Milton Wayne Hardy, Lovell Green Hardy, Individually, and doing business as Game Time Amusements v. The State of Texas--Appeal from County Court at Law No 1 of Johnson County

IN THE

TENTH COURT OF APPEALS

No. 10-99-336-CV

MILTON WAYNE HARDY AND

LOVELL GREEN HARDY,

INDIVIDUALLY AND DOING BUSINESS

AS GAME TIME AMUSEMENTS,

Appellants

v.

THE STATE OF TEXAS,

Appellee

From the County Court at Law No. 1

Johnson County, Texas

Trial Court # 99-000127

O P I N I O N

The State sought to forfeit twenty eight-liner machines, four slot machines, and other evidence seized in the course of a gambling investigation. After a show-cause hearing, the court found that the seized evidence constitutes gambling devices, gambling paraphernalia, or gambling proceeds and ordered that this evidence be forfeited to the State. Milton Wayne Hardy and Lovell Green Hardy, individually and doing business as Game Time Amusements, (collectively, the Hardys ) claim in six issues that the evidence is legally and factually insufficient to support the court s determination that the eight-liners and slot machines constitute gambling devices and gambling paraphernalia.

BACKGROUND

Officers from the Department of Public Safety, the Office of the Attorney General, and the Office of the County Attorney of Johnson County executed a search warrant at Game Time Amusements ( Game Time ) during the course of a gambling investigation. The officers seized twenty devices commonly known as eight-liners, four slot machines, $2,340.25 in United States currency, seventy-two $5.00 gift certificates for Wal-Mart/Sam s Club, $130.00 in personal checks, and other miscellaneous items.

The State filed a petition seeking forfeiture of the seized items. // On the same date, the trial court issued a notice under article 18.18(b) of the Code of Criminal Procedure advising the Hardys that they must appear and show cause why the seized property should not be destroyed or forfeited. // See Tex. Code Crim. Proc. Ann. art. 18.18(b) (Vernon Supp. 2001).

Lovell Hardy testified that the eight-liners and slot machines are electronic devices which operate at least partially by chance. When a player inserted money in one of these devices, the machine would record the number of credits. For each play, the machine recorded the bets made and reduced the available credits accordingly. For each win, the device recorded the number of points won. When a player finished at a particular machine, he would summon the attendant to verify his points. The attendant then depressed a button which caused the device to dispense tickets in an amount corresponding to the number of points and which deleted that person s recorded point total so another could play. The penny machines dispensed one ticket for every 100 points accumulated. The nickel machines dispensed one ticket for every 500 points accumulated.

Hardy testified that the 100-point tickets were worth $1.00 and the 500-point tickets were worth $5.00. A player could exchange tickets for a $5.00 gift certificate to Wal-Mart/Sam s Club or for play on another machine. To exchange tickets for re-play on another machine, a player presented his tickets to the attendant who placed the money in the device of the player s choice.

At the conclusion of the hearing, the court found that the seized eight-liners and slot machines are gambling devices and gambling paraphernalia and ordered their forfeiture together with other currency, gift certificates, and miscellaneous items which the court found to be gambling paraphernalia or proceeds.

At the Hardys request, the court filed findings of fact and conclusions of law. The court made the following findings which are pertinent to this appeal:

g. That a player of the machines could obtain a Wal-Mart/Sam s Club gift certificate as a result of the play of the machines and that 72 such gift certificates were seized at Game Time Amusements on March 10, 1999;

i. That the 72 Wal-Mart/Sam s Club gift certificates, each valued at $5.00 for a total value of $360.00, seized on March 10, 1999 are things of value and that the sixteen (16) Wal-Mart/Sam s Club gift certificates, each valued at $5.00 for a total of $80.00, and awarded to Department of Public Safety undercover officers through playing the machines at Game Time Amusements during the course of the investigation are things of value ; and

n. That the machines as identified in the State s Motion For Forfeiture of Gambling Proceeds, Devices, Equipment and Paraphernalia, do not qualify under the gambling device exclusion set out in section 47.01(4)(B) of the Texas Penal Code.

The court stated in Conclusion of Law a that the twenty-four seized machines constitute gambling devices and gambling paraphernalia.

BURDEN OF PROOF

We begin with the settled proposition that forfeiture proceedings under chapter 18 of the Code of Criminal Procedure are in rem proceedings which are civil in nature. See State v. Rumfolo, 545 S.W.2d 752, 754 (Tex. 1976); Janjua v. State, 991 S.W.2d 419, 422 n.3 (Tex. App. Houston [14th Dist.] 1999, no pet.); see also United States v. Ursery, 518 U.S. 267, 288-89, 116 S. Ct. 2135, 2147-48, 135 L. Ed. 2d 549 (1996). As such, they are governed by the rules applicable to civil trials and appeals generally. See Janjua, 991 S.W.2d at 422 n.3; Fleming v. State, 704 S.W.2d 530, 531 (Tex. App. Houston [14th Dist.] 1986, writ ref d n.r.e.); Brown v. Barlow, 685 S.W.2d 406, 408 (Tex. App. San Antonio 1985, orig. proceeding) (per curiam).

The appropriate standard of review in a civil appeal in which the sufficiency of the evidence is questioned depends on which party had the burden of proof at trial. See, e.g., Checker Bag Co. v. Washington, 27 S.W.3d 625, 633 (Tex. App. Waco 2000, pet. denied); Crow v. Burnett, 951 S.W.2d 894, 897 (Tex. App. Waco 1997, pet. denied). Thus, we must first determine who has the burden of proof in a show-cause hearing under article 18.18(f). See Tex. Code Crim. Proc. Ann. art. 18.18(f) (Vernon Supp. 2001).

Article 59.05(b), which governs a hearing commenced by the State to forfeit contraband used in the commission of first and second degree felonies, drug offenses, and other listed crimes, squarely places the burden on the State to prove its entitlement to forfeiture by a preponderance of evidence. // See Tex. Code Crim. Proc. Ann. art. 59.05(b) (Vernon Supp. 2001). Article 18.18(f), however, allocates the burden of proof in a different manner. // Id. art. 18.18(f). The statute provides:

(f) If a person timely appears to show cause why the property or proceeds should not be destroyed or forfeited, the magistrate shall conduct a hearing on the issue and determine the nature of property or proceeds and the person's interest therein. Unless the person proves by a preponderance of the evidence that the property or proceeds is not gambling equipment, altered gambling equipment, gambling paraphernalia, gambling device, gambling proceeds, prohibited weapon, criminal instrument, or dog-fighting equipment and that he is entitled to possession, the magistrate shall dispose of the property or proceeds in accordance with Paragraph (a) of this article.

Id.

This statute plainly requires a property owner to prove by a preponderance of evidence that the seized property is not contraband subject to forfeiture. Nevertheless, the parties cite the 1976 Supreme Court decision in Rumfolo as authority for the proposition that the burden actually rests with the State to prove its entitlement to forfeiture by a preponderance of evidence. // See Rumfolo, 545 S.W.2d at 754. In our view, Rumfolo does not support this proposition.

In Rumfolo, the lower court held that article 18.18, subsections (b) and (f), violates the due process and due course of law provisions of the federal and state constitutions because it places the burden of proof on the property owner. See Rumfolo v. State, 535 S.W.2d 16, 21 (Tex. Civ. App. Houston [14th Dist.]), rev d, 545 S.W.2d 752 (Tex. 1976). The Supreme Court rejected this holding. The Court began by noting that due process requires only that the State provide notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Rumfolo, 545 S.W.2d at 754 (quoting Robinson v. Hanrahan, 409 U.S. 38, 40, 93 S. Ct. 30, 31, 34 L. Ed. 2d 47 (1972)); accord City of West Covina v. Perkins, 525 U.S. 234, 240, 119 S. Ct. 678, 681, 142 L. Ed. 2d 636 (1999) (due process in forfeiture proceeding requires notice and opportunity to be heard); see also LaChance v. Erickson, 522 U.S. 262, 266, 118 S. Ct. 753, 756, 139 L. Ed. 2d 695 (1998) ( core of due process is the right to notice and a meaningful opportunity to be heard ); University of Tex. Med. School v. Than, 901 S.W.2d 926, 930 (Tex. 1995) (due course of law at a minimum requires notice and an opportunity to be heard at a meaningful time and in a meaningful manner ).

The perception that Rumfolo places the burden of proof on the State comes from the following statement in that opinion:

We construe Art. 18.18 to require the State to assume the burden to prove the proceeds were used in the gambling activity and to trace the money to the named respondents. As applied to this action, the statute clearly satisfies the constitutional requirement of procedural due process. Here the trial court conducted an evidentiary hearing after notice in writing to the respondents. After the State offered testimony concerning the gambling by the named respondents and the results of the search following the raid, the respondents had an opportunity to present evidence. The record shows the respondents or their attorney were present but offered no evidence at the hearing. To require claimants to show the property or proceeds is not gambling equipment or gambling proceeds as the case may be, is compatible with the due process requirement that claimants receive notice and be afforded an opportunity to present their objections to such forfeiture. In this case the State has satisfied due process through its notice and the hearing afforded the parties.

Rumfolo, 545 S.W.2d at 754 (citation omitted).

We view Rumfolo as requiring the State to make a prima facie showing that the property in question is contraband subject to forfeiture. See Brown, 685 S.W.2d at 408 n.2 ( the State, by failing to offer evidence, did not meet its initial burden of proof ). This is quite similar to the burden applicable to forfeiture proceedings under title 19, section 1615 of the United States Code. // See 19 U.S.C.A. 1615 (West 1999). Under this federal statute, the government bears an initial burden of showing that the seized contraband is subject to forfeiture. Id.; United States v. $129,727.00, 129 F.3d 486, 492 (9th Cir. 1997); United States v. Land, Prop. Currently Recorded in the Name of Neff, 960 F.2d 561, 563 (5th Cir. 1992) (hereinafter, Neff ). Once the government makes this initial showing, the burden shifts to the claimant to prove by a preponderance of evidence that the property is not subject to forfeiture. Id.; accord Ursery, 518 U.S. at 289, 116 S. Ct. at 2147-48.

Following this parallel federal concept, we hold that the State bears an initial burden in an article 18.18 forfeiture hearing to show that the seized property is contraband subject to forfeiture. See Rumfolo, 545 S.W.2d at 754; Brown, 685 S.W.2d at 408 n.2. Applying the plain meaning of the words set forth in article 18.18(f), we further hold that, once the State has made this initial showing, the burden shifts to the claimant to prove by a preponderance of the evidence that the property is not subject to forfeiture and that he is entitled to possession of it. // See Tex. Code Crim. Proc. Ann. art. 18.18(f); Ursery, 518 U.S. at 289, 116 S. Ct. at 2147-48; $129,727.00, 129 F.3d at 492; Neff, 960 F.2d at 563; Rumfolo, 545 S.W.2d at 754; see also Tune v. Texas Dep t of Pub. Safety, 23 S.W.3d 358, 363 (Tex. 2000) (courts must enforce the plain meaning of an unambiguous statute ). Accordingly, the ultimate burden of proof in an article 18.18 forfeiture hearing lies with the claimant. See United States v. $506,231, 125 F.3d 442, 451 (7th Cir. 1997).

In the present case, the Hardys rely almost exclusively on the statutory exclusion provided by section 47.01(4)(B) of the Penal Code. See Tex. Pen. Code Ann. 47.01(4)(B) (Vernon Supp. 2001). Because they bear the burden of proving by a preponderance of evidence that the seized machines are not subject to forfeiture, we conclude that they bear the burden of proving that the seized machines come within the statutory exclusion on which they rely.

STANDARDS OF REVIEW

Because the Hardys bore the ultimate burden of proof in the forfeiture proceeding, their challenge to the legal sufficiency of the evidence in actuality constitutes an assertion that they established as a matter of law that the statutory exclusion applies to the seized machines. See Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989); Crow, 951 S.W.2d at 897. Under Sterner, we first search the record for evidence that supports the court s refusal to find that the statutory exclusion applies, disregarding all contrary evidence. See Sterner, 767 S.W.2d at 690; Waldrep v. Texas Employers Ins. Ass n, 21 S.W.3d 692, 697 (Tex. App. Austin 2000, pet. denied). If we find some probative evidence to support the refusal to so find, then the inquiry ends. See Sterner, 767 S.W.2d at 691; Waldrep, 21 S.W.3d at 702 n.14; Markowski v. City of Marlin, 940 S.W.2d 720, 725 (Tex. App. Waco 1997, writ denied). If not, we then search the entire record to determine whether the Hardys established the application of the statutory exclusion as a matter of law. See Sterner, 767 S.W.2d at 690; Waldrep, 21 S.W.3d at 697; Brush v. Reata Oil & Gas Corp., 984 S.W.2d 720, 725 (Tex. App. Waco 1998, pet. denied).

We likewise construe the Hardys factual sufficiency challenge as an assertion that the court s refusal to find that the statutory exclusion applies is contrary to the great weight and preponderance of the evidence. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Crow, 951 S.W.2d at 897. Such a challenge requires us to consider and weigh all the evidence, not just the evidence which supports the court s refusal to so find. See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Vickery v. Commission for Lawyer Discipline, 5 S.W.3d 241, 258 (Tex. App. Houston [14th Dist.] 1999, pet. denied). We must sustain the court s refusal to find, unless it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id.

The Hardys also challenge the legal and factual sufficiency of the evidence to support one of the court s conclusions of law. However, a court s legal conclusions cannot be challenged for factual sufficiency. See Mangum v. State, 986 S.W.2d 788, 793 (Tex. App. Amarillo 1999, pet. denied) (per curiam); Clary v. Schmolke, 977 S.W.2d 883, 885 n.1 (Tex. App. Beaumont 1998, pet. denied). Instead, we review the court s conclusions of law de novo. City of Houston v. Kolb, 982 S.W.2d 949, 952 (Tex. App. Houston [14th Dist.] 1999, pet. denied); Hitzelberger v. Samedan Oil Corp., 948 S.W.2d 497, 503 (Tex. App. Waco 1997, pet. denied). We set aside these conclusions only when they are erroneous as a matter of law. Id.

With these standards in mind, we examine the issues presented.

GAMBLING DEVICES

The Hardys contend in their second and fourth issues respectively that they established as a matter of law that the seized machines are not gambling devices or gambling paraphernalia and fit within the statutory exclusion provided by section 47.01(4)(B). They similarly argue in their sixth issue that Conclusion of Law a that the seized machines constitute gambling devices and gambling paraphernalia is erroneous as a matter of law.

The Hardys first issue claims that the court s finding that the seized devices are gambling devices and gambling paraphernalia is contrary to the great weight and preponderance of the evidence. They aver in their third issue that the court s refusal to find that the statutory exclusion applies to the seized machines is contrary to the great weight and preponderance of the evidence. Their fifth issue avers that Conclusion of Law a is not supported by factually sufficient evidence. //

Central to all of the Hardys issues is their belief that they operated the seized machines in such a manner that they would come within the statutory exclusion provided by section 47.01(4)(B). That provision reads in pertinent part as follows:

(4) Gambling device means any electronic, electromechanical, or mechanical contrivance not excluded under Paragraph (B) that for a consideration affords the player an opportunity to obtain anything of value, the award of which is determined solely or partially by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance. The term:

. . . .

(B) does not include any electronic, electromechanical, or mechanical contrivance designed, made, and adapted solely for bona fide amusement purposes if the contrivance rewards the player exclusively with noncash merchandise prizes, toys, or novelties, or a representation of value redeemable for those items, that have a wholesale value available from a single play of the game or device of not more than 10 times the amount charged to play the game or device once or $5, whichever is less.

Tex. Pen. Code Ann. 47.01(4)(B).

The parties do not dispute the manner in which the Hardys operated the seized machines. In sum, the devices dispensed tickets in a number corresponding to the points accumulated which could be exchanged for gift certificates or for money to play on another machine. //

A machine falls within the exclusion provided by section 47.01(4)(B) only if it rewards the player exclusively with noncash merchandise, prizes, toys, or novelties, or a representation of value redeemable for those items. Id. (emphasis added). The undisputed testimony establishes that the seized machines did not award prizes, toys or novelties. The pivotal question is whether the tickets dispensed constituted representation[s] of value redeemable for [noncash merchandise prizes, toys, or novelties]. Id.

According to Webster s, the term cash means money or its equivalent. Merriam-Webster s Collegiate Dictionary 177 (10th ed. 1993); see also Albertson s, Inc. v. Sinclair, 984 S.W.2d 958, 960 (Tex. 1999) (employing dictionary definition to construe statute). Noncash, then, is something other than money or its equivalent. A player could exchange the tickets dispensed by the seized machines for gift certificates (an equivalent of money) or for money to play on another machine. Accordingly, we conclude that the seized machines rewarded players with tickets redeemable for cash. But see State v. One Super Cherry Master Video 8-Liner Machine, No. 03-99-751-CV, 2001 Tex. App. LEXIS 3891, at *13-16 (Tex. App. Austin June 14, 2001, no pet. h.) (State failed to prove as a matter of law that tickets dispensed by machines operated in a similar manner were not exchangeable for noncash merchandise ).

The Hardys also contend that the seized machines fall within the statutory exclusion because the value of the tickets which could be dispensed after a single play was not more than 10 times the amount charged to play the game or device once or $5, whichever is less. See Tex. Pen. Code Ann. 47.01(4)(B). However, a reading of the statute reflects that this limitation refers only to the value of the noncash merchandise, prizes, toys, or novelties which a player could win by playing a particular machine. Id. Because the undisputed evidence establishes that the seized machines rewarded players with tickets redeemable for cash, the fact that the Hardys limited the amount of cash a player could win from a single play is irrelevant.

CONCLUSION

The undisputed evidence establishes that the eight-liners and slot machines seized from Game Time do not fit within the statutory exclusion provided by section 47.01(4)(B). Thus, the Hardys failed to establish as a matter of law that the statutory exclusion applies. The court s refusal to find that the statutory exclusion applies is not contrary to the great weight and preponderance of the evidence. Conclusion of Law a that the seized machines constitute gambling devices is not erroneous as a matter of law. In view of these holdings, we need not address that portion of the Hardys issues which challenges the court s alternative findings and conclusions that the seized devices constitute gambling paraphernalia.

For these reasons, we conclude that the Hardys first, second, third, fourth, and sixth issues are without merit.

We affirm the judgment.

REX D. DAVIS

Chief Justice

Before Chief Justice Davis

Justice Vance and

Justice Gray

(Justice Gray concurring)

Affirmed

Opinion delivered and filed June 27, 2001

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