Case Information
*1 . .
OFTEXAS
Auemm. 78711 TEXAS
dOaN I,. aILL
Awl-ORNEY GENERAL
July 29, 1977 Honorable Mack Wallace, Chairman Opinion No. H-1030 Railroad Commission of Texas
P. 0. Drawer 12967 Re: Authority of Railroad Austin, Texas 78711 Commission to prohibit con-
tract provisions limiting the liability of an LPG dealer.
Dear Mr. Wallace:
YOU have requested our opinion concerning the authority of the Railroad Commission to modify, delete, prohibit, or otherwise regulate the terms and conditions of an equipment rental contract between a licensed Liquified Petroleum Gas (LPG) dealer and a lessee customer. You specifically ask about such contract terms which purport to limit the liability of a licensed LPG dealer for negligence.
Section 3A of article 6066d, V.T.C.S., provides: General. The Railroad Commission of Texas is hereby authorized, empowered, and directed, and it shall be its duty to promulgate and adopt, in accordance with this Act, adequate rules, regula- tions, and/or standards pertaining to any and all aspects or phases of the LPG industry (except as provided in Sub- section D. of this Section) which will protect or tend to protect the health, welfare, and safety of the general public.
The Commission is granted jurisdiction to regulate "any and all aspects or phases of the LPG industry" in the interest of public health, welfare, or safety. Thus the Commission may regulate terms and conditions of such rental contracts at least to the extent that they may affect the public health, welfare or safety.
P. 4252
Honorable Mack Wallace - Page 2 (H-1030)
It has been suggested to us that the court's opinion in Spence & HOwe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (Tex. 1963). ' rndicates that there is no connection be- tween clauses which limit liability and negligent conduct. However, as we read the decision, the court was merely stating that the connection was insufficient to mandate a general rule of public policy which would preclude the enforceability of such provisions in all instances. While the court noted the lack of any distinction between indemnity clauses in a commer- cial contract and common insurance policies on behalf of pri- vate citizens, the opinion falls short of finding that there is no connection between indemnity clauses and negligent con- duct. The courts found such a connection in G., C. & S. F. Ry. v. McGown, 65 Tex. 640 (1886), and Bisso v. 'Inland ~~~ Water- ways Corp 349 U.S. 85 (1955). Furthel,..- more, as in Allright, Inc. v. Eiiedge, 515 S.W.2d 266 (Tex. 1974 ), the court in Spence was dealing with a standard of ordinary care.
As stated in Robert R. Walker, Inc. v. Burgdorf, 244 S.W.2d 506, 509 (Tex. 1951):
From those who handle . . . combustible gases . . . the law exacts a duty to pro- tect the public which is proportionate to and commensurate with the damages in- volved.
Thus, LPG dealers are bound to exercise a "high degree of carei to protect the public. Farmers Butane Gas Co., Inc. v. Walker, 489 S.W.2d 949 (Tex. Civ. App. - Waco 1973, no writ). The protection of the public is the clear intent behind arti- cle 6066d.
Since, in our view, the use of equipment rental contract terms which limit the liability of LPG dealers for negligence or provide for indemnification thereof by their customers could have an adverse affect upon the public safety in light of the standard of care required of LPG dealers, we believe the Rail- road Commission has clear authority to regulate or prohibit such terms.
We believe these indemnification clauses are void and un- enforceable as a matter of law since LPG dealers are charged with a dutv of safetv on behalf of the public and the term relates to-negligence in the performance of this duty to the public. Western Union Telegraph Co. v. Linn, 26 S.W. 490 *3 Honorable Mack Wallace L.Fage 3. ',(H-1030)
(Tex. 1894); G., C. & S. F. Ry. Co;, vCi?Gown, supra; Lone Star Gas Co. v. Vea, 37m2d 89 ( . .,'~ hpp. -- East'land 1964, writ ref'd n.r.e.): Dittman v. City of~N:w Braunfels, 48 S.W. 99, no writ): Restatement of Contracts 1114 (Tex. Civ. App.18 S 575, cited in Spence & Howe Construction Co. v. Gulf Oil Corp., supra at 633, and Crowell v. Ho
495 S.W.Zd 887, 889 (Tex. 1973)
vice Co., 85 S;E.Zd 169 (Ga. E
Conun. Code, S 2.719; Northwe
Inc., 351 F.2d 253 (9th Cir. . versity of California, 383 P
County of Missoula, 517 P.2d
Furthermore, the terms of contracts executed subject to the regulatory authority of the Railroad Commission are not protected from the jurisdiction of the Commission by article 1, section 16. Houston Lig 1, section 16. Houston Lig
Commission of Texas, 529 S. Commission of Texas, 529 S.
v. Lo-Vaca Gathering Co., v. Lo-Vaca Gathering Co., 5 5
El Paso 1976, writ ref'd n.r.e.); Railroad Commission of Texas El Paso 1976, writ ref'd n.r.e.); Railroad Commission of Texas
(Tex. Civ. APP. A, 358 U.S. 33 '.2d 973 (Tex. Civ . #one Star Gas Co., 'd - writ ref'd) on other grounds, 304 U.S. 224 (1938). See Letter Advisory - z. 136 (1977).
SUMMARY The Railroad Commission may act to pro- hibit the use of indemnity terms within existing and future equipment rental con- tracts between a licensed LPG dealer and its lessee.
Attorney General of Texas L/$
DAVID M. KENDALL, First Assistant
Honorable Mack Wallace - Page 4 (R-1030)
C. ROBERT HEATH, Chairman
Opinion Committee
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p. 4255