Webb County Appraisal Dist. v. New Laredo Hotel, Inc.

• Decision Date: 03 July 1990
• Docket Number: No. C-9308,C-9308
• Citation: 792 S.W.2d 952
• Parties: WEBB COUNTY APPRAISAL DISTRICT and Webb County Appraisal Review Board, Petitioners, v. NEW LAREDO HOTEL, INC., Respondent.
• Court: Texas Supreme Court

Page 952

792 S.W.2d 952

WEBB COUNTY APPRAISAL DISTRICT and Webb County Appraisal Review Board, Petitioners, v. NEW LAREDO HOTEL, INC., Respondent.

No. C-9308.

Supreme Court of Texas.

July 3, 1990.

Randall Buck, C. Richard Fine, Austin, for petitioners.

Craig L. Austin, San Antonio, for respondent.

OPINION

HIGHTOWER, Justice.

This case involves a dispute over property tax valuation. New Laredo Hotel, Inc. (Hotel) paid $3,000,000.00 for property located in Webb County. Shortly thereafter, the Webb County Appraisal District (District) valued the property at $4,648,638.00. Taxes were to be assessed on that amount. Hotel filed a timely protest and attached a copy of the closing statement reflecting the $3,000,000 sales price. At the protest hearing before the Webb County Appraisal Review Board (Board), the Hotel did not appear nor did it file an affidavit. The Board denied the protest and left the valuation unchanged. The Hotel filed suit in district court, appealing the Board's decision in a trial de novo. The District and the Board moved to dismiss for want of jurisdiction because the Hotel failed to exhaust all administrative remedies. This motion was based on the Hotel's failure to appear at the Board's hearing to offer evidence or argument in support of its protest. The trial court granted the motion and dismissed the Hotel's suit for want of jurisdiction. The court of appeals was persuaded by the Hotel's arguments that neither personal appearance nor the filing of an affidavit by the taxpayer is a jurisdictional prerequisite to an appeal to district court. "We conclude that the right to trial de novo is not conditioned on either the appearance of the taxpayer or the filing of an affidavit." 777 S.W.2d 165, 166. The court of appeals reversed and remanded the cause for trial on the merits. For the reasons stated below, we reverse the judgment of the court of appeals and affirm the judgment of the trial court.

The issue in this case is whether a taxpayer is required to "appear" at the protest hearing before the Appraisal Review Board as a prerequisite to an appeal to district court. The District and the Board argue that appearance should be required. A taxpayer may "appear" before the Board in person, through a representative, or by means of an affidavit. The pertinent section of the Texas Tax Code reads as follows:

(a) On the filing of a notice as required by Section 41.44, the appraisal review board shall schedule a hearing on the protest....

(b) The property owner initiating the protest is entitled to an opportunity to appear to offer evidence or argument. The property owner may offer his evidence or argument by affidavit without personally appearing if he attests to the affidavit before an officer authorized to administer oaths and submits the affidavit to the board hearing the protest before it begins the hearing on the protest. On receipt of an affidavit, the board shall notify the chief appraiser....

TEX.TAX CODE ANN. § 41.45 (Vernon 1982 & Supp.1990). Also of importance is section 41.66(c) which provides that "[a] property owner who is entitled as provided by this chapter to appear at a hearing may appear by himself or by his agent...." TEX.TAX CODE ANN. § 41.66(c) (Vernon 1982).

The Hotel argues that it filed an adequate notice of protest and did more than was statutorily required by filing an unsworn copy of the closing statement with its protest. According to the Hotel, this constituted "very substantial documentation of gross overevaluation." The Hotel maintains that this issue may be resolved only by considering article 7345f, the predecessor of section 41.45. Article 7345f reads, in pertinent part, "... a taxpayer shall be required to file with the board of equalization a sworn affidavit, in addition to the rendition, prior to invoking the provisions of this article but shall not be required to appear personally or by representative." TEX.REV.CIV.STAT ANN. art. 7345f (repealed). Although appearance under article 7345f was clearly not mandatory, filing an affidavit was. It is the Hotel's position that, had the legislature intended to make appearance (by whatever means) mandatory, it could have easily done so by using the appropriate language. Instead, the Hotel argues, the legislature used the precatory word "may" in drafting section 41.45 and therefore appearance is not required. We disagree. Chapter 41 of the Texas Tax Code assumes appearance. Put simply, it is not a question of whether the taxpayer must appear, but rather how the taxpayer will make its appearance. As this court stated in National Surety Corp. v. Ladd, 131 Tex. 295, 115 S.W.2d 600, 602 (1938), "[i]n many cases the word 'may' has been construed to mean 'shall' and vice versa. The rule is governed by the intention expressed in the statute."

The Hotel further argues that the requirement of an affidavit subverts the definition of "sufficiency of protest" in section 41.44(d) ¹. We disagree. The Board must have evidence before it from which it can determine if the property was overvalued. The protest itself merely initiates the process while the affidavit or appearance provides the evidence on which the protest will be determined. If the taxpayer presents no evidence, the appraisal review board has nothing before it on which to make a determination, which is a prerequisite to judicial review.

The Hotel argues that Keggereis v. Dallas Central Appraisal District, 749 S.W.2d 516 (Tex.App.--Dallas 1988, no writ), implicitly states that appearance is neither required nor jurisdictional. According to the Hotel, the right to a hearing belongs to the taxpayer and may be waived or exercised only by the taxpayer, not the government. "Due process simply affords a right to be heard before final assessment; it does not detail the review." Id. at 518. The Hotel argues that the proper emphasis is on the latter phrase, "it does not detail the review." Id. While the Hotel accurately quotes Keggereis, its emphasis is misplaced. Keggereis noted that any denial of a hearing was rectified by a trial de novo. The Hotel was not denied a hearing; on the contrary, a hearing was properly scheduled and the Hotel chose not to appear.

In Keggereis, the taxpayers appealed from a summary judgment in favor of the Dallas Central Appraisal District and the Appraisal Review Board based on their failure to exhaust their administrative remedies under the Property Tax Code ². The taxpayers filed a timely protest with the Board and appeared personally at the hearing (a key distinction). They complained that the Board denied them the opportunity to testify and present evidence regarding the tax exempt status of their property and that this denial was tantamount to a denial of due process. The taxpayers argued that this denial entitled them to proceed directly to district court for trial de novo without the necessity of exhausting all administrative remedies. The court of appeals held that the taxpayers' failure to comply with the administrative review procedures of the Code constituted a failure to exhaust administrative remedies and therefore their cause of action was precluded in the district court. Id. at 519. Rather than support the Hotel's position, Keggereis supports the position of the District and the Board.

The ultimate effect of accepting the Hotel's position would be the emasculation of the administrative hearing process. Filing a protest would become merely one more hoop to jump through before appealing to district court. It would not be inconceivable for a taxpayer to file a protest with the appraisal review board and simultaneously file a petition in district court based on the alleged overevaluation. By requesting a trial date after the review board's hearing, the taxpayer could merely amend his petition to reflect the board's decision if the protest was denied, or dismiss the suit if the protest was granted. The intent of the administrative review process is to resolve the majority of tax protests at this level, thereby relieving the burden on the court system. See Dallas County Appraisal District v. Lal, 701 S.W.2d 44, 47 (Tex.App.--Dallas 1985, writ ref'd n.r.e.). The corollary to this rule is that judicial review of administrative orders is not available unless all administrative remedies have been pursued to the fullest extent. City of Sherman v. Public Utility Commission, 643 S.W.2d 681, 683 (Tex.1983).

It must be presumed that the legislature would not do a useless act. Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547, 551 (Tex.1981); see also, TEX.GOV'T CODE ANN. § 311.021 (Vernon 1988). However, if the taxpayer is not required to appear at the protest hearing in order to appeal to district court, the administrative hearing process would become useless. We hold that taxpayers contesting property valuation must appear, either personally, by representative, or by affidavit, at the protest hearing as a prerequisite to an appeal to district court. ³

For the reasons stated herein, we reverse the judgment of the court of appeals and affirm the judgment of the trial court.

Dissenting opinion by HECHT, J., joined by PHILLIPS, C.J.

HECHT, Justice, dissenting.

I dissent. Once again the Court, unassisted by precedent or logic, rewrites a statute to its own liking. Taxpayers with the temerity to protest the valuation of their property by trying to follow the statutory rules, without the benefit and expense of expert legal counsel, are in for a cruel surprise. Only the very shrewd are likely to suspect that a statute which says that a taxpayer is entitled to an administrative hearing tacitly mandates that the taxpayer attend that hearing or give up the right to judicial review of the protested property valuation. To play so sharply with the rules governing tax protests is unfair and unjust.

The scant record in this case presents a rather skeletal set of facts. The Webb County Appraisal District valued the real property involved in this...