“I‘WEA OMNEP GENERAL,
OF TEXAS
AUHTIN 11.-rExAm
PRICE DANIEL
ATTORNEYGENERAL
August 6, 1949
Hon. William J. Murray, Jr., Chairman
Railroad Commission of Texas
Austin, Texas
Attention: Mr. S. C. McIntosh
Dear Mr. Murray: Opinion No. v-875
Re: Several questions relative
to the provisions of S. B.
481, 5lst Legislature.
You recently requested the opinion of the Attorney
General as to whether or not the Railroad Commission can ac-
cept a bond, or bonds, in lieu of the insurance policies re-
quired by the provisions of the second paragraph of Section
11, Article 6053, V.C.S,, as amended by S. B. 481, 51st Leg-
islature. By letter dated July 27th, you requested our opinion
on several other questions relative to the provisions of S.B.
481, as follows:
"The request forwarded to you on July 14,
for an opinion regarding S. B. 481, amending
Set tion 11 of Chapter 358, Acts of the 49th
Legislature, did not include three points on
which we now desire your consideration and
opinion.
1. S. B. 481 sets out that Manufacturer's
and Contractor's Liability IS one of the
policies which a licensee shall carry.
The Manufacturer's and Contractors liabil-
ity policy form, which has been approved
by the Board of Insurance Commissioners,
under Definition of Hazards show five di-
visions as follows:
1. Premises
2. Elevators
3. Independent Contractors
Products
2: Contractual
"Obviously a L. P. Gas licensee's opera-
Honorable William J. Murray, Jr., page 2 (V-875)
tlons would not embrace all of the hazards
above mentioned. However, since S. B. 481
does not exclude any of the named hazards,
and since a licensee In making an installa-
tion of a L. P. Gas container and/or L. P.
Gas piping system, which If carelessly, neg-
ligently or improperly installed, may be the
cause of an accident after the licensee's
workmen have completed,the installation and
left the customer's premises, is it manda-
tory on the Railroad Commission to require
the filing of evidence of Products Liability
coverage?
2. The licensed manufacturer of L. P.
Gases or L. P. Gas containers, or L. P. Gas
equipment has heretofore been required to
carry Products Liability insurance. Under
the provisions of S. B. 481, is it mandatory
on the Commission to require the filing of
Products Liability by such manufacturers?
3. S. B. 256, amending Subsections 6,
7, 8, and 10 'of Section 1 of S. B. 269,
Chaoter 358. in Section 7, Par. (b) created
a Limited-License wherein licensees'are au-
thorized to service and/or repair, and/or
connect and/or adjust ranges and/or cookIng
appliances, and/or space heaters, floor
furnaces and water heaters excepted.
"Under the provlsions of S. B. 481, what
insurance may the ConmissIon legally require
such limited licensees to carry?"
Senate Bill No. 481, 51st Legislature, amending Sec-
tion 11, Article 6053, V. C. S., reads as follows:
"No license shall be issued pursuant to
this section unless such licensee shall first
file with the Commission a surety bond in the
sum of Two Thousand ($2,000.00) Dollars with
a bonding company authorized to do business in
Texas. All such bonds shall provide that the
obligator therein will indemnify and pay the
State of Texas, to the extent of the face
amount thereof, all judgments which may be
recovered In the name of the State of Texas
against such licensee, during the termof such
bond and proximately caused by any violation,
Honorable William J. Murray, Jr., page 3 (V-875)
by said licensee, of the terms of this Act or
any orders or rules promulgated by the Rail-
road Commission as authorized by this Act.
"In addition to the bond herein required,
such licensee shall be obligated to procure
from some reliable insurance carrier quali-
fied to do business in the State of Texas, and
keep same in force so long as they shall con-
tinue in business , policies of insurance in
the following kinds and amounts, said policies
to guarantee payment of damages which,proxi-
mately result from acts of negligence, while
said licensee Is engaging in any of the acti-
vlties as hereln provided:
"1 . A public liability and property
damage insurance policy on each and every
motor vehicle, including trailers designed
for use therewith on highways, used in the
transportation of liquefied petroleum gases,
of Five Thousand ($5,000.00) Dollars for bodily
Injuries to any one' erson, or a total of TB~
Thousand ($10,000.00P Dollars for bodily in-
juries for any one accident involving two or
more persons, and property damage for any one
accident of Five Thousand ($5,000.00) Dollars.
"2. A manufacturess and contractors
liability policy of Five Thousand ($5,000.00)
Dollars for an one~person, and not to exceed
Ten Thousand (i lO,OOO.OO) Dollars for any one
accident in which two or more persons'are ins-
jured, and of Five Thousand ($5,000.00) Dol-
lars total property damage for any one accident.
“3 . A workmen's compensation or employ-
ers' liability policy.
"Provided, however, that this section
shall not be applicable unless and until such
policies are available for purchase; and fur-
ther provided, that such policies of insur-
ante shall be approved by the Railroad Commls-
sIon of Texas. Provided further, however,
that nothing in this Act shall prevent or pro-
hlbit such licensee from purchasing policies
of insurance of a greater coverage than the
amounts specified herein."
Honorable William J. Murray, Jr., page 4 (v-875)
We shall answer your questions in the order submit-
ted.
1. Can the Railroad Commission accept
a bond or bonds in lieu of the insurance pol-
icies required by the second paragraph of
Section 11 Article 6053, V.C.S., as amended
by S. B. 481, 51st Legislature?
S. B. No. 481, quoted above , provides that licensees
under Article 6053 shall be obltgated to procure from some
reliable insurance carrier specified policies of Insurance.
No provision Is made in said bill for such licensees to pro-
cure a bond or bonds in lieu of the specified Insurance pol-
icies. The bill is clear and unambiguous and not, therefore,
subject to construction. 39 Tex. Jur. 1.61,Statutes, Section
88.
We cannot by departmental construction amend the bill
so as to allow licensees to procure bonds in lieu of insurance
policies. The very purpose of S. B. 481, as evidenced by the
title thereof, is to "clarify and specify the kind and amounts
of insurance coverage to be carried by every licensee." To
amend the bill by departmental construction so as to allow
bond coverage in lieu of Insurance would defeat the express
purpose of the Legislature ln enacting the bill.
You are accordingly advised that the Rallroad Commis-
sion cannot accept a bond or bonds in lieu of the Insurance
policies required by the provlsions of the second,paragraph
of Section 11, Article 6053, as amended by 5. B. 481, 51st
Legislature.
2. Since the licensee in making an in-
stallation of a liquefied petroleum gas con-
tainer and/or liquefied petroleum gas piping
system, which if carelessly, negligently, or
improperly installed, may be the cause of an
accident after the licensee's workmen have
completed the Installation and left the cus'
tamer's premises, is it mandatory for the Rail-
road Commission to require the filing of evi-
dence of products liability coverage?
The second paragraph of S. B. 481 provides in part:
I!
....such licensee shall be obligated to
procure .*. polI,ciesof insurance in the follow-
ing kinds and amounts, said policies to guarantee
payment of damages which proximately result from
Honorable William J. Murray, Jr., page 5 (V-875)
acts of negligence, while said licensee is en-
gaging in any of the activities as herein pro-
vided......" (Underscoring ours)
The installation of liquefied petroleum gas containers
and/or piping system are activities provided for in Article.
6058. (Section 7 (a), Article-6053, as amended by S. B. 256,
Acts of 51st Legislature, 1949, Chapter 220, p. 411.) Pro-
ducts liability coverage would cover damages arising from ac-
cidents occurring after the Insured has completed lnstalla-
tion and left the customer's premises. It cannot be disputed
that accidents canand do occur after completion of installa-
tion and after the licensee has left the premises, causing
damages which proximately result from acts of negligence com-
mitted by the licenseewhile he was engaged in Installing the
equipment and/or piping system. In fact, It would be safe to
say that a great portion of all damages which,proximately re-
sult from acts of negligence while the licensee Is engaged in
installing the equipment and/or piping system ~111 arise from
accidents occurring after the licensee has left the premises
of the customer.
S. B. 481 obligates licensees to procure only three
policies of insurance. Those are: (1) public liability and
property damage on motor vehicles used in the transportation
of liquefied petroleum gases; (2) a manufacturer's and con-
tractor's liability policy; and (3) a Workmen's Compensation
or Employer's liability policy. Clearly, the public liabil-
ity and property damage policy on automobiles used in the
transportation of liquefied petroleum gases, and Workmen's
Compensation or employer's liability policy, do not provide
products liability coverage. You state in your letter and
have furnished evidence that the Board of Insurance Commis-
sioners have approved a manufacturer's and contractor's lia-
bility policy which Includes products liability coverage.
If such a manufacturer's and contractor's liability policy
IS in fact available for purchase, it is the duty of the
Railroad Commission to require licensees to procure such a
policy. The products liability coverage contained therein
is necessary In order to guarantee payment of damages which
proximately result from acts of negligence, while the licensee
is engaging in an activity provided for in Article 6053.
You are accordingly advised that the Railroad Commis-
sion should not approve a manufacturer's and contractor's lia-
billty policy from licensees engaged in Installing liquefied
petroleum gas containers and piping systems which does not pro-
vide products liability coverage, if such policy is available
for purchase.
Honorable William J. Murray, Jr., page 6 (V-875)
3. Is it mandatory for the Railroad Commls-
slon to require the filing of evidence of pro-
ducts liability coverage by manufacturer's of
liquefied petroleum gases or liquefied petroleum
gas containers or liquefied petroleum gas equip-
ment?
The manufacture of liquefied petroleum gases is not
an activity provided for in Article 6053. Accordingly, such
manufacturers are not required to procure products llabillty
coverage which would cover damages arising from an accident
occurring after the gases had passed into the possession of a
customer, which proximately resulted from negligence of the
manufacturer while manufacturing the gases.
However, the manufacture of liquefied petroleum gas
containers and e uipment is an activity provided for in Article
6053 (Section 7 9-
a), Article 6053, as amended-by Senate Bill
256, Acts 51st Leglslature,,l949, Chapter 220, page 441).
Section 11 thereof requires such manufacturers to provide
coverage for damages proximately resulting from an act of
negligence, while engaged in an activity provided for ln
Article 6053. Manufacturers of liquefied petroleum gascon-
talners and equipment must, therefore, procure a manufacturers
and products liability policy which provides products liabil-
ity coverage.
We invite your attention to the fact that Section 6 of
Article 6053, V.C.S., as amended by S. B. 256, Acts 51st Legis-
lature, 1949, Chapter 220, page 411, provides as follows:
"(b). Nothing contained in this Act shall
apply to the sale in the ordinary courseof busi-
nessof any part or any appliance which may be
employed for uses other than as an integral part
of a liquefied gas system when the seller does
not service, make repairs or permanent connection
to any such liquefied gas system, as long as said
appliance or container is approved under the
standards set by the Railroad Commission of Texas.
Nor shall this Act apply to containers used in
accordance with and subject to the regulation of
the Interstate Commerce Commission, and containers
which are owned and used by the Federal Government."
Those engaged solely in the activities provided in this
section would not be required to secure a license from the
Railroad Commission and would not, therefore, be required to
comply with Section 11.
- . . I
Honorable William J. Murray, Jr., page 7 (V-875)
4.~ S.B. 256, Acts 51st Legislature, 1949;
Ch."220, p. 411, amended Article 6053, V.C.S.,
so as to authorize the Railroad Commission to
issue a limited license. Under the provisions
of 5. B. 481, what insurance may the Commission
legally require such limited licensees to carry?
S. B. 256 Acts,5lst Legislature 1949 Ch. 220 .p.
411. amended Artiile 6053 by adding the&o Seition 7(bf,
whi;h reads as follows:
"(b). There is hereby created a limited
license under the provisions of this Act, where-
in persons, firms, corporations or associations
are authorized to service and/or repair and/or
connect and/or adjust ranges and/or cooking ap-
pliances, and/or space heaters, floor furnaces
and water heaters excepted, when done with ap-
proved llquefied petroleum gas connectors, and
when connected to existing piping outlets of ap-
proved llquefled petroleum gas facilities, and
when such appliances as specified herein meet the
requirements of the RaIlroad Commission of Texas
for use with liquefied petroleum gas as a fuel.
"Persons, firms, corporations or associa-
tions qualifying under the provlslons of the
limited license provided for herein, shall apply
to the Railroad Commission of Texas for a li-
cense so to do, such application to be in wrlt-
lng, and shall contain such information as the
Rallroad Commission shall prescribe. No such
license shall be issued until the Commissionshas
determined that the applicant has made good and
sufficient proof that he can and will meet all
safety requirements provided In this Act and by
the rules and regulations of the Railroad Commis-
sion, and the Commlssion finds that such ap-
plicant is qualified and the evidence adduced
justifies issuance of such lImited license."
Such limited l~icenseesare licensed under the provi-
sIons of Article 6053 and are therefore required to carry the
policies of insurance set forth in Section 11 of said Article,
as amended by S. B. 481, 51st Legislature, that are applicable
to their activities. You are accordingly advised that such
limited llcenseees must procure the insurance policies which
are applicable to the service to be performed ~bg them. As
l-lmltedlicensees will not be transporting liquefI.edpetroleum
gases, they will not be required to obtain the public liability
Bonorable William J. Murray, Jr., page 8 (v-875)
and property damage insurance pollcg on motor vehicles. ROW-
ever, it Is readily seen thatthe manufacturer's and contrac-
tor's liability pollcg and Workmen's Compensation or Employer's
Liability policy will be applicable to such licensees and must
be procured by them.
SUMMARY
The Railroad Commission has no authority
to accept bonds in lieu of the insurance poli-
cies required by the provisions of the second
paragraph of Sectionll; Article 6053, V.C.S.,
as amended by S. B. 481, 51st Legislature.
Llcensees engaged in business of'manufac-
turing liquefied petroleum containers and equip-
ment, and licenseees engaged.In the installation
of such containers and equipment must procure a
manufacturer's and contractor's liability pol--
Icy which provides'products liability coverage,
if such policy Is available for purchase.
Limited licensees under the prov'lsionof
Section 7(b); Article 6053, V.C.S., as amended
bg.S. B, 256, Acts 51st Legislature, 1949, ch.
220, p- 441, must procure the insurance policies
provIdea for in Section 11, Article 6053, as
amended, which are applicable to the activities
engaged in by them.
Yours very truly
ATTORNEY GENERAL OF TEXAS
By s/lhrwarclM. Goolsby
Durwara M. Goolsbg
Assistant
DMG:db:wc
APPROVED:
s/Joe R. Greenhill
FXRST ASST. ATTORNEY GENERAL