Douglas Aircraft Co. v. County of Los Angeles

NOURSE (Paul), J. pro tern.

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This is an action by plaintiff Douglas Aircraft Company, to recover from defendants taxes paid under protest to the county of Los Angeles. These taxes were assessed on the county’s own account and on the account of the two municipalities named as defendants. The general demurrer of the defendants was overruled with leave to answer. The defendants did not answer and judgment was rendered and entered in favor of the plaintiff in accordance with the prayer of the complaint.

The parties are agreed that the statement of facts made by the appellant in its brief is correct and contains the facts essential to the determination of this appeal. That statement is as follows:

“Douglas Aircraft Company made regular property statement to the County Assessor for tax purposes during the assessment season of 1953. It listed in such statement its

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taxable solvent credits of $68,690,200, and claimed a deduction of $14,406,099.48 therefrom on account of purported ‘debts’, the same being the amount of its income taxes due the United States. The Assessor did not consider that such income taxes constituted deductible ‘debts’ and denied the claimed deduction and assessed Douglas Aircraft Company on account of solvent credits in the full amount of $68,690,209. Application to the County Board of Equalization was duly made for reduction of the assessment and heard and denied. The complaint asserts over-assessment of plaintiff’s solvent credits in the amount of the income taxes thus not deducted and claims refund of an amount equal to the taxes on the amount of the asserted over-assessment, to-wit, taxes of $14,406.09.”

The sole question involved in this appeal is: Are income taxes due to the federal government debts owing by the assessee to a bona fide resident of this state or to a person doing business within this state, within the meaning of section 1 of article XIII of the Constitution of this state, and of sections 112-114 of the Revenue and Taxation Code? We have come to the conclusion that this question must be answered in the negative, and the judgment entered against the defendants reversed.

So far as pertinent here, section 1 of article XIII of the Constitution of this state provides that all property in the state, except as otherwise provided, shall be taxed in proportion to its value and that the Legislature may provide for a deduction from credits of all