State v. Smith

¶1(dissenting).

¶2I respectfully dissent. This dissent, however, is limited to the holdings which are adverse to the contentions of Respondents, Fred Smith, et al., in the following particulars.

¶3(1) The Court is in error in upholding the judgment of the Court of Civil Appeals wherein that court held that the *3491961 amendment to Article 1.07 operates prospectively only.

¶4(2) The Court is in error in holding that Article 21.04 creates a lien in behalf of the State superior to the interest of petitioner-respondent, C. D. Wyche, the holder of a prior existing vendor’s lien and deed of trust.

¶5(3) The Court is in error in failing to hold that Article 21.04 does not fix a lien on any interest in real estate except the interest of the owner or operator of the place of amusement.

¶6The 1961 amendment to Article 1.07 added the following language.

“Provided, however, before the taxes provided for in this law shall become a lien on real estate, notice thereof must be filed in the county where the real estate is located on which the lien is desired as provided in Article 1.07A of this Act. Such lien shall not be valid or effective as against any mortgagee, holder of a deed of trust, purchaser, pledgee or judgment creditor acquiring title, lien or other right or interest before such notice has been so filed and recorded.”

¶7Since the amendment was adopted in order to provide a means of perfecting a lien on real estate in favor of the State it is unreasonable to conclude that it was the intention of the Legislature that the 1961 amendment operate prospectively only. By failing to hold that the 1961 amendment is to be given retroactive effect, the Court has, in effect, held that the State’s tax lien statement, when properly filed, operates retroactively to impress a superior lien on the interests of lien holders such as Wyche. Not only that, the holding in this case is based upon the holding of the same court in Miller, et al. v. Calvert, Comptroller, et al., 418 S.W.2d 869 (Tex.Civ.App.1967, no writ) and State of Texas v. Rope, 419 S.W.2d 890 (Tex.Civ.App.1967, writ filed) wherein the effect of the holding was to allow the State to take the property of landlords for taxes owed by lessees. If these holdings are allowed to stand, it simply means that purchasers of real property in Texas on which the various tax occupations and industries are carried on or have been carried on will be subjected to the payment of taxes which were unknown to the owner who sold the property, much less a purchaser thereof.

¶8Article 1.07(1), as pointed out by the Court, provides that before the taxes “provided for in this law shall become a lien on real estate, notice thereof must be filed in the county where the real estate is located on which the lien is desired as provided in Article 1.07A of this Act.” It should also be noted that the caption of Article 1.07, Title 122A, as amended by the Legislature in 1961, announces the purpose of “providing for recording of lien of all taxes provided for in this Act.” When the Legislature used the words “this Act,” it was not referring only to the amendatory Act of 1961, but it was referring to all of Title 122A. This conclusion is inescapable when it is recognized that the 1961 amendment does not provide for any taxes. For the same reason, the words “this law” in the body of the Act could not refer only to the amendatory Act of 1961, since there are no taxes provided for in either of Articles 1.07, 1.07A or 1.07B. These articles are entirely general remedial and procedural provisions. These articles were enacted in 1961, to supply procedural and remedial provisions which were entirely absent in the original 1959 Act. The very purpose of the 1961 amendment of Article 1.07, and the enactment of the new Article 1.07A and 1.07B was to prevent clouds being cast upon the type of property involved in this case. This purpose is clearly expressed in the emergency clause of the 1961 Act. The clause reads:

“The need for a method of determining the status and ownership of real property and real property liens … create an emergency.”

¶9Thus, it is seen that the declared purpose of the Legislature will be defeated by the holding that Articles 1.07, 1.07A, and 1.07B *350apply only prospectively. Rather than establishing the status of ownership of real property, the holding will lead to confusion primarily for the reason that title examiners will he compelled to make an independent investigation apart from the examination of an abstract of title to determine whether or not the subject property is free from a tax claim of the State of Texas arising out of Article 21.04 or any other State tax liens arising out of transactions prior to the 1961 amendment. To compel such procedure is to cause a departure from the well established rules governing title examinations. There is no authority for such radical departure. However, this Court is upholding a decision of the court of civil appeals which refused to hold that the Legislature intended to give retroactive effect to the 1961 amendment to Article 1.07, merely because the lien asserted by the statutes was essential to enforcement and collection of the tax. The Court of Civil Appeals based its conclusion largely on the proposition that there was an absence from the amendment of an express declaration by the Legislature of an intent to distinguish prior liens. Here again, the holding fails to recognize that the dominant purpose was to free real estate transactions from all hidden unasserted State tax liens. Common sense dictates that the construction gives the 1961 amendment to Article 1.07 by the Court not only defines the intention of the Legislature, but creates two rules — one applicable to liens prior to 1961, and one applicable to liens thereafter. In such a situation, how can the declared purpose “to determine the status of [Texas] real property and real property liens” be accomplished ?

¶10The rule of interpretation followed in the case of City of Mason v. West Texas Utilities Co., 150 Tex. 18, 237 S.W.2d 273 (1951) is applicable here. There the Court said: “If a statute is curative or remedial in its nature, the rule is generally applied that it be given the most comprehensive and liberal construction possible. It certainly should not be given a narrow, technical construction which would defeat the very purpose for which the statute was enacted.” It appears that this Court, in approving the holding of the intermediate court, has ignored a cardinal principle that the chief function of the Judiciary is that of interpretation. In West Coast Hotel Co. v. Parrish, 300 U.S. 379, 404, 57 S.Ct. 578, 587, 81 L.Ed. 703 (1937) the Court said: “The judicial function is that of interpretation; it does not include the power of amendment under the guise of interpretation.”

¶11This rule and others will now be discussed in connection with the other questions being considered, i. e., whether or not Article 21.04 fixes a lien on any interest in real estate except the interest of the owner or operator of the place of amusement, and whether or not Article 21.04 creates a lien in behalf of the State superior to the interest of the lienholder, Wyche. These two questions are encompassed in one general question: Does the phrase “all property used” in Article 21.04 imply that the State’s lien is to apply to all property utilized in a place of amusement regardless of ownership?

¶12The pertinent langauge of Article 21.04 is as follows:

“The State of Texas shall have a prior lien … on all property used by the owner or operator of any place of amusement as designated in this Chapter … ⅜»

¶13The Court has approved the holding of the Court of Civil Appeals that the Legislature, in providing that the lien shall be “on all property used by the owner or operator of any place of amusement” meant to invoke a lien so as to be effective against the interest of any and all persons in and to real property that may be used by the owner or operator in such place of amusement. This Court, in approving such holding, apparently approves the reasoning of the intermediate court, or at least it does not disapprove the reasons in rejecting the contention of Wyche that Article 21.04(2) does not place a lien upon any property except property belonging to the owner or operator of the *351place of amusement, and that the lien is limited to the property the owner or operator actually uses in the business. The reasons assigned are to be found in the case of State v. Rope, 419 S.W.2d 890 (Tex.Civ.App.1967, writ filed).1 There the Court said:

“It is obvious from reading chapter 21, in the light of knowledge that is common to everyone, that collection of the admission tax is attended with difficulties not encountered in the collection of most other types of taxes. The stock-in-trade of amusement businesses generally is a facility where customers may assemble, with such additional properties, mostly personal, as will aid in furnishing amusement or entertainment. Nothing tangible is produced or manufactured, little if any merchandise is sold, and inventories of goods are small or do not exist. The principal source of income is from admissions paid by customers for amusement or entertainment on separate occasions and usually on separate days.”

¶14These are the reasons upon which the intermediate court based its conclusion that “[i]t appears reasonable that the legislature, having proposed to place a tax on admissions, would be aware of the collection problems, and would provide such means as the legislature believed would enable the State to collect its taxes. The levy of a tax without adequate means of enforcing collection would be purposeless and unavailing.”

¶15The Court of Civil Appeals, as well as this Court, does cite the case of the State v. Wynne, 134 Tex. 455, 467, 133 S.W.2d 951, 957 (1939), wherein this Court observed that “[m]any courts hold that property used in a business may be subjected to a lien for an excise or occupation tax on the business carried on, although it is not owned by the person carrying on the business.” Regardless of the holding in Wynne, this Court should not uphold the imposition of a lien for taxes upon real property interests of a person who is not personally subject to the tax, unless it is clear from the terms of the statute that the Legislature intended that a person not connected with the business and who has no notice by recording or otherwise of the tax, shall have his property subjected to the lien. This, in effect, is what the State is asking this Court to do. The State contends that Articles 21.01-21.04, Title 122A, Vernon’s Annotated Civil Statutes, together with other excise or occupation taxes having individual lien provisions, create a statutory tax lien. The State contends that this Court should hold that the tax lien can be legally impressed without notice, and that since no uniformly applicable statute of limitations is provided for such lien, its claim may be asserted and lien established at any time, whether it be ten, twenty, or fifty years after the tax claim accrued. When the Legislature used the phrase “all property used,” it definitely knew that under Article 21.01, only the “owner or operator” of the place of amusement owed the tax. Wyche has not been held personally liable for the tax. It is clear that the Legislature meant to place a limitation as to property to be subjected to the lien. By using the limiting language “all property used”, it meant to exclude all other property owned by the owner or operator of the place of amusement. By the adoption of the 1961 amendment to Article 1.07(1) and the new Articles 1.07A and 1.-07B, the Legislature made it clear that a lien shall not attach to the owner’s or operator’s property used in connection with the place of amusement, unless the lien has been recorded. Absent notice by recordation, the 1961 amendment not only prevents the State’s lien that might otherwise be created by Article 21.04 from being superior to existing deeds of trust and vendor’s liens, but excludes any lien even as against the owner or operator of the place of amusement much less the owner of property not engaged in the amusement business. To apply the holding in Wynneto *352this case would be to allow the Court, under the guise of Judicial interpretation, to, in fact, amend the statute. To hold as the State would have us hold, that a person who is not personally subject to the tax, but whose only connection is the fact that he owns or purchases land which at some time in the past has been used for one of the purposes enumerated under the articles on amusement taxes herein discussed, would be in violation of the due process provisions of the Constitution of the United States, Amend. XIV, § 2, and the Constitution of Texas, Article I, §§ 16, 17 and 19. See International Harvester Credit Corp. v. Goodrich, 350 U.S. 537, 76 S.Ct. 621, 100 L.Ed. 681 (1955); Burnet v. Wells, 289 U.S. 670, 53 S.Ct. 761, 77 L.Ed. 1439 (1932); Schlothan v. Territory of Alaska, 276 F.2d 806, 362 U.S. 990, 80 S.Ct. 1079, 4 L.Ed.2d 1022 (1960) ; Territory of Alaska v. Craig Enterprises, Inc., 355 P.2d 397, 84 A.L.R.2d 1082 (Alaska Sup.1960).

¶16For the reasons stated, the judgments of the lower courts should be affirmed in part and reversed and rendered in part.