TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-09-00612-CV
Scott Hamilton, Appellant
v.
County of Bastrop, Appellee
FROM THE DISTRICT COURT OF BASTROP COUNTY, 335TH JUDICIAL DISTRICT NO. 9999, HONORABLE TERRY L. FLENNIKEN, JUDGE PRESIDING
MEMORANDUM OPINION
Appellant Scott Hamilton filed a petition to recover excess proceeds from
a delinquent tax sale under tax code section 34.04. Hamilton based his claims on purported
assignments to a total of $10,396.44 of the excess proceeds that he had obtained from the property
owner’s heirs. He had paid only $2,000 for the assignments. Relying on amendments to tax code
section 34.04 that took effect during the pendency of Hamilton’s petition, the district court awarded
Hamilton only $2,500. In eight issues, Hamilton argues principally that the district court erred in
refusing to award him the full $10,396.44 because the amendments to section 34.04 do not apply to
his claim and, if they do, that their application infringes his “vested rights” in violation of various
constitutional protections. Hamilton also complains that Bastrop County lacked standing to file a
response in opposition to his petition. We will affirm the district court’s judgment. BACKGROUND
Bastrop County sued Rodney C. Gibson for delinquent taxes, penalties, and interest,
and, after Gibson failed to answer, took a default judgment. The district clerk issued an order of
sale and a bill of costs. After the real property at issue was sold and taxes, penalties, and interest
under the judgment were satisfied, there remained $15,594.66 in excess proceeds from the sale. The
excess proceeds were deposited with the district clerk on December 22, 2008.
Gibson died on February 26, 2009, leaving his estate to his mother, his two brothers,
and his sister. On July 25, 2009, Gibson’s mother and Hamilton purported to execute an assignment
of her rights in the excess proceeds (a one-half share, or $7,797.33) in exchange for Hamilton’s
payment of $1,500 to her. Similarly, on July 31, 2009, one of Gibson’s brothers and Hamilton
purported to execute an assignment of the brother’s interest in the excess proceeds (a one-sixth share,
or $2,599.11) for $500. Thus, as of July 31, 2009, Hamilton claimed to own assignments to a
total of $10,396.44 of the excess proceeds from the sale of Gibson’s real property, for which he had
paid only $2,000.
Relying on these assignments, Hamilton filed a petition in district court requesting
release of $10,396.44 in excess proceeds to him. Claims to excess proceeds from tax sales were, and
continue to be, governed by section 34.04 of the tax code. On September 1, 2009, while Hamilton’s
petition was still pending, amendments to section 34.04 took effect that prohibit a person from taking
an assignment of a property owner’s claim to excess proceeds unless the person pays the owner
consideration of at least eighty percent of the owner’s claim amount. See Act of May 14, 2009,
2 81st Leg., R.S., ch. 254, § 2, 2009 Tex. Gen. Laws 698, 699 (codified as amended at Tex. Tax Code
Ann. § 34.04 (West Supp. 2009)).
On September 4, 2009, the County filed a response to Hamilton’s petition urging
the district court to deny it because Hamilton had paid less for his purported assignments than the
newly effective amendments to section 34.04 now required—$8,317.15.1 See Tex. Tax Code Ann.
§ 34.04(b). Following two hearings held on September 9 and 30, 2009, the district court, applying
amended section 34.04, awarded Hamilton only $2,500 of the excess proceeds. This amount
corresponded to the maximum assignment that amended section 34.04 would have permitted
Hamilton to obtain for the $2,000 he paid.2 See id. § 34.04(j). On October 9, 2009, the district clerk
issued a $2,500 check to Hamilton. This appeal followed.
ANALYSIS
In eight issues, Hamilton, who is representing himself, asserts essentially three sets
of arguments. First, in his third and seventh issues, Hamilton disputes whether, as a matter of
statutory construction, the September 1, 2009 amendments to tax code section 34.04 apply to his
claims. Second, in his first, second, and fourth through sixth issues, Hamilton complains of several
different asserted constitutional violations that are each predicated on his claim to a “vested right”
to the $10,396.44 in excess proceeds under the assignments. Finally, in his eighth issue, Hamilton
argues that the County lacked standing to file a response in opposition to his petition.
1 This figure is eighty percent of $10,396.44. 2 $2,000 is eighty percent of $2,500.
3 Applicability of amendments
Hamilton argues that the legislature did not intend the 2009 amendments to apply
to pending claims to excess tax sale proceeds. To the contrary, the amendments explicitly provided:
The change in law made by this Act applies to the disposition of excess proceeds of a tax sale paid to the clerk of the court that issued the warrant or order of sale regardless of the date on which the warrant or order of sale was issued, the tax sale was conducted, or the proceeds were paid to the clerk.
Act of May 14, 2009, 81st Leg., R.S., ch. 254, § 3, 2009 Tex. Gen. Laws 698, 699. The legislature
thus expressly provided that the amendments apply to any “disposition of excess proceeds” occurring
after their September 1, 2009 effective date, regardless of when the underlying events took place.
Here, the judgment ordering the disposition of excess proceeds was signed on September 30, 2009,
and the distribution was made on October 9, 2009. Because the legislature plainly made the
amendments applicable to excess proceeds still pending disposition as of September 1, 2009, as were
the excess proceeds Hamilton was claiming, we overrule Hamilton’s third and seventh issues.
“Vested rights”
Hamilton also asserts that he had a “vested right” in his claim to excess proceeds; that
application of the amendments to his pending claim violated the retroactivity clause of article I,
section 16 of the Texas Constitution, the contracts clause of the same provision, and the contracts
clause of the federal constitution; and that “his substantive vested rights to claim in excess proceeds
are still valid even if contracts are in violations of certain provisions of [amended section 34.04].”
Each of these complaints depends, at least in part, on whether Hamilton possessed a vested right in
4 the full $10,396.44 in excess proceeds that he was purportedly assigned.3 Consequently, we focus
our analysis of these issues on whether Hamilton possessed a vested right in the amount of excess
proceeds he claimed.
As noted, tax code section 34.04 governs claims for excess proceeds following
the seizure and sale of property. Under section 34.04, a person must file a petition for excess
proceeds in the same court and under the same cause number as the underlying suit for seizure or
sale of the property. See Tex. Tax Code Ann. § 34.04(a). Parties that establish their claims to the
proceeds are paid according to the following priorities:
(1) to the tax sale purchaser if the tax sale has been adjudged to be void and the purchaser has prevailed in an action against the taxing units under Section 34.07(d) by final judgment;
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-09-00612-CV
Scott Hamilton, Appellant
v.
County of Bastrop, Appellee
FROM THE DISTRICT COURT OF BASTROP COUNTY, 335TH JUDICIAL DISTRICT NO. 9999, HONORABLE TERRY L. FLENNIKEN, JUDGE PRESIDING
MEMORANDUM OPINION
Appellant Scott Hamilton filed a petition to recover excess proceeds from
a delinquent tax sale under tax code section 34.04. Hamilton based his claims on purported
assignments to a total of $10,396.44 of the excess proceeds that he had obtained from the property
owner’s heirs. He had paid only $2,000 for the assignments. Relying on amendments to tax code
section 34.04 that took effect during the pendency of Hamilton’s petition, the district court awarded
Hamilton only $2,500. In eight issues, Hamilton argues principally that the district court erred in
refusing to award him the full $10,396.44 because the amendments to section 34.04 do not apply to
his claim and, if they do, that their application infringes his “vested rights” in violation of various
constitutional protections. Hamilton also complains that Bastrop County lacked standing to file a
response in opposition to his petition. We will affirm the district court’s judgment. BACKGROUND
Bastrop County sued Rodney C. Gibson for delinquent taxes, penalties, and interest,
and, after Gibson failed to answer, took a default judgment. The district clerk issued an order of
sale and a bill of costs. After the real property at issue was sold and taxes, penalties, and interest
under the judgment were satisfied, there remained $15,594.66 in excess proceeds from the sale. The
excess proceeds were deposited with the district clerk on December 22, 2008.
Gibson died on February 26, 2009, leaving his estate to his mother, his two brothers,
and his sister. On July 25, 2009, Gibson’s mother and Hamilton purported to execute an assignment
of her rights in the excess proceeds (a one-half share, or $7,797.33) in exchange for Hamilton’s
payment of $1,500 to her. Similarly, on July 31, 2009, one of Gibson’s brothers and Hamilton
purported to execute an assignment of the brother’s interest in the excess proceeds (a one-sixth share,
or $2,599.11) for $500. Thus, as of July 31, 2009, Hamilton claimed to own assignments to a
total of $10,396.44 of the excess proceeds from the sale of Gibson’s real property, for which he had
paid only $2,000.
Relying on these assignments, Hamilton filed a petition in district court requesting
release of $10,396.44 in excess proceeds to him. Claims to excess proceeds from tax sales were, and
continue to be, governed by section 34.04 of the tax code. On September 1, 2009, while Hamilton’s
petition was still pending, amendments to section 34.04 took effect that prohibit a person from taking
an assignment of a property owner’s claim to excess proceeds unless the person pays the owner
consideration of at least eighty percent of the owner’s claim amount. See Act of May 14, 2009,
2 81st Leg., R.S., ch. 254, § 2, 2009 Tex. Gen. Laws 698, 699 (codified as amended at Tex. Tax Code
Ann. § 34.04 (West Supp. 2009)).
On September 4, 2009, the County filed a response to Hamilton’s petition urging
the district court to deny it because Hamilton had paid less for his purported assignments than the
newly effective amendments to section 34.04 now required—$8,317.15.1 See Tex. Tax Code Ann.
§ 34.04(b). Following two hearings held on September 9 and 30, 2009, the district court, applying
amended section 34.04, awarded Hamilton only $2,500 of the excess proceeds. This amount
corresponded to the maximum assignment that amended section 34.04 would have permitted
Hamilton to obtain for the $2,000 he paid.2 See id. § 34.04(j). On October 9, 2009, the district clerk
issued a $2,500 check to Hamilton. This appeal followed.
ANALYSIS
In eight issues, Hamilton, who is representing himself, asserts essentially three sets
of arguments. First, in his third and seventh issues, Hamilton disputes whether, as a matter of
statutory construction, the September 1, 2009 amendments to tax code section 34.04 apply to his
claims. Second, in his first, second, and fourth through sixth issues, Hamilton complains of several
different asserted constitutional violations that are each predicated on his claim to a “vested right”
to the $10,396.44 in excess proceeds under the assignments. Finally, in his eighth issue, Hamilton
argues that the County lacked standing to file a response in opposition to his petition.
1 This figure is eighty percent of $10,396.44. 2 $2,000 is eighty percent of $2,500.
3 Applicability of amendments
Hamilton argues that the legislature did not intend the 2009 amendments to apply
to pending claims to excess tax sale proceeds. To the contrary, the amendments explicitly provided:
The change in law made by this Act applies to the disposition of excess proceeds of a tax sale paid to the clerk of the court that issued the warrant or order of sale regardless of the date on which the warrant or order of sale was issued, the tax sale was conducted, or the proceeds were paid to the clerk.
Act of May 14, 2009, 81st Leg., R.S., ch. 254, § 3, 2009 Tex. Gen. Laws 698, 699. The legislature
thus expressly provided that the amendments apply to any “disposition of excess proceeds” occurring
after their September 1, 2009 effective date, regardless of when the underlying events took place.
Here, the judgment ordering the disposition of excess proceeds was signed on September 30, 2009,
and the distribution was made on October 9, 2009. Because the legislature plainly made the
amendments applicable to excess proceeds still pending disposition as of September 1, 2009, as were
the excess proceeds Hamilton was claiming, we overrule Hamilton’s third and seventh issues.
“Vested rights”
Hamilton also asserts that he had a “vested right” in his claim to excess proceeds; that
application of the amendments to his pending claim violated the retroactivity clause of article I,
section 16 of the Texas Constitution, the contracts clause of the same provision, and the contracts
clause of the federal constitution; and that “his substantive vested rights to claim in excess proceeds
are still valid even if contracts are in violations of certain provisions of [amended section 34.04].”
Each of these complaints depends, at least in part, on whether Hamilton possessed a vested right in
4 the full $10,396.44 in excess proceeds that he was purportedly assigned.3 Consequently, we focus
our analysis of these issues on whether Hamilton possessed a vested right in the amount of excess
proceeds he claimed.
As noted, tax code section 34.04 governs claims for excess proceeds following
the seizure and sale of property. Under section 34.04, a person must file a petition for excess
proceeds in the same court and under the same cause number as the underlying suit for seizure or
sale of the property. See Tex. Tax Code Ann. § 34.04(a). Parties that establish their claims to the
proceeds are paid according to the following priorities:
(1) to the tax sale purchaser if the tax sale has been adjudged to be void and the purchaser has prevailed in an action against the taxing units under Section 34.07(d) by final judgment;
(2) to a taxing unit for any taxes, penalties, or interest that have become due or delinquent on the subject property subsequent to the date of the judgment or that were omitted from the judgment by accident or mistake;
(3) to any other lienholder, consensual or otherwise, for the amount due under a lien, in accordance with the priorities established by applicable law;
3 Article I, section 16 of the Texas Constitution, which prohibits the enactment of retroactive laws, protects vested rights by excluding them from the reach of subsequently enacted legislation. See Tex. Const. art. I, § 16. Statutes that do not affect a claimant’s vested rights, however, are not protected by article I, section 16. Corpus Christi People’s Baptist Church v. Nueces County Appraisal Dist., 904 S.W.2d 621, 626 (Tex. 1995) (citing State v. Project Principle, Inc., 724 S.W.2d 387, 390 (Tex. 1987)); Board of Med. Exam’rs for Tex. v. Nzedu, 228 S.W.3d 264, 273 (Tex. App.—Austin 2007, pet. denied). The same is true of the contracts clauses of both the Texas and United States Constitutions. See U.S. Const. art. I, § 10, cl. 1; Tex. Const. art. I, § 16; Liberty Mut. Ins. Co. v. Texas Dep’t of Ins., 187 S.W.3d 808, 825 (Tex. App.—Austin 2006, pet. denied).
5 (4) to a taxing unit for any unpaid taxes, penalties, interest, or other amounts adjudged due under the judgment that were not satisfied from the proceeds from the tax sale; and
(5) to each former owner of the property, as the interest of each may appear, provided that the former owner:
(A) was a defendant in the judgment;
(B) is related within the third degree by consanguinity or affinity to a former owner that was a defendant in the judgment; or
(C) acquired by will or intestate succession the interest in the property of a former owner that was a defendant in the judgment.
Id. § 34.04(c). Under this statutory scheme, Hamilton, who stands in the shoes of his assignees,
former owners of the property, would only be entitled to excess proceeds to the extent that
funds remained after claims by the tax sale purchaser, the taxing units, and lienholders had been
satisfied. See id.
Where a right to proceeds remains contingent rather than unconditional, potential
rather than definitive, there can be no vested right. See, e.g., Corpus Christi People’s Baptist
Church, Inc. v. Nueces County Appraisal Dist., 904 S.W.2d 621, 626 (Tex. 1995) (taxing unit has
no vested right to taxes upon assessment due to existing potential that exemption applies); Shanks
v. Treadway, 110 S.W.3d 444, 446 n.2 (Tex. 2003) (“Pension plan benefits become vested when the
employee has an unconditional ownership interest in them . . . .”); John Freese & Assocs. v. City of
Garland, No. 05-00-01625-CV, 2002 Tex. App. LEXIS 4026, at *8-9 (Tex. App.—Dallas 2002,
no pet.) (assignee to former property owner has no vested right to excess proceeds where claim
is contingent on no entity with greater priority having claim to the proceeds). Although Hamilton
6 obtained assignments to the proceeds before the September 1, 2009 amendments took effect,
the amount of the proceeds to which he was entitled—if any—remained a function of the claims
asserted by the four categories of claimants having higher priority under section 34.04(c).
Consequently, what Hamilton possessed as of the date of the assignments were merely contingent
or potential rights to the proceeds, rights that depended entirely on the claims of those enjoying
higher priority. Hamilton thus had no vested right in excess proceeds until the district court
determined his claim in light of other potential claims, and entered final judgment. See John Freese
& Assocs., No. 05-00-01625-CV, 2002 Tex. App. LEXIS 4026, at *8-9.
Hamilton’s right to proceeds did not vest until the district court rendered
its final judgment awarding $2,500 in proceeds to Hamilton on September 30, 2009. Because
Hamilton had no vested right until September 30, 2009—after the effective date of the amendments
to section 34.04—the application of the amended version of section 34.04 does not infringe
the constitutional rights he invokes. We overrule Hamilton’s first, second, fourth, fifth, and
sixth issues.
Standing
In his eighth and final issue, Hamilton asserts that section 34.04 “does not provide
for Bastrop County to file . . . a response” to his petition and reasons from this that the County lacks
standing to oppose his petition. As an initial matter, we observe that even if the County lacked
standing to appear as a party in opposition to Hamilton’s petition, this would not demonstrate
that the district court erred in denying Hamilton the full amount of his claim. Leaving this aside,
Hamilton’s challenge to the County’s standing is without merit.
7 Subject-matter jurisdiction is essential to the authority of a court to decide a case,
and standing is a component of subject-matter jurisdiction. See Texas Ass’n of Bus. v. Texas Air
Control Bd., 852 S.W.2d 440, 443-45 (Tex. 1993). The general test for standing is whether there
is a real controversy between the parties that will actually be determined by the judicial declaration
sought. Id. at 446.
Section 34.04 requires a party filing a claim for excess tax sale proceeds to do so
under the same cause number as the underlying suit for sale or seizure of the property, and to serve
notice on all parties to the underlying action. Tex. Tax Code Ann. § 34.04(a)-(b). As it was
the County that was statutorily authorized to bring the underlying suit, these notice provisions
necessarily contemplate that the County would receive notice of any petitions by claimants seeking
excess proceeds and would be a party to any ensuing litigation over competing rights to those
proceeds. Further, the County has a justiciable interest in those proceeds. The underlying judgment
was granted in favor of the County for its benefit, as well as for the benefit of all political
subdivisions for which the County collects taxes. The County and the taxing units are not only
entitled to the excess proceeds in certain circumstances, see id. §34.04(c), but are also entitled to any
proceeds remaining in the court’s registry after a period of two years, see id. § 34.03(b) (West 2008).
In sum, the County has a justiciable interest in the controversy concerning the excess proceeds that
will be resolved by the judicial declaration sought. See Texas Ass’n of Bus., 852 S.W.2d at 446.
Accordingly, we overrule Hamilton’s eighth issue.
8 CONCLUSION
Having overruled each of Hamilton’s issues, we affirm the judgment of the
district court.
__________________________________________
Bob Pemberton, Justice
Before Chief Justice Jones, Justices Pemberton and Waldrop
Affirmed
Filed: April 1, 2010