Untitled Texas Attorney General Opinion ( 2002 )


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  •  ’ OFFICE    OF THE ATTORNEY   GENERAL   . STAI-t   OF TEXAS
    JOHN CORNYN
    February 12,2002
    The Honorable Dustanna Rabe                                Opinion No. JC-0463
    Hopkins County Attorney
    110 Main Street                                            Re: Disposition of funds previously accumulated
    Sulphur Springs, Texas 75482                               under pretrial diversion agreements (RQ-0437-JC)
    Dear Ms. Rabe:
    You ask about the disposition of funds previously accumulated under unauthorized pretrial
    diversion agreements. ’ We conclude that the accumulated “pretrial diversion fees” and the interest
    earned on those fees must be returned to the individuals who paid those fees. We also conclude that
    unclaimed fees and interest earnings on those fees may become abandoned property that must be
    reported and delivered to the Comptroller of Public Accounts.
    Your request is a follow-up to Attorney General Opinion JC-0042, in which this
    office concluded that a prosecutor, such as the Hopkins County Attorney, may not enter into an
    agreement with an offender whereby the prosecutor will defer prosecution in exchange for the
    offender’s agreement to contribute money to a public or private organization. See Tex. Att’y Gen.
    Op. No. JC-0042 (1999). In Attorney General Opinion JC-0119, this office reiterated the conclusion
    reached in Attorney General Opinion JC-0042: “[A] prosecutor may not, under any circumstances,
    condition participation in a pretrial diversion program upon a contribution to a nonprofit entity.”
    Tex. Att’y Gen. Op. No. JC-0119 (1999) at 2. Your predecessor in office implemented a program
    that allowed certain individuals charged with misdemeanor crimes to enter into a pretrial diversion
    agreement in lieu of prosecution. See Request Letter, supra note 1, at 1. Under the program, an
    individual was placed on “probation” and monitored solely by the county attorney’s office. See 
    id. The pretrial
    agreement required the individual to pay a pretrial diversion “fee” that was deposited
    into a “pretrial account” established by your predecessor. See 
    id. But see
    Tex. Att’y Gen. Qp. No.
    JC-0042 (1999) at 1 (“The prosecutor requires, as a quid pro quo, the offender to contribute to
    an organization selected by the prosecutor, which may be governmental . . . or private . . . .“)
    (emphasis added). This account has a balance of $26,470. See Request Letter, supra note 1, at 1.
    In light of Attorney General Opinion JC-0042, you believe the funds in the “pretrial account”
    established by the previous county attorney “may have been collected inappropriately,” and you are
    concerned about the disposition of the funds. See 
    id. at 2.
    ‘See Letter from Honorable Dustanna Rabe, Hopkins County Attorney, to Honorable John Comyn,   Texas
    Attorney    General (Sept. l&2001) (on file with Opinion Committee) [hereinafter Request Letter].
    The Honorable   Dustanna Rabe - Page 2           (JC-0463)
    You ask:
    1) [W]hat do you recommend the County Attorney’s office do with
    money that remains in a pre-trial diversion fund set up by the
    previous county attorney?
    2) In the event your response is [that] the money collected shall be
    returned to those who contributed to the account, what shall be
    done if we cannot locate complete records indicating who has
    paid into the account[?]
    3) [W]hat shall be done with any interest that has accrued on the
    account[? J
    Request Letter, supra note 1, at 1.
    With respect to your first question, we conclude that pretrial diversion fee moneys that
    remain in the pretrial diversion fund must be returned to the individuals who paid those fees. See
    Camacho v. Samaniego, 
    954 S.W.2d 8
    1 l(Tex. App.-El Paso 1997, pet. denied) (holding that bail
    bond companies were entitled to refund of the unauthorized bail bond filing fees collected by sheriff
    from companies). They do not belong to the county attorney’s office nor to the county because the
    county attorney was not authorized to collect the pretrial diversion fees. See 
    id. at 825
    (“A tax or
    fee collected without statutory authority should not be considered the property of the governmental
    entity.“). We are unaware of any statutory authority-and     you do not direct us to any-that would
    allow or require the county attorney’s office or the county to retain these funds. CJ TEX. GOV’T
    CODEANN. 8 54.745 (Vernon 1998) (providing that nonrefundable tiling fee collected under pretrial
    diversion program operated in El Paso County must be deposited in county’s general fund).
    We do not believe the “voluntary payment rule” precludes the return of the pretrial diversion
    fees. According to this rule, the fact that a fee is not authorized does not necessarily mean that a
    person who has paid the fee is entitled to a refund. See Tex. Att’y Gen. Op. No. JC-0286 (2000) at
    4. Texas courts have consistently held that voluntary payment of an illegal tax or fee, based on a
    mistake of law, will not support a claim for repayment. See 
    Camacho, 954 S.W.2d at 825-26
    (citing
    cases); see also Tex. Att’y Gen. Op. No. JC-0286 (2000) at 5 (“If the equipment dealer here acted
    under the mistaken conclusion that he was legally required to prepay taxes in 1999, that would have
    been a mistake of law.“). A person who has voluntarily paid an illegal tax or fee “can receive a
    refund only upon a showing that the payment resulted from fraud, mutual mistake of fact, or duress,
    whether implied or express.” 
    Camacho, 954 S.W.2d at 826
    . We have found no instance in which
    a Texas court has applied the voluntary payment rule to funds collected by a prosecutor directly from
    individuals charged with criminal misconduct in lieu of prosecution, as involved here. But even
    assuming that a court would apply the rule in this context, we believe a court would hold that the
    individuals who paid the pretrial diversion fees were entitled to repayment because the fees were
    paid under duress. Failure to pay the pretrial diversion fees would have had a serious detrimental
    The Honorable Dustanna Rabe - Page 3               (JC-0463)
    effect-prosecution-on    the individuals charged with misdemeanors; and the county attorney could
    impose this detriment on the individuals without recourse to the courts. See 
    id. at 825
    .
    Similarly, in Camacho, the El Paso Court of Appeals held that bail bond companies were
    entitled to refund of illegal fees paid to the sheriff on each misdemeanor and surety bond issued by
    these companies because the fees were paid under duress. See 
    id. at 814,
    825-26. The Camacho
    court, after reviewing the cases that addressed the repayment of illegal taxes or fees, identified two
    elements that distinguished a fee or tax paid under duress from a voluntary payment: (1) the type
    of detriment that results to the taxpayer from a failure to pay; and (2) the type of mechanism
    available to the governmental entity to ensure payment. See 
    id. at 826.
    The Camacho court noted
    that the first element is met if failure to pay the tax or fee will foreclose the ability of a business to
    continue operation, or cause financial loss or closure of the business. See 
    id. With respect
    to the
    second element, the court explained that “[i]f the [governmental] entity has to seek payment through
    the courts, such as a suit to collect back property taxes, then no duress is present,” but “[i]f the
    governmental authority can impose a penalty without recourse to the courts, however, then duress
    is present.” 
    Id. In the
    case before it, the Camacho court concluded that the first element was met
    because failure to pay the bail bond fee would have prevented the bail bond companies from issuing
    surety bonds, i.e., they could not conduct their business. See 
    id. at 827.
    The second element was
    also met because failure to pay the fee would have meant that the surety bond would not be
    processed by the sheriff. See 
    id. In other
    words, the county could impose the penalty without
    recourse to the courts. See 
    id. Here, failure
    to pay the pretrial diversion fees would have resulted in criminal prosecution
    of individuals charged with misdemeanors.          And this penalty-the prosecution itself---could be
    imposed unilaterally by the county attorney. Therefore, there was “duress.” Thus, even if the
    voluntary payment rule applied here, which is doubtful, individuals who paid the fees would be
    entitled to a refund.
    In answer to your third question regarding the disposition of interest earnings, we conclude
    that interest earned on the pretrial diversion fees deposited in the pretrial account must also be
    returned to the individuals who paid those fees. Under the common law, interest follows principal,
    or, more poetically, “‘[IInterest shall follow the principal, as the shadow the body.“’ PhiZZips v.
    Washington Legal Found., 524 US. 156,165-66 (1998) (quoting Becl$ord v. Tobin, 1 Ves. Sen. 308,
    3 lo,27 Eng. Rep. 1049, 105 1 (Ch. 1749)). Texas courts follow the common-law rule. See Sellers
    v. Harris County, 483 S.W.2d 242,243 (Tex. 1972); Lawson v. Baker, 220 S.W. 260,272 (Tex. Civ.
    App.-Austin 1920, writ ref d); accord 
    Phillips, 524 U.S. at 165-66
    . As the Texas Supreme Court
    has stated, “Interest . . . is an increment that accrues” to the principal fund earning it, and, unless
    lawfully separated from the principal, becomes part of the principal. 
    Sellers, 483 S.W.2d at 243
    .
    Thus, the interest accruing to the “pretrial account” accrues to the “principal” of the fees and the
    individuals who paid them. In the absence of a statutory provision allowing the retention of the
    interest or any part of it, all the interest must be returned to those who paid the “principal” or the
    pretrial diversion fees. See Tex. Att’y Gen. Op. No. JC-0195 (2000) at 11 (interest accruing to cash
    bail bonds accrues to principal of bonds and their owners; county may not retain any interest earned
    on cash bail bonds).
    The Honorable Dustanna Rabe - Page 4              (JC-0463)
    Finally, you ask about the disposition of the funds in the pretrial account if your office
    “cannot locate complete records indicating who has paid into the [pretrial] account.” Request Letter,
    supra note 1, at 1. You note that “[wlithout complete records, the possibility exists there will be
    unidentifiable funds remaining in the account.” 
    Id. The county
    attorney’s office must, of course, make a reasonable effort to return the pretrial
    diversion fees and the interest earned on those fees to the individuals who paid the fees. But
    assuming those individuals cannot be located or are unknown, we conclude that those funds may
    become abandoned property that must be reported and delivered to the Comptroller of Public
    Accounts pursuant to chapter 74 of the Property Code. See TEX. PROP. CODE ANN. 89 74.001-.710
    (Vernon 1995 & Supp. 2002). Chapter 74 of the Property Code governs property that is presumed
    abandoned and is “designed to provide a means for absent owners to reclaim their property.” Melton
    v. State, 
    993 S.W.2d 95
    (Tex. 1999). In furtherance of that purpose, chapter 74 sets out a procedure
    whereby a person holding property that is presumed abandoned pursuant to chapters 72,73, or 75
    of the Property Code must annually report and deliver such property to the Comptroller of Public
    Accounts. See TEX. PROP.CODEANN. 0 8 74.00 1 (applicability); . 10 1 (holder required to file property
    report with Comptroller); .201 (Comptroller to give notice after report filed); .301 (delivery of
    property to Comptroller) (Vernon Supp. 2002). In general, personal property is presumed abandoned
    if for longer than three years: (1) the existence and location of the owner of the property is unknown
    to the holder of the property; and (2) according to the knowledge and records of the holder of the
    property, a claim to the property has not been asserted or an act of ownership of the property has not
    been exercised. See 
    id. 9 72.101
    (Vernon 1995). Once property is presumed abandoned, the
    Comptroller of Public Accounts assumes responsibility for it and, in effect, steps into the absent
    owner’s shoes. See Tex. Dep ‘t of Banking v. Mount Olivet Cemetery, 
    27 S.W.3d 276
    , 284 (Tex.
    App.-Austin 2000, pet. denied). “The purpose of removing abandoned property from the possession
    of the holder is to relieve that holder of any further liability with regard to such property and place
    it in the hands of the State, thereby providing a means for the absent owner to reclaim the abandoned
    property.” Mt. 
    Olivet, 27 S.W.3d at 284
    .
    The Honorable Dustanna Rabe - Page 5            (JC-0463)
    SUMMARY
    Unauthorized accumulated “pretrial    diversion fees” and the
    interest earned on the fees must be returned    to the individuals who
    paid those fees. Unclaimed fees and interest     earnings may become
    abandoned property that must be reported          and delivered to the
    Comptroller of Public Accounts pursuant          to chapter 74 of the
    Property Code.
    Attorney General of Texas
    HOWARD G. BALDWIN, JR.
    First Assistant Attorney General
    NANCY FULLER
    Deputy Attorney General - General Counsel
    SUSAN DENMON GUSKY
    Chair, Opinion Committee
    Sheela Rai
    Assistant Attorney General, Opinion Committee
    

Document Info

Docket Number: JC-463

Judges: John Cornyn

Filed Date: 7/2/2002

Precedential Status: Precedential

Modified Date: 2/18/2017