Mercury Herald Co. v. Moore

138 P.2d 673, 22 Cal. 2d 269, 147 A.L.R. 1111, 1943 Cal. LEXIS 184

• Court: California Supreme Court
• Decided: June 1, 1943
• Docket: S. F. 16809
• Status: Published

Opinions

TRAYNOR, J.

Petitioner seeks by this proceeding in mandamus to compel the auditor of Santa Clara County to issue a warrant in payment of a claim for the publication of a notice to terminate the right of redemption pursuant to section 3574 of the Revenue and Taxation Code.

The real property described in the published notice was sold to the state on June 29, 1935, for nonpayment of county taxes for 1934-35. The law at that time 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 the five years, or if the taxpayer failed to elect on or before April 20, 1936, to pay the delinquent taxes in installments (Pol. Code, sec. 3817c(3); extended to April 20, 1940, by Pol. Code, sec. 3817c (7), Stats. 1939, ch. 9) the property was deeded to the state. (Pol. Code, see. 3785.) Thereafter, under the law in effect when the property in question was deeded to the state on July 1, 1940, the property could be sold by the tax collector at public auction upon the direction of the board of supervisors of the county and the authorization of the State Controller, 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, secs. 3833-3834.25.) If the state did not dispose of the property it remained subject to redemption. (Pol. Code secs. 3817c (3), 3780.)

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, secs. 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 he 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, sec. 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, see. 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, sec. 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.

These provisions are an integral part of a plan to classify and rehabilitate tax-deeded property. The Legislature also provided for the appointment of a Land Classification Commission familiar with agricultural economics, real property taxation, conservation and regional planning, to classify tax-deeded property as desirable for public use, suitable for private ownership, or waste land. (Chap. 47, Stats. 1st Extra Session, 1940, Stats. 1941, p. 131.) The statute seeks to expedite the restoration of real property to the tax rolls. To that end it provides for the termination of the right of redemption to facilitate the use or rehabilitation of tax-deeded land while enabling the state to dispose of it more quickly and at a better price.

It is contended that the termination of the right of redemption of the property here in question impairs the obligation of a contract. There is no contractual relationship, however, between the taxpayer and the state. (Southern Service Co., Ltd. v. Los Angeles County, 15 Cal.2d 1, 11 [97 P.2d 963]; Perry v. Washburn, 20 Cal. 318, 350; Spurrier v. Neumiller, 37 Cal.App. 683 [174 P. 338].) The position of the taxpayer is not that of a purchaser who enters into a contract with the state in purchasing the property. The taxpayer’s own failure to pay the tax leads to the sale of the land as an exercise of the sovereign power to collect the tax. (Wood v. Lovett, 313 U.S. 362, 371 [61 S.Ct. 938, 85 L.Ed 1404]; Yates v. Hawkins, 46 N.M. 249 [126 P.2d 476, 478]; see Anglo California Nat. Bank v. Leland, 9 Cal.2d 347 [70 P.2d 937]; Robinson v. Howe, 13 Wis. 380, 386; Muirhead v. Sands, 111 Mich. 487 [69 N.W. 826, 828].)

It is also contended that the right to redeem after the property has been deeded to the state but before it has been sold by the state is a property right, and that the legislation in question deprives the property owner of that right without due process of law. This contention takes no account of 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 deed to the state upon the expiration of the five-year period conveyed absolute title to the property free of any incumbrance except liens for certain taxes. (Pol. Code, sec. 3787; Rev. & Tax. Code, sec. 3520.) 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, 43 Cal.App.2d 532 [111 P.2d 390]; Curtin v. Kingsbury, 31 Cal. App. 57, 61 [159 P. 830]; Chapman v. Zobelein, 19 Cal.App. 132 [124 P. 1021], aff’d 237 U.S. 135 [35 S.Ct. 518, 59 L.Ed. 874]; Young v. Patterson, 9 Cal.App. 469 [99 P. 552].) The property owner thereafter had at most an offer enabling him to regain title to the property, which could be revoked by the state at any time before acceptance. As the court stated in Buck v. Canty, supra, “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.” (162 Cal. 226, 233.) 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 in 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 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 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.” (2 Cal.2d 485, 489. See Allen v. Peterson, 38 Wash. 599 [80 P. 849].)

Even if there were no distinction between the right to redeem before deed to the state and after, a change in the method of redemption would not necessarily be contrary to due process of law. While the law in effect at the time of the sale to the state governs the redemption of the property when the Legislature does not provide otherwise, it is settled that the Legislature may make retroactive changes in the method of redemption. (Buck v. Canty, supra; Fox v. Wright, supra; Baird v. Monroe, supra; Wood v. Lovett, supra; League v. Texas, 184 U.S. 156 [22 S.Ct. 475, 46 L.Ed. 478].) This power is not unlimited, however. The changes cannot be arbitrary or capricious but must be reasonable when measured in the light of the public interest to be served and the effect of the changes upon the rights of the property owner. Those rights are not purely statutory and cannot be destroyed by the mere repeal of a statute. ( Cf. Pol. Code, sec. 327; Southern Service Co., Ltd. v. Los Angeles, supra; Penziner v. West American Finance Co., 10 Cal.2d 160 [74 P.2d 252]; Krause v. Rarity, 210 Cal. 644 [293 P. 62, 77 A.L.R. 1327]; Berg v. Traeger, 210 Cal. 323 [292 P. 495]; Callet v. Alioto, 210 Cal. 65 [290 P. 438]; Moss v. Smith, 171 Cal. 777 [155 P. 90]; People v. Bank of San Luis Obispo, 159 Cal. 65 [112 P. 866, Ann.Cas.1912B, 1148, 37 L.R.A.N.S. 934]; Napa State Hospital v. Flaherty, 134 Cal. 315 [66 P. 322].) At the time of the imposition of the tax the property is in private ownership, and the rights of the owner in that property, not being derived from statute, cannot be abrogated at will by the Legislature. When the tax is imposed the state prescribes the terms of payment and the conditions under which the property will be taken for nonpayment of the tax. By providing for the redemption of the property after sale to the state in the event of delinquency, the state does not take the property outright from the owner but allows him not only to retain the title but the right to remove the tax lien and clear his title to the property. It does not follow that because the state could provide in the first instance for a complete taking of the property that it may with impunity provide retroactively for such a taking without giving the owner notice or a fair opportunity to prevent forfeiture of his property. (See Wood v. Lovett, 313 U.S. 362, 371 [61 S.Ct. 938, 85 L.Ed. 1404].) It is settled, however, that the Legislature may validly limit the time within which an existing right may be exercised if the period remaining for its assertion is a reasonable one. (Alexander, Inc. v. United States, (C.C.A. 5th) 128 F.2d 82; Allen v. Peterson, supra; Robinson v. Howe, supra; Muirhead v. Sands, supra.) This rule is akin to the rule that the Legislature may enact a statute of limitations applicable to existing causes of action or shorten a former limitation period if the time allowed to commence the action is reasonable. (Security-First Nat. Bank v. Sartori, 34 Cal.App.2d 408, 414, 415 [93 P.2d 863]; see 16 Cal.Jur. 398; 34 Am.Jur. 44.)

In the present case the redemptioner clearly received adequate notice and a fair opportunity to regain the property. His position was in fact improved in several respects:

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 delay of a year in the new procedure unquestionably operates to the advantage of the taxpayer. Likewise, a four-months’ notice is more advantageous to him than a twenty-one days’ 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 364]; South San Joaquin Irrigation District v. Neumiller, supra; Buck v. Canty, supra; Merchants’ Trust Co. v. Wright, 161 Cal. 149 [118 P. 517]; Fox v. Wright, supra.) . From the standpoint of the redemptioner’s right there is little if anything to choose between such a provision and the one in question. Any objection that the termination must be by sale is met by the holding in South San Joaquin Irrigation District v. Neumiller, supra, 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, supra; Fox v. Wright, supra; Baird v. Monroe, supra.)

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 may 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 respondent relies the legislation in question either substantially impaired the right of redemption without reasonable justification or involved only 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. San Diego County v. Childs, 217 Cal. 109 [17 P.2d 734], and County of Los Angeles 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. 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. County of Los Angeles 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, 119 Am.St.Rep. 181, 10 L.R.A.N.S. 818], upon which the 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.” Respondent 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 respondent, were lifted from the context of the facts before the court and read literally it would have no bearing upon the present ease, 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, supra.) 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 thirty 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 impairment of the right in the Johnson case is in striking contrast to the absence of any proof of impairment in the present case.

Let a peremptory writ of mandate issue.

Gibson, C. J., and Schauer, J., concurred.