Opinion
Hearing Granted by Supreme Court Nov. 16, 1936.
Mandamus proceeding by the Pacific Company of California against the Board of Supervisors of the County of Los Angeles, and others.
Writ of mandate granted.
COUNSEL
Holbrook, Taylor, Tarr & Reed, of Los Angeles, for petitioner.
Everett W. Mattoon, Co. Counsel, and Gordon Boller, Deputy Co. Counsel, both of Los Angeles, for respondents.
OPINION
CRAIL, Presiding Justice.
The petitioner seeks a writ of mandate to compel the board of supervisors and county counsel of Los Angeles county to cancel and consent to cancellation, respectively, pursuant to the provisions of Political Code, § 3804a, the assessment to petitioner for the tax year 1936-1937 of certain stocks and bonds owned by it.
Stocks and bonds have for several years been taxed under the provisions of Political Code, § 3627a (as amended by St. 1935, p. 2251) the applicable part of which reads as follows: "Notes, debentures, shares of capital stock, bonds, deeds of trust, mortgages, and any legal or equitable interest therein, of the classes taxable to the owner thereof under the provisions of section 14 of Article XIII of the Constitution of this State, are hereby taxed upon their actual value at the rate of two-tenths of one per cent." Under the authority of section 14 of article 13 of the California Constitution the 1935 Legislature amended said section 3627a by adding the following: "The property aforesaid, except solvent credits, shall no longer be taxable under the provisions of this section if and when a net income tax shall be passed or adopted in this State. Upon the passage or adoption of such tax and from the time such income tax becomes effective such net income tax shall be in lieu of the tax herein provided for upon notes, debentures, shares of capital stock, bonds, deeds of trust, mortgages and any legal or equitable interest therein."
The same Legislature also enacted a net income tax law (Stats.1935, p. 1090; Gen. Laws Supp.1935, Act 8494), which was in effect on the first Monday of March, 1936. In spite of the enactment of said income tax law the county assessor has insisted on assessing petitioner’s stocks and bonds on the old basis, and this proceeding is brought for relief.
Section 3627a of the Political Code as amended in 1935 declares that such property "shall no longer be taxable under the provisions of this section if and when a net income tax shall be passed or adopted in this State." Petitioner contends that this condition or contingency has happened, and that the provision that the income tax was "in lieu of" the old intangible tax clearly means that such tax was substituted as a whole for the other.
The respondents contend that the release from taxes declared by said amendment "was intended and extended only as and when the property should come under the contemplated substitute tax liability." They contend that (1) "The 1935 amendment does not purport to grant tax exemption but merely to subject the property to ‘in lieu’ or substituted or commuted (income) tax," and that (2) "The income tax contemplated by said amendment was an income tax which should subject such property to an ‘in lieu’ or substitute tax." We have stated the contentions of respondents in their own language, and in each case have italicized the word "property." The amendment substitutes one tax "in lieu of" another tax.
It may not be reasonably said that the Legislature contemplated that a taxpayer should be exempt from the intangible tax only if and when he should pay to the state a tax under the new net income tax law, as contended by the respondents. Such a holding would require that in each case there be a determination as to whether the owner of the stocks and bonds has paid or will pay a net income tax on the particular stocks or bonds. The correct interpretation of the amendment is that the income tax was substituted as a whole for the old intangible tax.
The writ of mandate is granted.
We concur: WOOD, J.; GOULD, Justice pro tem.