In Re: Leo O’Brien and Daniel O’Brien, No. S1146-01 Cncv (Katz, J.,
Feb. 5, 2004)



[The text of this Vermont trial court opinion is unofficial. It has been
reformatted from the original. The accuracy of the text and the
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STATE OF VERMONT
Chittenden County, ss.:
                                                             S1147-01 CnC



IN RE LEO O’BRIEN & DANIEL J. O’BRIEN




                                  ENTRY

       This is a dispute over what constitutes ownership of land for the
purposes of taxation under 32 V.S.A. § 3651. Landowners and the town of
South Burlington have both moved for summary judgment based on a
stipulated factual record.

       Prior to 1997, Daniel and Leo O’Brien held a parcel of land in South
Burlington as tenants in common. This land was physically divided by a
road into a western and eastern parcel. For tax purposes, however, the City
assessed the land as a single parcel because it had undivided ownership, the
O’Brien brothers. At the beginning of 1997, the O’Briens subdivided the
eastern portion into three separate lots. As ownership remained unchanged,
their tax listing remained single parcel. In mid-December 1997, the
O’Briens formed the O’Brien Family Limited Partnership. Everyone
agrees that this partnership is a separate legal entity from the O’Brien
brothers and any of their other partnerships. One week following the
formation of the partnership, the O’Briens transferred all right, title, and
interest in only one of the subdivided lots and the western parcel to the
partnership by warranty deed. For the next three years the City continued
to list the all four properties as a single tax parcel. In 2001, however, the
property was separately listed based on the two forms of record title and
taxed accordingly.
         The O’Briens appeal this listing by claiming that they have retained
the beneficial interest in the property and any valuation or taxation should
reflect this reality. They rely on the fact that while full and alienable
ownership rests in the partnership, it is really nothing more than the
O’Brien brothers, who are its only partners and who will ultimately garner
any benefit from these parcels. This may be deemed the piercing-the-
partnership argument. But 32 V.S.A. § 3651 does not require the listers to
make such complicated inquiries into ownership. Robtoy v. City of St.
Albans, 132 Vt. 503, 505 (1974) (stating that the legislature intended to
make it “as simple and easy as possible” for listers to determine
ownership).

       There is no dispute that the O’Briens transferred ownership of two
parcels of land to a separate legal entity in December 1997. There is also
no dispute that the O’Briens did not retain any legal interest in this land
through a trust mechanism or lease. Their situation is inapposite to
Middlebury College v. Town of Handcock, 115 Vt. 157 (1947), where the
college was found not to have the beneficial ownership necessary for
taxation because it held the lands in question as trustee and subject to a
written trust. Beneficial ownership had been explicitly excluded from the
college and reserved for another group. The O’Briens, in contrast, did not
reserve any right of ownership from the partnership. Nor did they make or
record any kind of lease agreement with themselves that might have
provided the listers with an alternative for their decision. See San Remo
Realty Corp. v. City of Montpelier, 130 Vt. 607, 612 (1972) (noting that the
trial court utilized the exact same records as the listers but arrived at a
different conclusion that was bolstered with, not founded on, further
unrecorded agreements). The idea that city listers must pierce a partnership
to examine who really controls and possess land is simply not supported by
statute or caselaw. See Town of Brattleboro v. Smith, 117 Vt. 425, 429
(1952) (emphasizing the broad meaning of owner given by the legislature
to make the job of listers simple and easy).

        Finally, the O’Briens argue that their property transfer tax
exemption, under 32 V.S.A. § 9603(15), should be dispositive in the land
records to demonstrate their retention of beneficial interest. We disagree.
The exemption granted under § 9603(15) does not deal with ownership or
possession, it merely allows an exemption for land contributed to a new
partnership without a sale. In this case, there is no question that full
ownership was transferred. That the O’Briens, as the only real persons
behind all of the partnerships, will eventually reap any profits and make all
decisions is irrelevant as that can change with new partners or alterations in
the partnership agreement. To grant the O’Briens’ motion would then force
city listers to look beyond the land records to the unrecorded politics of
individual partnerships, an impossible burden that exceeds their duty under
the statute. Robtoy, 132 Vt. at 505. The fact remains that full ownership
in the two subject parcels was transferred and no right or interest was
legally retained by the O’Briens. As such, the City of South Burlington is
fully within its statutory power to value the parcels separately according to
ownership.

     Based on the foregoing, the O’Brien’s motion for summary
judgment is denied. The City of South Burlington’s motion for summary
judgment is granted.

       Dated at Burlington, Vermont________________, 2004.




                                          ________________________
                                          Judge
