                  TO BE PUBLISHED IN THE OFFICIAL REPORTS



                      OFFICE OF THE ATTORNEY GENERAL


                                State of California



                                 KAMALA D. HARRIS


                                   Attorney General



                             _________________________

                                            :
                OPINION                     :                No. 93-407
                                            :
                     of                     :             October 13, 1993
                                            :
         DANIEL E. LUNGREN                  :
           Attorney General                 :
                                            :
         CLAYTON P. ROCHE                   :
         Deputy Attorney General            :
                                            :

________________________________________________________________________

    THE HONORABLE BERNIE RICHTER, MEMBER OF THE CALIFORNIA
ASSEMBLY, has requested an opinion on the following question:

       May a city enforce an annexation agreement executed by the city and a landowner
of unincorporated property which requires the landowner, as a condition of receiving city
sewer services, to waive his or her right to protest the annexation of the property to the
city when such becomes legally permissible, with the waiver binding upon the
landowner, future owners, long-term lessees, and other persons residing on the property?

                                    CONCLUSION

       A city may enforce an annexation agreement executed by the city and a landowner
of unincorporated property which requires the landowner, as a condition of receiving city
sewer services, to waive his or her right to protest the annexation of the property to the
city when such becomes legally permissible, with the waiver binding upon the
landowner, future owners and long-term lessees of the property, but not other persons
residing on the property unless they have actual knowledge of the agreement.

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                                                  ANALYSIS

        We are informed that a California city has numerous islands of unincorporated
territory within its urban area. In supplying sewer services to these unincorporated areas,
it has imposed certain conditions upon landowners in exchange for furnishing the
services. As to property adjacent to the city, the landowner must file a petition to have
the property annexed to the city. The owner of land which is not contiguous, and hence
not immediately annexable, must execute and record a “sewer service and annexation
agreement” which in part:

               “1.		   Contains a waiver by the owner of the premises of any right
                       of protest to the annexation of the premises to the
                       incorporated territory of the city provided for under the
                       annexation laws of the state of California,

               “2.		   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



               “3.		   Provides that the agreement and any waiver, covenants and
                       conditions set forth therein run with the land on which the
                       premises are located; . . . .”

The question presented for resolution is whether the city may enforce these waiver terms
against (1) the landowner who has executed the waiver, (2) future owners of the property,
(3) long-term lessees of the property, and (4) other persons residing on the property. We
conclude generally that the waiver terms may be enforced by the city.

       Preliminarily we note that there is no duty on the part of a city to provide sewer
services to properties located outside of its boundaries. In fact, a city is not always
required to provide sewer services within its boundaries. (Richards v. City of Tustin
(1964) 225 Cal.App.2d 97.)

      As for the annexation of territory to a city, the governing statutory scheme is the
Cortese-Knox Local Government Reorganization Act of 1985 (Gov. Code, §§ 56000-
57550; “Act”).1 The Act allows landowners and registered voters in “inhabited territory”
(12 or more registered voters) to file written protests against a proposed annexation.
(§ 57051.) Depending upon the number of protests received, the annexation proceedings
may be terminated, an election held, or completed without an election. (§§ 57075,
57078.) Does the application of these state laws prevent a city from requiring a waiver of
annexation protest rights as a condition of furnishing sewer services?

   1
       All references hereafter to the Government Code are by section number only.

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                                                                                       93-407


       In Ferrini v. City of San Luis Obispo (1983) 150 Cal.App.3d 239, 246-247, the
court stated:

               “The annexation of territory by a city has long been held to be both a
       legislative matter and one of statewide concern. [Citations.] Consequently,
       matters relating to the annexation of territory to a municipality are not
       municipal affairs. [Citations.]

              “Therefore, the municipal charter may not contain provisions
       pertaining to annexation which are contrary to the general laws of statewide
       application. `The annexation of territory to a city is governed by the
       general laws of the state and is not a municipal affair [citation], and where a
       city council proceeds under legislative requirements relating to annexation,
       such requirements constitute the measure of power to be exercised.
       [Citations.] . . . .

               “The intention of the state Legislature to occupy the field in
       annexation procedures is evidenced by its declaration that MORGA shall
       provide the exclusive method for changes of organization (§ 35002) which
       include annexations (§ 35027). `[W]here the statute contains express
       provisions indicating that the Legislature intends its regulations to be
       exclusive within a certain field, local government may not legislate in that
       field. . . .”2

Under Ferrini, then, it could be argued that a city may not by ordinance, contract, or
otherwise, require annexation protest waivers from landowners or voters.

        In Morrison Homes Corp. v. City of Pleasanton (1976) 58 Cal.App.3d 724,
however, the Court of Appeal upheld an agreement by a developer to have his property
annexed to a city when legally permissible in exchange for connecting the property to the
city’s sewer system. The court rejected the argument that the agreement would violate
the annexation statutes, stating as follows:

             “The annexation process involves a legislative function of municipal
       government, in that a city engaging in it exercises a legislative power
   2
      “MORGA,” the Municipal Organization Act of 1977, was replaced by the Act; the
latter has a similar provision: “this division provides the sole and exclusive authority for
the initiation, conduct, and completion of changes of organization and reorganization for
cities and districts” (§ 56100).

                                             3

                                                                                         93-407


       expressly delegated to it by the state [citation] in pertinent statutes. . . . Its
       establishment and operation of a municipal sewer system is a
       `governmental function’ [citation] which it may perform under
       constitutional and statutory authority alike, . . . [citations]. The cited
       sources of a city’s authority to discharge the annexation or sewage
       functions do not expressly vest it with the authority to contract for either
       purpose, but they have this effect by necessary implication: `[A] city has
       authority to enter into contracts which enable it to carry out its necessary
       functions, and this applies to powers expressly conferred upon a
       municipality and to powers implied by necessity. [Citation.]’ (Carruth v.
       City of Madera (1965) 233 Cal.App.2d 688, 695 [annexation contract]. See
       McBean v. City of Fresno (1896) 112 Cal. 159, 161-163, 170 [sewage
       disposal contract].)” (Id., at pp. 733-734; fn. omitted.)

In Carruth v. City of Madera (1965) 233 Cal.App.2d 688, 695, relied upon in Morrison,
the court sanctioned an annexation agreement which involved the provision of sewer
services by a city to a proposed subdivision.

       While an annexation agreement executed by a landowner in exchange for sewer
services would thus not conflict with the provisions of the Act, does this mean that a right
to protest an annexation proposal may always be waived by a landowner? Section 3513
of the Civil Code provides:

       “Anyone may waive the advantage of a law intended solely for his benefit. But a
law established for a public reason cannot be contravened by a private agreement.”

The general operation of Civil Code section 3513 was summarized in Outboard Marine
Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 41, as follows:

               “Unless otherwise provided by law, any person may waive the
       advantage of a law intended for his benefit. (Civ. Code, § 3513.) Waiver is
       the voluntary relinquishment of a known right. [Citation.] To constitute a
       waiver, it is essential that there be an existing right, benefit, or advantage, a
       knowledge, actual or constructive, of its existence, and an actual intention
       to relinquish it or conduct so inconsistent with the intent to enforce the right
       in question as to induce a reasonable belief that it has been relinquished.
       The doctrine of waiver is generally applicable to all the rights and
       privileges to which a person is legally entitled, including those conferred by
       statute unless otherwise prohibited by specific statutory provisions.
       [Citations.] . . . .”


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On the other hand, as the court noted in Covino v. Governing Board (1977) 76
Cal.App.3d 314, 322, in holding that a teacher could not waive his status as a
probationary teacher in order to be employed as a temporary, full-time teacher:

               “Appellant’s claim that despite the provisions of the code he should
       be permitted to waive his right to the probationary status may not be
       accepted for two major reasons. One, while as a general rule anyone may
       waive the advantage of law intended solely for his benefit, a law
       established for a public reason cannot be waived or circumvented by a
       private act or agreement (Civ. Code, § 3513; [citations].) Teachers are
       public employees and their tenure rights elaborately regulated by the
       Education Code reflect the public policy of the state. As stated in De
       Haviland v. Warner Bros. Pictures (1944) 67 Cal.App.2d 225, 235:
       `Legislation which is enacted with the object or promoting the welfare of
       large classes of workers whose personal services constitute their means of
       livelihood and which is calculated to confer direct or indirect benefits upon
       the people as a whole must be presumed to have been enacted for a public
       reason and as an expression of public policy in the field to which the
       legislation relates.’ . . . .”

Consequently, a statutory right may be relinquished if there is knowledge of the right, the
waiver is intentional, and the right is intended solely for that individual’s benefit and is
not intended for a public purpose.

       A landowner signing the protest waiver in question would clearly have
“knowledge” of the right, but would the right be intended solely for his or her benefit?
We believe that it would. In Northridge Park Water District v. McDonell (1958) 159
Cal.App.2d 556, the question was whether a water district could adjourn a hearing
required by law based upon the landowners’ waivers of the statutory requirements. The
court concluded:

              “. . . No such adjournment was ordered, probably because each
       petition contained an express consent that the lands be included in
       Improvement District Number 1 and express waiver of the code
       requirement of adjournment. Section 32472 of the Water Code provides
       that if, during adjournment, protests are filed to inclusion, under the
       prescribed conditions, by a majority in number of the holders of title to the
       land proposed to be included, representing a majority in acreage of said
       land, the board shall dismiss the petition; otherwise the land shall be
       included subject to the conditions. It is apparent that the adjournment
       provision is to enable petitioners for inclusion to object to the proposed

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       conditions and for no other purpose. This statutory provision being for their
       benefit, they may waive it, as they did. . . .” (Id., at p. 562.)

Similarly, in Allen v. Hance (1911) 161 Cal. 189, the court held that a landowner could
waive his right to contest the validity of a street improvement proceeding. Pursuant to
Civil Code section 3513, therefore, we conclude that a landowner may waive his or her
right to protest a future annexation of the property by a city furnishing sewer services to
the property.

       As for any future owners of the property and long-term lessees, section 1589 of
the Civil Code provides:

              “A voluntary acceptance of the benefit of a transaction is equivalent
       to a consent to all the obligations arising from it, so far as the facts are
       known, or ought to be known, to the person accepting.”

Here, the subsequent purchasers and long-term lessees would clearly “accept” the
benefits of the original agreement, i.e., the sewer services, but would they know or ought
to know of the agreement? We believe that the answer may be found in the recording
laws (Civ. Code, §§ 1169-1220), which would give them constructive knowledge of the
prior landowner’s waiver. The recording of a conveyance of real property provides
constructive notice of its contents to subsequent purchasers, among others. Civil Code
section 1213 provides:

              “Every conveyance of real property or an estate for years therein
       acknowledged or proved and certified and recorded as prescribed by law
       from the time it is filed with the recorder for record is constructive notice of
       the contents thereof to subsequent purchasers and mortgagees . . . .”

A “conveyance” of real property is defined in Civil Code section 1215 as follows:

              “The term `conveyance’ as used in Sections 1213 and 1214,
       embraces every instrument in writing by which any estate or interest in real
       property is created, aliened, mortgaged, or incumbered, or by which the title
       to any real property may be affected, except wills.”

In American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1020, the
court explained:

              “The principle is well settled that once an instrument that affects real
       property is recorded, all persons who later acquire any interest in the

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      property are conclusively presumed to have constructive notice of the
      contents of the recorded document. (Civ. Code, §§ 1213-1215, 2934, 2952;
      Dexter v. Pierson (1931) 214 Cal. 247 . . . .”

The recording laws apply equally to long-term lessees as they do to subsequent
purchasers. (See Civ. Code, §§ 1214-1215; Commercial Bank v. Pritchard (1899) 126
Cal. 600, 603; Garber v. Gianella (1893) 98 Cal. 527, 529; Dean v. Brower (1931) 119
Cal.App. 412, 415.)

       In an analogous case, Citizens Suburban Co. v. Rosemont Dev. Co. (1966) 244
Cal.App.2d 666, the court applied section 1589 of the Civil Code to “successors” of a
contract under which a water company agreed to supply water to a development. While
“privity of contract” was found to be lacking, the court held that the successors were
subject to the burdens of the original contract under “privity by estoppel.” The court
concluded:

             “A fitting criterion of privity is supplied by a concept appearing
      elsewhere in this case. The concept is that expressed in Civil Code section
      1589, supra. Applied to the facts, it would be expressed as follows:
      Voluntary and knowing acceptance of contract benefits among the
      successive subdividers created a chain of privity without regard to express
      assignments or formal assumptions of contract burdens. At the time of the
      December 1956 water service agreement the ostensible contracting party
      (Rosemont Development Co., the limited partnership) had already left the
      scene. Immediate beneficiary of Price’s nondisclosure was Wunderlich, the
      new operator of the Rosemont development. The evidence is not clear
      whether Wunderlich was the active developer in December 1956 or
      whether he had already turned the operation over to Price and to his son-in-
      law, Reynolds. Either before December or within a few months thereafter,
      the Price & Reynolds partnership became the active developer. For several
      years following, the partnership used the water service agreement as an
      important instrumentality in the continued expansion of the Rosemont
      development. When the two partners incorporated, the corporation
      continued to receive the benefits of the Citizens Suburban water supply in
      the developed units of the subdivision. Price, a pervading figure in all these
      entrepreneurships, was perfectly aware of the methods he had used to lure
      Citizens Suburban into its commitments. Knowing acceptance of the
      contract benefits by each of the successive developers creates privity which
      estops the present developers from asserting that they are not `successors’
      of the original contracting party.” (Id. at p. 681.)


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In Haas v. Palace Hotel Co. of S.F. (1950) 101 Cal.App.2d 108, 117, the court stated:
“While a person may accept the benefits of a contract made for his benefit, such
acceptance implies an acceptance of the burdens necessarily connected with the
contract.”

        Accordingly, we conclude that subsequent purchasers and long-term lessees of the
property would be subject to the burdens of the original agreement, that is, waiver of the
right to protest any annexation proposal. Pursuant to section 1589 of the Civil Code, a
privity of contract by estoppel would arise.3

       Unlike subsequent owners and long-term lessees, “renters” (persons with leases of
less than a year, usually month to month tenants) would not have constructive notice of
the original owner’s agreement under the terms of Civil Code sections 1214 and 1589.
Accordingly, if renters are to be found subject to a landowner’s waiver, actual knowledge
of the agreement would be required. If they do have such knowledge,4 they would, by the
acceptance of the benefits of the sewer services and privity of contract by estoppel, be
subject to the original waiver. (Citizens Suburban Co. v. Rosemont Dev. Co., supra, 244
Cal.App.2d 666; Haas v. Palace Hotel Co. of S.F., supra, 101 Cal.App.2d 108.)

       In answer to the question presented, therefore, we conclude that a city may enforce
an annexation agreement executed by the city and a landowner of unincorporated
property which requires the landowner to waive his or her right to protest annexation of
the property to the city when such becomes legally permissible, with the waiver binding
upon the landowner, future landowners and long-term lessees of the property, but not
other persons residing on the property unless they have actual knowledge of the
agreement.

                                            *****




   3
    Due to our analysis of Civil Code section 1589 and the conclusion that we reach, we
need not determine the effect of the “run with the land” requirement of the particular
waiver agreement in question.
   4
       For example, the terms of the waiver could be placed in the rental agreements.


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