Salvaggio v. Houston Independent School Dist.

• Decision Date: 03 April 1986
• Docket Number: C14-85-690-CV,Nos. C14-85-663-C,s. C14-85-663-C
• Citation: 709 S.W.2d 306
• Parties: 32 Ed. Law Rep. 359 Lee SALVAGGIO, et ux, Appellants, v. HOUSTON INDEPENDENT SCHOOL DISTRICT, et al., Appellees. HOUSTON INDEPENDENT SCHOOL DISTRICT, et al., Appellants, v. Richard SCHWARTZ, et al., Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 306

709 S.W.2d 306

32 Ed. Law Rep. 359

Lee SALVAGGIO, et ux, Appellants, v. HOUSTON INDEPENDENT SCHOOL DISTRICT, et al., Appellees.

HOUSTON INDEPENDENT SCHOOL DISTRICT, et al., Appellants, v. Richard SCHWARTZ, et al., Appellees.

Nos. C14-85-663-CV, C14-85-690-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

April 3, 1986.

Rehearing Denied April 24, 1986.

Terry G. Wiseman, Fred Riepen, Jr., Houston, for appellants and appellees.

Joan C. Ward, Stanley Binion, Robert J. Collins, Jeffrey L. Rogers, Houston, for appellees and appellants.

Before CANNON, JUNELL and ROBERTSON, JJ.

OPINION

CANNON, Justice.

This case represents a consolidation of two appeals arising from a single order entered by the trial court which granted certification as a class action to one group of taxpayers (Schwartz class) and denied certification as a class action to a second group of taxpayers (Salvaggio class). Houston Independent School District and the City of Houston (HISD hereinafter) are appellants as to the Schwartz class and appellees as to the Salvaggio class.

The Salvaggio class contends the trial court erred in denying certification to the class of taxpayers against whom § 33.07 tax code penalties had been assessed and who (other than pursuant to suit and judgment) had subsequently paid the penalties. TEX.TAX CODE ANN. § 33.07 (Vernon 1982). The major issue raised is whether the voluntary payment rule should apply to attorney fees provided by § 33.07. HISD contends the trial court erred in granting certification to the class of taxpayers against whom § 33.07 penalties had been assessed but who had not yet paid the penalties (Schwartz class). Finding no error in the trial court's rulings, we affirm.

In 1981 the Texas legislature enacted § 33.07 which became effective January 1, 1982. This statute provides as follows:

§ 33.07. Additional Penalty for Collection Costs

(a) A taxing unit or appraisal district may provide, in the manner required by law for official action by the body, that taxes that remain delinquent incur an additional penalty to defray costs of collection, if the unit or district or another unit that collects taxes for the unit has contracted with an attorney pursuant to Section 6.30 of this code. The amount of the penalty may not exceed 15 percent of the amount of taxes, penalty, and interest due.

(b) A tax lien attaches to the property on which the tax is imposed to secure payment of the penalty.

(c) If a penalty is imposed pursuant to this section, a taxing unit may not recover attorney's fees in a suit to collect delinquent taxes subject to the penalty.

(d) If a taxing unit or appraisal district provides for a penalty under this section, the collector shall deliver a notice of delinquency and of the penalty to the property owner at least 30 and not more than 60 days before July 1.

Although there is some dispute among the parties as to the facts involved, it appears Mr. Salvaggio and his wife purchased some real property located in Houston, and within the boundaries of Houston Independent School District which was subject to delinquent ad valorem taxes to both the City of Houston and HISD. Attorney fee charges as provided by § 33.07 had also been assessed for tax years 1977 through 1983. The Salvaggios sought a waiver of all attorney fee charges as well as the late payment penalty and interest charges attached to all delinquent tax years. Tax officials advised there could be no waiver of any charges and demanded all sums due be paid in full so the Salvaggios paid the delinquent taxes and all charges. Thereafter, the Salvaggios learned that § 33.07 was passed by the legislature in 1981 and became effective on January 1, 1982. The Salvaggios argue the HISD assessment of § 33.07 charges for 1977 through 1981 is a retroactive application of a penal statute.

The Salvaggios joined other plaintiffs and began the prosecution of this action seeking, inter alia, a declaratory judgment that HISD illegally collected the penalties attached to ad valorem taxes which were delinquent on July 1 of the year in which they became due pursuant to § 33.07.

In the first point of error the Salvaggio class contends the trial court erred in denying certification to their class because the recovery of attorney fees levied pursuant to § 33.07 is not precluded by voluntary payment. Upon review of the record it appears the trial court's reason for denying certification of the Salvaggio class was based on the application of the voluntary payment rule. This rule, which has long been the law in Texas, stands for the proposition that taxes voluntarily paid may not be recovered by the taxpayer, even though the tax is illegal. State v. Connecticut General Life Insurance Co., 382 S.W.2d 745 (Tex.1964); City of Houston v. Feizer, 76 Tex. 365, 13 S.W. 266 (1890); Johnson Controls, Inc. v. Carrollton-Farmers Branch Independent School District, 605 S.W.2d 688 (Tex.Civ.App.--Dallas 1980, writ ref'd n.r.e.); Howell v. City of Dallas, 549 S.W.2d 36 (Tex.Civ.App.--Waco 1977, writ ref'd n.r.e.). The only exceptions to the rule against the recovery of voluntary payments of an illegal tax are (1) fraud; (2) express or implied duress; and (3) mutual mistake of fact. San Antonio Independent School District v. National Bank of Commerce of San Antonio, 626 S.W.2d 794 (Tex.App.--San Antonio 1981, no writ).

The trial court recognized that the claims of each individual class member would require fact findings as to the voluntary or involuntary nature of the payment of the collection penalty. The court would have to make a determination as to whether each claim fell within an exception to the rule against the recovery of voluntary tax payments. This would require a factual investigation into the circumstances surrounding each individual's payment. The Salvaggio class contends the voluntary payment rule does not apply to § 33.07 attorney fee charges imposed to cover the collection of the delinquent taxes. They argue the voluntary payment rule should be abrogated with respect to § 33.07 attorney fee penalties because these charges were provided to cover the costs of collecting the delinquent taxes and were not intended to be a penalty per se. The fault in this argument is obvious. Even if it were clear that the legislature did not intend for the § 33.07 charges providing for attorney fees to be included in the statutory definition of "penalties" for purposes of the voluntary payment rule, the trial court would still have to make a case by case factual analysis of the circumstances of each individual class member to determine whether or not class membership was proper. This would defeat the purpose of certification. The individualized nature of the proof required in the instant case precluded the trial court from finding that alleged questions of fact common to all class members predominate over issues affecting only individual class members.

The findings of a trial court in a motion to certify a class action are addressed to the sound discretion of the trial judge and will not be reversed on appeal unless there is a clear abuse of discretion. Jones v. City of Dallas, 604 S.W.2d 543, 545 (Tex.Civ.App.--Eastland 1980, writ dism'd). We find no abuse of discretion in these circumstances. Appellants' first point of error is overruled.

The second, third and fourth points of error also contest the application of the voluntary payment rule. In point of error number two, the Salvaggio class argues the trial court erred because the voluntary payment rule should...