74R11373 E
By Kuempel H.B. No. 667
Substitute the following for H.B. No. 667:
By Dear C.S.H.B. No. 667
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of auctions and auctioneers.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 1(10), Chapter 320, Acts of the 64th
1-5 Legislature, Regular Session, 1975 (Article 8700, Vernon's Texas
1-6 Civil Statutes), is amended to read as follows:
1-7 (10) "Auction business <company>" means a person,
1-8 partnership, corporation, association, or other legal entity that
1-9 <engages> in the regular course of business engages in <of>
1-10 arranging, managing, sponsoring, advertising, or conducting
1-11 auctions.
1-12 SECTION 2. Section 2, Chapter 320, Acts of the 64th
1-13 Legislature, Regular Session, 1975 (Article 8700, Vernon's Texas
1-14 Civil Statutes), is amended to read as follows:
1-15 Sec. 2. EXEMPT TRANSACTIONS. The provisions of this Act
1-16 shall not apply to the following transactions:
1-17 (1) a sale conducted by order of any United States
1-18 court pursuant to Title 11 of the United States Code relating to
1-19 bankruptcy;
1-20 (2) a sale conducted by an employee of the United
1-21 States or the State of Texas or its political subdivisions in the
1-22 course and scope of his employment;
1-23 (3) a sale conducted by a charitable or nonprofit
2-1 organization, if the auctioneer receives no compensation;
2-2 (4) <a sale conducted by an individual of his own
2-3 property if such individual is not engaged in the business of
2-4 selling such property as an auctioneer on a recurring basis;>
2-5 <(5)> a foreclosure sale of realty conducted
2-6 personally by a trustee under a deed of trust;
2-7 (5) <(6)> a foreclosure sale of personal property
2-8 conducted personally by the mortgagee or other secured party or an
2-9 employee <or agent> of such mortgagee or other secured party acting
2-10 in the course and scope of his employment if the employee <or
2-11 agent> is not engaged otherwise in the auction business and if all
2-12 property for sale in the auction is subject to a security
2-13 agreement;
2-14 (6) <(7)> a sale conducted by sealed bid;
2-15 (7) <(8)> an auction conducted by a licensed
2-16 auctioneer in a course of study, approved by the commissioner, for
2-17 auctioneers and conducted <only> for student training purposes;
2-18 (8) <(9)> an auction conducted by a posted stockyard
2-19 or market agency as defined by the Federal Packers and Stockyard
2-20 Act, 1921, as amended (7 U.S.C. Section 181 et seq.);
2-21 (9) <(10)> an auction of livestock conducted by a
2-22 nonprofit livestock trade association chartered in this state, if
2-23 the auction involves only the sale of the trade association's
2-24 members' livestock; or
2-25 (10) <(11)> an auction conducted by a charitable or
3-1 nonprofit organization chartered in this state, if the auction
3-2 involves only the property of the organization's members and the
3-3 auction is part of a fair that is organized under state, county, or
3-4 municipal authority.
3-5 SECTION 3. Section 3, Chapter 320, Acts of the 64th
3-6 Legislature, Regular Session, 1975 (Article 8700, Vernon's Texas
3-7 Civil Statutes), is amended by amending Subsections (a)-(d), (f),
3-8 and (h) and adding Subsections (i)-(l) to read as follows:
3-9 (a) Except as expressly exempted under this Act:
3-10 (1) no person may act as an auctioneer or associate
3-11 auctioneer in an auction held within this state unless the person
3-12 <he> holds a license issued by the commissioner under this Act; and
3-13 (2) an auction business, except one holding a
3-14 currently valid wholesale motor vehicle auction general
3-15 distinguishing number issued or renewed pursuant to the provisions
3-16 of Article 6686, Revised Statutes, may not be owned, managed, or
3-17 operated in this state unless the owner, manager, or operator holds
3-18 an auctioneer's license issued by the commissioner which is
3-19 conspicuously displayed during the conducting of an auction on the
3-20 premises of the business or at an auction site.
3-21 (b) A person is eligible for an auctioneer's license if the
3-22 person <he>:
3-23 (1) is at least 18 years of age;
3-24 (2) is a citizen of the United States or a legal
3-25 alien;
4-1 (3) is a high school graduate or holds a high school
4-2 equivalency certificate;
4-3 (4) has not been convicted of a felony involving moral
4-4 turpitude during the five years preceding the date of application;
4-5 (5) has completed not less than 80 hours of classroom
4-6 instruction at an auction school having a curriculum approved by
4-7 the department; and
4-8 (6) <either (i)> passes a written or oral examination
4-9 demonstrating the person's <his> knowledge of the auction business
4-10 and of the laws of this state pertaining to the auction business<;
4-11 or (ii) shows proof of his employment by a licensed auctioneer for
4-12 a period of one year during which the applicant participated in at
4-13 least five auctions>.
4-14 (c) A person is eligible for an associate auctioneer's
4-15 license if the person <he>:
4-16 (1) is a citizen of the United States or a legal
4-17 alien; <and>
4-18 (2) is employed under the direct supervision of a
4-19 licensed auctioneer; and
4-20 (3) is less than 18 years of age at the time the
4-21 license is issued or renewed.
4-22 (d) Each person applying for a license must apply to the
4-23 commissioner on a form provided by the commissioner that
4-24 establishes the applicant's eligibility for the license. The
4-25 application must be accompanied by all <the> required fees <bond,
5-1 the required license fee,> and either the limited sales tax permit
5-2 number issued by the comptroller of public accounts or proof of
5-3 exemption from the limited sales tax permit requirement.
5-4 (f) A person who establishes the person's <his> eligibility
5-5 for an auctioneer's license may apply to the commissioner for a
5-6 license examination. The application must be accompanied by the
5-7 examination fee prescribed by the commission. On receipt of an
5-8 examination application with the required fee, the commissioner
5-9 shall furnish the applicant with study materials and references on
5-10 which the examination will be based and a schedule specifying the
5-11 dates and places the examination will be offered. The applicant
5-12 may take the examination at any scheduled offering within 90 days
5-13 after receipt of the study materials. If an applicant fails the
5-14 qualifying examination, the applicant <he> may reapply to take the
5-15 license examination again. However, if the applicant fails the
5-16 examination twice within a one-year period, the applicant <he> must
5-17 wait one year to reapply.
5-18 (h) A license issued under this Act shall be issued for a
5-19 <the> period of one year <set by the commission>.
5-20 (i) A license issued to an auctioneer or an associate
5-21 auctioneer is not transferrable.
5-22 (j) Any change in the information furnished on the license
5-23 or renewal application must be reported by the applicant to the
5-24 department before the 30th day after the date the change occurred.
5-25 Failure to report or furnish such information may result in the
6-1 imposition of sanctions authorized by this Act.
6-2 (k) A licensee may apply for license renewal by:
6-3 (1) submitting a renewal application on a form
6-4 prescribed by the commissioner;
6-5 (2) providing all information required by the
6-6 commissioner; and
6-7 (3) paying the required fees.
6-8 (l) The fees required under this Act for a license are as
6-9 follows:
6-10 (1) $100 for issuance or renewal of an auctioneer's
6-11 license;
6-12 (2) $50 for issuance or renewal of an associate
6-13 auctioneer's license; and
6-14 (3) $100 payable to the auctioneer public protection
6-15 and recovery fund by an applicant for issuance or renewal of a
6-16 license. If the total of the fund is $500,000 or more on the first
6-17 day of September of any year, the license renewal will not require
6-18 a fee for the fund; if the fund is less than $500,000 on the first
6-19 day of September of any year, the renewal fee for the fund will be
6-20 a shared proportion to bring the fund back to $500,000; the fee for
6-21 the fund will never be above $100 in any renewal year.
6-22 SECTION 4. Section 3B, Chapter 320, Acts of the 64th
6-23 Legislature, Regular Session, 1975 (Article 8700, Vernon's Texas
6-24 Civil Statutes), is amended to read as follows:
6-25 Sec. 3B. Continuing education requirements <programs>.
7-1 (a) An applicant for renewal of an auctioneer's or associate
7-2 auctioneer's license must provide proof that the applicant has
7-3 completed 7-1/2 hours of continuing education in the year preceding
7-4 the date of the application for renewal.
7-5 (b) The commissioner shall approve the curriculum for
7-6 continuing education accepted under this section. A nonprofit
7-7 corporation or foundation approved by the commissioner or an
7-8 institution of higher education that provides continuing education
7-9 courses that cover the approved curriculum shall issue a
7-10 certificate of completion to a license holder for course hours
7-11 actually attended and completed by the licensee <The commissioner
7-12 may recognize, prepare, or administer continuing education programs
7-13 for licensees. Participation in the programs is voluntary>.
7-14 SECTION 5. Chapter 320, Acts of the 64th Legislature,
7-15 Regular Session, 1975 (Article 8700, Vernon's Texas Civil
7-16 Statutes), is amended by adding Section 3C to read as follows:
7-17 Sec. 3C. ADVISORY BOARD. (a) The auctioneer advisory board
7-18 is created to advise the commissioner on educational matters, the
7-19 curriculum for approved auction schools and for approved continuing
7-20 education courses, and the adoption of rules for the implementation
7-21 of this Act. The advisory board consists of six members appointed
7-22 by the commissioner.
7-23 (b) The advisory board consists of four licensed auctioneers
7-24 and two representatives of the general public, who serve staggered
7-25 four-year terms. A vacancy on the advisory board shall be filled
8-1 by appointment by the commissioner. A person who has served a full
8-2 four-year term may not be reappointed to a successive four-year
8-3 term.
8-4 (c) Appointments to the advisory board shall be made without
8-5 regard to the race, color, disability, sex, religion, age, or
8-6 national origin of the appointees. A member of the advisory board
8-7 is not liable in a civil action for an act performed in good faith
8-8 in the execution of duties as an advisory board member.
8-9 SECTION 6. Chapter 320, Acts of the 64th Legislature,
8-10 Regular Session, 1975 (Article 8700, Vernon's Texas Civil
8-11 Statutes), is amended by adding Section 4A to read as follows:
8-12 Sec. 4A. AUCTIONEER PUBLIC PROTECTION AND RECOVERY FUND.
8-13 (a) The auctioneer public protection and recovery fund is
8-14 established as a special trust fund with the state treasurer as
8-15 custodian, to be administered by the commissioner as trustee,
8-16 without appropriation, for the protection of the public and for the
8-17 payment of claims as authorized by this section. All fees paid by
8-18 licensees to the auctioneer public protection and recovery fund
8-19 shall be invested and reinvested by the state treasurer in the same
8-20 manner as funds of the Employees Retirement System of Texas, and
8-21 the income from the investments shall be deposited to the credit of
8-22 the fund; however, an investment may not be made that impairs the
8-23 liquidity required for public protection programs and claims
8-24 payments. The fees collected and the income earned from
8-25 investments deposited into the fund are not assets of the state and
9-1 may not be collected for the general operation of state government.
9-2 Money in the fund shall be spent as provided by this section for
9-3 the benefit and protection of persons who consign, sell, or
9-4 purchase goods at an auction or who may be damaged by the acts or
9-5 omissions of an auctioneer in the conduct of an auction.
9-6 (b) The department at the direction of the commissioner
9-7 shall develop public protection programs that may include:
9-8 (1) the preparation of educational materials for the
9-9 public providing information regarding the law and rules governing
9-10 auctions and auctioneers;
9-11 (2) the monitoring of auctions and auctioneer
9-12 education programs to assure compliance by auctioneers and auction
9-13 businesses; and
9-14 (3) the conducting of an informal dispute resolution
9-15 process for the settlement of claims.
9-16 (c) As part of the auctioneer public protection and recovery
9-17 fund, the commissioner shall reserve out of the fees paid into the
9-18 fund an amount not to exceed $250,000 for the payment of valid
9-19 claims under this section. Any amount in the fund in excess of
9-20 $250,000 may be spent only for public protection programs under
9-21 Subsection (b) of this section.
9-22 (d) An aggrieved person who obtains a final judgment in a
9-23 court against a licensee to recover damages for an act or omission
9-24 of the licensee in the conduct of an auction, on the termination of
9-25 all proceedings, including appeals and proceedings supplemental to
10-1 judgment for collection purposes, may file a verified application
10-2 in the court in which the judgment was entered for an order
10-3 directing payment of the judgment from the auctioneer public
10-4 protection and recovery fund subject to the limitations in this
10-5 section.
10-6 (e) Before litigation is commenced, an aggrieved person must
10-7 file notice of the claim with the commissioner. The notice must be
10-8 received by the commissioner before the first anniversary of the
10-9 date of the act or omission giving rise to the claim or the first
10-10 anniversary of the date the act or omission is discovered or should
10-11 reasonably have been discovered. Failure to timely file the notice
10-12 precludes recovery from the auctioneer public protection and
10-13 recovery fund.
10-14 (f) After notice under Subsection (e) of this section is
10-15 received by the commissioner, the department shall investigate the
10-16 claim and conduct an informal dispute resolution process to attempt
10-17 to settle the claim, if valid, on a reasonable basis. The results
10-18 of the department's investigation and the informal dispute
10-19 resolution process are admissible in litigation against the
10-20 licensee.
10-21 (g) A court may not enter an order for payment of a claim
10-22 from the auctioneer public protection and recovery fund except for
10-23 an amount equal to the actual cash loss of the aggrieved person or
10-24 $10,000, whichever amount is less. Actual cash loss suffered by an
10-25 aggrieved person does not include attorney's fees, speculative or
11-1 punitive damages, court costs, or consequential damages.
11-2 (h) The commissioner may not pay and the auctioneer public
11-3 protection and recovery fund is not liable for a total payment of
11-4 all claims by more than one aggrieved person arising from one
11-5 auction at one location in excess of $20,000. The total payment of
11-6 claims against a single auctioneer may not exceed $20,000.
11-7 (i) If the commissioner pays a claim against an auctioneer,
11-8 the auctioneer shall:
11-9 (1) reimburse the auctioneer public protection and
11-10 recovery fund immediately or agree in writing to reimburse the fund
11-11 on a schedule to be determined by rule of the commissioner; and
11-12 (2) immediately pay the aggrieved person an amount due
11-13 to that person or agree in writing to pay the aggrieved person on a
11-14 schedule to be determined by rule of the commissioner.
11-15 (j) A payment made by an auctioneer to the auctioneer public
11-16 protection and recovery fund or to an aggrieved person under this
11-17 section shall include interest accruing at the rate of eight
11-18 percent a year for the period beginning on the date the
11-19 commissioner pays the claim and ending on the date payment is made
11-20 by the auctioneer.
11-21 (k) A license issued under this Act may be revoked by the
11-22 commissioner on proof that the commissioner has made a payment from
11-23 the auctioneer public protection and recovery fund for an act by
11-24 the licensee that is subject to a claim against the fund. The
11-25 commissioner may probate an order revoking a license. An
12-1 auctioneer whose license is revoked under this subsection is not
12-2 eligible to receive a new license until the auctioneer has repaid
12-3 in full, including interest, the amount paid from the fund on the
12-4 auctioneer's behalf unless, after a hearing, the commissioner
12-5 issues a new probated license.
12-6 (l) If the commissioner pays from the auctioneer public
12-7 protection and recovery fund a claim against an auctioneer, the
12-8 department is subrogated to all rights of the aggrieved person
12-9 against the auctioneer to the extent of the amount paid to the
12-10 aggrieved person.
12-11 (m) For purposes of this section and recovery from the
12-12 auctioneer public protection and recovery fund, the term "aggrieved
12-13 person" does not include a motor vehicle dealer participating in a
12-14 wholesale motor vehicle auction.
12-15 (n) This section does not limit the authority of the
12-16 commissioner to take disciplinary action against a licensee for a
12-17 violation of this section or a rule of the commissioner. The
12-18 repayment in full of all obligations to the fund by a licensee does
12-19 not nullify or modify the effect of any other disciplinary
12-20 proceeding brought under this Act against the licensee.
12-21 SECTION 7. Sections 7(a) and (f), Chapter 320, Acts of the
12-22 64th Legislature, Regular Session, 1975 (Article 8700, Vernon's
12-23 Texas Civil Statutes), are amended to read as follows:
12-24 (a) The commissioner may deny, suspend, or revoke the
12-25 license of any auctioneer for any of the following causes:
13-1 (1) for obtaining a license through false or
13-2 fraudulent representation;
13-3 (2) for making any substantial misrepresentation in an
13-4 application for an auctioneer's license;
13-5 (3) for a continued and flagrant course of
13-6 misrepresentation or for making false promises through agents,
13-7 advertising, or otherwise;
13-8 (4) for failing to account for or remit, within a
13-9 reasonable time as determined by rules adopted by the commissioner,
13-10 any money belonging to others that comes into his possession and
13-11 for commingling funds of others with his own or failing to keep
13-12 such funds of others in an escrow or trustee account;
13-13 (5) for conviction in a court of competent
13-14 jurisdiction of this state or any other state of a criminal offense
13-15 involving moral turpitude or a felony;
13-16 (6) for violation of this Act or any rule or
13-17 regulation of the department; or
13-18 (7) for any violation of the Business & Commerce Code
13-19 in the conduct of an auction.
13-20 (f) If, after a hearing, the commissioner determines that a
13-21 license should be denied, revoked, or suspended, the applicant or
13-22 licensee may <has 30 days in which to> appeal the commissioner's
13-23 decision as provided by Chapter 2001, Government Code <to the
13-24 district court of Travis County or of the county in which the
13-25 violation is alleged to have occurred>.
14-1 SECTION 8. Section 10A, Chapter 320, Acts of the 64th
14-2 Legislature, Regular Session, 1975 (Article 8700, Vernon's Texas
14-3 Civil Statutes), is amended to read as follows:
14-4 Sec. 10A. EMPLOYMENT BY AUCTION BUSINESS <COMPANY>. A
14-5 person who holds a license issued under this Act may not act as an
14-6 auctioneer for an auction business <company> unless the business
14-7 <company> is owned, managed, or operated by a person who is
14-8 licensed under this Act or holds a currently valid wholesale motor
14-9 vehicle general distinguishing number.
14-10 SECTION 9. Section 11, Chapter 320, Acts of the 64th
14-11 Legislature, Regular Session, 1975 (Article 8700, Vernon's Texas
14-12 Civil Statutes), is amended to read as follows:
14-13 Sec. 11. Penalties. (a) Whoever acts as an auctioneer as
14-14 defined in this Act without first obtaining a license commits a
14-15 Class A <B> misdemeanor.
14-16 (b) Whoever violates any other provisions of this Act or any
14-17 rule or regulation promulgated by the commissioner in the
14-18 administration of this Act, for the violation of which no other
14-19 penalty is provided, commits a Class B <C> misdemeanor.
14-20 SECTION 10. Sections 5A and 5B, Chapter 320, Acts of the
14-21 64th Legislature, Regular Session, 1975 (Article 8700, Vernon's
14-22 Texas Civil Statutes), are repealed.
14-23 SECTION 11. (a) Except as otherwise provided by this
14-24 section, this Act takes effect September 1, 1995.
14-25 (b) On the effective date of this Act the balance of funds
15-1 in the auctioneer education and recovery fund is hereby transferred
15-2 to the auctioneer public protection and recovery fund.
15-3 (c) The change in law made by this Act applies only to a
15-4 claim against an auctioneer that is filed with the commissioner of
15-5 licensing and regulation on or after the effective date of this
15-6 Act. A claim filed before the effective date of this Act is
15-7 governed by the law in effect at the time the claim was filed, and
15-8 the former law is continued in effect for that purpose.
15-9 (d) The change in law made by this Act to Sections 3(b) and
15-10 (c), Chapter 320, Acts of the 64th Legislature, Regular Session,
15-11 1975 (Article 8700, Vernon's Texas Civil Statutes), regarding the
15-12 requirements for a license, takes effect September 1, 1996, and
15-13 applies only to an application for a license made on or after that
15-14 date. An application made before that date is governed by the law
15-15 in effect at the time the application was made, and the former law
15-16 is continued in effect for that purpose.
15-17 (e) The change in law made by this Act to Section 3B,
15-18 Chapter 320, Acts of the 64th Legislature, Regular Session, 1975
15-19 (Article 8700, Vernon's Texas Civil Statutes), regarding continuing
15-20 education required to renew a license, takes effect September 1,
15-21 1996, and applies only to a license renewed on or after that date.
15-22 A license renewed before that date is governed by the law in effect
15-23 at the time the renewal application was made, and the former law is
15-24 continued in effect for that purpose.
15-25 (f) The change in law made by this Act to Section 11,
16-1 Chapter 320, Acts of the 64th Legislature, Regular Session, 1975
16-2 (Article 8700, Vernon's Texas Civil Statutes), applies only to an
16-3 offense that occurs on or after the effective date of this Act.
16-4 For purposes of this subsection, an offense is committed before the
16-5 effective date of this Act if any element of the offense occurs
16-6 before that date.
16-7 (g) An offense committed before the effective date of this
16-8 Act is covered by the law in effect when the offense was committed,
16-9 and the former law is continued in effect for that purpose.
16-10 (h) In making the initial appointments to the auctioneer
16-11 advisory board, the commissioner of licensing and regulation shall
16-12 appoint three members to serve two-year terms and three members to
16-13 serve four-year terms.
16-14 SECTION 12. The importance of this legislation and the
16-15 crowded condition of the calendars in both houses create an
16-16 emergency and an imperative public necessity that the
16-17 constitutional rule requiring bills to be read on three several
16-18 days in each house be suspended, and this rule is hereby suspended,
16-19 and that this Act take effect and be in force from and after its
16-20 passage, and it is so enacted.