Opinion
11-21-1955
H. J. WILSON, Plaintiff and Appellant. v. Charles H. BEVILLE, City of Los Angeles, et al., Defendants. City of Los Angeles, Defendant and Respondent.* Civ. 20995.
Guerin & Guerin, Los Angeles, for appellant. Roger Arnebergh, City Atty., Peyton H. Moore, Jr., Chief Deputy City Atty., Spencer L. Halverson, Deputy City Atty., Los Angeles, for respondent.
H. J. WILSON, Plaintiff and Appellant.
v.
Charles H. BEVILLE, City of Los Angeles, et al., Defendants.
City of Los Angeles, Defendant and Respondent.*
Nov. 21, 1955.
Rehearing Denied Dec. 12, 1955.
Hearing Granted Jan. 18, 1956.
Guerin & Guerin, Los Angeles, for appellant.
Roger Arnebergh, City Atty., Peyton H. Moore, Jr., Chief Deputy City Atty., Spencer L. Halverson, Deputy City Atty., Los Angeles, for respondent.
ASHBURN, Justice pro tem.
Action to quiet title and for ejectment. Plaintiff claims title by virtue of a city treasurer's deed issued to his predecessor in interest after foreclosure sale under a street improvement bond issued pursuant to Improvement Act of 1911 (now secs. 5000-6794, Streets and Highways Code). The assessment resulting in this bond was levied under said Act of 1911 and recorded on November 23, 1927. On November 25, 1927, two days later, the city of Los Angeles commenced a condemnation action entitled City of Los Angeles v. Howse, in which it took an easement for street purposes (south La Brea Avenue) across part of the land upon which the street bond constituted a lien. The owner of that lien (who at that time would be the contractor) was not joined as a defendant, nor was he or any holder of the bond ever brought into the action. That fact gives rise to the primary question in this case.
The assessment was recorded on November 23, 1927, the action was filed on November 25, 1927, the bond was issued under said Act of 1911 on December 28, 1927, to Municipal Bond Company. A certificate of a treasurer's sale was issued to one Al Schuh on October 19, 1938, same was transferred on March 8, 1950 to Betty Wilson. The amount set forth in the notice to redeem was $295.06, but should have been $309.41. The treasurer's deed was issued to Betty Wilson on August 23, 1950. She quitclaimed to plaintiff on April 12, 1951, and he filed this action on the following day.
Final judgment of condemnation was entered on July 23, 1931, and the record owner of the portion condemned was awarded and paid the sum of $5,376.20. The city took possession of the condemned property on January 22, 1932, and forthwith devoted it to public use as a part of a city street. No portion of the assessment or bond has been paid.
The court rendered judgment that plaintiff is the owner of the condemned parcel subject to the city's street easement. Plaintiff appeals from the judgment claiming that the city acquired title subject to the lien of his bond, that that lien ripened into a fee title in plaintiff and, alternatively, that the city should have been required by way of inverse condemnation to pay to the plaintiff the amount previously awarded and paid to the record owner, not merely the amount of plaintiff's bond. The city, as respondent, contends first, that the lien of the bond was transferred by the condemnation to the award made in that action regardless of nonjoinder of the lien holder, and that his remedy was to appear and assert his rights in the eminent domain case or to collect the amount of the bond from the owner who received the award.
The question of whether a tax or assessment lien is lifted from the land and transferred to the condemnation award regardless of nonjoinder of the holder of the lien has not been definitely answered in this state. 1 The general proposition that a lien, whether it be a mortgage, trust deed or tax lien, attaches to the award and is removed from the condemned land, has been stated from time to time in this jurisdiction. Pomona College v. Dunn, 7 Cal.App.2d 227, 232, 46 P.2d 270; Rose v. Conlin, 52 Cal.App. 225, 230, 198 P. 653; Los Angeles Trust & Savings Bank v. Bortenstein, 47 Cal.App. 421, 423, 190 P. 850. Certainly that is the result when the award is on deposit in the court. Board of Capitol Managers v. Brasie, 72 Colo. 153, 210 P. 63; United States v. Cohen, D.C., 81 F.Supp. 340; United States v. 909.30 Acres of Land, etc., D.C., 114 F.Supp. 756; United States v. Certain Parcels of Land, D.C., 44 F.Supp. 936; Weber v. Wells, 9 Cir., 154 F.2d 1004. But none of the cases just cited (those in California or other jurisdictions) involves the point here presented--the right of a lien holder who has not been joined as a defendant and who has received no part of the award, same having been paid to the owner of the fee.
In California a condemnation action is not strictly one in rem, it is quasi in rem. Harrington v. Superior Court, 194 Cal. 185, 189, 228 P. 15; 18 Cal.jur.2d sec. 257, p. 10. An examination of the statute discloses that it is contemplated that al persons in interest, which of course includes lien holders, must be joined as defendants where their rights are known or appear of record.
Code of Civil Procedure, sec. 1244, states the requirements of the complaint and subdivision 2 says it must include: 'The names of all owners and claimants, of the property, if known, or a statement that they are unknown, who must be styled defendants'. Of course this means they must be joined. The first sentence of sec. 1245.3 contains this: 'In any action brought under this title the plaintiff may name as defendants, in addition to those persons who appear of record or are known to plaintiff to have or claim an interest in the property, 'all persons unknown claiming any title or interest in or to the property,' naming them in that manner * * *.' 2 Section 1246 requires each defendant to set forth his estate or interest in the property described and the amount of damages claimed by him. It also says: 'All persons in occupation of, or having or claiming an interest in any of the property described in the complaint, or in the damages for the taking thereof, though not named, may appear, plead, and defend, each in respect to his own property or interest, or that claimed by him, in like manner as if named in the complaint.' Section 1248 requires the court or jury to fix the value of the property sought to be condemned, 'and of each and every separate estate or interest therein; if it consists of different parcels, the value of each parcel and each estate or interest therein shall be separately assessed'. (This is not affected by sec. 1246.1 which was not enacted until after the proceedings now under discussion.) Section 1252 provides that: 'Payment may be made to the defendants entitled thereto, or the money may be deposited in Court for the defendants, and be distributed to those entitled thereto.' And sec. 1248, subd. 8: 'When the property sought to be taken is encumbered by a mortgage or other lien, and the indebtedness secured thereby is not due at the time of the entry of the judgment, the amount of such indebtedness may be, at the option of the plaintiff, deducted from the judgment, and the lien of the mortgage or other lien shall be continued until such indebtedness is paid.' 3 The last quoted subsection has been held to apply not only to voluntary liens but also street assessment and similar involuntary liens. City of Los Angeles v. Superior Court, 2 Cal.2d 138, 140, 39 P.2d 401. There is nothing in these statutory provisions to indicate any legislative recognition of a right to dispose of any lien upon property involved in an eminent domain proceeding without making the owner thereof a party and giving him an opportunity to be heard, not unless his claim is unknown and does not appear of record.
The case last cited, City of Los Angeles v. Superior Court, supra, was an action in eminent domain. Between the time of filing the complaint and the making of interlocutory judgment, assessments for street improvements became liens upon the property. The same not being due at the time of judgment, the city withheld the amount thereof and tendered the balance of the money to the owner of the fee, who refused to accept it. Thereupon the city brought an action in mandamus to compel him to fully satisfy the judgment upon receipt of the said money. The court first disposed of the contention that the terms of sec. 1248, subd. 8 do not include involuntary liens, such as a street assessment, and then explained the purpose of that subdivision as follows: 'The purpose of the statute is obviously to prevent a situation wherein the condemnor will pay the full value of the land, and thereafter will be forced to pay again to holders of liens on the land, when the liens become due. Bearing this purpose in mind, it certainly makes no difference whether the lien was created by the owner, as in the case of a mortgage, or arose in other ways.' 2 Cal.2d at page 140, 39 P.2d 401. The court relied somewhat upon Marin Municipal Water Dist. v. North Coast Water Co., 40 Cal.App. 260, 180 P. 620.
In that instance plaintiff water company had condemned land of defendant in a previous action; shortly before the interlocutory judgment was entered city and county taxes became a lien thereon; later, an order for possession was made and possession taken upon payment of the award to the defendant; the taxes were then due and were a lien upon the land but were not in default. 40 Cal.App. at page 262, 180 P. 620. Plaintiff later redeemed the premises from a tax sale and then sued defendant to recover the amount it had paid for that purpose. Judgment for defendant was affirmed, the court saying, 40 Cal.App. on page 262, 180 P. on page 621, relative to sec. 1248, subd. 8: 'It gives to the person taking property by proceedings in eminent domain the right to retain from the sum of money to be paid for it the amount necessary to discharge any lien existing thereon, but his neglect to adopt this course would not give rise, in the absence of some other provision of law creating it, to a right of action to recover it when once paid. The right given by this section seems to be one the extent of which is measured by the mode prescribed for its exercise. In eminent domain proceedings the only obligation resting upon the defendant is to prove his damages. * * * [40 Cal.App. at page 263, 180 P. at page 621:] We are of the opinion that the facts set out in the complaint fail to show any obligation on the part of the defendant to have removed the lien of the taxes at the time of the transfer of the land to the plaintiff; and that, there being no such covenant or duty, there could be no liability created either by the fact that the defendant did not pay such taxes, or that the plaintiff did pay the same.'
Section 1248, subd. 8 speaks as of the time of entry of judgment, and these two cases recognize that the condemnor must take care of liens accruing before that time or accept the risk of having to pay that portion of the award a second time.
In Thibodo v. United States, 9 Cir., 187 F.2d 249, plaintiff, the holder of street improvement bonds issued in 1931, which were a lien upon land condemned by the United States, sued the government to have the amount of his bonds declared a lien upon the condemned property; he had not been joined as a defendant and had received no part of the award. The condemnation action was filed and a declaration of taking and an order for possession made on February 9, 1943. The improvement resulting in the bonds under consideration in the Thibodo case was made pursuant to the Improvement Act of 1911 (which is digested in footnote 3 at page 252 of the opinion) and the court held, first, that the recordation of the assessment in accordance with the Act gave constructive notice to all persons of the existence of the lien, citing Castle v. Schulman, 32 Cal.2d 222, 195 P.2d 781. The court then said at page 255 of 187 F.2d: 'We hold that the lien here involved is a subject of public record, charging a subsequent condemnor with constructive notice thereof. Armed with this knowledge, the amount of the lien could have been withheld for its rightful claimant.' At page 256 of 187 F.2d: 'Under the California law, a lienholder has a present proprietary interest in the suject matter of land sought to be taken by eminent domain proceedings which confers a right to have such interest considered and determined in said action. City of Vallejo v. Superior Court, 1926, 199 Cal. 408, 249 P. 1084, 48 A.L.R. 610; Calif.Code Civ.Proc. (1949) §§ 1244, subd. 2, 1246, 1246.1, 1245. See Harrington v. Superior Court, 1924, 194 Cal. 185, 228 P. 15. Section 1248, subd. 8, of the California Code of Civil Procedure provides that if the amount of a lien is not due at the time of entry of the judgment, the amount may be deducted from the judgment, with the lien continuing until the indebtedness is paid. This section is held applicable to street improvement liens. * * * If the lien is due and overdue, the security holder is entitled to have the money awarded in the condemnation proceedings applied to the apyment of his claim. * * * The very purpose of the statute is to prevent a situation wherein the condemnor will pay the full value of the land, and thereafter will be forced to pay again to holders of liens on the land. * * *
'While it is true that the above cases seem to imply that the lienholder is not a necessary party to the proceedings, they leave no doubt of the fact that his interest must be protected in some practical manner.' The court, at page 256 of 187 F.2d, adverted to the rule that one who seeks relief for deprivation of constitutional rights must first exhaust his remedies in the state court. Then said at page 257 of 187 F.2d: 'Plaintiff should be given the opportunity to amend his complaint to show that he has exhausted the state remedy or that this relief is not available to him, or that pursuit for relief through the state courts would be fruitless. When appellant has taken proper steps as just suggested he may then state his claim for relief based upon a deprivation of constitutional rights, by virtue of the 'taking' of his right to have his bonds discharged through foreclosure of the lien upon the land.' The essence of this decision is that the holder of a street improvement bond, who is not joined as a party defendant in the eminent domain proceeding, does not lose any of his rights by the awarding and payment of the entire amount of damages to the owner of the fee.
In State v. Missouri Pac. Ry. Co., 75 Neb. 4, 105 N.W. 983, the holder of a tax lien was omitted from the condemnation action brought by the railway company. The lien was in existence at the time the suit was brought and it was held that the title acquired by the railway company was subject to the tax lien. At page 985 of 105 N.W. the court said: 'The property of an individual cannot be taken for the use of a railway company by condemnation proceedings without payment therefor. Under out statute the payment must be made to the owner of the land, and the doctrine is well settled that all persons who have an interest in the land are owners within the meaning of this statute. * * * The lien of these taxes was a matter of record. It could have been easily ascertained, and could have easily been provided for. Several cases have been brought to out attention in which the courts of other states have held that upon the suggestion of the railway company the court would require taxes then existing upon the land to be paid out of the condemnation money while the same was in the hands of the court. Philadelphia & R. R. Co. v. Pennsylvania S. V. R. Co., 25 A. 177. However this may be, there can be no doubt that under our statute the railway company might protect itself by making lienholders parties to the proceedings, and, if it neglects to do this, and allows the holder of the fee to obtain the entire award, it cannot afterwards insist that the lienholders shall, by such proceeding, be deprived of their interest in the property.' This ruling was followed in Ehlers v. Chicago, B. & Q. R. Co., 118 Neb. 477, 225 N.W. 468.
Municipal Securities Corp. v. Kansas City, 195 Mo.App. 464, 193 S.W. 880. In this instance the plaintiff owned tax bills which were liens upon land later condemned by the city. The plaintiff was not made a party to the condemnation action and the entire award was paid to others. He sued the city to recover the amount of the liens held by him and recovered. In affirming the judgment the court said, 193 S.W. at page 881: 'On this state of facts, the question is: Has the defendant city become liable to plaintiff for the amount of the tax bills? In our opinion no valid reason can be given why a liability does not exist. Three prominent facts stand out in the record: One, that plaintiff had the lien; and, second, that defendant appropriated the property on which the lien existed; and, third, that defendant paid out condemnation money to the owners, whose condemned lands it knew were subject to the lien of plaintiff's tax bills, without ever having given plaintiff any notice of its proceedings and of which plaintiff had no knowledge until about six months after the money had been paid. * * *
'That one with an interest in land cannot have it taken from him by a condemnation proceeding without being made a party thereto is a fundamental proposition of law which finds apt illustration in Holmes v. Kansas City, 209 Mo. 513, 528, 108 S.W. 9, 1134, 123 Am.St.Rep. 495.' At page 882 of 193 S.W.: 'Defendant next insists that the lien for plaintiff's tax bills was taken off the land and transferred to the money arising out of its condemnation, and that therefore that fund should be followed by some appropriate action against the owners who received it from the city. It is not necessary to inquire what other remedy or remedies plaintiff may or may not have, as long as the one it has elected to pursue rightfully belongs to it and upon every just and legal principle affords relief.'
In this matter of the rights of a lien holder who has not been joined in an eminent domain proceeding we see no distinction between a mortgage and a tax lien. Both are entitled to protection in the condemnation action. It was specifically so held as to mortgagees in Rose v. Conlin, supra, 52 Cal.App. 225, 198 P. 653; City of Vallejo v. Superior Court, 199 Cal. 408, 416, 249 P. 1084, 48 A.L.R. 610; and impliedly so held in City of Los Angeles v. Superior Court, supra, 2 Cal.2d 138, 39 P.2d 401, and Marin Municipal Water Dist. v. North Coast Water Co., supra, 40 Cal.App. 260, 180 P. 620.
We conclude that he failure to join the lien holder in the case of City of Los Angeles v. Howse left his lien unimpaired by the judgment.
The city counters this conclusion with an argument that its title was perfected through devotion to public use and the doctrine of inverse condemnation (See 17 Cal.Jur.2d, sec. 7, p. 585; 18 Cal.Jur.2d, sec. 374, p. 95; Hossom v. City of Long Beach, 83 Cal.App.2d 745, 754, 189 P.2d 787; Chilberg v. City of Los Angeles, 54 Cal.App.2d 99, 103, 128 P.2d 693; Hillside Water Co. v. City of Los Angeles, 10 Cal.2d 677, 688, 76 P.2d 681), which is undoubtedly applicable to the extent of precluding plaintiff from gaining possession, thus disrupting the public use; but the intervention of the public use does not destroy a lien holder's right to recover his debt; for instance, after foreclosure and inability to obtain possession he may have an action for mesne profits, (Dobbins v. Economic Gas Co., 182 Cal. 616, 634, 641, 189 P. 1073; Lowe v. Los Angeles Suburban Gas Co., 182 Cal. 649, 189 P. 1084); or he may sue to recover the value of his lien on the date of taking by the public agency.
Through application of this doctrine the lien holder becomes a money claimant and is required to comply with any applicable claims statute, such as sections 363 and 376 of the charter of the City of Los Angeles, of which we take judicial notice. They require filing with the city clerk of a written demand for any money or damages alleged to be due from the city provide that no suit may be brought on any such claim unless it has been made and rejected, in whole or in part, and that the demand must be presented within six months after the occurrence from which the damages arose. These claim statutes are fully applicable to claims for compensation under the doctrine of inverse condemnation, Powers Farms v. Consolidated Irr. Dist., 19 Cal.2d 123, 126, 119 P.2d 717; Veterans' Welfare Board v. City of Oakland, 74 Cal.App.2d 818, 826, 169 P.2d 1000, and compliance therewith is an indispensable prerequisite to the maintenance of an action thereon. Chilberg v. City of Los Angeles, supra, 54 Cal.App.2d 99, 104, 128 P.2d 693; Huffaker v. Decker, 77 Cal.App.2d 383, 386, 175 P.2d 254; Cathey v. City and County of San Francisco, 37 Cal.App.2d 575, 576, 99 P.2d 1109.
The court found that no claim was ever filed by plaintiff or his predecessors in interest and this finding is not challenged. It follows that plaintiff has no right to recover herein.
The judgment is affirmed.
McCOMB, Acting P. J., and FOX, J., concur.
Hearing granted; McCOMB, J., not participating. --------------- * Opinion vacated 306 P.2d 789. 1 79 A.L.R. 116 carries an annotation on the subject entitled 'Taxes--property taken by eminent domain.' 2 (Emphasis added.) This section was not enacted until after the proceedings in City v. Howse, but its phraseology is at least a legislative interpretation of the meaning of subdivision 2 of sec. 1244. 3 Section 1252.1, Code of Civil Procedure, providing for payment of taxes and assessments through the eminent domain proceeding, was not enacted until 1953.