Case Information
*1 The Attorney General of Texas JIM MAnOX Oct,cmber 24, 1984
Attorney General Opinion No. JM-215 Aonorable David Cain Supreme Gael Building Chairman P. 0. Box 1x49 Re: Bond requirements for Committee on Transportation Austin. TX. 78711. 254
51214752SOl motor vehicle dealers under Texas House of Representatives Telex 910/974.13S7 P. 0. Box 2910 Telecopier 51214754298 78769 Austin. Texas Dear Representative Cain: 714 Jackson. Suite 7W Dallas, TX. 75202-4SOS 2141742-99U
You have asked this office for its opinion on matters relating
the bond requirement for motor vehicle dealers under article 6686. Specific.%:Lly, you ask first whether article 6686 or any 4924 Alberta Ave., Suite 10 law implicitl.>~ requires that a particular kind of bond be filed El Paso, TX. 799052793 9151S33.w pursuant articll! 6686. Second, you ask whether the Texas Depart-
ment of Highways ancl Public Transportation has the authority the type bond filed under the act. 301 1exu. swe 700 rlouston. TX. 77002-3111 6686, section (a). describes the procedures to be 713/223ea9S followed by applicants for an original dealer’s and manufacturer’s general distinguirh,ing number or master dealer’s license plate. 808 Broadway, Suite 312 Subsection (a)(7), in particular. was rigniflcantly amended by the Lubbock. TX. 79401-3479 Sixty-eighth Legisl.c:ture in 1983. See Acta 1983, 68th Leg., ch. 941, 909i747.5239 at 5174. The atnentlrtents. which marked a number of changes from prior law. were analyzed by this office in an earlier opinion. See Attorney 4309 N. Tenth. Suite B General Opinion 13-136 Nonetheless, severalquestions McAllen. TX. 7SSOl-1SP.S concerning article rerrmin, the most significant which 512/a&?-4547 are the subject of J’our inquiry. 200 Mel Plaza. Suite 400 The present controversy arises from the newly enacted bond San Antonlo, TX. 7&?0%?797 requirement of art:lcIe 6686(a) (7). As a condition to the issuance of 512a2S.4191 a license under thti! act, subsection (a)(7) now requires each applicant An Equal Opportunltyl Altirmatlva Actlon EI@OYW procure culd file with the Department [of Bighways
and Public Transportation] a good and sufficient bond in I:he amount of Twenty-five Thousand Dollars (Emphasis added). ($25.000:‘.
The bond is condit::oned oo (1) the applicant’s satisfactory payment of all valid bank dralta drawn for the purchase of motor vehicles dealer-to-dealer trrhnsactions and (2) the applicant’s transfer of good *2 Ronorable David Cain - Page ii art.
title to each motor vehi:le he or she sells. 6686(a) (7). The act does no1: specify the type of bond to be submitted by applicaote. but merely tluLt it be “good and sufficient.” Thus, YOU ask in connection with you,’ first question whether the bond required under the act “may be either a cash bond, surety bond, or bank letter of credit that indemnifies :ln the same manner as a surety bond.” is our opinion that neither
In answer to your first question. nor any other law acts the type of bond filed under the act. Our conclusion rests, in part, on the fact no particular meaning or 1in:ttation is inherent in the words “good and sufficient bond.”
Rule 364 the Texa:, Rules of Civil Procedure, for example, persons seeking to suspend the execution of an adverse judgment to file a “good and sufficient bond” approved by the court The supreme clerk, prior to prosecuting an appeal or writ of error. court, interpreting the prt:decessor Rule 364, held that if one of the sureties on the bond wa.8 financially able to pay the amount of the bond in the event of default, and if the district clerk was willing to accept the bond, then this Inside the bond “good and sufficient” for the Ex I’arte Wrather, 161 S.W.2d 774, 775 (Tex. purposes of the rule. 1942). On the other hand, a bond which provides no security than the solvency the principal obligor is not a “good and sufficient bond” within thtz meaning the rule. Elliot v. Lester, 126 S.W.Zd 756, 759 (Tex. CL’?. App. - Dallas 1939. no writ). (repealed, see Probate Code 1346).
formerly authorized the su1.e of estate property. It required the guardian of the estate to post a “good and sufficient bond” prior the sale. In a case coastc%ing this requirement, one court of civil appeals concluded that theoc! words “relate to [the bond’s] terms and conditions the solvt!r.cy and sufficiency its sureties.” Jarnagin v. Garrett, 69 S.J.Zd 511, 514 (Tex. Civ. App. - Texarkana 1934, writ ref’d). The colrrt indicated that the duty of the officer accepting the bond was not: merely to require the bond; rather, officer was to “formulat(? . . . an order requiring a bond of a character,* one which satisfied the requirements of the law under vhich it was filed. Id. Such bonds should be liberally construed in order to effec,tuatehe purposes the bond is serve. Scroggs v. Morgan, LO7 S.W.2d 911 (Tex. Civ. App. - Beaumont 1937). rev’d on other grounds 130 S.W.Zd 283 (Tex. 1939). But see Setttgast v. Barris Count]5759 S.W.2d 543, 547 (Tex. Civ. App. - Galveston 1942. writ rl?:l’d) (bonds are strictly construed). Accordingly, we believe that the discretion, if any, of the Department of Highways and Public Tr~lsportation in accepting or refusing bond required by article 6686(a)(7) must be determined by reference the language of the act and the purpose it is intended to accomplish.
” (Jn-215)
Honorable David Cain - Page :I As we noted in AttorncG General Opinion JM-136 (1984). the bond required by article 6686(a)(7) to provide security consumers and auto dealers doing business with persons licensed under In this respect, Ihe purpose of subsection is similar the act. of laws in other atates vhich require bonds from applicants thet for motor vehicle dealer licenses.
5320.27(10) (West 1984); Iowa Code Ann. %$i%; :2;t %%I; %: Transp. Code AM. 1glS-103, U-308 (1984-85); Mich. Camp. Laws Ann. $257.248(7) (West 1984); 1I.C. Gen. Stat. 120-288(e) (1983); Okla. Stat. tit. 47, 0583(E) (1981). In this state, bonds of this kind are coavnon prerequisites to the issuance of operating permits or licenses See, e.g.. V.T.C.S. arts. 911b. 513 (motor for other occupations. carriers); 4413(29bb), S4bs,rivate investigators and private security agencies); 5221f. 513 (mobiLa! home dealers and manufacturers); 8501-l.
68(b) (boxing and wrestling; promoters); 8700. 05 (auctioneers). Our research indicates that under the ~majority of these statutes, only surety bonds sponsored by corporations licensed to conduct business the state are acceptable. IJe are also informed that following this lead, the Department of Highways and Public Transportation has engaged in a similar practice under article 6686(a)(7).
The language of article does not, in our opinion, support limitation imposed by the Department Highways and Public Transportation. Whereas the act stipulates that bonds submitted thereunder be “good and sufficient,” those previously cited statutes for which only corporate surety bonds are accepted expressly impose this requirement or provide for alternative forms of security. ‘allb, 113; 4413(29bb), 140; 522lf. 113;
fgp&b;l;Ti;$; ;;‘.‘“’ Set! also, Iowa Code Ann. 1322.4 (West 1984); Md. Transp. Code Ann. 515-308 (1984); N.C. Gen. Stat. 520-288(e) Furthermore, the rule urging liberal construction statutory bonds, Scroggs v. Morgan, supra, compels the rejection any rule or policy stricter than the statutory schame, particularly if it does not serve the public interest. Although a corporate surety bond arguably may provide the best form of security for consumers dealers, it does not necc!ssarily follow the other forms of security described in your ::c!quest cannot equally accomplish the goals of article 6686(a)(7). Moreover, because neither the courts nor the legislature has seen fit to impart a particular meaning or limitation on the words “good and sufficient bond,” this office is without authority to approve au ‘:I action by an administrative body. Accordingly, we answer both your first and second questions in the negative.
Finally, we caution that our conclusions should not be read to require the Department of Righways and Public Transportation abandon its discretion over l:he approval of bonds filed under the act. It is clear that the legislature intended to impose on the department the duty to determine the su:! ficiency of bonds submitted by applicants *4 Eonorable David Cain - Page 4 licenses and ta88. This necessarily entails the exercise
for dealer's the department in determining whether a some discretion by Given the bond in fact provides the security intended. number of applications the department must process every year, understandable that the de?.lrtment would adopt a practice which not the most administratively indemnifies adequately but is also convenient. Cf. Bullock v. Rewlett-Packard Co., 628 S.W.2d 754 (Tex. 1982). HowevE until article expressly authorizes such a practice, the department say not place limits on the type of bond acceptable under the act.
SUMMARY Neither article 6686 nor other law implicitly the bor,d filed pursuant to subsection to be of a particular kind. The Texas Department of Hi:~lways and Public Transportation may not, therefore, limit the type of bond filed under the act.
JIM MATTOX Attorney General of Texas TOM GREEN
First Assistant Attorney General
DAVID R. RICRARDS
Executive Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Rick Gilpin
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Rick Gilpin, Chairman
Colin Carl
Susan Garrison
Tony Guillory
Jim Moellinger
Nancy Sutton