Old Farms Owners Assn., Inc. v. HISD, No. 07-0924 (Tex. 2009)(per curiam)(tax suit, tax bill
mailed to incorrect address, penalties unrcoverable, statutory construction, effect of nonsuit)
The tax master found that the Taxing Units did not deliver the 1997 tax statement to
the Trust,[3] and that the Taxing Units also failed to deliver the required five-year
delinquency notice to the Trust in 2000. Based on these findings, the tax master
concluded that, while the Taxing Units could recover the base amount of these taxes,
it could not recover interest and penalties on those taxes. The district court upheld
this decision. See Tex. Tax Code § 33.74 (providing for appeal of tax master’s
findings to trial court)....we reverse the court of appeals, and reinstate the trial court’s
judgment
OLD FARMS OWNERS ASSOCIATION, INC. AND SUSAN C. LEE, TRUSTEE OF THE TRUST CREATED
UNDER ARTICLE IV OF THE WILL OF KATHERINE P. BARNHART, DECEASED v. HOUSTON INDEPENDENT
SCHOOL DISTRICT, ET AL.; from Harris County; 1st district (01-04-00538-CV, 236 SW3d 375, 07-26-07)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without
hearing oral argument, the Court reverses the court of appeals' judgment and reinstates the trial court's
judgment.
Per Curiam Opinion
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Old Farms Owners Assn., Inc. v. HISD (Tex. 2009)
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PER CURIAM
In this tax delinquency suit, we decide whether the 2001 amendments to section 33.04 of the Tax
Code apply to a case originally filed in 1999, nonsuited, and then refiled in 2002. We hold that the
amendments do not apply in this instance and, therefore, reverse the court of appeals and reinstate
the trial court’s judgment.
Respondents, multiple taxing units in the Harris County and Houston area (“Taxing Units”), sued
Susan C. Lee, the trustee of a trust created under the will of Katherine P. Barnhart (“the Trust”) for
delinquent property taxes on a 4.3174 acre tract of land.[1] The Trust was the record owner of this
tract in 1996, when the Harris County Appraisal District’s (HCAD) records listed the Trust’s address
as 1706 Post Oak Boulevard, an address maintained since 1993. In 1997, the Trust sold 4.2565 of
the 4.3174 acres to Westheimer Old Farms I, leaving the Trust with only 0.0609 acres. Because the
Trust still retained the full 4.3174 acres on the record date for purposes of property tax assessments
in 1997, the entire tax bill for that year was to be mailed to the Trust. See Tex. Tax Code §§ 22.01,
25.02, 32.07. However, after the sale but before the 1997 tax bill was mailed, HCAD unilaterally
changed its records to list the Trust’s address as 4550 Post Oak Boulevard, an address the Trust
had last maintained ten years earlier. It is unclear exactly why HCAD reverted back to an old
address, but nothing in the record suggests that the Trust requested the change. At any rate, the
Taxing Units sent the 1997 tax bill to the old 4550 Post Oak Boulevard address, and it was returned
as “undeliverable.” The Trust subsequently failed to pay the 1997 taxes.
In 1999, HCAD discovered and corrected the address error to reflect the Trust’s actual address.
The Taxing Units then sued the Trust for the unpaid 1997 taxes. However, for reasons that are
unclear in the record, the Taxing Units nonsuited the case in 2000.[2]
The case was then refiled in 2002, at which time the Taxing Units sought to recover $51,211.78 in
unpaid taxes, along with penalties and interest on those taxes of $44,194.75.
On November 4, 2003, a trial was held before a tax master. See Tex. Tax Code tit. I, subtit. E, Ch.
33, subch. D (providing for the use of a tax master in tax delinquency cases). At trial, the Trust did
not dispute the Taxing Units’ entitlement to the underlying taxes. However, the Trust did dispute the
Taxing Units’ entitlement to the interest and penalties on those taxes on two alternative grounds: (1)
because the Taxing Units delivered the Trust’s 1997 tax bill to the wrong address, the tax
never became delinquent, and penalties and interest could never begin to accrue; and (2) even if
the tax was delinquent, the penalties and interest were waived because the Taxing Units failed to
deliver the statutorily mandated five-year notice of delinquent taxes in 2000. See Tex. Tax
Code § 33.04(b), (c) (repealed 2001). The tax master found that the Taxing Units did not deliver the
1997 tax statement to the Trust,[3] and that the Taxing Units also failed to deliver the required five-
year delinquency notice to the Trust in 2000. Based on these findings, the tax master concluded
that, while the Taxing Units could recover the base amount of these taxes, it could not recover
interest and penalties on those taxes. The district court upheld this decision. See Tex. Tax Code §
33.74 (providing for appeal of tax master’s findings to trial court).
A divided court of appeals reversed the district court’s judgment on both grounds. 236 S.W.3d at
384. The court of appeals concluded that, under the Tax Code, a taxing unit is required to mail the
tax bill to the address provided by the appraisal district. Because the evidence demonstrated that
the Taxing Unit mailed the bill to the address provided by HCAD, the court of appeals held that the
Taxing Unit had complied with the statute, despite the fact that it had mailed to bill to the incorrect
address. With regard to the five-year delinquency notice, the court of appeals held that the Trust was
not eligible for a waiver of penalties and interest because that Tax Code provision was no longer in
effect and the new law applied retroactively to deprive the Trust of the pre-existing waiver. Id. at 381–
82. The court of appeals held that a savings clause accompanying the 2001 repealing legislation
did not apply to the Trust’s case. Id. On appeal, the Trust argues that the court of appeals erred and
that the trial court’s judgment should be reinstated. We agree.
Section 33.04 of the Tax Code, as it existed in 1999, states, in relevant part:
Notice of Delinquency.
(b) In addition to [a yearly notice], the tax collector for each taxing unit in each year divisible by five
shall deliver by mail a written notice of delinquency to each person who owes a tax that has been
delinquent more than one year and whose name and mailing address are known to the collector or
can be determined by the exercise of reasonable diligence . . . .
(c) Penalties and interest on a tax delinquent more than five years or a multiple of five years are
cancelled and may not be collected if the collector has not delivered the notice required by
Subsection (b) of this section in each year that is divisible by five following the date on which the tax
first became delinquent for one year.
Act of Jun. 14, 1985, 69th Leg., R.S., ch. 761, §1, 1985 Tex. Gen. Laws 2600, 2601.
The tax master found, and the record demonstrates, that the required five-year notice was not
delivered to the Trust as required in 2000. Thus, under former section 33.04 (c), penalties and
interest on the 1997 taxes are waived. However, section 33.04 was amended in 2001 to remove
the five-year notice requirement and the associated penalty and interest waiver provision.[4] But the
2001 legislation included a savings clause that continued the notice and waiver provisions in some
cases:
Section 33.04, Tax Code, as amended by this Act, does not apply to taxes subject to a delinquent
tax suit pending before the effective date of this Act. Section 33.04, Tax Code, as amended by this
Act, applies to all other taxes that became delinquent before the effective date of this Act or that
become delinquent on or after that date. Penalties and interest on a delinquent tax are not canceled
under Section 33.04, Tax Code, for failure to deliver any notice under that section as it existed
immediately before the effective date of this Act. A delinquent tax that is the subject of a collection
suit filed before the effective date of this Act is governed by Section 33.04, Tax Code, as that
section existed immediately before the effective date of this Act, and the former law is continued in
effect for that purpose.
Act of Jun. 17, 2001, 77th Leg., R.S., ch. 1430, § 40, 2001 Tex. Gen. Laws 5109, 5122 (emphasis
added). The second and third sentences of this clause clearly remove any penalty on the part of the
Taxing Units for failure to provide the five-year notice in the past in many cases. But the parties
dispute the meaning of the first and last sentences, which do exempt some cases. This is because
the delinquency suit was originally filed in 1999, nonsuited, then refiled in 2002 following the
amendments. Both the first and last sentence support the Trust’s argument that the former waiver
provisions should apply to its case. The first sentence of the clause states that the amendment
“does not apply to taxes subject to a delinquent tax suit pending before [September 1, 2001].” Id.
(emphasis added). Although the 1999 case was nonsuited, it was a suit that was pending before
September 1, 2001. Additionally, the Trust’s delinquent tax was “the subject of a collection suit filed
before the effective date of [the legislation],” as discussed in the last sentence of the clause. Id.
Although the 1999 suit ended in a nonsuit, that does not change the fact that it was a collection suit
filed before the effective date of the legislation.
We have held “a dismissal is in no way an adjudication of the rights of parties; it merely places the
parties in the position that they were in before the court's jurisdiction was invoked just as if the suit
had never been brought.” Crofts v. Court of Civil Appeals, 362 S.W.2d 101, 104 (Tex. 1962). We do
not modify that rule today, but we do recognize that this savings clause is broad enough to apply to
any collection suit filed prior to the revisions in the law, even if the suit was eventually nonsuited. This
must be so because, otherwise, the last sentence of the savings clause would have no meaning.
See Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 (Tex. 2000) (refusing to presume that
the Legislature intended a redundancy); Chevron Corp. v. Redmon, 745 S.W.2d 314, 316 (Tex.
1987) (noting that we must give effect to all a statute’s words). As noted by the dissent in the court of
appeals, “[t]he savings clause cannot be reasonably read to bar the prosecution only of suits taxing
authorities had prosecuted to completion under prior law because these suits were already barred
by the law of res judicata.” 236 S.W.3d at 388 (Keyes, J. dissenting) (emphasis in original). The
Taxing Units argue that it is possible the last sentence was meant to apply to cases such as those
that reach judgment, those pending appeal, or those disposed of for want of prosecution. But this
clause could not have been intended to apply to a case disposed of due to judgment or one
pending appeal because those cases would have already applied the statute in effect at the time of
trial. And as to those cases dismissed for want of prosecution, we agree that this clause would
apply to them, as long as they were dismissed without prejudice, in which case they are treated the
same as a nonsuit. See Crofts, 362 S.W.2d at 104; Webb v. Jorns, 488 S.W.2d 407, 409 (Tex.
1972). There is no indication that the Legislature intended to include a dismissal for want
of prosecution under this clause, but not a nonsuit.
The Taxing Units also argue that the clause’s last sentence acts as an instruction as to whether to
apply the 1985 version of the section 33.04,[5] which treated the waiver as mandatory, or the 1999
version of the statute, which treated the waiver as an affirmative defense.[6] We do not see this
instruction in the savings clause. Regardless, penalties and interest would not be recoverable under
either version.
For these reasons, we reverse the court of appeals, and reinstate the trial court’s judgment.[7]
OPINION DELIVERED: February 13, 2009
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[1] The Taxing Units also sued Old Farms Owners Association, Inc. and Westheimer Old Farms I, Ltd. The
Taxing Units sued these parties because they were the subsequent property owners after it was sold in
1997, the same year as the delinquent property tax bill at issue. The trial court assessed the 1997 taxes and
apportioned them among the parties in accordance with the sales contract.
[2] It appears, though it is not entirely clear from the record, that the Taxing Units and the Trust resolved the
back taxes from 1997 as to the 0.0609 acres, but not for the remaining 4.2565 acres that were sold in 1997.
[3] The Tax Master also found that the Trust did not receive statements from 1998–2001. Because the Trust
was not record owner on most of the property following 1997, the 1998-2001 statements were for small
amounts of no more than $3.03. See Tex. Tax Code § 31.01(f) (providing that a tax bill need only be mailed
once the total accrues to fifteen dollars). Thus, the dispute centers on the 1997 statement.
[4] Act of June 17, 2001, 77th Leg., R.S., ch. 1430, § 11, 2001 Tex. Gen. Laws 5109, 5112.
[5] See Act of Jun. 14, 1985, 69th Leg., R.S., ch. 761, §1, 1985 Tex. Gen. Laws 2600, 2601.
[6] See Act of Jun. 19, 1999, 76th Leg., R.S., ch. 1481, § 16, 1999 Tex. Gen. Laws 5097, 5101.
[7] Because we hold that the interest and penalties are waived under former section 33.04, we do not
consider whether they are waived due to the Taxing Units’ failure to deliver the 1997 tax bill to the Trust’s
correct address.