How can a Texas county legally sell seized eight-liner gambling machines?

TX AG Opinion GA-0533: How can a county sell seized eight-liner gambling machines?

Plain-English summary

The Cameron County Sheriff, through a state senator, asked how a county may dispose of seized "eight-liner" slot machines forfeited as gambling contraband under article 18.18 of the Code of Criminal Procedure. The sheriff wanted to know whether the county could sell the machines in bulk to private investors by some method other than an open public auction, both to fetch a better price and to make sure the equipment did not end up back in the local community or anywhere its use is illegal.

The Attorney General first explained what does not apply. Article 18.18 lets a court order forfeited gambling devices destroyed or forfeited to the state or a political subdivision, but it does not prescribe how to dispose of them afterward. The detailed forfeiture-disposition rules in chapter 59 of the Code of Criminal Procedure ordinarily do not reach these machines, because chapter 59 "contraband" means property used in a first- or second-degree felony or one of the specifically listed offenses, and gambling offenses are not on that list; in fact, possessing a gambling device is only a Class A misdemeanor. Other disposition statutes (for unclaimed or abandoned property, or for stolen property) also do not fit. So the Code of Criminal Procedure itself provides no method.

That left Local Government Code chapter 263. Most of its subchapters address specific situations that do not cover forfeited personal property, but subchapter D lets a county dispose of "salvage property" (worn or obsolete property with no value for its original purpose) or "surplus property" (property the county owns, does not need, but that still has some usefulness). Eight-liner machines are personal property, and whether the county is their "owner" depends on the terms of the forfeiture order, but depending on the facts the machines could qualify as salvage or surplus property under subchapter D, and no other statute generally governs the sale. The catch: subchapter D allows a sale only "by competitive bid or auction." The commissioners court has rulemaking discretion over the method and terms, so it could use a method other than a traditional open auction, but only if the method is still essentially competitive bidding, meaning due advertisement, an equal chance for all bidders, and no terms that restrict competition. A straight private bulk sale outside competitive bidding is not allowed. Finally, the opinion said the county may, through its rules, require every purchaser to agree to move the machines to a jurisdiction where their use is legal. The county can reject any bid in the county's best interest (a fact question for the commissioners court), and Penal Code section 47.06 itself recognizes a defense for shipping a gambling device to a place where it is legal, supporting such a removal condition.

Currency note

This opinion was issued in 2007. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Code of Criminal Procedure article 18.18, the chapter 59 forfeiture provisions, the Penal Code gambling offenses, and Local Government Code chapter 263 may have been amended since 2007. A county disposing of seized gambling devices today should confirm the current statutes and the current definitions of salvage and surplus property before relying on this analysis.

Who this opinion affected (as of 2007)

County commissioners courts and sheriffs: The opinion told them that forfeited eight-liner machines, if they qualify as salvage or surplus property and the county owns them, may be sold under Local Government Code chapter 263, subchapter D, but only by competitive bid or auction, and that destruction is also an option article 18.18 expressly allows.

Buyers of forfeited gambling equipment: The opinion indicated a county could lawfully condition a sale on the buyer's contractual agreement to take the machines to a jurisdiction where their use is legal.

Communities concerned about reuse: The opinion identified two tools to keep machines out of local use: ordering them destroyed under article 18.18, or selling them with a removal-to-legal-jurisdiction condition.

Common questions

Can a Texas county sell seized eight-liner machines in a private bulk deal?
Not as a private sale outside competitive bidding, according to this opinion. Local Government Code chapter 263, subchapter D allows a sale only by competitive bid or auction, though the commissioners court may use a non-open-auction method that is still essentially competitive bidding.

Why don't the regular forfeiture rules in chapter 59 apply?
The opinion explained that chapter 59 "contraband" is tied to felonies and specifically listed offenses, and gambling-device possession is only a Class A misdemeanor, so chapter 59 ordinarily does not cover these machines.

Can the county make sure the machines aren't used illegally after sale?
Yes. The opinion concluded the commissioners court may, by rule, condition all sales on the buyer's agreement to remove the machines to a jurisdiction where their use is legal, and the county may reject any bid in the county's best interest. The county can also have the machines destroyed.

Does the county definitely own the machines after forfeiture?
Not necessarily. The opinion noted that whether the county is the "owner," and thus whether subchapter D applies, depends on the terms of the court's forfeiture order.

Background and statutory framework

Article 18.18 provides for destruction or forfeiture of gambling devices, equipment, and paraphernalia following a final conviction (or, without conviction, under separate procedures), but does not prescribe a method of disposing of forfeited property (Tex. Code Crim. Proc. Ann. art. 18.18(a), (b)-(f) (Vernon Supp. 2006); State v. Dugar, 553 S.W.2d 102, 103-04 (Tex. 1977); Tex. Penal Code Ann. § 47.06(a), (e), (f) (Vernon 2003)). Chapter 59's disposition provisions ordinarily do not apply, because "contraband" there means property used in a first- or second-degree felony or a specifically listed offense, and gambling offenses (none of which are first- or second-degree felonies) are not listed (Tex. Code Crim. Proc. Ann. arts. 59.06, 59.01-.14, 59.01(2) (Vernon 2006); Tex. Penal Code Ann. §§ 47.01-.10 (Vernon 2003); see also § 71.02(a)-(b) (Vernon Supp. 2006)). Other specific disposition statutes, for unclaimed or abandoned property and for stolen property, also do not apply (Tex. Code Crim. Proc. Ann. arts. 18.17 (Vernon 2005), 47.01-.12 (Vernon 2006)).

Local Government Code chapter 263 governs county sale or lease of property. Subchapters A, B, C, E, and F address specific circumstances not covering forfeited personal property (Tex. Loc. Gov't Code Ann. §§ 263.001-.107, .201-.251 (Vernon 2005)). Subchapter D lets a county dispose of "salvage property" or "surplus property," as defined, with the commissioners court authorized to periodically sell such property (Tex. Loc. Gov't Code Ann. § 263.151 (Vernon 2005)). Eight-liner machines are personal property (San Antonio Area Found. v. Lang, 35 S.W.3d 636, 640 (Tex. 2000)), and whether the county is the owner depends on the forfeiture order, but the machines may qualify as salvage or surplus property, so subchapter D may apply. Section 263.152(a) authorizes the sale of surplus or salvage property only "by competitive bid or auction," subject to exceptions for sales to another political subdivision and for trade-in, destruction, or donation (Tex. Loc. Gov't Code Ann. § 263.152(a), (a)(2)-(4) (Vernon 2005)).

Competitive bidding requires due advertisement, an equal opportunity to bid on the same terms, and no terms that restrict competition (Tex. Highway Comm'n v. Tex. Ass'n of Steel Imps., Inc., 372 S.W.2d 525, 527 (Tex. 1963) (quoting Sterrett v. Bell, 240 S.W.2d 516, 520 (Tex. Civ. App.-Dallas 1951, no writ)); see also Tex. Loc. Gov't Code Ann. §§ 262.021-.036 (Vernon 2005)). With its rulemaking authority, the commissioners court may adopt a method of sale other than open auction so long as it is essentially competitive bidding (Tex. Loc. Gov't Code Ann. § 263.158 (Vernon 2005)). The court may reject any bid in the county's best interest, which is a fact question for the court (Tex. Loc. Gov't Code Ann. § 263.154 (Vernon 2005)), and may condition sales on the purchaser's agreement to remove the machines to a jurisdiction where their use is legal, consistent with the Penal Code's defense for shipping a device to such a place (Tex. Penal Code Ann. § 47.06(a), (f) (Vernon 2003)).

Citations

Statutes:

• Tex. Code Crim. Proc. Ann. art. 18.18(a), (b)-(f) (Vernon Supp. 2006)
• Tex. Code Crim. Proc. Ann. arts. 59.06, 59.01-.14, 59.01(2) (Vernon 2006)
• Tex. Code Crim. Proc. Ann. arts. 18.17 (Vernon 2005), 47.01-.12 (Vernon 2006)
• Tex. Penal Code Ann. §§ 47.01-.10, 47.06(a), (e), (f) (Vernon 2003)
• Tex. Penal Code Ann. § 71.02(a)-(b) (Vernon Supp. 2006)
• Tex. Loc. Gov't Code Ann. §§ 263.001-.107, .201-.251 (Vernon 2005)
• Tex. Loc. Gov't Code Ann. §§ 263.151, 263.152(a), (a)(2)-(4), 263.154, 263.158 (Vernon 2005)
• Tex. Loc. Gov't Code Ann. §§ 262.021-.036 (Vernon 2005)

Cases:

• State v. Dugar, 553 S.W.2d 102, 103-04 (Tex. 1977)
• San Antonio Area Found. v. Lang, 35 S.W.3d 636, 640 (Tex. 2000)
• Tex. Highway Comm'n v. Tex. Ass'n of Steel Imps., Inc., 372 S.W.2d 525, 527 (Tex. 1963)
• Sterrett v. Bell, 240 S.W.2d 516, 520 (Tex. Civ. App.-Dallas 1951, no writ)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0533
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2007/ga0533.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain - the linked PDF is authoritative.

GREG ABBOTT

March 23, 2007

The Honorable Eddie Lucio, Jr.
Chair, Committee on International Relations and Trade
Texas State Senate
Post Office Box 12068
Austin, Texas 78711-2068

Opinion No. GA-0533

Re: Counties' alternatives for disposing of seized gambling contraband (RQ-0536-GA)

Dear Senator Lucio:

On behalf of the Sheriff of Cameron County, you ask about the county's statutory alternatives for disposing of seized gambling contraband, specifically, slot machines known as "eight-liner" machines.

You ask generally about disposition of eight-liner machines forfeited under article 18.18 of the Code of Criminal Procedure. Request Letter, supra note 1, at 1. Article 18.18 of the Code of Criminal Procedure provides for the destruction or forfeiture of gambling contraband:

Following the final conviction of a person for possession of a gambling device or equipment, altered gambling equipment, or gambling paraphernalia, . . . the court entering the judgment of conviction shall order that the machine, device, gambling equipment or gambling paraphernalia . . . be destroyed or forfeited to the state. . . . If forfeited, the court shall order the contraband delivered to the state, any political subdivision of the state, or to any state institution or agency. If gambling proceeds were seized, the court shall order them forfeited to the state and shall transmit them to the grand jury of the county in which they were seized for use in investigating alleged violations of the Penal Code, or to the state, any political subdivision of the state, or to any state institution or agency.

TEX. CODE CRIM. PROC. ANN. art. 18.18(a) (Vernon Supp. 2006); see also TEX. PENAL CODE ANN. § 47.06 (Vernon 2003) (criminalizing possession of gambling device, equipment, or paraphernalia). Article 18.18 further provides procedures for destruction or forfeiture of such contraband when prosecution or conviction does not follow seizure. TEX. CODE CRIM. PROC. ANN. art. 18.18(b)-(f) (Vernon Supp. 2006). See generally State v. Dugar, 553 S.W.2d 102, 103-04 (Tex. 1977) (describing differences between article 18.18(a) and (b)). Article 18.18 does not, however, prescribe a particular manner for disposing of gambling contraband following forfeiture.

As article 18.18 does not specify a method for disposing of forfeited gambling property, you ask about the applicability of Local Government Code chapter 263, subchapter D, or "any other statutes" that may provide a means of disposal other than that set forth in chapter 263. See Request Letter, supra note 1, at 1. You are particularly interested in any statutory procedures that would allow a sale to "private investors by a method other than at an open auction." Id. The Sheriff has suggested that by selling the eight-liner machines in bulk to private investors rather than at public auction, the county might obtain a better price. It has also been suggested that a sale by a method other than an open auction might allow the county "to ensure that the equipment is not used in the local community or anywhere else its use is illegal." See Request Letter, supra note 1, at 1. Consequently, we examine the Code of Criminal Procedure and the Local Government Code for pertinent provisions.

Chapter 59 of the Code of Criminal Procedure contains detailed provisions for disposition of forfeited property. See TEX. CODE CRIM. PROC. ANN. art. 59.06 (Vernon 2006). See generally id. arts. 59.01-.14 (chapter 59). However, chapter 59's definition of "contraband" suggests that the chapter ordinarily does not apply to "a gambling device or equipment, altered gambling equipment, or gambling paraphernalia" that may be forfeited under article 18.18. "Contraband" under chapter 59 is defined as property (1) used in the commission of a first or second degree felony or (2) used or intended to be used in one of the offenses specifically listed in the definition. See id. art. 59.01(2). The definition does not expressly include any gambling offenses, such as those in chapter 47 of the Penal Code. See TEX. PENAL CODE ANN. §§ 47.01-.10 (Vernon 2003). And none of the gambling offenses in chapter 47 of the Penal Code are first or second degree felonies. See id. In particular, the gambling offense mentioned in article 18.18 of the Code of Criminal Procedure, "possession of a gambling device or equipment, altered gambling equipment, or gambling paraphernalia," is a class A misdemeanor. Compare id. § 47.06(a), (e) (making possession of a gambling device a "Class A misdemeanor"), with TEX. CODE CRIM. PROC. ANN. art. 18.18(a) (Vernon Supp. 2006) (providing for disposition of gambling contraband "[f]ollowing the final conviction of a person for possession of a gambling device or equipment, altered gambling equipment, or gambling paraphernalia"). Eight-liner machines seized under article 18.18 of the Code of Criminal Procedure ordinarily would not constitute chapter 59 "contraband" and thus would not be subject to that chapter's procedures.

Other provisions in the Code of Criminal Procedure that deal with the disposition of property under specific circumstances are inapplicable to gambling property forfeited under article 18.18. See, e.g., TEX. CODE CRIM. PROC. ANN. arts. 18.17 (Vernon 2005) (disposition of unclaimed or abandoned property); 47.01-.12 (Vernon 2006) (disposition of stolen property). Consequently, the Code of Criminal Procedure does not provide a means for disposing of eight-liner machines forfeited under article 18.18.

Thus, we turn to chapter 263 of the Local Government Code, by which a county may sell or lease property. Subchapters A, B, C, E, and F of chapter 263 do not apply because they all concern disposition of property under specific circumstances that would not include forfeited personal property. See TEX. LOC. GOV'T CODE ANN. §§ 263.001-.107, .201-.251 (Vernon 2005). Chapter 263's remaining property disposition provisions, those in subchapter D, authorize a county to dispose of personal property as either "salvage property" or "surplus property," which are defined terms:

(1) "Salvage property" means personal property, other than items routinely discarded as waste, that because of use, time, accident, or any other cause is so worn, damaged, or obsolete that it has no value for the purpose for which it was originally intended.

(2) "Surplus property" means personal property that:

(A) is not salvage property or items routinely discarded as waste;

(B) is not currently needed by its owner;

(C) is not required for the owner's foreseeable needs; and

(D) possesses some usefulness for the purpose for which it was originally intended.

Id. § 263.151. See generally id. §§ 263.151-.158 (subchapter D). Section 263.152 authorizes the commissioners court to "periodically sell the county's surplus or salvage property." Id. § 263.152(a).

Eight-liner machines are personal property. See San Antonio Area Found. v. Lang, 35 S.W.3d 636, 640 (Tex. 2000) ("Personal property is defined broadly to include everything that is subject to ownership not falling under the definition of real estate."). Whether the county is the "owner" of such property would depend on the terms of the court's order of forfeiture. The property would likely qualify as salvage property if "it has no value for the purpose for which it was originally intended" and otherwise meets that definition, or as surplus property, assuming the county is the owner of the property, if it "possesses some usefulness for the purpose for which it was intended." See TEX. LOC. GOV'T CODE ANN. § 263.151 (Vernon 2005). Thus, to answer your initial question, depending on the terms of the court's order and the particular facts and circumstances, Local Government Code chapter 263, subchapter D may apply to the disposal of eight-liner slot machines. And our review has not revealed another statute that would apply generally to the county's sale of property forfeited under article 18.18 of the Code of Criminal Procedure.

Consequently, we next consider the methods of sale that subchapter D, chapter 263 of the Local Government Code allows. The commissioners court is authorized to "adopt rules necessary to administer" subchapter D. Id. § 263.158. Nevertheless, section 263.152 authorizes the sale of surplus or salvage property only "by competitive bid or auction." Id. § 263.152(a). Thus, although the commissioners court's rule-making authority gives it some discretion to choose the method and terms of sale of surplus or salvage property, such rules must be consistent with a sale by "competitive bid or auction." Id.

While no statute defines "competitive bid or auction," the Supreme Court of Texas has described the "purpose and intent of competitive bidding ordinances and statutes" as follows:

"Competitive bidding" requires due advertisement, giving opportunity to bid, and contemplates a bidding on the same undertaking upon each of the same material items covered by the contract; upon the same thing. It requires that all bidders be placed upon the same plane of equality and that they each bid upon the same terms and conditions involved in all the items and parts of the contract, and that the proposal specify as to all bids the same, or substantially similar specifications. . . . There can be no competitive bidding in a legal sense where the terms of the letting of the contract prevent or restrict competition . . . .

Tex. Highway Comm'n v. Tex. Ass'n of Steel Imps., Inc., 372 S.W.2d 525, 527 (Tex. 1963) (quoting Sterrett v. Bell, 240 S.W.2d 516, 520 (Tex. Civ. App.-Dallas 1951, no writ)). In short, competitive bidding procedures will generally include due advertising and terms of purchase or sale that treat bidders equally and do not restrict competition. Assuming that chapter 263 applies to the sale of a particular eight-liner machine forfeited under article 18.18 of the Code of Criminal Procedure, the commissioners court may by rule adopt a method of sale other than at "open auction" provided the method is essentially a sale by competitive bid or auction. See TEX. LOC. GOV'T CODE ANN. §§ 263.152-.158 (Vernon 2005).

Perhaps anticipating this answer, you also ask whether "the county [may] use a competitive bidding procedure under which bidders are required to contractually agree to take the equipment to a jurisdiction where its use is not illegal." Request Letter, supra note 1, at 1. You express some concern that such a requirement might constitute an improper geographic restriction on the sale. See id. (citing Tex. Att'y Gen. Op. Nos. MW-139 (1980), DM-113 (1992)). While such a requirement might restrict the number of willing bidders, chapter 263 authorizes the commissioners court or its representative to reject any bid "in the best interests of the county." See TEX. LOC. GOV'T CODE ANN. § 263.154 (Vernon 2005). The county's best interest is a question of fact for the commissioners court to determine in the first instance and thus cannot be resolved in the opinion process. See Tex. Att'y Gen. Op. No. GA-0446 (2006) at 18 ("Questions of fact are not appropriate to the opinion process."). But given the county's interest in ensuring that the eight-liner machines are not used illegally in the community, we believe the commissioners court could exercise its rule-making authority to condition all sales on the purchaser's agreement to remove the machines to a jurisdiction where their use would not be illegal. See TEX. PENAL CODE ANN. § 47.06(a), (f) (Vernon 2003) (making it an offense to own, transfer, or possess a gambling device with intent to promote gambling; recognizing a defense when the purpose is to ship the device to another jurisdiction where possession or use is legal).

SUMMARY

Depending on the terms of the court order forfeiting eight-liner machines as gambling contraband, and assuming such machines meet the definition of surplus or salvage property under Local Government Code chapter 263, a county commissioners court may order the machines sold by competitive bid or auction. The commissioners court may adopt rules requiring the purchasers to remove the property to a jurisdiction in which its use is legal.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

William A. Hill
Assistant Attorney General, Opinion Committee

Footnotes

[1] See Letter from Honorable Eddie Lucio, Jr., Chair, Committee on International Relations and Trade, Texas State Senate, to Honorable Greg Abbott, Attorney General of Texas, at 1 (Sept. 22, 2006) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].

[2] Letter from Honorable Omar Lucio, Sheriff of Cameron County, to Honorable Eddie Lucio, Chair, Senate Committee on International Relations and Trade, at 2 (Aug. 14, 2006) (attached to Request Letter, supra note 1) (on file with the Opinion Committee).

[3] As you note, article 18.18 expressly authorizes the destruction of gambling contraband, which would achieve the goal of ensuring that the property is not reused for illegal purposes. See Request Letter, supra note 1, at 1; TEX. CODE CRIM. PROC. ANN. art. 18.18(a) (Vernon Supp. 2006).

[4] Under section 71.02 of the Texas Penal Code, a person commits the offense of engaging in organized criminal activity by committing or conspiring to commit, with the requisite intent, "any gambling offense punishable as a Class A misdemeanor," among other listed offenses. See TEX. PENAL CODE ANN. § 71.02(a) (Vernon Supp. 2006). An offense under section 71.02 "is one category higher than the most serious offense [in the section's list of crimes] that was committed, and if the most serious offense is a Class A misdemeanor, the offense is a felony of the third degree." Id. § 71.02(b).

[5] Section 263.152(a) contains an exception to the bidding or auction requirement when the purchaser of the property is another county or political subdivision. TEX. LOC. GOV'T CODE ANN. § 263.152(a) (Vernon 2005). The statute also allows a county to trade in, destroy, or donate to charity county property under certain circumstances. Id. § 263.152(a)(2)-(4).

[6] The County Purchasing Act contains procedures and requirements for a county to purchase property by competitive bid. See generally id. §§ 262.021-.036 (Vernon 2005). While the County Purchasing Act applies to county purchases rather than sales, it provides general insight into the Legislature's view of competitive bidding practices.