MERCURY HERALD CO v. MOORE (1942)

Mercury Herald Company, publisher of the daily paper, ‘San Jose Mercury Herald,’ petitioned this court for the writ of mandate directing the county auditor of Santa Clara County to issue a warrant in payment of a claim of $1.63 incurred for the publication of a notice to terminate the right of redemption pursuant to section 3574 of the Revenue and Taxation Code, St.1941, p. 1429. The petition was filed for the purpose of presenting the question of the constitutionality of certain sections of the Revenue and Taxation Code enacted in 1940 and 1941 which purport to provide the means for terminating the right of redemption of lands deeded to the state for delinquent taxes prior to June 1, 1942. Rev. and Tax.Code, § 3571 et seq., St.1940, 1st Ex.Sess., p. 136, St.1941, p. 1427 et seq. The issue is presented by the petition and a general demurrer thereto.

The real property involved was sold to the state on June 29, 1935, for nonpayment of the 1934–35 taxes. §§ 3767, 3771, Pol.Code, now § 3436, Rev. and Tax.Code, St.1939, p. 1324. A deed to the state was executed on July 1, 1940. Pol.Code, §§ 3771a, 3785, now § 3511, Rev. and Tax.Code, St.1939, p. 1326. At the time of the sale and deed, Political Code, sections 3780 and 3817, were in effect. Pursuant to those sections the owner of land which had been sold to the state for tax delinquency could redeem within five years and until a valid sale of the property by the state to a third person. Jordan v. Beale, 172 Cal. 226, 155 P. 990. Subsequently the Legislature sought to change the plan for the redemption of tax-deeded property by providing for earlier termination of the right. Thus, on and after June 1, 1942, and prior to January 1, 1947, it was provided that the right of redemption would be terminated as to all property upon execution of the deed to the state except property in distressed assessment districts (§ 3511.3, Stats.1941 at p. 1425); and that on and after January 1, 1947, the right of redemption would be terminated as to all property upon execution of the deed to the state. § 3511.5, Stats.1941, p. 1426. The two sections last mentioned are not material here because the deed to the state was executed prior to June 1, 1942. However, section 3571 (Stats.1941, at p. 1427) provides that the right to redeem property deeded to the state before June 1, 1942, should be terminated as specified in following sections. The material portions of sections 3572 and 3574 (Stats.1941, at pp. 1428, 1429) provide that within one year after June 1, 1942, notice of termination of the right of redemption shall be given to the assessee by mail and by publication. Section 3575 (Stats.1940, Ex.Sess., at page 136) sets the time for the termination of the right of redemption at four months after sending notice of the termination of the right; and such right is then provided to be terminated unless the property is redeemed or payment of taxes started prior to the expiration of the four months' period. § 3576, Stats.1940, Ex.Sess., p. 136.

Purporting to act pursuant to said sections the tax collector of Santa Clara County caused to be published in the petitioner's newspaper a notice of termination of the right to redeem the real property which had been deeded to the state as aforesaid. The respondent county auditor refused to issue a warrant in payment of the petitioner's charge for publishing the notice on the asserted ground that said sections of the Revenue and Taxation Code were unconstitutional. He contends that the law in force at the time the property was sold to the state for nonpayment of taxes governs the right of redemption and that the Legislature cannot deprive the redemptioner of rights fixed at that time.

The respondent's position is sustained by well-settled law in this state. In 1897 this court in the case of Teralta Land & Water Co. v. Shaffer, 116, Cal. 518, 48 P. 613, 58 Am.St.Rep. 194, determined that the right of redemption from a tax sale must be governed by the law in force at the time of sale and could not be affected by subsequent legislation; that such a right was a vested right and could not be impaired by the Legislature. The court rejected as against the weight of authority the proposition now advanced by the petitioner, that the time within which the right could be exercised might be shortened provided a reasonable time remained within which to exercise it. That case did not involve a statute shortening the period of redemption after the right had vested, but the rule announced has since been so applied and has in other respects been followed in this state without exception. Collier v. Shaffer, 137 Cal. 319, 321, 70 P. 177; Johnson v. Taylor, 150 Cal. 201, 88 P. 903, 10 L.R.A.,N.S., 818, 119 Am.St.Rep. 181; Biaggi v. Ramont, 189 Cal. 675, 209 P. 892; San Diego County v. Childs, 217 Cal. 109, 17 P.2d 734; Risso v. Crooks, 217 Cal. 219, 17 P.2d 1001; Los Angeles County v. Rockhold, 3 Cal.2d 192, 203–205, 44 P.2d 340, 100 A.L.R. 149; King v. Samuel, 7 Cal.App. 55, 93 P. 391; Wetherbee v. Johnston, 10 Cal.App. 264, 101 P. 802; Main v. Thornton, 20 Cal.App. 194, 128 P. 766.

In the case of Johnson v. Taylor, 150 Cal. at pages 206 and 207, 88 P. at page 906, 119 Am.St.Rep. 181, it was said: ‘To change a right of redemption which lasts indefinitely until the performance by a third party of some act which may or may not be performed, to a right limited by the expiration of a definite period of time, is a substantial change in the right. * * * And the conclusion follows that a law which authorizes the making of a deed at a fixed time, where, under the law in force at the date of sale, a deed could not be made until 30 days after the giving of notice by the purchaser, is a change which affects the substance of the owner's right, rather than one which goes merely to the remedy.’

The amendments and additions to the Revenue and Taxation Code were undoubtedly enacted in furtherance of the policy to return tax-deeded properties to the assessment rolls and thus alleviate in some measure the increasing burden of taxation on properties remaining in private ownership. But it is also true that tax proceedings are in invitum and that a sale of tax-deeded property conducted only in accordance with the statute in effect at the time of the sale to the state will cut off the right of redemption. If follows that the owner's right of redemption continues until such a sale is had. Jordan v. Beale, 172 Cal. 226, 155 P. 990; Walsh v. Burke, 134 Cal. 594, 66 P. 866; Main v. Thornton, 20 Cal.App. 194, 128 P. 766; Joslin v. Shaffer, 66 Cal.App. 69, 225 P. 307.

The case of South San Joaquin Irr. Dist. v. Neumiller, 2 Cal.2d 485, 42 P.2d 64, 66, relied on by the plaintiff, does not create an exception to the rule. There agreements were entered into between the county board of supervisors and the irrigation district for the purchase by the latter of tax-deeded property. The agreements were approved by the state controller but the tax collector refused to comply with a direction to cause a notice of the execution of the agreement to be given as required by Political Code, section 3897d. This court said: ‘In the absence of constitutional limitations, and there is none here, the Legislature is free to dispose of the state's tax deeded lands in any way deemed by it from time to time to be for the public interest. It is not confined to a disposal at public auction for cash but, where no self-imposed restrictions stand in the way, may dispose of said lands at private sale for cash or on credit. [citing cases] In fact, the Legislature in section 3480 of the Political Code has provided for public or private sale, after a period of redemption of one year, of land deeded to the treasurer trustee of a reclamation district on account of delinquent assessment. It is clear from all the authorities and on reason that the person having the privilege of redemption has no right to the disposition by the state of its tax deeded lands in any particular way when, as here, his right of redemption is not adversely affected.’ It was also stated that the case did not involve the question of the power of the Legislature to shorten the period of redemption as provided by section 3780 of the Political Code. In the present case the power of the Legislature to shorten the applicable period is brought directly in question. Upon the authorities hereinbefore cited, it must be declared that the enactment of said sections 3571, 3572, 3574, 3575, and 3576 of the Revenue and Taxation Code, insofar as they apply to property sold to the state before the effective date thereof, was in violation of section 10, article 1 of the United States Constitution and of section 16, article 1, of the California Constitution, and that as to property so sold those sections are void and of no effect.

The petition is denied.

I dissent. An act of the Legislature cannot lightly be set aside. It must be held valid in the absence of any convincing demonstration that it is prohibited by either the state or the United States Constitution. (See cases cited in 5 Cal.Jur. 612.) The majority opinion invokes the clauses prohibiting the impairment of obligation of contracts but does not establish any contractual relationship between the taxpayer and the state. Proceeding, nevertheless, on the assumption that a contract exists, it assumes that there can be an earlier termination of the right of redemption under the new law than under the old, amounting to an impairment of the obligation of the contract. Actually the reverse is true. A comparison of the old and new laws discloses not an impairment of the right but an enlargement thereof. The majority opinion overlooks the distinction between the absolute right to redeem within the fixed period of five years from the date of sale to the state, and the conditional right to redeem once the property has been deeded to the state if the state does not sell the property. The legislation in issue affects the second right only and is constitutional if it does not substantially impair that right.

The law at the time of sale of the property in question to the state on June 29, 1935, required the tax collector to publish an annual delinquent list of property on which taxes for the past year were not paid. If the taxes remained unpaid the property was sold to the state. The practical effect of such a sale was to start the running of the five-year period of redemption. Crocker v. Scott, 149 Cal. 575, 87 P. 102; In re Seick, 46 Cal.App. 363, 189 P. 314. If the property was not redeemed within five years, or if the taxpayer failed to elect on or before April 20, 1936, to pay the delinquent taxes in installments (Pol.Code, § 3817c3; extended to April 20, 1940, by Pol.Code, § 3817c7, Stats.1939, ch. 9, p. 12) the property was deeded to the state. Pol.Code, § 3785. The deed conveyed to the state absolute title to the property free of any encumbrances except liens for certain taxes. Pol.Code, § 3787; Rev. and Tax.Code, § 3520, St.1939, p. 1328. Upon execution of the deed the property owner forfeited all rights in the property except the privilege of redeeming it at any time before the state disposed of it. Buck v. Canty, 162 Cal. 226, 121 P. 924; Fox v. Wright, 152 Cal. 59, 91 P. 1005; Baird v. Monroe, 150 Cal. 560, 89 P. 352; Helvey v. Bank of America Nat. T. & S. Ass'n, 43 Cal.App.2d 532, 111 P.2d 390; Chapman v. Zobelein, 19 Cal.App. 132, 124 F. 1021, affirmed 237 U.S. 135, 35 S.Ct. 518, 59 L.Ed. 874; Young v. Patterson, 9 Cal.App. 469, 99 P. 552. Thereafter, under the law in effect when the property in question was deeded to the state on July 1, 1940, upon the direction of the board of supervisors of the county and authorization of the state controller, the property could be sold by the tax collector at public auction if notice of sale was mailed to the last assessee at least 21 days but not more than 28 days before the proposed sale, and notice thereof published once a week for three weeks starting at least 21 days before the sale. Pol.Code, §§ 3833–3834.25, St.1939, p. 1917.

In 1941 the Legislature provided for the termination of the right of redemption upon execution of the deed to the state, as to all property not in distressed assessment districts, deeded to the state on and after June 1, 1942. Rev. and Tax. Code, §§ 3511.3; 3511.5. If the deed to the state was executed before June 1, 1942, as in the present case, notice of termination must be mailed to the last assessee within one year after June 1, 1942, or within six months after default under a plan of installment payments, whichever of the two dates is later. Rev. and Tax.Code, § 3572. The tax collector must also publish the notice of termination of right of redemption once in a newspaper of general circulation published in the county, or, if none, by posting in three conspicuous places in the county, as to every assessee for whom no address is known, and for all property assessed to unknown owners. The publication must be made within 10 days after the notice is mailed. Rev. and Tax.Code, § 3574. If the property is not redeemed or installment payments commenced within four months after sending the notice, the right of redemption is terminated. Rev. and Tax.Code, § 3575. Since the legislation became effective June 1, 1941, the procedure that it established could not be set in motion for a year or more.

The fact that the new method differs from the old does not make it unconstitutional. If the Legislature does not otherwise provide, the law in effect at the time of the sale to the state governs the redemption of the property, but it is settled that the Legislature is free to change the method of redemption if it does not thus impair substantial rights. In Buck v. Canty, 162 Cal. 226, 121 P. 924, 927, for example, retroactive provisions requiring additional notice of sales of tax-deeded land were held valid. The court declared: ‘The Legislature has full control over the sale of property belonging to the state, which it may direct sold, and to regulate or change at any time the method of its disposition.’ In South San Joaquin Irrigation District v. Neumiller, 2 Cal.2d 485, 42 P.2d 64, the court reaffirmed the rule that the taxpayer had no vested right to the method adopted by the state for the disposition of its tax-deeded lands. The court declared: ‘The question is therefore narrowed to this: Does the person possessing a right to redeem also have a vested or such a substantial right in the method or conditions adopted by the state for the disposition by it of its tax deeded lands as would deprive the state of the power to change the method and terms of sale thereof, after it had received title to the lands? In other words, and as applied to the present situation, has the person having the privilege of redemption, whose rights in that behalf are not made more burdensome or onerous by the subsequent legislation, the constitutional right to compel the state to dispose of its title to tax deeded lands at public auction for cash as provided by section 3817 of the Political Code as the same was in effect at the time of the sale to the state? The answer must be in the negative. In the absence of constitutional limitations, and there is none here, the Legislature is free to dispose of the state's tax deeded lands in any way deemed by it from time to time to be for the public interest. It is not confined to a disposal at public auction for cash but, where no self-imposed restrictions stand in the way, may dispose of said lands at private sale for cash or on credit. * * * In fact, the Legislature in section 3480 of the Political Code has provided for public or private sale, after a period of redemption of one year, of land deeded to the treasurer trustee of a reclamation district on account of delinquent assessment. It is clear from all the authorities and on reason that the person having the privilege of redemption had no right to the disposition by the state of its tax deeded lands in any particular way when, as here, his right of redemption is not adversely affected.’ 2 Cal.2d 485, 489, 42 P.2d 64, 66.

While it has been held that tax sales to private purchasers are governed by the impairment of obligation of contract clauses of the United States and California Constitutions, it is questionable whether those clauses apply when the property is deeded to the state. See Anglo California Nat. Bank v. Leland, 9 Cal.2d 347, 352, 70 P.2d 937; Buck v. Canty, 162 Cal. 226, 231, 232, 121 P. 924. Assuming, however, the applicability of the clauses, the controlling question is whether the differences in the method of terminating the right of redemption substantially impair the rights of the person possessing the right to redeem. San Bernardino County v. Way, 18 Cal.2d 647, 661, 117 P.2d 354; Aikins v. Kingsbury, 170 Cal. 674, 151 P. 145; Miller v. Hart, 11 Cal.2d 739, 81 P.2d 923; San Bernardino County v. Industrial Acc.Comm., 217 Cal. 618, 629, 20 P.2d 673; City of Los Angeles v. Oliver, 102 Cal.App. 299, 283 P. 298; Antoni v. Greenhow, 107 U.S. 769, 2 S.Ct. 91, 27 L.Ed. 468; Oshkosh Water Works Co. v. Oshkosh, 187 U.S. 437, 439, 23 S.Ct. 234, 47 L.Ed. 249; Home Building & Loan Ass'n v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413, 88 A.L.R. 1481.

In the present case the right of the redemptioner is amplified rather than impaired:

Old Method

1. Right of redemption terminated by sale at any time upon proper notice.

2. Twenty-one days' notice by mail and by publication.

3. Right of redemption continues until terminated by sale; state not required to sell.

New Method

1. One year's delay before procedure became operative.

2. Four months' notice by mail before termination; notice by publication within 10 days after notice mailed.

3. Right of redemption must be terminated by June 1, 1943, if property not redeemed or installment payments begun before that time.

The year's delay in the new procedure unquestionably operates to the advantage of the taxpayer. Again, a four months' notice is more advantageous to him than a twenty-one day notice. As for the third difference, the Legislature could have provided that all tax-deeded property be sold by June 1, 1943, since it is free to determine what property shall or shall not be sold and when. Bray v. Jones, 20 Cal.2d 858, 129 P.2d 357; South San Joaquin Irrigation District v. Neumiller, 2 Cal.2d 485, 42 P.2d 64; Buck v. Canty, 162 Cal. 226, 121 P. 924; Merchants' Trust Co. v. Wright, 161 Cal. 149, 118 P. 517; Fox v. Wright, 152 Cal. 59, 91 P. 1005. From the standpoint of the redemptioner's right there is nothing to choose between such a provision and the one in question. Any objection that the termination must be by sale is met directly by the holding in South San Joaquin Irrigation District v. Neumiller, 2 Cal.2d 485, 42 P.2d 64, that the person having the privilege of redemption has no right to a particular kind of disposition of tax-deeded property. The state would normally seek to sell the property to return it to the tax rolls. While it may delay in doing so the taxpayer under the old method could not rely on such delay with any certainty and confidently bide his time to redeem. Any hope he might have had of redeeming advantageously by waiting rested on mere speculation as to what the state would do. It was not grounded in any legal right, for the state had the unqualified right to sell at any time and for any price and thus terminate the right of redemption. Buck v. Canty, 162 Cal. 226, 121 P. 924; Fox v. Wright, 152 Cal. 59, 91 P. 1005; Baird v. Monroe, 150 Cal. 560, 89 P. 352.

It was held in South San Joaquin Irrigation District v. Neumiller, supra, that the state can change the method of disposing of tax-deeded property after receiving the title thereto, by selling the property to a municipality, irrigation district, reclamation district, or other public corporation for such price and upon such terms as might be agreed upon and thereby terminate the right of redemption. It can likewise terminate the right of redemption by selling the property to a public corporation created to administer tax-deeded property. Just as appropriately the state can retain the property directly and terminate the right of redemption by giving the former owner as much notice as he would receive if the state sold the property to others.

In the cases upon which defendant relies the legislation in question either adversely affected the right of redemption or simply involved questions of statutory construction. In Teralta Land & W. Co. v. Shaffer, 116 Cal. 518, 48 P. 613, 58 Am.St.Rep. 194, the new act increased the amount required to redeem. Collier v. Shaffer, 137 Cal. 319, 70 P. 177, was concerned with the construction of the statute and not with the constitutionality of any retroactive application thereof. The new law involved in Biaggi v. Ramont, 189 Cal. 675, 209 P. 892, and Risso v. Crooks, 217 Cal. 219, 17 P.2d 1001, did not purport to be retroactive and its constitutionality was therefore not in question. In any event it provided for sale of the property at public auction and at the end of the five-year period without deed to the state, thus cutting off the right to redeem that would otherwise have existed after a deed to the state. San Diego County v. Childs, 217 Cal. 109, 17 P.2d 734, and Los Angeles County v. Rockhold, 3 Cal.2d 192, 44 P.2d 340, 100 A.L.R. 149, concerned acts for refunding certain obligations of districts organized under the Acquisition and Improvement Act of 1925, Deering's Gen.Laws, 1925–1927 Supp., Act 3276a. They provided for radical changes in the right of property owners to redeem lands that had been sold for delinquent assessments, including reductions in the redemption period from five years to one year, as well as additions to the amount necessary to redeem. Cf. Los Angeles County v. Jones, 6 Cal.2d 695, 59 P.2d 489; City of Dunsmuir v. Porter, 7 Cal.2d 269, 60 P.2d 836; City of Los Angeles v. Aldrich, 8 Cal.2d 541, 66 P.2d 647; Culver City v. Reese, 11 Cal.2d 441, 80 P.2d 992.

King v. Samuel, 7 Cal.App. 55, 93 P. 391; Wetherbee v. Johnston, 10 Cal.App. 264, 101 P. 802, and Main v. Thornton, 20 Cal.App. 194, 128 P. 766, were based upon Johnson v. Taylor, 150 Cal. 201, 88 P. 903, 906, 10 L.R.A., N.S., 818, 119 Am.St.Rep. 181, upon which defendant relies particularly. This case involved the validity of a tax deed made in 1899 pursuant to a sale in 1894. Under the law in effect when the sale was made the purchaser had to serve written notice upon the owner or occupant thirty days before the right of redemption expired or thirty days before applying for a deed. A deed could not be issued to the purchaser without the giving of this notice. The owner retained title until the execution of such deed and had at least one year after the sale and until thirty days after notice in which to redeem. In 1895 the Legislature adopted substantially the present system, providing that property be sold for delinquent taxes to the state, and if not redeemed within five years be deeded to the state, and that thereafter redemption might be made before entry or sale of the property by the state. In referring to this change the court declared: ‘To change a right of redemption which lasts indefinitely until the performance by a third party of some act which may or may not be performed, to a right limited by the expiration of a definite period of time, is a substantial change in the right.’ Defendant relies heavily upon this sentence, inferring a comparison between the right to redeem after deed to the state until the state sells, with the right under the old law in the Johnson case to redeem within thirty days after the service of the notice. Actually the court found no basis for such a comparison, for it clearly regarded the right of redemption after the close of the five-year period as too insubstantial to be measured against the previously existing right, and measured instead the five-year period, only to find it also inferior. It would be inconsistent now to give the right formerly regarded as insubstantial the same value as the right formerly regarded as impaired. Even if the sentence in the Johnson case, relied upon by defendant were lifted from the context of the facts before the court and read literally it would have no bearing upon the present case, where the right of redemption under the old law was terminated by the act, not of a third person without title to the property, but of the state itself as holder of the absolute title. South San Joaquin Irrigation District v. Neumiller, 2 Cal.2d 485, 42 P.2d 64. The Johnson case involved the basic right of a property owner to receive notice of the prospective loss of title to his property. The notice did not terminate the right of redemption as sale by the state did, but gave warning that the right would be terminated if the owner did not redeem. ‘Under the old law the owner could rest secure until he received notice of intention to apply for a deed. He then had 30 days in which to redeem. Under the new law his right of redemption could be cut off at any moment after the expiration of the statutory period, without any personal notification to him. * * * That these circumstances worked a substantial change in the rights which the owner had at the date of the sale seems clear.’ The demonstrated impairment of the right in the Johnson case is in striking contrast to the absence of any proof of impairment in the present case.

SHENK, Justice.

CURTIS, CARTER and EDMONDS, JJ., concurred.