Cooper v. US
| Decision Date | 26 December 1991 |
| Docket Number | No. 89-114-CIV-4-H.,89-114-CIV-4-H. |
| Citation | 779 F. Supp. 833 |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | Alfred B. COOPER, Sr., and Rhoda G. Cooper, Plaintiffs, v. UNITED STATES of America, Defendant. |
Lee A. Spinks, Poyner & Spruill, Charlotte, N.C., for plaintiffs.
Gerard J. Mene, Thomas Holderness, U.S. Dept. of Justice, Tax Div., Washington, D.C., for defendant.
This matter is before the court on cross-motions for partial summary judgment on stipulated facts. In this taxpayers' refund suit, the court is asked to determine whether the plaintiffs enjoyed private ownership of a narrow strip of "dry sand" beach property approximately 3200 feet long and 100 feet wide. The parties submitted exhaustive memoranda, and the State of North Carolina filed a memorandum as amicus curiae. This matter is now ripe for ruling.
The plaintiffs instituted this action to recover taxes, penalties, and interest after their refund claims submitted to the Commissioner of the Internal Revenue Service were denied. The refund involves charitable deductions claimed by the plaintiffs for the value of shares of stock in a corporation known as Atlantic Beach, Inc., ("ABI") conveyed by gift to the Town of Atlantic Beach (the "Town"). The Town immediately redeemed the stock for a portion of the dry sand property owned by ABI. Upon audit and review, the Internal Revenue Service disallowed a sizeable amount of the deductions.
As this matter is before the court on stipulated facts, the court hereby incorporates the parties' factual stipulations submitted on September 13, 1991, and dispenses with a detailed statement of the facts. The question before this court is whether the strip of dry sand beach property was owned by ABI during the years 1982 through 1984, or was public or "public trust" property.
ABI acquired title to the beach strip property by deed in fee simple in 1944. Over the years, ABI conveyed various parcels of oceanfront property in the Town of Atlantic Beach to the Town and other individuals. The strip of property in question represented the remaining portion of ABI's extensive real estate holdings. The parties agree that the strip of property lies landward of the mean high water mark of the Atlantic Ocean and seaward of the frontal dune or seawall. Property of this nature is termed "dry sand."
The defendant and amicus curiae assert that the dry sand property involved in this matter is public trust property held for the use and enjoyment of the general public. Alternatively, the defendant contends that the plaintiffs dedicated the dry sand property to the Town in 1938 when they recorded a plat showing the dry sand as an unmarked beach area.
Section 77-20 of the North Carolina General Statutes provides "the seaward boundary of all property within the State of North Carolina, not owned by the State, which adjoins the ocean, is the mean high water mark." Thus, property lying below the mean high water mark, the "wet sand," is in the public domain, while property lying above the mean high water mark, the dry sand, may be privately owned.1
Pursuant to Article XIV, § 5, of the North Carolina Constitution, the state is empowered to "acquire by purchase or gift" property necessary to "conserve and protect the state's lands and waters for the benefit of all its citizenry." This ability to acquire property for the dedication of public purposes arises under the doctrine of public trust.2 The North Carolina Constitution and the General Statutes authorize the state, as guardian of the public trust, to acquire an interest in privately-owned property by purchase, gift, dedication, or some other means. See N.C. Const. art. XIV, § 5; N.C.Gen.Stat. §§ 113-8, 113-34. As applied to beach property, the public trust doctrine protects the public's right to freely use and enjoy state-owned property — the wet sand beach.
Public trust rights are "established by common law as interpreted by the courts of this State." N.C.Gen.Stat. § 1-45.1 (1991). This court is not aware of any decision by the courts of North Carolina creating a public trust right in privately-owned dry sand as a means of accessing a public beach. The parties directed this court's attention to only one state, New Jersey, which has applied the public trust doctrine to preserve public access across privately-owned dry sand beach in order to reach the foreshore. See Matthews v. Bay Head Improv. Ass'n, 95 N.J. 306, 471 A.2d 355, cert. denied, 469 U.S. 821, 105 S.Ct. 93, 83 L.Ed.2d 39 (1984).
The extent to which the public trust doctrine applies to dry sand property in North Carolina is an unsettled question. The North Carolina Supreme Court recently stated:
We note dicta in the Court of Appeals opinion to the effect that the public trust doctrine will not secure public access to a public beach across the land of a private property owner.... As the statement was not necessary to the Court of Appeals opinion, nor is it clear that in its unqualified form the statement reflects the law of this state, we expressly disavow this comment.
Concerned Citizens of Brunswick County Taxpayers Ass'n v. State ex rel. Rhodes, 329 N.C. 37, 55, 404 S.E.2d 677, 688 (1991) (citations omitted). Because the Supreme Court failed to indicate what qualifications were necessary for the Court of Appeals' comment to accurately reflect the law in North Carolina, the extent to which the public trust doctrine applies in this case is unclear.
In the absence of a clear precedent from the North Carolina Supreme Court on the application of the public trust doctrine, the court concludes that the nature of plaintiffs' ownership is determined appropriately by statute. Private ownership in the dry sand is expressly established in N.C.Gen. Stat. § 77-20. Such private ownership is limited by the state's power, under the doctrine of public trust, to acquire an interest in the property. This court finds no evidence that the state exercised its power of eminent domain to acquire title, an easement, or any other interest in the dry sand owned by the plaintiffs.
The defendant contends that the plaintiffs made a dedication of the dry sand to the Town in 1938 by recording a plat. The defendant raises this defense for the first time on this motion for partial summary judgment and the plaintiff, characterizing this defense as an avoidance or affirmative defense, objects to its being raised at this time.
This action originated as, and remains, a tax refund suit. The ultimate issue to be determined relates to the valuation of the dry sand property which served as the basis for the charitable contribution deduction. The parties do not dispute the fact that the plaintiffs enjoyed some rights in the property. Accordingly, the court finds that the defense of dedication is not an affirmative defense in this action and, accordingly, is not barred from being introduced at this time by Rule 8(c) of the Federal Rules of Civil Procedure.
The plat recorded by the plaintiffs in 1938 depicted various subdivided lots, an area designated "beach," and an area designated "boardwalk." Although the dry sand property that is the subject of...
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Town of Nags Head v. Toloczko
...Id. § 77–20(e). Thus, public trust rights arguably include at least a portion of the dry sand area. However, in Cooper v. United States, 779 F.Supp. 833 (E.D.N.C.1991), the court noted that “[t]he extent to which the public trust doctrine applies to dry sand in North Carolina is an unsettle......
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Town of Nags Head v. Toloczko
...State.”), and they have consistently declined the opportunity to do so in the context of beachfront property. See Cooper v. United States, 779 F.Supp. 833, 835 (E.D.N.C.1991) (“The extent to which the public trust doctrine applies to dry sand property in North Carolina is an unsettled quest......
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Town of Nags Head v. Toloczko, 2:11-CV-1-D
...." Id. § 77-20(e). Thus, public trust rights arguably include at least a portion of the dry sand area. However, in Cooper v. United States, 779 F. Supp. 833 (E.D.N.C. 1991), the court noted that "[t]he extent to which the public trust doctrine applies to dry sand in North Carolina is an uns......
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Town of Nags Head v. Toloczko
...State."), and they have consistently declined the opportunity to do so in the context of beachfront property. See Cooper v. United States, 779 F. Supp. 833, 835 (E.D.N.C. 1991) ("The extent to which the public trust doctrine applies to dry sand property in North Carolina is an unsettled que......