I 

L%%T(BIRNEY GENERAL 

lF%-ElXAS 

.-. ,.- .~... ^._~ _,._..,,_____ 

Aris~nv. TEXAS 78711 i 

June 5, 1972 

Honorable Byron Tunnel1 

Chairman 

Opinion No. M- 1143 

Railroad Commission of Texas Re: Whether a change from a 

Capitol Station, Drawer 12967 sole proprietorship status 

Austin, Texas 78711 to a corporation creates 

a new and separate legal 

entity, which requires 

the latter to obtain a-~ 

First Year License under 

the Liquefied Petroleum 

Gas Code, Section 9 B(5), 

Dear Mr. Tunnell: Article 6066d, V.C.S.? 

Section 9 B(5), Article 6066d, Vernon's Civil Statutes, 

hereinafter referred to as LPG Code, reads as follows: 

"(5) First Year License. A license shall 

be issued by the Commission to said applicant 

in the name under or by which he conducts or 

proposes to conduct his business as such a 

dealer. Such license shall run to the dealership to or in connection with which it was issued and it shall confer no rights or privileges 

separate and apart from such dealership." 

Section 9 B(6) of the LPG Code reads as follows: 

"(6) Renewal License. Each license as 

an authorized dealer in Liquefied Petroleum 

Gas shall be renewable upon the timely payment 

or tender of the renewal license fee established 

and assessed therefor, and by furnishing the 

Commission with a bond as required in Section 

23 of this Act, a certificate of insurance evidencing that the insurance required in Section 

24 of this Act is in full force and effect, and 

such other information and data as may reasonably be required by the Commission." 

Factually you state that the Commission is experiencing 

numerous situations where individual licensees (sole proprietorships) 

incorporate their liquefied petroleum gas business, but continue to 

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Honorable Byron Tunnell, page 2 (M-1143) 

operate the business as a qualified person under one or more of 

the categories set out in Section 6 of the LPG Code. We, therefore, have the narrow question of whether the change from a 

sole proprietorship to a corporation, without more, requires 

that the corporation obtain a First Year License. 

The thrust of the LPG Code is safety. A liquefied petroleum gas dealer (sole proprietorship or corporation) must qualify 

for each of the separate categories listed in Section 6 in order 

to engage in any of the activities enumerated therein. Section 7. 

With respect to a partnership, firm, corporation, unincorporated 

association, or any other business entity, the individual who 

"shall be directly responsible for and actively supervising the 

operation of the dealership" shall make "good and sufficient 

proof that he can and will meet the safety requirements provided 

in this Act." Section 9 B(2). Further, the liquefied petroleum 

gas dealer (sole proprietorship or corporation) must furnish 

the Commission with the bond required by Section 23 and the 

certificate of insurance required by Section 24 to obtain either 

a First Year License or a Renewal License. It is clearly the 

intent of the LPG Code that the dealer (be it individual, partnership, firm, corporation, unincorporated association or any other 

business entity) is the person that must satisfy the statutory 

requirements to qualify for a liquefied petroleum gas license in 

one or more of the categories listed in Section 6, and it is 

that dealer or dealership that the Commission looks to for compliance with the statutory and regulatory safety standards. 

The LPG Code does not address itself specifically to the 

issue at hand. There is no statutory provision prohibiting a 

business entity from changing the legal form pursuant to which it 

conducts its authorized liquefied petroleum gas business. However, when a sole proprietorship is changed into a corporation, 

a new and separate business entity is created bearing no resemblance .to its predecessor. The corporation has not qualified as 

a dealer for a liquefied petroleum gas license. Even if the former 

sole proprietor remains directly responsible for the operations or 

is a qualified employee under Section 10, transfer of the license 

formerly held by the sole proprietorship to the corporation does 

not, because of Section 9 B(5), create a new dealership in the 

corporation. The new business entity must submit an application 

for a First Year License. To hold otherwise would permit persons by change of business form to avoid the clear intent of the 

LPG Code, and create dealerships without Commission sanction. 

Attorney General's Opinion No. V-638 (1948) reached the 

identical conclusion based on the same question presented here. 

However, the Opinion construed Article 6053, Vernon's Civil 

-5569- 
Honorable Byron Tunnel, page 3 (M-1143) 

Statutes, which was, insofar as relevant, repealed in 1959 

(Acts 56th Leg., p0 844, ch. 382). Further, the rationale in 

that opinion is incorrect, Therefore, to the extent only that 

the reasoning is inconsistent herewith, Opinion No. V-638 is 

modified by this Opinion. 

SUMMARY 

When a licensee sole proprietorship under 

Article 6066d, V,C,-S,, incorporates, the corporation is required to obtain the First Year License 

specified in the Liquefied Petroleum Gas Code, 

Section 9 B(5), Article 6066d, V.C,S. Attorney 

General's Opinion No. V-638 9948) is modified. 

ney General of Texas 

Prepared by Rex H. White, Jr. 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

W. Dyer Moore, Jr0 

Ralph Rash 

Gordon Cass 

John Reeves 

SAMUEL D. MCDANIEL 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NOLA WHITE 

First Assistant 

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