                                NUMBER 13-14-00574-CV

                                   COURT OF APPEALS

                       THIRTEENTH DISTRICT OF TEXAS

                          CORPUS CHRISTI - EDINBURG


SEBASTIAN COTTON & GRAIN, LTD.,                                                             Appellant,

                                                     v.

WILLACY COUNTY APPRAISAL DISTRICT,                                                          Appellee.


                        On appeal from the 197th District Court
                              of Willacy County, Texas.


                                  OPINION ON REMAND

   Before Chief Justice Contreras and Justices Longoria and Perkes
                Opinion on Remand by Justice Perkes1

        This property-tax dispute has been remanded to us by the Supreme Court of Texas

to decide the following issues: (1) whether appellant, Sebastian Cotton & Grain, Ltd.


        1 The Honorable Nelda V. Rodriguez, former Justice of this Court, did not participate in this opinion
on remand because her term of office expired on December 31, 2018, and she was replaced on panel by
Justice Gregory T. Perkes in accordance with the appellate rules. See TEX. R. APP. P. 41.1(a).
(Sebastian), was the owner of the subject property; (2) if so, whether Sebastian was

quasi-estopped from entering an agreement pursuant to tax code § 1.111(e) with

appellee, Willacy County Appraisal District (WCAD); and (3) if not, whether the trial court’s

finding that Sebastian fraudulently induced WCAD into entering the agreement was

supported by factually and legally sufficient evidence. Willacy Cty. Appraisal Dist. v.

Sebastian Cotton & Grain, Ltd., 555 S.W.3d 29, 48, 52 (Tex. 2018). Because we find

that Sebastian was the owner of the grain, and thus estopped from entering a contrary

agreement under § 1.111(e), we affirm.

                                         I. BACKGROUND2

       Sebastian rendered to WCAD its entire grain inventory as of January 1, 2009.

See generally TEX. TAX CODE ANN. § 22.01(a) (West, Westlaw through 2017 1st C.S.)

(requiring a property owner to declare, or “render,” to the appraisal district, “all tangible

personal property used for the production of income that the person owns . . . on January

1” so that the property may be taxed). After Sebastian applied for and was denied an

exemption on a portion of the inventory, it filed a motion to correct ownership under

§ 25.25(c) of the Property Tax Code, alleging that it actually sold 86% of the rendered

grain to DeBruce Grain, Inc. (DeBruce) in 2008.

       To support its position, Sebastian produced four sales contracts between

Sebastian and DeBruce, providing for the sale of a total of 1.34 million bushels of grain.

Each contract was executed in 2008 and provided for shipment in 2008. Through its

representations to the chief appraiser, Sebastian implied that possession of the grain on



        2 The facts are well-known to the parties and the supreme court’s opinion includes a

comprehensive background. See Willacy Cty. Appraisal Dist. v. Sebastian Cotton & Grain, Ltd., 555
S.W.3d 29, 34–37 (Tex. 2018). The background provided here is limited to the facts necessary to explain
our disposition. See TEX. R. APP. P.47.1.

                                                  2
January 1, 2009 was immaterial because ownership immediately transferred in 2008

upon execution of the contracts.3 In a phone conversation with Sebastian’s property tax

agent, the chief appraiser agreed to change the appraisal roll to reflect DeBruce as the

owner. Consequently, Sebastian was issued a tax refund.

        DeBruce protested the corrected appraisal roll and resulting tax assessment, also

asserting non-ownership. DeBruce pointed to a provision in the contracts expressing the

parties’ intent to resolve any disputes under the National Grain and Feed Association

Rules (NGFA Rules). Rule 6 of the NGFA Rules provides that title and risk of loss

transfer to the buyer at either the time of shipment or delivery, depending on the specific

term in the contract, but not before. DeBruce provided WCAD with proof that, of the 1.34

million total bushels contracted for, only 138,300 had been shipped or delivered by

January 1, 2009; some were shipped and delivered after January 1; and 808,797 bushels

were never shipped or delivered.              DeBruce acknowledged liability for the 138,300

bushels and disputed the rest. The chief appraiser agreed, changing the appraisal rolls

again to reflect Sebastian as the owner of the remaining grain.

        Sebastian protested to the Willacy County Appraisal Review Board (ARB). The

ARB upheld the change to the appraisal roll and Sebastian sought judicial review,

arguing: (1) WCAD was prohibited by statute from changing the appraisal roll because

it increased Sebastian’s tax liability; or (2) in the alternative, the phone conversation in



         3 Sebastian argued it was only a warehouseman for the grain on January 1, 2009. We note that

a Rendition of Taxable Personal Property requires the taxpayer to report any property it is holding as a
fiduciary and to identify the owner. TEX. TAX CODE ANN. § 22.01(a) (West, Westlaw through 2017 1st C.S.).
Additionally, “a person shall file a report listing the name and address of each owner of property that is in
his possession or under his management on January 1 by bailment.” Id. § 22.04(a) (West, Westlaw
through 2017 1st C.S.). Contrary to its subsequent position, Sebastian did not follow either of these
provisions, rendering all the grain in its possession on January 1.


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which the chief appraiser agreed to change the ownership to DeBruce was a final,

nonreviewable agreement under § 1.111(e) of the Property Tax Code. See id. § 1.111(e)

(West, Westlaw through 2017 1st C.S.) (providing that “[a]n agreement between a

property owner or owner’s agent and the chief appraiser is final if the agreement relates

to a matter . . . which may be corrected under Section 25.25 or on which a motion for

correction under that section has been filed but not determined by the [ARB]”).

       WCAD argued the ownership change was authorized and raised fraud as an

affirmative defense to its agreement with Sebastian. The case was tried to the bench

and the district court rendered a take nothing judgment against Sebastian, finding WCAD

was authorized to make the ownership change and the agreement should be set aside

because it was induced by fraud.

       On appeal to this Court, Sebastian again challenged WCAD’s statutory authority

to make the ownership change, as well as the factual and legal sufficiency of the evidence

to support the trial court’s fraud determination.    We reversed the trial court on the

authority issue without reaching Sebastian’s sufficiency challenge. The Supreme Court

of Texas granted WCAD’s petition for review and reversed, holding WCAD acted within

its authority.   Sebastian Cotton & Grain, 555 S.W.3d at 54.         The supreme court

remanded the case to this Court to first determine the issue of ownership, and then to

determine the propriety of Sebastian’s agreement with WCAD under § 1.111(e). Id.

                                     II. OWNERSHIP

       “[P]roperty taxes are the personal obligation of the person who owns or acquires

the property on January 1 of the year for which the tax is imposed.” TEX. TAX CODE ANN.




                                            4
§ 32.07(a) (West, Westlaw through 2017 1st C.S.). The trial court determined Sebastian

was the owner of the grain in its possession on January 1, 2009.4 We agree.

        Ownership is a legal question based on determined facts. Sebastian Cotton &

Grain, 555 S.W.3d at 46 & n.12 (citing Hudson Buick, Pontiac, GMC Truck Co., v. Gooch,

7 S.W.3d 191, 195–96 (Tex. App.—Tyler 1999, pet. denied)). The material facts in this

case are undisputed. Instead, both parties point us to the purchase contracts and the

NFGA Rules incorporated into those contracts to support their respective positions on

ownership.5 Interpretation of an unambiguous agreement is a question of law we review

de novo. AEP Tex. Cent. Co. v. Pub. Util. Comm’n, 286 S.W.3d 450, 464 (Tex. App.—

Corpus Christi 2009, pet. denied) (citing Weslaco Fed’n of Teachers v. Tex. Educ.

Agency, 27 S.W.3d 258, 263–64 (Tex. App.—Austin 2000, no pet.)).

        At the outset, this Court notes that each of the four purchase contracts resembles

an option agreement, which is defined as “[t]he right (but not the obligation) to buy or sell

a given quantity of securities, commodities, or other assets at a fixed price within a

specified time.” Option agreement, BLACK’S LAW DICTIONARY (10th ed. 2014); see also

Jarvis v. Peltier, 400 S.W.3d 644, 650 (Tex. App.—Tyler 2013, pet. denied).                           Each

contract provided a fixed price point per bushel, a specific shipment period, and that




        4
          “The district court shall try all issues of fact and law raised by the pleadings in the manner
applicable to civil suits generally.” TEX. TAX CODE ANN. § 42.23(a) (West, Westlaw through 2017 1st C.S.).

        5 Neither party has argued in the trial court or this Court that the purchase contracts or NFGA Rules

are ambiguous. Although the parties interpret the provisions differently, “[a] contract is not ambiguous
merely because the parties disagree.” URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 763 (Tex. 2018) (citing
Samson Expl., LLC v. T.S. Reed Props., Inc., 521 S.W.3d 766, 787 (Tex. 2017)). Contract ambiguity is a
question of law, id. (citing Samson Expl., 521 S.W.3d at 787), and we find the purchase contracts and the
incorporated NFGA Rules to be unambiguous because they are subject to only one genuine meaning.
See Nassar v. Liberty Mutual Fire Ins. Co., 508 S.W.3d 254, 258 (Tex. 2017) (per curium) (citing RSUI
Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 119 (Tex. 2015)).


                                                     5
payment would be due after delivery. According to the testimony of Sebastian’s owner

Terry Funk, it is not uncommon in the grain industry for buyers like DeBruce to cancel

orders; a buyer’s only obligation upon cancelation is to pay the difference, if any, between

the contract price and the market price at the time of cancelation, as well as any accrued

storage fees. It is undisputed that DeBruce canceled its purchase of 808,797 bushels;

i.e., DeBruce never took possession of or paid for the majority of the 1.34 million bushels.

We reject, therefore, Sebastian’s argument that execution of the four contracts

immediately transferred ownership in the 1.34 million bushels when DeBruce was under

no obligation to complete the transactions.

       Moreover, we are guided by the plain language of the contracts and the NGFA

Rules. Each purchase contract contained the same provision: “Any dispute under this

agreement shall be resolved under the rules of the Kansas City Board of Trade or the

National Grain and Feed Association.” Rule 6 of the NGFA Rules provides that title and

risk of loss transfer to the buyer at the time of shipment or delivery, but not sooner:

       Title, as well as risk of loss and/or damage, passes to the Buyer as follows:
       (A) On f.o.b. origin or f.o.b. basing point contracts, at the time and place of
       shipment. The time of shipment is the moment that the carrier accepts the
       appropriate shipping document. . . . (B) On delivered contracts: . . . By
       truck, upon arrival at the Buyer’s final destination.

NAT’L GRAIN & FEED ASS’N, NGFA GRAIN TRADE RULES, Rule 6 (2018).6 It is undisputed

that, as of January 1, 2009, only 138,300 bushels had been shipped or delivered to

DeBruce. We conclude, then, that under the NGFA Rules, Sebastian was the legal title

holder of all the grain in its possession on January 1.


       6 Neither party presented the trial court with the rules of the Kansas City Board of Trade and
Sebastian never argued they conflict with Rule 6 of the NGFA Rules.



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        The term “ownership” is not defined by the Property Tax Code. See TEX. TAX.

CODE ANN. § 1.04 (West, Westlaw through 2017 1st C.S.). But “[t]he person having legal

title to property is generally considered to be the owner thereof for purposes of taxation.”

Childress Cty. v. State, 127 Tex. 343, 349, 92 S.W.2d 1011, 1015 (1936). Sebastian

has failed to provide us with a principled reason to deviate from this general rule of law.

        We are also not persuaded by Sebastian’s argument that ownership and legal title

are not mutually inclusive. Read in context, the term “title” in Rule 6 was intended to be

synonymous with ownership. See Columbia Gas Transmission Corp. v. New ULM Gas,

Ltd., 940 S.W.2d 587, 591 (Tex. 1996) (“In determining the parties’ agreement, [courts]

are to examine all parts of the contract and the circumstances surrounding the formulation

of the contract.”) (citing National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517,

520 (Tex.1995) (per curium)). Otherwise, a buyer would be the owner upon execution

of a purchase contract, with all the attendant rights and obligations of ownership, yet legal

title would not pass until shipment or delivery—if either occurs at all.                       The only

reasonable interpretation of Rule 6 is that it delineates the point at which ownership

transfers from the seller to the buyer.7

        Finally, Sebastian argues in the alternative that DeBruce was at least the equitable

title holder of the disputed grain. It relies on AHF-Arbors at Huntsville I, LLC v. Walker

County Appraisal District, 410 S.W.3d 831 (Tex. 2012) for the proposition that equitable

title, as opposed to legal title, is sufficient to establish ownership for tax purposes.


        7
            Of course, as the preamble to the NFGA Rules makes clear, the parties were free to contract for
different terms. NAT’L GRAIN & FEED ASS’N, NGFA GRAIN TRADE RULES, Preamble (2018). In other words,
if Sebastian and DeBruce wanted to transfer legal title upon execution of the contracts, they were free to
include such a term in the contracts. But because they have failed to express a clear intent otherwise,
Rule 6 controls.


                                                    7
Equitable title is defined as “the present right to demand legal title.” Id. at 837 (citing

Carmichael v. Delta Drilling Co., 243 S.W.2d 458, 460 (Tex. Civ. App.—Texarkana 1951,

writ ref’d)). Even if we assume, without deciding, that DeBruce held equitable title in the

undelivered grain on January 1, 2009, we are not persuaded that an equitable title holder

should be assessed a tax liability over the legal title holder.

       We find AHF-Arbors to be distinguishable from this case in several material ways,

and therefore decline to deviate from the general rule that legal title establishes ownership

for tax purposes.     See Childress Cty., 127 Tex. At 349, 92 S.W.2d at 1015.                 Most

notably, AHF-Arbors concerned a tax exemption, not a tax liability, and thus required

interpretation of a different provision in the Property Tax Code with distinct policy

concerns. AHF-Arbors, 410 S.W.3d at 836–39 (interpreting § 11.182(b), not § 32.07(a),

and noting the social benefit of encouraging private investment in public housing).

Additionally, AHF-Arbors involved a nonprofit corporation imputing its status to its wholly-

owned and controlled subsidiary. Id. at 839. In this case, there is a dispute between

two purported owners, one of which must be personally obligated to pay the tax liability.

See TEX. TAX CODE ANN. § 32.07(a).

       To that end, we find Bailey v. Cherokee County Appraisal District, 862 S.W.2d 581

(Tex. 1993) to be more analogous to this case. In a dispute over whether the equitable

title holder or the legal title holder owed the tax liability, the Supreme Court of Texas held

that, “[w]hile it is true that the heirs hold equitable title to estate property, this interest does

not give rise to tax liability. The responsibility for taxes lies with the administrator as

holder of legal title.” Id. at 584. We conclude that, as the legal title holder of the grain




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in its possession on January 1, 2009, Sebastian was the actual owner for purposes of

taxation.

                                      III. ESTOPPEL

       Sebastian argues that, even if it is the owner, its agreement with WCAD to resolve

its motion to correct ownership constituted a final, nonreviewable agreement under

§ 1.111(e) of the Property Tax Code. See TEX. TAX. CODE ANN. § 1.111(e) (providing

that “[a]n agreement between a property owner or owner’s agent and the chief appraiser

is final if the agreement relates to a matter . . . which may be corrected under Section

25.25 or on which a motion for correction under that section has been filed but not

determined by the board”); see also Sebastian Cotton & Grain, 555 S.W.3d at 47-48

(“[T]he oral agreement between the parties in this case may be sufficient to establish a

section 1.111(e) agreement, assuming the agreement was made by a proper party.”). In

effect, Sebastian seeks to set aside WCAD’s ownership change to the appraisal roll as a

violation of their prior agreement.

       A taxpayer relying on the finality of a § 1.111(e) agreement must first establish the

agreement’s validity.     Sebastian Cotton & Grain, 555 S.W.3d at 47.          Whether an

agreement is valid and enforceable is generally a question of law we review de novo.

See Meru v. Huerta, 136 S.W.3d 383, 390 (Tex. App.—Corpus Christi 2004, no pet.)

(citing Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 678 (Tex. App.—Houston [1st

Dist.] 1996, no writ)).

       The plain language of § 1.111(e) limits its application to an agreement between

the chief appraiser and “a property owner or the owner’s agent.” TEX. TAX CODE ANN.

§ 1.111(e). Although we have determined Sebastian to be the actual owner of the grain



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in its possession on January 1, and thus the proper party to enter a section 1.111(e)

agreement, our inquiry does not end there. The supreme court instructed us to consider

“whether estoppel or quasi-estoppel may preclude Sebastian from entering into an

agreement under section 1.111(e) based on its representation that it was not the property

owner.” Sebastian Cotton & Grain, 555 S.W.3d at 48.

       But before turning to this question, we are guided by the supreme court’s holding

that an agreement under § 1.111(e) cannot resolve ownership as a legal matter because

a chief appraiser does not have the authority to make such a determination. Id. at 49.

As the supreme court explained, “liability arises out of actual property ownership, not the

appraisal roll and tax roll reflection of ownership. . . .     Simply put, tax liability exists

independently of the appraisal roll or tax bill.” Id. at 45.

       The substance of Sebastian’s agreement with WCAD was the resolution of

Sebastian’s motion to correct ownership, but that “correction did not determine actual

ownership as a legal matter.” Id. at 49. Instead, we have determined ownership in this

opinion, and our holding means Sebastian was the owner on January 1, 2009, long before

its agreement with WCAD. Id. at 45 (“[U]nder the Property Tax Code, WCAD’s correction

had no effect on tax liability—if Sebastian was indeed the owner on January 1, Sebastian

was liable for property taxes regardless of whose name appeared on the appraisal roll or

the tax bill.”). Because Sebastian was the owner of the disputed grain on January 1,

2009, we proceed to examine “whether estoppel or quasi-estoppel may preclude

Sebastian from entering into an agreement under section 1.111(e) based on its

representation that it was not the property owner.” Id. at 48 (emphasis added).




                                              10
       “Quasi-estoppel precludes a party from asserting, to another’s disadvantage, a

right inconsistent with a position previously taken. The doctrine apples when it would be

unconscionable to allow a person to maintain a position inconsistent with one to which he

acquiesced, or from which he accepted a benefit.” Id. at 48 (quoting Samson Expl., LLC

v. T.S. Reed Props., Inc., 521 S.W.3d 766, 778 (Tex. 2017)).

       In this case, Sebastian must now rely on its actual ownership to establish its right

to enforce the finality of its agreement with WCAD under § 1.111(e). See TEX. TAX. CODE

ANN. § 1.111(e); Sebastian Cotton & Grain, 555 S.W.3d at 48 (“It should go without saying

that if Sebastian was not the property owner, then it, by definition, lacked the authority to

make an agreement under section 1.111(e). To be clear, nothing in the statute or our

public policy prevents a non-owner of property from agreeing with the chief appraiser to

change the appraisal rolls to reflect that the non-owner in fact does not own the property.

However, such an agreement would not arise under section 1.111(e), and therefore would

be subject to review by the ARB or a judicial body.”). The assertion of this right is wholly

inconsistent with its prior position—that it was not the owner. For example, in the lead-

up to the agreement, Sebastian’s tax agent stated in an email to WCAD’s chief appraiser

that “Sebastian Grain did not own most of the inventory on January 1.” Sebastian’s

assertion of its right to finality under § 1.111(e) is to the detriment of WCAD and the taxing

authorities because, if the agreement is valid and enforceable, the grain will escape

taxation. And Sebastian accepted the benefit of resolving its motion to correct ownership

based on its assertion of non-ownership. It would be unconscionable to allow Sebastian

to now rely on its actual ownership to enforce that agreement when “the very nature of




                                             11
the agreement was to establish that Sebastian was not the owner of the grain.”

Sebastian Cotton & Grain, 555 S.W.3d at 48; see Samson Expl., LLC, 521 S.W.3d at 778.

        Because WCAD established Sebastian’s ownership as a legal matter, Sebastian

was precluded from taking the position that its agreement with WCAD was a final,

nonreviewable agreement under § 1.111(e). Because this issue is dispositive, we do not

reach Sebastian’s sufficiency of the evidence issue regarding fraud. See TEX. R. APP. P.

47.1.

                                       IV. CONCLUSION

        The trial court’s judgment is affirmed.


                                                   GREGORY T. PERKES
                                                   Justice

Delivered and filed the
18th day of April, 2019.




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