. 

### . .

. . : ,Honorable Bert Ford Administrator TexasLiquor Controi Board : Austin, Tetis _

.. ~Oplnlon No. O-7039

Rer Whether an Individual maybe an officer in more than five car- ~ porations, each of which owns a package store permlt,and related questions. Dear Sir: .

Wehave'received your letter of.Januarp'g, l$$,' .3$ikhwe quote as followstwW..L. Moody, Jr., of Galveston, and cer- : taln associations in and outs of Texas are the principal stockholders, officers and directors In eight Texas corporations and two out-of-stat0 .._ corporations doing business fin Texas. The Texas ... .., Liquor ControlBoard,has just discovered that it has issued eleven permItsto these corporations,. and now application for, a Package Store Permit has been made in the name of another~Texa .corporatlon. win checking the various applications and ,i~ 'in checking the information Yurnishod this of+ flce'by the representativesof the various cor- .porations, it has now beendlsdosed that in several instances certain sto&holders, owristock in.more than five corporations having Package Store Permitsr 

### more than five of the corporations in some instances are represented by commonoffi- .cers and.direotors. - -

.. . 7_,

# Ponorable Pert Ford - P&e a

.

.

-.

:

.’ *

:

. : .’ . . .

_

: :

. . :

:

.

.

. “The questions the Board wouldlike to &we answered are as follows: “1. Can one Individual bo an officer more than five corporations, each of which a Package Sotre Permit? owns “2. Can one Individual be an offlcor in more than five corporations, each of which OWIl.9 a Package Store Permiteven though such individual h&no stock ownership or other monetary interest in such corporatioii?



### .“3. more;than a Package I

### “4. more than Can one Individual

five corporations, Sotre Permit? Can one Individual five corporations, : be a director in ’ each ,of which owns . be a director in each of which owns ,‘: a Package Store Permit, eycn though such wdlvid-~ ua&‘has no stock Nnershlp 

### or other monetary hi- I terest In such corporation? : ‘..~ “5. Can one lndlvldua& own stock 3.x.1 more than five corporations, each of which owns a Package Store permit? 

### ~6; .Can one”indivldual have an interest . : represented either as a stockholder, director oreofficer In more than five corporations i if . ...: each. corporation has. a Packago Store Perm t? : 

### “7. ‘Can one indivld&. be an officer, director, or stoc’kholder in one or more corporations, ’ :> : each of which owns a’ ‘Package Store Permit, and a2so~ ‘. IndividuQly own or m an lnter.est in five add%-, - tional Package Store Permits? . 

### “8. Could an individual uho owns five Pack- ’ . age Store Permits actas independent executor, or I. .~ : 1

. . ; : *.,,’ ‘, , .r : :

. ,.

. ‘.

.. ponorablc pert Ford - Pace #s

.

.

. ‘. ““trustee for: an’ estate that owns’an.Interest In a Yackage Store Permit?,
“9. Could an estate contlnuously’own stock In more than five corpor.ltIons, each of which owns a Package-Store Permit? a ,~

. “10. Could an estate am’s tack in a holding . corporation which does not itself owna Package ’ Store Permit but does own stock in five other car- .poratlons, each of which owx Packngc Store Peznits, and also be the owner of stock in a slxth corporaJtion YhIch, owns a:Package Store ~Pcrmlt? _

. ... * ~. . ‘“1 de&e to refer you to Section 

### 17 (2), paie 27,.and the definition of *person’ on page 4 of the _., printed Act. . .: . ..

‘. “1 ,also want to call your attention to Gplnlon po. 3004 dated September 1, 1937,‘wrItton by Vernon ‘Coe, A.ssis,tant Attorney Gonoral. For your .conven- . ience 11 attach a copy of said opinion. ‘. ~*%ourv&lued opinion as to. the above questiona’.‘, irill beg~pprocIatod, ‘as a new corporation with ‘,stockholders, officers and:dIrectors In sgyo~of the original ‘ten ~corpdratlons mentioned above. has made applic&tIon ‘for a Package ,Store Permit,.” .:., As~jrour questions, are phrased. genorslly,:.vie shall answer‘thoti accordingly aild assume that there are ne ad+ .. tlonalfacts other ,than those which you specify.

The provisions of the Texas Liquor Control Act, as recorded in Vernon’s Ponal Code of ’Texas, which give rise .to your questions are,‘as followsl :
.’ nA&icle 

### ~666-17. (2) ’ It, shall Abe ‘unJ.a&l ‘1.i I for any person, to hold, or have ,an~Interest in. . ,. :~ ‘~ . . :. f ’ .: : . . . ,. ., ‘. * I :

.’ .

.. \’&moi-able Cert Pord - Paso $t

. . more than five (5) Package Stores or the busincss thereof. It shall further be unlawful for any person to hold or -have an ln~tercst in more th.an five 

### (5) Pacwge Store Permits.”
“Art&&e 

### 666-30. ‘Persons’ shall mean and refer to any natural person or association of natural.porson~s, trustee, recelvor, partnership corporation, organization, or the manager, agenc servant, or employee of any of thorn.” , Under the foregoing statutory provisions, a nat- ’ Ural person or a corporation may (1) hold or (2) have an m,in a maximum of five packagc stores or package store permits, provided all other requirements of the 11:. quor A& are fulfilled. Although. the term *‘holdoF is not defined in. the Mt, it is the person who makes.appllcatlon for and receives. the permit,- 11co~i-poration, being a sopa- ‘r,ate entity under the laws of this State, is reoogtized as a person capable of holding, a package store perhit. Xs’ It is the corporation that holds the peruit, it follows that neither the ‘officers nor the stockholders of ‘the corporation are.the ~Sndividual holders thereof. The problem here then is. the ‘nature’ 

### of. the ~interest.,a stockholder and-~offi-

. Cer.,of the corporation has in the permit held by the car- :._ poration. ‘. 

### 172

..

: ,.*

The issues you present her~ein your. first s5.x .qnestions Involve ~princlpally that. of commoncorporate .~ stockholders, dir.ectors and officers ‘ln~more than ~flve ,‘~ cor$oratlons, each!.of~which is .the holder. of a package .. store permit, land the ~effec.t thereof- upon ap lying the provisions of that part of Article 

### 666-17 (2!, which .. . reads: .. ..-

. . . “It. shall be unlaw’ful for any person to . . have ‘an interest. in ‘more than five (51 package :- stores . . .,‘Or 4 , . more.than,flve (5) package ~store permits.” .‘= The holding in mentto which you refer, . . :- 1 a previous opinion of this d&.x& No. 3006, 1s ,appllcable t, the

. ., .

..
‘.,

.

., . .I4d

_

. ponorahle. Bert Ford - Paae $5

. circumstances here. It.was ~thcre held that ownership by one gerson of stock In three corporations did not violate the ,provisions of Art. 666-17(2), supra, even though the three corporations together owned more than five package store permits. The reasoning in that opinion’ was based upon a no11 defined line of Texas authorities holding that a stockholder ln’a corporation dms.not own an interest in the~assets of a going corporation:and consequently the stockholder does not ownan Interest in the package store tho business thorcof, or the package store permit hold by Che corporation. lO.Tcx. Jur. . 781, Se& 

### 3; Prcsnall vs. Stockyards National Dank 15l S.W. 

### 873, 8763 Automobile Mortgage Companyvs. Ayub, 26b S.Li. 134. :.- This dopartment has previously constrkd “intcrestn as used in Article 666-17(2) according .to ’ its legal rather .than to its popular usage and as beini: synonymous with legnl title or equitable title, or both, pursuant to the. interpretation placed upon the term by Texas Courts and those of , ’ other jurisdiction.’ XcAlllster vs. zdip~e ,oii Company, 

## 98 S.W. (2d) 171; :lO Tex. Jur. 780, 781; Automobile Kortgage Co. vs. Ayub, 

### 266 S.W. ,134, U. S. vs. Delaware & Hudson Company, 

### 21.3 U.S. 

### 366; ~Byerly et al vs. Camey, 

### 161 S. W. (2d) 1105. Although officers and directors gonerally manage corporate affairs, it is our position that a director or officer of fhe corporation occupys the same position as the Sockholdors vith.respect~ to their ninteres.tn in the corporation under ., this statute.. An officer’s position with.respect to the corporation is brieflp’.statcd:in 19 C.J.S., Corporations, Section~741 as followsr

%‘he officers of

’a private corporation have no franchise in their.offlces; they are mere17 .. representatives. or agents of the corporation.e , Consequently, applying the holdlngbf the opinion .cited above and our construction of the word. “interest?, we arrive at the conclusion that a stockholder, :officor ,or direr 1 tor of a corporation, regardless of his stock ‘ownership, may. belong to more than five corporations each corporation ~holdlne a package store permit. Wc therefore answer your flrst 81xquestions In the af firnative.
‘. :
.pan r b

o.ale ,’

It is our further opinion that 8s adirector, officer or stockholder tn one or more corporations, each corporation holdinf: a nackarre store normit. has no leEa interest in the ..~ i I going corg&a.ti&, then he may’lndividualiy’and personally .hold the statutory m~xlmum of five package store permits. We therefore answer your question nu?ber 7 in the affirmative.

Weproceed to your question number 8 relative to un 5ndividual who owns five, package store permits and at tho same

-‘time acting as lndepondent executor or trustee for an estate that owns‘an interest in a Package Store Permit. A permit or license -granted uuder the terms of the Toxas Liquor Control Act,.ls a personal privilege and does not constitute. propor~fy, nor does It descend.by the 1~s of testate successionbut ceases upon the death of the licensee or permittee. However,. the.Texas Liquor Control Eoard may prescribe regulations where-’ by a new license maybe applied for and Issued wit&but payment of, additional fee as to unexpired periods of affected ‘licenses upon the death of the holder of said license to the end that the value of the,unexplred portion of the license shall not. be lost to the sudcessors :ln interest of any business: Involved and that. the conduct of said business mayhe eontinuod without ~&ntdrruption. SOQArt. 666-13, V.A.P.C. Said Article- further proviUes nthat any successor in Interest must ~.meet all reqtire- ~ments.of law applicable to.the holder of a permit or license .under the termsof this act, except that the executor, ad+- lstrator, trustee or receiver acting under any judicial ~proceedlnes shall not be required to be domiciled in the county in which’ the business Is, louated.”

Due to the .fact that the. quoted wording In the &ova stat&creates an exception a’s to executors, it would seem to ‘imply an assumption t?at an executor is a”succcssor in interest?- ‘to the deceased’s estate. however, whether an individual who already holds s maximum of five package store permits can legally act as indepondent executor or trusteo for sn ettate * . having a package store permit will depend upon his &? crest as’axecutor in said estate according to our prior definition of the term$ntcrost under Article 66~17(2); namely, a legal interest synonymous wlthlegal or equitable t$tle~. .- .,

,.., ‘~. ; ,,. .:. *

. ~’

. . ..~_. .‘., i
.’ ,: <.. *..-: . : ,,,’ ___ : 3 : : .c : ,

.J-43

. .
. ponorable Bert Fort - Page 97

Proceeding then th$t tihen a person dies, we find by Article 3314: V.A;C. S., leaviny: ~alawful will, ali of his estate devised or bcqucathod by said will vost ln~cdiatolp ~jn thn devisees or leR:atees; that upon the issuance of lottcrs~ testamentary or of administration, the executor shall have the right of possession of the estate and shall hold said estate in trust to be disposed of in accordance with. law. Wefind further by Artlclo 3’+27, V.A.C. S., the executor has broad discretion in m3naglng the business of the deceased for the welfare of the estate. Under these ’ statuteo, an independent executor is entitled to possession .of the entire estate. r’oal ns well as norsonal. (horroll . vs. Iianlett, 24 S. W: (2d) 531; Caufleid vs. New&n,. 265 ~* s. w. 1052). The independent executor or representative has nothing more than a temporary right to possession of the proparty of the estate. Tinenature of .his possessionls declared to be In trust, to be disposed of pursuant to law. .. horrell VS. Uamlett, 24 S. W.. (2d) 531; 13 Tex.’ Jur. 

### 7 2; Bra-.invs. Canal Bankand Trust Company l Fed.“2d 

### 832. C.C.A., La., 1 1~ .

It is therefore ‘our, opin on i that an lndepdndent executor or trustee, assuming that he has rccoived no legacy or devise in the business of selling liquor by the ’ terms of the will, does not have a legal interest in the assets of the estate to be distributed, as we have horetofore defined the term lntercst under Article 666-1X2). Consequently; weenswer your eighth question in the .&fir-. mative. ., As.we ‘&ve already determined~ tho nature of the ‘- $nteres$ as set out in Article 

### 666-17(2) eland,found that a stockholder does not have such an Interest in a corporation, it is.our further opinion that an estate would occupy the same.position as an individual in that respect and ownership by the estate of stock in five or more corporations, mch holding a package store permlt, IS’ likewise not a violation of Article 

### 666-17(2) supra. Ne ,therefore answer your ninth andtenth questions In the -affirmative.

Ve are’ not unmindful of tho strong and growing ’ line of. legal authorities preventing the use of the fiction of corporate.ldenity for Illegal purposes. The courts till ?#

. * '. ,

.. . . ,. **i*** . .

. . :. 

## :176,

Bonorable Eart Ford - Pase #a :

.. i look 3cyond the.&pbrite..forin to the’ purposa of it as well as to the officers ~assoclated.t;lth that purpose In order to eetemine If the corporate fiction is relied upon. to circumVent the provisions of a statute. Here have presented no facts which would lea d houever, as you us TVsuch a conelusion this opinion must rest solely ubon.those facts set out In your letter.. to you. Wetrust our findings bo,roln will be of assistance

: ‘. .

_’ 0 Very truly yours

ATTOIUiEY C&ERALdF !CEC&~
~.. .
. . Jack IL Aper’ ; Assistant ‘. ‘~ ..

. . *.

This opinion

. considered and ~~’ approved in
. Limited ’ I Conferences