 ’ 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
