1 The p l ai n ti f f s a reth e S tate

of T exas , w hich the judgm ent awarded $73,484.81; the Ci ties of Sa n A n toni o an d B al con es He i gh ts, wh i ch wereaw arde d $ 11 ,75 7.5 7; an d th e T ra n si t A uth ori ty of San A nton i o, wh i ch wa s a wa rde d $1 1,7 57. 57. Plai

nti f f s a l so recovered inter est , p enalt ies and attorney ’sf

ees . For brevi

ty, we ref er to thes e taxi

ng a uthori tie s col l ecti ve l y as the “ State.”
2 Herre ra ple ad ed un de ro at h t ha t he wa s “n o t liable in the c apa city in which he i s sued. . . . [T ]he unde rlying do llar amo unt , if any, allege d by t he [ St at e] wa s a nd co uld o nly ha ve be en o nly [sic ] a ‘tax’ account due. . . f

rom an d b y Lloyd’s Jew

elers, Inc ., a corporati

on.” (Em phasi s i n ori gi na l .) See Tex. R. Ci

v. P. 93. 

### TEXA S COU RT O F AP PEAL S, THIR D DISTRIC T, AT AU STIN

NO. 03-01-00101-CV
Arthur L. Her rer

a, Jr., d/b/a Nicole ’s Diam ond Cr eations, Appell ant

v. The State of

Tex as; The C ities of

San Antonio and Bal

cones Heights, Texas; and The Transit Authority of

San Antonio, Texas, Appellees

FROM THE DISTRICT CO URT OF TRAVIS COUNTY, 250T H JUDICIAL DIST RICT NO. 97-07590, H ONORABLE DON G. HUMBLE , JUDGE PRESIDING

T his is an appeal from a j udgme nt agai nst an in div idua l f or deli nquen t t axes i ncurred by a corpor ation. The taxi ng authoriti es 1 sue d Ar t hur L. H er re ra , Jr . d /b/ a N ic ole’ s Diamo nd Cre at ions (“ He rrera” ) an

d n ot th e c orp ora

te taxp ay er, Ll oyd ’sJew elers, In

c. Her rera f i l ed a s worn deni al al le gin g he was n

ot li abl e i n the capaci

ty i n wh ic h he was sued. 2 The State has nev er contro verted

that t he del

in quent taxes were i

ncurred by the cor por ate t axpay

er, Lloyd’s Jewel

ers, Inc. Af ter a brief bench trial, j udgment was rendered against Herrera p ersonall y. Thi s case is contro ll

ed3 Su bse qu en t t o t his Co ur t ’s o pinion in Parker, dated Decemb er 7, 2000, t he parties in that case f i l ed a j oi nt m oti on t o d ismi ss t he ap pea l. In a sup plement al op inion, t his Co ur t gr ant ed t he joint m oti on to dis mi ss an d withdrew

the judgment

pr eviou sly rende re d by t he Court. Park er v. Stat e , 40 S.W.3d 555 (Tex. App.—Austi

n 2001, no pet.). Ho wever, thi s Court did not withdraw i ts earli er opinion
. Id. (“The opi

nion of thi s Court da ted Dec em be r 7 , 2000, i

s n ot with drawn .”). Parker, there f ore, rem ai ns bi ndi ng a uthori ty. Te x. R . App. P. 42.1 (c). 2 by two of our prior decisions, Park er v. Stat e , 3 6 S .W. 3d 6 16 ( Te x. App.—A usti n 20 00, n o pet.), 3 and N.S. Sportsw

ear, Inc. v. State , 819 S.W.2d 230 ( T ex . Ap p. —A us t in 1 99 1, no wr it )
. We ho ld that t he evide nce p re sent ed by t he Sta te i s i n suf f i ci en t as a m atte r of l aw to s uppor

t th e j udgm

en t. Acco rd ingly, we r ever se t he judg ment o f the dist rict co ur t and r ende r jud gment t hat t he Stat e take nothin g. FACTUAL & PROCE DURAL BACKGROUND In order t o recover a corpo ration’s del in quent sales t ax fro m an individual, t he Sta te must sho w t ha t t he t ax is due, that t he i ndi vi dual was re spo nsible for t he de linquency, and t he amo unt of t he t ax ac t ually collect ed bythe in div idua l. In thi s case, the State obtained a judgm ent agai nst an in div idua l b as ed on on l y a N oti ce of Ta x Du e, a c er

ti f i ca te i ss ue d b y th e S tate i tse l f . Th at c er ti f i ca te
was is sued by

the Comptroller assessi

ng del in quent tax pursua

nt to section 111.013 of the C ode. Tex . Tax Code A nn . § 111.0 13 (W

est 199 2). The origi nal certif ic ate iss ued i n thi s case was

entitled “Comptr oller’s Ce

rtif i ca te to Atto rney General of Sales and Us e Tax Li

abi li ty” an d it ref erenced “Taxpay

er Numb er

2-451 -6 4- 2228-4" and i

dentif ie d the taxpayer

as “ Arth ur L. H errera , Jr. ” T he ce rt ifi cat e r eflect ed t hat t he
am ounts of $73,484.81, $11,757. 57 and $11,757.57 were owin g for the taxi

ng periods, June 1989 through Decem

ber 1992. It was att ached to the Stat e’s peti tion f il ed i n thi s case.4 T his l awsui t is not an appe al f rom th at adm i nistrati ve procee di ng. T his i s a

denov o ac ti on by the Stat e to co ll

ect deli nquen t t ax un der section 111.010 of the Tax Code. 3 The ca ption of the State ’s pe ti ti on charact erizes “Nicole’s Dia mond C reations” as

an assum ed nam e of an i ndi vi dual, Arth ur L. H errera , Jr. Tha t char act er izat ion is ca rr ied fo rt h into t he j udgm en t. The certif

ic ate att ached to the petition ref le c t s that it was “In The Mat ter of: Nicole’s Dia mond C reations.” There is no m

ention i n the peti tion or certifi

cate of Lloyd’s

Jewelers, Inc. At trial , the Stat e i

ntroduced only

two pieces of ev ide

nce. It in

tro duced another
certif i ca te is sued by the Com ptrol l er. Th at c erti

f i ca te m akesno m en ti on o f either “Nico le’s Diamo nd Creations” or

“Ll oyd ’sJew elers, In

c. ,” only Herrera. The Stat e al so in tro duced a copy of

an administr at ivelaw de cision, an d th e C om ptroll er ’s ord er appr ov i n g i t, that was is sued i

n an earli er administr at iveproceedin

g whereb y H errera chal

le nge d the C omptroll er’s determi nation of the tax owed. SeeTex . Tax

Code A nn . § 111.0 09 (W

est 199 2). 4 The S tate

di d n ot i n trod uc e a n y oth e r evi dence f rom th e adm i nistrati ve record besi des t he Co mpt ro ller’s d ecisio n. N one of t he t est imony
ordocumen

tary evi dence prese

nted at t he ad mini

st ra t iveh ea

ri n g w as i n trod uc ed at tr i al . Th e S tate in tro duced the Comptroller’s deci si on because it contain ed a fi ndi ng of f act whi ch the State contends
es t ab lish es He rr er a’ s p er so na l liabilit y.

The Co mpt r o ller ’s de cis io n is i m porta nt i n th i s c as e, n ot f or wh at i t prov es , but f or what i t doe s n ot prov e. F i nd i ng of Fa ct 3 i n th e C om ptrol l er’ s dec i si

on f oun d that “Ll oy d’ s f i l ed f or ban kruptcy prot ection un

der Chapter 11 [that] wa s con verted to a Ch

apter 7 on Feb ruary 12, 199 3.” Findingof Fact 4 st ates “Pet itioner [Herrera] was the President and Directo r of Lloyd’ s. Petitioner had ch ec k- si gn i n g a uth ori ty on al l cor porate ac cou n ts. ” F i n di n g of Fa ct 5 states that numerous other ind ividua ls had “ ch eck s i gni ng a uthori ty on the c orporate acc ounts.” Fi ndi ng of F act 6 stat es that4

af ter f i l i ng f orbankr upt cy, H er re ra and his w ife had che ck s igningau t ho r it y o n t he t ax an d p ayr o ll
acc ou nt s. F inding o f Fact 9 st at es “Du ring t he fourth quarter o f 1992, Petitioner retained sales tax moni es in a n e ffo r t t o ke ep t he co r po r at io n in

busi ness .” Thi s l ast fi

ndi ng i s the pi ece of ev

ide nce that t he St at e as ser t s est ablishes He rr er a’s p er so nal liabil ity for t he de linquent t ax. The decisi

on, however, also states:
The am ount o f tax co llec t ed by Pet itio ner has no t been e st ablished. Su ffi cient evi dence has n ot been presented that in

dic ates how muc

h tax Peti ti one r col l ec ted or rec ei ve d on be ha lf of t he St at e. Since P et itio ner co nt est s t he ent ire as sess ment, t he Tax Div isi on must establi sh

th e exten t of Pe ti ti on er ’s l i ab i l i ty an d n ot si m pl y rel y upon t he am ount set o ut in the Notice of Tax Due. [C i tation omi tted.] Th e Ta

x D i vi si on has no t pr es ent ed t he r eq uis it e p ro o f. * * * Sin ce the Tax Di

vi si on has n

ot establ is hed t he act ual amo unt re ceived or co llecte d by Peti tion er, t he as se ss men t un de r11 1. 01 6 mu st be de le te d. However, Petitioner adm itted t hat he did no t re mit t he sa l estax col l ec ted f orthe fourth quarter o f 1992 because he was

attempting to keep the busi ness runni ng. Inasm

uch as Peti

tioner has adm itted that he purposely

did n ot remi t t ax that w as co llec t ed , he sho uld be he ld resp o nsib le for the amount o f tax due resultin g from taxable sales on al l sa l es ta x reports f or the f ourth qua rter of 1 992. . . . The assess me nt agai nst Petitione

rin his pe rs ona l ca pa ci ty sh oul d b e u phel d f or al l the pe riodsi n th e f ourth qua rter of 1992; the remai nder of the as sessm

ent should be del

eted.
Nothi ng i n the dec i sion or the

record b ef

ore us, h owev er, i nd i ca teshow muc h t ax wa s c o llec t ed in the fourth quarter o f 1992. Further, Fi ndi ngs of Fact 10 and 11 provide:
10. The Ta x Division [ A t t or ney Gene ra l’s Office act ing o n behalf of t he Co mpt ro ller] c ont ends t hat t he amo unt of mone y Peti tioner al le gedl y c ollected and held in t ru st for t he st at e is evide nced by the am ount o f s al es tax report ed as be i ng due on th e s al esan d us e ta x r etu rn s w hi ch wa s n ot remi tt ed to the Stat e. 11. The re is no ev ide nc e in the record o f thi s case wh ic h i ndicates whether Lloyd’s accountedf

or i ts re ce i pts on th e c ash or accrual method o f account ing. Lloyd’s5 ma de cash sales a nd sa les o n char ge a cco unt s. I n add itio n, t her e is no evi dence t ha t Pe t it io ne rwa s inv o lve d in t he da y t o da y re co r d k ee pin g a nd r ep o r t fil in g oper ations of the busin

ess. Based on this scant evi dence, the di strict co urt rende red judgm ent for the State. Herrera appeals.
DISCUSSI ON

While findings o f fact and c onc lusions of law wer e made in the ancillary administr at ive proceedin g, t he r e w er e n o ne r eq ue st ed o rfiled by t he dis t r ict co ur t in t his c au se . Whe n a ca us e is tried t o t he co ur t and f

i nd i ng s of f ac t an d c onc l us i ons of la w are nei ther requested nor file d, all fact f in din gs ne ces sary

to the j udgm

en t wi l l be deem ed to supp ort the j udgm

en t. State v. Heal , 9 1 7 S.W.2d 6, 9 (Tex . 1996) ; Harlanda le Ind ep. Sch. Dist. v. Cornyn , 2 5 S .W. 3d 3 28, 332 (T ex. Ap p. —A us t in

20 00 , pe t . de nie d)
. We will a ffir m the j ud gment on a ny valid legal the or y fi nding supp ort i n the pl eadi ngs and ev i den ce. Point Lookout West, Inc. v. Whorton , 742 S.W.2d 277, 278 (T ex. 1987). We revi

ew questions

of law de novo wi

thout deferen

ce to a lower cour t’s le gal
conc l usi ons. Heal , 917 S.W.2d at 9. In reviewi ng a “no evi dence” chal

len ge on appeal, we mustco nsid er all e vid en ce in the li ght most fav

orable to the trial

cou rt’ s j udgm

en t, i nd ul gi ng every rea son ab l e i nf ere nc e i n f av or of the j udgm

en t. Associated

Ind em. Cor

p., v. CAT Contr ., 964 S.W .2d 276 , 285 (Tex. 19 98); Harland aleIndep. Sch. Dist. , 2 5 S .W. 3d a t 332 . We wil l uphold an i m pli ed f i ndi ng i f there i s m ore than a sci ntil la of evi dence that su pports i t. Id. The

re i s m ore than a sc i nti l l a of evi den ce to sup port6

a find ing wh en r ea so na ble mind s c o uld ar r ive at t he find ing giv en t he fac t s inthe re cord. Id . at 332- 33.
A. Coll ection Suits

Under Chapter 111 of the

Tax Code T his su it was brought to co ll ect delin quent tax under section 111.010 of the Texas Tax Code. By

i t, the S tate

se ek s to h ol d a

n i n di v i du al l i ab l e f or th e ta x ow ed by

a corpor ate taxpayer pursuant to sect ion 111.016 of the Tax Code. Thi s provis ion s tates t hat “an

y pe rson who recei

ves orco llec t s a t ax o ran y mo ne y re pr es en t ed t o be a t ax fr o m an o t he rpe r so n ho ld s t he am ount so coll ectedi n tru st f or th e b en ef i t of th e state and i s lia

ble to t he state for the ful l a mount coll

ected . . . .” Tex . Tax

Code A nn . § 111.0 16(a) (We st Supp . 2002)
. In an y su i t to co llect d elinquent t ax, t he St at e bea rs t he bur den o f pro of. The Comptroller

may issue t o t he St at e’s a t t or ney a “cer t ifi cat e” u nder sec t ion 1 11. 013 t hat re flect s t he
amou nt of

tax owe d, a l on g w i th pen al ti es an d i n terest a ccr ued . T he Cod e p rov i de s th at a Compt ro ll

er’s ce r t ifica t e is pr ima

facie evide nce o f the exist ence of t he de linquency and t he amou nt owed. Tex. Tax

Co de Ann. §111.013(a) (West 1992). This ev ide ntiary presum ption m ay be rebutted by sworn wri tte n pl eadings , whi ch

Herre ra f i l ed. Tex . Tax

Code A nn . §111.0 13(b ) (We st 1992 ). The evidentiary presumption afforde d by section 111. 013, however , do es not affect the S tat e’s burden of proof under secti on 111.016. Neverthel ess, i t is the certi fi

cate iss ued by the Comptroller in this case that th e S tate argues est abl

ish es both in div idua l l ia bi li ty unde r section 111.016 as wel

l a s t he amo un t o f t ax ac t ua lly co llec t ed by t ha t ind ividua l.

In orde r f or th e Sta te to c ol l ec t de l i

nq ue nt c orporatetax

f rom someone other than

t he
cor porate t axpa yer, it must pr ove t he amo unt of tax t he individual ac t ually rece ived o r c ollect ed, and5 General tort theory i

mposes perso nal l iabi li ty on a co rpo rat e employee f or the co rpo rat ion’s torts if he partici pated i n or di rected the torti ous con

duct. Leyendecker &

Assoc., Inc. v. Wechter , 683 S.W.2d 369, 375 (Tex. 1984) ; N.S. Sp ortsw ear, Inc. v. St ate , 8 19 S .W. 2d 2 30, 232 (T ex. Ap p. —A us t in

1991, no w

ri t). To rec ove

r f rom an i nd i vi dua l f or cor pora te ta x u nd er a con ve rs i on t he o ry, th e S tate

mus t pr ove that the tax funds were converted and that the corporat e em ploy ee partici pated i n, di rected , had actua

l knowl edge

of a nd r ati f i ed th e wron

gdoi ng. See id. 7 t he ind ividua l’ s l

i ab i l i ty i s l i m i ted to the am

ount he ac tuall

y col l ected. Parker, 36 S.W.3d at 618; N.S. Sportsw

ear, Inc ., 819 S.W.2d at 232. The State may not rel y on a c erti f i ca te as proof of an indivi dual’s liabil

ity for a co rp or at ion’s d elinquent t ax. This Co ur t has he ld o n mor e t han o n e occ as i on that a c o mpt r o ller ’s ce r t ifica t e d o es no t co nst it ut e mo r e t ha n a sc int illa of e vidence of t he
amou nt of tax an i

ndi vi dual actuall y c ollected or t hat

an ind iv i dual

i s person al

l y l i ab l e f or a corporati on’ s tax . Parker, 36 S.W.3d at 617-18; N.S. Sportsw ear , 819 S.W.2dat 233 (“P ro of, by
means o f t he co mpt r o ller ’s ce r t ific ates, o f t he full a mo un t o f t he co r po r at e t ax liabilit y is i ns uf f i ci en t.”). A certif

ic ate i s s imila r ly n o evi dence of in div idua l l ia bi li ty unde r the comm

on la w theory of c onversi

on. N.S. Sportsw

ear , 819 S.W.2d at 232. 5 T his Court has addres sed

t he qu an t um o f pr o o f ne ce ss ar y t o ho ld a n ind ividua l liable f ora corpor ation’s

tax under section 111.016. See Parker , 36 S. W.3d at 618 ; N.S. Sportsw ear, Inc. , 819 S.W .2d

at 2 30. In

ea ch ca se , we he l d that i

n a n a cti on prem i se d on se cti on 1 11. 016 , i

n a ddi ti on to liabil ity, t he State must affirmatively pr ove t he sp ecific amou nt of t ax ac t ually collect ed by t he ind ividua l. W e h

el d i n e ac h c as e that a

com ptrol l er’ s c erti f i ca te d oesnot

meet this b

urden
. Parker, 36 S.W.3 d 617 -18 ; N.S. Sportsw ear, Inc. , 8 19 S .W. 2d a t 233 . H er e, t he St at e intr od uce d t he Compt ro ll

er’s de cis io n in

an ef f ort to sat isfy i

t s bur den o f pro ving liabil

ity und er sec t ion 1 11. 016 , a nd reli ed on the certif

ic ate to prove the amount owed under section 111.016.6 Herr era’s ac t ua l st at eme nt , wh ic h the adm in is trat iv e l aw j udge characteri

zes as an “a dm i ssi on,”i s n ot set f orth i n th e d ec i si on. Th e e vi

de nti ary rec ord of t he ad mini

st ra t ive pr oc eed ing is no t be fo r e u s. All t ha t is in t his r ec o r d is t he st at eme nt in the de ci si on tha t He rrera “ad

m i tted” not remi tt in g tax durin

g the last quarter o f 1992. It is not clear whet her Her re ra made t he statement at the a dm i nistrati ve he ari ng or e l sew

here. However, assum

in g, without de cid ing , t ha t t he he ar sa y is adm is si ble, we find t ha t at mo st it sho ws o nly t ha t so me a mo un t o f t ax wa s w it hhe ld dur ing t he last quarter of 1 992 b

y Herre ra; i t does n ot sati sf y the State ’sbur

den to show h

ow m uch tax H errera ac tual l y col l ec ted an d di d n ot rem i t.
7 SeeTex . Tax

Code A nn . § 151.4 08 (W

est 199 2). 8 B. The Comptrol

ler ’s Decision as Pr

oof The only evi dence that tends to establish Herrera’s in div idua l l i ab i l i ty f oran y t ax is t he Comptroller’s deci si on dis cussed ab ove. Othert ha n t he alle ge d “ ad miss io n” r ep o r t ed ly made by Herre ra and ref erred to in the decision, the

re are no f acts e stab l i sh

i ng H err era ’s personal
re sp on si b i l i ty fo rt he t ax de linq ue nc y in t his record. At t he trial in the dis trict court , Herrera objected t o t he ad miss io n o f t he Co mp t r o ller ’s de cis io n be ca us e it wa s h ea r sa y. 6

The fact th at th e S tate fai le d to present any

evi dence of whether Ll

oyd’s Jewelers, Inc. used a cash or accrua l b asis f

or r epor ting i

ts t axes i s a

st r o ng ind ica t io n t ha t t he St at e w as un ab le to
me et i ts ev i den tia ry burden of prov i ng the am oun t of m one y ac tua l l y col l ec ted by Herrera a

nd not remi tt ed. 7 If a taxpay

er uses the accrual

me thod o f reporting taxe s, it m eans that a sale i s consi

dered to have been

ma de when an i nvoice i ssues an

d the sales taxes thereon i s due dur i ng the f i l i ng pe riod
co ver ing t he da t e o f the sale, even t hou gh t he invoice is not paid by t he cu st omer dur ing t hat fil ing period. Parker, 3 6 S .W. 3d a t 618 n.1 (U nder t he accrual me thod, “[s]ales

taxes are due whether or not t he ac t ual t axes have be en co llecte d by t he com pan y .”). Id . The cash basi s of repor ting taxes, in co nt ra st , mea ns t hat sales t axes ar e co llecte d at t he t ime of sale a nd due dur i ng the f i l i ng pe riod coverin g the date of sale.9 Findingof Fa ct 1 1 i n th e C om ptrol l er’ s dec i si

on sta ted th at th e S tate f ai l ed to produce any evidence at t he admi

nistrat ive l

evel as to whether Ll oyd’s Jew el er s, Inc. “ ac cou

n ted f or i ts
re ce i pts on the cash or accrual

basis o f acco unt ing.” The re was evidenc e in the administr at iverecord that “Ll oyd’s Jewelers, Inc. ma

de b oth cash s al es and s al es on charge a ccounts.” The State pr oduced even l ess evi den

ce a t the tri al be l ow. To meet its burden, the Stat e would h ave h ad to show which accountin g and tax reporting m

ethod Lloy

d’s Jewel ers, Inc. use d in o rd er t o e st ablish when t he tax
was col l ected a

nd w he n i t was d ue. SeeParker, 36 S.W .3d at 61 7-18. It is u nlik ely t he St at e c o uld pr ove how muc

h sal es tax Ll oyd’s coll ected, much

le ss how m

uch Herrera hi

ms el f col le cted, without estab l i sh i ng th e busi ne ss’ s ty pe of reporti ng a nd a ccoun tin g. Id.
CONCLU SION For these reasons, we rev

erse the j udgme

nt of the di strict

courtand r ende r jud gment that t he Sta

te of Te x as , the C i

ti es of Sa n A n toni o an d B al con es He i gh ts, an d th e T ra n si t A uth ori ty of San An toni o take nothi

ng f rom A rthur L . Herre

ra, Jr. or A

rthur L . H errera, Jr. d/b/a Nicole’s Diam ond Creat ions.

Mack Ki dd, Justice Bef ore Justices K

idd, B. A . Smi

th and Pury

ear Reversed a

nd Ren dered File d: February

7, 200210

Do No t Publis

h