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TODD v. UNITED STATES

May 29, 1985

BURT K. TODD and FRANCES HAYS TODD, Plaintiffs
v.
UNITED STATES OF AMERICA, Defendant


Hubert I. Teitelbaum, Chief United States District Judge.


The opinion of the court was delivered by: TEITELBAUM

I.

 Plaintiffs brought this action under the Internal Revenue Code of 1954, as amended, 26 U.S.C. §§ 1 et seq., seeking to recover federal income taxes and interest thereon, which plaintiffs contend was erroneously and illegally assessed and collected by the Internal Revenue Service (IRS).

 A non-jury trial on this matter was conducted on January 14-15, 1985.

 Judgment in this action will be entered for defendant and against plaintiffs for reasons set forth below.

 II.

 Plaintiff Burt K. Todd is the owner of a parcel of approximately 104 acres of land that is located in Ligonier Township, Westmoreland County, Pennsylvania. The property in question was at all relevant times used as an undivided country estate.

 Burt K. Todd obtained the property on December 12, 1956 by conveyance from R. K. Mellon and Constance Prosser Mellon (later, Constance Prosser Mellon Burrell), his wife.

 The deed conveying the property to Burt K. Todd contained the following covenants:

 
A. The party of the second part [Burt K. Todd] agrees not to subdivide any portion of the above described property, and further agrees not to lease any portion of said property to anyone except members of his immediate family; namely, his own children.
 
C. The party of the second part [Burt K. Todd] agrees that the Rolling Rock Hunt shall have the right and privilege to hunt for foxes over the above described premises with horses and hounds and agrees that the members or guests of members of Rolling Rock Club shall have the right to fish, hunt and shoot and to remove from said premises any fish or game thereon reduced and all such uses and purposes. The party of the second party [Burt K. Todd] is prohibited from erecting wire fences or other obstructions, as a protection for horses and hounds.

 On December 30, 1979, Burt K. Todd granted to the Western Pennsylvania Conservancy a scenic easement in gross upon the property in perpetuity, without expectation of economic benefit. The Conservancy is an organization described in 26 U.S.C. § 170(c) of the Internal Revenue Code.

 The easement that Burt K. Todd granted to the Conservancy was an easement with respect to real property in perpetuity, exclusively for conservation purposes, without the exception set forth in 26 U.S.C., Section 170(f)(3)(B)(iii)(1979).

 The Grant of Easement executed that day contained the following provision:

 
And in furtherance of the foregoing affirmative rights, and intending to be legally bound hereby the Grantor declares and imposes the following covenants, on behalf of himself, his heirs and assigns, which covenants shall run with and bind the Protected Property in perpetuity:
 
1. There shall be no subdivision of the property, except Grantor, his heirs and assigns retain the right to subdivide the property into not more than five parcels.

 On December 30, 1979, Constance Prosser Mellon Burrell, a grantor of the above Mellon deed dated December 12, 1956, granted to the Conservancy her interest in the restrictive covenants contained in the Mellon deed.

 R. K. Mellon and Sarah Mellon Scaife had died prior to December 30, 1979. Constance Prosser Mellon Burrell ...


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