Court Opinion

ID: 4143733
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:37:03.009345+00
Date Added: 2024-06-11T14:37:36.347701
License: Public Domain

Hon. James E. Kilday,  Director                Opinion NO. O-2644
Motor Transportation  Division                 Re:   Whether Railroad   Commis-
Railroad  Commission of Texas                  sion is required   to approve
Austin,  Texas                                 sale and transfer    of the capi-
                                               tal stock in a corporation
Dear Sir:                                      holding  a motor carrier   permit.

              In your   letter      of   August    29,   1940, you advise    us of
the   following:

               "Dunn Brothers    Inc.,   a Corporation,  duly in-
       corporated    and exis t ing under and by virtue      of
       the laws of the State of Texas, owns a contract
       carrier    permit and a special     commodity carrier    per-
       mit heretofore     issued by the Railroad      Commission.
       under the Motor Carrier        Law of Texas.

              "Carl H. Dunn, President       of the Corporation,
       has filed    an application     for the Commission's     ap-
       proval of the sale and transfer          of the capital
       stock in said corporation         to Harry Gowins, Jr.,
       setting   out in the application       that the Corpora-
       tion owns Contract      Carrier    Permit No. 11160 and
       Special   Commodity Permit No. 31981."

             You request         our opinion      in response   to the    following
questions:

             "1.   Is the Railroad    Commission required     to
       approve applications     for the sale and transfer        of
       the capital   stock in corporations     holding  certifi-
       cates or permits issued under the Motor Carrier            Law
       of Texas, before     such stock can be transferred?

              “2.   If your answer to             Question 1 is in the
       affirmative,    are we required             to collect  a filing
       fee with such applications?

               “3.   If we are required          to collect    a filing
       fee,    should we collect         only one filing     fee of ten
       dollars,     where more than one permit is owned by the
       Corporation      transferring        the stock,    or should we
       collect     a ten dollar      filing    fee for each permit
       owned by said Corporation?"
hon.    James d,. Kilday,           Page 2

              Section       6 (f)     of   Article.'3llb,      Vernon’s      Civil    :jt.:t-
utes,    reads:

                “Any contract         carrier     permit held,         owned, or
        obtained      by any motor carrier             operating       under the
        provisions        of Section      6 may be sold,          assigned,
        leased,     transferred,         or inherited;         provided,       how-
        ever,    th:lt any proposed           sale,    lease,     assignment,
        or transfer         shall   be fir’st     presented       in wri.ting      to
        the Commission for its aoprovnl                   or disapproval
        and the Commission may disapprove                     such proposed
        sale,    assignment,        lease     or transfer       if it be found
        and determined          by the Commission that su;h proposed
        sale,    assignment,        lease,     or transfer        is not in good
        faith    or that the proposed             purchaser,        assignee,
        lessee,     or transferee         is not capable          of continuing
        the operation         of the equipment proposed                to be sold,
        assigned,       leased,     or transferred          in such a manner
        as to render the services                demanded in the best in-
        terest    of the public;          the Commission in approving
        or dtsapproving           any sale,      assignment,        lease,     or
        transfer      of any permit may take into consioeration
        ,111 of the requirements              and qualifications            of a
        regular     applicant       required      in this Section,           and
        apply same as necessary               qualifications          of any pro-
        posed purchaser,           assl.gnee,     lessee,      or transferee;
        provided,       however,      that in case a permit is trans-
        ferred    that the transferee             shall pay to the Commis-
        sion a sum of money equal to ten (10) per cent of
        the amount paid as a consideration                     for the transfer
        of the permit which sum of ten (10) per cent shall
        be deposited         in the Zt-;te ,i’reasury to the credit                  of
        the i!ighlJay       Fund of the jtaie;           provi.ded,      however,
        th:lt ny permit obtUned                bv any motor carrier              or by
        any assignee         or trransferee       shall     be taken and held
        subject     to the right         of the State at any time to
        limit,     restrict,       or forbid      the use of the streets
        and highways of this State to any holder                         or owner of
         such permit.          Lvery application          filed     with the Cod]-
        mission      for an order approving              the lease,        sale)   or
        transfer       of any permit shall be accompanied                     by a
        filing     fee in the sum of Ten Dollars                   ($10) which fee
         shall be in addition            to other fees and taxes and
         shall be retained           by the Commission whether the
        lease,     sale,     or transfer        of the permit is approved
        or not.        Added Acts 1939, 46th Leg.,                p. 89, 61 1.”

             The Railroad   Commission is given no authority       regard-
ing the transfer     of shares. of stock in private    corporations,
even in those corporations      holding  motor carrier    permits and
certificates    of convenience   and necessity.    This question      doubt-
less arises    out of the thought on the part of the person
Hon. James d. Kilday,        page   3

acquiring    the stock that the view might be taken that a sale
of the capital    stock is tantamount to a sale of all the assets,
including    the permit,    as suggested    under a particular     state of
facts   in Vick v. Park, 171 S.W. 1039 (the identical           opinion
being reported    -ilso in 173 :5&!. 989).       However, we do not be-
lieve   such a doctrine     would be applied     !n such a way as to re-
auire the Railroad      Commission to approve a sale and transfer
of the stock in a corporation         owning a permit.      The tangible
property    of a corporation     belongs   to the     corpor~~tionas such,
the stockholders      merely owning intangible      interests   in the cor-
porate business.       Turner v. Cattlemen's      Trust Co.    215 S.:i.
831, Corn. App.; Automobile       Mortg. Co. v. Ayub, 26& S.;:. 134,
Comm. App.

             We do not believe      there exist      sufficient     reasons   for
the courts     to disregard   the corporate      fiction      and treat the
transfer    of the stock as a transfer         of the permit.        The finan-
cial   strength    of the corporation     itself     is not impaired by the
sale of stock.        If the service    is not kept up or the permit
is otherwise     abused remedies are provided          in Article      911b.    jee
Section    12 (b).     Under the facts    as stated,       your first    question
is given‘s     negative   answer.

                                            Yours   very             truly

                                           By /s/ Glenn R. Lewis
                                           Glenn H. Lewis, ,Assistant

Aic'HC\VKD%iP 13, 1940
/s/  Gerald C. Mann
ATTi,R;d&YGZN:&AL OF TEXAS

             Ot'INI.!N COMIMITTHE
             H'B, CHAIRMAN

GRi:R,i:wb