THE ,A~TORNEY GENERAL
OF??EXAS
Amm-m. TEXAR 78711
October 15, 1968
Honorable Robert S. Calvert Opinion No. M-291
Comptroller of Public Accounts
Capitol Station Re: Constitutionality of
Austin, Texas Article 7.09 (2) (b),
Title 122A, Taxation-
General, Vernon's
Dear Mr. Calvert: Civil Statutes.
You ask our opinion whether Article 7.09 (2) (b),
Title 122A, Taxation-General, Vernon's Civil Statutes, is
constitutional and enforceable so that an application for
a cigarette distributor's permit may be denied by the Comp-
troller by reason thereof. We must answer this question in
the affirmative.
This Article a,uthori.zes
you to deny a cigarette distri-
butor's permit if,
"(b) The applicant or managing employee
(including, in the case of a corporation, any
officer, director, manager or any stockholder
who holds directly or through family or partner
relationship 10 per cent or more of the stock
of such corporation and, in the case of a part-
nership, a partner or manager) is, by reason of
his business experience, financial standing, trade
connections, previous business affiliation,
including prior employment, or prior conviction
of a felony not likely to maintain operations in
compliance with this Chapter, or has failed to dis-
close any material information required or made
any material false statement in the application
therefor." (underscoring added)
Chapter 7, the Cigarette Tax Law, prescribes certain
definite duties and responsibilities of trust upon distri-
butors in the sale of cigarettes, the making of timely reports
of sales to the Comptroller, the purchase and proper stamping
of same, the keeping of accurate records for .the Comptroller's
inspection, etc. (Chap. 7, Title 122A, Tax.-Gen., V.C.S.).
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.. .,
Hon. Robert S. Calve&, page 2 (M-291)
We believe the case of Jordan, et ux. v. State Board
of Insurance, 334 S.W.2d 278 (Tex.Sup. 19bO) is clear, com-
prehensive and decisive of your question. The Court unani-
mously held that the provision in Article 1.14, Section 3
of our Texas Insurance Code which authorizes the Board of
Insurance to refuse or revoke a certificate of authority
of an insurance company because the officers and directors
thereof "are not worthy of the public confidence" was con-
stitutional. The Court held that the quoted standard was
sufficiently definite and did not violate the due process
clauses of the Texas and United States Constitutions, being
Article I, Section 19, and the Fourteenth Amendment, respec-
tively.
The Court further stated that administrative standards
of "just and reasonable," "public interest," and "public
convenience, interest, or necessity," have been held suffi-
cient by the Supreme Court of the United States; and that a
Texas Court of Civil Appeals had upheld cancellation of a
teaching certificate upon a finding that the holder thereof
was "a person unworthy to instruct the youth of this State";
and that the New Hampshire Supreme Court held its state statute
relative to licensing a foreign insurance company was valid
wherein ". . . the commissioner shall regard it as safe, reli-
able and entitle to confidence."
Since the legal presumption is in form of the validity
of such a statute and there are standards or guidelines to
control the relevant scope of inquiry of the administrative
agency, it is our opinion that the statute confers a reason-
able discretion upon the Comptroller rather than the right
arbitrarily to discriminate between applicants by granting
a permit to one and refusing it to another,without good reason.
See 12 A.L.R. 1450, para. b, "Determination of personal
fitness"; 42 Am.Jur. 342, Public Admin. Law, Sec.,45.
In Gundling v. Chicago, 177 U.S. 183 (1899), an ordi-
nance was upheld which gave the mayor power to determine
whether a person applying for a license to sell cigarettes
had good character and reputation and was a suitable person
to be entrusted with their sale. The contention that sllch
a law vested the official with arbitrary power to grant or
refuse a license under such a vague standard was duly con-
sidered and overruled.
The caption of the Act under consideration is suffi-
cient.
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Hon. Robert S. Calvert, page 3 (M-291)
SUMMARY
Article 7.09 (2) (b), Title 122A,
Taxation-General, Vernon's Civil Statutes,
is constitutional and confers a reasonable,
legal discretionin the Comptroller to
determine the personal fitness of appli-
cants within the guidelines prescribed by
the statutes for a cigarette distributor's
permit. The Comptroller may rely upon
this statute to justify the denial of an
application for such a permit.
very truly,
Prepared by W. E. Allen
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Hawthorne Phillips, Chairman
Kerns B. Taylor, Co-Chairman
Fisher A. Tyler
Jack Sparks
Dyer Moore, Jr.
Mark White
A. J. Carubbi, Jr.
Executive Assistant
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