Montgomery County v. Wildwood Medical
| Decision Date | 31 October 2007 |
| Docket Number | No. 2280, Sept. Term, 2005.,2280, Sept. Term, 2005. |
| Parties | MONTGOMERY COUNTY, Maryland v. WILDWOOD MEDICAL CENTER, L.L.C. |
| Court | Court of Special Appeals of Maryland |
Scott R. Foncannon (Karen L. Henry, Marc P. Hansen, Charles W. Thompson, Jr., County Attorney, on the brief), Rockville, for Appellant.
James Demma, Rockville, and John R. Llewellyn, Germantown, for Appellee.
Panel: BARBERA, THEODORE G. BLOOM,* (Ret'd, Specially Assigned), JAMES A. KENNEY, III,** (Ret'd, Specially Assigned), JJ.
This appeal by Montgomery County is from a judgment of the Circuit Court for Montgomery County that affirmed an order of the Maryland Tax Court directing the County to refund, with interest, $88,259.25 paid by appellee to record a deed conveying real estate to Wildwood Medical Center, L.L.C., a Maryland Limited Liability Company.
In 1962, Alvin L. Aubinoe and Dorothy B. Aubinoe, his wife, acquired title to certain parcels of land known as Wildwood Manor, in Montgomery County. In ensuing years, multiple conveyances (all duly recorded) were made of undivided partial, fractional interests in the Wildwood Manor property, each for a nominal consideration, either to the children or grandchildren of the Aubinoes or to trusts created on behalf of the children or grandchildren.
As of 22 December 2003, title to undivided fractional interests in the Wildwood Manor property was vested in the names of Alvin and Dorothy's daughter, Dorothy A. Shelton (25%); Worthington H. Talcott, Jr., Trustee of the Dorothy A. Shelton Trust (37.5%); Alvin L. Aubinoe, III, Trustee of the Alvin L. Aubinoe Trust, # 3 (9.375%); Victoria L. Aubinoe (9.375%); Scot M. Aubinoe (9.375%); and Amanda M. Aubinoe (9.375%). Each family member and trust, hereinafter collectively referred to as the Aubinoe Family and Trusts, had acquired title to his, her, or its fractional share of the subject real estate by a succession of duly recorded deeds.
On 22 December 2003, the Aubinoe Family and Trusts, the title owners of the Wildwood property, signed a formal General Partnership Agreement. They assert that they had been operating as a partnership for several years, as evidenced by partnership tax returns they had been filing. On 23 December 2003, the Aubinoe Family and Trusts signed and sealed a deed conveying the property that is the subject of this case to Wildwood Medical Center, L.L.C. ("the LLC"), a limited liability company created for that purpose. The subject property was identified in that deed as follows:
Parcel "B" in the subdivision known as "WILDWOOD MANOR SHOPPING CENTER," as per plat thereof recorded in Plat Book 156 at Plat No. 17744 among the Land Records of Montgomery County, Maryland, together with the right of ingress and egress over a private drive pursuant to an Easement for Ingress and Egress dated December 27, 1989, and recorded among the Land Records of Montgomery County, Maryland in Liber 9166 at Folio 079.
The conveyance listed and described the "Grantor, party of the first part," as follows:
Dorothy A. Shelton formerly known as Dorothy Aubinoe Griffith, Alvin L. Aubinoe, III, Trustee of an unrecorded revocable trust known as the Alvin L. Aubinoe III Trust No. 3, Victoria L. Aubinoe, Scot M. Aubinoe, Amanda M. Aubinoe, and Dorothy Aubinoe Shelton and Worthington H. Talcott, Jr., Trustees of the Dorothy Griffith Shelton Family Trust, all of the above dba Wildwood Medical Center General Partnership, a Maryland General Partnership, party of the first part. . . .
The LLC, a Maryland Limited Liability Company, was described as "Grantee, party of the second part."
The habendum and tenendum clause of the deed read, "To Have and To Hold the said tract of ground and premises above described and mentioned, and hereby intended to be conveyed . . . in fee simple."
Pursuant to Md.Code (1985, 2001 Repl. Vol., 2006 Cum.Supp.), Tax-Property Article, sections 12-108(y)(2) and 13-405(c), concerning "Recordation Taxes" and "Transfer Taxes," the grantee, the LLC, presented to the Clerk of the Circuit Court for Montgomery County, or one of her assistants, the deed to it from the Aubinoe Family and Trusts as an "[i]nstrument of writing" that purported to convey title to real property as defined in section 12-101(c)(1)(i). And, in accordance with section 12-102 of the Tax-Property Article, the grantee, the LLC, paid a recordation tax, calculated in accordance with section 12-105. It also paid a county transfer tax in accordance with Title 13 of the Tax-Property Article. The total amount paid by the LLC as recordation and transfer taxes was $88,259.25.
Having paid recordation and transfer taxes in order to record the deed, the LLC requested a refund of those taxes, asserting that, as the grantee of property from a Maryland general partnership, it was exempt from paying such taxes according to provisions in Title 12 and 13 of the Tax-Property Article. The Montgomery County Department of Finance denied the request. The LLC then appealed to the Maryland Tax Court. The Tax Court conducted a hearing and issued a decision in favor of the LLC.1 Montgomery County was ordered to refund, with interest, the recordation and transfer taxes paid by the LLC. The county then sought judicial review by the Circuit Court for Montgomery County. The circuit court, after conducting a hearing, affirmed the Tax Court's ruling, whereupon Montgomery County filed this appeal.
In Maryland, prior to 1766, title to land, at least an inheritable title, such as fee simple or fee simple absolute, was transferred by livery of seisin, a ritual in which the grantor and the grantee would go upon the land where the grantor would deliver possession of the land by handing over a twig, a clod of dirt, or a piece of turf. Livery of seisin was abolished in Maryland in 1766, and thereafter title to real estate has been transferred only by enrollment of deeds, a substitute for, and equivalent to, an act of livery. See Matthews v. Ward, 10 G. & J. 443 (1839). The recording of a deed or lease is a final and complete act that passes title; until this is accomplished, everything else is unavailing. Until the deed is recorded, the legal title remains in the grantor. See Nickel v. Brown, 75 Md. 172, 23 A. 736 (1892). The legal title to land does not pass, other than by operation of law, until a deed is properly executed and recorded. See Kingsley v. Makay, 253 Md. 24, 251 A.2d 585 (1969). "Recorded" signifies "copied or transcribed into some permanent book." Maryland Dep't of Natural Res. v. Hirsch, 42 Md.App. 457, 477, 401 A.2d 491 (1979), rev'd on other grounds, 288 Md. 95, 416 A.2d 10 (1980).
The statutory provision that imposes a tax on the recordation of documents that transfer title to real estate is precise in its requirements. With respect to a change of ownership, the recorded document, or "instrument of writing," is a document that "conveys title to . . . real property." Tax-Prop. § 12-101(c)(1)(i) (emphasis added).
The act of recordation of a deed is the substitute for livery of seisin that effects the transfer of title. An event, occurrence, or transaction that merely reflects a change of ownership of property need not even be in writing, as the Court of Appeals noted in Vlamis v. DeWeese, 216 Md. 384, 140 A.2d 665 (1958).
In Vlamis v. DeWeese, Warren E. Malin bought land in Elkton, erected a building on it, and began to operate a garage and automobile sales agency. The following year, Malin sold to Reuben Deilbert a one-half interest, as a tenant in common in the real estate and personal property used in the business, giving Deilbert a deed to an undivided half interest in the land. The deed was timely recorded. They then operated the business as partners. Several months later, Deilbert died. The issues before the court were the nature of the property and whether Deilbert's daughter had inherited an interest in the real estate. Based on the evidence with respect to the operation of the business, the Court held that, although Deilbert had title to an undivided one-half interest in the real estate, the property itself, having been dedicated to and essential to the operation of the partnership, had become partnership property without any formal or even informal transfer from the partners to the partnership. Vlamis v. DeWeese, therefore, makes it clear that ownership of property may be, either formally or informally, separated from title to the property.
In Dean v. Pinder, 312 Md. 154, 159, 538 A.2d 1184 (1988), the Court of Appeals traced the history of Maryland's transfer tax:
In 1937, the General Assembly enacted § 213 of Article 81 of the Annotated Code of Maryland under the subtitle "Tax on the Recordation of Instruments in Writing." 1937 Md. Laws. Sp. Sess., Ch. 11, § 213. Since its enactment, this provision has been repealed and reenacted several times and was codified as Maryland Code (1947, 1980 Repl.Vol., 1984 Cum.Supp.) Article 81, § 277 at the time this dispute arose. This 1984 provision provided in pertinent part:
(a) Written instruments.—(1) Except as otherwise provided in this section, a tax is hereby imposed upon every instrument of writing conveying title to real or personal property, or creating liens or encumbrances upon real or personal property, offered for record and recorded in this State with the clerks of the circuit courts of the respective counties.
. . .
(b) Instruments conveying title or securing debts.—(1) In the case of instruments conveying tile to property, the tax shall be at the rate of 55 cents for each $500 or fractional part thereof of the actual consideration paid or to be paid; in the case of instruments securing a debt, the tax shall be at the rate of 55 cents for each $500 of the principal amount of the debt secured (Emphasis added.)
The Court explained that, "[a]lthough this tax is computable on the...
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