Hon. James E. Kllday         opinion Noo. o-357
Dlrector,Motor Tram-         Be; .Observance by Ballroad Commis-
portatlon Divlslon           sion of corporate riOt;on  in approv-
Railroad Commlsslon of       lng or dlsapprovlng transfers of
  Texas                      Special Commodity Permits nuder the
Austin, Texas                provlslons of Article glib, Vernon’s
                             Clvll Statutes.
Dear Sir:
              We uote -the r0ii0wing fact   situation   presented In
your letter    oP December 4, 1939:
           “J. H. Robinson Truck Lines, Inc., a Texas
     corporation,  in which J. H. Robinson ,a citizen
     of Texas, owns approximately 75% of {he capital
     stock, has properly proceed from this Commission
     end holds .severel Intrastate Certlf’icates of Pub-
     lic Convenience and Necessity authorizing said
     corporation to operate over Texas highways as an
     IRTRASBXECommonCarr%er by trucki and said cor-
     poration so extensively operates and has so ex-
     tenslvely operated severel years.
           *The 75% stock ownership is based on Mr. Rob-
     inson’s ownership of 374 shares out of a total of
     '500shares. Ed De Leon vice-president    and dlrecr-
     tor, owns 125 shares anb 0, H. Johnson,  secretary-
     trrsurer,   owns one share. Hr. Robinson Is presi-
             The assets of the corporation are sald to be
     aboui $100 000.06. The capital stock llablllty    has
     been set a$ $50,000&O.
           “On November 29, 1939, by au a~pl’lcatlon fil-
      ed with this Division, the Commlsslon Is asked to
      approve of a sale end transfer into J. H. Robinson,
      personally and Sndlvldually, out of the 0. D. Jack-
      son of Refuglo r Texas of au IRTRASTATR     Special
      Commodity Per&l; No.&9       heretofore issued by
      this Commission, authcirlzlng said Jackson to tram-
      port by truok:
Hon. James E. Kllday,       page 2


        Texas and from all points In Texas to Befuglon
              AND, AS WELL,
        *pilfleld   ee          to and from all points In
        Texas.*
           You observe that we have recently held, in response
to an Inquiry from your department, that a person may not hold
a CommonCarrier Truak Certlfloate   OS Public Convenience and
Neoessity and a Special Commodity Truck Permit at one and the
8aiM time.
              You present the following    questions for the conslder-
ation    of this  department:
              *(a)   Shall this Comml8slon observe or disre-
        gard the corporate fiction in this and 8lmilar
        cases?    (b) Does this Commission have the poten-
        tial power to approve of aald trans er and sale?
        (c) I8 it dlscretlonery   with this Eomml8sion as
        to whether It approves or disapproves this trans-
        fer and sale?”
              We will    endeavor to answer your se’eond and third ques-
tions first.
            Subdivision (d), Section 6, Article 911b Vernon’s
Civil Statutes    confer8 authorlt   upon the Railroa h Commission
to Issue certain special commodlt p permits *upon such term8
condltltis   and restrl&lons  a8 the Railroad Commlaslon may beem
         a Into this authority there 1s to be read of necessity,
!gP%ltation      contained in Section 6bb of said A&, that “no
appllaatlon for permit to operate a8 a contract carrier shall
be granted by the Commlsslon to any person operating as a eom-
mon carrier and holding a certificate    of convenience and neces-
8ity...n
             Subdivision (e) of the Act permits the transfer of
such Special Commodity Permits upon approval by the Consnls8lon,
and proVlde8 that the Commission %ay disapprove such proposed
        transfer If It be Sound and determined by the Commission
ihit’auch propo8ed . . . transter 18 not in good faith or’ that the
proposed . . . trausieree 1s not capable of continuing the opera-
tion of the equipment proposed to be transferred in such a man-
ner as to render the services demanded In the best Interest of
the public; the Commission In approving or disapproving any ...
transier of any permit may take into consideration all of the
requirements and quallf lcatlons OS a regular applicant.. .*
 Hon. James E. Elldw,             page 3          ,. ::      ( ., in I-: .:~ z._,zz:..


               .Your second and thlr,d questions,,: .therefo.re2.~+re,.,an-
  ,,qered ,as SoIlpws~r: .:.~‘,I’;.;, ~.‘:J’.: i, :”      I,,.     ..-.’ +:[.:.;,, i.:.
            : ...‘rhe.‘aufh~~tp”b~..the +&&&i&             io’ ap&& ;jr~ hisi: _
   prove the proposed transfer of a S@eeclEQ‘C~hpmoditfr’~er~~lt’irl                          P1
   dep,eqd,upon its findings .,oS,Sact.~ IS, .the, Conjmlsslon finds
   that the e.ffect -of ‘Its’ .aDproveI“of .the, tr&n&Ser~propose,d,will
     e to &nSer ‘a perndt to &t as :a Spe&I :f&rt&~ty, ~Contraqt:
   e arrler upon a person holding a CertSSlcate~‘dS Convenlerice ‘and
   HeCeSslt,y, .lt ig&& decline, to approve. the tr.aqsfer.                    An,approv-
: ~+$.oi such ,,a pnsfer        ~pilld constitute’ anatt&pt upon the pert
   of the~,Commissldn to arrogate ‘to-,Itself. thei ‘power ‘to : suspeaa
   We iWJislons         of Se,ctl.y? 6th .?F $iJe; ‘+p i ..: .,,nil’
                                                                  ‘~I:
                                                                     ,.~‘?;,:
                                                                          ;‘,.-:
                                                                              .‘.‘..~;,!‘~;~;
                your flrst que &‘& .ls &&&;i.Ca& &&&f                              ‘: : ‘2: I!:,
                      ;..Y:   ,,
               A corporation’ Is lk’most instances to be regarded as
 a legal. ,entltp se.perate and:dlstlnct       from Its Individual mem-
 bers or stockholders.           Disregard of the so-called “aorporate
 fiction*     Is the exception .and not the ruIe.           Fact situations
 whereb the .coUr~a.h.ave.&r&srded the corporate entity are
 classlfik'd    as fmOW8; ‘ina no’te appearing In 5 Texas Law Re-
 view, at page 77,                                 c CQ~1:”<..I:.y::c.;(Y<,LCi
                                                                             : ‘,
               qirst,      where it is used a9,a ,~~“$,c~~~:i”,~.,~          ~.‘.
        petrating fraud; second, where “‘a.‘~ rforat~~‘~Is:~-‘~ :.
        organized and operated a8 a m.ere.tpg, , or pUs1ne.s~.~,
        conduit of anothe,r corporatloa~ 4 ~%hlkjd,;.vherg;the
                                                 .^                      : .’ ::
        corporate fiction is resorted         o ‘as’amsan&‘rS
        evading an exlstlng legal obligation;           fourth, ,.whsre-,,
        the corporate fiction 1s employed to achieve or “: ~,:
        perpetuate monopoly; fifth, where the corporate
        fiction is used to circumvent a statute; sixth,
        where the corporate Slotion Is relied upon as a
        protection of crime or to justifywrong."
            Whether the corporate Slctlon should be disregarded
  seems to turn upon the ascertainment of the following facts:
             (1) Is the situation factually such that                           the car or-
  ate entity Is but the alter ego of the stockholder;                           and (2 P
  are the facts such that an adherence to the fiction                           of <he sep-
  arate existence of the corporation would under the                            particular
  circumstances, sanction a fraud or                                               First
  National Rank In Canyon vs. Gamble ?           pp.),                          132 S.W.(2d)
  100, opinion adopted by the Supreme Court.
            It 1s therefore clear that this department cannot ad-
  vise the Commfsslon that it should observe or disregard the
                                                                        --\   .


  Ho+ Jams E. Kllday,    pige 4


  corporate Sletlon ln the situation prerrented, for whether the
  corporate,  fiction  8hotfLd be dieregarded    depend8 upon the de-
  termtnatlon of what are esrentl8lly     questions of fact for the
  Commlrsioa to resolve, towltt
              1. mther     the tramfer to Roblnaon 18 In reality
  fiCtitiOU8   and Intended to vest real tit18 to the permit, ac-
~:‘:++8Lly, la the corporatlonj   or,
              2. Uhether the oontrol over the oorporatloa byBob-
  lnson a8 majority 8tookholder 18 such that In fact the aorport
  atlon 18 but the alter ego of Robinson, aud whether the cor-
  porate fiction 18 being U8ed in an attempt to clrcument the
  provision8 of the law above quoted.
                                  Yours very truly
                                  ATTORNEY
                                         GENERAL
                                               OF TEXAS
                                  By /8/ B. W. Falrchlld
                                  R. W. Falr&lld,   Aaslstant
  AkPROVEDDPC18, 1939
  jr/ Gerald C. itana
  ATTOREEY  GXERALOF TEXAS
  APPROVED:
          OP&ilI~ONC~!ST”
  BY:       D
  RUFzpbptwb
