## THE ,A~TORNEY GENERAL
OF??EXAS
Amm-m. TEXAR 78711 October 15, 1968

Honorable Robert S. Calvert Opinion No. M-291 Comptroller of Public Accounts Capitol Station Re: Constitutionalityof Austin, Texas Article 7.09 (2) (b), Title 122A, TaxationGeneral,Vernon's Dear Mr. Calvert: Civil Statutes.

You ask our opinionwhetherArticle 7.09 (2) (b), Title 122A, Taxation-General,Vernon's Civil Statutes, is constitutionaland enforceable so that an application for a cigarettedistributor'spermitmay be deniedby the Comptrollerby reason thereof. We must answer this question in the affirmative. This Article a,uthori.zes you to deny a cigarette distributor's permit if,

"(b) The applicant or managing employee (including,in the case of a corporation, any officer, director,manager or any stockholder who holds directly or through family or partner relationship 10 per cent or more of the stock of such corporationand, in the case of a partnership, a partner ormanager) is, by reason of his business experience, financial standing, trade connections,previous business affiliation, includingprior employment, or prior conviction of a felony not likely tomaintain operations in compliancewith this Chapter, or has failed to disclose any material information required or made any material false statement in the application therefor." (underscoringadded) Chapter 7, the CigaretteTax Law, prescribes certain definite duties and responsibilitiesof trust upon distributors in the sale of cigarettes, themaking of timely reports of sales to the Comptroller, the purchase and proper stamping of same, the keeping of accurate records for .theComptroller's inspection, etc. (Chap. 7, Title 122A, Tax.-Gen., V.C.S.).

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Hon. Robert S. Calve&, page 2 (M-291)

We believe the case of Jordan, et ux. v. State Board of Insurance, 334 S.W.2d 278 (Tex.Sup.19bO) is clear, comprehensive and decisive of your question. The Court unanimously held that the provision in Article 1.14, Section

## 3 of our Texas Insurance Code which authorizes the Board of Insurance to refuse or revoke a certificateof authority of an insurance companybecause the officers and directors thereof "arenot worthy of the public confidence"was constitutional. The Court held that the quoted standardwas sufficientlydefinite and did not violate the due process clauses of the Texas and United States Constitutions,being Article I, Section 19, and the Fourteenth Amendment, respectively. The Court further stated that administrative standards of "justand reasonable," "public interest,"and "public convenience, interest, or necessity,"have been held sufficient by the Supreme Court of the United States; and that a Texas Court of CivilAppeals had upheld cancellationof a teaching certificateupon a finding that the holder thereof was "a person unworthy to instruct the youth of this State"; and that theNew Hampshire Supreme Court held its state statute relative to licensinga foreign insurance companywas valid wherein ".
. . the commissioner shall regard it as safe, reliable and entitle to confidence."

Since the legal presumption is in form of the validity of such a statute and there are standards or guidelines to control the relevant scope of inquiry of the administrative agency, it is our opinion that the statute confers a reasonable discretionupon the Comptroller rather than the right arbitrarily to discriminatebetween applicantsby granting a permit to one and refusing it to another, without good reason. See 12A.L.R. 1450, para. b, "Determinationof personal fitness"; 42 Am.Jur. 342, Public Admin. Law, Sec.,45.

In Gundling v. Chicago, 177 U.S. 183 (1899), an ordinance was upheld which gave themayor power to determine whether a person applying for a license to sell cigarettes had good character and reputationand was a suitableperson to be entrustedwith their sale. The contention that sllch a law vested the officialwith arbitrarypower to grant or refuse a license under such a vague standardwas duly considered and overruled. The caption of theAct under consideration is sufficient.

-1411-Hon. Robert S. Calvert,page 3 (M-291) SUMMARY Article 7.09 (2) (b),Title 122A, Taxation-General,Vernon's Civil Statutes, is constitutionaland confers a reasonable, legal discretionin the Comptroller to determine the personal fitness of applicants within the guidelinesprescribedby the statutes for a cigarettedistributor's permit. The Comptrollermay rely upon this statute to justify the denial of an application for such a permit.
very truly,

Prepared by W. E. Allen AssistantAttorney General
APPROVED: OPINION COMMITTEE Hawthorne Phillips, Chairman Kerns B. Taylor, Co-Chairman Fisher A. Tyler Jack Sparks Dyer Moore, Jr. Mark White
A. J. Carubbi, Jr. ExecutiveAssistant

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