People v. Maxfield , 30 Cal. 2d 485 ( 1947 )

EDMONDS, J.

The state claims the rents which it charges were received from certain real estate during the period between the dates of tax deeds made by the county of Los Angeles because of tax delinquencies, and the times of redemptions of the properties. A demurrer to the state’s complaint was sustained without leave to amend, and the appeal from the judgment which followed this ruling presents for decision only the question of law which concerns the construction to be given the applicable statutory provisions.

The amended complaint alleges that on July 1,1943, certain parcels of land were conveyed by the tax collector of Los Angeles County to the state. The deeds were recorded on November 8, 1943, and the state alleges that it was the owner of these parcels from that date until each of them was redeemed in full by the former owner. The latest redemption was in June, 1944. According to the complaint, from the date of the deed to each lot until its redemption, the former owner “took the rents, issues and profits from said parcels . . . and have at all times retained said rents, issues and profits,” the exact amount and value of which is unknown to the state.

The decisive question is whether the state, after the redemption of the property, has the right to an accounting and to the payment of rents collected by the redemptioners during the period of time the state was the owner of the properties. It bases its rights to the income from them upon sections 3651 and 3652, Revenue and Taxation Code, which provide:

“3651. After the recording of the deed to the State, the State has exclusive power through the Controller to rent tax-deeded property and to receive all proceeds arising in any manner from the property except proceeds from a transaction terminating the right of redemption, if the right of redemption has not been terminated, or from a sale of a parcel of tax-deeded property.”

“3652. The Controller or any person designated by him may exact an accounting of the proceeds from tax-deeded property from: (a) The former owner of the property.

“ (b) Any person having an interest in the property.

“(e) Any person in actual or constructive possession of any part of the property.”

The redemptioners contend that upon payment of a tax delinquency, all rights of the state, including that to collect accrued rents and profits, cease. This is the construction which must be given to the quoted statutes, it is said, when they are read in conjunction with sections 4112 and 4107 of the Revenue and Taxation Code which provide: “On request of the redemption officer, the Controller shall issue a receipt which may be recorded in the recorder’s office like a deed. This record has the same effect as a deed of reconveyance of the interest conveyed by the sale or deed to the State.” (§4107) “On redemption, the deed becomes null and any interest acquired by virtue of the sale to the State ceases.” (§4112.)

The deed to the state, executed pursuant to the statutory requirements, conveys absolute title, free of all encumbrances, except certain specified liens. (Rev. & Tax. Code, § 3520.) It is not the same title as that of a private purchaser, because the purpose of the conveyance is not the acquisition of the property but the collection of the taxes. (Anglo Cal. Nat. Bank v. Leland, 9 Cal.2d 347, 353 [70 P.2d 937].) However, the only difference between the state’s title and that of a private purchaser is the privilege of redemption. “Upon execution of the deed [to the State] the property owner forfeited all rights in the property except the privilege of redeeming it at any time before the state disposed of it.” (Mercury Herald Co. v. Moore, 22 Cal.2d 269, 273 [138 P.2d 673, 147 A.L.R. 1111].) The state’s title is absolute, but subject to defeasance should the former owner exercise his privilege of redemption. The tax collector’s receipt, authorized by section 4107 of the Revenue and Taxation Code, which is recorded “like a deed,” is a reconveyance of an absolute title owned by the state and issues upon the performance of all conditions necessary for redemption.

Rights incident to ownership of property conveyed to the state are expressly provided for by the Revenue and Taxation Code. These include the right to possession (§ 3653); the right to rent or lease and receive the proceeds from the property (§§ 3651 and 3655); the right to exact an accounting of the proceeds of the property (§ 3652); the right to bring an action of unlawful detainer or ejectment (§ 3654); and the right to sell the property at public auction to the highest bidder (§ 3476). These rights are no more limited than those of an individual who has title to real property. They cease upon the transfer of title but certain rights, such as that to rents and profits which accrued during the period of ownership, are personal and do not pass with the deed nor cease to be actionable upon the conveyance of the property. Under section 4112 of the Revenue and Taxation Code the tax deed is not void from the beginning but only upon redemption; the state’s interest in the land then ceases because title has passed to the redemptioner. At that time the right to possession of the land, and to lease or rent and receive the proceeds, is at an end. So also is the right to sell the property at public auction. But a right of action which accrued during the period of ownership is not terminated by the redemption ; the state is in the same position as that of an individual who conveys land to which he has title.

The case of List v. Sandell, 42 Cal.App.2d 505 [109 P.2d 376], relied upon the respondents, is not inconsistent with these conclusions. There the state leased tax-deeded property to a stranger. As part of the consideration for the use of the property, the lessee agreed to pay the state one-sixth of the crop to be grown. The former owner redeemed the property before the crop was harvested. As between the state and the former owner, it was held that the latter was entitled to share the crop with the tenant. The court applied the general rule that growing crops remain a part of the realty until severed and, unless reserved in writing, pass with the title to the grantee. In People v. Gustafson, 53 Cal.App.2d 230 [127 P.2d 627], the court expressly declined to decide the precise question now presented for determination. And although In re Mead-Haskell Co., 47 F.Supp. 997, holds that the right of the state to collect rents and profits is in the nature of a penalty and, therefore, they may not be collected from á trustee in bankruptcy after redemption, such a construction cannot be reconciled with fundamental principles incident to the ownership of land.

The Tax Redemption Termination Act (Stats. 1941, ch. 47, p. 131, and see Stats. 1941, ch. 290, § 49, p. 1432) effected a fundamental change in the taxation law. For the purpose of establishing a comprehensive tax rehabilitation program, the Legislature determined that the title to property upon which taxes should become delinquent was to vest absolutely in the state upon execution of the tax deed. Accordingly, the appellant’s complaint states a cause of action.

The judgment is reversed.

Gibson, C. J., Traynor, J., and Spence, J., concurred.