Court Opinion

ID: 9643143
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:20:38.674169+00
Date Added: 2024-06-11T18:10:57.782425
License: Public Domain

*193ENOCH, Justice,
joined by GONZALEZ and HECHT, Justices, dissenting.
I disagree that sections 34.02 and 34.06 of the Texas Property Tax Code require taxing authorities to deposit with the court excess proceeds from a resale of foreclosed property and permit the former property owner to reclaim those proceeds. Where a legislative enactment is susceptible to more than one interpretation, it should not be given the interpretation that leads to an absurd result. See Cramer v. Sheppard, 140 Tex. 271, 167 S.W.2d 147, 166 (1942). The Court’s statutory interpretation, thinly supported, leads to an absurd result — one that permits a nonpaying taxpayer to recover a windfall at the expense of paying taxpayers. I respectfully dissent.
Under section 34.01(c), when a sufficient bid at a foreclosure sale is not received, the property is sold to the taxing unit for either the aggregate amount of the judgment against the property or the market value, whichever is less. Tex. Tax Code § 34.01(c). When the property is bid off to the taxing unit as provided in section 34.01(c), the taxing unit takes title to the property for its use and benefit and for all other taxing units with established tax liens in the suit. Id. The taxing unit takes title to all the interest owned by the delinquent taxpayer, including the delinquent taxpayer’s right to the use and possession of the property, and subject only to the delinquent taxpayer’s right of redemption. Id. Although section 34.01(e) expressly subjects the acquired title to the right of redemption only, the Court erroneously concludes that the title acquired by the taxing unit is also subject to a claim for excess proceeds, citing to Walsh v. Spender, 275 S.W.2d 220 (Tex.Civ.App.—San Antonio 1954, no writ), a case of questionable prece-dential value for this Court, as the only authority in support of its interpretation.
Section 34.01(c) expressly defines the taxing unit’s title to foreclosed property when the property is bid off to the taxing unit. Section 34.01(c) does not provide that the taxing unit’s title is restricted by any claim for excess proceeds, and it could not do so logically. When, as in this case, there is not a sufficient bid at a foreclosure sale, there are no excess proceeds against which a claim can be made. The taxing unit acquires title to property subject only to the delinquent taxpayer’s right of redemption. Thus, when the property at issue in this case was bid off to KISD in 1988, the delinquent taxpayer had no claim for excess proceeds because there were none. The only interest in the property the delinquent taxpayer retained in the property was the right of redemption, which lapsed unexercised.
Despite the fact that under section 34.01(c) the foreclosure sale extinguishes all of the taxpayer’s interest in the property save the right of redemption, the Court concludes that sections 34.06(b) and 34.02(c) resurrect an interest in the excess proceeds realized from a resale. In reaching this conclusion, the Court relies on Webster’s Third New International Dictionary of the English Language as controlling legal authority to establish that the phrase “sale ... pursuant to foreclosure of a tax hen” of section 34.02(c) include within its meaning the resale of property owned by a taxing unit. Even accepting Webster’s Dictionary as authority, I fail to see how defining “pursuant to” to mean “in carrying out” clarifies section 34.02(c) in any pertinent way. The ultimate question is whether a resale of property owned by a taxing unit is a sale “pursuant to” or “in carrying out” a foreclosure of a tax Hen. Webster’s Dictionary simply does not resolve this issue of statutory interpretation.
The Court further relies on the structure of subsections (c) and (d) of section 34.02 in concluding that a resale of property by a taxing unit is a sale “pursuant to foreclosure of a tax Hen.” Unquestionably, subsections (c) and (d) differentiate between the sale of real and personal property. Subsection (e), however, also differentiates tax Hen foreclosure sales from resales by taxing authorities after the tax Hen has already been foreclosed. Recognizing that any claim for excess proceeds is extinguished when property is bid off to a taxing unit under section 34.01(c), section 34.02(c) simply limits the distribution of excess proceeds to tax Hen foreclosure sales. Consistent with a plain reading of section 34.01(c), which vests title in the taxing unit subject only to the right of *194redemption and free of any claim for excess proceeds, the words “pursuant to foreclosure of a tax lien” excludes resales by taxing authorities after the tax lien has already been foreclosed. Sections 34.02(c) and 34.06(b) do not require KISD to deposit any proceeds from the resale to Hall and Kaspr-zak with the trial court.
The Court’s conclusion that there is no statutory authority under section 34.06 for the distribution of “excess” proceeds to any taxing authority, 899 S.W.2d at 191, is plainly erroneous. This conclusion continues the Court’s unsupported judicial revision of these provisions to provide for excess proceeds when the Legislature has refused to do so. Section 34.06(a) expressly provides that the proceeds of a resale are to be paid to the taxing authority that originally purchased the property at the tax foreclosure sale. Of course, section 34.06 makes no specific provision for distribution of excess proceeds to a taxing authority because that section contemplates, consistent with sections 34.01(c) and 34.02(c), that the proceeds realized from a resale are not “excess proceeds” realized at a tax foreclosure sale.
The Court’s interpretation of sections 34.02(c) and 34.06(b) is driven by the erroneous conclusion that the “taxing authority is made whole by its collection of delinquent taxes, costs and expenses of court from the proceeds of the sale.” 899 S.W.2d at 192. The Court collapses “sale” and “resale” into one concept. From the sale at foreclosure, the taxing authority in fact cannot be made whole unless there are excess proceeds on resale. The Court somehow views a taxing authority as speculating in the real estate market, holding property it has purchased when the market was low and then selling the property during boom times to maximize the return on its investment. The incentives of the system, however, are not as stated by the Court. To the contrary, the property, while owned by the taxing authority between foreclosure and resale, generates no tax revenue. It is thus in the taxing unit’s interest to get the property back on the tax rolls as soon as the market permits. Moreover, as the Court concedes, nothing in Chapter 34 of the Property Tax Code permits the taxing authority to collect the taxes that would otherwise accrue during the period that it owns the property. 899 S.W.2d at 190. It is only by collecting all proceeds generated on resale of the property that the taxing authority may recoup its lost tax revenue during the period that it held title to the property.
Ignoring this concern, the Court instead concludes that the delinquent taxpayer is entitled to all proceeds in excess of the original tax deficiency realized on resale of the property. While this is illogical to me in the first instance, it approaches the absurd when the excess proceeds result from the very increase in the market value of the property occurring while the property was held by the taxing authority. The Court agrees that this is problematic, 899 S.W.2d at 192, but it misses the point. The delinquent taxpayer failed to pay the taxes that accrued on her property. She lost all her ownership interest in the property, except the right of redemption, when it was foreclosed upon and sold to the taxing unit. After the foreclosure, the delinquent taxpayer had none of the incidents of ownership and more importantly none of the obligations, including the obligation to pay taxes on the property. Because she chose not to redeem the property, she further avoided paying any penalties. Why a delinquent taxpayer should realize the gain in market value on property between the time of foreclosure on her interest and the taxing unit’s resale, particularly without her having to pay further taxes or any redemption penalties is not explained by the Court. I suggest it cannot be explained by the Court because there is no principled explanation for bestowing such a windfall on a delinquent taxpayer.
Sections 34.06(b) and 34.02(c) should not and need not be interpreted to require KISD to turn over for the benefit of the delinquent taxpayer the excess proceeds from the resale of the property. I would not do so and therefore respectfully dissent. I would affirm the judgment of the court of appeals.