Marted, a Texas General Partnership v. Central Education Agency and Mission Consolidated Independent School District ( 1998 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

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NO. 03-97-00267-CV

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Marted, a Texas General Partnership, Appellant

v.

Central Education Agency and Mission Consolidated

Independent School District, Appellees

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FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT NO. 94-11217, HONORABLE MARY PEARL WILLIAMS, JUDGE PRESIDING

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Marted, a Texas General Partnership ("Marted"), sued the Central Education Agency ("Agency") for judicial review of a decision issued by the Commissioner of Education ("Commissioner") denying Marted's petition for detachment and annexation of a tract of land it owns. The Commissioner based his decision on Marted's failure to comply with a now-repealed requirement of the Texas Education Code. See Act of May 10, 1991, 72nd Leg., R.S., ch. 152, § 1, 1991 Tex. Gen. Laws 742, 742 (Tex. Educ. Code Ann. § 19.0221(c), since repealed and recodified at Tex. Educ. Code Ann. § 13.051(b)(1)(B)) (hereinafter "former Educ. Code"). The district court affirmed the Commissioner's decision, and Marted appeals. We will reverse.

FACTUAL AND PROCEDURAL BACKGROUND

In March 1992 Marted acquired about forty acres of land from Dr. M. B. Smith in order to develop it into a subdivision called The Woods at Cimarron. The subdivision was to contain estate-sized lots and was to be a small part of a larger development. Soon after it had purchased the property, Marted learned that about half of the lots within the property were in Mission Consolidated Independent School District ("MCISD") and the other half were in Sharyland Independent School District ("SISD"). Pursuant to former Educ. Code § 19.0221, Marted sought to transfer to SISD the portion of the subdivision lying within the boundaries of MCISD. That statute required that a petition for detachment and annexation must be "signed by the surface owners of taxable property, according to the most recent certified appraisal roll, in the territory that is to be detached from one district and added to another." Former Educ. Code § 19.0221(c) (emphasis added). A petition for detachment and annexation, signed by representatives of Marted, was filed in both school districts in October 1992. Both districts denied the petition. Marted filed an appeal of the local decisions with the Commissioner. After a hearing on the merits, the Commissioner, acting on behalf of the Agency, decided that Marted failed to meet the requirements of former Educ. Code § 19.0221(c) because Marted was not, at the time it filed the petition, listed on the most recent certified appraisal roll as the surface owner of the property. Marted sought review of the Commissioner's decision in the Travis County district court. The district court affirmed the Commissioner's decision, and Marted now challenges that judgment.

DISCUSSION

In its first point of error, Marted challenges the Commissioner's interpretation of former Educ. Code § 19.0221(c), which provided the basis for the Commissioner's denial of Marted's petition for detachment and annexation. On the date of Marted's petition, the most recent certified appraisal roll still listed Dr. Smith as the owner even though Marted had been the actual surface owner of the property for more than six months. The Commissioner concluded that the plain language of the statute required the signature of the person listed on the appraisal roll, and that the petition should be denied because it did not contain Dr. Smith's signature.

The standard for reviewing an agency's legal determination is de novo. In re Humphrey's, 880 S.W.2d 402, 404 (Tex.), cert. denied, 115 S. Ct. 427 (1994); Fireman's Pension Comm'n v. Jones, 939 S.W.2d 730, 735 (Tex. App.--Austin 1997, no writ). An agency's construction of a statute deserves serious consideration as long as the construction is reasonable. See Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993). However, we should not construe a statute in a manner that will produce an absurd, unjust, or foolish result when it is reasonably susceptible of an alternative construction. City of San Antonio v. Fourth Court of Appeals, 820 S.W.2d 762, 768 (Tex. 1991); Anderson v. Penix, 161 S.W.2d 455, 458-59 (Tex. 1942).

In his decision, the Commissioner discussed why the Legislature invoked the use of appraisal rolls into the process of detachment and annexation: "[T]he purpose of tying these requirements to the certified appraisal rolls of the relevant taxing authorities is no doubt to insure ready administration of the law." We agree that the primary purpose appears to be to avoid a situation in which the Commissioner would be called on to resolve a dispute over property ownership. However, no such dispute is present in this case. Both sides acknowledge that Marted was the actual surface owner of the property in question at the time the petition for detachment and annexation was filed.

Appraisal rolls reflect ownership of property as of January 1 of a given tax year. See Tex. Tax Code Ann. § 32.07 (West 1992) ("Tax Code"). The yearly updating of the appraisal rolls often is not generated until the summer of the year in question. See Tax Code § 26.01. This process would, in the present case, yield two unreasonable results. First, although Marted purchased the property in March, it could not, under the Commissioner's construction, petition for detachment and annexation until the summer of the following year, after issuance of the new updated appraisal roll showing its ownership, even though all other rights of ownership were transferred to it at the time the property was purchased. An even more anomalous result would be that the right to petition for annexation and detachment would remain in Dr. Smith, the previous owner, for well over a year after he no longer had any right of ownership in the property. ⁽¹⁾

The Commissioner apparently believes he must, in all cases, use the appraisal roll as the conclusive determination of who owns property and thus has the statutory right to petition for detachment and annexation. Marted maintains that a more reasonable construction would consider appraisal rolls merely as prima facie evidence of ownership. It suggests that the use of appraisal rolls as evidence of ownership should be analogous to the way an appraisal roll is used in the Tax Code. In the Tax Code, appraisal rolls serve only as prima facie evidence of ownership. See Tax Code § 33.47(a); General Elec. Capital Corp. v. City of Corpus Christi, 850 S.W.2d 596, 600 (Tex. App.--Corpus Christi 1993, writ denied). Under the Tax Code, a person may challenge the appraisal roll by asserting that he did not own the property or that the property was not located in the taxing district as of January 1 of the tax year. See Tax Code § 42.09(b)(1), (2); General Electric, 850 S.W.2d at 600.

We believe the interpretation suggested by Marted is reasonable where there is no bona fide dispute as to the ownership of the property in question. We do not decide whether parties operating under former Educ. Code § 19.0221(c) may challenge the appraisal rolls before the Commissioner in other circumstances; rather, we conclude only that under the facts of the present case, in which there is no dispute that Marted was the surface owner of the property when the petition was filed, a reasonable construction of the statute would allow Marted to petition for detachment and annexation.

Appellee MCISD suggests that the severity of the Commissioner's interpretation of the statute is softened in two ways. First, MCISD asserts that Marted could have had the appraisal rolls "corrected" by using Tax Code § 25.25(b). It is not clear, however, that such a change would be possible under that provision. An appraisal roll merely identifies the owner of the property as of January 1 of the tax year, not at some later time. See Tax Code § 32.07. Thus, while section 25.25(b) allows for correction of errors in the appraisal rolls, the listing of Dr. Smith as the owner on January 1 arguably was not an "error" even after the property was sold to Marted. Neither MCISD nor the Commissioner points to any case in which section 25.25(b) has been used to update the roll rather than correct errors. Without deciding the extent to which section 25.25(b) may be so employed, we are not convinced this section affords Marted the opportunity to update the appraisal rolls.

Second, MCISD contends Marted could have bargained with the previous owner to get his signature on the petition, just as buyers and sellers bargain over apportioning tax liability for a given year. However, the complexity involved with the transfer of tax liability is not present in the transfer of the right to petition for detachment and annexation. It makes sense that the Legislature shifted the burden of apportioning tax liability to the bargaining that goes on between buyer and seller. Nonetheless, we are not convinced that the Legislature intended to shift to the transacting parties the decision of when the statutory right to petition transfers from buyer to seller rather than to allow that right to transfer along with all the other rights of ownership.

Finally, MCISD points out that a related statute looks to the appraisal rolls for determining total taxable value of property to be detached and annexed; from this, MCISD argues that allowing a person not listed on the appraisal roll to file a petition for annexation and detachment would open the door to challenges to the value reflected on the appraisal roll. See former Educ. Code § 19.021(2). We disagree that this would be the necessary result. Although the appraisal rolls conclusively set appraised value under the Tax Code, they do not conclusively establish the identity of the true surface owner of a tract of property. See Tax Code § 42.09 (only ownership or location of property may be asserted as affirmative offense against liability for tax liability). Furthermore, because we conclude merely that an undisputed surface owner of property may petition for detachment and annexation, we need not and do not hold that a party may, under former Educ. Code § 19.0221, bring to the Commissioner any bona fide dispute as to either ownership or valuation of property. We sustain point of error one.

In its second point of error Marted suggests that the Commissioner's decision violates the due process clause of the United States Constitution. U.S. Const. amend. XIV. Because we have sustained Marted's first point of error, we need not address the merits of this argument.

CONCLUSION

We reverse the judgment of the district court and remand the cause to the Commissioner for a determination of the merits of Marted's appeal concerning its petition for detachment and annexation.

J. Woodfin Jones, Justice

Before Chief Justice Carroll, Justices Jones and Kidd

Reversed and Remanded

Filed: January 15, 1998

Do Not Publish

1. When the Education Code was rewritten in 1995, the relevant provision was amended to state that the petition requesting detachment and annexation must be signed by a majority of "the surface owners of taxable property in the territory to be detached and annexed, if the territory does not have residents." Tex. Educ. Code Ann. § 13.051(b)(1)(B) (West 1996). There is no mention of appraisal rolls.

ggests that the severity of the Commissioner's interpretation of the statute is softened in two ways. First, MCISD asserts that Marted could have had the appraisal rolls "corrected" by using Tax Code § 25.25(b). It is not clear, however, that such a change would be possible under that provision. An appraisal roll merely identifies the owner of the property as of January 1 of the tax year, not at some later time. See Tax Code § 32.07. Thus, while section 25.25(b) allows for correction of errors in the appraisal rolls, the listing of Dr. Smith as the owner on January 1 arguably was not an "error" even after the property was sold to Marted. Neither MCISD nor the Commissioner points to any case in which section 25.25(b) has been used to update the roll rather than correct errors. Without deciding the e