Honorable James E. Kilday, Director
Motor Transportation Division
Railroad Commission of Texas
Austin, Texas
                                       Opinion NO. o-1871
                                       Re:   The authority of
                                             the Railroad
                                             Commission to allow
                                             the>transfer of 18
                                             contract.carrler
                                             permits to an asso-
                                             ciation of contract
                                             carriers which
                                             associationis
                                             formed for the pur-
                                             pose ~of effecting
                                             a saving on In;
                                             surance.

.Dear Sir:
          We are in receipt of your l.etterof January 18, 1940,
in which you request an opinion of this department as-to the
authority of the Railroad Commission to allow the transfer
of eighteen contract carrier permits to an association under
the facts set out in your letter as follows:
          "The Commission has heretcfore established
     a policy that, when an individual or a corpora-
     tion has obtained over five contracts, such in-
     dividual or corporation will ba zonsidered by
     the Commission as a Common Carrier and not ellgi-
     ble any longer as a contract permit holder; and,
     in such event, of course,~will be required to
     prove aonvenience and necessity if he proposes
     to haul for more than five concerns.
          "I have been presented with a problem that
      I desire your advice on: There are l.Cindivi-
     duals holding 18 separate contract carrier per-
     mits to haul for the Continental Oil Company to
     18 different towns from Wichita Fall, Texas.
    Honorable James E. Kilday, page 2 (C-1871)


        These 18 individuals have no relation with each
.       other except that each owns a filling stat&on
        selling Continental products. They, however,
        desire to form an assoalatlon or a trusteeship
        and to file an application with the Commission
        and transfer their 1.8 different aontract car-
        rier permits to the association, and to be held
        by the assoaiation from year to year, subject
        to a renewal of the association by the indivl-
        duals.
             "It is represented that the only reason they
        desire that this be done Is because, 'In such event,
        the association can get fleet Insurance and, of
        course, you know such insurance is cheaper. It Is
        desired by these individuals that they have the
        permission to dissolve the association at the end
        of any given year after the association is autho-
        rlsed, so that, in the event the association is
        dissolved, the Individual permits would revert
        back to the Individuals that now own them."
              Under the terms of Artlole glib, Seatlon 1 (g), an
    association which operates or causes to be operated motor
    vehicles could be a "motor carrier." Said provision reads
    as follows:
                         erm 'motor oarrler' means any
         persoCl!g!i2e , taorporation, company, ao-
         partnership, association or joint stock asso-
         ciation, end their lessees, receivers or
         trustees appointed by any Court whatsoever,.owning,
         controlling, managing, operating or causing to
         be operated any motor propelled vehicle used
         in transporting property for compensation or
         hire over any public highway in this State,,
         where in the course of such transportation a
         highway between two or more incorporated~cities,
         towns or villages is traversed; provided that
         the term ‘motor carrier' as used In this Act
‘
         shall not Include, and this Act shall not apply
         to motor vehicles operated exclusively within
         the Incorporated limits of cities or towns."
              There can be no question, therefore, but that the
    proposed association could be a motor carrier and could
    operate as a contract carrier within the meaning of the
    Motor Carrier Act.
-




Honorable James E. Kilday, page 3 (o-1871)


          The Railroad Commission of Texas Is aLthorlsed to
approve the transfer or lease of a contract carrier permit
under the authority of House Bill 224, Acts of the 46th
Legislature, 1939. This Article has been Incorporated into
Vernon's Annotated Civil Statutes as Article glib, Section
6 (f) and reads as followar
           “(f) Any contract aarrler permit held,,own-
     ed, or obtained by any motor carrier operating
     under the provisions of Section 6 may be sold,
     assigned, leased, transferred, or Inherited; pro-
     vided, however, that .anyproposed sale, lease,
     assignment, or transfer shall be first presented
     In writing to the Commission for its approval
     and the Commission may disapprove such proposed
     sale, assignment, lease, or transfer if it be
     found and determined by the Commission that suah
     proposed sale, assignment, lease,  or transfer
     Is not in gsod?faith or that the proposed pur-
     chaser, assignee, lessee, or transferee is not
     capable of continuing the operation of the equip-
     ment proposed to be sold, assigned, l,eased,or
     transferred ih such a manner as to render the
     services demanded In the best Interest of the
     public; the Commission in approving or dlsap-
     proving any sale, assignment, lease, or transfer
     of any permit may take into consideration all
     of the requirements and qualifications of a re-
     gular  applioant required In this Section, and
     apply same as neaessary qualifications of any
     proposed purohaser, assignee, lessee, or trans-
     feree; provided, however, that in case a permit
     is transferred that the transferee shall pay to
     the Commission 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 State
     Treasury to the credit of the Highway Fund of
     the,State; provided, however, that any permit
     obtained by any motor carrier or by any assignee
     or transferee.shall be taken and held sub-
     jeot 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. Every application filed with
     the.Uommisslon for an order approving the lease,
     sale, or transfer of any permit shall be acaom-
     panied by a filing fee In the sum of Ten Dollars
     ($10) which fee shall be in addition to other
Honorable James E. Kilday, page 4 (0-1871)


     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., H. B, #224, B 1."
          Under the provisions of the above quoted article
if the Railroad Commission of Texas satisfied Itself that
a transfer or lease of a contract aarrier permit should be
approved, the Commission has the authority to gqant permls-
slon for such transfer or lease and this rule would apply
in the case at hand.
          It is provided in H. B. No. 224 that a contract
carrier permit may be either assigned, leased, transferred
or Inherited. Evidently the attempt here is to lease or
assign the eighteen contract carrier permits to the asso-
alatlon for a period of a year. In other words, we do not
have here an attempt to make an outright assignment or
transfer of the eighteen contract carrier permits to the
association, but rather it is to be an assignment or lease
on a year to year basis.
          If the Railroad Commission should approve such
leases or assignmentaof the eighteen contract carrier per-
mits to the association then the association would have to
be regarded as operating under eighteen separate contract
carrier permits. It could not be sald,that the assoaia-
tlon would be operating under one permit unless.sald associa-
tion should apply to the Railroad Commission for a new per-
mit and be granted the same. As long as the association
would be operating under the eighteen leased or,transferred
contract carrier permits, then, the Railroad Commission
would have to recognize such association as operating under
eighteen permits and not under one.
          It is the opinion of this department, therefore,
that the Railroad Commission has the authority to grant
permission to the eighteen contract carriers involved to
transfer, lease, or assign their permits to an association
if the Commission feels that the permission forksuch trans-
fer, assignment, or lease is warranted under the.terms of
H. B. No. 224. However, unless the association obtained
a new permit it would be operating under the elghteen‘con-
tract carrier permits and the Railroad Commission would have
to consider all of such permits separately and not as one
permit during the existence of the association.
          In your letter you ask whether or not an assoala-
tion operating under eighteen separate aontraat carrier
Honorable James E. Kilday, page 5 (O-1871)


permits would be violating the rule that the Commission as
heretofore established that an individual who has over five
contracts is a~common carrier and must apply for a certlfi-
cate of convenience and necessity. You state in the first
paragraph of your letter, however, "and In such event, of
course, will be required to prove convenience and neces-
sity if he proposes to haul for more than five concerns."
It Is to be pointed out in tm   Eectionxt       the pro-
posed association which would be operating under eighteen
contract carrier permits would not be hauling for more than
five conaerns because said association would be hauling
for only one concern, the same being the Continental Oil
Company. From the statement in your letter, therefore, It
seems that the rule of the Commission would apply only
where the person or corporation is proposing to haul for
more than five concerns. If that Is the rule of the
Commission, then, the association here would not be violating
the same by operating under eighteen contract carrier
permits because it would only be hauling for one concern
and not for more than five. If the rule of the Commission
that 'youmention in your letter applies to every carrier
that operates under more than flve contract carrier permits,
regardless of whether said carrier Is hauling for one oon-
tern or for more than five concerns, then, In that case, the
proposed plan would be a violation of such a rule.
          We trustthat the above discussion will be suffi-
cient to enlighten you as to the authority of the Railroad
Commission in this matter.

                                       Yours very truly
                                  ATTORREYCURERAL OFTEXAS



                                  By
                                                Billy Goldberg
BG:JM   APPROVED   Jan 30, 1940                       Assistant


        ATTORNEY GENERAL OF TEXAS
