Ringwalt, Charles C., Jr.

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UC Law Journal Volume 8 Issue 3 Article 9 1-1957 Eminent Domain: Liability for Assessments Accruing During Proceedings Charles C. Ringwalt Jr. Follow this and additional works at: https://repository.uclawsf.edu/hastings_law_journal  Part of the Law Commons Recommended Citation Charles C. Ringwalt Jr., Eminent Domain: Liability for Assessments Accruing During Proceedings, 8 UC LAW SF L.J. 327 (1957). Available at: https://repository.uclawsf.edu/hastings_law_journal/vol8/iss3/9 This Note is brought to you for free and open access by the Law Journals at UC Law SF Scholarship Repository. It has been accepted for inclusion in UC Law Journal by an authorized editor of UC Law SF Scholarship Repository. For more information, please contact wangangela@uchastings.edu. terms within the operation of the Habitual Criminal Statute through the exerciseof judicial discretion as outlined above, the function of that statute would be fairlycarried out and its effectiveness enhanced.Robert H. ConnettEMINENT DOMAIN: LmBianTy FOR ASSESSMENTS ACCRUING DuRiNGPROCEEDINGSWhere property has been physically appropriated for public use by the state,is the owner of the legal title liable for taxes and special assessments that accrueagainst the land subsequent to such appropriation but prior to the passage of titleto the condemner?In the normal situation, the condemner does not enter upon the land until suchtime as compensation has been paid to the condemnee. In such cases, the generalrule is that title to the condemned property does not vest in the condemner untilthe final judgment in the eminent domain proceedings is paid.1 This rule protectsthe owner by preventing the taking of his property without just compensation.2 Italso protects the condemner because, until the time that the judgment is rendered,the condemning party may elect to abandon the proceedings and pay only thecourt costs and the condemnee's attorney fees.3 As the condemnee is still the legalowner until the termination of the proceedings, he is obliged to pay the propertytaxes and special assessments for local improvements that are levied upon hisland.4 If he fails to pay, the assessing authority may take what is due from theaward granted to the condemnee in the eminent domain proceedings. 5The rule is different, however, where the condemning party has entered uponthe land under court order and deprived the condemnee of all beneficial use of theproperty.6 In this situation, the subsequent divestiture of title is merely a confir-mation of the original physical taking,7 and all courts that have faced this prob-lem have recognized the injustice of assessing the condemnee for benefits which hecannot enjoy.8 Relief is usually granted either on the theory that the transfer ofownership relates back to the commencement of the proceedings,9 or, as is done inNew York, the sum of the taxes and assessments paid by the condemnee is addedto the compensation subsequently awarded to him.10 Other courts, citing thesecases as authority, reach the same result but give no independent reason for grant-ing such relief to the condemnee.'1 Both of the principal theories for granting relief1 CA. CODE CIv. PROC. § 1253.2 CALIF. CONsT. art I, § 14.3 CAL. CODE Civ. PRoc. § 1255a.4 29 C.J.S., Eminent Domain § 200 (1941) ; 18 Au. Jim., Eminent Domain § 235 (1938).rCAL. CODE CIV. PROC. § 1252.1.6 29 CJ.S.,.Eminent Domain § 135 (1941) ; 18 Am..JuR., Eminent Domain § 278 (1938).7 People v. Joerger, 12 Cal. App. 2d 665, 55 P.2d 1269, 1272 (1936).8 45 A.L.R.2d 518 (1956).9 Chicago Park District v. Downey Coal Company, 1 IJ1.2d 54, 111 N.E.2d 223 (1953);City of Chicago v. McCausland, 379 Ill. 602, 41 N.E.2d 745 (1942); Sherwin v. Wigglesworth,129 Mass. 64 (1880); Independent Consolidated School District No. 27 v. Waldron, 241 Minn.326, 63 N.W.2d 555 (1954) ; Jasper Land and Improvement Company v. Kansas City, 293 Mo.674, 239 S.W. 864 (1922) ; State v. Floyd, 204 N.C. 291, 168 S.E. 222 (1933).0 In re Mayor, 40 App. Div. 281, 58 N.Y.S. 58 (1899).11 Fishel v. City and County of Denver, 106 Colo. 576, 108 P.2d 236 (1940); MilmarEstate Inc. v. Borough of Fort Lee, 36 N.J.S. 321, 116 A.2d 592 (1955).M~ay, 1957] NOTESTHE HASTINGS LAW JOURNALare subject to criticism. The idea of relation back is nothing more than a legal fic-tion invented for the sake of convenience. It does not take into account the exacttime when the owner was deprived of the beneficial use of his property which maybe after the taxes become due. The weakness of the second theory lies in caseswhere the state is the condemning party, for to include payment of taxes and as-sessments in the compensation fund will subject the state to taxation indirectlywhere it cannot be directly taxed. In California, for instance, the property of thestate is exempt from local taxation and assessment,12 and to compel the state topay the condemnee for taxes or assessments he has paid would have the same effectas levying a direct assessment on the state.A case in point recently arose for the first time before the California SupremeCourt in People v. Peninsula Title Guaranty Co.13 In that case the condemnees ap-pealed from a court order directing the payment of $612.20 to the city of SanMateo to satisfy a claimed assessment lien. The money was to come out of the fundawarded the condemnees for the condemnation of their property. The assessmentlien was asserted after the state, pursuant to a court order, had taken possession ofthe property and started construction of a highway overpass. In its decision re-versing the trial court, the Supreme Court of California did not rely on either ofthe two theories previously discussed, nor did it cite any of the cases which had.Instead, the court held that a taking which is of sufficient consequence is deemedto have the same effect of finality of transfer for tax and assessment purposes ashas the passage of title. 14 In seeking to establish what constitutes such a taking,the court said:"Where it can be said that in addition to a mere taking of possession by the condemnerthere is also such a substantial change in the status of the land taken and the condem-nee's relation to it as to constitute, in effect, a divestiture for all practical purposes ofthe former owners' interest, the strict rule should not apply."'1 5The strict rule that the court refers to is of course the rule that the condemnee, aslegal owner, is liable for taxes and assessments until the proceedings in eminentdomain are terminated. The test laid down by the court requires two things: aphysical change in the land, and the exclusion of the condemnee. The real prob-lem is deciding how much of a physical change is necessary in order to bring theexception to the strict rule into operation. In People v. Peninsula Title GuarantyCo. the taking consisted of requiring the condemnees to remove themselves fromthe property, the removal of buildings by the state, and the construction of a high-way overpass on the condemnees' land. The court rejected the idea propounded bythe city of San Mateo that the test of the taking must be that the land may not berestored to its original condition, 16 and cited a case where entry on the land and thecommencement of construction was held to be a sufficient taking.17 People v.Peninsula Title Guaranty Co. held that the city of San Mateo was not entitled tocollect the assessment lien from the condemnee.As the law in California now stands, if there appears to be a sufficient takingof the property the safest thing to do is to advise the condemnee not to pay taxes12 CAL. CONST. art XIII, § 1; 14 Ops. CAL. ATT'y GEN. 46 (1949).13 47 Cal. 2d ......... 301 P.2d 1 (1956).14 Id. at ........,301 P.2d at 4.15 Id. at ....... ,301 P.2d at 3.16 Id. at .........301 P.2d at 4.17 Id. at .........301 P.2d at 3.[Vol. 8or assessments. Then, under the decision in People v. Peninsula Title GuarantyCo., the court in the eminent domain proceedings will have to decide whether anaward should be made to the assessing authority from the compensation fund. Therisk that the condemner will abandon the proceedings and leave the condemnee topay the taxes or assessments along with interest and penalties seems so slight thatthe gamble of waiting is probably well taken.The solution offered by People v. Peninsula Title Guaranty Co., however,would be inadequate in a situation where the condemner abandons the proceedingsor where the condemnee pays the taxes or assessments in advance of the finalaward. The discussion that follows is an attempt to find a method of dealing fairlywith the parties in these two situations.In appraising this problem, one is apt to concentrate on the injustice beingdone to the condemnee and forget that there are two other interested parties, thecondemner and the assessing authority, each with rights that should be protected.Although the concept that private property shall not be taken without just com-pensation should be assigned paramount consideration, we must neither lose sightof the assessing authority's right to assess property,'8 nor overlook the con-demner's privilege to abandon the proceedings and its possible immunity fromtaxation.First, consider the effect of abandonment of the proceedings by the condemner.The condemnee is not only liable for the assessments, but also for penalties thathave resulted from the delinquency. Under the California code provision for aban-donment,19 he may recover only court costs and attorney's fees from the con-demner. Where the abandonment has occurred after physical entry on the land,the condemner has been liable as a trespasser ab initio,20 but there is no reason orauthority for holding a trespasser liable for assessments or taxes, nor for penaltiesand interest. Add to this the fact that the condemner may be immune from taxa-tion, and it is clear that no remedy lies here.It seems unjust that the condemnee should be held liable for penalties. He mayargue that he was relieved of all burdens during the taking and that, therefore, nopenalties should be assessed against him during the period when the condemna-tion proceedings were in progress, and that the taxes or assessments did not be-come delinquent until then. The assessing authority may argue that it has a rightto assess the property, that the condemnee could have paid the assessments andavoided the penalties but instead took a chance, and that there is no justificationfor penalizing the assessing authority for what goes on between the condemner andthe condemnee.The other situation occurs where the condemnee pays the taxes or assessmentsafter there has been a substantial taking. Should he be permitted to recover fromthe assessing authority upon termination of the eminent domain proceedings?The only statutory remedy available in California appears to be the followingcode section:Within six months after the payment an action may be brought against a county or acity in the superior court to recover the taxes paid under protest.2118 CAL. JuR., Taxation § 23 (1926).19 See note 3 supra.2OJohnson v. Climax Molybdenem Co., 109 Colo. 1308, 124 P.2d 929 (1942) ; MitchellCounty v. Hudspeth, 151 Ga. 767, 108 SE. 305 (1921).21 CAL. R v. AND TAX. CODE § 5138.MVay, 1957] NOTES

Eminent Domain: Liability for Assessments Accruing During Proceedings

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Eminent Domain: Liability for Assessments Accruing During Proceedings

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