Vournas v. Montgomery County

DAVIDSON, Judge. This case presents the question whether the transfer of privately owned real property to the United States as a result of condemnation is a transfer within the scope of Montgomery County Code (1972, 1977 Repl.Vol. & 1982 Cum.Supp.), § 52-19 through § 52-27 (real property transfer tax). More particularly, the question involves the interrelationship of § 52-20, authorizing Montgomery County to impose a transfer tax on real property; § 52-21(d)(4), levying a tax on the transfer of farmland (farmland transfer tax); and 42 U.S.C. § 4653 (1982), authorizing federal ¹²⁵ reimbursement of local transfer taxes incurred by an owner of real property condemned by the United States. Section 52-20 provides in pertinent part: “(a) ...

The county council for Montgomery County is empowered and authorized to levy and impose by resolution or ordinance a tax to be paid and collected on the transfer in Montgomery County of any fee simple interest in real property except by way of mortgage, deed of trust, or deed of trust for the benefit of creditors, and on the transfer of any leasehold interest in real property, where such lease contains a covenant for perpetual renewal.” (Emphasis added.) Section 52-21(d)(4) provides in pertinent part: “There is hereby levied a tax on all transfers in the county of a fee simple interest in real property ... such tax to be computed on the value of the full consideration for such transfer at one of the following rates: “(d) A percentage of the value of the consideration for the transfer of land ... which, while owned by the transferor, has been assessed at any time during the five years preceding transfer on the basis of being actively devoted to farm or agricultural use ... said tax to be paid by the transferor of such land, which percentage shall vary according to the following schedule: “(4) Land assessed and taxed to the transferor for more than three years on the basis of farm or agricultural use, six percent.” (Emphasis added.) 42 U.S.C. § 4653 provides in pertinent part: “The head of a Federal agency, as soon as practicable after the date of payment of the purchase price or the date of deposit in court of funds to satisfy the award of compensation in a condemnation proceeding to acquire real property, whichever is the earlier, shall reimburse the owner, to the extent the head of such agency ¹²⁶ deems fair and reasonable, for expenses he necessarily incurred for— “(1) recording fees, transfer taxes, and similar expenses incidental to conveying such real property to the United States____” (Emphasis added.) The petitioner, George C. Yournas (transferor), was the owner of real property located in Montgomery County. On 7 October 1975, the United States instituted a condemnation proceeding in the United States District Court for the District of Maryland to condemn a portion of this real property. On 12 November 1975, the respondent, Montgomery County (County), filed an appearance in order “to collect any and all County and State taxes which are due on the property as of the date of taking.” The County requested “that any County and State taxes that are due and owing on the property taken be paid out of the deposit of estimated just compensation and final award to the extent said proceeds diminish said debt.” On 25 January 1979, the district court determined the amount of compensation to be paid by the United States for the condemned property. Additionally, the district court ordered that the amount of compensation “shall be subject to all liens, encumbrances and charges of whatsoever nature existing against the said land at the time of vesting title thereto in the United States of America and that all such liens, encumbrances and charges of whatsoever nature shall be payable and deductible from said sum.” Finally, the district court ordered that upon payment by the United States into the registry of the court the fee simple title to the condemned property shall become vested in the United States “free and clear of all claims and liens....” After the United States paid the compensation award into the registry of the district court, the district court,- in response to a petition filed by the transferor, ordered that the amount of the compensation award be delivered to Commonwealth Title Land Insurance Company.

The district court further ordered that company to “apply the proceeds of said check to the payment and discharge of all taxes, ¹²⁷ assessments, liens and encumbrances against the said property as of the date title vested.... ” On 11 April 1979, the documents evidencing the transfer of the real property from the transferor to the United States were recorded in the Land Records of Montgomery County. Notwithstanding the requirement of § 52-23, 1 the transferor did not pay any farmland transfer tax to the County before these documents were recorded. Thereafter, the County demanded payment of the tax allegedly due. The transferor refused to pay the farmland transfer tax.

On 20 June 1980, the transferor filed suit in the Circuit Court for Montgomery County seeking declaratory and injunctive relief. In the declaration, the transferor alleged, insofar as here relevant, that § 52-21(d) is unconstitutional “in that it seeks to tax a condemnee pursuant to an involuntary conversion by the ultimate sovereign, namely the USA.” In its answer, the County denied the invalidity of the tax and asserted that the transferor owed a farmland transfer tax. Additionally, the County filed a counterclaim for the amount of the tax. Cross motions for summary judgment were filed.

The trial court decided that § 52—21(d) was constitutional and determined that an involuntary transfer to the United States resulting from a condemnation proceeding is subject to the farmland transfer tax. The trial court further determined that, despite the fact that the farmland transfer tax was not collected out of the proceeds of the condemnation award, the transferor remained liable for the payment of the tax. On 2 February 1982, the trial court entered a final judgment declaring the farmland transfer tax to be constitutional, valid and enforceable. Additionally, the trial court denied the transferor’s motion for summary judgment, ¹²⁸ granted the County’s motion for summary judgment on its counterclaim, and required the transferor to pay the farmland transfer tax plus costs.

The transferor filed an appeal to the Court of Special Appeals. That Court affirmed the trial court’s judgment. Vournas v. Montgomery County, 53 Md.App. 243 , 452 A.2d 1263 (1982). We shall affirm the judgment of the Court of Special Appeals for reasons other than those expressed by that Court.

Here the transferor contends that the scope of § 52-21(d)(4) must be interpreted in the light of the law as it existed when the General Assembly authorized the County to levy transfer taxes. The transferor asserts that the real property transfer tax was enacted in 1961 “at a time when Federal condemnation proceedings were entirely immune from state or local taxation.” More particularly, the transferor claims that in 1961 a transfer of property to the United States as a result of condemnation would have been immune from local transfer taxes whether assessed against the United States government or the owner of the condemned property. The. transferor maintains that under these circumstances there was no legislative intent to include a transfer of property to the United States as a result of a condemnation within the scope of § 52-21(d)(4). The transferor concludes that because 42 U.S.C. § 4653 , authorizing the reimbursement of transfer taxes to the owner of real property condemned by the United States, was not enacted until 1971, it is not an appropriate factor to be-considered in determining the scope of § 52-21(d)(4).

We do not agree. The cardinal rule of statutory construction is to ascertain the actual intent of the legislative body. Atlantic Richfield Co. v. Sybert, 295 Md. 347, 361-62 , 456 A.2d 20, 27 (1983); State v. Loscomb, 291 Md. 424, 429 , 435 A.2d 764, 767 (1981). Ordinarily, when there is an ambiguity in a statute, the circumstances existing and events occurring at the time of the- statute’s enactment may be considered. ¹²⁹ Kindley v. Governor of Maryland, 289 Md. 620, 625 , 426 A.2d 908, 911 (1981); Funk v. Mullan Contracting Co., 197 Md. 192, 198 , 78 A.2d 632, 636 (1951); Maryland Agricultural College v. Atkinson, 102 Md. 557, 561 , 62 A. 1035, 1037 (1906).

However, because laws are intended