# Petition — Ball v. County of Los Angeles > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_2085%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1979 - **Citation:** 439 U.S. 1116 ## Text 7~ Supreme Court, U, & { FILED NOV 80 1978 __MHOHAEL RODAK, JR., CLERK IN THE SUPREME COURT OF THE UNITED STATES October Term, 1978 No. WE 827 HELEN BALL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Petitioner, vs. COUNTY OF LOS ANGELES, Respondent. Petition For Writ Of Certiorari To The Supreme Court Of The State Of California VOLNEY F. MORIN VOLNEY F. MORIN, JR. VOLNEY F. MORIN, INC. LAW CORPORATION _ 1341 Cahuenga Boulevard Los Angeles, Calif. 90028 Attorneys for Petitioner. Unicorn Press, Legal Printers, Santa Ana, CA, Phone 546-7320 ad —_—- — — ee SUBJECT INDEX Page eC eaten, 4 Sdekabaesbre. +s ones a ee Pat ee aa as wong ees S eae as 2 ee errr ree 2 Constitutional Provisions and Statutes Involved....... 3 ES ERS eee ee 7 A. Statement of Substantive Facts............ 7 B. Statement of Procedural Facts............ 9 Reasons for Granting the Writ...................45. 10 A. Ball Denied Equal Protection Of Law By Discriminatory And Arbitrary Legislation For Payment Of Interest On Tax Refunds... 10 B. California Revenue And Taxation Code As Presently Constituted Is Discriminatory And Arbitrary In Its Policy Of Payment Of In- terest On Overpayments And Refunds Of EE SEs eee eb a6 Aah as wk SH wees 14 C. The Supreme Court And Lower Federal Courts Have Already Affirmed The Proposi- tion That Citizens Are Entitled To Recovery Of Interest In Connection With A Refund Of ot My 2a ag Ee EN oe de 24 APPENDIX INDEX Page Appendix A. Minute Order, Supreme Court Of The State Of California, dated August 24, 1978...... Appendix B. Ball v County of Los Angeles, 82 Cal. App. 3d 312, Court of Appeals, 2d District, dated Sk Se POU eee re. ree Appendix C, Order Dismissing Complaint and Entry of Summary Judgment in Favor of Defendant and Against Plaintiff, dated February 3, 1978, of the Superior Court of the State of California for the County of Los Angeles. . . Appendix D. Reporter's Transcript on Appeal.......... Appendix E. Appellant's Opening Brief to Court of Ap- aia VIN e ON Le emai Appendix F. Petition for Hearing In The Supreme Court of the State of California................. Appendix G. Text of Pertinent Sections of California Revenue and Taxation Code.............. Appendix H. Lease Between Helen Ball, Lessor and City of Los Ans, Lees i: ois aes ii 15 17 26 49 70 TABLE OF AUTHORITIES CITED Cases Page Airway Electric Appliance Corp. v. Day (1924), 266 U.S. 71, 69 L.Ed. 169, 45 Sup. Ct. Rep......... 12 Ball v. County of Los Angeles (1978), 82 Cal. App. PRL baelsnks x SUA Whe a oc tee oh Ree 2, 7-8, 10 Barbier v. Connolley (1885), 113 U.S. 27, 28 L.Ed. Ss ee te I Slee Pd akc mkotoes chRd ca te 12 Billings v. United States (1914), 232 U.S. 261, 34 ee Fe eee re eee 17 Boott Cotton Mills v. City of Lowell (1893), 159 bias: TER OU Wie, Beer he Ge ieee. 24 Bryam v. Thruston County (1926), 141 Wash. 28, 251 P. 103; 141 Wash. 28, 252 P. 943 (1927 re- CIS F555 SSE ail ah 20-21 Chicago and Northwestern Ry. v. Schmidt (1970), 85S.D. 223, 1SON.W. 2d 233...........0.005. 23 Chicago St. P. M. & O. Ry. v. Mundt (1930), 56 Dads Wes ES Oe sia ce Won be idscves on 22-23 Cities Service Oil Co. v. City of Pittsburg (1972), SO es ET Pin Re ccc rte vas sb aeny' 19 Department of Mental Hygiene v. McGilvery (1958), 50 Cal. 2d 742, 329 P. 2d 689........... 3 Doric Co. v. King County (1962), 59 Wash. 2d 741, PN MN ae ae a NG ss allan ainhs and 4h Bie 0p 21 Eisenstadt v. Baird (1972), 405 U.S. 438, 31 L.Ed. ee rah bie w'ala 5 9 dey 4.6.4 90:1 12, 16 Erskine v. Van Arsdale (1872), 15 Wall. (U.S.), 75, A eae Mh etl Sk AL ae Bae Ad a As 17, 24 TABLE OF AUTHORITIES CITED (Continued) Cases Page Ford Motor Co. v. City of Detroit (1973), 43 Mich. App: B66, 306 MW. BB SOBs 5 cin cc kee Ceca 22 Great Northern Railway Co. v. Stevens County (1919), 108 Wash. 238, 183 P. 65.............. 21 Green v. State of California (1887), 73C.29....... 13, 14 Gulf, C. & S. F. R. Co. v. Ellis (1896), 165 U.S. 150, 41 L.Ed. 666, 17 Sup. Ct. Rep. 255............ 12 Haiku Sugar Co. v. Johnstone (1918), 249 Fed. 103, 001 C.C.A. OOD. on... ccs ccdweenvaeen 17 International Paper Co. v. Burrill (1919), 260 Fed. O00 OO. a. 6 ace khcen doe eee 17 Kentucky R. Tax Cases (1885), 115 U.S. 321, 29 L.Ed. 414, 6 Sup. Ct. Rep. 57... cc cccsevees ll Ketchikan Spruce Mills v. Kewey (1957), 17 Alaska hE TE ee ee ne 18 Lelande v. Lowery (1945), 26 Cal. 2d 224, 157 P. 2d BR ses n'k 6.0.5) bp ous oe ne 3 Lindsley v. Natural Carbonic Gas Co. (1911), 220 U.S. 61, 55 L.Ed. 369, 31 S. Ct. 337............ 12-13 Los Angeles v. Southern Cal. Tel. Co. (1948), 32 Cal. 2d 378, 196 P. 2d 773; appeal dismissed, 336 U.S. 929, 93 L.Ed. 1090, 69S. Ct. 737.......... 3-4 Louisville Gas & Electric Co. v. Coleman (1928), 277 U.S. 32, 72 L.Ed. 770, 48S. Ct. 423........ 11, 13 Magoun v. Illinois Trust & Sav. Bank (1897), 170 U.S. 283, 42 L.Ed. 1037, 18 Sup. Ct. Rep. 594... ll McDonald v. Board of Election Commissioners (1969), 394 U.S. 802, 22 L.Ed. 2d 739, 89 S. Ct. iv TABLE OF AUTHORITIES CITED (Continued) Cases Page Metropolitan Life Insurance Co. v. State (1924), 194 EP PE rte Us eee 24 Mullaney v. Hess (1951), 189 F. 2d 417 (9th Cir.)... 18 National Home v. Parrish (1913), 229 U.S. 494, 57 ae OY Re ere ee 17 People v. England (1934), 140 Cal. App. 310, 35 P. i Thea hae ie a a 3 People v. Stevens (1877), 71 N.Y. 527............. 14 People v. Sullivan (1943), 60 Cal. App. 2d 539, 114 IT See aes ss cast kes s cat 3 Philadelphia and Reading Coal and Iron Co. v. School District of Borough of Tamaqua (1931), PI 5 484 k-v0: 60.6 os ogee ss 18, 19 Proctor & Gamble Distributing Co. v. Sherman ® 17 Railway Express Agency v. New York (1949), 336 U.S. 106, 93 L.Ed. 553, 31S. Ct. 463........... 13 Redfield v. Bartels (1891), 139 U.S. 694, 35 L.Ed. a ne wiWeden seas 17 Reed v. Reed (1971), 404 U.S. 71, 30 L.Ed. 2d 225, ki i a's a cen ess 12, 16 Re Railroad Tax Cases (1882), 8 Sawy. 238, 13 Fed. as ea Pe aoa nb bidin's Edeas.g0 0+ > ll Royster Gauna Co. v. Virginia (1920), 253 U.S. 412, 64 L.ED. 989, 40 Sup. Ct. Rep. 560............ 12, 13 San Bernardino v. Way (1941), 18 Cal. 2d 647, 117 I ae CURES, aon vainia s ace cnid's oh s ne 3 Santa Clara County v. Southern P. R. Co. (1883), 9 ee eer eee ere ll TABLE OF AUTHORITIES CITED (Continued) Cases Page Schlesinger v. Wisconsin (1925), 270 U.S. 230, 70 L.Ed. 557, 46 Sup. Ct. Rep. 260............... 12 State, etc., Co. v. Davis (1915), 228 Fed. 246(D.C.) 17 State Tax Commission v. United Verde Extension Mining Co. (1931), 39 Ariz. 136, 4 P. 2d 395; 39 Ariz. 331, 6 P. 2d 889 (1931 reh. denied)......... 21-22 Williams v. Harvey (1931), 91 Mont. 168, 6 P. 2d Since ads wales Cs CE 1h aes Lc eek Sc aeres 22 Zimmerman v. Corson County (1917), 39 S.D. 167, RR of RS Gee 5 ee A en ae 22, 23 Miscellaneous ee, ey. a a 16 Fe Ail se. ne oC eee 16 Pg Se ee a a Oe wes. Tae 17 $2 Cai Dar; Se eeetion 87S 00.5. . eee i ee ah 3 Statutes Calif. Civil Code Section 1915...............0c cues 4,14 Calif. Rev. & Tax. Code Section 202(b) (Now 202(a)(2)) 7 Calif. Rev. & Tax. Code Section 2617............... 14 Calif. Rev. & Tax. Code Section 2618............... 14 Calif. Rev. & Tax. Code Section 2704............... 14 Calif. Rev. & Tax. Code Section 2705............... 14 vi TABLE OF AUTHORITIES CITED (Continued) Statutes Page Calif. Rev. & Tax. Code Section 2759............... 14 Calif. Rev. & Tax. Code Section 2760............... 14 Calif. Rev. & Tax. Code Section 2761............... 14 Calif. Rev. & Tax. Code Section 2762............... 14 Calif. Rev. & Tax. Code Section 2922............... 14 Calif. Rev. & Tax. Code Section 2922.5.............. 14 Calif. Rev. & Tax. Code Section 5096............... 10 Calif. Rev. & Tax. Code Section 5097............... 10 Calif. Rev. & Tax. Code Section 5099............... 10 Calif. Rev. & Tax. Code Section 5101............... 10 Calif. Rev. & Tax. Code Section 5103............... 10 Calif. Rev. & Tax. Code Section 5104.............. 4, 10 Calif. Rev. & Tax. Code Section 5105.............. 4, 10 Calif. Rev. & Tax. Code Section 5105.5............. 4,10 Calif. Rev. & Tax. Code Section 5106............... 4 Calif. Rev. & Tax. Code Section 5107............... 4,9 Calif. Rev. & Tax. Code Section 5108............... 4 Calif. Rev. & Tax. Code Section 5141.............. 4, 10 Calif. Rev. & Tax. Code Section 5141.5.............. 4 Calif. Rev. & Tax. Code Section 5142.............. 4, 10 Calif. Rev. & Tax. Code Section 5143............... 4,9 Calif. Rev. & Tax. Code Section 5150.............. 4, 10 Calif. Rev. & Tax. Code Section 5151............... 4 Calif. Rev. & Tax. Code Section 6907............... 4 Calif. Rev. & Tax. Code Section 6936............... 4 Calif. Rev. & Tax. Code Section 8130............... 4 Calif. Rev. & Tax. Code Section 8151............... 4 Calif. Rev. & Tax. Code Section 9155............... 5 Calif. Rev. & Tax. Code Section 9174............... 5 Calif. Rev. & Tax. Code Section 10901.............. 5 Calif. Rev. & Tax. Code Section 11555.............. 5 Calif. Rev. & Tax. Code Section i11576.............. 5 vii TABLE OF AUTHORITIES CITED (Continued) Statutes Page Calif. Rev. & Tax. Code Section 11934.............. 5 Calif. Rev. & Tax. Code Section 12983.............. 5 Calif. Rev. & Tax. Code Section 13107.............. 5 Calif. Rev. & Tax. Code Section 14374.............. 5 Calif. Rev. & Tax. Code Section 14375.............. 5 Calif. Rev. & Tax. Code Section 16271.............. 5 Calif. Rev. & Tax. Code Section 16272.............. 5 Calif. Rev. & Tax. Code Section 19062.............. 5 Calif. Rev. & Tax. Code Section 19062.11............ 5 Calif. Rev. & Tax. Code Section 19091.............. 5 Calif. Rev. & Tax. Code Section 26080.............. 6 Calif. Rev. & Tax. Code Section 26081.............. 6 Calif. Rev. & Tax. Code Section 26107.............. 6 Calif. Rev. & Tax. Code Section 30366.............. 6 Calif. Rev. & Tax. Code Section 30406.............. 6 Calif. Rev. & Tax. Code Section 32405.............. 6 Calif. Rev. & Tax. Code Section 32417.............. 6 Calif. Rev. & Tax. Code Section 38606.............. 6 Calif. Rev. & Tax. Code Section 38616.............. 6 Calif. Rev. & Tax. Code Section 39202.............. 6 Calif. Rev. & Tax. Code Section 40116.............. 6 Calif. Rev. & Tax. Code Section 40130.............. 6 Calif. Rev. & Tax. Code Section 41105.............. 7 Calif. Rev. & Tax. Code Section 41113.............. 7 Calif. Rev. & Tax. Code Section 42505.............. 7 Calif. Rev. & Tax. Code Section 42515.............. 7 Constitution of the State of California, Aste 1 Biola BB. ia eG Ss OE 3 Constitution of the State of California Aabebe 8 Gatien Ga ssn. a ah SO 3 Constitution of the State of California Artiote XIE Section 16. 220 0 6 oo i ee UR es, 15 TABLE OF AUTHORITIES CITED (Continued) Statutes Constitution of the United States Fourteenth Amendment, Section 1 United States Code, po Ee ee United States Code, _: # — 8 A ene ix Page IN THE SUPREME COURT OF THE UNITED STATES October Term, 1978 No. HELEN BALL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Petitioner, vs. COUNTY OF LOS ANGELES, Respondent. Petition For Writ Of Certiorari To The Supreme Court Of The State Of California Petitioner, Helen Ball, individually and on behalf of all others similarly situated, prays that a Writ of Certiorari issue to review the denial of hearing by the Supreme Court of the State of California rendered on August 24, 1978, and to remand the case to the Supreme Court of the State of California for determination of Ball’s appeal. Additionally, petitioner prays that this Court review the opinions and decisions of the Court of Appeals, Second Appellate District, State of California, rendered on June 29, 1978, and determine whether the Court of Appeals improperly affirmed the Summary Judgment of the Superior Court of Los Angeles County, rendered on February 3, 1977. on OPINIONS BELOW The denial on August 24, 1978, by the Supreme Court of the State of California, of the Petition for Hearing is reported at Minutes, Supreme Court, San Francisco, August 24, 1978, and is set forth in Appendix A. The opinion and decision of June 29, 1978, of the Court of Appeals, Second Appellate District, State of California, on appeal is reported at 82 Cal. App. 3d 312, and is set forth in Appendix B. Order Dismissing Complaint and Entry of Summary Judg- ment in Favor of Defendant and Against Plaintiff, dated February 3, 1977, of the Superior Court of the State of California, for the County of Los Angeles, is set forth in Ap- pendix C. JURISDICTION The first Order of the Court of Appeals for the Second Appellate District was entered on June 29, 1978, and the denial of the Petition for Hearing was entered August 24, 1978. This Petition for Writ of Certiorari was filed within 90 days from the last Order as required by Section 2101(c) of Title 28 of the United States Code. The jurisdiction of this Court is invoked under Section 1257(3) of Title 28 of the United States Code. QUESTIONS PRESENTED 1. Whether the California Court of Appeals in affirm- ing the Summary Judgment of the Superior Court denied Ball’s equal protection of the laws. 2. Whether the Statutes of the State of California as contained in the Revenue and Taxation Code deny citizens equal protection under laws as they presently exist, for pay- ing interest on tax refunds. 3. Whether the conflict of laws of the United States and the States deny United States Citizens equal protection under the laws as they presently exist for paying interest on tax refunds. CONSTITUTIONAL PROVISIONS AND STATUTES INVOLVED The Constitutional provision at the heart of this Petition is the Fourteenth Amendment which states in Section 1. Citizens of the United States: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privilége or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws,” The provisions of the Constitution of the State of Cali- fornia, Article 1 Declaration of Rights, Section 11 (Uniform general laws) states: “All laws of a general nature shall have a uniform operation.” Section 21 (Privileges and immunities) states: “No special privileges of immunities shall be granted which may not be altered, revoked, or repealed by the Legislature; nor shall any citizen, or class of citizens, be granted privileges or immunities which, upon the same terms, shall not be granted to all citizens.” These provisions have been interpreted by the California courts as being the equivalent of the Equal Protection Clause of the Fourteenth Amendment (Department of Men- tal Hygiene v McGilvery, 50 Cal. 2d 742, 754, 329 P. 2d 689, 695; Lelande v Lowery, 26 Cal. 2d 224, 157 P. 2d 639; San Bernardino v Way, 18 Cal. 2d 647, 117 P. 2d 354; Peo- ple v Sullivan, 60 Cal. App. 2d 539, 141 P. 2d 200; People v England, 140 Cal. App. 310, 35 P. 2d 565; 11 Cal. Jur. 2d Section 272, and cases cited therein. See also Los Angeles v silt Southern Cal. Tel. Co., 32 Cal. 2d 378, 196 P. 2d 773, ap- peal dismissed, 336 U.S. 929, 93 L.Ed. 1090, 69 S. Ct. 737). The Statutes involved include California Civil Code Sec- tion 1915, providing the underlying basis for interest; and the California Revenue and Taxation Code: (Appendix G). Division 1 Property Taxation ~ Part 9 Corrections, Cancellations, and Refunds Chapter 5 Refunds Article 1 Refunds Generally Sections 5104, 5105, 5105.5, 5106, 5107, 5108! Article 2 Payment Under Protest and Suit to Recover Sections 5141, 5141.5, 5142, 5143? Article 2.5 Interest on Refunds Sections 5150, 5151° Division 2 Other Taxes Part 1 Sales and Use Taxes Chapter 7 Overpayments and Refunds Article 1 Claim for Refund Section 6907 Article 2 Suit for Refund Section 6936 Part 2 Motor Vehicle Fuel License Tax Chapter 7 Overpayments and Refunds Article 2. Claim for Refund Section 8130 Article 3 Suit for Refund Section 8151 ‘Sections 5104, 5105, 5105.5 Repealed by Stats 1976 Chapter 499 Sec- tions 7, 8, 9 and Renumbered Sections 5142 and 5150; Section 5108 Amended and Renumbered Section 5151 by Stats 1976 Chapter 499 Sec- tion 10. *Articie 2 Sections 5136-5154 Repealed by Stats 1976 Chapter 499 Sec- tion 11; Article 2 Sections 5140-5149.5 Added by Stats 1976 Chapter 499 Section 12. Article 2.5 Interest on Refunds Sections 5150 and 5151 Added by Stats 1976 Chapter 499 Section 13. Part 3 Use Fuel Tax Chapter 6 Overpayments and Refunds Article 1 Claim for Refund Section 9155 Article 2 Suit for Refund Section 9174 Part 5 Vehicle License Fee Chapter 3 Collections and Refunds Article 3. Refunds Section 10901 Part 6 Private Car Tax Chapter 5 Overpayments and Refunds Article 1 Claim for Refund Section 11555 Article 2 Suit for Refund © Section 11576 Part 6.7 Documentary Transfer Tax Act Chapter 4 Administration Section 11934 Part 7 Insurance Taxation Chapter 7 Cancellations and Refunds Article 2. Refund or Credit for Collected Taxes Section 12983 Chapter 8 Taxpayer’s Suits Section 13107 Part 8 Inheritance Tax Chapter 10 Refunds Sections 14374, 14375 Part9 Gift Tax Chapter 9 Refunds Article 3 Interest on Refunds Sections 16271, 16272 Part 10 Personal Income Tax Chapter 20 Overpayments and Refunds Article 1 Claim for Refund Sections 19062, 19062.11 Article 2 Suit for Refund Section 19091 Part 11 Bank and Corporation Tax Law Chapter 22 Refunds and Credits = me Article 1 General Provisions Sections 26080, 26081 Article 2 Suit for Refund Section 26107 Part 13 Cigarette Tax Chapter 6 Overpayments and Refunds Article 1 Claim for Refund Section 30366 Article 3 Suit for Refund Section 30406 Part 14 Alcoholic Beverage Tax Chapter 8 Overpayments and Refunds Article 1 Claim for Refund Section 32405 Article 2. Suit for Refund Section 32417 Part 18.5 Timber Yield Tax Chapter 7 Overpayments and Refunds Article 1 Claim for Refund Section 38606 Article 2. Suit for Refund Section 38616 Part 19 State Litter Control, Recycling, and Resource Recovery Assessment* Chapter 3 Administration Section 39202 (Provisions of Division 2 Part 1 Chapter 7 apply) Part 19 Energy Resources Surcharge Law° Chapter 5 Overpayments and Refunds Article 1 Claim for Ru.und Section 40116 Article 2 Suit for Refund Section 40130 Part 20 Emergency Telephone Users Surcharge Law* ‘Part 19 Sections 39000-39251 Added by Stats 1977 Chapter 1161 See- tion 4 and Repealed by Stats 1978 Chapter 87 Section 16, ‘Part 19 Sections 40001-40191 Repealed by Stats 1978 Chapter 87 Sec- tion 16, “Part 20 Added by Stats 1976 Chapter 443 Section 7, ~ Chapter 5 Overpayments and Refunds Article 1 Claim for Refund Section 41105 Article 3 Suit for Refund Section 41113 Part 21 State Litter Control, Recycling, and Resource Recovery Assessment’ Chapter 6 Overpayments and Refunds Article 1 Claim for Refund Section 42505 Article 2 Suit for Refund Section 42515 STATEMENT OF CASE A. Statement of Substantive Facts Helen Ball owns real property which she leased to the City of Los Angeles as a library materials depository bet- ween 1971 and 1974. She received erroneous tax bills from the County of Los Angeles and paid taxes on the property in each of the three years. Helen Ball subsequently discovered the assessment was improper and the tax bills were sent er- roneously as said property was exempt from taxation under Revenue and Taxation Code Section 202, Subdivision (b) (now Rev. & Tax. Code, Section 202(a)(2)). Application for exemption from property taxes was filed on April 10, 1974 and processed and verified by the County between April and July of 1974. Helen Ball requested a re- fund of taxes erroneously collected, plus interest. The Coun- ty refunded to Helen Ball the erroneously collected taxes without dispute, however, it refused to reimburse her for the use of her money, i.e. pay interest. In its opinion, the California Court of Appeals below stated at page 315: “The question presented by this appeal is whether a taxpayer is entitled to recover in- terest on tax payments erroneously collected "Part 21 Enacted by Stats 1978 Chapter 87 Section 17, oe by the County on exempt property when the County promptly refunds the erroneous payments upon being put on notice of its er- ror.” (Ball v County of Los Angeles, 82 Cal. App. 3d 312, 315) (Emphasis added). Further, at page 320, the Court of Appeals stated: “This plan is fair. The tax payments at issue were apparently collected by mutual mistake. Neither Ball nor the County seem to have been aware of the applicability of the exemption,” (Emphasis added), It is submitted that the question posed by the Court below is incorrect, While it is true the taxes were assessed by mistake and erroneously collected, the payments by the tax- payer were not by mistake nor erroneous. Ball relied on paragraph 12 of the Lease to direct the pay- ment of taxes, which states: “TAXES 12. Lessor shall pay all taxes or assessments levied upon real property herein demised, but shall not be liable for any taxes or assessments levied against the personal property or fixtures of the Lessee.” (Appen- dix H). A taxpayer must be able to pay statements for taxes in good faith, upon the expectation that if the statement is in- correct, then the payment made therefore will not only be refunded, but will be refunded with interest. It matters not that the refund is prompt or imprompt. The sole point is that the use of money requires payment for the use of money. Again, in its opinion filed on June 29, 1978, at page 320, the Court below continued on with its view as to prompt- ness, saying: “Ball is denied interest on her tax refund under such a plan because she received her refund shortly after she presented her ap- plication for exemption to the County — shortly after the County had been given = notice that these taxes had been erroneously collected from her.” (Emphasis added). Here again, the fact that the refund was received “short- ly” is of no moment. The point, as with promptness, is that whether the refund was received shortly or promptly, after the taxpayer presented her application, she should have been paid for the use of her money. B. Statement of Procedural Facts Petitioner commenced this action in Los Angeles Municipal Court on May 12, 1975. County demurred on grounds it lacked authority to pay interest; the demurrer was overruled and the County did not appeal. The Honorable Robert Fainer (now Superior Court Judge) presiding, stated: “The demurrer of the defendant, County of Los Angeles, to the complaint is overruled. The County of Los Angeles has the authority to refund “taxes” and the term “taxes” as used in Revenue and Taxation Code Sections 5107 and 5143 includes penalties, interest and costs. This is not an action to determine the legality of any tax, but is an action to recover the balance of taxes due after a re- fund, to wit, the interest thereon.” On November 10, 1975 a Second Amended Complaint was filed commencing this class action and was sub- sequently transferred to Los Angeles Superior Court. Coun- ty again demurred. In his ruling, Honorable Charles H. Phillips supported Judge Fainer’s opinion and denied Coun- ty’s demurrer. Upon the suggestion of Honorable Campbell M. Lucas, made to counsel for both parties, in order that legal issues could be ruled upon without first trying the factual issues which seemed not to be in dispute, and in order that the legal issues presented herein could expeditiously proceed thereafter to this Honorable Court, if necessary, County fil- ed its Motion for Summary Judgment. Said Motion was = granted by Honorable Campbell M. Lucas and entered in favor of County. (See Order for Dismissal and Summary Judgment and Reporter's Transcript on Appeal, Appendix C and D). Helen Ball appealed advancing the premise that all par- ties before a court of law are entitled to equal protection under the law as provided for by the Fourteenth Amend- ment of the Constitution of the United States (See page 7-8 of Appellant's Opening Brief (Appendix E); Footnote 1, Ball v County of Los Angeles, (supra) (Appendix B); and page 10-11 of Petition for Hearing in the Supreme Court of California (Appendix F)). Judgment was affirmed for the County by the Court of Appeals and filed )une 29, 1978. Ball then petitioned for a hearing before the Supreme Court of The State of California as set forth in Appendix F. Petition for Hearing was denied as entered in Minutes of the Supreme Court of the State of California of August 24, 1978 (Appendix A). REASONS FOR GRANTING WRIT A. Ball Denied Equal Protection Of Law By Discriminatory And Arbitrary Legislation For Payment Of Interest On Tax Refunds. Taxpayers in the State of California who discover an overpayment of Property Taxes or that they are entitled to a refund on said taxes must by law file a claim with the Coun- ty and exhaust all administrative remedies prior to filing suit for refund as provided by law. Sections 5096, 5097, 5099, 5103 (now 5141), 5104 (now 5142) of Revenue and Taxation ° Code. A claim for refund if acknowledged as valid by Board of Supervisors will be paid by warrant upon the appropriate fund (Section 5101) with no provision for interest. If claim is denied, taxpayer may then file suit per Section 5103 (now 5141). When the Court acknowledges the claim as valid, in- terest may be recovered per Sections 5105 and 5105.5 (now 5150). -—10— Under both of these situations the taxpayers are in the basic underlying similar circumstance of having a valid claim against the County for refund of erroneously collected taxes and the County has had the use of their money withoui just compensation, There is no equitable reason on one hand, that the Coun- ty can have the use of taxpayers’ money without just com- pensation (interest) only because the Board of Supervisors acknowledges the validity of the claim when presented, where on the other hand if a claim is denied and a Court of Law acknowledges the same claim as valid, taxpayers are allowed just compensation (interest) for the use of their money by the County. It is therefore submitted that this different treatment of taxpayers who have a claim of refund and for just compen- sation of the use of their money by the County is not fair, equitable nor affords equal protection under the law. As this Honorable Court put forth in Louisville Gas & Electric Co. v Clell Coleman (1928), 277 U.S. 32, 37, 72 L.Ed. 770, 774, 48 S. Ct. 423: “In the first place, it may be said generally that the equal protection clause means that the rights of all persons must rest upon the same rule under similar circumstances, Ken- tucky R. Tax Cases, 115 U.S. 321, 327, 29 L.Ed. 414, 419, 6 Sup. Ct. Rep. 57; Magoun v Illinois Trust & Sav. Bank, 170 U.S. 283, 293, 42 L.Ed. 1037, 1042, 18 Sup. Ct. Rep. 594, and that it applies to the exercise of all the powers of the state which can affect the individual or his property, including the power of taxation. Santa Clara County v Southern P. R. Co., 9 Sawy. 165, 18 Fed. 385, 388-399; Re Railroad Tax Cases, 8 Sawy. 238, 13 Fed. 722, 733. It does not, however, forbid classification; and the power of the state to classify for purposes of taxation is of wide range and flexibility, pro- vided always, that the classification “must be | reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly cir- cumstanced shall be treated aiike.” F. S. Royster Guano Co. v Virginia, 253 U.S. 412, 415, 64 L.Ed. 989, 990, 40 Sup. Ct. Rep. 560; Airway Electric Appliance Corp. v Day,266 U.S. 71, 85, 69 L.Ed. 169, 177, 45 Sup. Ct. Rep. 12; Schlesinger v Wisconsin, 270 U.S. 230, 240, 70 L.Ed. 557, 564, 43 A.L.R. 1224, 46 Sup. Ct. Rep. 260. That is to say, mere difference is not enough: the at- tempted classification “must always rest upon some difference which bears a reasonable and just relation»to the act in respect to which classification is proposed, and can never be made arbitrarily and with- out any such basis.” Gulf, C & S F R Co. v Ellis, 165 U.S. 150, 155, 41 L.Ed. 666, 668, 17 Sup. Ct. Rep. 255.” (Emphasis in original). sley v Natural Carbonic Gas Co., 220 U.S. 61, 55 L.Ed. 369, 31 S. Ct. 337 (1911); Railway Express Agency v New York, 336 U.S. 106, 93 L.Ed. 553, 69 S. Ct. 463 (1949); McDonald v Board of Election Commis- sioners, 394 U.S. 802, 22 L.Ed. 2d 739, 89 S. Ct. 1404 (1969). The Equal ‘Protection Clause of that amendment does, however, deny to States the power to legislate that dif- ferent treatment be accorded to persons plac- ed by a statute into different classes on the basis of criteria wholly unrelated to the ob- jective of that statute. A classification ‘must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly cir- cumstanced shall be treated alike.’ Royster Guano Co. v Virginia, 253 U.S. 412, 415, 64 L.Ed. 989, 990, 40 S. Ct. 560 (1920).” It is respectfully submitted that the treatment and classification of taxpayers in California with regard to pay- It was also stated in recent decisions of this Court that dif- ing just compensation or interest on property tax refunds by ferent treatment of persons placed into different classes by claim or suit does not meet the principles as set forth in statute cannot be legislated, as set forth in Thomas S. Louisville Gas & Electric Co. v Coleman (supra). The dif- Eisenstadt v William R. Baird (1972), 405 U.S. 438, ference in classification and treatment is unreasonable and 446-447, 31 L.Ed. 2d 349, 358-359, 92 S. Ct. 1092: “The basic principles governing application of the Equal Protection Clause of the Four- teenth Amendment are familiar. As The Chief Justice only recently explained in Reed v Reed, 404 U.S. 71, 75-76, 30 L.Ed. 2d 225, 229, 92 S. Ct. 251 (1971): “In applying that clause, this Court has consistently recognized that the Fourteenth Amendment does not deny to States the power to treat different classes of persons in different ways. Barbier v Connolly, 113 U.S. 27, 28 L.Ed. 923, 5S. Ct. 357 (1885); Lind- a arbitrary, having no fair and substantial relation to the ob- ject of the legislation. In Christopher Green v State of California (1887), 73 C. 29, 30, the California Supreme Court set forth the following principle of conduct between individuals and state which has been subsequently followed: “A state, in its conduct with individuals, must be judged by the same rules which govern in similar cases between individuals; and whenever by its own consent, it comes into court for the adjudication of its rights and obligations, those rights and obligations should be adjusted upon the same principles as if both parties to the suit were private in- dividuals. (People v Stevens, 71 N.Y. 527.)” California Revenue and Taxation Code in all its parts authorizes assessment of penalty and interest if returns or payment of taxes are delinquent and additional penalties for intentional failure or fraud. (See Sections 2617, 2618, 2704, 2705, 2759-2762, 2922, 2922.5 re penalty and interest for Property Taxes). There is no requirement for suit against the taxpayer to collect these penalties and interest. Yet the County, supposedly judged by the same rules, refuses to pay interest on refund of property taxes unless taxpayer is forced to sue, The theory of interest as set forth in California Civil Code Section 1915 is: , “Interest is the compensation allowed by law or fixed by the parties for the use, or for- bearance, or detention of money.” The delinquent taxpayer detains money belonging to the state and must pay penalty and interest without suit for the use and detention of state’s money. However, ‘vhen the state erroneously collects taxes, it has the use of the tax- payer's money but refuses to pay interest for the use and detention of that money unless the taxpayer is forced to sue. It is therefore submitted that this treatment and classification by the state is neither fair, equitable nor in keeping with the principle of Green v State of California (supra). B. California Revenue And Taxation Code As Presently Constituted Is Discriminatory And Ar- bitrary In Its Policy Of Payment Of Interest On Overpayments And Refunds Of Taxes. California Revenue and Taxation Code contains approx- imately 18 various types of taxes imposed by law upon the citizens of the State. All Parts provide for the State to assess and collect, without suit, penalties for delinquent returns ae and/or payments plus interest for the use of money due the State by taxpayers from the date due until paid. One Part, Vehicle License Fee, provides for a refund of erroneously collected fees but no provision for interest. Two Parts, Property Taxation and Documentary Transfer Tax, have provisions for refunds of erroneously collected tax by 1) claim against the agency, but does not provide for interest by this method; 2) suit of agency with provisions for interest. The fifteen remaining taxes provide for refund by claim against the agency and for suit to recover erroneously paid taxes and both methods of recovery provide for interest for the use of taxpayer's money. The last paragraph of Section 15 of Article XIII, Revenue and Taxation, of the Constitution of the State of California requires allowance of interest on recovery of an illegally col- lected tax: “No injunction or writ of mandate or other legal or equitable process shall ever issue in any suit, action or proceeding in any court against this State, or any officer thereof, to prevent or enjoin the collection of any tax levied under the provisions of this article; but after payment thereof action may be main- tained to recover, with interest, in such manner as may be provided by law, any tax claimed to have been illegally collected.” (Emphasis added). The filing of a claim for refund is an action provided by law and the law requires exhaustion of all administrative remedies prior to the state allowing suit. The California Constitution does not specify legal action by suit to recover taxes paid. It is clear that the Constitution of the State of California and fifteen Parts of the Revenue and Taxation Code intend that the state pay interest for the use of a taxpayer’s money received and collected illegally. Erroneous collection of taxes is illegal and the taxpayer should be reimbursed for the use of this money by the County just as by law the County — requires interest from the taxpayer for the use of its money not paid when due the County. It has been set forth by this donorable Court in Eisenstadt v Baird and Reed v Reed (supra) that a State is not denied “the power to treat different classes of persons in different ways” but does not have “the power to legislate that treatment be accorded to persons placed by a statute into different classes on the basis of criteria wholly unrelated to the objective of that statute.” The State of California, by statute, has classified persons into various tax categories making them similar in cir- cumstances, basically all being taxpayers. However, California has by statute accorded a different treatment of these taxpayers with regard to payment of interest, for the use of their money by illegally or erroneously collected taxes, contrary to the case law established by this Court and the Constitution of the State of California. The criteria ‘of paying interest on refunds to some and not others is wholly unrelated to the objective of the Revenue and Taxation Code which under the Constitution of the State of Califor- nia is to create revenue by lawful means for the State. Property taxpayers are denied the same treatment as other taxpayers. All must exhaust administrative remedies before initiating suit, however, property taxpayers are denied compensation for the use of their money by the State through these remedies unlike other taxpayers and are therefore denied the possibility of recovery by suit in order to be made whole, denying them their constitutional right to equal protection under the law. C. The Supreme Court And Lower Federal Courts Have Already Affirmed The Proposition That Citizens Are Entitled To Recovery Of In- terest In Connection With A Refund Of Tax. The subject of the right of a taxpayer to collect interest on a tax refund is annotated in 57 A.L.R. 357, 76 A.L.R. 1012, wa — — —_——-— — ee es and 112 A.L.R. 1183. While there is some conflict among the authorities on this issue, it appears from these annota- tions that a majority of jurisdictions mandate recovery on interest. The Honorable Learned Hand declared in Proctor Gam- ble Distributing Co. v Sherman (1924), 2 F. 2d 165, 166 (D.C.N.Y.): . . it is not an adequate remedy, after tak- ing away a man’s money as a condition of allowing him to contest his tax, merely to hand it back, when, no matter how long after, he established that he ought never to have been required to pay at all. Whatever may have been our archaic notions about in- terest, in modern financial communities a dollar today is worth more than a dollar next year, and to ignore the interval as im- material is to contradict well-settled beliefs about value, and, if I get no compensation for its loss, my remedy does not altogether right my wrong.” The United States Supreme Court has recognized for over 100 years that: “Where an illegal tax has been collected, the citizen who has paid it, and has been obliged to bring suit against the collector, is, we think, entitled to interest in the event of recovery, from the time of the illegal exaction.” Er- skine v Van Arsdale (1872) 15 Wall. (U.S.) 75, 77, 21 L.Ed. 63. See also: Redfield v Bartels (1891), 193 U.S. 694, 11 Sup. Ct. 683, 35 L.Ed. 310; National Home v Parrish (1913), 229 U.S. 494, 33 Sup. Ct. 944, 57 L.Ed. 1296; Billings v United States(1914), 232 U.S. 261, 286, 34 Sup. Ct. 421, 58 L.Ed. 596; State, etc., Co. v Davis (1915) (D.C.), 228 Fed. 246, 250; Haiku Sugar Co. v Johnstone (1918), 249 Fed. 103, 109, 161 C.C.A. 155; International Paper Co. vBurrill (1919) (D.C.), 260 Fed. 664, 667. In International Paper Co. v Burrill (supra), at page 669, the Court held: “As the money was wrongfully obtained by the defendant through implied duress, and as it is no defense that the defendant has paid the money into the an ae treasury of the commonwealth, there must be judgment for the plaintiff for the amount of the tax, with interest thereon from the date of payment, May 22, 1916.” Modernly, the “adequacy of remedy at law” issue was raised in Mullaney v Hess (1951), 189 F. 2d 417 (9th Cir.). Applying Alaska law, the Court stated: “We think that the weight of authority is that interest is recoverable on tax refunds in absence of express statutory authority therefor. The reasoning of these cases is in harmony with the modern view they express.” Id. at 420. In 1957 in Ketchikan Spruce Mills v Kewey (1957), 17 Alaska 336, the United States District Court for Alaska also permitted recovery of interest under a territorial statute which provided for refund of taxes but made no mention of interest. Of all the states, Pennsylvania has the most thoroughly developed case law on the question of interest on refunds of real property taxes. There has, moreover, been an evalua- tion of principles in that state which will be illuminating in the case of Helen Ball. ‘ The underlying principles were enunciated in the leading and often cited case of Philadelphia and Reading Coal and Iron Co. v School District of Borough of Tamaqua (1931), 304 Pa. 489, 156 A. 75. Plaintiff won a judgment that real property taxes for the benefit of the school district had been improperly assessed. The court held: “One further question raised in argument re- mains to be determined, whether or not plaintiff is entitled to interest on the amount paid in excess of the proper levy. The judg- ment as it now stands is for the total excess payment, $8,547.75, with interest at 6 per cent, from September 21, 1923, the date of payment by plaintiff, the whole amounting to $12,137.80. The precise point does not ap- pear to have been raised before in this court, and we are thus free to deal with it a on unhampered by precedent. It is unnecessary to review the wealth of conflicting authorities in other jurisdictions .. . . The weight of authority appears to be that, where the taxpayer is entitled to a refund on an excess payment of taxes, whether such right accrues by virtue of statute or not, the taxpayer is entitled to interest on the refund if no statute or public policy militates against it. Such is the law in the United States courts . as well as several other states.... With this view we agree.” 156 A. at 77 (Citations omitted). In Cities Service Oil Co.v City of Pittsburgh (1972), 449 Pa. 481, 297 A. 2d 466, the court discussed the various rules in a context of mercantile license taxes paid for the benefit of a school district. The court’s decision appears to be equal- ly applicable to real estate taxes, especially since the whole line of decisions originated with Tamaqua. It was held, in broad and useful language: “If a taxpayer is entitled to a tax refund, he is also entitled to interest on the refund so long as no statute or public policy militates een Bee eis Ss The commonwealth Court, in determining the date from which to compute the interest due Cities Service, stated, ‘. . . before interest will accrue there must be an improper detention by the taxing authority; and the taxpayer must make a de- mand for refund. . . However, the taxing authority's detention of the taxpayer's money is not improper until there has been a deci- sion to this effect.’ . . . “We agree that there must be an improper detention and that the taxpayez must make a demand for refund. We disagree that in all cases improper detention commences from the date of a decision to that effect. Rather, we believe that a court can decide that a tax- as. P. 103, upon reargument, 141 Wash. 28, 252 P. 943 (1927), interest was allowed on real property taxes illegally assessed and paid under protest. The court referred to an older case which awarded interest but gave no reason for the award: ing body has improperly detained the tax- payer's money from a point in time prior to the determination that the detention is im- proper... . “Here the taxpayer has asked that interest be computed from the date of payment and demand for refund. Courts in charging and allowing interest need not limit themselves by hard and fast rules but should charge and allow interest in accordance with principles of equity ... . That the taxpayer’s money was improperly detained and demand for re- fund made should be sufficient to justify a court’s exercise of its equity powers. Here, however, the taxpayer paid the taxes promptly once they were assessed; inflation had deteriorated the value of the dollar that was improperly detained by the City and School District; and the City and School District, never having any right to the money, were able to borrow less or invest the money. Since the City and School District benefited from the use of the taxpayer's money, it is only fair that the taxpayer receive simple interest for the period the “It is also contended that in any event the in- terest allowed from the date of the payment of the illegal tax under protest is improper, citing authority from other jurisdictions to the effect that interest is never allowed on il- legal taxes sought to be recovered after pay- ment. We seem to have settled this question in this state in the case of Great Northern Railway Co. v Stevens County, 108 Wash. 238, 183 P. 65, where we gave directions to enter judgment in favor of the company against the County for the amount of the il- legal tax, with legal interest from March 6, 1918, the date on which the railway com- pany was compelled to, and did, pay an ex- cessive an illegal tax. “After having examined and considered all the questions raised in the case, we are con- vinced that the judgment was right.” 251 P. at 110. See also Doric Co. v King County, 59 Wash. 2d 741, 370 P. 2d 254 (1962). In Arizona, the principal decision is State Tax Commis- sion v United Verde Extens'on Mining Co. (1931), 39 Ariz. 136, 4 P. 2d 889. The Court relied upon statutory authoriza- tion for the award of interest but gave as its reason an equitable argument: “(I)n reason and logic, when the state com- pels one of its citizens under the pain of forfeiting all rights of recovery, to pay in ad- the date of payment and demand.” 297 A. 2d vance of suit a sum of money which it is at 468-469 (Citations omitted; emphasis afterwards adjudged was illegally demand- added), ed, the same principle of common justice uld require that the state, to make the The equitable principles enunciated in that case should would req , be applied in the case of Helen Ball. citizen whole, should repay not merely the In Bryam v Thurston County (1926), 141 Wash. 28, 251 sum illegally so obtained, but interest from money was improperly detained. “Moreover, if taxing authorities are authorized to collect combined interest and penalties on back taxes to their original due dates (at a rate greater than the simple in- terest sought here on a refund), we see no hardship in requiring them to pay simple in- terest on amounts i:snproperly detained from CC tt it —20— = ae the date the money was paid to it. Were this a case of a small taxpayer, who, in order to maintain his suit, was compelled to borrow money to pay the illegal tax, it would be recognized at a glance that full justice could only be done by repaying to him, not only the sum so paid, but interest thereon, and in principle no difference exists because the tax- payer in this case happens to be a large cor- poration which presumably had in_ its treasury the funds to pay the tax.” 4 P. 2d at 399. The reasoning of the United Verde case was relied upon in Williams v Harvey (1931), 91 Mont. 168, 6 P. 2d 418, which was, however, also a case based primarily on statute. See also Ford Motor Co. v City of Detroit (1973), 43 Mich. App. 248, 204 N.W. 2d 348. In South Dakota, the leading case is Zimmerman v Cor- son County (1917), 39 S.D. 167, 163 N.W. 711. The Court spoke of interest in the context of whether an injunction should be issued, a disallowance of interest resulting in “no adequate remedy at law.” It was held: to the contrary, it should come into court on the same basis as to liability for interest and costs, in the event of adverse decision, as any other suitor... . “, . . Conceding that sovereignty is not subject to suit without its consent, and that a suit to recover taxes paid may be deemed a suit against the sovereign, nevertheless when the sovereign consents to suit it ought not to be given an unfair and arbitrary advantage therein, beyond what is accorded to other suitors similarly circumstanced, unless necessity or the language of a statute so re- quires. We think Zimmerman v Corson County announces a rule consonant with justice and supported by many decisions, and we are not now disposed to depart from it merely because it was not treated at more length when announced, or because there is and has been some conflict in the decisions relating to the point.” 229 N.W. at 395. “Respondent's suggestion that the remedy is See also Chicago and Northwestern Ry. v Schmidt (1970), not adequate for the reason that the statute 85 S.D. 223, 180 N.W. 2d 233 (plaintiff entitled to interest does not in terms authorize a recovery of in- but employed erroneous procedure). terest is without merit. It cannot be doubted In Indiana, the court rejected contractual arguments in a that plaintiff would be entitled to interest case involving taxes on the receipts of an insurance company upon any sum wrongfully collected by the and relied on cases of the United States Supreme Count: County; nor can we agree with respondent's “(In actions to recover back money suggestion that the enforced collection of a tax, unlawful in whole or in part, may result in irreparable injury such as to entitle the plaintiff to a remedy by injunction.” 163 N.W., at 713, Likewise in Chicago St. P. M. &. O. Ry. v Mundt (1930), 56 S.D. 530, 229 N.W. 394, it was held: “It seems to us the fair, just and reasonable rule that, when the sovereign submits itself to suit, unless the statute expressly provides unlawfully enacted in the name of the state by a public officer, of which the state has had the possession and use, and of the use of which the owner has been deprived since it was so paid under compulsion, a different rule has been applied. For many years the Supreme Court of the United States has uniformly held that ‘in suits against collec- tors to recover moneys illegally exacted as taxes and paid under protest *** interest is —23— recoverable without any statute to that ef- fect, and this, although the judgment is not to be paid by the collector but directly from the treasury.’ Erskine v Van Arsdale, 15 Wall. (U.S.) 75, 77, 21 L.Ed. 63 (1872).... “The rule thus adopted is just and equitable and should be followed in the absence of any positive law to the contrary.” Metropolitan Life Insurance Co. v State, 194 Ind. 657, 144 N.E. 420, 422 (1924) (Citations omitted). An older case, much cited, held under statutory authority that interest should be paid from the date of demand. Boott Cotton Mills v City of Lowell (1893), 159 Mass. 383, 34 N.E. 367. CONCLUSION It is evident that the majority of jurisdictions favors pay- ment of interest for the use of a taxpayer's money by the state. It is not an adequate remedy, after using a taxpayer's money, merely to hand it back to him no matter how long after he established he need not have paid it al all. With the economic situation of a dollar today being worth less next year, it is not fair, equitable or just that states can legislate laws denying a citizen what he justly and rightfully deserves and that which other citizens in different jurisdictions justly and rightfully obtain. It denies them their constitutional right to equal protection under the laws of the land. The Constitution of the State of California requires in- terest to be paid for the use of taxpayers money from illegal- ly collected taxes and the Fourteenth Amendment to the Constitution of the United States provides equal protection under the laws. Inasmuch as Helen Ball has been denied her rights under law, review by certiorari is the only effective means of assuring that Helen Ball will not lose those rights. It is therefore urged that this Court review and remand this case to the Supreme Court of the State of California with an order that the Supreme Court of the State of a. California decide the merits of Ball’s appeal which was directed to the issue of whether Ball was entitled to interest for the use of money illegally and erroneously collected as taxes as provided in the Constitution of the State of Califor- nia. Petitioner also urges that this Court decide whether the Court of Appeals, Second Appellate District, State of California improperly affirmed the Summary Judgment of the Superior Court of Los Angeles County, thereby denying Ball of her constitutional right to equal protection of the law and what is justly and rightfully hers. Respectfully submitted, HELEN BALL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, By VOLNEY F. MORIN, JR., VOLNEY F. MORIN, VOLNEY F. MORIN, JR., VOLNEY F. MORIN, INC. LAW CORPORATION Attorneys for Petitioner. pe ET APPENDIX A. MINUTES SUPREME COURT SAN FRANCISCO, AUG. 24, 1978 — (2d Civ 52206, Div 3)—Ball v. County of Los Angeles. (82 Cal. App. 3d 312.) Ap- pellant’s petition denied. APPENDIX B. COURTS OF APPEAL SECOND APPELLATE DISTRICT DIVISION THREE 312 BALL V. COUNTY OF LOS ANGELES 82 Cal. App. 3d 312; ______ Cal. Rptr. (Civ. No. 52206. Second Dist., Div. Three. June 29, 1978.) HELEN BALL, Plaintiff and Appellant, v. COUNTY OF LOS ANGELES, Defendant and Respondent. SUMMARY Plaintiff commenced an action against a county, alleging that she was entitled to recover interest on property taxes voluntarily refunded to her by defendant. The refund was promptly paid by the county upon receipt and verification of information that certain property owned by plaintiff and upon which she had paid tax was exempt from taxation. The trial court granted a motion for summary judgment in favor of defendant county. (Superior Court of Los Angeles County, No. CA 000289, Campbell M. Lucas, Judge.) The Court of Appeal affirmed. The court held that there was no right to interest as payment for the use of money unless the right has been created by statute or by an express or implied contract. In California, there is no implied con- tract of any kind that the state or county will pay interest on its indebtedness. The court also held that Rev. & Tax. Code, Section 5107, does not authorize accrued interest on a tax refund. The court further held that the existence of specific sections in the Revenue and Taxation Code express- a ly providing for the payment of interest on tax refunds negates any conclusion that a taxpayer's entitlement to in- terest is provided for generally. Under the doctrine of “the expression of one excludes the other” the failure of the Legislature to provide expressly for the payment of interest on certain refunds while expressly providing for such pay- ment on other refunds indicates an intention to exclude from the omitted refunds the obligation of interest. Finally, the court held that the Revenue and Taxation Code reveals a comprehensive legislative plan which authorizes recovery of interest on a tax refund only where a county, with notice of an improper assessment has’ failed to grant a tax refund. Thus, plaintiff was not entitled to a refund. She received her refund shortly after she presented her application for ex- emption to the —— (82 Cal. App. 3d 313) county and shortly after the county had been given notice that these taxes had been erroneously collected from her. (Opinion by Cobey, Acting P.J., with Allport, and Potter, JJ., concurring.) HEADNOTES Classified to California Digest of Official Reports, 3d Series (1) Interest Section 2—When Interest Recoverable or Allowable. It is well established that there is no right to interest as payment for the use of money unless the right has been created by statute or by an express or implied contract. (2) Interest Section 2—When Interest Recoverable or Allowable. The state, or subdivisions thereof, are liable for interest for the use of a taxpayer’s money only if there is a specific statute authorizing the payment of interest on refund. (3a, 3b) Property Taxes Section 63 —Collection and Pay- ment—Actions to Recover Taxes—Interest.—-In an ac- tion against a county to recover interest on property sin taxes voluntarily refunded by the county, Rev. & Tax. Code, Section 5107 does not authorize the payment of interest by the county for the use of a taxpayer's money. Section 5107 is a general definitional section which makes clear that interest collected from the tax- payer in connection with tax payments will be includ- ed in any refund of those taxes. The section defines on- ly the scope of tax refunds and does not constitute authorization for the payment of interest by a county. (See Cal. Jur. 2d, Taxation, Section 382; Am. Jur. 2d, In- terest and Usury, Section 34.) (4) Statutes Section 39—Giving Effect to Statute—Con- firmation of Parts—Construction of Statute in Con- text.—A cardinal rule of statutory interpretation is that code sections are not to be read in isolation but construed in context. (5) Property Taxes Section 63—Collection and Payment—Actions to Recover Taxes—Interest.— The existence of various sections in the Revenue and Taxa- tion Code expressly providing for the payment of in- terest on tax refunds negates the conclusion that a tax- payer's entitlement (82 Cal. App. 3d 314) to interest is provided for generally. Under the doctrine of “the ex- pression of one excludes the other,” the failure of the Legislature to provide expressly for the payment of in- terest on certain refunds while expressly providing for such payment on other refunds indicates an intention to exclude from the omitted refunds the obligation of interest. (6) Property Taxes Section 63—Collection and Payment—Actions to Recover Taxes—Recovery of In- terest. —The Revenue and Taxation Code reveals a comprehensive legislative plan which authorizes recovery of interest on a tax refund only where a coun- ty, with notice of an improper assessment, has failed to grant a tax refund. Interest is denied on tax refunds unless and until the county receives notice of its error, malign and interest does not begin to accrue until the date of the filing of the claim for refund. (7) Restitution and Constructive Contracts Section 1—Interest.— Where money has been improperly paid ‘.y one private party to another under a mutual mistake, interest will not begin to accrue until the mistake is discovered and a demand for restitution made, Interest is not recoverable until and unless an individual has notice of his duty to make restitution. (8) Counties Section 16—Claims—Interest.—Where the government owes a liquidated claim upon a definite date, that claim does not draw interest until demanded based on the consideration that it would be inconve- nient and burdensome for the officials of a municipali- ty or county to seek its creditors and tender payment of their claims, and also that it would be oppressive and unjust to permit creditors of a municipality or county with good credit to turn claims into investments through omitting to present them and collecting in- terest thereon. COUNSEL Volney F. Morin and Volney F. Morin, Jr., for Plaintiff and Appellant. John H. Larson, County Counsel, and Charles J. Moore, Deputy County Counsel, for Defendant and Respondent. (82 Cal. App. 3d 315) OPINION COBEY, Acting P.J.—Helen Ball, suing individually and on behalf of all others similarly situated, appeals from a summary judgment entered in favor of the County of Los Angeles (hereafter County) on her complaint alleging that she is entitled to recover interest on property taxes volun- tarily refunded to her by the County. The refund was paid by the County upon receipt and verification of information that certain property owned by Ball and upon which she = = had paid tax was exempt from taxation. The appeal lies. (Code Civ. Proc., Sections 437c, 904.1, subd. (a).) The question presented by this appeal is whether a tax- payer is entitled to recover interest on tax payments er- roneously collected by the County on exempt property when the County promptly refunds the erroneous payments upon being put on notice of its error.' We will answer this ques- tion in the negative. A taxpayer has no right to recover in- terest from the County unless interest is provided for by statute and such is not the case here. FACTS? During the three year period between 1971 and 1974 Ball owned real property which she leased to the City of Los Angeles as a library materials depository. Due to the nature of the property's use, Ball was entitled to exemption of it from property taxation. (Former Rev. & Tax. Code, Section 202, subd. (b).)° Nevertheless, no application for exemption ‘Ball raises two additional contentions which need not be dealt with at length. First, she contends that two trial court rulings prior to the sum- mary judgment—overruling demurrers raising the same issue raised by the County's motion for summary judgment—established her right to in- terest on the refunds as the law of the case and therefore should have been determinative of the motion for summary judgment, The fetal defect in this contention is that this doctrine applies only to a prior decision in the case determined by an appellate court. The rulings of a trial court during an earlier stage in the proceeding are not conclusive, (See Davies v Krasna (1975) 14 Cal. 3d 502, 507 (121 Cal. Rptr. 705, 535 P. 2d 1161, 79 A.L.R. 3d 807); 6 Witkin, Cal. Procedure (2d ed. 1971) Sections 633-634, pp. 4552-4553.) Ball's second additional contention is that she is entitled to interest on her refund as a matter of her constitutional right to equal protection of the law. (See U.S. Const., 14th Amend.) In response we need only note that this contention is unsupported by apposite authority. *The parties agree that there is no dispute between them with regard to the facts, *This exemption has been recodified as Revenue and Taxation Code sec- tion 202, subdivision (a)(2). All references to former code sections refer to sections in effect at the time of the action at issue. walfhenn (82 Cal. App. 3d 316) frdém property taxes was filed with the County until April 10, 1974, and taxes were collected on the property in each of the three years.‘ The County processed and verified Ball’s exemption claim between April and July of 1974. The County did not dispute Ball’s right to a refund and on August 12, 1974, a warrant was issued to Bal! refunding to her taxes paid on the exempt property between 1971 and 1974. No interest was included in the refund payment. DISCUSSION 1. County Is Liable for Interest Only Where Such Liability Is Created by Statute (1) It is well established that there is no right to interest as payment for the use of money unless the right has been created by statute or by an express or implied contract. (45 Am. Jur. 2d, Interest and Usury, Sections 34-35, pp. 39-40; cf. Civ. Code, Section 1428.) There is a split of authority, however, on the question of governmental liability for in- terest on tax refunds. In some jurisdictions it is held that there is an implied contract between the state and the tax- payer that the state will be liable for interest for the period of time it has the use of the taxpayer's money. Therefore these jurisdictions have adopted the rule that a state or municipal corporation which must refund all or part of a tax which has been paid is liable for interest on the refund even in the absence of a statute which specifically authorizes payment of interest. (Annot., Right to Interest on Tax Re- fund or Credit in Absence of Specific Controlling Statute *A request for refund of tax payments will be acted upon if the claim for refund is filed within four years after the making of the payment. (Rev. & Tax. Code, Section 5097, subd. (b).) Legislation which became effective subsequent to the case at bench, however, now requires submission of an annual application for exemption and allows only a partial refund if the taxpayer fails to file a timely application. (Rev. & Tax. Code, Sections 255, 270; 58 Ops. Cal. Atty. Gen. 538, 539-541 (1975).) a (1963) 88 A.L.R. 2d 823, 825-827, Section 2, and cases cited.) Other jurisdictions have rejected the implied con- tract theory and follow the rule that there is no liability for interest on a refund in the absence of a statute that specifically creates a liability for such interest. (Idem., 88 A.L.R. 2d 823, 835-840, Section 5, and cases cited.) Several rationales have been advanced for the rule requir- ing specific statutory creation of governmental liability for interest on tax refunds. The rule has been said to be based upon the doctrine that requires the state’s consent before the state becomes liable. (Columbia Steel Co. v. State (1949) 34 Wn. 2d 700 (209 P. 2d 482, 489); cf. Sovereign Immunity (82 Cal. App. 3d 317) Study (Feb. 1963) 5 Cal. Law Revision Com. Rep., pp. 17-21.) It is suggested that the rule is supported by the theory that a contract for interest is implied only when there is either delay or default on the part of the debtor and such delay or default will not be attributed to the government since it is presumed that the government always stands ready to pay what it owes promptly. (Monarch Mills v. South Carolina Tax Commission (1929) 149 S.C. 219 (146 S.E. 870, 872); cf. Evid. Code, Section 664; Tripp v. Swoap 1976) 17 Cal. 3d 671, 683 (131 Cal. Rptr. 789, 552 P. 2d 749).) The rule has been said to rest upon the practical con- sideration that the tax collector has no money to pay interest in the absence of statutory authority to establish a fund for that purpose. (Lakefront Realty Corporation v. Lorenz (1960) 19 Ill. 2d 415 (167 N.E. 2d 236, 240-241).) Finally, several jurisdictions found the rule to be required by state constitutional provisions prohibiting payments from the state treasury in the absence of a legislative act or resolu- tion. (New England Mut. Life Ins. Co. v. Reece (1935) 169 Tenn. 84 (83 S.W. 2d 238, 242); Kaemmerling v. State (1924) 81 N.H. 405 (128 A. 6, 7); see Cal. Const., art. XVI, Section 7; Richter v. Board of Supervisors (1968) 259 Cal. App. 2d 99, 105 (66 Cal. Rptr. 52).) (2) California has adopted the rule which requires a specific statutory provision to create governmental liability for interest. ““(W)hatever the law may be elsewhere it has a Oe always been the rule in California that there is no implied contract of any kind that the state will pay interest on its in- debtedness for it is liable only when made so by statute.” (Gregory v. State of California (1948) 32 Cal. 2d 700, 703 (197 P. 2d 728, 4 A.L.R. 2d 924); People v. Union Oil Co. (1957) 48 Cal. 2d 476, 480 (310 P. 2d 409); Jones-Hamilton Co. v. Franchise Tax Bd. (1968) 268 Cal. App. 2d 343, 350 (73 Cal. Rptr. 896).) Therefore the County’ is liable to Ball for interest for the use of her money only if there is a specific statute authorizing the payment of interest on her refund. 2. The Statutory Scheme Denies Interest on Ball’s Refund (3a) Ball contends that accrued interest on her tax re- fund is authorized by Revenue and Taxation Code section 5107 and former section 5143.° We disagree. We do not believe that these sections authorize the (82 Cal. App. 3d 318) payment of interest by the County for the use of a taxpayer’s money. For reasons set forth below, we believe that these sections are merely general definitional sections which make clear that interest collected from the taxpayer in connection with tax payments (i.e. upon delinquent payment of taxes) will be included in any refund of those taxes. Specific sections of the Revenue and Taxation Code govern the payment of interest on tax refunds and indicate a comprehensive plan that denies interest on erroneously collected taxes during the period within which the taxpayer has failed to put the County on notice of the erroneous levy. (4) A cardinal rule of statutory interpretation is that code sections are not to be read in isolation but construed in context. (Tripp v. Swoap, supra, 17 Cal. 3d at p. 679; *Counties in California are subdivisions of the state. (Cal. Const., art. XI, Section 1; Gov. Code, Section 23000; Byers v. Board of Supervisors (1968) 262 Cal. App. 2d 148, 155 (68 Cal. Rptr. 549).) *Section 5143 was subsequently repealed. (Stats. 1976 ch. 499, Section 11, p. 1240.) All section references hereafter are to sections of the Revenue and Taxation Code unless otherwise noted. sili Stanley v. Justice Court (1976) 55 Cal. App. 3d 244, 249 (127 Cal. Rptr. 532).) (3b) Section 5107 and former section 5143 were once both part of the chapter of the Revenue and Taxation Code regarding refunds. Section 5107 remains a part of an article related to refunds generally. Section 5143 was part of the article regarding recovery of taxes paid under protest. These two sections have identical language. They both state that “as used in this article, ‘tax’ or ‘taxes’ include penalties, interest, and costs.” Although both these sections define “tax” as including in- terest, when read in context, it becomes clear that they refer only to the return of funds collected from the taxpayer. Whenever the word “tax” is used throughout the articles it is modified by the words “paid,” “collected,” “recovery,” or “refund.” Each of these modifiers implies that the “tax,” defined to include penalties, interest, and costs, has already been collected from the taxpayer by the County. Thus, these sections define only the scope of tax refunds. Such definition is necessary since tax refunds under sec- tion 5096 include both delinquent and nondelinquent taxes. The former may have interest, costs, and penalties added to the tax assessment itself. (See Section 6591.) (5) Likewise, an examination of the articles of which these two sections were a part reveals the existence of various sections expressly providing for the payment of in- terest on tax refunds. (Former Sections 5105, 5108, 5141;’ ’These sections were subsequently repealed, but largely reenacted in other section. (See Sections 5150, 5151.) Section 5105 stated: “In any action in which the recovery of taxes is allowed by the court, the plaintiff is entitled to interest on the taxes for which recovery is allowed at a rate per centum per annum equal to the rate per centum per annum that the defendant has received, through in- vestment or by bank deposit, on the amount allowed and recovered as taxes from the date of the filing of the claim for refund to the date of entry of judgment, and such accrued interest shall not apply to taxes paid before the effective date of this action.” Current section 5150 was derived from former section 5105. Section 5108 stated: “Interest at the rate of 6 percent per annum shall be paid, when such in- terest is ten dollars ($10) or more, on amounts refunded under Section = Ehrman and Flavin, Taxing Cal. Property, Sections 494, 495, 497, (82 Cal. App. 3d 319) pp. 474, 477, 479; (1976 supp.) Section 496b, pp. 308-309; Marshall, State and Local Taxation, Section 128, subd. (c), p. 166; (1977 pocket pt.) Section 128, subd. (i), pp. 113-114.) While these last mentioned sections do not apply to the cases at bench,* the existence of these specific sections negates the 5096.3 or 5096.7, or refunded as a result of the reduction of assessed value following an application for equalization by a board of equalization or by a court action to recover taxes. However, no interest shall be paid under the provisions of this section if the taxpayer has been given the notice re- quired by Section 2635 and has failed to apply for the refund within 30 days after the mailing of such notice. “Interest allowed under this section shall be computed from the date of the recording of the deed to the public agency acquiring the property in eminent domain to the date of the filing of the claim for refund, or from the date of the payment of the tax on property subject to an application for equalization of the assessed value thereof to the date of the determina- tion of the equalized value of the property; provided, however, that no in- terest shall be paid under the provisions of this section if such period of time is 30 days or less. “The interest charged shall be apportioned to the appropriate funds, as determined by the county auditor.” Current section 5151 was derived from former section 5108. Section 5141 stated: “If the court finds that the assessment complained of is void in whole or in part, it shall render judgment for the plaintiff for the amount of the taxes paid on so much of the assessment as is found to be void. In such event but only where taxes are paid after the effective date of this act, the plaintiff is entitled to interest on the taxes for which recovery is allowed at a rate per centum per annum equal to the rate per centum per annum that the defendant has received, through investment or by bank deposit, on the amount allowed and recovered as taxes from the date of payment under protest to the date of entry of judgment, and such accrued interest shall be included in the judgment. The taxes paid on so much of the assessment as is not found to be void shall constitute valid taxes which, if paid after delinquency, shall carry penalties, interests and costs.” Current sections 5144 and 5150 were derived from former section 5141. *Former section 5105 is inapplicable to the case at bench because it en- titles a taxpayer to interest only on a refund obtained by court order and wn (82 Cal. App. 3d 320) conclusion that a taxpayer's entitlement to interest is provided for generally. Under the doctrine of “the expression of one excludes the other” the failure of the Legislature to provide expressly for the payment of interest on certain refunds while expressly providing for such payment on other refunds indicated an intention to exclude from the omitted refunds the obligation of interest. (Hill v. City of Eureka (1939) 35 Cal. App. 2d 154, 158 (94 P. 2d 1025); County of Madera v. Superior Court (1974) 39 Cal. App. 3d 665, 670 (114 Cal. Rptr. 283).) (6) These sections also reveal a comprehensive legislative plan which authorizes recovery of interest on a tax refund only where the county, with notice of an im- proper assessment, has failed to grant a tax refund.® Under these sections interest is denied on tax refunds unless and un- til the county receives notice of its error—notice given by re- no resort to court action was required here in order that the taxpayer might recover her refund. The erroneously collected tax payments were promptly refunded by the County upon the filing of her application for exemption. Former section 5108 is inapplicable because it entitles a taxpayer to in- terest only on refunds that result from a reduction in assessed valuation following an application for equalization by a board of equalization or by a court action to recover taxes. The refund here was based upon an appli- cation for exemption rather than an application for equalization and was granted by the County rather than a board of equalization or court. Finally, former section 514] is inapplicable because this section entitles a taxpayer to interest only where taxes were paid under protest and are later found by a court to be the result of a void assessment. The tax payments here were neither made under protest nor refunded by court order, *This legislative plan is continued in the recently enacted sections deriv- ed from the former sections of the Revenue and Taxation Code discussed above. (Sections 5150, 5151.) The importance of notice in the legislative plan is also seen in the requirement that a tax refund claim must be presented to and denied by the County before a court action for refund may be legally commenced. (Sections 5140, 5141, 5142, former Sections 5103, 5104; Signal Oil & Gas Co. v. Bradbury (1960) 183 Cal. App. 2d 40, 43-56 (6 Cal. Rptr. 736).) a fund claim, application for equalization, or payment under protest. Interest does not begin to accrue under former sec- tion 5105 until “the date of the filing of the claim for re- fund.” Interest accrues pursuant to former section 5108 from “the date of the payment of tax on property subject to an application for equalization of the assessed value” and not even then if the property is reassessed within 30 days. Former section 5141 authorized payment of interest “from the date of payment under protest.” Ball is denied interest on her tax refund under such a plan because she received her refund shortly after she presented her application for exemption to the County—shortly after the County had been given notice that these taxes had been erroneously collected from her. This plan is fair. The tax payments at issue were ap- parently collected by mutual mistake. Neither Ball nor the County seem to have been aware of the applicability of the exemption. (7) Even where money has been improperly paid by one private party to another under a mutual mistake, interest will not begin to accrue until the mistake is discovered and a demand for restitution made. (Rest., Restitution, Section 156, com. a, p. 619; 45 Am. Jur. 2d, In- terest and Usury, Sections 88, 90, pp. 79-81; Anderson v. Pacific Bank (1896) 112 Cal. 598, 603 (44 P. 1063); Bank of China v. Wells Fargo Bank & Union Trust Co. (9th Cir. 1953) 209 F. 2d 467, 472.) Interest is not (82 Cal. App. 3d 321) recoverable until and unless an individual has notice of his duty to make restitu- tion. (8) This rule applies with even greater force to funds er- roneously held by the government due to the extent and nature of governmental activities. Indeed, where the government owes a liquidated claim upon a definite date that claim does not draw interest until demanded bused “on the consideration that it would be inconvenient and burdensome for the officials of a municipality (or county) to seek its creditors and tender payment of their claims, and also that it would be oppressive and unjust to permit ~ creditors of a municipality (or county) with good credit to turn claims into investments through omitting to present them and then collecting interest thereon.” (56 Am. Jur. 2d, Municipal Corporations, Counties, and other Political Sub- divisions, Sections 833, 842, pp. 823-824, 828; South Yuba Water Co. v. Auburn (1911) 16 Cal. App. 775, 780 (118 P. 101); Engebretson v. City of San Diego (1921) 185 Cal. 475, 479 (197 P. 651).) Even in jurisdictions which have adopted the rule that the state has an implied contract to pay interest for the use of tax funds which are eventually refunded, in- terest does not begin to accrue until the taxpayer puts the state on notice that tax payments have been erroneously col- lected by making a demand for a refund. (Girard Trust Co. v. City & County of Philadelphia (1948) 359 Pa. 319 (59 A. 2d 124, 127-128) Van Hise v. Board of Sup’rs (1897) 21 Misc. 572 (48 N.Y.S. 874, 879) overruled on other grounds, 26 Misc. 750 (57 N.Y.S. 281, 288); Atwell v. Zeluff (1872) 26 Mich. 118, 119-120; Boston and Sandwich Glass Co. v. City of Boston (1842) 45 Mass. 181, 190.) DISPOSITION The summary judgment for the County of Los Angeles is affirmed. Allport, J., and Potter, J., concurred. = APPENDIX C SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES HELEN BALL, individually and on behalf of all others similarly situated, Plaintiff, Vv. COUNTY OF LOS ANGELES, Defendant. NO. CA 000 289, ORDER DISMISSING COMPLAINT AND FOR ENTRY OF SUMMARY JUDGMENT IN FAVOR OF DEFENDANT AND AGINST PLAINTIFF The motion of defendant County of Los Angeles for an order pursuant to Section 437(c) of the Code of Civil Pro- cedure dismissing the complaint herein and entering judg- ment for defendant was regularly heard on February 3, 1977. Charles J. Moore, Deputy County Counsel, appeared as attorney for defendant, and Volney F. Morin and Volney F. Morin, Jr., appeared as attorneys for plaintiff. The Court finds that there is no triable issue of fact and that the action has no merit. IT IS ORDERED that the complaint is dismissed and that judgment be entered in accordance with this order in favor of the County of Los Angeles and against Helen Ball as ~~ requested in the Answer to the Second Amended Com- plaint. Dated: January 3, 1977. * /s) CAMPBELL M. LUCAS Judge of the Superior Court * Clerical error dated order January 3, 1977 instead of February 3, 1977, the date of hearing. acim APPENDIX D SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES DEPARTMENT NO. 59 HON. CAMPBELL M. LUCAS, JUDGE HELEN BALL, individually and on behalf of all others similarly situated, Plaintiff, VS. COUNTY OF LOS ANGELES, ) ) ) ) ) ) ) ) Defendant. ) NO. CA 000,289 REPORTER’S TRANSCRIPT ON APPEAL Thursday, February 3, 1977 APPEARANCES: For the Plaintiff: VOLNEY F. MORIN, SR. VOLNEY F. MORIN, JR. For the Defendant: JOHN H. LARSON, COUNTY COUNSEL By: CHARLES J. MOORE, Deputy Page 1 LOS ANGELES, CALIFORNIA THURSDAY, FEBRUARY 3, 1977 A.M. SESSION THE COURT; Good morning, gentlemen. (All counsel respond, “Good morning.”) a THE COURT: Ball vs. County of Los Angeles. Your appearances, please? MR. MOORE: Charies Moore, Deputy County Counsel, on behalf of the County. MR. MORIN, JR.: Volney F. Morin, Jr. for Helen Ball and the other plaintiffs. MR. MORIN, SR.: Volney F. Morin, Sr., for Helen Ball and all the other individuals similarly situated. THE COURT: Counsel, I think in reading the moving papers and the papers in opposition, that there is no dispute over the facts of the matter, and this really turns on the question of law. Is that correct? MR. MOORE: Yes, Your Honor. MR. MORIN, JR.: Yes, sir. THE COURT: I have read the moving in opposition papers. And do you wish to argue, Mr. Moore? MR. MOORE: Your Honor, I would reserve my open- ing argument. I believe that I would like to rely on my mov- ing pepers at this time, and of course, answer any questions you have. THE COURT: All right, Mr. Morin? MR. MORIN, JR.: I would only like to supplement the Page 2 papers that we have supplied in opposition by bringing the court’s attention to Civil Code 437(c), and remind the court perhaps that the County has a burden to show that the ac- tion has no merit and that they are entitled to a judgment as a matter of law. That was not discussed in my memorandum in opposi- tion, but I feel strongly that the action does have merit, and they are not entitled to a judgment as a matter of law. THE COURT: Do you wish to add anything, Mr. Moore? MR. MOORE: I'll apologize for the absence of the reply brief. I received the opposition on Monday, and I didn’t feel I would be giving the court enough time to submit a reply. The only point raised in the opposition papers concerns the law of the case doctrine. The points and authorities have wean indicated that since this matter has been the subject of a hearing, the County demurred and the demurrer was over- ruled, the law of the case doctrine applies, and I would wish to merely point out to the court that as far as the law of the case doctrine, the effect of the First Appellate decision on all subsequent proceedings, it is the rule which requires the trial court to follow that rule which has been laid down by the Appellate Court on former appeals. It is the County’s position that the application of the law of the case doctrine is inappropriate in this case and that surely we're entitled to judgment at this point, not- withstanding the fact that we have demurred and the demurrer was overruled. Page 3 THE COURT: Thank you. As I understand the papers, gentlemen, we have a situation where by statute it is provided that if you bring a lawsuit for the recovery of taxes and any interest or penalties that may have collected pursuant to those taxes, that you can recover interest if you are successful in the lawsuit. But where there is merely a reimbursement by the County, there is no statutory provision for the payment of interest; that in a nutshell, the circumstances, the present state of the statute, leaving aside for the moment the dispute about whether or not the word “taxes” includes interest, that would be claimed, that is, the interest for the use of the money by the County. MR. MORIN, JR.: Your Honor, I th‘nk the statutes are not clear in that regard. THE COURT: Let’s talk about that. If you bring a lawsuit, there is a clear statute that if you sue for the return of taxes paid, or penalties paid, or imposed for failure to pay, that you can get that back with interest, if you go through the court system. MR. MORIN, JR.: — I believe that is the case. THE COURT: But if you just make an application for refund, there is nothing in the statute about the interest for the time the County has held the money, other than the = = discussion that has been had about the definition of “taxes.” MR. MORIN, JR.: Other than that, but I think you're overlooking that definition and this is very important, so Page 4 you really can’t consider it separately from that definition. THE COURT: All right, just as long as I understand the basic situation because my ruling is going to be to grant the motion for summary judgment. I don’t have the power that the Supreme Court has to make new law, as they often do. MR. MORIN, JR.: Have you considered the fact that this is really an action for the recovery of taxes and interest, and it was characterized as such by Judge Fainer in the Municipal Court? THE COURT: I have considered it, but I don’t agree with your interpretation that this is an action to recover in- terest in the sense that “interest” is used in the definition of “taxes,” My interpretation is, if as a part of the taxes collected there has been an imposition by the County of penalty and interest, that interest which has been paid to the County would be recoverable. Interest for the use of the money is a different situation, and in the court’s mind does not fall within that definition. MR. MORIN, JR.: You're referring to Civil Code 1915? THE COURT: No, I'm referring to the Revenue and Taxation Code section that defines taxes to include interest, penalties, and costs. MR. MORIN, JR.: It is your opinion that the definition applies only to penalties, interest, and costs collected by the County? THE COURT: That's correct. Page 5 MR. MORIN, JR.: Is that decision supported by any legislative opinion or anything of that type? THE COURT: You are the one that is supposed to sup- ply points and authorities. In the absence thereof, I have to make my own decision on that. MR. MORIN, JR.: That's exactly the point, -_ THE COURT: I was really going to say when you sue to recover taxes, it implies to me that is something that you have already paid, and you have paid interest as a part of that tax. The interest that you're suing for is something over and above the taxes. It is something that the class claims they are entitled to by reason of the County’s use of tic money, and that is unrelated to the question of whether the County had collected for taxes or otherwise, because the County has never in fact collected that money. Also the court is looking at the situation where the Legislature has restricted action specifically with regard to lawsuits, and the specifically passed legislation indicates you may recover interest to the time the County retained this money, if you are successful in a lawsuit. In the absence of any further legislation, that is a ques- tion for the Legislature to take up. There appears to be no provision for the County paying interest on taxes that have not been recovered in a lawsuit. As I think is obvious, the whole reason for this pro- ceeding today is to shortcut a lot of expensive discovery and preparation for a fullblown class action and perhaps get Page 6 a determination on the question of law that would clear it up for everyone. My granting the motion is going to clearly frame that question of law for you. Then it is going to be up to the Ap- pellate Court as to how they look at it. So with that explanation of the court, the court will grant the motion in favor of the defendant County against the individual plaintiff, Helen Ball. MR. MORIN, JR.: May I please make a statement, Your Honor? THE COURT: Yes. MR. MORIN, JR.: First of all, with respect to the issues being raised on demurrer in the court below, the County has raised the same point in the Municipal Court, and the Superior Court, relative to this action, and in both cases the demurrer was overruled and the judge that decided that aae.. question ruled that the County did have the authority to re- fund taxes and the term included penalties and costs under the Revenue and Taxation Code 1507 and also 5143. The fact of the matter is that the County of Los Angeles does collect penalties for delinquent payments of taxes, and the collection for that extra money is because the payment was not made on time, and I think the underlying reason, I am sure, is that the taxpayer has the use of his money, which rightfully should be the County’s. THE COURT: Mr. Morin, I have considered these matters. Please keep in mind you're arguing after the deci- sion. And I’m going to indicate I see a considerable Page 7 difference from a situation where a taxpayer pays a tax under duress or coer- cion, and perhaps pays it under protest, but nonetheless has to pay it, and a situation such as Mrs. Ball’s, where there was no need to ever pay the tax, if she properly had filed her exemption. The fault lies with her rather than the County. MR. MORIN, JR.: Helen Ball paid her taxes, as all County taxpayers must, upon the pain of forfeiture in order to retain her property. THE COURT: At that time didn’t she have a right to an exemption because that property was being used by a free public library? MR. MORIN, JR.: Indeed, she did. THE COURT: And if she had filed her claim or exemp- tion, certainly she wouldn’t have had to pay the tax. This is a different situation than where you pay the tax and then challenge the constitutionality of the tax and then you find that the constitutionality of the tax was at fault, and it was an illegal tax. This tax, in the court’s opinion, would never have been collected, and the money would never have been held by the County, and the County would never have had the use of it, if Mrs. Ball had done what the law gives her a right to do, namely to say to the County, “I don’t owe you any money because it is exempt.” —22— MR. MORIN, JR.: I recognize that, and I recognize your opinion, and I’m merely trying to frame in my mind, and perhaps for the benefit of any reviewing court, the arguments that we Page 8 presented in our opposition to the County's motion for summary judgment. It occurs to me that the underlying basis of our claim, and I feel very strongly about it, is that the County collected the penalties from the taxpayer, and had the use of the money, when it should not have been the County’s. I don’t think it’s fair, and I think that equitable prin- ciples should apply, and the County should pay interest when the County collected money from the taxpayer which it was not entitled to, just like the taxpayer pays interest when it doesn’t pay the County the money that is due the County. In this case the County has had the use of the taxpayer’s money, and the taxpayer is receiving no interest for such use. We're not asking for any punitive damages or for anything by way of mistake or fraud or duress or anything of that sort. We’re merely talking about the compensation for the use of the money, and the case law in California has not been developed in this point, and the case law in the majority of the other jurisdictions is clear where the Government has the use of the taxpayer’s money, that in- terest is due the taxpayer. THE COURT: Well, Mr. Morin, you mentioned equitable considerations and fairness. I don’t believe your complaint is framed for equitable relief. As I understand it, it is just a complaint for damages. There is no inadequate remedy at law here, and I’m not sitting as a court of equity, Page 9 particularly when I’m just looking at a point of law. Your suit was for damages, not for equitable relief. MR. MORIN, JR.: It is clear that we are seeking money damages, but I think equitable principles ap»ly in this case, —23— and I fail to see how the court failes to consider principles of fairness and fair treatment under the law. I'm also moving on to a different point. I believe that the counsel has not proven the action has no merit or that they are entitled to a judgment as a matter of law. They did not meet the requirements of CCP 437(c). THE COURT: Well, we have all agreed that there is no triable issue of fact, and the right of interest for your client depends on a queston of law. It turns on a question of law, yes or no. MR. MORIN, JR.: Well, where do we go from here? THE COURT: I believe your clients have no right under the present state of the law. It doesn’t mean that the Legislature cannot change the law, and it doesn’t mean that the Supreme Court cannot change it, but I have to make my ruling under the law as it now stands, and I have made that ruling. I don’t believe there is anything left in the case than considering the matter on appeal. MR. MORIN, JR.: All right, Your Honor, thank you very much, THE COURT: I thought when we had our informal conference earlier that is what we were really looking at, to see Page 10 if we could get a determination on it, not necessarily a binding one for me or Judge Fainer or Judge Phillips, but from an Appellate Court, which decision would have some teeth in it. Certainly, you are entitled to go on from here and take the matter up on appeal. But the fact that a demurrer has been sustained doesn't prevent other demurrers from being brought. It doesn’t pre- vent a motion for judgment under the pleadings, and it doesn’t prevent a summary judgment motion, and it doesn’t prevent the matter from being raised on appeal. You are going to have something in your favor if you can say there was a split on the Superior Court level, but really this is an Appellate Court question. = So all I can do is give both sides my blessing and say some day we will have it resolved. Is notice waived, counsel? MR. MORIN, JR.: Yes MR. MOORE: Yes, Your Honor. THE COURT: Thank you, gentlemen. APPENDIX E 2nd Civil No. 52206 IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT HELEN BALL, individually and on behalf of all others similarly situated, Plaintiffs and APPELLANTS, VS. COUNTY OF LOS ANGELES, ) ) ) ) ) ) ) ) Defendant and RESPONDENT. _ ) APPELLANTS’ OPENING BRIEF STATEMENT OF THE CASE RELIEF SOUGHT Appellant, Helen Ball, for herself and for all others similarly situated, seeks reimbursement from County of Los Angeles (County) for use of her and their money. Appellant, Helen Ball, for herself and for all others similarly situated asks that the ORDER DISMISSING COMPLAINT AND FOR ENTRY OF SUMMARY JUDG- MENT in favor of defendant, County, of the Honorable Campbell M. Lucas, dated February 3, 1977 be vacated, and that this Court determine that the County does have authority under the California Revenue and Taxation Code to reimburse taxpayers for the use of their money; that this Court Page 2 ORDER County to reimburse (pay interest to) taxpayers for the use of their money due to an overpayment of tax, because of an im- proper assessment or for any other reason taxpayer has over- paid taxes to County; and that this Court ORDER said reimbursement be compounded annually from the date claims for refunds accrued to date of payment, and thereafter pay interest on the interest, which had not been paid. Appellant, Helen Ball, for herself and for all others similarly situated, asks that this class action be returned to Los Angeles Superior Court for completion of the trial. Judgment or Ruling of the Superior Court sought to be vacated, is attached as Exhibit !. NATURE OF THE ACTION County sent Helen Bal! a Secured Property Tax Bill (Bill) which she paid. Thereafter she discovered the Bill had been sent, and payment thereof had been made, erroneously. She requested, and obtained, reimbursement of the money she paid; she requested but was denied, reimbursement for use of the money she paid. It does not matter whether the reimbursement she seeks is considered to be interest, or penalty, or costs. The Califor- nia Legislature has stated, and then restated, that all three words are included under the generic term “taxes”. Part 4, chapter 5 of California Revenue and Taxation Code governs refunds of Page 3 taxes. Both Article 1, Refunds Generally, Section 5107 (1941) and Arti- cle 2, Payment Under Protest and Suit to Recover, Section 5143 (1941), state: “As used in this article, ‘tax’ or ‘taxes’ in- cludes penalties, interest, and costs.” It is clear the California Legislature has twice spoken and each time, in identical words, it has expressed its intention that refunds of taxes includes refunds of taxes, penalties, in- terest, and costs. The taxpayer is to be made whole. = = For over one hundred years California law has recognized that: “Interest is the compensation allowed by law or fixed by the parties for the use, or forebearance, or detention of money.” (Civil Code Section 1915; enacted in 1872 and amended by Code Amendments Ch 612 Section 202 P245 (1873-1874) to read as at present.) The County charges and collects money for delinquent taxes - presumably under the theory expressed in Civil Code Section 1915 and specifically authorized by Revenue and Taxation Code Sections 2617, 2618, 2704 and 2705. That is, the taxpayer has use of his money and the County has to forbear the use of the taxpayer's money. Money is collected for delinquent taxes by County even though there has been no action in which the recovery of taxes is allowed by the by the court pursuant to Revenue and Taxation Code Section 5105. The subject of the right of a taxpayer to collect interest on a tax refund is annotated in 57 A.L.R. 347, 76 A.L.R. 1012 and 112 A.L.R. 1183. While there is some minor conflict Page 4 among the authorities on this issue, it appears from these annotations that a majority of jurisdictions do permit recovery of interest by a taxpayer. SUMMARY OF MATERIAL FACTS County has denied the claim of Helen Ball. (See attached Exhibit 2, letter dated October 24, 1975, from County of Los Angeles Department of Auditor-Controller.) County continues to deny the claim of Helen Ball and all other tax- payers similarly situated for reimbursement for County's use of their money, by raising two arguments: 1. The County has no authority, and 2. The County’s authority is strictly regulated by the Revenue and Taxation Code. COUNTY HAS AUTHORITY TO PAY INTEREST County demurred in earlier proceedings in this case in the Municipal Court on the grounds it lacked authority to pay interest - the same grounds advanced below. On July 2, 1975, the Honorable Robert Fainer, sitting in Law and Mo- tion, ruled: “The demurrer of the defendant, County of Los Angeles, to the complaint is over-ruled. The County of Los Angeles has the authority to refund “taxes” and the term “taxes” as us- ed in Revenue and Taxation Code Sections 5107 and 5143 includes penalties, interest and costs. This is not an action to determine the legality Page 5 of any tax, but is an action to recover the balance of taxes due after a refund, to wit, the interest thereon.” Notice of Judge Fainer’s Ruling, and Proof of Service By Mail, dated December 2, 1975, were filed on December 3, 1975. From Judge Fainer’s ruling, County did not appeal. The ruling in the Municipal Court in favor of Helen Ball, was based on the same code sections; the same issues; the same arguments; and the same facts as are now before this court, On November 10, 1975, the Second Amended Complaint for Damages, which commenced this class action, was filed. On December 9, 1975, the Clerk of the Superior Court mailed his Notice of Transfer of Action, from the Municipal Court to Superior Court. On January 14, 1976, County demurred once again. This time to the Second Amended Complaint and the present class action. Said demurrer was opposed by appellant and in the Points and Authorities in support of such opposition, Revenue and Taxation Code Section 5107 and Section 5143 —29— were fully discussed. In appellant's Supplement to Memorandum in Opposition to Demurrer, and Points and Authorities in support thereof, the ruling of the Honorable Robert Fainer, referred to above, was discussed in full, so as to make certain his ruling was a part of the record herein. On February 2, 1976, in Department 84, the Honorable Charles H. Phillips presiding, the demurrer of the County was Page 6 overruled, the Court saying: “General demurrers overruled on the merits per the points and authorities and the reasons stated by Judge Fainer.” From Judge Phillips’ ruling, County did not appeal. EARLIER RULINGS IN THIS CASE SHOULD BE FOLLOWED It is respectfully submitted that the rulings of Honorable Robert Fainer and Honorable Charles H. Phillips should be followed by this Court, under the theory of the Law Of The Case. “A decision which determines the rights of the parties under a given state of facts becomes the law of that case and is not sub- ject to revision on a later appeal, even though the prior decision is admittedly er- roneous. Dewey v. Gray 2 C 374; Phelan v. San Francisco 20 € 39. Indeed, it is when the former rule is deemed erroneous that the doctrine of the law of the case becomes most important...” People v. Holladay 93 C 241, 29 P 54; Tally v. Ganahl 151 C 418, 90 P 1049; Westerfeld v. New York Life Ins. Co. 157 C 339, 107 P 699; Union Oil Co. v. and “The law of the case is not less binding upon the courts and the parties because questions of great public interest are involved such as, for instance, may be affected by the con- struction of an act of Congress. Leese v. Clark 20 C 387 (Mexican Land Grants con- firmed by Congress). While the importance of the questions involved should induce a careful consideration in the first place, it can have no effect upon the conclusiveness of a decision once made. Leese Page 7 v. Clark 20 C 387; Blatz Brew. Co. v. Collins 88 CA2d 438, 199 P2d 34.” 4 Cal. Jur. 2d Section 699 and “It follows that an announced principle which is the law of the case must be adhered to and observed throughout the subsequent progress of the case both in the lower court and upon subsequent appeal, although the appellate court believes upon further con- sideration that the former decision in that particular is erroneous, Burns v. Jackson 53 CA 345, 200 P 80; George v. Los Angeles 51 CA 2d 311, 124 P2d 872; and this fowl be uniformly followed unless there are unusual circumstances leading to injustice or un- fairness. Allen v. California Mut. Bldg. & Loan Assn. 22 C2d 474, 139 P2d 321. The law of the case doctrine is not limited, however, to cases in which the first decision is deemed erroneous. The principle is equally applicable where the prior decision is un- questionably correct...” 5 Cal. Jur. 3d Section 641. Reconstruction Oil Co. 58 CA2d 30, 135 P2d 621.” Courts are charged with responsibility of interpreting laws enacted by the legislative branch of the government. aS And when a court interprets a law, then a county has whatever power a court says it has. If it is to pay interest under the law, then a county has authority to pay interest. This Appeal is advanced on the premise that all parties before a court of law are entitled to equal treatment under the law. The XIV Amendment to the United States Con- stitution provides at Section 1: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the Page 8 privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” A County government and an elderly widow must abide the same rules and are entitled to the same rights and privileges. Helen Ball advances for herself and for all other taxpayers similarly situated, the proposition that if County charges and collects money (interest) for delinquent payment of pro- perty taxes, then County must refund money (interest) when it has use of taxpayers’ money due to an overpayment of tax. The Honorable Learned Hand declared in Proctor & Gamble Distributing Co. v. Sherman 2 F. 2d 165, 166 (D.C.N.Y. 1924): * ..it is not an adequate remedy, after taking away a man’s money as a condition of allow- ing him to contest his tax, merely to hand it back, when, no matter how long after, he established that he ought never to have been required to pay at all.” The facts in the case of Helen Ball are not in dispute. ails Helen Ball does not claim for herself or any other taxpayer that a penalty should be assessed against the County of Los Angeles for any willful or improper conduct. Instead, her claim is based on the argument that Civil Code Section 1915 provides the underlying basis for in- terest. Revenue and Taxation Code Section 5107 and Sec- tion 5143 authorize the County to pay interest on taxes which were improperly assessed, and thereafter paid, with or without protest, and this Court should order the Page 9 County to do that which it is unwilling to do - treat the taxpayers in the same way it demands it be treated. CALIFORNIA STATUTORY LAW California law regulating the imposition of real property taxes is primarily statutory, currently coditied for the pur- poses of this brief in the Revenue and Taxation Code Sec- tions 1-36, 101-134 (general provisions), 290-900 (assess- ment), 1601-2125 (equalization), 2501-2862 (collection), and 4801-516l-(corrections, cancellations, and refunds). The history of the California property tax is one of recurr- ing cycles of abuse and reform. Ehrman and Flavin, Taxing California Property: Assessment, Equalization and Collec- tion, ch. 1 (1967) (hereafter Ehrman and Flavin). The last major reform was in 1966. Id. Section 27. This was designed to remove a “cloak of mystery which surrounds the processes of assessment and equalization and to provide remedies for unequal assessment.” Id, Sections 27-44. The relevant statutes were enacted at various times, mostly in 1941 and 1955, but a liberalizing section on refunds, Revenue and Taxation Code Section 5108, was enacted in 1970. In general, assessments are performed by assessors in the counties. Revenue and Taxation Code Section 404. Essen- tially “assessment” means establishing the value of the pro- perty. Ehrman and Flavin, supra, Sections 184-185. The State Board of Equalization provides regulations to govern assessors, Government Code Section 15606, = = Page 10 and publishes the Assessor’s Handbook for the use of assessors. Ehrman and Flavin, supra, Section 430. “Equalization” means the adjustment of individual assessments so that one taxpayer is not taxed at a greater proportional rate than another. Ehrman and Flavin, supra, Section 440. The California Constitution provides both for county boards of equalization, CAL. CONST. art. Xill, Section 9, and for the state board, CAL. CONST. art XIII, Section 9.5. The constitutional provisions are implemented by provisions in the code relating to the county board of supervisors, acting as the county board of equalization, Revenue and Taxation Code Sections 1601-1615, and by local assessment appeals boards, Revenue and Taxation Code Sections 1620-1629, Sections 1750-1765. Ehrman and Flavin, supra, Section 440. County employs an assessment appeals board, Id, Section 475, and Los Angeles County equalization procedures are governed by special code provi- sions. Revenue and Taxation Code Sections 1760-1764. Revenue and Taxation Code Section 5105 states: Recovery of interest. In any action in which the recovery of taxes is allowed by the court, the plaintiff is entitl- ed to interest on the taxes for which recovery is allowed at a rate per centum per annum equal to the rate per centum per annum that the defendant has received, through invest- ment or by bank deposit, on the amount allowed and recovered as taxes from the date of the filing of the claim for refund to the date of entry of judgment, and such accrued interest shall be included in the judgment. This section shall not apply to taxes paid before the effective date of this act. Page 11 (Added Stats 1941 ch 664 Section 10; Amended Stats 1961 ch 2151 Section 1.) It should be remembered that the word “taxes” as used in iin, Section 5105 includes “penalties, interest and costs” (Section 5107). Hence, in one relevant part, Section 5105 could reasonable be accurately restated: “In any action in which the recovery of penalties, interest and costs is allowed by the court, the plaintiff is entitled to interest on the interest and costs for which recovery is allowed....” Section 5105 is applicable for the reason that the i. unt case is an action for the recovery of “taxes” as defined 1m Sec- tion 5107. Section 5105 deserves still closer consideration, having in mind that it comes under Chapter 5, Refunds, and Article 1, Refunds Generally, and was enacted in 1941. Clearly the legislature was attempting to fill the void which would oc- cur if a taxpayer obtained a judgment of recovery and was left to receive interest only from the date of judgment, as is the usual case. Here, the legislature seeking to redress that possible wrong said the plaintiff would recover interest “...on the amount allowed and recovered as taxes from the date of filing of the claim for refund to the date of entry of judgment,...” It is the position of Helen Ball that the meaning of Section 5107 and in haec verba Section 5143, ("As used it) this Arti- cle, ‘tax’ or ‘taxes’ includes penalties, interest, and costs.”’) is clear from a plain reading. Page 12 The Municipal Court and the Superior Court had no trouble determining the meaning of these sections. The Honorable Robert Fainer (with the Honorable Charles H. Phillips later concurring) held that: “The County of Los Angeles has the authority to refund ‘taxes’ and the term ‘taxes as used in Revenue and Taxation Code Section 5107 and Section 5143 includes penalties, interest, and costs.” Revenue and Taxation Code Section 5108 was added to the Code in 1970 and is thus a later section than any other, in both Articles 1 and 2 on Refunds. This section provides: Interest at the rate of 6 per cent per annum shall be paid, when such interest is ten ones dollars ($10) oi more, on amounts refunded . . as a result of the reduction of assessed value following ar. application for equaliza- tion by a board of equalization or by a court action to recover taxes... . Interest allowed under this section shall be computed . . . from the date of the payment of the tax on property subject to an applica- tion for equalization of the assessed value thereof to the date of the determination of the equalized value of the property; provid- ed, however, that no interest shall be paid under the provisions of this section if such period of time is 30 days or less. (Emphasis added) Section 5108 is helpful in the case of Helen Ball because it points to a liberalization of statutory law in the area of in- terest on refunds. As will be discussed next, California case law is less illuminating on the matter of Helen Ball. Page 13 CALIFORNIA CASE LAW There is no current California case law that deals with the question of whether a taxpayer is entitled to interest on tax refunds. The inclusion of Revenue and Taxation Code Section 5141 in 1941 (still in force) invalidates earlier deci- sions. California courts have not decided a case involving in- terest on refunds under its modern tax code. Because the question has not been considered in recent years, it is still open. "California case law applies primarily to cases where the amount of tax is calculated by the taxpayer and not where the taxes are collected by error in the Jevy or collection pro- cess. Also, most cases deal with a common fact situation where the action was brought under Political Code Section 3819 - not the case of Helen Ball. The first case, and a very early one, in which California — = courts spoke of a right to interest on property tax refunds was Savings and Loan Society v. City and County of San Francisco, 131 Cal. 356, 63 P. 665 (901), which was con- cerned with taxes on personal property, also taxed in the same manner as realty. The court refused to allow interest from the date of the payment of the tax under protest, holding as to the relevant Civil Code sections: The code sections cited relate to interest as compensation or damage between parties to an action, and the language of the statute is general and does not include the state or any Page 14 of its political subdivisions. The state is not bound by general words of a statute which would operate to establish a right of action against it. . . .The action here is brought under a new section of the Political Code - 3819 - in which no provision is made for the payment of interest. 131 Cal. at 363 (citations omitted). The case is distinguish- able, of course, on the grounds that the cause of action in the case of Helen Ball is based on entirely different grounds than Political Code Section 3819, and this case precedes Revenue and Taxation Code Section 5107 and Section 5143 by forty years. The next following California cases discussed also precede enactment of Revenue and Taxation Code Section 5107 and Section 5143, and are based on Political Code Section 3819. In another early case, Columbia Savings Bank v. County of Los Angeles 137 Cal. 467, 70 P. 308 (1902), involving the taxation of personal property (bonds), the court held on general principles of equity that interest was owing from the date of judgment. The court held: (The taxpayer) is entitled to the return of the money paid under protest, if the tax was il- legal. If the tax was legal the county was en- titled to payment, and the taxpayer is not in- jured. In such case there was neither “use, or re forbearance, or detention of money” (Civ. Code, Sec. 1915) prior to findings and judg- ment that the tax was illegal. The statute under which the payment was made to the defendant does not provide for the payment of interest, nor was any money due thereon from the defendant until its liability was fix- ed by the judgment of a court of competent jurisdiction. Nor was this a loan of money by the plaintiff to the defendant, which would be presumed to be made upon interest, Page 15 unless otherwise stipulated at the time in writing, as provided in section 1914 of the Civil Code. Whether, if it were shown that the defendant made a profit out of the money paid to it under said statute, the plaintiff would be entitled to damages to the extent of such profit, not ex- ceeding the legal rate of interest, is a ques- tion not presented and not considered. But the judgment in the case before us fixed the liability of the defendant, and from that date the money to which the plaintiff was entitled was detained from it, and natural justice, as well as the statute which provides that in- terest at seven per cent is payable on judgments recovered in the courts of this state, justifies the judgment relating to in- terest. (Civ. Code, Sec. 1920);.... 137 Cal. at 471 (emphasis added). This case is helpful but not controlling because in the case of Helen Ball it was not necessary to obtain a judgment ordering a refund. It was so clearly evident that a refund was justified that County refunded the improperly assessed tax without need for a trial. The results of changes in the taxing statutes were reflected in Wells Fargo and Co. v. City and County of San Francisco, 25 Cal. 2d 37, 152 P. 2d 625 (1944). The trial = = court awarded interest and the award was affirmed on ap- peal because the attack on the judgment was collateral in nature. The court stated: It is well settled that in an action to recover taxes paid under protest under Section 3819 of the Political Code, interest cannot be allowed from the time of payment but only from the time of the adjudication declaring the money due. 1. 1. Rev. & Tax. Code, Section 5141, enacted in 1941, provides for interest from the date of payment under protest, as to taxes paid after the effective date of the sec- tion. Page 16 25 Cal. 2d at 43. Again, the including of Revenue and Taxa- tion Code Section 5141 (still in force) invalidates earlier decisions. No cases subsequent to the enactment of the provisions of the modern code sections have been uncovered which speak of the right to recover interest in cases involving real proper- ty taxation. SUPR™ME COURT AND FEDERAL CASE LAW The Supreme Court of the United States has recognized for over 100 years that: ... Where an illegal tax has been col- lected, the citizen who has paid it, and has been obliged to bring suit against the collector, is, we think, entitled to in- terest in the event of recovery, from the time of the illegal exaction.” Erskine v. Van Arsdale, 15 Wall. (U.S.) 75, 77 (1872). See also: Redfield v. Bartels, 139 U.S. 694, 11 Sup. Ct. 683, 35 L.Ed. 310 (1891); National Home v. Parrish, 229 U.S. 494, 496, 33 Sup. Ct. 944, 57 L.Ed. 1296 (1913); Billings v. United States, 232 U.S. 261, 286, 34 Sup. Ct. 421, 58 L.Ed. 596 (1914); State, etc., Co. v. Davis, (D.C.) 228 Fed. 246, 250 (1915); Haiku Sugar Co. v. Johnstone, 249 Fed. 103, 109, 161 C.C.A. 155 (1918); International Paper Co. v. Burrill, (D.C.) 260 Fed. 664, 667 (1919). = In International Paper Co. v. Burrill, supra, at page 669, the Court held: “...As the money was wrongfully obtained by the defendant through implied duress, and as it is no defense Page 17 that the defendant has paid the money into the treasury of the commonwealth, there must be judgment for the plain- tiff for the amount of the tax, with interest thereon from the date of payment, May 22, 1916.” Modernly, the “adequacy of remedy at law” issue was raised in Mullaney v. Hess, 189 F. 2d 417 (9th Cir. 1951), Applying Alaska law, the court stated: We think that the weight of authority is that interest is recoverable on tax refunds in absence of express statutory authority therefor. The reasoning of these cases is in harmony with the modern view they express. Id. at 420. In 1957 in Ketchikan Spruce Mills v. Kewey, 17 Alaska 336 (1957), the United States District Court for Alaska also permitted recovery of interest under a territorial statute which provided for refund of taxes but made no mention of interest. OTHER STATES CASE LAW Of all the states, Pennsylvania has the most thoroughly developed case law on the question of interest on refunds of real property taxes. There has, moreover, been an evalua- tion of principles in that state which will be illuminating in the case of Helen Ball. The underlying principles were enunciated in the leading and often cited case of Philadelphia and Reading Coal and Iron Co. v. School District of Borough of Tamaqua, 304 Pa. 489, 156 Page 18 A. 75 (1931). Plaintiff won a judgment that real property taxes for the benefit of the school district had been improperly assessed. se The court held: One further question raised in argument re- mains to be determined, whether or not plaintiff is entitled to interest on the amount paid in excess of the proper levy. The judg- ment as it now stands is for the total excess payment, $8,547.75, with interest at 6 per cent, from September 21, 1923, the date of payment by plaintiff, the whole amounting to $12,137.80. The precise point does not ap- pear to have been raised before in this court, and we are thus free to deal with it unhampered by precedent. It is unnecessary to review the wealth of conflicting authorities in other jurisdictions . . . .The weight of authority appears to be that, where the taxpayer is entitled to a refund on an excess payment of taxes, whether such right accrues by virtue of statute or not, the taxpayer is entitled to interest on the refund if no statute or public policy militates against it. Such is the law in the United States courts . . » as well as several other states. . . .With this view we agree. 156 A. at 77 (citations omitted; emphasis added). In Cities Service Oil Co. v. City of Pittsburgh, 449 Pa. 481, 297 A. 2d 466 (1972), the court discussed the various rules in a context of mercantile license taxes [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_2085%3A1. Public record. Not legal advice.