09-0218
$1,943.76 IN THE UNITED STATES CURRENCY, ET AL. v. THE STATE OF TEXAS; from Tarrant County;
2nd district (02-07-00021-CV, ___ SW3d ___, 01-29-09, pet. denied July 2009)
gambling devices seized under a search warrant, retroactive application of the Supreme Court of Texas's
decision)
MEMORANDUM OPINION[1]
------------
Appellant Billy Joe Farrell, Jr. appeals from the trial court=s determination with respect to his property
seized under a search warrant. In three issues, Appellant argues that the machines and other property
seized were not gambling devices as defined by Texas Penal Code section 47.01(4)(B), that the retroactive
application of the Supreme Court of Texas=s decision in Hardy v. State[2] is an improper application of law,
and that the trial court committed reversible error by failing to return the property. Because we hold that
the trial court did not err by determining that the Aeight liners@ at issue here are gambling devices, we
affirm the trial court=s judgments.
In 2002, Appellant owned and operated a gaming business. As part of his business, Appellant owned
Aeight liner@ gaming machines. After a successful play on one of the machines, a player would be
awarded points that could be redeemed for restaurant or retail gift cards or for credit for further play on the
machines. In July 2002, Fort Worth police raided the business and seized the machines (as well as other
items) pursuant to a search warrant. The police also searched, pursuant to a search warrant, the home of
one of the gaming room=s employees.
The State brought a gambling promotion charge against Appellant but later dismissed it. Appellant then
moved for the release of the seized property under article 18.18 of the code of criminal procedure.[3] The
presiding judge of the 396th District Court heard the motion while sitting as the 396th District Judge and as
the judge for Criminal District Court Number Three and denied relief, after which Appellant brought these
appeals.
In its brief, the State argues that this court does not have jurisdiction over this appeal. Because we may not
reach the merits of the case if we do not have jurisdiction, we must address this argument.[4]
Article 18.18(b) orders magistrates to take certain actions with respect to confiscated property, and it
neither expressly provides for nor abrogates the right of appeal from magisterial determinations under that
article.[5] A forfeiture proceeding is in rem and is civil in nature.[6] We have jurisdiction over appeals in
civil matters arising from district courts.[7] But the State argues that we do not have jurisdiction over this
civil matter because the district court was acting as a magistrate and appellate courts do not have
jurisdiction over determinations by magistrates under article 18.18.
We disagree. Under the Texas Constitution, district courts have jurisdiction over forfeiture proceedings.[8]
The Supreme Court of Texas has held that because the legislature cannot take away the jurisdiction given
to a district court by the constitution, Athe most that the Legislature could constitutionally accomplish in [a]
rticle 18.18(b)‑(f)[] was to grant concurrent jurisdiction to a court . . . that was not also a district court.@[9]
Thus, article 18.18 allows for courts in addition to district courts to preside over forfeiture proceedings.
Because the district court had jurisdiction over the forfeiture proceedings by virtue of the constitutional
powers granted to district courts[10] or the statutory powers granted to courts acting as magistrates,[11] we
have jurisdiction over this appeal.[12] We overrule the State=s jurisdictional challenge.
We now turn to the merits of the appeal. In Appellant=s first issue, he argues that the machines and other
property seized were not gambling devices as that term is defined by Texas Penal Code section 47.01(4)
(B). In Appellant=s brief, however, he limits his argument to error as to the forfeiture of his Aeight liner@
machines. Appellant makes no argument as to why the other items seized are not gambling devices or not
otherwise subject to forfeiture under article 18.18.[13] We therefore affirm the trial court=s judgments as to
the other property seized and limit our analysis of his issues to the Aeight liners.@[14]
Article 18.18 provides that after a person is convicted for possession of a gambling device, Athe court
entering the judgment of conviction shall order that the . . . device . . . be destroyed or forfeited to the state.
@[15] But if no prosecution or conviction results from the seizure, Athe magistrate to whom the return was
made shall notify in writing the person found in possession of the alleged gambling device . . . to show
cause why the property seized should not be destroyed.@[16]
If the person appears to show cause, the magistrate must conduct a hearing, but A[u]nless the person
proves by a preponderance of the evidence that the property . . . is not . . . [a] gambling device . . . and
that he is entitled to possession, the magistrate shall dispose of the property.@[17] The article
incorporates the penal code definition of gambling device.[18]
Penal code section 47.01 defines the term Agambling device@ as Aany electronic, electromechanical, or
mechanical contrivance . . . that for a consideration affords the player an opportunity to obtain anything of
value, the award of which is determined solely or partially by chance, even though accompanied by some
skill, whether or not the prize is automatically paid by the contrivance.@[19] The definition expressly
excludes devices that would otherwise fall within the statutory definition if they reward players Aexclusively
with noncash merchandise prizes, toys, or novelties, or a representation of value redeemable for those
items,@ where the noncash prizes have a value under a certain amount.[20] No one disputes that the
Aeight liners@ at issue here meet the general definition of Agambling device.@ But Appellant argues that
at the time the devices were seized, they came within the exception under section 47.01(4)(B), in that
players were rewarded with noncash merchandise, and no player was awarded a prize from a single play
having a wholesale value more than the statutorily proscribed amount.
In June 2001, both the Waco and Austin Courts of Appeals handed down decisions reaching different
conclusions as to whether a gambling device that awarded points redeemable for gift certificates fell within
the statutory exception in section 47.01(4)(B).[21] The Supreme Court of Texas decided this issue in Hardy
and held that these devices are gambling devices.[22] In Hardy, the devices at issue awarded tickets
redeemable either for gift certificates or for cash for further play on the machines. The court held that gift
certificates are a money equivalent, and therefore the machines did not award tickets redeemable
exclusively for noncash prizes and thus did not fit the exclusion under section 47.01(4)(B). The Aeight
liners@ owned by Appellant likewise awarded points that could be redeemed for retail or restaurant gift
certificates or for further play on the machines either at that time or some time in the future. Thus, because
Appellant=s gambling devices did not reward players exclusively with noncash prizes, under Hardy, they do
not meet the exclusion and are prohibited gambling devices.
Appellant points to the Amarillo Court of Appeal=s decision in Twenty-Nine (29) Gambling Devices v. State
[23] and argues that the court there Aconceded@ that before the supreme court=s Hardy decision, there
was a conflict between the Austin and Waco Courts of Appeals and that Aif the Amarillo court cannot decide
whether [the Austin Court of Appeals= holding in Cherry Master] or [the Waco Court of Appeals= holding in
Hardy] prevails, how can Appellant determine if his business involves gaming and [not] gambling?@
Appellant misconstrues the opinion. The Amarillo court noted that prior to Hardy, there was a split in the
courts of appeals as to whether the State bore the burden of proof at an article 18.18 hearing. Regarding
the appellant=s argument that the devices at issue fit the statutory exception because they awarded points
redeemable for gift certificates and not cash, the court stated that this position was foreclosed by the
supreme court=s decision in Hardy.[24] We overrule Appellant=s first issue.
The supreme court handed down the Hardy decision in 2003, after the State seized Appellant=s devices. In
Appellant=s third issue, he argues that the trial court reversibly erred by failing to return the property
because Hardy should not be applied retroactively. The supreme court has stated that A[a] decision of
[that court] operates retroactively unless [that court] exercises its discretion to modify that application.@
[25] Here, the supreme court did not announce a limitation on the retroactive application of Hardy. On the
same day it handed down that decision, it handed down another case relating to the same type of gambling
devices, referred to Hardy as controlling on the issue, and did not discuss at all whether Hardy should be
applied retroactively or prospectively.[26]
But the supreme court has also said that although its decisions usually apply retroactively, Aexceptions are
recognized when considerations of fairness and policy dictate prospective effect only.@[27] The court
adopted factors from the United States Supreme Court for determining when to apply a decision
retroactively. The factors are:
(1) whether the decision establishes a new principle of law by either overruling clear past precedent on
which litigants may have relied or by deciding an issue of first impression whose resolution was not clearly
foreshadowed; (2) whether prospective or retroactive application of the particular rule will further or retard
its operation through an examination of the history, purpose, and effect of the rule; and (3) whether
retroactive application of the rule could produce substantial inequitable results.[28]
Appellant argues that the first element is Aeasily met@ because prior to the Hardy decision, courts of
appeals had been split on the issue of whether these devices met the exception of 47.01(4)(B). We
disagree. That at least one Texas appellate court had held that these devices did not meet the statutory
exception should have indicated to Appellant that reasonable minds could reach the same conclusion, and
because of the disagreement between the courts of appeals, one could foresee the likelihood that the
supreme court would consider the issue.[29] Thus, the first factor does not favor Appellant.
On the second factor, Appellant=s argument is that he paid a permit tax through the city of Fort Worth and
a license fee to the state comptroller. Thus, a retroactive application would put the State in the position of
having charged taxes on illegal gambling equipment. He also raises the question of whether he would have
a cause of action against those to whom he paid taxes and fees and argues that A[i]t would be difficult to
see why any retroactive application of [Hardy] would do anything but hinder the Court=s opinion.@ The
rule at issue here is that because money prizes are prohibited by statute, monetary equivalents are also
prohibited, and none of Appellant=s arguments persuade us that a retroactive application of the rule would
retard its operation.
As for the third factor, Appellant argues that he bought the devices from the city of Waco, acquired a permit
for his business and a license from the Texas comptroller, paid for a maintenance contract for a damaged
device, paid amusement tax, purchased gift cards for prizes, purchased restaurant gift cards, obtained a
bank loan to purchase the devices, and was forced to pay the loan after the devices were seized. He
contends that the financial hardships he suffered because of the total collapse of his business after the
seizure Awhen a reasonable person would cite [the Austin Court of Appeals= opinion in Cherry Master[30]]
as an authority to stay in business is pat[e]ntly unfair,@ and he should be allowed to sell the machines in a
jurisdiction where they are legal so as to recoup his losses. These results are not Asubstantial inequitable
results.@ A reasonable person would not have relied on an opinion from the Austin Court of Appeals as
controlling in this district on an issue that this court had not yet determined.[31] That is particularly true
here when in the same month that the Austin Court of Appeals decided Cherry Master, the Waco Court of
Appeals reached the opposite conclusion.[32] And Appellant=s evidence shows that he acquired the
business permit and the license from the comptroller after the Waco court declared that machines awarding
these types of prizes did not meet the statutory exception, so Appellant could not have reasonably relied on
the Cherry Master holding in making his decision to run these machines in his business. We overrule
Appellant=s third issue.
Appellant in his second issue argues that with the Hardy decision, the supreme court Achanged the rules@
by deciding that gift cards are equivalents of money. He contends that a retroactive application of Hardy is
an improper application of law because the federal and Texas constitutions prohibit ex post facto laws.
Prohibitions against ex post facto laws Aapply to civil statutes only when the statutory scheme is so punitive
either in purpose or effect as to transform what was clearly intended as a civil remedy into a criminal
penalty.@[33] A forfeiture proceeding under article 18.18 is civil in nature and is against the property and
not the owner of the property and is therefore usually not punitive.[34] Thus, a retroactive application of
Hardy does not constitute an ex post facto law.
Appellant further argues that the seizure of the devices combined with the modification of the definition of
gambling device under Hardy and the application of that definition to his case Acompletely impaired
Appellant=s obligation with his contract with Azle Bank.@ We infer this to be an argument that a retroactive
application of Hardy would violate the Texas Constitution=s prohibition against the enactment of a
retroactive law impairing the obligation of contracts.[35] Appellant did not raise this argument in the trial
court, and he may not raise it now for the first time on appeal.[36] We overrule his second issue.
Finally, we address an issue raised during oral arguments in this case. The State seized Appellant=s
property in July 2002. The case against Appellant was dismissed in June 2004. No action was taken by the
State under article 18.18 after the dismissal, and Appellant filed a motion for a release of the property in
October 2006, more than two years after the charges were dismissed. Following oral arguments, the
parties filed supplemental briefs addressing a question raised during argument as to how long the State
may wait to bring a motion for forfeiture under article 18.18 before the motion is no longer Atimely@ under
the statute and forfeiture is waived.[37] This issue was not raised in the trial court, however, and therefore
we may not address it on appeal.[38]
Having overruled all of Appellant=s issues, we affirm the trial court=s judgments.
LEE ANN DAUPHINOT
JUSTICE
PANEL: DAUPHINOT and MCCOY, JJ.; and DIXON W. HOLMAN, J. (Senior Justice, Retired, Sitting by
Assignment).
DELIVERED: January 29, 2009
[1]See Tex. R. App. P. 47.4.
[2]Hardy v. State, 102 S.W.3d 123 (Tex. 2003).
[3]Tex. Code Crim. Proc. Ann. art. 18.18(b) (Vernon 2005).
[4]See Grunewald v. Technibilt Corp., 931 S.W.2d 593, 597 (Tex. App.CDallas 1996, writ denied) (holding
that because the court lacked subject matter jurisdiction, it had no authority other than to dismiss the
appeal); Protestants v. Am. Pubs, Inc., 787 S.W.2d 111, 113 (Tex. App.CHouston [1st Dist.] 1990, writ
denied) (stating that a court must dismiss a case if it becomes apparent that the court has no authority to
adjudicate it).
[5]See Tex. Code Crim. Proc. Ann. art. 18.18(b).
[6]Hardy, 102 S.W.3d at 126B27.
[7]See Tex. Civ. Prac. & Rem. Code Ann. ' 51.012 (Vernon 2008).
[8]See Tex. Const. art. V, ' 8.
[9]State v. Dugar, 553 S.W.2d 102, 105 (Tex. 1977).
[10]See Tex. Const. art. V, ' 8.
[11]See Tex. Code Crim. Proc. Ann. art. 18.18(b)B(f); State ex rel. Holmes v. Salinas, 784 S.W.2d 421, 424
(Tex. Crim. App. 1990) (orig. proceeding) (holding no jurisdictional defect and that district court held
position of magistrate Asolely through his office of district judge@ and therefore his Aauthority to act in the
capacity of magistrate [was] dependent upon his office.@
[12]See Tex. Civ. Prac. & Rem. Code Ann. ' 51.012; see also Brown v. Barlow, 685 S.W.2d 406, 407 (Tex.
App.CSan Antonio 1985, no writ) (noting that the Supreme Court of Texas has implicitly held that rulings by
magistrates under article 18.18 are appealable).
[13]See Tex. Code Crim. Proc. Ann. art. 18.18(b) (Vernon Supp. 2008) (providing for the forfeiture of any
seized Agambling device or equipment, altered gambling equipment or gambling paraphernalia, gambling
proceeds, prohibited weapon, obscene device or material, child pornography, scanning device or
re‑encoder, criminal instrument, or dog‑fighting equipment@ unless cause is shown why it should not be
forfeited).
[14]See Pat Baker Co., Inc. v. Wilson, 971 S.W.2d 447, 450 (Tex. 1998) (AIt is axiomatic that an appellate
court cannot reverse a trial court=s judgment absent properly assigned error.@).
[15]Tex. Code Crim. Proc. Ann. art. 18.18(a).
[16]Id. art. 18.18(b).
[17]Id. art. 18.18(f).
[18]Id. art. 18.18(g)(2).
[19]Tex. Penal Code Ann. ' 47.01(4) (Vernon 2003).
[20]Id. ' 47.01(4)(B) (emphasis added).
[21]Compare State v. One Super Cherry Master Video 8‑Liner Mach., 55 S.W.3d 51, 55 (Tex. App.CAustin
2001), rev=d, 102 S.W.3d 132 (Tex. 2003), with Hardy v. State, 50 S.W.3d 689, 697 (Tex. App.CWaco
2001), aff=d, 102 S.W.3d 123 (Tex. 2003).
[22]Hardy, 102 S.W.3d at 131.
[23]110 S.W.3d 146 (Tex. App.CAmarillo 2003, no pet.).
[24]Id. at 151.
[25]Bowen v. Aetna Cas. & Sur. Co., 837 S.W.2d 99, 100 (Tex. 1992).
[26]State v. One Super Cherry Master Video 8‑Liner Machine, 102 S.W.3d 132, 133 (Tex. 2003).
[27]Elbaor v. Smith, 845 S.W.2d 240, 250 (Tex. 1992).
[28]Id.
[29]Cf. id. (determining that the case represented an issue of first impression whose resolution was not
clearly foreshadowed because Aonly a couple of states [had] previously@ reached the same holding and
that A[t]he only Texas opinion which even hinted@ at such a holding was one concurring opinion).
[30]Cherry Master, 55 S.W.3d at 55.
[31]See Eubanks v. Mullin, 909 S.W.2d 574, 576 n.1 (Tex. App.CFort Worth 1995, no writ) (noting that the
opinions of other courts of appeals are persuasive but not controlling).
[32]See Hardy, 50 S.W.3d at 697.
[33]Real Prop. Located at 4125 Blanton, Wichita Falls, Wichita County, Tex., With a Legal Description of
Lot 1 Block 4 Univ. Park B1, Wichita County, Tex. v. State, 230 S.W.3d 476, 483 (Tex. App.CFort Worth
2007, pet. denied).
[34]See id. (holding that civil forfeiture proceedings under chapter 59 of the code of criminal procedure
Aare civil, in rem proceedings against property rather than against the defendant and are not normally
classified as punishment@); Hardy, 102 S.W.3d at 126B27 (noting that forfeiture proceedings under article
18.18 are civil, in rem proceedings).
[35]See Tex. Const. art. I, ' 16; Wessely Energy Corp. v. Jennings, 736 S.W.2d 624, 627 (Tex. 1987).
[36]See In re J.B.W., 99 S.W.3d 218, 225 (Tex. App.CFort Worth 2003, pet. denied) (AThere is no right to
complain of unpreserved trial court error for the first time on appeal, except when the error is fundamental.
@).
[37]See Tex. Code Crim. Proc. Ann. art. 18.18(b) (requiring law enforcement agency informed by the State
that no prosecution will result from seizure to Atimely@ make motion for show cause hearing on forfeiture).
[38]See Tex. R. App. P. 33.1(a); Pat Baker Co., 971 S.W.2d at 450 (holding that appellate court may not
reverse based on a complaint not raised in the trial court).