Hon. JamesE. Kilday, Director Opinion NO.

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Motor Transportation Division Re: Whether Railroad CommisRailroad Commission of Texas sion is required to approve Austin, Texas sale and transfer of the capital stock in acorporation Dear Sir: holding amotor carrier permit.

In your letter of August 29, 

### 1940, you advise us of the following:

"DunnBrothers Inc., aCorporation, duly incorporated andexisting under andbyvirtue of the laws of the State of Texas, owns acontract carrier permit and a special commodity carrier permit heretofore issued bythe Railroad Commission. under the Motor Carrier Lawof Texas.

"Carl H. Dunn, President of the Corporation, has filed anapplication for the Commission's approval of the sale andtransfer of the capital stock in said corporation to Harry Gowins, Jr., setting out in the application that the Corporation owns Contract Carrier Permit No. 11160 and Special Commodity Permit No. 31981."

Yourequest our opinion in response to the following questions:

"1. Is the Railroad Commission required to approve applications for the sale and transfer of the capital stock in corporations holding certificates 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 werequired to collect afiling fee with such applications?



### “3. If weare required to collect afiling fee, should wecollect only one filing fee of ten dollars, where more than one permit is owned bythe Corporation transferring the stock, or should we collect aten dollar filing fee for each permit owned by said Corporation?"hon. Jamesd,. Kilday, Page 2

Section 6 (f) of Article.'3llb, Vernon’s Civil :jt.:tutes, reads:

“Any contract carrier permit held, owned, or obtained by anymotor carrier operating under the provisions of Section 6maybe sold, assigned, leased, transferred, or inherited; provided, however, th:lt any proposed sale, lease, assignment,

or transfer shall be fir’st presented in wri.ting to the Commission for its aoprovnl or disapproval andthe Commission may disapprove such proposed sale, assignment, lease or transfer if it be found anddetermined bythe 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 amanner
as to render the services demanded in the best interest of the public; the Commission in approving

or dtsapproving any sale, assignment, lease, or transfer of anypermit maytake into consioeration ,111of the requirements and qualifications of a regular applicant required in this Section, and apply sameas necessary qualifications of any proposed purchaser, assl.gnee, lessee, or transferee; provided, however, that in case apermit is transferred that the transferee shall pay to the Commission a sumof money equal to ten (10) per cent of the amount paid as aconsideration for the transfer of the permit which sumof ten (10) per cent shall be deposited in the Zt-;te ,i’reasury to the credit of the i!ighlJay Fundof the jtaie; provi.ded, however, th:lt ny permit obtUned bv any motor carrier or by any assignee or trransferee shall be taken andheld subject to the right of the State at any time to limit, restrict, or forbid the use of the streets andhighways of this State to anyholder or owner of such permit. Lvery application filed with the Cod]- mission for an order approving the lease, sale) or transfer of any permit shall be accompanied bya filing fee in the sumof TenDollars ($10) which fee shall be in addition to other fees andtaxes and shall be retained bythe Commission whether the lease, sale, or transfer of the permit is approved

or not. Added Acts 1939, 46th Leg., p. 89, 611.”

The Railroad Commission is given no authority regarding the transfer of shares. of stock in private corporations,

even in those corporations holding motor carrier permits and certificates of convenience andnecessity. This question doubtless arises out of the thought on the part of the personHon. James d. Kilday, page 

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acquiring the stock that the view might be taken that asale of the capital stock is tantamount to a sale of all the assets, including the permit, as suggested under aparticular state of facts in Vick v. Park, 171 S.W. 1039 (the identical opinion being reported -ilso in 173 :5&!. 989). However, wedonot believe such adoctrine would be applied !n such awayas to reauire the Railroad Commission to approve a sale andtransfer of the stock in acorporation owning apermit. The tangible property of acorporation belongs to the

corpor~~tion as such, the stockholders merely owning intangible interests in the corporate business. 831, Corn.App.; Turner v. Cattlemen's Trust Co. 215 S.:i. Automobile Mortg. Co. v. Comm.App. Ayub, 26&S.;:. 134,

Wedo not believe there exist sufficient reasons for the courts to disregard the corporate fiction andtreat the transfer of the stock as atransfer of the permit. The financial strength of the corporation itself is not impaired bythe sale of stock. If the service is not kept upor 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:&ALOFTEXAS

Ot'INI.!NCOMIMITTHE H'B, CHAIRMAN

GRi:R,i:wb