Court Opinion

ID: 4131398
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:15:19.102381+00
Date Added: 2024-06-11T14:33:26.579179
License: Public Domain

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                                                  The Attorney        General of Texas
                                                                September 19, 1983
 JIM MATTOX
 Attorney General

 Supreme      Court Building                    Honorable Mack Wallace                 Opinion No. m-69
 P. 0. Box 12546                                Chairman
 Austin.    TX. 76711. 2546                     Railroad Commission of Texas           Re: Fee payable to Railroad
 5121475-2501
                                                P. 0. Drawer 12967                     Commission on  transfer of
 Telex    9101674.1367
 Telecopier     51214750266
                                                Austin. Texas   78711                  certificate or   permit  of
                                                                                       authority

 714 Jackson,   Suite 700                       Dear Mr. Wallace:
 Oal,as.. TX. 75202.4506
 2141742-6944
                                                     You have asked the amount of transfer tax, if any, that is due
                                                the Railroad Commission of Texas under article 911b. sections 5a(a),
 4624 Alberta             Ave.. Suite     160   6(e) and 6(f), V.T.C.S., when the owner of a motor carrier permit or
 El Paso. TX.             79905.2793            certificate of authority pledges it as collateral for a note and
 9151533.3464                                   defaults on the note.

                                                     Under the facts presented to us, it appears that the original
                                                owner of a permit or certificate of authority issued by the Railroad
       J/223-5686                               Commission was a motor carrier, operating pursuant to that authority,
                                                who borrowed $75,000. The creditor who loaned the $75,000 held the
                                                operating authority as security for the note. When the original owner
 606 Broadway.               Suite 312
 Lubbock.     TX.           79401.3479
                                                defaulted on the note, the operating authority was transferred to the
 6061747-5236                                   creditor in cancellation of the debt of $75,000, apparently by a
                                                voluntary,assignment reciting $1 as cash consideration. We believe
                                                that the transfer tax provisions apply under these facts and that the
 4309 N. Tenth, Suite 6
                                                amount of tax to be paid by the holder of the operating authority is
 McAllen,     TX. 76501-1665
 512/662-4547                                   $7,500.10. We express no opinion as to other requirements regarding
                                                transfers of operating authority under article 911b.
     200 Main Plaza, Suite 400                       Section Sata) of article 911b provides:
     San Antonio.  TX. 76205.2797
     5121225-4191
                                                          [I]n case a certificate is transferred . . . the
                                                          transferee shall pay the Commission a sum of money
     An Equal          OppOrtunityI                       equal to ten (10) percent of the amount paid as a
     Affirmative         Action     Employer              consideration    for   the    transfer   of    the
                                                          certificate . . . .

                                                Sections 6(e) and 6(f) contain the same provision in case a permit is
                                                transferred.

                                                     The questions are whether an owner who pledges its operating
                                                authority as collateral and a creditor who holds the operating
f-
                                                                     p. 296
Honorable Mack Wallace - Page 2   (I+69)

authority after default and assignment are a "transferor" and
"transferee," respectively, and whether the receipt,of the permit or
certificate under these facts is a taxable transfer. To qualify as a
transferee of a motor carrier certificate within the contemplation of
article 911b, section 5=(a), the recipient of the certificate must
show, among other things, that it is capable of continuing service
under the certificate. See Brown Express, Inc. v. Railroad Commission
of Texas, 415 S.W.2d 394, 396 (Tex. 1967); Attorney General Opinion
M-1201 (1972). That aspect of a taxable transfer is not an issue
under the facts presented to us because the creditor holding the
operating authority is willing and able to operate it until such time
as it may be transferred to a third party.

     Sections 5a(a), 6(e), and 6(f) envision several types of
transfers in that they each state that any certificate or permit
"held, owned, or obtained by any motor carrier . . . may be sold,
assigned, leased, transferred, or inherited." (Emphasis added). The
word "obtain" in its general sense means to get hold of by effort, to
get possession of, to-procure. and to acquire in any way. - See Black's
Law Dictionary, 972 (5th ed. 1979); Webster's New InGnational
Dictionary, 1682 (2nd ed. 1947). The word "transfer" was defined in
Ditto Investment Company v. Ditto, 302 S.W.2d 692, 694 (Tex. Civ. App.
- Fort Worth 1957), rev'd on other grounds, 309 S.W.2d 219 (1958),
wherein the court stated:
                                                                          ?
          Common use of the word 'transfer' is to denote the
          passing of title in property, or an interest
          therein, from one person to another, and, in this
          sense, the term means that the owner of property
          delivers it to another with the intent of passing
          the rights which he had in it to the latter.

Because the interest in the permit or certificate of authority passes
from the possession of the owner who pledges it as collateral to that
of the creditor to whom it is assigned after default on the note, we
believe the transaction is a taxable event under article 911b.

     The amount of tax on such a transfer is 10 percent of the amount
paid as consideration for the transfer of the permit or certificate of
authority. The actual cash consideration under the facts presented to
us is $1. When a permit or certificate of authority is used to secure
a note for $75,000, the true consideration is much greater than $1.
Attorney General Opinion O-1505 (1939) dealt with the transfer tax for
a certificate that was leased. In that opinion, this office stated
that the value of the use of the certificate is determined by the
parties themselves. The parties at hand clearly contemplate a
certificate value of at least $75,000. Therefore, the amount of the
tax to be paid by the transferee in this instance is 10 percent of

                              p. 297
-

    Honorable Mack Wallace - Page 3    (J'M-69)

    $75,000, plus 10 percent of the $1 given as actual cash consideration,
    resulting in a total transfer tax of $7,500.10.

                                 SUMMARY

                The transfer tax provisions of article 911b.
             sections S=(a), 6(e), and 6(f), V.T.C.S., apply to
             a creditor capable of continuing service under a
             motor carrier permit or certificate of authority
             that is assigned to the creditor after default on
             a note for which the authority is collateral.
             Since the amount of the transfer tax is 10 percent
             of the amount paid as consideration for the
             transfer, the tax is 10 percent of the amount of
             the cancelled debt, plus 10 percent of any
             additional cash consideration.

                                             Very truly yours,
                                                    .

                                           J~ks
                                              JIM     MATTOX
                                              Attorney General of Texas

    TOM GREEN
    First Assistant Attorney General

    DAVID R. RICHARDS
    Executive Assistant Attorney General

    Prepared by Nancy Sutton
    Assistant Attorney General

    APPROVED:
    OPINION COMMITTEE

    Rick Gilpin, Chairman
    Jon Bible
    David Brooks
    Colin Carl
    Jim Moellinger
    Nancy Sutton

                                 p. 298