Court Opinion

ID: 4127402
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:26:42.179911+00
Date Added: 2024-06-11T14:31:41.835971
License: Public Domain

TO BE PUBLISHED IN THE OFFICIAL REPORTS

                      OFFICE OF THE ATTORNEY GENERAL

                                State of California

                              JOHN K. VAN DE KAMP

                                 Attorney General

                            _________________________

                                           :

                OPINION                    :                No. 86-703

                                           :

                    of                     :              MAY 19, 1987
                                           :

        JOHN K. VAN DE KAMP                :

           Attorney General                :

                                           :

        RONALD M. WEISKOPF                 :

        Deputy Attorney General            :

                                           :

________________________________________________________________________

               THE HONORABLE STEVEN L. KABOT, City Prosecutor, City of
Visalia, has requested an opinion on the following subject:

              Is a community college district, being exempt from the payment of state
income or franchise taxes pursuant to the California Constitution, an organization which
is authorized to conduct legal bingo games under the provisions of Penal Code section
326.5 and a local ordinance adopted pursuant thereto?

                                    CONCLUSION

              A community college district is not an entity which may be authorized by
local ordinance to conduct bingo games pursuant to the provisions of Penal Code section
326.5.

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                                        ANALYSIS

               A lottery is defined as "any scheme for the disposal or distribution of
property by chance, among persons who have paid . . . any valuable consideration for the
chance of obtaining such property or a portion of it. . . ." (Pen. Code, § 319.) Bingo is a
game in which chance determines the possibility of winning, and consequently "when the
elements of a prize and consideration are also present, a bingo game constitutes a lottery.
[Citation.]" (60 Ops.Cal.Atty.Gen. 130, 131 (1977).)

              Until recently lotteries had generally been prohibited in California both
constitutionally and statutorily (Cal. Const., art. IV, § 19, subd. (a); Pen. Code, pt. 1, tit.
9, ch. 9, § 319, et seq.)1, and bingo as a gambling game was prohibited as such. (City of
Pomona v. Christian Fellowship Center (1981) 125 Cal. App. 3d 250, 252.) In 1976, the
voters approved a constitutional amendment to article IV, section 19 of the state
constitution to permit the Legislature to "authorize cities and counties to provide for
bingo games . . . for charitable purposes." (Cal. Const., art. IV, § 19, subd. (c)), and the
Legislature has done so in Penal Code section 326.5. (See Live and Learn v. City of Los
Angeles (1986) 188 Cal. App. 3d 407, 415, fn. 4; People v. 8,000 Punchboard Card
Devices (1983) 142 Cal. App. 3d 618, 620; City of Pomona v. Christian Fellowship
Center, supra; 60 Ops.Cal.Atty.Gen. 130, 131 supra.) Basically the section allows certain
organizations that are exempt from the payment of the bank and corporations tax under
specified sections of the Revenue and Taxation Code to conduct bingo games for
charitable purposes pursuant to local ordinance.2 Community college districts do not fall
   1
      A state lottery of course now exists (Cal. Const., art. IV, § 19, subd. (d); Gov. Code,
tit. 2, div. 1, ch. 12.5, § 8880, et seq., the California State Lottery Act of 1984.)
   2
      In 67 Ops.Cal.Atty.Gen. 528, 528-529 (1984) we summarized the relevant
provisions of section 326.5 as follows: "Bingo must be authorized by a local ordinance
which allows games to be conducted only by certain tax-exempt organizations, mobile
home park associations and senior citizens organizations. The receipts are to be used
only for charitable purposes. No person except security personnel employed by the
organization conducting the games may receive a wage. No minors may participate in
the games. The bingo games must be conducted on property owned or leased by the
organization or on certain donated property. The games shall be open to the public and
operated, staffed, promoted and supervised only by members of the organization, except
for hired security personnel. No individual, corporation, partnership or other legal entity
except the organization shall hold a financial interest in the conduct of the games. Profits
and proceeds must be kept in special accounts and not commingled with other accounts.
Except in the case of an organization exempt from tax under Revenue and Taxation Code
section 23701d, the lesser of 20% or $1,000 per month of the proceeds may be used for
rental of property and for overhead. Proceeds may be used for prizes, not exceeding

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within any of the stated sections that are referred to in section 326.5, but they are exempt
from taxation generally under the Constitution. (Cf., Cal. Const., art. XIII, § 26, subd.
(c); (nonprofit educational institutions); The Housing Authority v. Dockweiler (1939) 14
Cal. 2d 437, 453, 455; and see, Cal. Const., art. III, § 3, subds. (b) and (d); San Marcos
Water District v. San Marino Unified School District (1986) 42 Cal. 3d 154, 160-162.)
Since Penal Code section 326.5 does not limit the other anti-lottery provisions of the
Penal Code (60 Ops.Cal.Atty.Gen., supra at 132), we are asked whether a community
college district is thus nevertheless embraced thereunder so as to permit it to conduct
bingo games pursuant to local ordinance. We conclude it is not. Penal Code section
326.5, subdivision (a) provides:

              "(a) Neither this chapter nor Chapter 10 (commencing with Section
       330) applies to any bingo game which is conducted in a city, county, or city
       and county pursuant to an ordinance enacted under Section 19 of Article IV
       of the State Constitution, provided that such ordinance allows games to be
       conducted only by organizations exempted from the payment of the bank
       and corporation tax by Sections 23701a, 23701b, 23701d, 23701e, 23701f,
       23701g, and 23701l of the Revenue and Taxation Code and by mobile
       home park associations and senior citizens organizations; and provided that
       the receipts of such games are used only for charitable purposes."

              Part 11 of Division 2 of the Revenue and Taxation Code, the Bank and
Corporation Tax Law, imposes an income/franchise tax on corporations doing business in
this state. (Id., § 23151.) Sections 23701 through 23710 of that code exempt certain
organizations therefrom. Among them are certain labor, agricultural or horticultural
organizations (§ 23701a), certain fraternal beneficial societies, orders, or organizations
(§ 23701b), certain religious, charitable, scientific, literary, educational, amateur sports
or humanitarian corporations (§ 23701d), certain business leagues, chambers of
commerce, real estate boards and boards of trade (§ 23701e), certain civic leagues, social
welfare and employees' organizations (§ 23701f), certain nonprofit pleasure and
recreation clubs (§ 23701g), and certain domestic fraternal societies, orders or
associations (§ 23701l).

             A community college district does not fall within any of the sections
offering exemptions from income tax exemption that are specifically mentioned in Penal
Code section 326.5. If it were to be pigeon-holed in one of them it would be section
23701d which provides an exemption for certain "[c]orporations . . . organized and
operated exclusively for . . . educational purposes. . . ." But that section is not so
accommodating. While community college districts (Ed. Code, tit. 3, div. 7), as school

$250 in value for each separate game, and for fees."

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districts, have been described as "corporation[s] organized for educational purposes" (see
Barber v. Mulford (1897) 117 Cal. 356, 358; 57 Ops.Cal.Atty.Gen. 155, 158 (1974); cf.
Turlock Irr. Dist. v. White (1921) 186 Cal. 183, 187, 190), they are not corporations in
the strict sense. (Id., at 187, 189, 190) Rather, they are essentially agencies of the state
for the local operation of the state school system (Hall v. City of Taft (1956) 47 Cal. 2d
177, 181; Butler v. Compton Junior College Dist. (1947) 77 Cal. App. 2d 719, 728) and
their sometimes being denominated as (public or municipal) corporations is nothing more
than a way of recognizing that essential. (Butler v. Compton Junior College Dist., supra;
cf. Turlock Irr. Dist. v. White, supra, at 190.) That being so, not only would a community
college district not be an educational corporation within the meaning of section 23701d,
but it would not be one which would be subject to the Bank and Corporations Law at all.
That law imposes a tax on

              — "every corporation doing business within the limits of the state
       and not expressly exempted from taxation by the provisions of the
       constitution . . . for the privilege of exercising its corporate franchises. . . ."
       (Rev. & Tax. Code, § 23157, subd. (a).)

Since "doing business" is defined as "actively engaging in any transaction for the purpose
of financial or pecuniary gain or profit (§ 23101), which community college districts do
not, they would not be subject to the Law's embrace and so they would not be
"corporations" to be excepted from it.

               But perhaps more important, going to their essential, is the fact that public
entities or agencies such as community college districts, although sometimes classified as
"public corporations," have long been held to be exempt from taxation or special
assessment. (San Marcos Water District v. San Marcos Unified School District, supra,
42 Cal.3d at 160-161; cf., The Housing Authority v. Dockweiler, supra, 14 Cal.2d at 453-
454; Turlock Irr. Dist. v. White, supra, 186 Cal. at 190; Water District v. County of
Orange (1939) 30 Cal. App. 2d 740, 742-743.) As the court said in Water District v.
County of Orange, ". . . [I]t has always been the policy of the law in California, since the
adoption of the present Constitution, to exempt from taxation property of the state and
state agencies generally classified as public corporations. . . ." (30 Cal.App.2d at 742.)3
   3
      We note that the constitution expressly exempts property owned by the state,
property owned by local governments, and building land and equipment used exclusively
for community colleges from property taxation (Cal. Const., art. XIII, § 3, subds. (a), (b)
and (d)) respectively), and income of nonprofit educational institutions of collegiate
grade that is used for educational purposes, from income tax. (Cal. Const., art XIII, § 26,
subd. (c).) A community college district maintains one or more community colleges.
(Ed. Code, § 72011.)

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The rationale for such exemption "is to prevent one tax-supported entity from siphoning
tax money from another such entity . . . [with] no actual gain in tax revenues." (San
Marcos Water District v. San Marcos Unified School District, supra, at 161.)

              Community college districts thus are not covered by the Bank and
Corporation Law, and it is therefore not unexpected that the sections of that law which
offer exemption from its coverage do not include them. Nevertheless, it is suggested that
inasmuch as community college districts are "exempted from the payment of the bank
and corporations tax," albeit for reasons other than being included in the particular
sections of the Bank and corporations law that are mentioned in Penal Code section
326.5, that they may thus still qualify to be authorized to conduct bingo games. We
believe that not to be the case, their exemption from taxation notwithstanding.

               By section 326.5 the Legislature has authorized cities and counties to
provide for bingo games by local ordinance, pursuant to a specially enacted constitutional
amendment that was necessary for it to do so. (Compare, art. IV, § 19, subd. (c) with id.,
subd. (a).) In that authorization, however, the Legislature "provided that such ordinance
allow games to be conducted only by organizations exempted from the payment of the
bank and corporation tax by [certain] Sections of the Revenue and Taxation Code." (Pen.
Code, § 326.5, subd. (a); emphasis added.) That proviso limits the basic authorization for
cities and counties to provide for bingo games and deprives it of any force inconsistent
with it. (Cf. McAlpine v. Baumgartner (1937) 10 Cal. 2d 409, 417; Livermore v. Waite
(1894) 102 Cal. 113, 120 (provisos).) The proviso restricting the authorization of section
326.5 is quite specific as to which organizations are meant to be eligible to conduct bingo
games pursuant to local ordinance. It does not speak in general terms of organizations or
entities which may be exempt from taxation for whatever reason, but rather specifically
designates only those so exempt by reason of certain sections of the Revenue and
Taxation Code's Bank and Corporations Law. Community college districts, as well as
other entities which may enjoy other-derived exemption from the bank and corporations
tax, are not included in those specific references. It is a general tenet of statutory
construction that a specification of certain things as coming within the operation or
exception of a statute will preclude the inclusion of other things not mentioned (Collins v.
City & Co. of S.F. (1952) 112 Cal. App. 2d 719, 731; Rick v. State Board of Optometry
(1965) 235 Cal. App. 2d 591, 607), as it is to be inferred that they were intentionally
excluded by the specific enumeration. (Wildlife Alive v. Chickering (1976) 18 Cal. 3d
190, 196; De Weese v. Unick (1980) 102 Cal. App. 3d 100, 106.) That tenet has particular
force here because the Legislature has preceded the specific enumeration with the word
"only", which is itself a word "'of restriction as to that which it qualifies and of exclusion
as to other things.'" (White Stores v. Atkins (Tenn. 1957) 303 S.W.2d 720, 726; see also,
People v. Fair (1972) 43 Cal. 137, 146-147.) Further, we are also taught that exceptions
are usually strictly construed (City of National City v. Fritz (1949) 33 Cal. 2d 635, 636;

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Pardee Construction Co. v. California Coastal Com. (1979) 95 Cal. App. 3d 471, 478),
and section 326.5 and its constitutional base (art. IV, § 19, subd. (c)) constitute but a
narrow exception to the public policy of this state against gambling. (Cf., In re Goddard
(1937) 24 Cal. App. 2d 132, 140-141; 66 Ops.Cal.Atty.Gen. 94, 101 (1983).) "Since bingo
[games] exist and operate only by virtue of a special constitutional and statutory
permission, . . . in allowing such games to operate within the [a locality], [a local agency]
may give that permission only on the terms of the legislative permit." (City of Pomona v.
Christian Fellowship Center, supra, 125 Cal. App. 3d 250, 253; accord, 60
Ops.Cal.Atty.Gen. 130, 132, supra.) Community college districts are not included in the
terms of that permit and we therefore conclude that they are not organizations which may
be authorized by local ordinance to conduct bingo games pursuant to it, their general
exemption from bank and corporation taxation notwithstanding. Needless to say, without
such authorization they may not legally conduct bingo games. (Pen. Code, § 319 et seq.;
60 Ops.Cal.Atty.Gen. 130, 132, supra.)

                                           *****

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