Francis H. Leggett & Co. v. County of Los Angeles

FLEMING, J.-

— The issue here is whether the seller or the buyer of certain cannery equipment should bear the burden of the county property tax for the year 1962-1963.

On March 5, 1962, the tax assessment date under Revenue and Taxation Code, section 405, the transfer of the interest in the property from seller Booth to buyer Leggett was still unfinished, to a greater or lesser degree. Section 405 contains catchall language designed to assure that property in the county is assessed to somebody, and, accordingly, directs the assessor to assess taxable property in the county “to the persons owning, claiming, possessing, or controlling it at 12 o ’clock meridian of the first Monday in March. ” When the parties to a pending sale are unable to agree between themselves on an allocation of liability for property taxes, a court must analyze their transaction and determine which party had the assessable interest in the property on the taxable date. Here the trial court found that the seller Booth was liable for the tax and entered judgment accordingly for the county against Booth.

The pertinent history of this transaction shows that by written agreement of November 17, 1961, Booth agreed to sell, and Leggett to buy, certain canning machinery and canning equipment in a canning factory leased by Booth in Long Beach, California. Paragraph 3 of their agreement provided for a closing on December 29, 1961, at the offices of Seeman Brothers, Leggett’s parent company in New York. At the closing three things were to take place: (a) Booth was to deliver a bill of sale, (b) Leggett was to deliver 5,000 shares of Seeman Brothers stock as consideration, (c) Booth was to deliver a letter agreeing to hold the shares for investment. Paragraph 10 of the agreement provided: “The risk of loss or damage to the said premises by fire or otherwise until delivery of the deed is assumed by Seller.”

On December 28, 1961, the closing was extended to January 15, 1962. Thereafter Leggett and Booth agreed to enter an amendment extending the closing to March 1, 1962. On March 1 Booth telegraphed Leggett in New York that it had signed the amendment that day and airmailed it to New York.

[754]

Paragraph 3 of the amendment provided that delivery of the three items specified in the original agreement, that is, the bill of sale, the stock, and the investment letter, would take place at the closing on March 1, 1962. Paragraph 6 of the amendment changed paragraph 10 of the original agreement to read: “The risk of loss or damage to the said premises by fire or otherwise until