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L%%T(BIRNEY GENERAL
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Aris~nv. TEXAS 78711 i
June 5, 1972
Honorable Byron Tunnel1 Opinion No. M- 1143
Chairman
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 dealer-
ship to or in connection with which it was is-
sued 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 evi-
dencing that the insurance required in Section
24 of this Act is in full force and effect, and
such other information and data as may reason-
ably 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, there-
fore, 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 petro-
leum 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, partner-
ship, 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 com-
pliance 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. How-
ever, when a sole proprietorship is changed into a corporation,
a new and separate business entity is created bearing no resem-
blance .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 per-
sons 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
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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 corpora-
tion 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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