Hon. James E. Kilday, Director Opinion NO. O-2644
Motor Transportation Division Re: Whether Railroad Commis-
Railroad Commission of Texas sion is required to approve
Austin, Texas sale and transfer of the capi-
tal stock in a corporation
Dear Sir: holding a motor carrier permit.
In your letter of August 29, 1940, you advise us of
the following:
"Dunn Brothers Inc., a Corporation, duly in-
corporated and exis t ing under and by virtue of
the laws of the State of Texas, owns a contract
carrier permit and a special commodity carrier per-
mit heretofore issued by the Railroad Commission.
under the Motor Carrier Law of Texas.
"Carl H. Dunn, President of the Corporation,
has filed an application for the Commission's ap-
proval of the sale and transfer of the capital
stock in said corporation to Harry Gowins, Jr.,
setting out in the application that the Corpora-
tion owns Contract Carrier Permit No. 11160 and
Special Commodity Permit No. 31981."
You request our opinion in response to the following
questions:
"1. Is the Railroad Commission required to
approve applications for the sale and transfer of
the capital stock in corporations holding certifi-
cates or permits issued under the Motor Carrier Law
of Texas, before such stock can be transferred?
“2. If your answer to Question 1 is in the
affirmative, are we required to collect a filing
fee with such applications?
“3. If we are required to collect a filing
fee, should we collect only one filing fee of ten
dollars, where more than one permit is owned by the
Corporation transferring the stock, or should we
collect a ten dollar filing fee for each permit
owned by said Corporation?"
hon. James d,. Kilday, Page 2
Section 6 (f) of Article.'3llb, Vernon’s Civil :jt.:t-
utes, reads:
“Any contract carrier permit held, owned, or
obtained by any motor carrier operating under the
provisions of Section 6 may be sold, assigned,
leased, transferred, or inherited; provided, how-
ever, th:lt any proposed sale, lease, assignment,
or transfer shall be fir’st presented in wri.ting to
the Commission for its aoprovnl or disapproval
and the Commission may disapprove such proposed
sale, assignment, lease or transfer if it be found
and determined by the Commission that su;h proposed
sale, assignment, lease, or transfer is not in good
faith or that the proposed purchaser, assignee,
lessee, or transferee is not capable of continuing
the operation of the equipment proposed to be sold,
assigned, leased, or transferred in such a manner
as to render the services demanded in the best in-
terest of the public; the Commission in approving
or dtsapproving any sale, assignment, lease, or
transfer of any permit may take into consioeration
,111 of the requirements and qualifications of a
regular applicant required in this Section, and
apply same as necessary qualifications of any pro-
posed purchaser, assl.gnee, lessee, or transferee;
provided, however, that in case a permit is trans-
ferred that the transferee shall pay to the Commis-
sion a sum of money equal to ten (10) per cent of
the amount paid as a consideration for the transfer
of the permit which sum of ten (10) per cent shall
be deposited in the Zt-;te ,i’reasury to the credit of
the i!ighlJay Fund of the jtaie; provi.ded, however,
th:lt ny permit obtUned bv any motor carrier or by
any assignee or trransferee shall be taken and held
subject to the right of the State at any time to
limit, restrict, or forbid the use of the streets
and highways of this State to any holder or owner of
such permit. Lvery application filed with the Cod]-
mission for an order approving the lease, sale) or
transfer of any permit shall be accompanied by a
filing fee in the sum of Ten Dollars ($10) which fee
shall be in addition to other fees and taxes and
shall be retained by the Commission whether the
lease, sale, or transfer of the permit is approved
or not. Added Acts 1939, 46th Leg., p. 89, 61 1.”
The Railroad Commission is given no authority regard-
ing the transfer of shares. of stock in private corporations,
even in those corporations holding motor carrier permits and
certificates of convenience and necessity. This question doubt-
less arises out of the thought on the part of the person
Hon. James d. Kilday, page 3
acquiring the stock that the view might be taken that a sale
of the capital stock is tantamount to a sale of all the assets,
including the permit, as suggested under a particular state of
facts in Vick v. Park, 171 S.W. 1039 (the identical opinion
being reported -ilso in 173 :5&!. 989). However, we do not be-
lieve such a doctrine would be applied !n such a way as to re-
auire the Railroad Commission to approve a sale and transfer
of the stock in a corporation owning a permit. The tangible
property of a corporation belongs to the corpor~~tionas such,
the stockholders merely owning intangible interests in the cor-
porate business. Turner v. Cattlemen's Trust Co. 215 S.:i.
831, Corn. App.; Automobile Mortg. Co. v. Ayub, 26& S.;:. 134,
Comm. App.
We do not believe there exist sufficient reasons for
the courts to disregard the corporate fiction and treat the
transfer of the stock as a transfer of the permit. The finan-
cial strength of the corporation itself is not impaired by the
sale of stock. If the service is not kept up or the permit
is otherwise abused remedies are provided in Article 911b. jee
Section 12 (b). Under the facts as stated, your first question
is given‘s negative answer.
Yours very truly
By /s/ Glenn R. Lewis
Glenn H. Lewis, ,Assistant
Aic'HC\VKD%iP 13, 1940
/s/ Gerald C. Mann
ATTi,R;d&YGZN:&AL OF TEXAS
Ot'INI.!N COMIMITTHE
H'B, CHAIRMAN
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