Jensen v. Covington

• Decision Date: 08 August 2007
• Docket Number: No. 10-06-00159-CV.,10-06-00159-CV.
• Parties: Clarence JENSEN, Appellant, v. Jason COVINGTON, Appellee.
• Court: Texas Court of Appeals

234 S.W.3d 198

Clarence JENSEN, Appellant, v. Jason COVINGTON, Appellee.

No. 10-06-00159-CV.

Court of Appeals of Texas, Waco.

August 8, 2007.

Rehearing Overruled September 18, 2007.

Tom D. Rorie, Nacogdoches, for appellant.

Thomas R. McLeroy, Jr., Center, for appellee.

Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.

OPINION

BILL VANCE, Justice.

Clarence Jensen sued Jason Covington to compel him to convey the interest Covington had acquired as the purchaser in a tax sale of Jensen's real property. Jensen contended that he had tendered, or attempted to tender, the price required to redeem the property under section 34.21 of the Texas Tax Code, but that Covington thwarted his redemption attempt. Jensen requested a declaratory judgment that (1) his tender of the redemption price was sufficient, (2) determined the redemption price, and (3) required Covington to execute a deed conveying the property to Jensen. Covington claimed that Jensen did not make an effective tender in a timely manner. After a bench trial, the court ruled that Jensen had not redeemed the property and entered a take-nothing judgment. Presenting thirteen issues, Jensen appeals. We will reverse and remand.

Factual Background and Evidence

Jensen, a retiree, inherited the real property at issue (a house) from his mother. The ad valorem taxes were overdue, and the local taxing authorities obtained a judgment on the delinquencies. The property was sold at a tax sale to the Center ISD as trustee on June 4, 2003, and the Sheriff's Tax Deed was recorded on August 14, 2003. Jensen had 180 days—until February 10, 2004—to redeem the property. See TEX. TAX CODE ANN. § 34.21(e)(1) (Vernon Supp.2006). On September 16, 2003, Center ISD sold the property to Covington.

Having redeemed the property once before, Jensen was familiar with the redemption process, but he had miscalculated his 180-day deadline by a few days. Around 3:00 p.m. on February 10, 2004, while in Richardson, Texas, Jensen contacted a Center lawyer, Ken Muckelroy, who determined that the redemption deadline was February 10. Jensen, working from a Kinko's copy center in Richardson, hurriedly borrowed money to cover the redemption price and had the funds wired to Muckelroy. From the available information, Muckelroy estimated the redemption price amount and placed it in his escrow account. His secretary, Susan Livingston, hand-delivered a letter to Covington, who ran a lumber yard about a half-mile from Muckelroy's office. The letter, which was also sent by certified mail, states:

Please be advised that my client, Clarence Jensen, has elected to exercise his right of redemption, as to the above-referenced property, according to Section 34.21 of the Property Tax Code. Mr. Jensen hereby requests a written itemization of all amounts spent by you in costs on the property. "Costs" includes those items defined in Section 34.21(i) of the Property Tax Code. Please forward the itemization to my office.

You may come to my office to execute a Quitclaim Deed; to confirm the amount necessary for redemption; and to pick up a check, drawn on my escrow account, for your proceeds. If you wish to handle this process in a different manner, please let me know.

Livingston took the letter in an envelope to Covington at his lumber yard, along with an extra copy that was intended for him to sign as an acknowledgement of receipt. Livingston said that she handed the envelope and the extra copy to Covington and that he glanced over it and asked if Muckelroy was in the office. Livingston responded that he was in the office, and Covington handed the letter back to her without signing it. She returned to the office and reported to Muckelroy what had happened. Because Covington had asked if Muckelroy was in the office, she assumed Covington would be coming to the office.

Covington admitted that Livingston brought him an envelope but denied that she gave him a copy and asked him to sign it. He said that he told her that he would "come by and see Ken later." Covington testified that he did not open the envelope, read the letter, inquire why Muckelroy's employee had hand-delivered correspondence to him, or call Muckelroy. He claimed he was busy running his lumber yard, though he promptly left at 5:00 p.m. that day. His explanation for not reading the letter or inquiring about the hand-delivery was that he assumed the subject matter concerned a 1997 transaction in which Muckelroy had represented him.

Muckelroy waited at his office until approximately 6:30 p.m., but Covington never came. Muckelroy called Covington's home twice and left a message. While waiting, Muckelroy had Livingston send the letter to Covington by fax at 5:49 p.m. with a fax cover sheet that stated:

Ken just wanted to make it clear to you that Mr. Jensen has deposited more than enough money in my [sic] trust account to pay you, but we do not know the exact amount of the redemption until we hear from you as to the [sic] your expenses. Ken will be in the office until 6:00 P.M. Thanks.

Despite the hand delivery and the fax, Covington never contacted Muckelroy on February 10. The next day, Muckelroy called Covington's business twice but was unable to speak to him. He also went to Covington's business to speak with him, but after he identified himself, the employee inquired within and returned to tell Muckelroy that Covington was not there. Muckelroy next drove to Covington's residence and left with Covington's wife a quitclaim deed and a check from Muckelroy's escrow account payable to Covington in the amount of $45,625.00. Muckelroy testified that Mrs. Covington's wife accepted the check and quitclaim deed and told him it would not be necessary to pay the county tax assessor-collector. Mrs. Covington disputed Muckelroy's account, denying that she understood the purpose of Muckelroy's visit and saying that she laid aside the documents until Covington came home. Finally, Muckelroy sent a February 11 letter by fax to Covington, stating in pertinent part:

On the afternoon of February 10, 2004, my secretary, Susan Livingston, hand delivered Mr. Clarence Jensen's notice of redemption to you, and you told her that you would come to my office and discuss this matter. I waited at my office for you until after 6:30 p.m. before calling your home and leaving a second message. I have also placed two calls for you today.

Muckelroy said that he never made a payment to the tax-assessor collector because he never got an itemization of Covington's costs and because he believed that Mrs. Covington had accepted his check as payment of the redemption amount. Covington testified that he had paid taxes on the property and he produced receipts showing his maintenance costs. He admitted that, as of February 10, he had sufficient records of his expenses as of that date so that he could have provided Muckelroy an itemization if he had chosen to do so.

On February 12, Covington's attorney returned the check to Muckelroy with a letter stating that the tender was unacceptable to Covington and insufficient to redeem the property because it was tardy, conditional, and "not in the form which would discharge the underlying obligation under the Texas Business and Commerce Code."

Applicable Law

Section 34.21 of the Texas Tax Code controls this case. It provides in pertinent part:

(a) The owner of real property sold at a tax sale to a purchaser other than a taxing unit that was used as the residence homestead of the owner or that was land designated for agricultural use when the suit or the application for the warrant was filed, or the owner of a mineral interest sold at a tax sale to a purchaser other than a taxing unit, may redeem the property on or before the second anniversary of the date on which the purchaser's deed is filed for record by paying the purchaser the amount the purchaser bid for the property, the amount of the deed recording fee, and the amount paid by the purchaser as taxes, penalties, interest, and costs on the property, plus a redemption premium of 25 percent of the aggregate total if the property is redeemed during the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed during the second year of the redemption period.

. . .

(e) The owner of real property sold at a tax sale other than property that was used as the residence homestead of the owner or that was land designated for agricultural use when the suit or the application for the warrant was filed, or that is a mineral interest, may redeem the property in the same manner and by paying the same amounts as prescribed by Subsection (a), (b), (c), or (d), as applicable, except that:

(1) the owner's right of redemption may be exercised not later than the 180th day following the date on which the purchaser's or taxing unit's deed is filed for record; and (2) the redemption premium payable by the owner to a purchaser other than a taxing unit may not exceed 25 percent.

(f) If the owner of the real property makes an affidavit that the owner has made diligent search in the county in which the property is located for the purchaser at the tax sale or for the purchaser at resale, and has failed to find the purchaser, that the purchaser is not a resident of the county in which the property is located, that the owner and the purchaser cannot agree on the amount of redemption money due, or that the purchaser refuses to give the owner a quitclaim deed to the property, the owner may redeem the land by paying the required amount as prescribed by this section to the assessor-collector for the county in which the property described has been redeemed. The assessor-collector receiving the payment shall give the owner a signed receipt witnessed by two persons. The receipt, when recorded, is notice to all persons that the property described has been redeemed. The assessor-collector shall on demand pay the money received by the assessor-collector to the...