Opinion
NOT TO BE PUBLISHED
Superior Court County of Ventura No. 56-2008-00325844- CU-PT-VTA, Glen M. Reiser, Judge
C. Daniel Carroll; McCann & Carroll, for Appellant.
Noel. A. Klebaum, County Counsel, County of Ventura and Linda K. Ash, Assistant County Counsel, for Respondents
YEGAN, J.
Global Discoveries, Ltd. (Global) appeals the denial of its petition for a peremptory writ to compel the County of Ventura and the Ventura County Tax Collector (County) to pay $168,911.11 in excess proceeds from the tax sale of a vacant lot. (Rev. & Tax. Code, § 4674.) County denied the excess proceeds claim because Global did not have a security interest in the vacant lot and was not a "party of interest" within the meaning of section 4675. We affirm.
All statutory references are to the Revenue & Taxation Code. "Section 4674 provides that the excess proceeds remaining after the unpaid tax assessments on the property and certain other charges are paid shall be held on account of the parties of interest in the property. Such proceeds may be claimed by the 'parties of interest,' as defined in section 4675. Any excess proceeds which are unclaimed within one year of the tax sale are to be distributed to the taxing agencies which had unpaid assessments against the property." (First Corporation, Inc. v. County of Santa Clara (1983) 146 Cal.App.3d 841, 843.)
Procedural History
County sold the vacant lot on March 30, 2006 for $185,000 after the owner, Montecito DDRK II, a California Limited Partnership, failed to pay its property taxes. After deducting taxes, penalties, and costs of sale, there was $168,977.11 in excess proceeds.
Global claimed that it should be paid the excess proceeds because it was the assignee of the 1991 Skipton Deed of Trust and had a security interest in the vacant lot. (§ 4675, subd. (b)). The deed of trust did not describe the vacant lot but did describe the neighboring property at 1290 East Main Street.
Section 4675, subdivision (b) states in pertinent part: "After the property has been sold, a party of interest in the property at the time of the sale may assign his or her right to claim the excess proceeds only by a dated, written instrument that explicitly states that the right to claim the excess proceeds is being assigned...."
County advised Global that the claim would be denied unless Global provided additional evidence that it had a security interest in vacant lot. In response Global submitted the declaration of Denise Green, daughter of Ethel Skipton. Green stated that Edith Skipton loaned Ronald Uhles $113,400 in 1991 and that Uhles gave Skipton a promissory note secured by a deed of trust on his property at 1290 East Main Street, Santa Paula, as described in the deed of trust and Exhibit B-1 of the deed of trust. Uhles also owned a vacant lot that was described in another exhibit (Exhibit B-2) but not referenced in the deed of trust. Green declared: "My mother and Mr. Uhles intended for the Deed of Trust to encumber both parcels described in Exhibits B-1 and B-2. The omission of a reference for the property described in Exhibit B-2 on the face page of the Deed of Trust is a clerical error."
Global claimed that Skipton made the loan to facilitate Uhle's purchase of Skipton's interest in a Goleta building. Uhles also purchased Robert and Carol Hanlin's partnership interest in the Goleta building and provided the Hanlins a deed of trust virtually identical to the Skipton deed of trust. The Hanlin deed of trust, like the Skitpon deed of trust only described the property at 1290 East Main Street, Santa Paula. (Exhibit B-1.) Exhibit B-2 described the vacant lot.
After County denied the claim, Global filed a petition for writ of mandate. Following a hearing, the trial court denied the writ petition.
Standard of Review
Global filed a petition for a writ of ordinary mandamus (Code Civ. Proc., § 1085) which is used to review adjudicatory decisions where the agency is not required to hold an evidentiary hearing. (American Board of Cosmetic Surgery v. Medical Board of California (2008) 162 Cal.App.4th 534, 547.) "Ordinary mandamus may be used to compel the performance of a duty that is purely ministerial in nature [citation] or to correct an abuse of discretion [citation]. When reviewing the exercise of discretion, '[t]he scope of review is limited, out of deference to the agency's authority and presumed expertise: "The court may not reweigh the evidence or substitute its judgment for that of the agency. [Citation.]" 'In general... the inquiry is limited to whether the decision was arbitrary, capricious, or entirely lacking in evidentiary support....' [Citations.]" (Ibid.)
Party of Interest
Global has no claim to the excess proceeds unless it is a "party of interest," i.e., a "lienholder[] of record" or a "person with title of record to all or any portion of the property" (i.e., the vacant lot) prior to recordation of the tax deed. (§ 4675, subds. (e)(1) & (e)(2); see Marion Drive, L.L.C. v. Saladino (2006) 136 Cal.App.4th 1432, 1437.)
Here the deed of trust describes the encumbered property as "1290 East Main Street [¶] Legal Description attached as Exhibit B-1." The deed of trust makes no reference to the vacant lot.
The statute of frauds requires that the security interest in a deed of trust be stated in writing with sufficient clarity to identify it. (Civ. Code § 1624, subd. (a)(6); Miller & Starr, Cal. Real Estate (3rd ed 2003) § 10:17, p. 70.) Although the property description can be in an incorporated document, the reference to the document must be clear and unequivocal. (Calvi v. Bittner (1961) 198 Cal.App.2d 312, 316; Saterstrom v. Glick Bros. Sash etc. (1931) 118 Cal.App. 379, 381.)
Manual Incorporation
Global asserts that recordation of Exhibit B-2 concurrently with the deed of trust created a security interest by "manual incorporation." We reject the argument because there is no evidence that Exhibit B-2 was appended to or a stapled attachment to the deed of trust. The notary acknowledgment states that Uhles executed the deed of trust on September 6, 2001 and that the instrument consists of two pages (i.e., the deed of trust and Exhibit B-1), not three pages.
One could surmise that Exhibit B-2 was "added on" when the deed of trust was recorded, but that did not create a security interest in the vacant lot. A county recorder is duty bound to record any document authorized by law to be recorded even if the document lacks legal sufficiency. (Gov. Code, § 27201, subd. (a).) A rogue document such as Exhibit B-2 "derives no validity from the mere fact that it is recorded." (City of Los Angeles v. Morgan (1951) 105 Cal.App.2d 726, 733.) If the rule were otherwise, one could record a deed of trust on Blackacre, attach an address book to the back of the deed of trust at time of recordation, and claim that the recordation encumbered all real property described in the address book.
Global's assertion that recordation of Exhibit B-2 placed County on constructive notice is equally without merit. "Revenue and Taxation Code section 4675 does not require the County to go out and search for parties of interest." (Fjaeran v. Board of Supervisors (1989) 210 Cal.App.3d 434, 441.) The recordation of a rogue document "is comparable to a blank piece of paper.... As a consequence the record[ing] thereof is not constructive notice of its contents or of the fact that it is actually recorded." (City of Los Angeles v. Morgan, supra, 105 Cal.App.2d at p. 733.)
Extrinsic Evidence
Global argues that extrinsic evidence may be considered to construe the deed of trust. Parol evidence, however, may not be used to insert language in a deed of trust, to show a party's subjective intent, or to circumvent the rule that incorporation by reference must be clear and unequivocal. (Roberts v. Lebrain (1952) 113 Cal.App.2d 712, 715.) "The [property] description must be such, either in terms or by reference, that the property can be identified without resort to parol evidence. [Citations.] Parol evidence cannot be used to furnish a description." (Ibid.)
The deed of trust states that it encumbers one parcel, not two. It refers to "that property," sets forth the address, and states "Legal Description attached as Exhibit B-1." Where the deed of trust is clear and explicit, parol evidence is not admissible to add to, detract from, or change the written terms of the deed of trust. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 345, citing Pacific Gas & Elec. Co. v. G.W. Thomas Drayage etc. Co. (1965) 69 Cal.2d 33, 39.)
Global argues that the deed of trust is ambiguous because it was recorded the same day as the Hanlin deed of trust. The date, sequence, or manner of recordation creates no ambiguity as to the security interest described in the Skipton deed of trust.
Global argues that Uhles has never disputed that the Skipton deed of trust encumbered the vacant lot, but why should he? Uhles defaulted on the Skipton loan after he sold the vacant lot in 1994. Skipton recorded a notice of default on September 14, 1994 but did not follow through with the foreclosure.
Extra-Record Evidence
Global requests that we consider extra-record evidence submitted with the writ petition after County denied Global's claim. But writ review of an administrative decision does not permit a court to consider new evidence. (Carrancho v. California Air Resources Board (2003) 111 Cal.App.4th 1255, 1269.) "An unbroken line of cases holds that, in traditional mandamus actions..., evidence outside the administrative record 'extra-record evidence' is not admissible. [Citations.]" (Ibid.)
Denise Green submitted a more detailed declaration concerning the history of the partnership buyout and the Skipton deed of trust. Global also submitted the declaration of Michael Godwin, a purported title insurance expert, opining that the Skipton deed of trust established a lien on the vacant lot.
The Legislature has granted County, not the courts or title insurance companies, the authority to decide claims for excess proceeds. (See § 4675, subd. (d).) Global makes an arguable claim that the Skipton deed of trust encumbers the vacant lot, but the County is the body to decide whether the claim has merit. Based on the recitals in the deed of trust, the notary acknowledgment, and the evidence presented, Global makes no showing that County's denial of the claim was erroneous.
Assignment of Deed of Trust
County denied the claim on the alternative ground that the Skipton deed of trust was not assigned to Global within the meaning of section 4675. To assert a claim for excess proceeds, Global must be a "person with title of record to all or any portion of the property...." (§ 4675, subd. (e)(2).)
Although Ethel Skipton died in 2000, her estate was never probated. Pursuant to a pour-over will, Skipton left her property to the Ethel P. Skipton Living Trust of which Denise Green is the successor trustee. After County sold the vacant lot, Green, acting as successor trustee of the Ethel P. Skipton Living Trust, purportedly assigned the 1991 Skipton deed of trust to Global.
We agree that the Ethel P. Skipton Living Trust may have an equitable interest in the deed of trust as an estate beneficiary, but that does not make Global a "person with title of record to all or any portion of the [subject] property prior to recordation of the tax deed... " (§ 4675, subd. (e)(2), italics added.)
Global argues that upon Skipton's death, the estate assets "poured over" to the Ethel P. Skipton Living Trust, making the living trust a "party of interest." This is a fiction. The Ethel P. Skipton Living Trust cannot acquire title of record until the estate is probated and there is a distribution of estate assets (i.e., the promissory note and deed of trust). (Prob. Code, § 11604; Witkin, Summary of Cal Law (10th ed. 2005) Wills and Probate, § 723, pp. 809-811.) In the alternative, Skipton's heirs could have recorded an affidavit pursuant to Probate Code sections 13100 and 13106.5 to support Global's claim for excess proceeds. (See § 4675, subd. (f); Ross, Cal. Practice Guide (The Rutter Group 2008) Probate ¶¶ 2:16.2 and 2:17.2, pp. 2-7 and 2-11.) Green, however, failed to follow this procedure.
Section 4675, subdivision (f) provides: "In the event that a person with title of record is deceased at the time of the distribution of the excess proceeds, the heirs may submit an affidavit pursuant to Chapter 3 (commencing with Section 13100) of Part I of Division 8 of the Probate Code, to support their claim for excess proceeds."
County reasonably concluded that Global and Global's assignor (Denise Green) are not persons with title of record who can assert a claim to the excess proceeds. (§ 4675, subd. (e)(2).) "The words 'any person with title of record' appear to be abundantly clear. [Global] would have us read the statute as if it said 'any person with title of record, or any holder of unrecorded title....' [Global's] interpretation is simply not what the statute says." (Azadozy v. Nikoghosian (2005) 128 Cal.App.4th 1369, 1373.)
County has no authority to declare Global a "party of interest" nor can it waive section 4675. Under the statute, "[h]olders of unrecorded title do not have the same rights as holders of recorded title." (Id., at p. 1374.)
Forfeiture/Escheat
Global complains that County acted as "Judge, Jury and Executioner" in denying the claim. We understand, from its point of view, how it arrives at this characterization. That, however, is the nature of our tax system as set out by the Legislature which has the plenary power to control the manner in which tax refunds and excess proceeds are claimed. (See e.g., Woolsey v.. State of California (1992) 3 Cal.4th 758, 790-793.) "Prior to the enactment of section 4675 [in 1985], no title holder had any right to excess proceeds from a tax sale. [Citations.]" (Azadozy v. Nikoghosian, supra, 128 Cal.App.4th at p. 1374.)
Global argues that section 4675 is a remedial statute and should be liberally construed to permit the distribution of excess proceeds whenever possible. "This interpretation is incorrect. The statutory amendments do not create a presumption that the excess proceeds must be distributed to parties of interest if any means can be found to do so." (First Corporation, Inc. v. County of Santa Clara, supra, 146 Cal.App.3d at pp. 846-847.) Global's assertion that denial of the claim "works an escheat[] is incorrect. Property can 'escheat' only to the state, and not to local governments. [Citation.]" (First Corporation, Inc. v. County of Santa Clara, supra, 146 Cal.App.3d at p. 847.)
Speculative Evidence of Intent
Global's argument that Ethel Skipton "intended" the deed of trust to encumber the vacant lot is unavailing because Skipton's intent as a money lender is irrelevant. What controls is Uhle's intent. Did Uhles intend to pledge the vacant lot as security when he executed the deed of trust? The trust deed says "no" because it only describes 1290 East Main Street. There is no reference to Exhibit B-2 or the vacant lot. The notary acknowledgment states that Uhles executed a two-page document, i.e., the deed of trust and Exhibit B-1.
The only evidence offered by Global is Denise Green's declaration that "[m]y mother and Mr. Uhles intended for the Deed of Trust to encumber both parcels described in Exhibits B-1 and B-2." ~(AA 97)~ Green states that the failure to reference the vacant lot in the deed of trust is "a clerical error."
The declaration is hearsay, lacks foundation, speculates about Uhles' "intent," and violates the statute of frauds and parole evidence rule. (See Gursey v. Campus Camera Shop (1950) 98 Cal.App.2d 257, 263 [conversations subsequent to execution and delivery of instrument barred by parol evidence rule].) There is no evidence that Green was even present when Uhles executed the deed of trust or that Uhles told someone to attach Exhibit B-2 when he signed the document. In construing a trust instrument, what controls is the trustor's intent at the time of execution as shown by the face of the document -- not the wishes, desires or thoughts of someone after the event. (See Mummert v. Security-First Nat. Bank (1960) 183 Cal.App.2d 195, 199.)
Conclusion
Our task is the same as the trial court's examination, i.e., to determine whether substantial evidence supports County's denial of the claim. (See e.g., Auerbach v. Assessment Appeals Bd. No. 2 (2008) 167 Cal.App.4th 1428. 1437.) The record clearly shows that Global is not a lienholder of record, a person with title of record, or a "party of interest" who can make a section 4675 excess proceeds claim. Global's assertion that it has an equitable claim to the excess proceeds, if true, would result in a rewrite of section 4675. The Legislature's plenary power in tax matters is well established. (Woolsey v. State of California, supra, 3 Cal.4th at pp. 790-793.) Trial courts do not have the unfettered discretion to fashion an equitable remedy. (Rider v. County of San Diego (1992) 11 Cal.App.4th 1410, 1421.)
The judgment (order denying writ petition) is affirmed. County is awarded costs on appeal.
We concur: GILBERT, P.J., COFFEE, J.