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: Constitutionality of 

Austin, Texas Article 7.09 (2) (b), 

Title 122A, TaxationGeneral, Vernon's 

Dear Mr. Calvert: Civil Statutes. 

You ask our opinion whether Article 7.09 (2) (b), 

Title 122A, Taxation-General, Vernon's Civil Statutes, is 

constitutional and enforceable so that an application for 

a cigarette distributor's permit may be denied by the Comptroller by 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 corporation and, in the case of a partnership, a partner or manager) is, by reason of 

his business experience, financial standing, trade 

connections, previous business affiliation, 

including prior employment, or prior conviction 

of a felony not likely to maintain operations in 

compliance with this Chapter, or has failed to disclose any material information required or made 

any material false statement in the application 

therefor." (underscoring added) 

Chapter 7, the Cigarette Tax Law, prescribes certain 

definite duties and responsibilities of trust upon distributors in the sale of cigarettes, the making of timely reports 

of sales to the Comptroller, the purchase and proper stamping 

of same, the keeping of accurate records for .the Comptroller'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 certificate of authority 

of an insurance company because the officers and directors 

thereof "are not worthy of the public confidence" was constitutional. The Court held that the quoted standard was 

sufficiently definite 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 "just and 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 Civil Appeals had upheld cancellation of a 

teaching certificate upon a finding that the holder thereof 

was "a person unworthy to instruct the youth of this State"; 

and that the New Hampshire Supreme Court held its state statute 

relative to licensing a foreign insurance company was 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 discretion upon the Comptroller rather than the right 

arbitrarily to discriminate between applicants by granting 

a permit to one and refusing it to another, without good reason. 

See 12 A.L.R. 1450, para. b, "Determination of 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 the mayor power to determine 

whether a person applying for a license to sell cigarettes 

had good character and reputation and was a suitable person 

to be entrusted with their sale. The contention that sllch 

a law vested the official with arbitrary power to grant or 

refuse a license under such a vague standard was duly considered and overruled. 

The caption of the Act under consideration is sufficient. 

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Hon. Robert S. Calvert, page 3 (M-291) 

SUMMARY 

Article 7.09 (2) (b), Title 122A, 

Taxation-General, Vernon's Civil Statutes, 

is constitutional and confers a reasonable, 

legal discretionin the Comptroller to 

determine the personal fitness of applicants within the guidelines prescribed by 

the statutes for a cigarette distributor's 

permit. The Comptroller may rely upon 

this statute to justify the denial of an 

application for such a permit. 

very truly, 

Prepared by W. E. Allen 

Assistant Attorney 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. 

Executive Assistant 

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