Untitled Texas Attorney General Opinion

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.). -1410- .. ., 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. -1411- 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 -1412-