Court Cogitates On Meaning Of "Stock"

Allen Matkins
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Allen Matkins

Under California's famous Proposition 13, a change in ownership of real property triggers a reappraisal and reassessment of the property for property tax purposes.  Section 60 of the Revenue & Taxation Code defines a "change in ownership" as "a transfer of a present interest in real property, including the beneficial use thereof, the value of which is substantially equal to the value of the fee interest".  Section 62(a) identifies various transfers as being excluded from the definition of a "change-in-ownership".   Included on that list is "Any transfer between . . .  legal entities . . . that results solely in a change in the method of holding title to the real property and in which proportional ownership interests of the transferors and transferees, whether represented by stock, partnership interest, or otherwise, in each and every piece of real property transferred, remain the same after the transfer".  

A tale of many reversals . . .

In Prang v. Amen, 2020 Cal. App. LEXIS 1153, the Court of Appeal was called upon to consider whether "stock" refers solely to voting stock or to non-voting stock as well.  The case involved a corporation that transferred its real property to a trust.  The trust owned all of the corporation's voting stock, but several others owned the corporation's non-voting stock.  The County Assessor found that a transfer had occurred for purposes of Proposition 13 because the property was now owned by the trust and some of the owners of the non-voting stock were not beneficiaries of the trust.  The trust appealed and the Assessment Appeals Board reversed, finding that only the voting stock should be considered and thus there had been no change in ownership.  Not to be deterred, the Assessor sought relief in the Superior Court which  granted the Assessor's petition to vacate the Board's decision.

In a 2-1 decision, the Court of Appeal affirmed the Superior Court's decision (finding that a change in ownership had occurred).  Interestingly, the State Board of Equalization filed an amicus brief arguing that "stock" is an ambiguous term because there are many categories of stock.  Justice Lamar W. Baker dissented, arguing that the majority's holding will engender unpredictable and, in some cases, unfair consequences.

Why Was Called A Matilda German Empress?

In yesterday's post, the Peterborough Chronicle and I referred to Matilda as German.  However, she was born in England.  She became associated with Germany when she married Henry V, King of Germany and Holy Roman Emperor in 1114.  As Voltaire famously observed "Ce corps qui s'appelait et qui s'appelle encore le saint empire romain n'était en aucune manière ni saint, ni romain, ni empire (the body that calls itself, and that continues to call itself the Holy Roman Empire, was in no ways holy, Roman or an empire)".   I recall having a long debate with my Fifth Grade teacher, Mr. Smith, as to whether Voltaire was correct (I sided with Voltaire).  In retrospect, I think it was just Mr. Smith's way of encouraging me to research the issue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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