Untitled Texas Attorney General Opinion ( 1983 )

c
The Attorney General of Texas
September 19, 1983
JIM MATTOX
Attorney General
Supreme Court Building Honorable Mack Wallace Opinion No. m-69
P. 0. Box 12546 Chairman
Austin. TX. 76711. 2546 Railroad Commission of Texas Re: Fee payable to Railroad
5121475-2501
P. 0. Drawer 12967 Commission on transfer of
Telex 9101674.1367
Telecopier 51214750266
Austin. Texas 78711 certificate or permit of
authority
714 Jackson, Suite 700 Dear Mr. Wallace:
Oal,as.. TX. 75202.4506
2141742-6944
You have asked the amount of transfer tax, if any, that is due
the Railroad Commission of Texas under article 911b. sections 5a(a),
4624 Alberta Ave.. Suite 160 6(e) and 6(f), V.T.C.S., when the owner of a motor carrier permit or
El Paso. TX. 79905.2793 certificate of authority pledges it as collateral for a note and
9151533.3464 defaults on the note.
Under the facts presented to us, it appears that the original
owner of a permit or certificate of authority issued by the Railroad
J/223-5686 Commission was a motor carrier, operating pursuant to that authority,
who borrowed $75,000. The creditor who loaned the $75,000 held the
operating authority as security for the note. When the original owner
606 Broadway. Suite 312
Lubbock. TX. 79401.3479
defaulted on the note, the operating authority was transferred to the
6061747-5236 creditor in cancellation of the debt of $75,000, apparently by a
voluntary,assignment reciting $1 as cash consideration. We believe
that the transfer tax provisions apply under these facts and that the
4309 N. Tenth, Suite 6
amount of tax to be paid by the holder of the operating authority is
McAllen, TX. 76501-1665
512/662-4547 $7,500.10. We express no opinion as to other requirements regarding
transfers of operating authority under article 911b.
200 Main Plaza, Suite 400 Section Sata) of article 911b provides:
San Antonio. TX. 76205.2797
5121225-4191
[I]n case a certificate is transferred . . . the
transferee shall pay the Commission a sum of money
An Equal OppOrtunityI equal to ten (10) percent of the amount paid as a
Affirmative Action Employer consideration for the transfer of the
certificate . . . .
Sections 6(e) and 6(f) contain the same provision in case a permit is
transferred.
The questions are whether an owner who pledges its operating
authority as collateral and a creditor who holds the operating
f-
p. 296
Honorable Mack Wallace - Page 2 (I+69)
authority after default and assignment are a "transferor" and
"transferee," respectively, and whether the receipt,of the permit or
certificate under these facts is a taxable transfer. To qualify as a
transferee of a motor carrier certificate within the contemplation of
article 911b, section 5=(a), the recipient of the certificate must
show, among other things, that it is capable of continuing service
under the certificate. See Brown Express, Inc. v. Railroad Commission
of Texas, 415 S.W.2d 394, 396 (Tex. 1967); Attorney General Opinion
M-1201 (1972). That aspect of a taxable transfer is not an issue
under the facts presented to us because the creditor holding the
operating authority is willing and able to operate it until such time
as it may be transferred to a third party.
Sections 5a(a), 6(e), and 6(f) envision several types of
transfers in that they each state that any certificate or permit
"held, owned, or obtained by any motor carrier . . . may be sold,
assigned, leased, transferred, or inherited." (Emphasis added). The
word "obtain" in its general sense means to get hold of by effort, to
get possession of, to-procure. and to acquire in any way. - See Black's
Law Dictionary, 972 (5th ed. 1979); Webster's New InGnational
Dictionary, 1682 (2nd ed. 1947). The word "transfer" was defined in
Ditto Investment Company v. Ditto, 302 S.W.2d 692, 694 (Tex. Civ. App.
- Fort Worth 1957), rev'd on other grounds, 309 S.W.2d 219 (1958),
wherein the court stated:
?
Common use of the word 'transfer' is to denote the
passing of title in property, or an interest
therein, from one person to another, and, in this
sense, the term means that the owner of property
delivers it to another with the intent of passing
the rights which he had in it to the latter.
Because the interest in the permit or certificate of authority passes
from the possession of the owner who pledges it as collateral to that
of the creditor to whom it is assigned after default on the note, we
believe the transaction is a taxable event under article 911b.
The amount of tax on such a transfer is 10 percent of the amount
paid as consideration for the transfer of the permit or certificate of
authority. The actual cash consideration under the facts presented to
us is $1. When a permit or certificate of authority is used to secure
a note for $75,000, the true consideration is much greater than $1.
Attorney General Opinion O-1505 (1939) dealt with the transfer tax for
a certificate that was leased. In that opinion, this office stated
that the value of the use of the certificate is determined by the
parties themselves. The parties at hand clearly contemplate a
certificate value of at least $75,000. Therefore, the amount of the
tax to be paid by the transferee in this instance is 10 percent of
p. 297
-
Honorable Mack Wallace - Page 3 (J'M-69)
$75,000, plus 10 percent of the $1 given as actual cash consideration,
resulting in a total transfer tax of $7,500.10.
SUMMARY
The transfer tax provisions of article 911b.
sections S=(a), 6(e), and 6(f), V.T.C.S., apply to
a creditor capable of continuing service under a
motor carrier permit or certificate of authority
that is assigned to the creditor after default on
a note for which the authority is collateral.
Since the amount of the transfer tax is 10 percent
of the amount paid as consideration for the
transfer, the tax is 10 percent of the amount of
the cancelled debt, plus 10 percent of any
additional cash consideration.
Very truly yours,
.
J~ks
JIM MATTOX
Attorney General of Texas
TOM GREEN
First Assistant Attorney General
DAVID R. RICHARDS
Executive Assistant Attorney General
Prepared by Nancy Sutton
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Rick Gilpin, Chairman
Jon Bible
David Brooks
Colin Carl
Jim Moellinger
Nancy Sutton
p. 298