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(182 P.)

The tax sale was conducted under the [ by the said purchaser as taxes, penalties provisions of section 3897 of the Political and costs at such sale.

Code. This action is based upon subdivision 5 of section 3898 of the Political Code as amended in 1913 (St. 1913, p. 560), which is as follows:

"Whenever, in any action at law, it shall be determined by a court that the sale and conveyance provided for in this and the preceding section are void for any reason and that the purchaser from the state may not be finally awarded the property so purchased, no decree of the court shall be given declaring a forfeiture of the property until the former owner, or other party in interest, shall have repaid to the purchaser the full amount of taxes, penalties and costs paid out and expended by him, to be determined by the court, in pursuit of the state's title to the property so sold. The said purchaser may also present a claim against the county, in the manner provided by law, for a refund of the amount paid into the county treasury as the purchase price of such property in excess of the amount for which he may have been reimbursed for taxes, penalties, and costs as herein provided, and such excess shall be refunded in accordance with section 3804 of this Code."

Plaintiff brought an action to quiet title against the owner of the premises, and in that action it was adjudged that the assessment upon which the sale to the state in 1907 was based was void, and that for that reason the purchaser was not entitled to any reimbursements for taxes, penalties, and costs paid out or expended by her. She, therefore, brought this action against the county for the full amount paid by her at the tax sale, to wit, $516.

[1-4] The question involved depends upon the proper construction of subdivision 5, section 3898, and particularly the meaning of the last sentence thereof concerning the amount to be paid by the county.

Appellant contends that as she "did not recover anything from the record owners, the whole amount that she had paid to the state was in excess' of any amount that she received, and that the Code should be liberally construed so as to cover, not only a case where the record owner would be compelled to pay taxes lawfully assessed, though otherwise invalid, leaving a balance to be recovered of the state, but also to cover a case where it was impossible for the court to order any amount paid." On the other hand, it is claimed by respondent that the appellant has not brought herself within the meaning of the express provisions of the statute. "It seems conclusive," says the respondent, "that the provision for refund made in this amendment is limited to those cases where particular circumstances existed. First, there must be a decree ‘declaring a forfeiture of the property' as against the purchaser at tax sale. Secondly, there shall be a reimbursement by the owner of the amount paid

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In con sidering the effect of the Code amendment giving new remedies to the purchaser at a tax sale it is essential to consider the rights and remedies of such purchaser before the enactment of the statute as well as the general scheme of legislation concerning such sales as provided by the amendment of 1913. Previous to this amendment the purchaser at a tax sale had no remedy against the county or state to recover money paid to the county or state at a tax sale. Loomis v. County of Los Angeles, 59 Cal. 456; Brooks v. Tulare County, 117 Cal. 467, 49 Pac. 469; Holland v. Hotchkiss, 162 Cal. 366, 123 Pac. 258, L. R. A. 1915C, 492; Moyer v. Wilson, 166 Cal. 261, 135 Pac. 1125. In an equitable action or in a statutory action under section 738, Code of Civil Procedure, brought against the purchaser at the tax sale, if the sale was found to be illegal and void the court required the owner of the property to pay the taxes legally assessed against the property as a condition precedent to declaring the sale void and clearing the owner's title. Holland v. Hotchkiss, 162 Cal. 366, 123 Pac. 258, L. R. A. 1915C, 492. This right, however, did not exist where the purchaser was seeking affirmative relief in the action. As was said in Moyer v. Wilson, supra:

"Where the purchaser under a sale which is not effective to pass title proceeds against the owner, the latter may stand upon his strict_legal rights, and defend his title without tendering payment of any tax."

It was also held that where the assessment itself was void, as well as the sale, that no payment would be required from the owner as a condition precedent to the quieting of his title. In order to determine the proper amount payable by the property owner and by the county to a purchaser, it is also necessary to consider the general scheme for tax sales.

Since 1895 tax sales to individual purchasers for state and county taxes have ceased, all sales being made to the state. For five years the owner is entitled to redeem his property from said sale by paying the original amount of the tax, with penalties and costs, and also all taxes subsequently assessed against the property with penalties. Sales were not made to the state for taxes levied after the first sale. Pol. Code, §§ 3813, 3814. After the deed to the state, upon application and authorization, the property would be sold by the tax collector to the highest bidder for cash. "No bid," however, "shall be received or accepted at such sale for less than the amount of all the taxes levied upon such property and all costs and penalties for every year delinquent as shown upon the delinquent rolls for said

years to the date of the execution of the deed to the state, and all expenses accrued to the date of the sale together with interest at seven per cent. per annum from the first day of July following the delinquency in each of said years to the date of the sale hereunder, computed upon the aggregate amount of such delinquent taxes, penalties and costs." Pol. Code, § 3897. It will be observed, then, that the purchaser not only is required to bid an amount sufficient to pay the particular tax for which the original sale was made five years before the deed, but also every subsequent tax. This requirement that the purchaser pay the taxes assessed for each of five years is particularly significant in view of the rule that where the assessment upon which the sale is based is void the owner will not be required to reimburse the purchaser at the tax sale, for that rule is based upon the principle that the owner should not be compelled to pay a void tax in order to secure his property. Where, however, the tax purchaser has paid off valid tax liens upon the property, the purchaser is equitably entitled to reimbursement for such portion of the taxes paid as were justly chargeable upon the property regardless of the fact that the particular tax for which the sale was made was void.

necessary in order to make him the highest bidder, and thereby secured a right to redeem the property upon the payment of all taxes subsequently assessed; the other, the scheme under section 3897, by which the purchaser was required to pay, in the first instance, an amount at least sufficient to cover all taxes, etc. Under both of these schemes of sale to individual purchasers the purchaser was required to pay taxes covering the five-year period, with interest, penalties, and costs. In each instance, in order to become the highest bidder, it might be essential that he should pay some amount in excess of such taxes, penalties, and costs. Aside from the possibility, or, we may say, probability, of some defects in the proceedings, as to many of which the deed is made conclusive evidence of regularity, the purchaser secured the absolute fee to the land. The amount of the taxes, penalties, and costs would probably not exceed 7 to 10 per cent. of the value of the property, leaving a margin of 90 per cent. of the value to be bid, depending upon the belief of the purchaser in the validity of the title acquired by him. It is obvious that the amount thus bid would be increased if the purchaser could be assured that if this deed was void he would at least recover the money paid by him. No doubt the amendment in question was adopted to assure the purchaser such reimbursement. The amendment first provides for reimbursement from the property owner, and then provides for a refund from the county treasury of that part of the purchase price "in excess of the amount for which he may have been reimbursed for taxes, penalties and costs" as therein provided. In determining what the "excess" may be, it is important to consider the provisions of the statute with relation to the amount of reimbursement required to be paid by the property owner to the purchaser.

In considering the language of subdivision 5 of section 3898, Political Code, it should also be observed that in the same statute amending that section, section 3771 of the Political Code was also amended (St. 1913, p. 587), so that thereafter, at the end of the five-year period, the property sold to the state five years previously was included in the annual tax collector's sale for delinquent taxes, and this property, instead of being sold or deeded to the state, was sold to private purchasers. This property "which has not been redeemed from the sale made to the state five years previously, shall be The introductory phrase of the statute sold by the tax collector at public auction "whenever in any action at law" is an apt to the highest bidder for cash in lawful reference to an action at law as distinguishmoney of the United States; but no bid shall ed from an equitable proceeding, but other be accepted at such sale for less than the provisions of the statute are inconsistent amount of * taxes, penalties and with that construction. For instance, the costs due as shown in said advertised list. term "decree" is used in referring to deciAfter such bid has been made and accepted sion of the court in the "action at law." “A the right of redemption shall cease, except decree is the judicial decision of a litigated as to the purchaser, who shall have thirty case by a court of equity. days within which to make redemption as accurate to use the word 'judgment' as approvided in section 3785b of this Code, and plied to courts of law and 'decree' to courts if not so redeemed or if no sale is had under of equity, although the former term is now the provisions of this paragraph, then said used in a larger sense to include both." property shall be deeded to the state." Sec- Bouvier's Law Dic. "The word 'decree' is tion 3771. It appears, then, that there are peculiarly appropriate to those proceedings two schemes for the sale of property sold to in which a plaintiff or a defendant is rethe state five years previously: One, the quired to do equity as a condition of secursale under section 3771 in the ordinary ing relief." Id., Bishop Eq., § 7. Hence the course, by which the purchaser was required use of the word “decree” would indicate that to bid sufficient to pay the original tax with in using the phrase "actions at law" the penalties, etc., plus whatever amount was Legislature intended to include equitable

It is

(182 P.)

judged that the initial assessment and levy were void, and for that reason the purchaser was refused any relief. This decision was erroneous. Unless all subsequent tax levies paid by her were also void, the purchaser should have been reimbursed by the property owner for all valid tax levies paid by her. In the absence of evidence or allegation the presumption is that the other four assessments and tax levies included in the amount required to be paid by the purchaser at the time of purchase were valid. It cannot be ascertained from the complaint whether these four valid tax levies were less than or in excess of the $516 paid by the purchaser at the tax sale which is now sought to be recovered, for, by a proviso in section 3897, Political Code, not heretofore mentioned in this opinion, upon proper authorization by the board of supervisors, the tax collector could receive a bid for less than the full amount of all taxes, penalties, and costs levied upon the property. So far as appears from anything alleged in the complaint, the property in question may have been offered in accordance with these provisions at a price less than the total amount of taxes, penalties, and costs levied upon the property, and in that event the sum of $516, for all that appears in the complaint, may have been less than the taxes justly due and le

suits, as well as the common-law forms of action. The term "action" is alone sufficient to include both forms of civil remedies (section 22, Code Civ. Proc.; Smith v. Richmond, 19 Cal. 476, 481; Lux v. Haggin, 69 Cal. 255, 267, 4 Pac. 919, 10 Pac. 674), and the term "law," of course, in its broad sense includes equity. While the language of the amendment under consideration does not use legal terms with technical accuracy, we are satisfied that the statute was intended to cover every decision of a court in a civil action wherein it is adjudged that the purchaser's title is void, whether at law or in equity, and regardless of whether the purchaser is a plaintiff "in pursuit of the state's title to the property sold" or a defendant in an action brought by the owner. No doubt the phrase "in pursuit of the state's title to the property sold," as contradistinguished from "the amount paid at the tax sale," was used in view of the fact that under the provisions of section 3771 of the Political Code the purchaser at the tax sale was required to pay an added amount to the purchase price to redeem the property from all subsequent taxes before securing a deed. It will be observed, then, that in every instance the purchaser, in whatever form of proceeding the relative rights of the purchaser and the property owner may be litigated, is entitled to be reimbursed by the property owner "the full amount of tax-gally levied upon said property for the four es, penalties and costs paid out and expended by him, to be determined by the court, in pursuit of the state's title to the property so sold." If he thus receives the full amount so expended by him, the amount to be paid by the county would be the difference between the taxes, penalties, and costs paid by and to the purchaser and the amount bid by the purchaser at the time of sale. Under the new scheme for the protection of the purchaser at the tax sale it is evident that the primary purpose of this legislation, so far as the payment by the county is concerned, was to reimburse the purchaser the amount of such excess paid to the county, over and above the taxes justly due it. The Legislature could not have intended that the county should refund taxes justly due it. On the contrary, such taxes were to be paid by the owner to the purchaser.

[5] There remains to be considered the question whether in the event that the purchaser fails to recover judgment against the owner for the taxes, penalties, and costs expended by him, he can recover from the county such portion of the taxes, penalties, and costs as he thus fails to secure from the property owner. The question is of importance in this action as to the repayment of void tax levies, for it is alleged in the complaint that in the action between the purchaser and the property owner it was ad

years subsequent to the levy found by the court to be void. In view of that fact, it is unnecessary to determine in this case whether the amount of a void tax paid by a purchaser and not collected from the owner must be repaid to him by the county under the provisions of section 3898, Political Code.

[6] In the foregoing discussion we have assumed, and now hold, that the amount to be paid by the county is fixed by the law, not by the decree in the litigation between the owner and the purchaser at the tax sale. The county is not a party to that litigation. It was no doubt intended that the county should act upon the adjudication of the court so far as the invalidity of the tax sale was concerned, for this is a matter of indifference to the county. But the question as to whether or not the court has therein correctly determined the amount payable from the property owner to the purchaser is one, we think, that is not conclusive upon the county. In other words, we hold that the language of the statute requiring a refund from the county of the portion of the purchase price "in excess of the amount for which he may have been reimbursed for taxes, penalties and costs as herein provided" should be read in effect as though the language were "for which it is herein provided that he shall be reimbursed by the property owner," or "for which he

2254-CONSTRUCTION BY COURT SUBSEQUENT AMENDMENTS USING SAME LANGUAGE.

should be reimbursed for taxes, penalties [2. STATUTES
and costs as herein provided." That is to
say, we think that the statute itself, rather
than the decree of court, fixes the amount to
be paid by the county and by the property

owner.

[7] Respondent also contends that the demurrer to the complaint was properly sustained for the reason that the claim against the county upon which the suit is based was filed before the decree in the action between the purchaser and property owner was entered. It is clear that the right of the purchaser to be reimbursed by the county is predicated upon a formal and final adjudication that the title acquired by him at the tax sale was invalid and void. It follows that the purchaser must either waive his right to appeal, or the time for appeal must expire, or an appeal, if taken, must be determined before the purchaser can claim any refund from the county. It is obvious that under the statute the county should not refund any portion of the money paid by the purchaser until final determination of the right of the purchaser in and to the property in question. For this reason the claim was prematurely filed with the

county.

[8] The judgment of the trial court was correct for the reason that the complaint failed to show any "excess" to be refunded by the county within the meaning of the

The phrase, "claiming the benefits of this chapter," in Code Civ. Proc. 1187, having been given a meaning by court construction ing a mechanics' lien and not to other remedies confining its operation to the benefits of assertafforded by the chapter, its subsequent continuation in amendments should not be held to have changed its meaning.

In Bank.

Appeal from Superior Court, Los Angeles County; Chas. Wellborn, Judge.

Action by the General Electric Company against the American Bonding Company of Baltimore. Judgment for plaintiff, and defendant appeals. Affirmed.

W: Fricke, all of Los Angeles, for appellant.
J. Crider, Jr., A. L. Abrahams, and Chas.
William Ellis Lady, of Los Angeles, for re-
spondent.

PER CURIAM. Action on a bond given by labor and material to be furnished in the cona contractor to secure payment of claims for from a judgment in favor of plaintiff, a corstruction of a building. Defendant appeals poration that supplied certain materials for use in the building.

The bond in question had at its beginning the following words:

P., as amended in 1911, and must be equal to 50 per cent. of the contract price. Bond to labor

"This bond is required by section 1183, C. C.

law, and for the further reason that the
claim against the county was prematurely
filed, and such claim was a necessary pre-ers, materialmen, etc."
requisite to the filing of a complaint. Sec-
tions 3898, 3804, Pol. Code.
The judgment is affirmed.

We concur: MELVIN, J.; LENNON, J.

(180 Cal. 675)

GENERAL ELECTRIC CO. v. AMERICAN
BONDING CO. OF BALTIMORE. (L.
A. 5781.)

(Supreme Court of California. July 5, Rehearing Denied Aug. 4, 1919.)

By the terms set forth in the body of the Instrument, it is "expressly made to inure to the benefit of any and all persons who perform labor upon or furnish materials to be used in the work described" in the building contract. There is a further provision as follows:

"Any and all such persons shall have and are given a right of action to recover upon this bond against the said principal and surety, or | either of them, in any suit brought to foreclose mechanics' liens, which may be filed by such persons, or any of them, upon the property mentioned in said contract, or in a separate suit 1919. brought upon this bond, and may recover in such action or actions, the value of such labor done or materials furnished, or both." (The italics are ours.)

1. MECHANICS' LIENS
128-MATERIAL-
MEN'S ACTION ON CONTRACTOR'S BOND-NE-
CESSITY OF PLAINTIFF'S FILING LIEN
CLAIM.

A contractor's bond as required by Code Civ. Proc. § 1183, creates a direct obligation on the surety's part to pay for materials used in constructing a building, and such section, as well as section 1197, preserves to materialmen a right of action thereon without having first filed a lien claim, notwithstanding section 1187, requiring filing of lien claims for asserting liens.

[1] Defendant sets forth in its answer a special defense based upon the failure of the provisions of section 1187, Code of Civil respondent to file any claim of lien under Procedure. It was alleged that during the time within which a claim of lien might have been filed a large sum of money was due from the owner to the contractor which could and would have been applied to respondent's claim if the lien had been thus

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(182 P.)

formally asserted. The court sustained a demurrer to this special defense and also on motion ordered it stricken out. These rulings are specified as erroneous. The question for this court to decide, therefore, is whether or not a materialman may sue on a bond, conditioned as is the one which is the basis of this action, without first duly filing a claim of lien.

Appellant insists that this is strictly a statutory bond, and that no liability arises upon it as a common-law obligation. The learned District Court of Appeal of the Second Appellate District agreed with appellant's view and reversed the Judgment upon the authority of Miles v. Baley, 170 Cal. 151, 149 Pac. 45; Hubbard v. Jurian, 35 Cal. App. 757, 170 Pac. 1093; and Crane Co. v. Maryland Casualty Co. (App.) 173 Pac. 491.

The first of these cases arose, not under section 1183, Code of Civil Procedure, but under an act to secure the payment of the claims of materialmen, etc., employed upon public work. By the terms of the act it was made the duty of the contractor before entering upon the performance of the work to file the prescribed bond binding the sureties to pay for materials or labor, up to the amount specified therein, in case of the contractor's default "provided such claims shall be filed" as thereafter required.

It appears in Miles v. Baley that the verified statement prescribed by section 2 of the act (St. 1897, p. 201) as a condition precedent to the maintenance of a suit upon the bond had not been filed by the claimant. Therefore the sureties on the bond were held not to be liable. Said section 2, after requiring that the materialman or laborer must file a verified statement of claims within 30 days from the time when the work is completed, provides that "at any time within ninety days after the filing of such claim," the materialman or laborer "may commence an action against the sureties." This is the fundamental and essential difference between Miles v. Baley and the case at bar. In that case the materialman under the plain terms of the statute governing the performance of the public work and the renuneration therefor was required to file his claim before and as a precedent condition Lo the maintenance of a suit on the bond. The section governing the materialmen in the case at bar (section 1183, Code of Civil Procedure) contains no such restriction. Miles v. Baley therefore is not authority sustaining defendant's theory in the case at bar. Hubbard v. Jurian distinctly holds, however, that only those claimants who have duly perfected their liens within the statutory time are entitled to recover upon the bond given by section 1183, Code of Civil Procedure. Crane Co. v. Maryland Casualty Co. (App.) 173 Pac. 494, follows Hubbard v. Jurian without discussion of the principles

involved. In Richardson & Fisher Co. v. Chicago Bonding & Surety Co., 35 Cal. App. 650, 170 Pac. 856, decided a few days before Hubbard v. Jurian, the court held that filing of a lien as prescribed by section 1187, Code of Civil Procedure, was a prerequisite to a suit on the bond given in accordance with section 1183, Code of Civil Procedure. In Hubbard v. Jurian there were petitions for transfer of the cause to this court and said petitions were denied. Unless, therefore, we are prepared to overrule the three decisions last cited, we must reach the same conclusion at which the learned District Court of Appeal arrived in this case. We are of the opinion that the cited cases were improperly decided so far as they held that a bond like the one before us is incapable of enforcement unless the claimants seeking to bind the sureties have filed their liens within the prescribed time. The rationale of these decisions appears clearly from the following language in the opinion in Hubbard v. Jurian, supra (at page 770 of 35 Cal. App., at page 1098 of 170 Pac.) :

"The bond in suit was executed in response to the requirements of the statute. It is therefore a statutory bond in the strictest sense, and under the familiar and well-settled rule parties claiming the benefit of the obligation of the bond must show a substantial compliance with the conditions of the statute under which the bond was given. Section 1183 of the Code of Civil Procedure, under which the bond was given, is part and parcel of title 4, c. 2, of that Code, which relates exclusively to 'liens of mechanics and others upon real property,' and section 1187 of the same Code and chapter requires that every person claiming the benefits of the provisions of the designated chapter must file a verified lien within the time specified by that section. Obviously, the several Code sections of the chapter in question must be considered and construed together, and when so considered it must be held that the provision of section 1183 that the required bond shall in addition to any conditions for the performance of the contract, be also conditioned for the payment in full of the claims of all persons performing labor upon or furnishing materials. etc.,' has reference to the 'claims' of lien specified in section 1187 and required to be filed for record within a designated time, and to the claims' which the statute further says must be verified by the oath of the claimant or some other person."

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We are of the opinion that this construction gives an importance to section 1187, Code of Civil Procedure, and limits the rights of materialmen in a manner not contemplated by the Legislature. Section 1197 of the same chapter clearly contemplates suits which may be maintained without the previous filing of liens, for it provides that

"Nothing contained in this chapter shall be construed to impair or affect the right of any person to whom any debt may be due for work done or materials furnished to maintain a personal action to recover said debt against the

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