Honorable Robert S. Calvert Opinion No. M- 449 

Comptroller of Public Accounts 

State Capitol Building Re: House Bill No. 579, 

Austin, Texas Chapter 497, Acts of the 

61st Legislature, page 

1606 (Title 122A, 

,Taxation-General, V.C.S.) 

regarding certain coinDear Mr. Calvert: operated machines. 

Your opinion request dated July 28, 1969, poses six 

questions that have arisen under new Article 13.17, Title 

122A, Taxation-General, Vernon's Civil Statutes, which was 

enacted by the 61st Legislature and which becomes effective 

September 1, 1969. 

Your first question Inquires as to whether a business 

licensed under Article 13.17 Is required to file with the 

Comptroller and the Consumer Credit Commissioner a copy of 

'any personal loans, notes, mortgages and any other monetary 

benefits extended to a person engaged in selling 

alcoholic beverages for on-premises consumption." 

or$Er;i$g 

lowing portiozis of the Article'have relevance to thiS'quek3tion; 

to-wit : 

"Section 2. DEEINITIONS. . . . 

+++ 

“(2) tfinancial interest" includes any 

legal or equitable interest, and specifically 

includes the ownership of shares or bonds of 

a corporation. 

*it* 

?!&@tioa$???. * . . 

"(1) It shall be unlawful for a nerson 

who has a financial interest in a business 

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. 

Hon. Robert S. Calvert, page 2 (M-449) 

required to be licensed by this Article to 

knowingly have a financial interest in a 

business engaged in selling or serving ,alcoholic beverages for on-premises consumption 

unless otherwise permitted in this Article. 

no bona fide financial interest or commitment 

in existence prior to September 1, 1969, shall 

be deemed a violation of this Article, but no, 

such interest or commitment may be renewed or 

altered after September 1, 1969, without the 

written approval of the Comptroller, provided 

that this prohibition shall not apply if the 

business engaged in selling or serving alcoholic 

beverages be a corporation whose securities are 

registered under the laws of the United States 

or the State of Texas. (Emphasis added. ) 

*++ 

“(6) Any person required to be licensed by 

this Article may make an extension of credit to 

a lessee or a bailee of a music or skill or 

pleasure coin-operated machine for business or 

commercial purposes when the following terms and 

conditions have been met and the following duties 

and obligations satisfactorily assumed and discharged D 

*** 

“(7) Any person required to be licen~sed by 

this Article who co-signs, guarantees, or becomes 

surety for an extension of credit or loan of any- 

,thing of value to any person engaged in selling or 

serving alcoholic beverages for on-premises consumption or to any person who he has reason to believe 

is about to be engaged in selling or serving alcoholic 

beverages for on-premises consumption, shall file 

with the Comptroller and the Consumer Credit Commissioner, 

a copy of all documents related to the transaction.” 

It is our opinion that a person who lends money to be used 

in a liquor business or who takes a mortgage on any property 

owned by or used in the liquor business has thereby become 

financially Interested in the liquor business within the spirit 

and contemplation of the Act. 

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. 1 

Hon. Robert S. Calvert, page 3 (M-449) 

In Nevada Tax Commission v. Hicks, 310 P.2d 852 (Nev., 

sup. 195'2) th t t d th terms "directly or 

indirectly'int~r%d E?~h~"&sin&s't and "financially 

participating in the business" as contained in the Gambling 

Control Act of the State of Nevada and commission rules 

thereunder. Section 1Oc of the Gambling Control Act provided that applications for gambling licenses shall include 

the names of all persons directly or indirectly interested 

in the business and the nature of such business. cofnmission 

Rule II 1 which was promulgated under such Gambling Control 

Act provided that with regard to the revocation or suspension 

of licenses the omission of the nsme'of any person financially 

participating in the business from the application should be 

deemed pertinent. 

One of the questions in the case was whether the lending 

of money to a hotel corporation for the purpose of constructing a hotel gave the lender a "financially participating 

interest" in the hotel corporation. The court disposed of 

that specific question thusly: 

"It is our view that the language lfinanclally 

participating interest' should not be as narrowly 

defined as respondents would have it but may reasonably be construed to include the investment which 

results when money is lent for the purpose of financing 

an enterprise. Otherwise such financial interests 

a8 those represented by the corporate bonds of sn 

incorporated licensee would be excluded. While these 

do not have the potentially hazardous effect upon the 

public welfare which direct operational control would 

have, still they can be said to be of material concern to the commission." 

Thus, except for the provisions of paragra h 

Section 27, all those barred under Section 27(l P 

(6) of 

rrom having 

a financial interest in a business where alcoholic beverages 

are sold or served for on-premises cFsumption are prohibited 

from making loans to or accepting mortgages from such an 

alcoholic beverage business. However, it is our opinion that 

paragraph (6) provides a means whereby a person otherwise 

prohibited from making such loans can extend credit to a 

lessge or bailee of a coin-operated machine, even though he be 

all% 

eng +d in the on-premises alcoholic business, provided that 

les and regulations set forth in paragraph (6), including 

subparagraphs (a) through (f), are strictly followed. 

- 2226 - 
Hon. Robert S. Calvert, page 4 

Section 27(l) provides an exception if the one engaged 

(M- 449) 

In the sale of alcoholic beverages for on-premises consumption is a corporation whose securities are registered under 

the laws of the United States or this State. However, for 

reasons below given in answer to your second question, we 

are also of the opinion that if the licensee extends credit 

to a corporation of the type described in the exception, 

the licensee must also follow all 

graph (6) and its subparagraphs (a P 

rovisions of said parathrough (f) before it 

can extend credit for business or commercial purposes to a 

lessee or bailee of a coin-operated machine. In brief, a 

licensee under the Act cannot make a.loan to anyone save an 

excepted corporation engaged in the on-premises alcoholic 

beverage business except under paragraph (6), and loans to 

an excepted corporation under Section 27(l) can be made if 

the corporation is a lessee or bailee of a machine on1 

under the terms of the provisions of said paragraph (6 7 . 

We think that paragraph (7) above-quoted is selfexplanatory. It provides that a person licensed by the Act 

can co-sign, guarantee or become surety for the extension 

of credit to a person engaged in the liquor business so long 

as a copy of all documents related to the transaction are 

filed with the Comptroller and the Consumer Credit Commissioner. 

Your second question inquires as to whether a business 

licensed under Article 13.17 will be required to file a copy 

of any personal loans, notes, mortgages and any other monetary 

benefit extended to a person who is not engaged in selling 

or serving alcoholic beverages for on-premises consumption. 

Rxcept~for the provisions of paragraph (6) of Section 27 of 

the Act, there are no prohibitions against a coin-operated 

business becoming interested in another business where alcoholic beverages are not sold for on-premises consumption. 

However, under the provisions of said paragraph (6) which 

extends credit to any lessee or bailee of a coin-operated 

machine (whether such lessee or bailee is in the liquor buslness or not) must follow all of the rules and regulations 

set forth in said paragraph (6) and subparagraphs(a) through 

(f), both inclusive, of said paragraph (6). Since the 

Legislature has provided the means, methods and conditions 

under which a licensed business may make a loan to a lessee 

or bailee of a coin-operated machine, such loans cannot otherwise be made. Where a statute prescribes a method under which 

an Act can be accomplished, no other method can 

R 

e implied 

and all other methods are excluded. Creager v. Ida&o County 

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Hon. Robert S. Calvert, page 5 (M-449) 

Water Improvement District No. 4, 283 S.W. 151 (Tex.Comm. 

3 . 1926). Vit pi1 

lpSp55 erro; refo n.rv;! 

Ware, 280 S.W.2d 378 (Tex.Clv.App. 

Sec.'llll. 

.); 53 Tex.Jur.2d 205, Statutes, 

Your third question reads as follows: 

"Can a person own and operate his own coin 

machine in his business where alcoholic beverages 

are sold and consumed on the premises under Section 27(l), under this act?" 

In Attorney General's Opinion M-437 recently issued, 

this office held that a person who owned and operated his 

own coin-operated machine in his own place of business was 

engaged in a business which is required to be licensed under 

this Act. Therefore, under the plain provisions of Section 

27(l) of the Act, one who is engaged in the business of 

selling alcoholic beverages for on-premises consumption is 

absolutely barred from owning and operating a coin-operated 

machine in his liquzr business. Exceptions to this rule 

are granted in the 

7 

randfather clause" which is contained 

in said Section 27(1 and which is self-explanatory. Section 

27(l) also grants an exemption to corporations whose securities are registered under the laws of the United States or 

Texas. Paragraph (2) of Section 27 also grants an exemption 

In that one who has a financial interest in a business required 

to be licensed can also have an interest in real property on 

which there is located a business engaged in selling or serving alcoholic beverages for on-premises consumption. 

Your fourth question is as follows: 

"Section 26 requires that a written contract 

be filed with the Comptroller as to all agreements 

with licensee and business where a coin-operated 

machine is placed. Would a copy of a blanket contract suffice or would the licensee be required to 

file a copy of each contract signed and sworn to by 

both parties?" 

The applicable portions of Section 26 are as follows: 

"Section 26. ~MJT~;RIZRD CONTRACTS PROHIBITED; 

a 

"(1) No person licensed under this Article 

may place or operate a music or skill or pleasure 

-2228.. 
Hon. Robert S. Calvert, page 6 (M-449) 

coin-operated machine In an establishment 

where alcoholic beverages are sold or served 

for on-premises consumption except by written 

contract. The contract must include all provisions of the agreement between the parties 

and a statement sworn to by both parties that 

there are no other understandings or agreements _ . between tne parties. 

"(2) The licensee shall 

filed with the Comptroller. 

of the contract 

terms previously 

u(bkent where the machine Is placed; and 

furnish a copy to the manager of the 

establi 

of bu:&;ss. 

retain a copy at his principal place 

“(3) The manager of the establishment shall 

retain his copy of the contract on his premises." 

With the words "unless on terms previously filed with 

the Comptroller,!' as contained in paragraph (2)(a), the 

Legislature apparently undertook to provide an exception 

to the rule that a copy of each contract must be filed with 

the Comptroller. These words are ambiguous, and they must, 

if possible, be construed in such a fashion as will ascribe 

a reasonable and fair meaning within the legislative intent, 

as ascertained from a view of the statute as a whole. 53 

Tex.Jur.2d 180-189, Statutes, Sets. 125-126. 

In assigning some efficacy to the exemption provision 

and at the same time staying within the manifest spirit' of 

the policing provisions of the Act, we are of the opinion 

that a fully executed copy of each and every contract must 

be filed with the Comptroller. However, applicable terms of 

the contract may be incorporated and made a part of the contract by express reference to another contract or other 

instrument which sets forth certain contractual terms and 

provisions and which is definitely identified in the present 

contract and which has been previously filed with the Comptroller, Such a contract so incorporating certain terms by 

reference must also affirm that all parties have read such 

terms and provisions and understand them. Thus, a copy of 

a "blanket contract" will suffice only to the extent aboveoutlined. 

Your fifth question inquires as to whether the Act 

requires that a license be procured at each place of business 

where a coin-operated machine Is placed and operated. 

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Hon. Robert S. Calvert, page 7 (M-449) 

We are of the opinion that the Act requires a license 

on the distinctive business of dealing in coin-operated. 

music, skill or pleasure machines. This conclusion i's, 

manifest from many references to the Article, samples of 

which are as follows: 

"Section 8. LICENSE REQUIRRU; PRNALTY; 

EXCEPTIONS. 

"(1) No person shall engage in business 

to manufacture, own, buy, sell, or rent, leaso, 

trade, lend, or furnish to another, or repair, 

maintain, service, transport within the state, 

store, or import, a music coin-operated machine 

or a skill or pleasure coin-operated machine 

without a license issued under this Article. 

*** 

"Section 11. DISPLAY; PENAL!lTY, 

"(1) A person licensed to do business under 

this Article shall prominently display his current 

license certificate at his place of business at 

all times. 

*+* 

"Section 15. TYPES OF LICENSES. 

"(1) A person who wishes to engage in certain 

business dealing with music coin-operated machines 

or skill or pleasure coin-operated machines shall 

apply for a general business license, or an import 

license, or both. 

"(2) A general business licensee may engage 

in business to manufacture, own, buy, sell, rent, 

lease, trade, repair, maintain, service, transport 

or exhibit within the state, and store music and 

,' skill or pleasure coin-operated machines. 

"(3) An import licensee may engage in busirless i 

to import, transport, own, buy, repair, sell, and 

deliver, music and skill or pleasure coin-operated 

machines, for sale and delivery within this.State." 

The provisions of Section 12 dealing with the application 

for a license are also relevant in that the application must 
Hon. Robert S. Calvert, page 8 (M-449) 

show the nature of'the business entity to be licensed snd 

must show the location of each coin-operated machine which 

is owned, possessed or controlled by the licensee. It is 

further relevant that while Article 13.02 of Chapter 13, 

Title 122A, Taxation-General, V.C.S., distinctly provides 

for a tax of $15.00 per year on each coin-operated machine, 

Article 13.17 deals with the licensing of a business which 

deals in such machines. 

The only difficulty in interpretation with regard to 

this question is found in the provisions of Sections 9 and 

16 of Article 13.~17. Section g(2) provides that a license 

shall be effective for a single place of business. Section 

16(l) provides that an annual license fee of $300.00 shall 

be paid for each "type and place of business licensed under 

this Article." 

In McCauley v. Hobbs Trailers, 357 S.W.2d 494, (Tex. 

Civ.App. 1962 

Article 6165a: r)cl”‘s 

it) the court construed Section 2 of 

., which defines a loan broker as “a 

person, firm,. or corporation . . . who pursues the business 

of lending money, . . . and taking for security for the 

payment of such loans . . . an assignment of wages. . . ." 

The court held that the term "business" connoted a distinctive business, i.e., au occupation or employment habitually 

engaged in for the purpose of profit or improvement. 

The requirement of a license to engage ir,a particular 

business or occupation whether it is called a license tax, 

an occupation tax, a privilege tax or an excise tax, is 

not a tax an property. 53 C.J.S. 457-458, Licenses, Sec. 3; 

Producers Oil Company v. Stevens, 99 S.W. 157 (Tex.Civ.App. 

907, error ref.). Rather, such a business licensing 

requirement exacts a tax or fee for the rivllege of carrying 

on a business or occupation. 53 C.J.S. t 46-447, Licenses, 

Sec. 1; 36 Tex.Jur.2d 618, Licenses, Sec. 28. Statutes 

imposing licenses and business taxes are to be construed 

liberally in favor of the citizen and strictly against the 

government. and ever-v doubt as to construction must be 

&solved & favor oflthe one against whom the enactment is 

sought to be applied. Ii. E. Butt Grocery Company v. Shepherd, 

137 S.W.2d 823 (Tex.Civ.App. 1940, error ref.); 53 C . J . S . 

495, Licenses, 6ec. 13. Based o&an interpretation of the 

spirit and intent of the statute as gathered from its four 

corners, we are of the opinion that this Licensing Act is 

aimed at the distinctive business of dealing in coin-operated 

machines and that a license must be procured for each place 

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. . . 

HCQ. Robert S. Calvert, page 9 (M-449) 

where that distinctive and identifiable business, a6 such, 

is carried on. Thus, each person in the business Is required 

to have at least one license before he can engage in business 

at all. The first license is effective as to a single place a 

of business, so that if a person has any other establishment 

in which he maintains an 

contemplated by Section 5 

of the business activities, as 

(1) of Article 13.17, such as a 

warehouse, repair shop, store, etc., he is required to have 

a license for each such establishment or "place of business.” 

Goldstein v. State Revenue Commission, 178 S.E. 164 (Ga.Sup. 

1935); 53 C.J.S. 551, Licenses, Sec. 24. Take for example, 

a person who is in the basic, overall business of owning 

coin machines aud placing them'on various locations for oper;.---*’ 

ation. If that person had an office and warehouse In Dallas 

and another office end warehouse in Houston, he would need 

a license for his Dallas location and mother license for his 

Houston location. If the same person had an offlce, or repair 

shop, end a,warehouse in separate locations in each of the 

two cities, he would need a total of six licenses. However,. 

he would not necessarily need a separate license for each 

place where he places a machine on location. A single 

machine on location is a part of his business, but the Act. 

does not clearly require a license for a part or portion of 

his business. It merely requires a license for each 

of the overall, Identifiable business or occupation w f 

was Intended to be subject to being licensed:. 

We do not consider your sixth question because It is 

conditioned on sn affirmative answer to question No. 5. 

SUMMARY 

Under Article 13.17 of Title 122A, TexationGeneral, Vernon's Civil Statutes, House Bill 

No. 579, Chapter 497, Acts of the 61st Legislature, page 1606, a licensed business otherwise prohibited from having a financial interestin a business where alcoholic beverages are sold 

for on-premises consumption may nevertheless make 

extensions of credit to lessees and bailees of 

coin-operated machines provided that he must 

strictly comply with the provisions of paragraph 

(6) of Section 27 of the Article. Loans to 

corporations of the type in which the licensee 

Is not prohibited from having a financial interest 

must also be made under said paragraph (6) if such 

-2232- 
Hon. Robert S. Calvert, page 10 (M-449) 

AW:dc 

corporation is a lessee or ballee of such 

machines. Extensions of credit by a licensed 

business to a lessee or bailee of a coinoperated machine who is not engaged in a business 

where alcoholic beverages are sold for on-premises 

consumption must also strictly comply with the 

provisions of said Section 27(6). A person cannot 

own and operate his own coin-operated machines in 

his own place of business where alcoholic beverages 

are sold for on-premises consumption unless he 

comes w&thin* oxceptlons granted in the "grandfather clause'" of Section 27(l) of the Act, or 

unless he is the type of corporation which is 

excepted under Section 27(l), or unless he comes 

within the exception provided for the ownership of 

interest in real estate as set forth In Section 27(2). 

Under Section 26 of the Article, a fully executed 

copy of each written contract must be filed with 

the Comptroller, provided however that terms and 

provisions of the contract may be Incorporated and 

made a part thereof by reference to another contract 

or written instrument containing such terms, provided 

that such referred-to instrument must have theretofore been filed with the Comptroller and must be 

definitely identified In the present contract, and 

the contract must affirm that all parties have read 

such referred-to terms and understand them. It 1s~ 'I' 

required that a license be procured for the distinctive business which is required to be licensed, and 

he must have a separate license for each place such 

as sn office, warehouse, repair shop, store, etc., 

where that distinctive business is carried on; 

however, a licensee'uhder the Act is not necesserily 

required to procure a separate license for each 

location where one of his machines is placed on 

location, unless that licensee carries on his distinctive business also at such location. 

ey General of Texas 

- 2233 - 
,Hon. Robert S. Calvert, page 11 (M- w9) 

Prepared by Alfred Walker 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

George Kelton, Vice-Chairman 

Roger Tyler 

Houghton Brumlee, Jr. 

John Banks 

Tom Bullington 

W. V. Geppert 

Staff Legal Assistant 

Hawthorne Phisips 

Executive Assistant 

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