Court Opinion

ID: 4134853
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:55:33.28646+00
Date Added: 2024-06-11T14:21:48.935565
License: Public Domain

February 14, 1966

Honorable Robert S. Calvert           Opinion No, (C-608)
Comptroller of Public Accounts
Capitol Station                       Re:    Additional Bonds to
Austin, Texas                               Secure Payment of Motor
                                            Fuel Tax Under Chapter 9,
                                            Title 122A, Taxation-
Dear Mr. Calvert:                           General, V.C,S.
     We have received your letter in which you request
an opinion as to whether the Comptroller can accept a
motor fuel tax bond filed voluntarily by a distributor
in an amount in excess of, or in addition to, the maxi-
mum of $50,000 bond prescribed by Article 9.07, Title
122A, V.C.S.
     S,incethere is no statutory provision for a dis-
tributor to file an additional bond except when required
by the Comptroller, we presume that you desire to be
advised if the Comptroller may require such bond in excess
of $50,00O,and if such bond is voluntarily submitted to
you by a distributor, whether you have authority to accept
the same. As we shall hereinafter notice, the statute
requires the distributor to file an original bond in order
to secure a permit.
     The question presented by you makes it necessary to
decide in the event the Comptroller determines that the
amount of an existing bond is insufficient, unsatisfactory,
or unacceptable, whether:
     (1) May any new or additional bond~voluntarily
     submitted or required by the Comptroller exceed
     $50,000 or

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Honorable Robert S. Calvert, Page 2        Opinion No, (C-608)

     (2) Is the right of the Comptroller to require
     reports at shorter intervals than one month
     the exclusive remedy to follow if he is of the
     opinion that the original maximum bond is in-
     sufficient.
     In 1929, for the first time, the law provided for a
distributor to execute a bond to secure the payment of the
tax which bond wasless            than $1,000 nor more than
$100,000, The Act also had a provision which merely pro-
vided that the Comp,trollermay require an additional bond at
any time (Acts 4lst Leg. 2nd C,S. 1929, P, 172 (185)).
     In 1933, for the first time, the law provided that the
Comptroller might require the distributor to make reports
and remit to the State for taxes collec,tedby him at shorter
intervals than one month. (Acts 43rd Leg. R.S. 1933, m
     Under Title 122A, V.C,S,, the Motor Fuel Tax Law was
carried forward as Chapter 9 of said title and by Article
9,02 the tax is now 5q!per gallon and Articles 9.06 and
9.07 of said title provide for the bond as prescribed by
the 1957 Act to be not less than $1,000 nor more than $50,000
and has the same provisions pertaining to requiring additional
or new bonds.
     Article 9.06(2) provides that upon receipt of an
application for a permit from a distributor and the "bond
hereinaf,terprovided for", the Comptroller shall issue ,the
permit.
     As heretofore shown, the first time a bond was required
was by the Act of 1929 and said Act also provided that "before
any permit shall be issued", every distributor shall execute
and file a bond in a certain amount named in the said statute.
All of the subsequent acts of 1931, (p* 163), 1933, (p.75),
1941, (p.302), and 1957, (p. 418) as well as the present Art.
9.07, have the same requirement, This, we believe, clearly
shows that it was the intention of the legislature that only
the original bond necessary to secure a permit cannot exceed
the sum of $50,000,

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Honorable Robert S. Calvert, Page 3       Opinion No. (C-608)

     The pertinent provisions of Article 9.07 read as
follows:
     "Article 9.07   Bond
          "(1) Before any permit shall be issued
     and before engaging in the first sale, use, or
     distribution of motor fuel, upon which a tax is
     required to be paid in Texas, every distributor
     shall execute and file with the Comptroller a
     good and sufficient surety bond, which shall
     run concurrently with the permit required of a
     distributor to be obtained. The said bond shall
     be signed by said distributor and a good and
     sufficient surety company or companies authorized
     to do business in this State, to be approved by
     the Comptroller, and except as hereinafter provided,
     in an amount not less than One Thousand Dollars
       1,000) nor more than Fifty Thousand Dollars
     It50,000), payable to the S,tateof Texas, and
     conditioned upon the full, complete and faithful
     performance by the distributor of all the conditions
     and requirements imposed upon him by this Chapter,
     or the rules and regulations of the Comptroller pro-
     mulgated hereunder, on a form to be prescribed by the
     Comptroller with the approval of the Attorney General,
     . * .The amount of any bond required of any distributor
     shall be fixed by the Comptroller, and subject to the
     limitations herein provided, additional bond may be
     required by the Comptroller at          an existing
     bond becomes insufficient, unsatisfactory, or un-
     acceptable. However, the distributor may demand a
     reduction of his bond after six (6) months from the
     effective date thereof to a sum to be not more than
     three (3) times the highest tax said distributor has
     collected and paid to the Statefor any month during
     the preceeding six (6) months, or the highest tax
     that could accrue on motor fuel purchased tax-free
     during any said month, but which shall never be less
     than the minimum aforesaid.

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Honorable Robert S. Calvert, Page 4   Opinion No, (C-608)

            "(2) The Comptroller shall have the right,
    if, in his opinion, the amount of any existing
    bond shall become insufficient or any surety
    on a bond shall become unsatisfactory or un=
    acceptable, to require the filing of a new or
    an add#tional bond. When said new bond-&       been
    furnished the Comptroller shall cancel the bond
    for which'said new bond is substituted. No re-
    coveries on any bond or execution of any new bond
    or renewal of a permit shall invalidate any bond,
    A new bond may be demanded when any new permit is
    issued or revived but no revocation or revival shall
    affect the validity of any bond, Provided further,
    that the Comptroller shall have the authority to
    require    any distributor to make reports and remit
    to the State for taxes collected by hti, or taxes
    accruing on motor fuel used by him, at shorter
    intervals than one (1) month at any time any maxi-
    rum bond shall, in the opinion of said Comptroller
    become insufficient. Should any distributor fail
    or refuse to supply a new or additional bond within
    ten (10) days after demand, or shall fail or refuse
    to file reports and remit or pay the said,tax at the
    intervals fixed by the Comptroller, said distributor's
    permit shall be cancelled by the Comptroller as herein
    provided.

          “(3).   0 .

          "(4) That in lieu of giving a bond, any
     distributor may deposit in the Suspenee Account
     of the State Treasury money in the amount of the
     bond that may be required, which shall never be
     rU.eased until securities are substituted for the
     same, or a bond executed 'inlieu thereof, or until
     the Comptroller has made a complete and thorough
     investigation and authorized the same to be re-
     leased;. 0 Q *" (Emphasis supplied).

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     .

Honorable Robert S. Calvert, Page 5      Opinion No. (C-608)

     We will now proceed to answer the two questions we have
set out above.
                            1.
     May any new or additional bond voluntarily submitted or
required by the Comptroller exceed $50,000?
     It is clear under the provision of the above statute that
the Comptroller is authorized "subject to limitations" therein
provided to require an additional bond at any time an existing
bond becomes insufficient, unsatisfactory, or unacceptable.
In Section (2) of said Article 9.07, the Comptroller is authorized
to require the filing of a -new bond or additional bond.
     What are the "limitations" provided for as mentioned in
Article 9.07 authorizing the Comptroller to require the distributor
to make a new or additional bond? Does this mean that the bonds
must be limited to $50,000 in the principal amount? We believe
not. As stated above, it is clear that the limit of $50,000 is
onlyfbr the purpose of securing a permit and since the statute
provides for requiring an additional or new bond without making
any limitation as to the amount of said bond we believe that a
requirement may be made that said bond shall be in any amount
whether more or less than $50,000 which the Comptroller believes
is necessary to secure the State in the payment of the tax. We
believe that the only limitations intended are that the bond
must be by a good and sufficient surety company authorized to
do business in Texas; payable as conditioned as provided by
said Article; authorizing the distributor to demand a reduction
of his bond under certain circumstances; and the distributor
is allowed to deposit security in lieu of a bond as provided
by Section (4) of said Article.
     If it should be said that the limitation of $50,000 as
set out in Section (1) of said Article means that the additional
bond shall not exceed $50,000, then no effect whatever can be
gi~vento the provision allowing the Comptroller to require a new

                            -2952-
                                                 ,   ‘.

 Honorable Robert S. Calve&,   Page 6    Opinion No. (C&08)

 or additional bond. For example, when the Comptroller finds
 that an existing bond is insufficient and that additional
 security in the amount of $100,000 is necessary why should
 the distributor be required to execute two (2) bonds in the
 sum of $50,000 instead of one (1) bond in the sum of $lOO,OOO?
       Since it is clear that the purpose of requiring a
 bond is to secure the State in the payment of the tax due
 on the 25th day of each month, it is our opinion that if
 in the Comptroller's opinion the new or additional bond
 should be in an amount more than $50,000 in order that the
 Sta,temay be properly secured, he may require the bond in
 such additional amount as may be necessary and may be one
 bond whether for more or less than $50,000. We can conceive
 of no reason, if the present bond is insufficient, and .the
 distributor ,voluntarilysubmits a new or additional bond,
 why the Comptroller cannot accept same, if he deems such sub-
 mitted bond to be sufficient in amount to protect the State,
 whether the amount of the bond is less or exceeds the sum
 of $50,000,
                               2.
      The next question is whether the authority of the
 Comptroller to require reports at shorter intervals than
 one month is the exclusi,veremedy when he finds that the
 existing bond is insufficient.
       Since the Act gives two (2) remedies to the Comptroller
  to-wit, to require additional bonds or shorten the term for
  making reports, we belie,vethat the Legislature intended by
" the statute that when the Comptroller is of the opinion that
  the existing bond is insufficient, unsatisfactory, or un-
  acceptable, it is in his discretion to require a new or
  additional bond or require the distributor to make reports
  at shorter intervals than one month. I,tis possible that
  the distributor might not be able to make a bond in the
  amount that the Comptroller might determine to be sufficient
  and for that reason he could cut short the intervals for
  filing reports and paying the tax.
      It occurs to us, as a practical matter, that when the
 Comptroller deems an existing bond to be insufficient to
 protect the State, that he should make demand that the
 distributor either furnish a new or additional bond that
 is in a sufficient amount or that in lieu thereof that
                                                            1s
 the distributor report and pay the tax at specified inter~va
 less than one month,
                           -2953-
. . .-

         Honorable Robert S. Calvert, Page 7       Opinion No, (C-608)

                              SUMMAR
                              _-----        r
                   Under Article 9.07, Title 122A, V.C.S., if and
              when the Comptroller is of the opinion that an existing
              bond is insufficient, unsatisfactory, or unacceptable,
              he may require a new or additional bond, which bond,
              according to his determination, may be in any amount
              whether more or less than $50,000, which he considers
              necessarytosecure the State in the payment of the
              taxes provided for, or, in his discretion, he may re-
              quire the distributor to make reports and remit to
              the State for taxes collected by him, or taxea accruing
              on motor fuel used by him, at shorter intervals than
              the one month period provided for in Article 9.07.
                                        Yours very truly,
                                        WAGGONER CARR
                                        Attorney General of Texas

              HGC:sjl
              APPROVED:
              OPINION COMMITTEE
              W. V, Geppert, Chairman
              John Reeves
              F. C. Jack Goodman
              W. E. Allen

              APPROVED FOR THE ATTORNEY GENERAL
              BY: T. B. Wright

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