HDH P'ship v. Hinsdale Cnty. Bd. of Equal.
| Decision Date | 19 October 2017 |
| Docket Number | Court of Appeals No. 16CA1723 |
| Parties | HDH PARTNERSHIP ; Lawrence Ausherman; Mark L. Ish ; Herb Marchman; Hondros Family Real Estate, LLC ; and Teresa M. Mull Revocable Trust, Petitioners-Appellants, v. HINSDALE COUNTY BOARD OF EQUALIZATION, Respondent-Appellee and Board of Assessment Appeals, State of Colorado, Appellee. |
| Court | Colorado Court of Appeals |
Hoskin Farina & Kampf, P.C., Michael J. Russel, Andrew H. Teske, Karoline M. Henning, Grand Junction, Colorado, for Petitioners-Appellants.
Schumacher & O'Loughlin, LLC, Michael P. O'Loughlin, Gunnison, Colorado, for Respondent-Appellee.
Cynthia H. Coffman, Attorney General, Krista Maher, Assistant Attorney General, Denver, Colorado, for Appellee.
Opinion by JUDGE GRAHAM
¶ 1 In this case we are tasked with determining whether owners of fishing and hunting memberships, HDH Partnership, Lawrence Ausherman, Mark L. Ish, Herb Marchman, Hondros Family Real Estate, LLC, and Teresa M. Mull Revocable Trust, may be taxed for the parcels of real estate allocated to them in their membership agreements.
¶ 2 The parcels are part of a larger tract of land used as a hunting and fishing club in southwestern Colorado. Membership in the club is granted to those who hold a deed to one of the parcels which collectively comprise the club grounds. Members cannot make improvements on their parcels or exclude other club members. Instead, the club retains control over the grounds and grants all members equal access, regardless of the parcel to which they hold title. A member's rights to access the grounds can be revoked if he or she owes money or violates club rules.
¶ 3 On these facts, we conclude that the club is the true property owner because it enjoys the most significant incidents of ownership while members effectively have a license to use club grounds, notwithstanding that they hold bare legal title to the parcels. Therefore, the club, not the members should bear the real property tax burden.
¶ 4 In 1979, the Lake Fork Hunting and Fishing Club (the Club) was formed. A declaration transferred 1400 acres of land to the Club, divided into twenty-nine parcels, known as "Ranches." Except for a single "Floating Membership" that is not tied to a Ranch, the only way to obtain membership in the Club is to hold title to part of a Ranch. Membership cannot be "sold, assigned or transferred, voluntarily or by will or by operation of law." Instead, "[w]henever a member ... cease[s] to own the interest in the real property which entitles him to such membership ... such member shall automatically be dropped from the membership rolls of the Club and the membership certificate [is transferred] to the new ranch owner." In other words, club membership cannot be severed from the deed, but instead follows record title to a Ranch.
¶ 5 The Club reserves the following rights:
Initially, members were barred from building more than three residences on any Ranch, but, in 1999, the declaration was amended to prohibit the construction of any residence on a Ranch.
¶ 6 The Club's bylaws limit the number of guests a member may bring to the Club for hunting or fishing and the number of days an individual guest may hunt or fish. Members must register themselves and their guests when using Club grounds, and their hunting and fishing activities are subject to detailed Club regulations. The Club is entitled to all revenues from fees charged for hunting, fishing, shooting, and other activities on the grounds.
¶ 7 Only "members in good standing" are permitted to access Club grounds, which are defined as "all property owned by Lake Fork Hunting and Fishing Club including all ranches by virtue of the ownership of which persons are entitled to membership in the Lake Fork Hunting and Fishing Club." Members who have unpaid assessments or other outstanding fees "shall not be entitled to the privileges of the Club." And the Board of Governors may "censure[ ], fine[ ], or have all privileges suspended ... for violation of the Declaration ..., By-Laws, Rules or Regulations ... or for any conduct which in the opinion of the Board, is improper or prejudicial to the welfare of or reputation of the Club."
¶ 8 Each of the petitioners in this case holds membership in the Club by virtue of a deed conferring record title to a Ranch or part of a Ranch. They initiated this action after they disagreed with the Hinsdale County Assessor's 2015 assessment of those parcels. They argued that the Assessor should not have assessed property taxes to them individually because, although they are the record title holders, they do not actually enjoy traditional incidents of ownership, which are instead retained by the Club. The Club, they said, is the true property owner and therefore it should have received the property tax assessment. Petitioners also argued that the Assessor failed to account for the personal property value of the Ranch deeds. The value of the deeds, they claimed, was not in the land but in the club membership that the deed granted—membership which constitutes a personal property interest not subject to real property taxation.
¶ 9 The Hinsdale County Board of Equalization (BOE) agreed with the Assessor that petitioners were the parcel owners and affirmed the Assessor's valuation. Petitioners appealed to the Board of Assessment Appeals (BAA), which agreed with the BOE and affirmed its decision. Petitioners then filed this appeal.
¶ 10 Because we agree with petitioners that the Club is the true owner of the parcels, we conclude that the BAA erred as a matter of law in assessing real property taxes to petitioners. We also conclude that the BAA erred in affirming the Assessor's valuation, because it was based on the personal property value of petitioners' licenses to use Club grounds, rather than the value of the parcels as real property. Accordingly, we reverse the BAA's order and remand for further proceedings consistent with this opinion.
¶ 11 We must first answer the following question: Who is the true owner of the Ranches who should be assessed taxes for them? We agree with petitioners that bare legal title is not determinative, and, instead, we must look beyond the legal form to the substance of the parties' respective rights. We also agree that, based on petitioners' and the Club's respective rights, petitioners hold mere licenses to use Club grounds, while the Club retains the most significant traditional incidents of ownership. Therefore, we conclude that the Club, as the true owner, should have been assessed the taxes.
¶ 12 We review decisions of the BAA as a mixed question of fact and law. See Cantina Grill, JV v. City & Cty. of Denver Bd. of Equalization , 2015 CO 15, ¶ 15, 344 P.3d 870. We defer to the BAA's factual findings unless they are unsupported by competent evidence in the record, but we interpret the tax statutes de novo, and apply those interpretations to the facts to reach our own legal conclusions. Roaring Fork Club, LLC v. Pitkin Cty. Bd. of Equalization , 2013 COA 167, ¶ 21, 342 P.3d 467 ; see also §§ 24-4-106(7), (11), 39-8-108(2), C.R.S. 2017; Cantina Grill , ¶ 15.
¶ 13 Whether something is "an interest in property that can be valued and is subject to property tax" is a question of law. Roaring Fork , ¶ 26.
¶ 14 When interpreting statutes, we give the words their ordinary and common meanings and interpret the provisions as a whole, giving effect to all parts. Bd. of Cty. Comm'rs v. Vail Assocs., Inc. , 19 P.3d 1263, 1273 (Colo. 2001).
¶ 15 The BOE insists that the Assessor was obligated to assess taxes to the record title holders (petitioners) and that we may not look beyond bare legal title when determining ownership for tax purposes.1 Petitioners disagree, arguing that the law permits us to look beyond the title to the substance of the parties' rights when determining ownership. We agree with petitioners. Their position finds support in statute and case law.
¶ 16 First, reading the tax statutes as a whole, we conclude that record title is not conclusive evidence of property ownership. It is true that assessors are directed to ascertain real property ownership "from the records of the county clerk and recorder." § 39-5-102(1), C.R.S. 2017. But those records are merely "prima facie evidence of all things appearing therein." § 39-1-115, C.R.S. 2017. Prima facie means "[a]t first sight; on first appearance but subject to further evidence or information." Black's Law Dictionary 1382 (10th ed. 2014). And section 39-5-122(2), C.R.S. 2017, provides that "[i]f any person is of the opinion that ... property has been erroneously assessed to such person, he or she may appear before the assessor and object." Therefore, while record title is evidence of property ownership, it merely creates a rebuttable presumption, not a...
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Kelly v. Bd. of Cnty. Comm'rs of Summit Cnty.
...of the recognized rights associated with ownership, were the owners of the property for taxation purposes. HDH P'ship v. Hinsdale Cty. Bd. of Equalization , 2017 COA 134, 459 P.3d 586 (cert. granted Apr. 9, 2018). There, applying the substance over form doctrine, the division concluded that......