IN THE
TENTH COURT OF APPEALS
No. 10-11-00438-CV
BRAZOS COUNTY APPRAISAL DISTRICT,
Appellant
v.
BRYAN-COLLEGE STATION REGIONAL
ASSOCIATION OF REALTORS, INC.,
Appellee
From the 85th District Court
Brazos County, Texas
Trial Court No. 11-000629-CV-85
OPINION
The Bryan-College Station Regional Association of Realtors sought to take
advantage of a newly enacted tax statute which, if the Association met all of its
requirements, would permit the exemption of Association property from taxation. The
Brazos County Appraisal District denied the exemption because it believed the statute
to be unconstitutional. After the Association’s protest was also denied, it filed suit in
district court. The Appraisal District sought a summary judgment on the grounds that
the statute was unconstitutional. Its motion was denied. The Association then sought
summary judgment on the grounds that it met the requirements of the statute.
Summary judgment in favor of the Association was granted. We affirm the trial court’s
judgment as modified.1
PUBLIC CHARITABLE FUNCTIONS
In its first two issues on appeal, the Appraisal District contends that the trial
court erred in granting summary judgment in favor of the Association because section
11.231 of the Texas Tax Code is unconstitutional, and if it is constitutional, the
Association produced no summary judgment evidence to prove that it qualified for an
exemption under any provision of Article VIII, Section 2 of the Texas Constitution.
Section 2(a) of Article VIII authorizes the Texas Legislature to exempt certain
public property from taxation. TEX. CONST. art. VIII, § 2(a). Any law exempting
property not mentioned in this particular section is “null and void.” Id. The property at
issue here is of “institutions engaged primarily in public charitable functions, which may
conduct auxiliary activities to support those charitable functions; <” Id. (emphasis
added). In 1999, section 2(a) was amended to broaden the base of institutions that could
benefit from a tax exemption. See generally House Research Organization, “Proposed
1 The constitutionality of an exemption for the Association’s property appears to be an issue of first
impression. According to the Amicus Curiae, Texas Association of Realtors, appraisal districts in El Paso,
Taylor, Tarrant, Collin, Hood, Denton, Lubbock, Parker, Smith, Cameron, Burnet, Dallas, Erath,
McLennan, and Williamson Counties have granted the exemption to realtor associations while appraisal
districts in Brazos, Gillespie, Nueces, Bell, Hidalgo, Kerr, and Bexar Counties have denied the exemption
to realtor associations
Brazos County Appraisal District v. Bryan-College Station Regional Association of Realtors, Inc. Page 2
Constitutional Amendments: November 1999 Election,” August 9, 1999 (retrieved from
http://ballotpedia.org/wiki/index.php/Texas_Proposition_4_(1999) on March 5, 2013).
With that amendment, the phrase “engaged primarily in public charitable functions”
replaced the prior phrase “purely public charity.” Id. “Public charitable functions” is
not defined by the Constitution.
The Legislature has sought to implement article VIII, § 2(a) by proposing and
adopting section 11.231 of the Texas Tax Code which became effective in January of
2010. TEX. TAX CODE ANN. § 11.231 (West Supp. 2012). This particular section exempts
from taxation property of nonprofit community business organizations which provide
economic development services to local communities. Id. To qualify for an exemption
under this section, the organization must be a “nonprofit community business
organization” which is “engaged primarily in performing one or more of the following
functions in the local community: (1) promoting the common economic interests of
commercial enterprises; (2) improving the business conditions of one or more types of
business; or (3) otherwise providing services to aid in economic development.” Id. (b),
(d).
The Appraisal District argues that section 11.231 is unconstitutional because a
nonprofit community business organization is not an institution that is engaged
primarily in public charitable functions. Specifically, the Appraisal District argues that
Brazos County Appraisal District v. Bryan-College Station Regional Association of Realtors, Inc. Page 3
the functions defined in section 11.231(d) are not charitable functions. We disagree with
the Appraisal District.
In Boyd v. Frost National Bank, the Texas Supreme Court addressed the validity of
a trust created for "charitable purposes." Boyd v. Frost National Bank, 196 SW.2d 497, 499
(Tex. 1946). Relatives challenged the trust's reference to "charitable purposes" as being
too vague and indefinite for the trustee to enforce. Id. The Supreme Court rejected the
relatives' challenge. According to the Supreme Court, "charitable purpose" has a fixed
and definite meaning in law such that a determination may be made on whether a
given purpose is charitable. Id. at 501. The Supreme Court upheld the will's use of the
phrase "charitable purposes," and identified the following functions as "charitable
purposes:"
1) the relief of poverty;
2) the advancement of education;
3) the advancement of religion;
4) the promotion of health;
5) governmental or municipal purposes; and
6) other purposes the accomplishment of which is beneficial to the community.
Id. at 502; (citing RESTATEMENT (SECOND) OF TRUSTS §368 (1959)) (emphasis
added).
Brazos County Appraisal District v. Bryan-College Station Regional Association of Realtors, Inc. Page 4
The Appraisal District urges us to follow cases applying a former version of
Article VIII, section 2(a) when determining whether the functions listed in section
11.231(d) of the Tax Code are "charitable functions." See City of Houston v. Scottish Rite
Benevolence Ass'n, 111 Tex. 191, 230 S.W. 978, 981 (1921) (an institution was one of
"purely public charity" where: first, it made no gain or profit; second, it accomplished
ends wholly benevolent; and, third, it benefited persons, indefinite in numbers and in
personalities, by preventing them, through absolute gratuity, from becoming burdens to
society and to the State), and River Oaks Garden Club v. Houston, 370 S.W.2d 851, 854
(Tex. 1963) (same). We have rejected this type of argument before. In McLennan County
Appraisal District v. American Housing Foundation, the appraisal district urged this Court
to apply cases construing former Article VIII § 2(a), which exempted "institutions of
purely public charity." McLennan County Appraisal District v. American Housing
Foundation, 343 S.W.3d 509, 511 (Tex. App.—Waco 2011, pet. denied). We rejected the
"purely public charity" test and explained that the word 'purely' no longer appeared in
the constitutional definition of qualifying institutions. Id.; see TEX. CONST. ART. VIII, §
2(a). Thus, we held, the issue now is whether the owner of the property is “engaged
primarily in public charitable functions.” Id.
We find the definition of a charitable purpose found in Boyd to be more
persuasive in determining whether the functions set out in section 11.231(d) are, “public
charitable functions.” In our view, a charitable purpose is, at least, no less broad in
Brazos County Appraisal District v. Bryan-College Station Regional Association of Realtors, Inc. Page 5
scope than a charitable function. In other words, a charitable purpose is a subset of
charitable function. This view corresponds with the general purpose of the 1999
amendment of Section 2(a). Thus, we hold that the phrase “public charitable function”
includes, at a minimum, everything that the Supreme Court has considered in Boyd to
be a “charitable purpose.” Further, promoting a local community’s common economic
interests of commercial enterprises; improving the business conditions of one or more
types of business of a local community; or otherwise providing services to aid in
economic development for a local community are at least included within the Boyd
charitable purpose of “other purposes the accomplishment of which is beneficial to the
community.” Boyd, 196 SW.2d at 502. And because we find “charitable purpose” is a
subset of “charitable function,” section 11.231 of the Texas Tax Code does not violate
Article VIII, Section 2(a) of the Texas Constitution.
The Appraisal District’s first issue is overruled.
The Appraisal District also argues that the Association did not prove it met the
“charitable purpose” requirement of Article VIII, Section 2(a) of the Texas Constitution.
See McLennan County Appraisal Dist. v. Am. Hous. Found., 343 S.W.3d 509, 511 (Tex.
App.—Waco 2011, pet. denied) (“Before an organization can be considered for
qualification for tax exempt status under . . . the Texas Tax Code, that organization must
first meet the applicable constitutional requirements which entitle those organizations
Brazos County Appraisal District v. Bryan-College Station Regional Association of Realtors, Inc. Page 6
to seek the exemption,” quoting North Alamo Water Supply Corp. v. Willacy County
Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991)).
In support of its motion for summary judgment, the Association provided
evidence by affidavit that it was a nonprofit community business organization engaged
primarily in performing one or more of the following functions in the local community:
(1) promoting the common economic interests of commercial enterprises; (2) improving
the business conditions of one or more types of business; or (3) otherwise providing
services to aid in economic development. The Appraisal District neither challenges this
evidence on appeal nor at the trial court. Thus, the Association proved its qualifications
for the exemption under the statute. Because we have held that those qualifications are
included within the definition of charitable purposes which is a subset of charitable
functions, the Association has also proved it met the requirements of Article VIII,
Section 2(a) of the Texas Constitution.
The Appraisal District’s second issue is overruled.
ATTORNEY’S FEES
Lastly, the Appraisal District contends that the trial court erred in awarding
attorney’s fees to the Association. In Texas, attorney's fees are recoverable from an
opposing party only when authorized by statute or by contract between the parties.
Travelers Indem. Co. of Conn. v. Mayfield, 923 S.W.2d 590, 593 (Tex. 1996); Midland Cent.
Appraisal Dist. v. BP Am. Prod. Co., 282 S.W.3d 215, 225 (Tex. App.—Eastland 2009, pet.
Brazos County Appraisal District v. Bryan-College Station Regional Association of Realtors, Inc. Page 7
denied). The Association asserts that attorney's fees were authorized by section 42.29 of
the Tax Code. The trial court awarded attorney’s fees in the amount of $8,000 to the
Association pursuant to section 42.29.
Section 42.29 provides that a "property owner who prevails in an appeal to the
court under Section 42.25 or 42.26 may be awarded reasonable attorney's fees." TEX.
TAX CODE ANN. § 42.29 (West Supp. 2012). Section 42.25 provides a remedy for an
excessive appraisal, entitling the owner to a reduction of the appraised value on the
appraisal roll. Id. § 42.25 (West 2008). Section 42.26 provides a remedy for the unequal
appraisal of property in relation to the appraised values of other properties. Id. § 42.26
(West 2008). Sections 42.25 and 42.26 do not apply to this case because the Association
did not challenge the appraised value of its property; it challenged the Appraisal
District’s denial of a tax exemption. Consequently, since the Association did not prevail
on a claim "under Section 42.25 or 42.26," attorney's fees were not authorized by section
42.29. See Midland Cent. Appraisal Dist., 282 S.W.3d at 225.
If the legislature had intended for attorney's fees to be recoverable in a case of
this type, it could have included in its section 42.29 authorization of attorney's fees an
appeal challenging the denial of an exemption. Id. The legislature specifically
authorized such protests in section 41.41(a). TEX. TAX CODE ANN. § 41.41(a) (West 2008)
(listing nine distinct actions that may be protested by taxpayer, including: excessive
value, unequal appraisal, denial of an exemption, ownership, and inclusion on tax roll).
Brazos County Appraisal District v. Bryan-College Station Regional Association of Realtors, Inc. Page 8
The legislature, however, did not authorize attorney's fees for all such protests. Section
42.29 authorizes attorney's fees for only two distinct types of protest: excessive value
and unequal appraisal. Dallas Cent. Appraisal Dist. v. Seven Inv. Co., 835 S.W.2d 75, 77-79
(Tex. 1992); Midland Cent. Appraisal Dist., 282 S.W.3d at 225. The Association’s protest
cannot be categorized as falling within either of those two. See id.
Accordingly, the Appraisal District’s third issue is sustained.
CONCLUSION
Having sustained the Appraisal District’s third issue, we modify the trial court’s
final summary judgment signed on August 26, 2011 to delete its order awarding
attorney’s fees to the Association.
Having overruled the remaining issues, we affirm the judgment of the trial court
as modified.
TOM GRAY
Chief Justice
Before Chief Justice Gray,
Justice Davis, and
Justice Scoggins
Affirmed as modified
Opinion delivered and filed April 18, 2013
[CV06]
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