Court Opinion

ID: 5452021
Source: CourtListenerOpinion
Date Created: 2022-01-08 19:10:03.558826+00
Date Added: 2024-06-11T08:32:27.378342
License: Public Domain

BIRD, C. J., Concurring and Dissenting.
Initiatives by their very nature are direct votes of the people and should be given great deference by our courts. Judges should liberally construe this power so that the will of the people is given full weight and authority. However, if an initiative conflicts with the federal Constitution, judges are duty bound to hold the offending sections unconstitutional.
When these principles are applied to the cases before this court, it is clear that article XIIIA is constitutional in all respects save one. I endorse *249the majority opinion’s view that there has not been a violation of the one subject rule, an impermissible revision of the Constitution, or a curtailment of the right to travel. Further, it is correct in holding that the question of impairment of contracts is not properly before this court and is not ripe for decision.
One issue remains which troubles me deeply. As judges we must be devoted to the preservation of the great constitutional principles which history has bequeathed to us. In article XIIIA, one of those principles has been violated—the equal protection clause. No one mindful of this nation’s colonial history can seriously question the right of the people to act to redress tax grievances. However, our citizens also have a right to be treated equally before the law. The right to equality of taxation is as basic to our democracy as is the right to representation in matters of taxation. Under article XIIIA property taxpayers are not treated equally, and those sections which promote this disparity must fall.
I
Consider these facts. John and Mary Smith live next door to Tom and Sue Jones. Their houses and lots are identical with current market values of $80,000. The Smiths bought their home in January of 1975 when the market value was $40,000. The Joneses bought their home in 1977 when the market value was $60,000. In 1977, both homes were assessed at $60,000, and both couples paid the same amount of property tax. However, under article XIIIA in 1978, the Joneses will pay 150 percent of the taxes that the Smiths will pay. Should a third couple buy the Smiths’ home in 1978, that couple would pay twice the taxes that the Smiths would have paid for the same home had they not sold it. Today, this court holds that such disparity is not only equitable, but that it does not violate the equal protection clause of the Constitution.
The basic problem with this position is that it upholds the adoption of an assessment scheme that systematically assigns different values to property of equal worth. By pegging some assessments to the value of property at its date of purchase and other assessments to the value of property as of March 1, 1975, article XIIIA creates an irrational tax world where people living in homes of identical value pay different property taxes. Thus, instead of establishing an assessment scheme with one basis by which all property owners are taxed, article XIIIA utilizes two bases, *250acquisition date and 1975 market value, to impose artificial distinctions upon equally situated property owners.
Article XIIIA divides the property tax-paying public into two classes, pre- and post-1975 purchasers. Section 2(a) rewards those owners who purchased their property before March 1, 1975, by constitutionally fixing their tax assessments at lower figures than those who buy property of similar or identical value at a later date. This “roll back” provision confers substantial benefits upon one group of property owners not shared by other similarly situated owners. This provision raises the ugly specter of a race for tax savings in which the players start at different points, weighed down by different “handicaps.”
Inequalities in state taxation have been held to be constitutional so long as they “rest upon some ground of difference having a fair and substantial relation to the object of legislation . . . .” (Royster Guano Co. v. Virginia (1920) 253 U.S. 412, 415 [64 L.Ed. 989, 990, 40 S.Ct. 560]; see also Kahn v. Shevin (1974) 416 U.S. 351, 355-356 [40 L.Ed.2d 189, 193, 94 S.Ct. 1734]; Allied Stores of Ohio v. Bowers (1959) 358 U.S. 522, 526-527 [3 L.Ed.2d 480, 484, 79 S.Ct. 437]; Ohio Oil Co. v. Conway (1930) 281 U.S. 146, 159-160 [74 L.Ed. 775, 781-782, 50 S.Ct. 310].)
However, even minimal scrutiny requires that the statutes of the Legislature and the initiatives of the people be defensible in terms of a shared public good, not merely in terms of the purposes of a special group or class of persons. (See Tribe, American Constitutional Law (1978) p. 995.) The law should be something more than just the handmaiden of a special class; it must ultimately be the servant of justice.
Respondents fail to establish the general public benefit to be found in giving some, but not all, individuals a “roll back” to 1975 assessments. To be eligible for the full “roll back,” article XIIIA requires that an individual have owned continuously his or her property since a date prior to March of 1975. This requirement makes it literally impossible for persons purchasing property in 1978 or thereafter to qualify for benefits granted fully to pre-1975 owners (and less fully to 1975-1978 owners). In so doing, article XIIIA transgresses the constitutional guarantee of equal protection under the law.
Respondents defend the rationality of the 1975 date by characterizing it as a cut-off date or “grandfather” clause. Although its arbitrariness is *251conceded, they argue that it is defensible as a matter of administrative convenience. This contention lacks merit. It merely acknowledges that “it is difficult to be just, and easy to be arbitrary.” (Stewart Dry Goods Co. v. Lewis (1935) 294 U.S. 550, 560 [79 L.Ed. 1054, 1059, 55 S.Ct. 525].) Administrative convenience is wholly inadequate to warrant preferred treatment of a closed class of property owners. This court has previously refused to accept administrative convenience as a sufficient explanation of “great” differences in tax rates among similarly situated individuals. (Haman v. County of Humboldt (1973) 8 Cal.3d 922, 927-928 [106 Cal.Rptr. 617, 506 P.2d 993]; cf. Toomer v. Witsell (1948) 334 U.S. 385, 398-399 [92 L.Ed. 1460, 1472-1473, 68 S.Ct. 1157].) In Haman, this court rejected the contention that administrative convenience justified a 23 percent spread in the rate at which California-registered and out-of-state registered fishing vessels were taxed. Article XIIIA may in individual cases cause a disparity in taxes which is much greater than 23 percent. This is especially true in those cases where the effect of inflation and appreciation on real property values has been acute.
The fact that the former property tax system allowed inequalities through exemptions for charitable, religious, nonprofit and educational institutions is no answer to the questions raised by article XIIIA. Those exemptions benefitted the general public since the public received specific benefits from the exempted organizations. No one has yet established what benefits the general public derives from the systematic undervaluation of the property of pre-1975 purchasers, and this court should decline to hypothesize rationales. (See Gunther, The Supreme Court, 1971 Term—Forward: In Search of Evolving Doctrine on a Changing Court: A Model for a Newer Equal Protection (1972) 86 Harv.L.Rev. 1, 33, 44-46, 47.)
II
The adoption of the acquisition date of property as the standard for valuation raises novel constitutional questions never decided by the Supreme Court. In analyzing section 2(a), this court must decide whether it is constitutionally permissible for a state to systematically assign unequal assessment to properties of concededly equal market value.
The practical effect of section 2(a) is to undervalue property purchased at an earlier date in comparison to the assessments assigned to subsequently purchased property. The extent of undervaluation will fluctuate *252with the degree of property value appreciation in a particular locality. Given the “roll back” feature, the process inevitably starts by substantially undervaluing prior purchased property.
Once it is understood that article XIIIA systematically imposes different assessments on property of similar worth, a long line of Supreme Court cases becomes relevant. Those cases support the proposition that a person is denied equal protection of the law when his property is assessed at a higher value than property of equal worth in the same locale. “The purpose of the equal protection clause of the Fourteenth Amendment is to secure every person within the State’s jurisdiction against intentional and arbitrary, discrimination, whether occasioned by express terms of a statute or by its improper execution .... And it must be regarded as settled that intentional systematic undervaluation by state officials of other taxable property in the same class contravenes the constitutional right of one taxed upon the full value of his property.” (Sunday Lake Iron Co. v. Wakefield (1918) 247 U.S. 350, 352-353 [62 L.Ed. 1154, 1155-1156, 38 S.Ct. 495]; see also Raymond v. Chicago Traction Co. (1907) 207 U.S. 20, 36-37 [52 L.Ed. 78, 87-88, 28 S.Ct. 7]; Sioux City Bridge v. Dakota County (1923) 260 U.S. 441, 445 [67 L.Ed. 340, 342-343, 43 S.Ct. 190, 28 A.L.R. 979]; Cumberland Coal Co. v. Board (1931) 284 U.S. 23, 28-29 [76 L.Ed. 146, 149-150, 52 S.Ct. 48].)
In Sioux City Bridge, supra, the Supreme Court held it to be a violation of the equal protection clause to assess one company’s property at 100 percent of its market value while other real estate in the same district was generally assessed at only 55 percent of the market value. Section 2(a) of article XIIIA authorizes the same kind of discrimination as that condemned in Sioux City Bridge. Initially, properties purchased in earlier years will be undervalued in comparison with other properties (though they may be identical in current fair market value) purchased, constructed, or transferred in later years. Then, as the years go by, the skewed nature of the tax world created by article XIIIA will become even more pronounced as each successive generation of purchasers will have their property overvalued in comparison to their neighbors or predecessor owners. For example, consider the condominium complex where each unit, though of identical fair market value, receives a different tax assessment simply because purchased in a different year. Consider the plight of the military family required by circumstances to change residence periodically. In 1979, that family may sell a house purchased in 1975, and buy a new house of identical current cash value. However, their *253tax bill will take a quantum leap upward, as their assessment jumps from 1975 to 1979 levels. Conversely, the family allowed by circumstances to remain in one house for long periods of time will reap substantial tax benefits simply because of the length of their residency.
Consider further the plight of the family which “newly constructs” their house after a natural disaster such as fire or flood. Article XIIIA, section 2(a) penalizes them by reassessing the value of their house to market value at the time of the new construction. What is the possible rationale for allowing natural disasters to trigger an increase in property tax obligations? Surely a truly rational tax world would consider such families for tax relief.1 Finally, consider the reassessment to current market value mandated by section 2, subdivision (a) for “changes in ownership” brought about by divorce or death. Did those who voted so overwhelmingly for article XIIIA’s general tax relief also intend to penalize those families who experience such family crises?
In Cumberland Coal Co. v. Board, supra, 284 U.S. 23, the Supreme Court invalidated a taxing measure that ignored differences in current market value. In that case, the local assessors chose to assign the same dollar value per ton to all unmined coal in the county. However, it was undisputed that there existed substantial differences in value between given tons of coal, depending on the mining and transportation costs. The court saw clearly the gross inequalities that resulted, even though the same percentage tax was levied on all: “. . . the fact that a uniform percentage of assigned values is used, cannot be regarded as important if, in assigning the values to which the percentage is applied, a system is deliberately adopted which ignores differences in actual values so that property in the same class as that of the complaining taxpayer is valued at the same figure (according to the unit of valuation, as, for example, an acre) as the property of other owners which has an actual value admittedly higher. Applying the same ratio to the same assigned values, when the actual values differ, creates the same disparity in effect as applying a different ratio to actual values when the latter are the same.” (Id., at p. 29 [76 L.Ed. at p. 150].)
Article XIIIA adopts an assessment scheme similar in effect to that condemned in Cumberland Coal. The same percentage (one percent) is *254applied to all assessed values; but the assessed values themselves do not accurately reflect the respective market values of property. This has the effect, as the court noted in Cumberland Coal, supra, 284 U.S. at page 29 [76 L.Ed. at p. 150], of taxing identically situated property owners at different percentages of the true value of their property. If article XIIIA had been drafted to say, “Some persons will pay a property tax of one percent of the true value of their property; others will pay only a one-half of one percent tax,” the violation of the equal protection clause would have been obvious. Yet, the result under article XIIIA is the same. Assume, for instance, that the market value of a home increases from $50,000 in 1975 to $100,000 some time in the future. A one percent tax on the 1975 value is equivalent to a one-half of one percent tax on the new value.
Decisions in this jurisdiction have reiterated the principle that the equal protection clause is violated when one person’s property is assessed at a higher level than another person’s property which is of identical value. For example, in Birch v. County of Orange (1921) 186 Cal. 736, 741 [200 P. 647], this court held that a taxpayer is entitled to “the exercise of good faith and fair consideration on the part of the taxing power in assessing his property, at the same rate and on the same basis of valuation as that applied to other property of like character and similarly situated.”
The Court of Appeal recently restated this principle: “The value of property for assessment purposes is to be determined ... on such basis as is used in regard to other property so as to make all assessments as equal and fair as is practicable. [Citations.] In order to cany out this principle, the assessor and the county board of equalization must apply the same ratio to market value uniformly within the county.” (Glidden Company v. County of Alameda (1970) 5 Cal.App.3d 371, 378 [85 Cal.Rptr. 88, 86 Cal.Rptr. 464]; see also Simms v. County of Los Angeles (1950) 35 Cal.2d 303, 315 [217 P.2d 936]; Mahoney v. City of San Diego (1926) 198 Cal. 388, 397, 404 [245 P. 189]; Metropolitan Stevedore Co. v. County of Los Angeles (1972) 29 Cal.App.3d 565, 572 [105 Cal.Rptr. 595]; City of Los Angeles v. County of Inyo (1959) 167 Cal.App.2d 736, 740 [335 P.2d 166]; Rancho Santa Margarita v. San Diego Co. (1932) 126 Cal.App. 186, 197 [14 P.2d 588]; Birch v. County of Orange (1927) 88 Cal.App. 82, 85 [262 P. 788].) Thus, strong authority exists for the conclusion that the attempt of article XIIIA to assign different assessments to properties of equal market value violates the equal protection clause.
*255Respondents would seek to deny that those who pay more for property are in reality “similarly situated” with those who paid less for property of the same value in earlier years. The premise of this argument is that the later purchaser is better able to afford a high tax since (1) he paid more for his property to begin with and (2) he knew from the beginning he was buying a highly assessed piece of property.
The fact that a purchaser presently pays $80,000 for a home which someone else bought for $40,000 in 1975 may tell us nothing more than that inflation has been rampant and property values on the rise. In fact, the higher mortgage payments that new homeowners pay as compared to earlier purchasers forewarns us against any cavalier assumption that later purchasers are able to bear heavier taxes.
Section 2(a) mandates reassessment to current market value not only for voluntary purchasers but any time there is a “change in ownership.” Thus, as previously noted, the person who inherits the family home or the spouse who gains title to property after a divorce may find that the assessment on the property .suddenly skyrockets for property tax purposes. There is no rationality to the jump in valuation that accompanies these occurrences. Similarly, those persons who must move often because of the nature of their employment (for example, military families) will find that section 2(a)’s mandated reassessments bear little relation to their financial situation. Even more perplexing is the situation of persons who find that new construction must be done to their property after a natural disaster. Section 2(a) once more requires reassessment to “full cash value.” The arbitrariness of article XIIIA’s assessment scheme could not be more apparent.
Finally, the arbitrariness of the acquisition date valuation as a tax standard can be demonstrated by considering the plight of the taxpayer whose property has actually decreased in value since 1975. Under the previous tax system, such a person’s property tax assessment would eventually reflect the decline in market value. However, under article XIIIA the assessment remains fixed at the acquisition date value since section 2(b) allows for a reduction in assessment only on the basis of a downward turn in the consumer price index.
I am aware that during the past 40 years, since the end of the Lochner era (see Lochner v. New York (1905) 198 U.S. 45 [49 L.Ed. 937, 25 S.Ct. 539]), courts have not used the Fourteenth Amendment “to strike down *256state laws . . . because they may be unwise, improvident, or out of harmony with a particular school of thought.” (Williamson v. Lee Optical Co. (1955) 348 U.S. 483, 488 [99 L.Ed. 563, 572, 75 S.Ct. 461].) I fully agree that in regard to matters of economics and tax policy, courts must defer to the will of the people unless the challenged enactment lacks a rational basis. However, the rational basis test was never meant to authorize judicial tolerance of unconstitutional classifications.
Earlier this year, this court reiterated that minimal scrutiny “ ‘require[s] the court to conduct “a serious and genuine judicial inquiry into the correspondence between the classification and the legislative goals.” ’ ” (Cooper v. Bray (1978) 21 Cal.3d 841, 848 [148 Cal.Rptr. 148, 582 P.2d 604], quoting Newland v. Board of Governors (1977) 19 Cal.3d 705, 711 [139 Cal.Rptr. 620, 566 P.2d 254], italics original in Cooper v. Bray, supra.) After conducting such a “serious and genuine judicial inquiry,” many courts have found that various classifications could not survive even minimal scrutiny under the equal protection clause. (E.g., U.S. Dept. of Agriculture v. Moreno (1973) 413 U.S. 528, 538 [37 L.Ed.2d 782, 790, 93 S.Ct. 2821]; Rinaldi v. Yeager (1966) 384 U.S. 305, 309-310 [16 L.Ed.2d 577, 580-581, 86 S.Ct. 1497]; D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22-23 [112 Cal.Rptr. 786, 520 P.2d 10]; Blumenthal v. Board of Medical Examiners (1962) 57 Cal.2d 228, 234-235 [18 Cal.Rptr. 501, 368 P.2d 101]; Miller v. Union Bank & Trust Co. (1936) 7 Cal.2d 31, 34-36 [59 P.2d 1024].) Some of the classifications which were invalidated related to matters of taxation. (E.g., WHYY v. Glassboro (1968) 393 U.S. 117, 120 [21 L.Ed.2d 242, 245, 89 S.Ct. 286]; City of Los Angeles v. Shell Oil Co. (1971) 4 Cal.3d 108, 125-126 [93 Cal.Rptr. 1, 480 P.2d 953]; County of Alameda v. City and County of San Francisco (1971) 19 Cal.App.3d 750, 756-757 [97 Cal.Rptr. 175, 48 A.L.R.3d 332].) The lines drawn by section 2(a) of article XIIIA are similar in elfect to the discriminatory categories struck down in those cases. If a serious and genuine judicial inquiry is made of the classifications under section 2(a), it is clear that they violate the equal protection clause of the Constitution by treating identical or similarly situated property taxpayers in an unfair and unequal way.
III
This decision has not been an easy one. The issues are close and reasonable people may differ. Emotions run high on this question, but as judges we must follow the law and do what it requires. As Justice Story *257wrote in Trustees of Dartmouth College v. Woodward (1819) 17 U.S. (4 Wheat.) 250, 338 [4 L.Ed. 629, 713], “It is not for judges to listen to the voice of persuasive eloquence, or popular appeal. We have nothing to do, but to pronounce the law as we find it; and having done this, our justifications must be left to the impartial judgment of our country.”

It is noteworthy that a proposed constitutional amendment to remedy this anomalous situation has been adopted by the Legislature and awaits a vote of the people. (Sen. Const. Amend. No. 67, Stats. 1978 (1977-1978 Reg. Sess.) res. ch. 76, pp.-.)