Marathon Oil Company, an Ohio Corporation v. Leon Independent School District, et al.--Appeal from 87th District Court of Leon County

[WITHDRAWN 10-2-96]

IN THE

TENTH COURT OF APPEALS

No. 10-95-323-CV

MARATHON OIL COMPANY, AN OHIO

CORPORATION,

Appellant

v.

LEON INDEPENDENT SCHOOL DISTRICT,

ET AL.,

Appellees

From the 87th District Court

Leon County, Texas

Trial Court # 6244-B

O P I N I O N

Leon Independent School District and Leon County ("Plaintiffs") sued Marathon Oil Company ("Marathon") for delinquent property taxes for the years 1983, 1988, 1989, 1990, 1991, and 1992. After a bench trial, the court entered a judgment in favor of Plaintiffs for a total of $8,781.91, including penalties and interest. $3,807.47 of that amount was against Marathon as a "personal judgment," and the entire amount was established as a statutory tax lien. Marathon does not contest payment of the taxes. It does, however, dispute the validity of that portion of the judgment that assessed penalties and interest, asserting in three points of error that a taxing authority should not be able to impose penalties and interest under the tax code when the required notices were not sent to the actual current owner of the property. Plaintiffs argue that Marathon is precluded from raising the non-receipt-of-notice issue, that the evidence shows the notices were properly sent, and that Marathon failed to utilize remedies available to it as an owner who did not receive tax notices. We will affirm the judgment.

TAX PROCEDURES

Procedures for the assessment and collection of ad valorem taxes are set out in the Property Tax Code ("tax code"). Tex. Tax Code Ann. 1.01-43.04 (Vernon 1992 & Supp. 1996). Each tax year stands on its own. Taxes are assessed as of January 1 of each year. Id. 21.01. When the appraisal records for each year are completed, the chief appraiser presents them to the appraisal review board for review and determination of any protests. Id. 25.22. Those appraisal records, as changed and approved by the board, constitute the "appraisal roll" for the geographic area served by the appraisal district. Id. 25.24. The part of the appraisal roll applicable to each "taxing unit" is then certified by the chief appraiser to the assessor for that unit, who submits it to the governing body of the taxing unit. Id. 1.04(12), 26.01(a), 26.04(b). When the tax rate has been established and is adopted by the governing body, the "appraisal roll" with the tax rate applied becomes the "tax roll" for the taxing unit. Id. 26.05, 26.09. The taxpayer of record is sent a tax statement. Id. 31.01. Taxes are due on receipt of the tax bill and generally become delinquent if not paid before February 1 of the following year. Id. 31.02. A notice of delinquency is given to each person whose name appears on the current delinquent tax roll. Id. 33.04(a). An additional notice is given in each year divisible by five to each taxpayer whose taxes have been delinquent for more than one year. Id. 33.04(b).

The parties entered a stipulation of facts. They agree that the property interest in question was actually owned, as of the beginning of each year, as follows:

" January 1, 1983 P.M. Johnston, Trustee

" January 1, 1988 Yvonne Hancock

" January 1, 1989 TXO Production Company

" January 1, 1990 TXO Production Company

" January 1, 1991 Marathon Oil Company (TXO merged with Marathon)

" January 1, 1992 Marathon Oil Company

In support of its judgment, the court entered findings of fact:

" Marathon became the owner of the property on January 1, 1991;

" Plaintiffs levied and assessed taxes, penalties, and interest against the property in the amounts stated in the judgment;

" The property had a market value as of the date of trial of $77,670;

" For each tax year in question, the Plaintiffs sent tax bills in accordance with section 33.01 of the tax code;

" Plaintiffs sent notices of delinquent taxes in accordance with section 33.04(a) of the tax code;

" In 1985, 1990, and 1995, Plaintiffs sent five-year notices of delinquent taxes in accordance with section 33.04(b) of the tax code.

Based on these findings the court concluded that Plaintiffs had complied with the notice provisions of the tax code, that $8,781.91 in taxes, penalties, and interest was due, of which $3,807.47 was for the years 1991 and 1992 for which Marathon was "personally liable."

The Plaintiffs agree that all annual notices of delinquency and the 1985 and 1990 five-year delinquent notices were sent to Yvonne Hancock, who at all relevant times was listed by the Plaintiffs as the owner of the property, at her last known address. The 1995 five-year delinquent notice was sent to Marathon after the suit was filed. The parties agree that Marathon was not required to "render" the property, which is a royalty interest that has been severed from the surface of the real property and is taxed separately. Id. 22.01-.27. Because Marathon was never listed as an owner by the appraisal district, it was never in a position to avail itself of any of the administrative remedies provided by the tax code before the appraisal rolls were certified to the Plaintiffs for each of the tax years in question.

CONTENTIONS

We first look to a summary of the contentions of the parties as presented in their briefs.

marathon's points

Marathon's first point asserts that the fifteen percent penalty should not be assessed because the delinquency notices for the years 1989 through 1992 required by the tax code were not sent to the actual owner of the property. Id. 1.07, 33.04(a). It points out that subsection (d) of section 33.07 requires that a "notice of delinquency" be sent "to the property owner" at least 30 days and not more than 60 days before July 1 of the year in which the tax became delinquent. Id. 33.07(d). It also points to section 1.07, which provides the method the taxing authority must use to give notices, which speaks in terms of the "property owner." Id. 1.07. Marathon cites three cases in support of its argument under this point:

1. City of Houston v. First City, 827 S.W.2d 462 (Tex. App. Houston [1st Dist.] 1992, writ denied);

2. New v. Dallas Appraisal Review Bd., 734 S.W.2d 712 (Tex. App. Dallas 1987, writ denied); and

3. Uvalde County Appraisal Dist. v. Parker, 733 S.W.2d 609 (Tex. App. San Antonio 1987, writ ref'd n.r.e.).

Marathon's second point is based on the same reasoning as its first, asserting that it should not be liable for the penalty and interest on taxes for the years 1983 and 1988 because the five-year delinquency notices required by section 33.04(b) were not given properly. Tex. Tax Code Ann. 33.01, 33.04(b).

Marathon's final point is also based on the same reasoning as its first, contending that it should not be liable for the penalty and interest on taxes for the years 1989 through 1992 because the annual delinquency notices required by section 33.04(a) were not given properly. Id. 33.01, 33.04(a).

No additional cases are cited in support of points two and three only factually-based arguments are made.

Marathon's position at trial sheds some light on its points of error. Its pleadings simply deny that proper notices were sent. It did not plead lack of notice as an affirmative defense. At the beginning of the trial, its counsel stated:

Your honor, Marathon Oil Company is not contesting the tax amounts. We're willing to even pay somebody else's taxes to clear the lien. But the matter at issue here is the penalties, penalties of the five year notice under 33.04 (b) and the 15% delinquent tax collection fee under 33.07. And we think that the taxing authorities improperly issued the delinquent notices so that the question of whether or not the taxing authority properly issued delinquent notices, that's at issue today.

plaintiffs' reply points

Plaintiffs do not reply point by point. Rather, they advance three reasons why Marathon should not be allowed to escape payment of the court-assessed penalties and interest.

Plaintiffs first assert that Marathon cannot raise lack of notice as a defense. They point out that the appraisal district, which is by statute a political subdivision of the State, separate and apart from the taxing subdivisions, has the responsibility for determining the name and address of each property owner within its jurisdiction. Tex. Tax Code Ann. 6.01(c), 25.02(a)(1). Plaintiffs further point out that the administrative procedures available to taxpayers to question any action "of the chief appraiser, the appraisal district, or the appraisal board that applies to and adversely affects the property owner" must be followed; otherwise, a taxpayer is prohibited from seeking judicial relief. In this regard, Plaintiffs point to three cases:

1. Dallas County Appraisal Dist. v. Lal, 701 S.W.2d 44 (Tex. App. Dallas 1985, writ ref'd n.r.e.);

2. Herndon Marine Prod., Inc. v. San Patricio County Appraisal Review Bd., 695 S.W.2d 29 (Tex. App. Corpus Christi 1985, writ ref'd n.r.e.); and

3. City of Shenandoah v. Jimmy Swaggart Evangelistic Ass'n, 785 S.W.2d 899 (Tex. App. Beaumont 1990, writ denied).

The record shows that the Leon County Appraisal District provided Yvonne Hancock's name and address for each of the years in question to each Plaintiff, which used that information to prepare for mailing the various notices required by the tax code. The Plaintiffs say that under these circumstances the tax code prohibits Marathon from raising lack of notice as a defense in a suit to recover delinquent taxes. Valero Transmission Co. v. Hays Consol. Indep. Sch. Dist., 704 S.W.2d 857, 862 (Tex. App. Austin 1985, writ ref'd n.r.e.) (administrative procedures are exclusive remedy available to a property owner); Tex. Tax Code Ann. 42.09 (property owner may not raise grounds subject to administrative procedures as defense in a suit for collection of delinquent taxes).

Further, Plaintiffs say that the assessor/collector for a taxing authority is prohibited from making changes to the tax roll except as authorized by the appraisal review board, a district court in an appeal, or the governing body of the taxing authority. The chief appraiser for the appraisal district may, however, change the appraisal roll at any time to correct clerical errors that do not affect the amount of tax liability, including the name or address of a taxpayer. Tex. Tax Code Ann. 25.25(b). And, the assessor for a taxing authority may make similar changes. Id. 26.15(b).

Under their first reply, Plaintiffs frame the issue as: "were actions taken by the Leon County Appraisal District in listing the account in the name and address of Yvonne Hancock for the years in question reviewable by a trial court in a delinquent tax suit"?

Plaintiffs' second reply points to the tax code's provision that a taxing unit's current tax roll and delinquent tax roll showing the property and the amount of tax imposed "constitute prima facie evidence that each person charged with a duty relating to the imposition of the tax has complied with all requirements of law and that the amount of tax alleged to be delinquent against the property listed is the correct amount." Id. 33.47(a). This presumption "places upon the party against whom it operates the burden of producing evidence sufficient to justify a finding of non-existence of the presumed fact." D & M Vacuum Serv., Inc. v. Zavala County Appraisal Dist., 812 S.W.2d 435, 438 (Tex. App. San Antonio 1991, no writ). Thus, they say that the record contains sufficient evidence to support the court's finding that Plaintiffs sent all the notices required by the tax code. They further assert that the name and address of the property owner was correctly listed on the tax rolls, pointing out that separate estates or interests in land and improvements are to be "listed separately in the name of the owner of each if the estate or interest is described in a duly executed and recorded instrument of title." Tex. Tax Code Ann. 25.04. Because, they say, no such instrument showing title in anyone other than Yvonne Hancock appears in the record, the court properly found that the notices sent to Yvonne Hancock complied with the tax code. Additionally, they say that there is no evidence that Plaintiffs knew that TXO or Marathon owned the property.

Finally, Plaintiffs point to two sections of the tax code that provide "limited relief" to "ameliorate the harsh result to a property owner when a tax notice is not delivered." First, section 41.411 allows a property owner to protest matters about which the owner did not receive notice. Id. 41.411. However, the tax in question must be paid before it becomes delinquent. Id. 42.08(b).

Second, section 33.011, as it existed until August 26, 1991, required that a governing board waive penalties on delinquent taxes if any act or omission of the taxing unit or the appraisal district caused or resulted in the taxpayer's failure to pay the tax before delinquency and if the tax is paid within twenty-one days after the taxpayer knew or should have known of the delinquency. Id. 33.011(a). Effective August 26, 1991, the legislature added another requirement that a request for a waiver must be made within six months after the delinquency date. Id. 33.011(d). Marathon acquired the property on January 1, 1991. At that time, the 1983, 1988, and 1989 taxes were delinquent. Marathon says that it first knew of delinquent taxes on April 11, 1995, when it was served with citation in this suit. On June 26, 1995, it tendered payment of the taxes, but that tender was refused by the Plaintiffs.

DECISION

Initially, we note that the court made no finding concerning Marathon's failure to avail itself of either of the remedies which Plaintiffs stress in their third reply point. We cannot support the judgment by presuming a finding on this ground of recovery. Tex. R. Civ. P. 299.

We believe that Plaintiffs' second reply to Marathon's points of error is well taken. The tax code directs the chief appraiser of the appraisal district to list all property in the district and the value of each property. Tex. Tax Code Ann. 25.01. The appraiser lists the name and address of the owner, if known. Id. 25.02. If different persons own separate estates or interests in any property and that interest is described in a recorded instrument in the records of the county, the appraiser is directed to list that interest separately. Id. 25.04. Although Marathon submitted some evidence that TXO or Marathon sent division orders to the appraisal district, we have examined those instruments and they do not appear to have been recorded in Leon County. // Thus, it appears that the chief appraiser acted correctly in listing Yvonne Hancock, the last recorded owner of the property, as the owner in the appraisal rolls for the various years in question.

Marathon attempted to show that Plaintiffs or the appraisal district had actual notice that TXO or Marathon was the true owner of the property. It also asserts that Plaintiffs did not act with "reasonable diligence" as required by sections 33.04(a) and 33.04(b) in preparing the delinquency notices that were sent. Id. 33.04(a)(2), (b).

Marathon does not, however, attack the court's findings. Its points merely assert that because the various notices that the court found were given by Plaintiffs under the tax code were not mailed to the actual owner of the property, Plaintiffs are precluded from collecting any penalty amounts. As we have noted, the court made findings of fact and conclusions of law at Marathon's request. Tex. R. Civ. P. 296, 297. Marathon did not request additional or amended findings. Id. 298. Thus, we may not deem any finding as a result of the court's failure to make a finding. Id. The court's refusal to make any additional findings requested would have been reviewable on appeal. Id. 299. Marathon's position is essentially that the record establishes as a matter of law that notices were not sent to the actual owner of the property interest at the time the respective notices were sent, and for that reason, the various penalties cannot be collected.

Marathon's position might be viewed in one of two ways. First, that it complains of the court's findings on relevant elements of Plaintiffs' claims, i.e., that Plaintiffs properly sent notices as required and were reasonably diligent in ascertaining the name of the owner of the property when the taxes became delinquent, in which event our task is to question the sufficiency of the evidence to support the court's findings in support of its judgment. Or second, that it advanced an affirmative defense that was tried by consent, i.e., non-notice to the actual owner of the property or the lack of reasonable diligence, on which Marathon had the burden of obtaining findings.

Considering the latter first, Marathon's failure to request findings on defensive issues is fatal to its position it has waived any defense that the notices were not properly sent or that the Plaintiffs were not diligent in finding the name of the property owner. In 1st Coppell Bank v. Smith, property owners sued to remove a bank's purported lien as a cloud on the title to their property. 742 S.W.2d 454 (Tex. App. Dallas 1987, no writ). On appeal from a judgment invalidating the lien, the 1st Coppell court said:

In point of error thirteen, the Bank contends that the Smiths are estopped from challenging the Bank's lien. None of the trial court's findings of fact or conclusions of law speak to the issue of estoppel. The Bank did not formally request additional or amended findings of fact and conclusions of law.

. . .

A party asserting affirmative defenses in a trial before the court must request findings in support of such a defense in order to avoid waiver on appeal. If the findings filed by the court do not include any element of the ground of defense, the party asserting the ground of defense must request additional or supplemental findings of fact. The failure to do so effects a waiver of the ground or defense.

Id. at 464-65. We are presented with an almost identical situation. None of the court's findings speak to the issues of lack of notice to the actual owner or reasonable diligence. Marathon did not request additional or amended findings of fact. By failing to do so, it waived those issues as grounds of defense. Id. at 465.

We next examine the question from the standpoint of sufficiency of the evidence to support the court's findings that Plaintiffs gave all notices required by the tax code. First, we recall that in a non-jury case, determination of the credibility of the witnesses and the weight to be given their testimony is left to the trial judge. Aatco Transmission Co. v. Hollins, 682 S.W.2d 682, 685 (Tex. App. Houston [1st Dist.] 1984, no writ).

Marathon presented testimony of William Henry Parrott, its Regional Property Tax Manager who is responsible for preparation and filing of property tax returns, negotiations with tax appraisers, and the payment of taxes in a seven-state area. He is a licensed Senior Property Tax Consultant in Texas. He testified that Marathon reports "thousands upon thousands of ownership interests in [its] mineral properties" to various taxing authorities in Texas each year in "boxes upon boxes of division orders." He said that neither TXO nor Marathon were sent notices by Plaintiffs during the years that those companies owned the property. On cross-examination he said that he "made the assumption" that TXO sent division orders to Leon County, but that he never worked for TXO. He said that in his opinion Marathon would have sent division orders showing its ownership of the property interest in question to Pritchett & Abbot, an appraisal firm which was the Leon County Appraisal District's agent.

Stephen W. Merchantson worked for TXO as a division order analyst, where he was responsible for "setting up the ownership under oil and gas wells and maintaining the ownership during the life of the properties." He continued in that capacity with Marathon after the merger. He said that TXO purchased the property interest in question from Yvonne Hancock in March of 1988 and that the property ownership change was recorded in the County Clerk's office. // He said that her name disappeared from TXO's division orders effective April 1, 1988, because the interest was then included with TXO's interest on later division orders. The same information the absence of Yvonne Hancock as an owner was shown on division orders after TXO and Marathon merged. He said that it was "his understanding" that division orders were sent to the Leon County Appraisal District by TXO and Marathon but he did not know exactly what was sent.

Considering the evidence that bears on the question of notice, including evidence in support of and in opposition to the court's findings, we cannot say that the record demonstrates that the findings are clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

We do not reach Plaintiffs' first reply, i.e., whether, under these circumstances, section 42.09 of the tax code precludes Marathon from raising non-notice as a defense. Tex. Tax Code Ann. 42.09.

CONCLUSION

For the reasons stated, we overrule Marathon's points of error and affirm the judgment.

BILL VANCE

Justice

Before Justice Cummings,

Justice Vance, and

Chief Justice McDonald (Retired)

Affirmed

Opinion delivered and filed August 30, 1996

Do not publish

[WITHDRAWN BY ORDER 10-2-96]