Case Information
*1 Opinion NO. O-2644 Hon. James E. Kilday, Director Motor Transportation Division Re: Whether Railroad Commis- Railroad Commission of Texas sion is required to approve Austin, Texas sale and transfer of the capi-
tal stock Dear Sir: holding a motor carrier permit.
In your letter of August 29, 1940, you advise us of the following:
"Dunn Brothers Inc., a Corporation, duly corporated and exis t ing under and by virtue of the laws of the State of Texas, owns a contract permit and a special commodity carrier per- mit heretofore issued by the Railroad Commission.
under the Motor Carrier Law of Texas.
"Carl H. Dunn, President of the Corporation, has filed an application for the Commission's ap- proval of the sale and transfer
stock in said corporation to Harry Gowins, Jr., setting out in the application that the Corpora- tion owns Contract Carrier Permit No. 11160 and Special Commodity Permit No. 31981."
You request our opinion in response following questions:
"1. Is the Railroad Commission required approve applications the sale and transfer the capital in corporations holding certifi- cates or permits issued under the Motor Carrier Law of Texas, before such stock can be transferred?
“2. If your answer to Question 1 is in the affirmative, are we required to collect a filing fee with such applications?
“3. If we are required to collect a filing fee, should we collect only one filing fee of ten dollars, where more than one permit is owned by the Corporation transferring the stock, or should we collect a ten dollar for each permit owned by said Corporation?"
hon. James d,. Kilday, Page 2
Section 6 (f) of Article.'3llb, Vernon’s Civil :jt.:t- utes, reads:
“Any contract permit held, owned, or obtained by any motor carrier operating under the provisions of Section 6 may be sold, assigned, leased, transferred, or inherited; provided, how- ever, th:lt any proposed sale, lease, assignment, or transfer shall be fir’st presented in wri.ting the Commission its aoprovnl or disapproval and the Commission may disapprove such proposed sale, assignment, lease or transfer if it be found and determined by the Commission that su;h proposed sale, assignment, lease, or transfer is not in good faith or that the proposed purchaser, assignee, lessee, or transferee is not capable of continuing the operation of the equipment proposed to be sold, assigned, leased, or transferred in such a manner as to render the services demanded in the best terest of the public; the Commission in approving or dtsapproving any sale, assignment, lease, or transfer of any permit may take into consioeration ,111 of the requirements and qualifications of a regular applicant required in this Section, and apply same as necessary qualifications of any pro- posed purchaser, assl.gnee, lessee, or transferee; provided, however, that in case a permit is trans- ferred that the transferee shall pay to the Commis- sion a sum of money equal to ten (10) per cent of the amount paid as a consideration for the transfer of the permit which sum of ten (10) per cent shall be deposited in the Zt-;te ,i’reasury to the credit the i!ighlJay Fund of the jtaie; provi.ded, however, th:lt ny permit obtUned bv any motor carrier or by any assignee or trransferee shall be taken and held subject to the right of the State at any time to or forbid the use of the streets limit, restrict, and highways of this State to any holder or owner of Lvery application filed with the Cod]- such permit. mission for an order approving the lease, sale) or of any permit shall be accompanied by a in the sum of Ten Dollars ($10) which fee shall be in addition to other fees and taxes and shall be retained by the Commission whether or transfer of the permit is approved lease, sale, or not. Added Acts 1939, 46th Leg., p. 89, 61 1.”
The Railroad Commission is given no authority regard- ing the transfer of shares. of stock in private corporations, even in those corporations holding motor carrier permits and This question doubt- certificates of convenience and necessity. less arises out of the thought on the part of the person *3 page 3 Hon. James d. Kilday,
acquiring the stock that the view might be taken that a sale is tantamount to a sale of all the assets, including the permit, as suggested under a particular state of facts in Vick v. Park, 171 S.W. 1039 (the identical opinion being reported -ilso in 173 :5&!. 989). However, we do not be- lieve such a doctrine would be applied !n such a way as to re- auire the Railroad Commission to approve a sale and transfer of the stock owning a permit. The tangible property of a corporation belongs as such, corpor~~tion the stockholders merely owning intangible interests in the cor- porate business. Turner v. Cattlemen's Trust Co. 215 S.:i. Ayub, 26& S.;:. 134, 831, Corn. App.; Automobile Mortg. Co. v. Comm. App.
We do not believe there exist sufficient reasons the courts to disregard the corporate fiction and treat of the stock as a transfer of the permit. The finan- cial strength of the corporation itself is not impaired by the sale of stock. If the service is not kept up or the permit is otherwise abused remedies are provided in Article 911b. jee Section 12 (b). Under the facts as stated, your first question is given‘s negative answer.
Yours very truly By /s/ Glenn R. Lewis Glenn H. Lewis, ,Assistant Aic'HC\VKD %iP 13, 1940
/s/ Gerald C. Mann
ATTi,R;d&Y GZN:&AL OF TEXAS
Ot'INI.!N COMIMITTHE
H'B, CHAIRMAN
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