Anthony Bonanno v. Commissioner of Revenue (April 3, 2006)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



ANTHONY BONANNO 		   v.	COMMISSIONER OF REVENUE

Docket No. C271902				Promulgated:
							April 3, 2006


This is an appeal under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39 from the refusal of the appellee Commissioner of Revenue ("Commissioner") to refund deeds excise paid by the appellant on October 3, 2001.      
Commissioner Rose heard the appeal.  He was joined in the decision for the appellee by Chairman Foley and Commissioners Scharaffa, Gorton, and Egan.  
These findings of fact and report are made at the request of the appellee pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.


Domenic S. Terranova, Esq. for the appellant.

Kevin M. Daly, Esq. and Arthur M. Zontini, Esq. for the appellee.



FINDINGS OF FACT AND REPORT
On the basis of testimony and exhibits submitted at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact.  
The Bonanno Farm Trust (the "Trust") was created on September 4, 1986 for the benefit of the three Bonanno brothers, Clement Bonanno, Angelo Bonanno, and the appellant, Anthony Bonanno ("Mr. Bonanno").  The Trust's assets included nine parcels of land which Clement Bonanno and his brothers had used in the family's farming business.  The Bonanno brothers had conveyed various parcels of land to Clement Bonanno as the Trust's original trustee.  Clement Bonanno died on July 1, 1998.  After his death, Clement Bonanno's beneficial interest passed to his sister, Rose Bonanno.  Angelo Bonanno and Mr. Bonanno became the successor trustees.  The beneficiaries of the Trust at all relevant times were Angelo Bonanno, Rose Bonanno, and Mr. Bonanno (collectively, the "Beneficiaries").
Disagreements arose among the Beneficiaries and Richard Bonanno, an employee of the Trust.  These disagreements resulted in litigation.  On September 25, 2001, Mr. Bonanno executed a settlement agreement ("Settlement Agreement") in which he agreed to waive his beneficial interest in the Trust, resign as trustee, and dismiss three pending lawsuits and "forever resolve any dispute" between himself and the other Beneficiaries and Richard Bonanno.  In exchange, Mr. Bonanno received $100,000 and a deed in fee simple (the "Deed") to one of the Trust's nine parcels, consisting of approximately nine acres and appraised at approximately $700,000 ("Property").  
When Mr. Bonanno presented the Deed to the Essex North District Registry of Deeds ("Registry of Deeds"), the Assistant Registrar would not record the Deed unless a deeds excise stamp was purchased and affixed to it.  Through his attorney, Mr. Bonanno paid the deeds excise, amounting to $3,192, on October 3, 2001.  The parties to the instant appeal agreed that the deeds excise was calculated properly based on the appraised value of the Property.   
On October 3, 2002, Mr. Bonanno timely filed an Application for Abatement with the appellee, the Commissioner of Revenue ("Commissioner"), seeking a full refund of the deeds excise he had paid.  On December 10, 2003, the Commissioner issued a Notice of Abatement Denial.  On February 9, 2004, Mr. Bonanno seasonably filed a petition under formal procedure with the Board.  On the basis of these facts, the Board found that it had jurisdiction over this appeal.  
The Board found that the transfer of the Property outright to Mr. Bonanno pursuant to the Settlement Agreement constituted a transfer for consideration of an interest in property.  Therefore, for reasons explained in the following Opinion, the Board upheld the application of the deeds excise and issued a decision for the appellee in this appeal.

OPINION
General Laws c. 64D, § 1 provides in pertinent part that "there shall be levied, collected and paid" an excise upon every "[d]eed, instrument or writing, whereby any lands, tenements or other realty sold shall be granted, assigned, transferred or otherwise conveyed to, or vested in, the purchaser or purchasers . . . when the consideration of the interest or property conveyed . . . exceeds one hundred dollars . . . ."  Mr. Bonanno contended that a transfer for consideration did not occur, because the Settlement Agreement merely resulted in the distribution to him of property that was equivalent to his percentage share in the Trust.  To support this contention, Mr. Bonanno relied on Letter Ruling 82-82 ("LR 82-82"), in which the Commissioner determined that "the deed by which a corporation distributes real estate in kind to its shareholders as part of a corporate dissolution of the corporation is not subject to the deeds excise."  In that scenario, no consideration was exchanged for the real estate because the distribution to the shareholders was essentially a liquidating dividend in which the shareholders received distributions equal to their percentage interests in the corporation.  Mr. Bonanno likened that distribution to his receipt of real estate in a value equal to his percentage share in the Trust.  He concluded that, since no transfer for consideration had occurred, no deeds excise was due upon the recording of the Deed.
The Commissioner countered that LR 82-82 was not applicable to the facts of this appeal because Mr. Bonanno's receipt of the Property was in exchange for consideration, namely his agreement to release the other Beneficiaries and Richard Bonanno from pending lawsuits and the surrender of his beneficial interest in a percentage of all the Trust property, which consideration exceeded one hundred dollars.   
The Board agreed with the Commissioner.  "There is no doubt that the forbearance to prosecute a genuine contest in the courts is a sufficient consideration for a promise."  Silver v. Graves, 210 Mass. 26, 30 (1911); see also Margolies v. Hopkins, 401 Mass. 88, 91 (1987) ("Abandonment of a claim brought in good faith is good consideration for a promise even if the claim ultimately might have been unsuccessful."); Graphic Arts Finishers, Inc. v. Boston Redevelopment Authority, 357 Mass. 40, 42-3 (1970) ("'[Legal detriment] means giving up something which immediately prior thereto the promisee was privileged to retain, or doing or refraining from doing something which he was then privileged not to do, or not to refrain from doing.'") (quoting Williston, Contracts (3rd ed.) § 102A).  The Board thus found and ruled that the transfer of the Property was in exchange for consideration.  Accordingly, the Board ruled that the deeds excise was properly applied when Mr. Bonanno recorded the Deed at the Registry of Deeds.  



Conclusion
The Board found and ruled that Mr. Bonanno's receipt of the Property was in exchange for consideration.  Therefore, the deeds excise was properly applied pursuant to G.L. c. 64D, § 1 when Mr. Bonanno recorded the Deed.  The Board thus issued a decision for the appellee in the instant appeal.

				THE APPELLATE TAX BOARD


By:  ____________________________________
Anne T. Foley, Chairman

     
____________________________________
Frank J. Scharaffa, Commissioner


____________________________________
Donald E. Gorton, III, Commissioner


     ____________________________________
Nancy T. Egan, Commissioner

  
____________________________________
James D. Rose, Commissioner 



A true copy,


Attest:_____________________________
  	    Assistant Clerk of the Board

  Pursuant to the Trust document, Clement Bonanno held a 38.36% share in the Trust, and Anthony Bonanno and Angelo Bonanno each held a 30.82% share in the Trust.
  The parties did not raise, and the Board did not consider, whether the appraised value of the Property was the correct value which should have been subscribed to the Deed.
 The deeds excise is collectible from either party to a transfer of property.  G.L. c. 64D, § 2 (deeds excise collectible from either "the person who makes or signs the deed . . . or for whose benefit the same is made or signed").    

ATB 2006-210