By: Brown S.B. No. 1446
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of certain motor vehicle dealers and to
1-2 the sale, titling, and registration of certain motor vehicles.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subdivisions (ii), (iii), (iv), (v), (vi), (vii),
1-5 (viii), and (ix), Subsection (1-A), Section (a), Article 6686,
1-6 Revised Statutes, are amended to read as follows:
1-7 (ii) In this article <subsection>, "dealer"
1-8 means a person regularly and actively engaged in the business of
1-9 buying, selling, or exchanging (1) motor vehicles, (2) motorcycles,
1-10 (3) house trailers, or (4) trailers or semitrailers. The term
1-11 includes franchised motor vehicle dealer, independent motor vehicle
1-12 dealer, and wholesale motor vehicle dealer.
1-13 (iii) In this article, "franchised motor vehicle
1-14 dealer" means a person engaged in the business of buying, selling,
1-15 or exchanging new motor vehicles at an established and permanent
1-16 place of business pursuant to a franchise in effect with a motor
1-17 vehicle manufacturer or distributor.
1-18 (iv) In this article, "independent motor vehicle
1-19 dealer" means a dealer other than a franchised dealer or a
1-20 wholesale dealer.
1-21 (v) In this article, "wholesale motor vehicle
1-22 dealer" means a dealer who sells motor vehicles to no person
1-23 except:
2-1 (A) the holder of a valid dealer's general
2-2 distinguishing number; or
2-3 (B) a foreign dealer authorized by Texas
2-4 law or interstate reciprocity agreement to purchase a vehicle in
2-5 Texas without remitting the motor vehicle sales tax.
2-6 (vi) In this article, "franchise" has the
2-7 meaning given it in the Texas Motor Vehicle Commission Code
2-8 (Article 4413(36), Vernon's Texas Civil Statutes).
2-9 (vii) No person may engage in business as a
2-10 dealer <in (1) motor vehicles, (2) motorcycles, (3) house trailers,
2-11 or (4) trailers or semitrailers>, either directly or indirectly or
2-12 by consignment, unless that person has a currently valid general
2-13 distinguishing number assigned by the Department for each location
2-14 from which the person engages in business. If a dealer consigns
2-15 more than five vehicles in a calendar year for sale from a location
2-16 other than the location for which the dealer holds a general
2-17 distinguishing number, the dealer must also hold a general
2-18 distinguishing number for the consignment location, unless the
2-19 consignment location is a wholesale motor vehicle auction.
2-20 (viii) <(iv)> The provisions of Subdivision
2-21 (vii) <(iii)> of this subsection do not apply to:
2-22 (A) a person who sells or offers for sale
2-23 fewer than five (5) vehicles of the same type in a calendar year if
2-24 the person owns the vehicles and if the vehicles are registered in
2-25 his name;
3-1 (B) a person who sells or offers to sell a
3-2 vehicle acquired for personal or business use if the person does
3-3 not sell or offer to sell to a retail buyer and the transaction is
3-4 not held for the purpose of avoiding the provisions of this
3-5 article;
3-6 (C) an agency of the United States, this
3-7 state, or local government;
3-8 (D) a financial institution or other
3-9 secured party selling a vehicle in which it holds a security
3-10 interest in the manner provided by law for the forced sale of that
3-11 vehicle;
3-12 (E) a receiver, trustee, administrator,
3-13 executor, guardian, or other person appointed by or acting pursuant
3-14 to the order of a court;
3-15 (F) an insurance company selling a vehicle
3-16 acquired from the owner as the result of paying an insurance claim;
3-17 (G) a person selling an antique passenger
3-18 car or truck that is at least 25 years old or a collector selling a
3-19 special interest motor vehicle as defined in the Article V, Section
3-20 1, Chapter 741, Acts of the 67th Legislature, Regular Session, 1981
3-21 (Article 4477-9a, Vernon's Texas Civil Statutes) if the special
3-22 interest vehicle is at least 12 years old;
3-23 (H) a licensed auctioneer who, as a bid
3-24 caller, sells or offers to sell property to the highest bidder at a
3-25 bona fide auction if neither legal nor equitable title passes to
4-1 the auctioneer and if the auction is not held for the purpose of
4-2 avoiding another provision of this article. In addition to the
4-3 other requirements of this paragraph, if an auction is conducted of
4-4 vehicles owned, legally or equitably, by a person who holds a
4-5 general distinguishing number, the auction may be conducted only at
4-6 a location for which a general distinguishing number has been
4-7 issued to that person;
4-8 (I) a person who is a domiciliary of
4-9 another state and who holds a valid dealer license and bond, if
4-10 applicable, issued by an agency of that state, when that person
4-11 buys a vehicle from, sells a vehicle to, or exchanges vehicles with
4-12 a person who:
4-13 (1) holds a current valid
4-14 general distinguishing number issued by the Department, if the
4-15 transaction is not intended to avoid the terms of this article; or
4-16 (2) is a domiciliary of
4-17 another state if the person holds a valid dealer license and bond,
4-18 if applicable, issued by that state, and if the transaction is not
4-19 intended to avoid the terms of this article.
4-20 (ix) <(v)> A person who engages in business as a
4-21 dealer in this State shall make application to the Department for a
4-22 general distinguishing number authorizing him to reassign
4-23 manufacturer's certificates of origin, certificates of title, or
4-24 other basic evidences of ownership for the vehicles he sells. No
4-25 person may reassign a manufacturer's certificate of origin,
5-1 certificate of title, or other basic evidence of ownership until he
5-2 has been issued a general distinguishing number hereunder in one of
5-3 the six categories provided by this subdivision. An applicant
5-4 shall specify whether he proposes to be a (1) franchised motor
5-5 vehicle dealer, (2) independent motor vehicle dealer, (3) wholesale
5-6 motor vehicle dealer, (4) motorcycle dealer, (5) house trailer
5-7 dealer, or (6) trailer or semitrailer dealer <in (1) motor
5-8 vehicles, (2) motorcycles, (3) house trailers, or (4) trailers or
5-9 semitrailers>. If the applicant proposes to secure the issuance of
5-10 dealer's license plates under Subsection (1) of this section for
5-11 attachment to more than one type of such vehicles, a separate
5-12 general distinguishing number is required for each. A dealer shall
5-13 obtain a separate and distinct general distinguishing number for
5-14 each location at which he engages in the business of buying,
5-15 selling, or exchanging motor vehicles, except that a dealer holding
5-16 a general distinguishing number for a particular type of vehicle
5-17 may buy, sell, or exchange vehicles of that type from more than one
5-18 location within the limits of a city if each location within the
5-19 limits of that city meets all requirements of an established and
5-20 permanent place of business set forth in this article and rules
5-21 promulgated by the Department, and if the dealer is not otherwise
5-22 prohibited by law from doing business at more than one location. A
5-23 dealer holding a general distinguishing number may reassign a
5-24 manufacturer's certificate of origin, certificate of title, or
5-25 other basic evidence of ownership of any type of vehicle owned by
6-1 him and which he is not otherwise prohibited by law from selling;
6-2 provided, however, that such dealer may reassign a manufacturer's
6-3 certificate of origin, certificate of title, or other basic
6-4 evidence of ownership of a motor vehicle owned by him and which he
6-5 is not otherwise prohibited by law from selling only if he has
6-6 complied with Subdivision (xi) <(vii)> of this subsection or is
6-7 licensed by the <Texas> Motor Vehicle Board of the Texas Department
6-8 of Transportation <Commission>.
6-9 (x) <(vi)> The Department may not issue a
6-10 general distinguishing number to a person until the person has
6-11 filed with the Department a sworn application showing and swearing
6-12 to the truth of the following:
6-13 (A) that the location for which the
6-14 applicant seeks the issuance of a general distinguishing number is
6-15 an established and permanent place of business situated on real
6-16 property owned, or leased by him under a written lease for a term
6-17 of not less than one year, on which the applicant maintains a
6-18 permanent furnished office for the sale of vehicles of the type
6-19 specified in his application and equipped as required by the
6-20 Department, a conspicuous sign with letters at least six inches in
6-21 height showing the name of the applicant's business, and on which
6-22 the applicant has sufficient space to display at least five (5)
6-23 vehicles of the type specified in his application, except that a
6-24 wholesale motor vehicle dealer <who buys, sells, or exchanges
6-25 vehicles with no person other than another dealer holding a general
7-1 distinguishing number> is not required to maintain display space;
7-2 (B) that the applicant intends to remain
7-3 regularly and actively engaged in business as a dealer of the type
7-4 of vehicle for which he seeks a general distinguishing number for
7-5 at least one year at the specified location and that the applicant
7-6 or his bona fide employee will be on the location for the purpose
7-7 of buying, selling, leasing, or exchanging vehicles and will be
7-8 available to the public or the Department at that location during
7-9 reasonable and lawful business hours;
7-10 (C) that the applicant has complied with
7-11 all applicable state laws and municipal ordinances; and
7-12 (D) other information required by the
7-13 Department.
7-14 (xi) <(vii)> In addition to other requirements
7-15 provided by law, the Department may not issue or renew a general
7-16 distinguishing number as a motor vehicle dealer or a wholesale
7-17 motor vehicle auction to an applicant until the applicant shows
7-18 proof satisfactory to the Department that the applicant has
7-19 purchased a properly executed surety bond in the amount of $25,000
7-20 with good and sufficient surety approved by the Department. The
7-21 bond shall be approved as to form by the attorney general and shall
7-22 be conditioned on the applicant's payment of all valid bank drafts,
7-23 including checks, drawn by the applicant for the purchase of motor
7-24 vehicles and the applicant's transfer of good title to each motor
7-25 vehicle the applicant offers for sale. In lieu of the bond
8-1 otherwise required by this subdivision, the Department may accept
8-2 and receive the pledge of cash, a cash deposit, a certificate of
8-3 deposit, or other instrument determined by the Department to be
8-4 adequate security for the obligations of the bond. Recovery
8-5 against the bond or other security may be made by a person who
8-6 obtains a judgment against a dealer or wholesale motor vehicle
8-7 auction assessing damages and reasonable attorney's fees for an act
8-8 or omission on which the bond is conditioned if the act or omission
8-9 occurred during the term for which the general distinguishing
8-10 number will be valid. The liability imposed on the surety under
8-11 this section is limited to the face amount of the bond for the
8-12 amount of the valid bank drafts, including checks, drawn by the
8-13 applicant for the purchase of motor vehicles or the amount paid to
8-14 the applicant for the motor vehicle for which good title was not
8-15 delivered, and for attorney's fees which are reasonable in relation
8-16 to the work performed and which are incurred in the recovery of a
8-17 judgment for an act or omission on which the bond was conditioned.
8-18 The surety on a bond shall not be liable for successive claims in
8-19 excess of the bond amount, regardless of the number of claims made
8-20 against the bond or the number of years the bond remains in force.
8-21 The requirements of this subdivision do not apply to a person
8-22 licensed by the Motor Vehicle Board of the Texas Department of
8-23 Transportation.
8-24 (xii) <(viii)> The Department shall deny an
8-25 application for a general distinguishing number, or renewal
9-1 thereof, if it is satisfied from the application and other
9-2 information before it that any of the facts in the application are
9-3 untrue or that the applicant has been guilty of any conduct that
9-4 would result in cancellation under Subsection (5-A) of this
9-5 section.
9-6 (xiii) <(ix)> The Department or any interested
9-7 person may bring an action in a court of competent jurisdiction to
9-8 enforce the provisions of this subsection and to prohibit the
9-9 operation of a dealer in violation of the terms of his application
9-10 for a general distinguishing number. In an action brought under
9-11 this subdivision, the plaintiff may seek an injunction and, if a
9-12 plaintiff other than the Department, may recover his attorney's
9-13 fees.
9-14 SECTION 2. Subsection (a), Article 6686, Revised Statutes,
9-15 is amended by adding Subsection (2-B) to read as follows:
9-16 (2-B) Motor Vehicle Dealers. (i) The holder of a
9-17 franchised motor vehicle dealer's general distinguishing number may
9-18 buy, sell, or exchange new or used motor vehicles and reassign a
9-19 manufacturer's certificate of origin, certificate of title, or
9-20 other basic evidence of ownership of any type of vehicle owned by
9-21 him if the holder is not otherwise prohibited by law from selling
9-22 or offering the vehicle for sale.
9-23 (ii) The holder of an independent motor vehicle
9-24 dealer's general distinguishing number may reassign a certificate
9-25 of title or other basic evidence of ownership of any type of
10-1 vehicle owned by the dealer which the dealer is not otherwise
10-2 prohibited by law from selling or offering for sale.
10-3 (iii) The holder of a wholesale motor vehicle
10-4 dealer's general distinguishing number may sell or offer to sell
10-5 motor vehicles to no person except a dealer holding a general
10-6 distinguishing number or a foreign dealer otherwise authorized by
10-7 Texas law or interstate reciprocity agreement to purchase a vehicle
10-8 in Texas without remitting the motor vehicle sales tax.
10-9 SECTION 3. Subsection (5-A), Section (a), Article 6686,
10-10 Revised Statutes, is amended to read as follows:
10-11 (5-A) Cancellation. The Department may cancel a
10-12 general distinguishing number if:
10-13 (A) the dealer has filed a false or forged title
10-14 or tax document, including sales tax affidavit or affidavit making
10-15 application for a certified copy of a title;
10-16 (B) the dealer has failed to take assignment of
10-17 all certificates of title, manufacturer's certificates, or other
10-18 basic evidence of ownership for vehicles acquired by the dealer or
10-19 failed to assign the certificate of title, manufacturer's
10-20 certificate, or other basic evidence of ownership for vehicles
10-21 sold;
10-22 (C) the dealer has used or permitted the use of
10-23 a metal dealer's plate or a Dealer's Temporary Cardboard Tag on a
10-24 vehicle which the dealer does not own or control or on a vehicle
10-25 which is not in stock and offered for sale;
11-1 (D) the dealer has made a material
11-2 misrepresentation in any application or other information filed
11-3 with the Department;
11-4 (E) the dealer has failed to maintain the
11-5 qualifications for a general distinguishing number;
11-6 (F) the dealer has willfully failed to comply
11-7 with this Act or any rule or regulation of the Department;
11-8 (G) the dealer has not assigned at least five
11-9 (5) vehicles in the prior twelve (12) months. This paragraph does
11-10 not apply to dealers who have been licensed less than twelve (12)
11-11 months; <or>
11-12 (H) the dealer has failed to demonstrate
11-13 compliance with the provisions of Sections 23.12, 23.12A, and
11-14 23.12B, Tax Code; or
11-15 (I) the dealer has used or allowed the use of
11-16 his general distinguishing number, or used or allowed the use of a
11-17 location for which a general distinguishing number is held, for the
11-18 purpose of avoiding the provisions of this article.
11-19 SECTION 4. Subsection (7), Section (a), Article 6686,
11-20 Revised Statutes, is amended to read as follows:
11-21 (7) Fees and Forms. Each applicant for an original
11-22 general distinguishing number shall pay to the Department a fee of
11-23 $500 <Two Hundred and Fifty Dollars ($250)>. Each applicant for
11-24 renewal of a general distinguishing number shall pay to the
11-25 Department an annual fee of $200 <One Hundred Dollars ($100)>.
12-1 Each applicant for a dealer's plate or plates shall pay a fee of
12-2 $20 <Ten Dollars ($10)> for each metal dealer's plate desired.
12-3 Each applicant for a manufacturer's plate or plates shall pay a fee
12-4 of $40 <Twenty Dollars ($20)> for each plate. All such fees shall
12-5 be deposited in the State Highway Fund. Applications for a
12-6 dealer's or manufacturer's license plate or general distinguishing
12-7 number, and for renewals thereof, shall be made in writing on forms
12-8 prescribed and furnished by the Department, and each such
12-9 application shall contain a statement to the effect that the
12-10 applicant agrees to permit the Department to examine during working
12-11 hours the ownership papers for each vehicle, registered or
12-12 unregistered, in the possession of the applicant or under his
12-13 control. All facts stated in an application shall be sworn to
12-14 before an officer authorized to administer oaths and no dealer's
12-15 general distinguishing number shall be issued until this Act is
12-16 complied with. All such applications, accompanied by the
12-17 prescribed fee, should be made to the Department by January 15 of
12-18 each year and the license plates for those applications meeting the
12-19 provisions of this Act will be mailed to the applicants during the
12-20 succeeding months of February and March. Unless otherwise provided
12-21 by law or rule of the Motor Vehicle Board of the Texas Department
12-22 of Transportation, each <Each> general distinguishing number and
12-23 each dealer's and manufacturer's license plate shall expire on
12-24 March 31 of each year.
12-25 SECTION 5. The importance of this legislation and the
13-1 crowded condition of the calendars in both houses create an
13-2 emergency and an imperative public necessity that the
13-3 constitutional rule requiring bills to be read on three several
13-4 days in each house be suspended, and this rule is hereby suspended,
13-5 and that this Act take effect and be in force from and after its
13-6 passage, and it is so enacted.