State of California Ex Rel. State Lands Commission v. County of Orange

The State of California, acting through the State Lands Commission (the State), brought this action for declaratory re lief, an injunction, accounting and restitution against the County of Orange (the County) and its harbors, beaches and parks district. The State seeks to halt the County’s practice of spending for its own municipal purposes revenue derived from tidelands improvements at Dana Point Harbor. In 1961, the State granted its interest in these tidelands to the County through a trust grant stating as its purpose the promotion of harbor construction, operation and related activities. The County contends its spending is authorized by a clause of this grant allowing it to “collect and retain rents” from improvements it constructed at the harbor, and upon this premise brought a general demurrer to the complaint. The superior court sustained the demurrer without leave to amend, and dismissed the complaint. This appeal followed. We reverse.

Facts

The facts underlying this action outline a trustor-trustee relationship between the State and the County. Upon its admission to the United States in 1850, the State became the owner in fee simple of tidelands within its…