a diagram of the property upon which the reassessment was proposed to be levied and to prepare one reassessment on the various parcels for the proportion of the refunded unpaid balance of the cost of all improvements in proportion to the benefits received.

The regularity of the proceedings thus far is not questioned. The demurrer filed by the respondent raises the question of the constitutionality of the 1937 amendment to section 31, which provides for so-called ‘multiple district refunding’ in one proceeding. The portions of the amended section which are pertinent to the present discussion are:

‘When all or any part of the lands in any district, the indebtedness of which could be refunded under the provisions of this act, lie in any other district or districts, the indebtedness of which could be refunded under the provisions of this act, all or any number of such districts which wholly or partially overlap may be included in one refunding proceeding and the total indebtedness of all of the districts so included in one proceeding may be refunded in such proceeding and one issue of refunding bonds issued and one reassessment levied therefor. It is the intent of this section to permit, but not to require, the refunding in one proceeding of the indebtedness of all districts which wholly or partially overlap, and to authorize the refunding in one proceeding of the indebtedness of any number of districts where some part of the area of each of the districts lies wholly or partially within the boundaries of one or more of the other districts included in the same refunding proceedings, and such refunding in one proceeding of the indebtedness of two or more districts may be called ‘multiple district refunding.’ * * * The provisions of this section are to be liberally construed, to the end that jurisdiction to refund in one proceeding the indebtedness of any and every combination of districts now existing shall be full and complete.'

It is further provided by the section that the resolution of intention and all the required notices shall state ‘that the refunding shall not be authorized unless the consent of the owners of a majority in area of the lands included within each of the districts, who shall likewise be the owners of a majority in area of the lands included within the exterior boundaries of the total area which comprises the districts, is filed with the clerk of the legislative body conducting the proceeding. * * * If, at the hearing provided in section 3 hereof, the legislative body determines that the written consent of the owners of a majority in area of the lands in each of the districts, who are likewise the owners of a majority in area of the lands included within the exterior boundaries of the total area comprising the districts, has been filed, it shall be authorized to proceed with such multiple district refunding and to make a reassessment and issue refunding bonds therefor as in this act provided. The reassessment shall be spread over all of the lands in the total area comprising the districts and subject to tax or assessment for the payment of principal and interest of any of the bonds of the districts to be refunded in the proceeding.’ The total reassessment is provided to be spread ‘against all of the lands subject to reassessment hereunder within the total area comprised by the districts and benefited by the acquisitions or improvements or acquisitions and improvements, and upon each lot, piece or parcel thereof in proportion to the estimated benefits received by each such lot, piece or parcel of land from the acquisitions or improvements or acquisitions and improvements to pay for which the indebtedness proposed to be refunded was incurred’. The section also contains the following provisions: ‘In the event that the holders of one or more of the outstanding bonds of any of the districts included in the multiple district refunding proceeding do not enter [into] any contract with the legislative body to refund the same, nevertheless, if the holders of 75% or more of the total amount of the outstanding bonds of all of said districts do contract with the legislative body which conducts the refunding proceedings for the refunding of the bonds owned or held by them, said legislative body shall have authority to refund all of the indebtedness of the districts included in such multiple district refunding proceeding under the provisions of this act, but, in such event, prior to recording the reassessment levied under this act, sufficient moneys to adequately provide for the retirement or payment of the bonds of the nonconsenting holders must be provided and set aside in the proper fund or funds for that purpose.’

The petition herein also discloses that districts Nos. 32 and 40 do not overlap each other, but that district No. 240 partially overlaps district No. 32 and wholly overlaps district No. 40. The outstanding indebtedness of district No. 32 is $16,815.43; of district No. 40, $16,878.85; and of district No. 240, $190,901; a total for all three districts of $224,595.28. The proposed total maximum reassessment for all three districts is $139,980.29, payable over a nine-year period, with the interest rate reduced to five and one-half per cent annually. It also appears that a hearing was duly noticed and held at which protests of property owners were considered; that written consents were on file of the owners of a majority in each of the districts who likewise are owners of a majority in area of the land within the exterior boundaries of all three districts. In the pending reassessment proceeding it is contemplated that the ad valorem method of assessment under the 1925 act shall be replaced by a specific lien assessment against the lands included within the exterior boundaries of all three districts in proportion to the benefits received by each parcel from the improvements to pay which the indebtedness proposed to be refunded was incurred. No contention is made that at least 75 per cent of the bondholders have not consented, or that sufficient moneys are not provided for the retirement of the bonds of any nonconsenting bondholders.

The question posed by the respondent is: ‘Do the provisions of the Assessment Bond Refunding Act of 1933, authorizing the refunding in one proceeding of the indebtedness of two or more ad valorem assessment districts by the levy of one specific lien reassessment and the issuance of one issue of refunding bonds, when the owners of a majority in area of the land in each of said districts constituing the owners of a mojority in area of the land in all of said districts, have consented thereto, impair contract rights or vested rights of property owners in the respective districts?’

The respondent concedes the practical necessity for multiple district refunding proceedings, that is, the impossibility, practically, to refund or adjust the indebtedness of one of several overlapping districts without at the same time adjusting the indebtedness of the others. He contends, however, that to spread the multiple district refunding reassessment upon the the lands in the total area comprised of the three original districts in proportion to benefits from all of the acquisitions and improvements of the several districts violates the contract clause of the state and federal constitutions, impairs vested rights, and takes property without due process of law. Const.Cal. art. 1, §§ 13, 16; U.S.C.A.Const. art. 1, § 10, cl. 1; Amend. 14, § 1.

The validity of the refunding statute of 1933 as amended has been considered and determined in the recent cases of County of Los Angeles v. Jones, 6 Cal.2d 695, 59 P.2d 489; City of Los Angeles v. Aldrich, 8 Cal.2d 541, 66 P.2d 647, and City of Culver City v. Reese, 11 Cal.2d 441, 80 P.2d 992. Each of those cases involved the refunding of the indebtedness of but one improvement district.

The petitioner relies on cases such as Ferry v. O'Brien, 188 Cal. 629, 206 P. 449; Palo Verde Irrigation District v. Seeley, 198 Cal. 477, 245 P. 1092; Cowart v. Union Paving Co., 216 Cal. 375, 14 P.2d 764, 83 A.L.R. 1185, and others, which upheld legislation providing for reassessment for public improvements under special circumstances not here involved.

If the plan of reassessment proposed by the petitioner contemplates that land in one of the overlapping districts may bear a proportion of the assessment for improvements in another district, although such land was not included in the latter district originally and, inferentially, at least, found not to have been benefited by the improvement, difficulties might be encountered giving rise to questions which are not here necessary to decide. The petitioner emphasizes, however, that the additional assessment will not be levied unless such land in one district is shown actually to have benefited by the improvements in the other district. Both the petitioner and the respondent seem to assume that the language of section 31 as amended directs or authorizes the reassessment on lands not originally found to have been benefited by the improvements. We find no expression in section 31 which would warrant this court in concluding that the legislature intended the authorization thus apparently assumed. The pertinent language of the section which bears upon the extent of the area to be affected by the reassessment is the following:

‘The reassessment shall be spread over all of the lands in the total area comprising the districts and subject to tax or assessment for the payment of principal and interest of any of the bonds of the districts to be refunded in the proceeding. * * * The total amount * * * shall be assessed upon the against all of the lands subject to reassessment hereunder within the total area comprised by the districts and benefited by the acquisitions or improvements or acquisitions and improvements, and upon each lot, piece or parcel thereof in proportion to the estimated benefits received by each such lot, piece or parcel of land from the acquisitions or improvements or acquisitions and improvements to pay for which the indebtedness proposed to be refunded was incurred.’

Does the foregoing language indicate a legislative intent that the ‘estimated benefits' shall include benefits derived from all public improvements involved in the multiple district refunding proceeding, even though such land was not determined originally to have been benefited thereby? Or does the language import an intent that the ‘estimated benefits' are restricted to benefits which were determined to have been received in the original proceeding? It might be argued that the use of the conjunctive and disjunctive in referring to the acquisitions and improvements of all districts indicated the interpretation suggested by the first question. But that interpretation would contemplate that by the refunding an additional assessment could be levied upon lands for an improvement on account of which they were not theretofore assessable. We take it that if the alternative construction indicates the proper intent and meaning of the statute, no possible objection could be presented against reassessing upon each parcel of land in one sum the proportionate amounts which would be due for each of the improvements from which originally it was determined to have derived a benefit. This conclusion might not permit the petitioner to go the full length intended by the present refunding proceeding; but in our opinion it accomplishes the object of the statute within its express terms.

The language presented for interpretation by this proceeding is subject to the rule of strict construction. East Bay Municipal Utility Dist. v. Garrison, 191 Cal. 680, 688, 218 P. 43; Mulville v. City of San Diego, 183 Cal. 734, 192 P. 702; Merced County v. Helm, 102 Cal. 159, 36 P. 399; Creighton v. Manson, 27 Cal. 613, 614, 629; 23 Cal.Jur., p. 805, 806; 24 Cal.Jur., pp. 22, 28, and cases cited. The rule of interpretation is stated in Merced County v. Helm, supra, page 165, 36 P. page 400, as follows: ‘Any attempt on the part of the state, or of the county as one of the political subdivisions of the state, to take the property of an individual for public purposes by way of taxation, must find an express statutory warrant, and all laws having this object are to be construed strictly in favor of the individual as against the state. * * * The proceeding is in invitum, and no presumption is to be indulged in favor of the right to take the property, or of any intention that is not distinctly expressed in the statute under which it is sought to be taken. [Citing cases.] A tax can never be extended by construction to things not named or described in the statute as the subject of taxation.’

The application of the foregoing rule would result in confining the ‘estimated benefits' intended as the measure of the reassessment, to those benefits determined in the original proceeding or proceedings to have been received by each parcel of land. If the legislature intended to authorize the extension of the assessment for the improvement to lands not originally determined to have been benefited thereby, it could have said so in unmistakable terms, in which event other objections not now necessary for determination could be presented.

It therefore becomes unnecessary to decide in this proceeding the question of the constitutionality of the section had it authorized such additional assessment on lands outside of the district originally determined to include all the lands benefited by the improvement. No contention is made, nor could a contention successfully be made, that the section as amended does not otherwise conform in all respects to the requirements of the Constitution as expounded in the cases hereinabove cited bearing upon the validity of refunding assessment acts. The fact that the outstanding obligations of three improvement districts are permitted to be refunded in one proceeding and by the imposition of an assessment in one sum on each parcel of land affected thereby, may not alone be the basis of any meritorious objection on constitutional grounds, so long as thereby the land is not burdened to any greater extent than it would have been had the refunding of the outstanding indebtedness of each district been conducted separately. The section as amended therefore does not authorize any greater or additional burden upon any of the lands to be affected by the multiple district refunding proceeding.

The petitioner is entitled to the issuance of the writ directing the respondent, as surveyor of the County of Los Angeles, to prepare a diagram and make the reassessment upon the lands involved in the pending proceeding in conformity with the views herein expressed.

Let a peremptory writ issue accordingly.

SHENK, Justice.

We concur: CURTIS, J.; EDMONDS, J.; SEAWELL, J.; HOUSER, J.