Honorable Robert S. Calvert Opinion No. M- 449
Comptroller of Public Accounts
State Capitol Building Re: House Bill No. 579,
Austin, Texas Chapter 497, Acts of the
61st Legislature, page
1606 (Title 122A,
,Taxation-General, V.C.S.)
regarding certain coin-
Dear Mr. Calvert: operated machines.
Your opinion request dated July 28, 1969, poses six
questions that have arisen under new Article 13.17, Title
122A, Taxation-General, Vernon's Civil Statutes, which was
enacted by the 61st Legislature and which becomes effective
September 1, 1969.
Your first question Inquires as to whether a business
licensed under Article 13.17 Is required to file with the
Comptroller and the Consumer Credit Commissioner a copy of
'any personal loans, notes, mortgages and any other monetary
benefits extended to a person engaged in selling or$Er;i$g
alcoholic beverages for on-premises consumption."
lowing portiozis of the Article'have relevance to thiS'quek3tion;
to-wit :
"Section 2. DEEINITIONS. . . .
+++
“(2) tfinancial interest" includes any
legal or equitable interest, and specifically
includes the ownership of shares or bonds of
a corporation.
*it*
?!&@tioa$???. * . .
"(1) It shall be unlawful for a nerson
who has a financial interest in a business
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.
Hon. Robert S. Calvert, page 2 (M-449)
required to be licensed by this Article to
knowingly have a financial interest in a
business engaged in selling or serving ,alco-
holic beverages for on-premises consumption
unless otherwise permitted in this Article.
no bona fide financial interest or commitment
in existence prior to September 1, 1969, shall
be deemed a violation of this Article, but no,
such interest or commitment may be renewed or
altered after September 1, 1969, without the
written approval of the Comptroller, provided
that this prohibition shall not apply if the
business engaged in selling or serving alcoholic
beverages be a corporation whose securities are
registered under the laws of the United States
or the State of Texas. (Emphasis added. )
*++
“(6) Any person required to be licensed by
this Article may make an extension of credit to
a lessee or a bailee of a music or skill or
pleasure coin-operated machine for business or
commercial purposes when the following terms and
conditions have been met and the following duties
and obligations satisfactorily assumed and dis-
charged D
***
“(7) Any person required to be licen~sed by
this Article who co-signs, guarantees, or becomes
surety for an extension of credit or loan of any-
,thing of value to any person engaged in selling or
serving alcoholic beverages for on-premises consump-
tion or to any person who he has reason to believe
is about to be engaged in selling or serving alcoholic
beverages for on-premises consumption, shall file
with the Comptroller and the Consumer Credit Commissioner,
a copy of all documents related to the transaction.”
It is our opinion that a person who lends money to be used
in a liquor business or who takes a mortgage on any property
owned by or used in the liquor business has thereby become
financially Interested in the liquor business within the spirit
and contemplation of the Act.
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. 1
Hon. Robert S. Calvert, page 3 (M-449)
In Nevada Tax Commission v. Hicks, 310 P.2d 852 (Nev.,
sup. 195'2) th t t d th terms "directly or
indirectly'int~r%d E?~h~"&sin&s't and "financially
participating in the business" as contained in the Gambling
Control Act of the State of Nevada and commission rules
thereunder. Section 1Oc of the Gambling Control Act pro-
vided that applications for gambling licenses shall include
the names of all persons directly or indirectly interested
in the business and the nature of such business. cofnmission
Rule II 1 which was promulgated under such Gambling Control
Act provided that with regard to the revocation or suspension
of licenses the omission of the nsme'of any person financially
participating in the business from the application should be
deemed pertinent.
One of the questions in the case was whether the lending
of money to a hotel corporation for the purpose of construct-
ing a hotel gave the lender a "financially participating
interest" in the hotel corporation. The court disposed of
that specific question thusly:
"It is our view that the language lfinanclally
participating interest' should not be as narrowly
defined as respondents would have it but may reason-
ably be construed to include the investment which
results when money is lent for the purpose of financing
an enterprise. Otherwise such financial interests
a8 those represented by the corporate bonds of sn
incorporated licensee would be excluded. While these
do not have the potentially hazardous effect upon the
public welfare which direct operational control would
have, still they can be said to be of material con-
cern to the commission."
Thus, except for the provisions of paragra h (6) of
Section 27, all those barred under Section 27(l P rrom having
a financial interest in a business where alcoholic beverages
are sold or served for on-premises cFsumption are prohibited
from making loans to or accepting mortgages from such an
alcoholic beverage business. However, it is our opinion that
paragraph (6) provides a means whereby a person otherwise
prohibited from making such loans can extend credit to a
lessge or bailee of a coin-operated machine, even though he be
eng +d in the on-premises alcoholic business, provided that
all% les and regulations set forth in paragraph (6), including
subparagraphs (a) through (f), are strictly followed.
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Hon. Robert S. Calvert, page 4 (M- 449)
Section 27(l) provides an exception if the one engaged
In the sale of alcoholic beverages for on-premises consump-
tion is a corporation whose securities are registered under
the laws of the United States or this State. However, for
reasons below given in answer to your second question, we
are also of the opinion that if the licensee extends credit
to a corporation of the type described in the exception,
the licensee must also follow all rovisions of said para-
graph (6) and its subparagraphs (a P through (f) before it
can extend credit for business or commercial purposes to a
lessee or bailee of a coin-operated machine. In brief, a
licensee under the Act cannot make a.loan to anyone save an
excepted corporation engaged in the on-premises alcoholic
beverage business except under paragraph (6), and loans to
an excepted corporation under Section 27(l) can be made if
the corporation is a lessee or bailee of a machine on1
under the terms of the provisions of said paragraph (6 7 .
We think that paragraph (7) above-quoted is self-
explanatory. It provides that a person licensed by the Act
can co-sign, guarantee or become surety for the extension
of credit to a person engaged in the liquor business so long
as a copy of all documents related to the transaction are
filed with the Comptroller and the Consumer Credit Commis-
sioner.
Your second question inquires as to whether a business
licensed under Article 13.17 will be required to file a copy
of any personal loans, notes, mortgages and any other monetary
benefit extended to a person who is not engaged in selling
or serving alcoholic beverages for on-premises consumption.
Rxcept~for the provisions of paragraph (6) of Section 27 of
the Act, there are no prohibitions against a coin-operated
business becoming interested in another business where alco-
holic beverages are not sold for on-premises consumption.
However, under the provisions of said paragraph (6) which
extends credit to any lessee or bailee of a coin-operated
machine (whether such lessee or bailee is in the liquor busl-
ness or not) must follow all of the rules and regulations
set forth in said paragraph (6) and subparagraphs(a) through
(f), both inclusive, of said paragraph (6). Since the
Legislature has provided the means, methods and conditions
under which a licensed business may make a loan to a lessee
or bailee of a coin-operated machine, such loans cannot other-
wise be made. Where a statute prescribes a method under which
an Act can be accomplished, no other method can e implied
and all other methods are excluded. Creager v. RIda&o County
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Hon. Robert S. Calvert, page 5 (M-449)
Water Improvement District No. 4, 283 S.W. 151 (Tex.Comm.
3 . 1926). Vit pi1 Ware, 280 S.W.2d 378 (Tex.Clv.App.
lpSp55 erro; refo n.rv;! .); 53 Tex.Jur.2d 205, Statutes,
Sec.'llll.
Your third question reads as follows:
"Can a person own and operate his own coin
machine in his business where alcoholic beverages
are sold and consumed on the premises under Sec-
tion 27(l), under this act?"
In Attorney General's Opinion M-437 recently issued,
this office held that a person who owned and operated his
own coin-operated machine in his own place of business was
engaged in a business which is required to be licensed under
this Act. Therefore, under the plain provisions of Section
27(l) of the Act, one who is engaged in the business of
selling alcoholic beverages for on-premises consumption is
absolutely barred from owning and operating a coin-operated
machine in his liquzr business. Exceptions to this rule
are granted in the randfather clause" which is contained
in said Section 27(1 7 and which is self-explanatory. Section
27(l) also grants an exemption to corporations whose securi-
ties are registered under the laws of the United States or
Texas. Paragraph (2) of Section 27 also grants an exemption
In that one who has a financial interest in a business required
to be licensed can also have an interest in real property on
which there is located a business engaged in selling or serv-
ing alcoholic beverages for on-premises consumption.
Your fourth question is as follows:
"Section 26 requires that a written contract
be filed with the Comptroller as to all agreements
with licensee and business where a coin-operated
machine is placed. Would a copy of a blanket con-
tract suffice or would the licensee be required to
file a copy of each contract signed and sworn to by
both parties?"
The applicable portions of Section 26 are as follows:
"Section 26. ~MJT~;RIZRD CONTRACTS
PROHIBITED;
a
"(1) No person licensed under this Article
may place or operate a music or skill or pleasure
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Hon. Robert S. Calvert, page 6 (M-449)
coin-operated machine In an establishment
where alcoholic beverages are sold or served
for on-premises consumption except by written
contract. The contract must include all pro-
visions of the agreement between the parties
and a statement sworn to by both parties that
_there are no other . understandings or agreements
between tne parties.
"(2) The licensee shall
of the contract
terms previously
filed with the Comptroller.
furnish a copy to the manager of the
establiu(bkent where the machine Is placed; and
retain a copy at his principal place
of bu:&;ss.
“(3) The manager of the establishment shall
retain his copy of the contract on his premises."
With the words "unless on terms previously filed with
the Comptroller,!' as contained in paragraph (2)(a), the
Legislature apparently undertook to provide an exception
to the rule that a copy of each contract must be filed with
the Comptroller. These words are ambiguous, and they must,
if possible, be construed in such a fashion as will ascribe
a reasonable and fair meaning within the legislative intent,
as ascertained from a view of the statute as a whole. 53
Tex.Jur.2d 180-189, Statutes, Sets. 125-126.
In assigning some efficacy to the exemption provision
and at the same time staying within the manifest spirit' of
the policing provisions of the Act, we are of the opinion
that a fully executed copy of each and every contract must
be filed with the Comptroller. However, applicable terms of
the contract may be incorporated and made a part of the con-
tract by express reference to another contract or other
instrument which sets forth certain contractual terms and
provisions and which is definitely identified in the present
contract and which has been previously filed with the Comp-
troller, Such a contract so incorporating certain terms by
reference must also affirm that all parties have read such
terms and provisions and understand them. Thus, a copy of
a "blanket contract" will suffice only to the extent above-
outlined.
Your fifth question inquires as to whether the Act
requires that a license be procured at each place of business
where a coin-operated machine Is placed and operated.
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Hon. Robert S. Calvert, page 7 (M-449)
We are of the opinion that the Act requires a license
on the distinctive business of dealing in coin-operated.
music, skill or pleasure machines. This conclusion i's,
manifest from many references to the Article, samples of
which are as follows:
"Section 8. LICENSEREQUIRRU;PRNALTY;
EXCEPTIONS.
"(1) No person shall engage in business
to manufacture, own, buy, sell, or rent, leaso,
trade, lend, or furnish to another, or repair,
maintain, service, transport within the state,
store, or import, a music coin-operated machine
or a skill or pleasure coin-operated machine
without a license issued under this Article.
***
"Section 11. DISPLAY; PENAL!lTY,
"(1) A person licensed to do business under
this Article shall prominently display his current
license certificate at his place of business at
all times.
*+*
"Section 15. TYPES OF LICENSES.
"(1) A person who wishes to engage in certain
business dealing with music coin-operated machines
or skill or pleasure coin-operated machines shall
apply for a general business license, or an import
license, or both.
"(2) A general business licensee may engage
in business to manufacture, own, buy, sell, rent,
lease, trade, repair, maintain, service, transport
or exhibit within the state, and store music and
,' skill or pleasure coin-operated machines.
"(3) An import licensee may engage in busirless i
to import, transport, own, buy, repair, sell, and
deliver, music and skill or pleasure coin-operated
machines, for sale and delivery within this.State."
The provisions of Section 12 dealing with the application
for a license are also relevant in that the application must
Hon. Robert S. Calvert, page 8 (M-449)
show the nature of'the business entity to be licensed snd
must show the location of each coin-operated machine which
is owned, possessed or controlled by the licensee. It is
further relevant that while Article 13.02 of Chapter 13,
Title 122A, Taxation-General, V.C.S., distinctly provides
for a tax of $15.00 per year on each coin-operated machine,
Article 13.17 deals with the licensing of a business which
deals in such machines.
The only difficulty in interpretation with regard to
this question is found in the provisions of Sections 9 and
16 of Article 13.~17. Section g(2) provides that a license
shall be effective for a single place of business. Section
16(l) provides that an annual license fee of $300.00 shall
be paid for each "type and place of business licensed under
this Article."
In McCauley v. Hobbs Trailers, 357 S.W.2d 494, (Tex.
Civ.App. 1962 it) the court construed Section 2 of
Article 6165a: r)cl”‘s ., which defines a loan broker as “a
person, firm,. or corporation . . . who pursues the business
of lending money, . . . and taking for security for the
payment of such loans . . . an assignment of wages. . . ."
The court held that the term "business" connoted a distinc-
tive business, i.e., au occupation or employment habitually
engaged in for the purpose of profit or improvement.
The requirement of a license to engage ir,a particular
business or occupation whether it is called a license tax,
an occupation tax, a privilege tax or an excise tax, is
not a tax an property. 53 C.J.S. 457-458, Licenses, Sec. 3;
Producers Oil Company v. Stevens, 99 S.W. 157 (Tex.Civ.App.
907, error ref.). Rather, such a business licensing
requirement exacts a tax or fee for the rivllege of carrying
on a business or occupation. 53 C.J.S. t 46-447, Licenses,
Sec. 1; 36 Tex.Jur.2d 618, Licenses, Sec. 28. Statutes
imposing licenses and business taxes are to be construed
liberally in favor of the citizen and strictly against the
government. and ever-v doubt as to construction must be
&solved & favor oflthe one against whom the enactment is
sought to be applied. Ii. E. Butt Grocery Company v. Shepherd,
137 S.W.2d 823 (Tex.Civ.App. 1940, error ref.); 53 C. J . S .
495, Licenses, 6ec. 13. Based o&an interpretation of the
spirit and intent of the statute as gathered from its four
corners, we are of the opinion that this Licensing Act is
aimed at the distinctive business of dealing in coin-operated
machines and that a license must be procured for each place
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. . .
HCQ. Robert S. Calvert, page 9 (M-449)
where that distinctive and identifiable business, a6 such,
is carried on. Thus, each person in the business Is required
to have at least one license before he can engage in business
at all. The first license is effective as to a single place a
of business, so that if a person has any other establishment
in which he maintains an of the business activities, as
contemplated by Section 5 (1) of Article 13.17, such as a
warehouse, repair shop, store, etc., he is required to have
a license for each such establishment or "place of business.”
Goldstein v. State Revenue Commission, 178 S.E. 164 (Ga.Sup.
1935); 53 C.J.S. 551, Licenses, Sec. 24. Take for example,
a person who is in the basic, overall business of owning
coin machines aud placing them'on various locations for oper;.---*’
ation. If that person had an office and warehouse In Dallas
and another office end warehouse in Houston, he would need
a license for his Dallas location and mother license for his
Houston location. If the same person had an offlce, or repair
shop, end a,warehouse in separate locations in each of the
two cities, he would need a total of six licenses. However,.
he would not necessarily need a separate license for each
place where he places a machine on location. A single
machine on location is a part of his business, but the Act.
does not clearly require a license for a part or portion of
his business. It merely requires a license for each
of the overall, Identifiable business or occupation wf
was Intended to be subject to being licensed:.
We do not consider your sixth question because It is
conditioned on sn affirmative answer to question No. 5.
SUMMARY
Under Article 13.17 of Title 122A, Texation-
General, Vernon's Civil Statutes, House Bill
No. 579, Chapter 497, Acts of the 61st Legis-
lature, page 1606, a licensed business other-
wise prohibited from having a financial interest-
in a business where alcoholic beverages are sold
for on-premises consumption may nevertheless make
extensions of credit to lessees and bailees of
coin-operated machines provided that he must
strictly comply with the provisions of paragraph
(6) of Section 27 of the Article. Loans to
corporations of the type in which the licensee
Is not prohibited from having a financial interest
must also be made under said paragraph (6) if such
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Hon. Robert S. Calvert, page 10 (M-449)
corporation is a lessee or ballee of such
machines. Extensions of credit by a licensed
business to a lessee or bailee of a coin-
operated machine who is not engaged in a business
where alcoholic beverages are sold for on-premises
consumption must also strictly comply with the
provisions of said Section 27(6). A person cannot
own and operate his own coin-operated machines in
his own place of business where alcoholic beverages
are sold for on-premises consumption unless he
comes w&thin* oxceptlons granted in the "grand-
father clause'" of Section 27(l) of the Act, or
unless he is the type of corporation which is
excepted under Section 27(l), or unless he comes
within the exception provided for the ownership of
interest in real estate as set forth In Section 27(2).
Under Section 26 of the Article, a fully executed
copy of each written contract must be filed with
the Comptroller, provided however that terms and
provisions of the contract may be Incorporated and
made a part thereof by reference to another contract
or written instrument containing such terms, provided
that such referred-to instrument must have thereto-
fore been filed with the Comptroller and must be
definitely identified In the present contract, and
the contract must affirm that all parties have read
such referred-to terms and understand them. It 1s~ 'I'
required that a license be procured for the distinc-
tive business which is required to be licensed, and
he must have a separate license for each place such
as sn office, warehouse, repair shop, store, etc.,
where that distinctive business is carried on;
however, a licensee'uhder the Act is not necesserily
required to procure a separate license for each
location where one of his machines is placed on
location, unless that licensee carries on his dis-
tinctive business also at such location.
ey General of Texas
AW:dc
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,Hon. Robert S. Calvert, page 11 (M- w9)
Prepared by Alfred Walker
Assistant Attorney General
APPROVED:
OPINIONCOMMITTEE
Kerns Taylor, Chairman
George Kelton, Vice-Chairman
Roger Tyler
Houghton Brumlee, Jr.
John Banks
Tom Bullington
W. V. Geppert
Staff Legal Assistant
Hawthorne Phisips
Executive Assistant
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