1-1 By: Brown S.B. No. 1446
1-2 (In the Senate - Filed March 13, 1995; March 20, 1995, read
1-3 first time and referred to Committee on Finance; April 7, 1995,
1-4 reported adversely, with favorable Committee Substitute by the
1-5 following vote: Yeas 11, Nays 0; April 7, 1995, sent to printer.)
1-6 COMMITTEE SUBSTITUTE FOR S.B. No. 1446 By: Brown
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to the regulation of certain motor vehicle dealers and to
1-10 the sale, titling, and registration of certain motor vehicles.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Subdivisions (ii), (iii), (iv), (v), (vi), (vii),
1-13 (viii), and (ix), Subsection (1-A), Section (a), Article 6686,
1-14 Revised Statutes, are amended to read as follows:
1-15 (ii) In this article <subsection>, "dealer"
1-16 means a person regularly and actively engaged in the business of
1-17 buying, selling, or exchanging (1) motor vehicles, (2) motorcycles,
1-18 (3) house trailers, or (4) trailers or semitrailers. The term
1-19 includes franchised motor vehicle dealer, independent motor vehicle
1-20 dealer, and wholesale motor vehicle dealer.
1-21 (iii) In this article, "franchised motor vehicle
1-22 dealer" means a person engaged in the business of buying, selling,
1-23 or exchanging new motor vehicles at an established and permanent
1-24 place of business pursuant to a franchise in effect with a motor
1-25 vehicle manufacturer or distributor.
1-26 (iv) In this article, "independent motor vehicle
1-27 dealer" means a dealer other than a franchised dealer or a
1-28 wholesale dealer.
1-29 (v) In this article, "wholesale motor vehicle
1-30 dealer" means a dealer who sells motor vehicles to no person
1-31 except:
1-32 (A) the holder of a valid dealer's general
1-33 distinguishing number; or
1-34 (B) a foreign dealer authorized by Texas
1-35 law or interstate reciprocity agreement to purchase a vehicle in
1-36 Texas without remitting the motor vehicle sales tax.
1-37 (vi) In this article, "franchise" has the
1-38 meaning given it in the Texas Motor Vehicle Commission Code
1-39 (Article 4413(36), Vernon's Texas Civil Statutes).
1-40 (vii) No person may engage in business as a
1-41 dealer <in (1) motor vehicles, (2) motorcycles, (3) house trailers,
1-42 or (4) trailers or semitrailers>, either directly or indirectly or
1-43 by consignment, unless that person has a currently valid general
1-44 distinguishing number assigned by the Department for each location
1-45 from which the person engages in business. If a dealer consigns
1-46 more than five vehicles in a calendar year for sale from a location
1-47 other than the location for which the dealer holds a general
1-48 distinguishing number, the dealer must also hold a general
1-49 distinguishing number for the consignment location, unless the
1-50 consignment location is a wholesale motor vehicle auction.
1-51 (viii) <(iv)> The provisions of Subdivision
1-52 (vii) <(iii)> of this subsection do not apply to:
1-53 (A) a person who sells or offers for sale
1-54 fewer than five (5) vehicles of the same type in a calendar year if
1-55 the person owns the vehicles and if the vehicles are registered in
1-56 his name;
1-57 (B) a person who sells or offers to sell a
1-58 vehicle acquired for personal or business use if the person does
1-59 not sell or offer to sell to a retail buyer and the transaction is
1-60 not held for the purpose of avoiding the provisions of this
1-61 article;
1-62 (C) an agency of the United States, this
1-63 state, or local government;
1-64 (D) a financial institution or other
1-65 secured party selling a vehicle in which it holds a security
1-66 interest in the manner provided by law for the forced sale of that
1-67 vehicle;
1-68 (E) a receiver, trustee, administrator,
2-1 executor, guardian, or other person appointed by or acting pursuant
2-2 to the order of a court;
2-3 (F) an insurance company selling a vehicle
2-4 acquired from the owner as the result of paying an insurance claim;
2-5 (G) a person selling an antique passenger
2-6 car or truck that is at least 25 years old or a collector selling a
2-7 special interest motor vehicle as defined in the Article V, Section
2-8 1, Chapter 741, Acts of the 67th Legislature, Regular Session, 1981
2-9 (Article 4477-9a, Vernon's Texas Civil Statutes) if the special
2-10 interest vehicle is at least 12 years old;
2-11 (H) a licensed auctioneer who, as a bid
2-12 caller, sells or offers to sell property to the highest bidder at a
2-13 bona fide auction if neither legal nor equitable title passes to
2-14 the auctioneer and if the auction is not held for the purpose of
2-15 avoiding another provision of this article. In addition to the
2-16 other requirements of this paragraph, if an auction is conducted of
2-17 vehicles owned, legally or equitably, by a person who holds a
2-18 general distinguishing number, the auction may be conducted only at
2-19 a location for which a general distinguishing number has been
2-20 issued to that person;
2-21 (I) a person who is a domiciliary of
2-22 another state and who holds a valid dealer license and bond, if
2-23 applicable, issued by an agency of that state, when that person
2-24 buys a vehicle from, sells a vehicle to, or exchanges vehicles with
2-25 a person who:
2-26 (1) holds a current valid
2-27 general distinguishing number issued by the Department, if the
2-28 transaction is not intended to avoid the terms of this article; or
2-29 (2) is a domiciliary of
2-30 another state if the person holds a valid dealer license and bond,
2-31 if applicable, issued by that state, and if the transaction is not
2-32 intended to avoid the terms of this article.
2-33 (ix) <(v)> A person who engages in business as a
2-34 dealer in this State shall make application to the Department for a
2-35 general distinguishing number authorizing him to reassign
2-36 manufacturer's certificates of origin, certificates of title, or
2-37 other basic evidences of ownership for the vehicles he sells. No
2-38 person may reassign a manufacturer's certificate of origin,
2-39 certificate of title, or other basic evidence of ownership until he
2-40 has been issued a general distinguishing number hereunder in one of
2-41 the six categories provided by this subdivision. An applicant
2-42 shall specify whether he proposes to be a (1) franchised motor
2-43 vehicle dealer, (2) independent motor vehicle dealer, (3) wholesale
2-44 motor vehicle dealer, (4) motorcycle dealer, (5) house trailer
2-45 dealer, or (6) trailer or semitrailer dealer <dealer in (1) motor
2-46 vehicles, (2) motorcycles, (3) house trailers, or (4) trailers or
2-47 semitrailers>. If the applicant proposes to secure the issuance of
2-48 dealer's license plates under Subsection (1) of this section for
2-49 attachment to more than one type of such vehicles, a separate
2-50 general distinguishing number is required for each. A dealer shall
2-51 obtain a separate and distinct general distinguishing number for
2-52 each location at which he engages in the business of buying,
2-53 selling, or exchanging motor vehicles, except that a dealer holding
2-54 a general distinguishing number for a particular type of vehicle
2-55 may buy, sell, or exchange vehicles of that type from more than one
2-56 location within the limits of a city if each location within the
2-57 limits of that city meets all requirements of an established and
2-58 permanent place of business set forth in this article and rules
2-59 promulgated by the Department, and if the dealer is not otherwise
2-60 prohibited by law from doing business at more than one location. A
2-61 dealer holding a general distinguishing number may reassign a
2-62 manufacturer's certificate of origin, certificate of title, or
2-63 other basic evidence of ownership of any type of vehicle owned by
2-64 him and which he is not otherwise prohibited by law from selling;
2-65 provided, however, that such dealer may reassign a manufacturer's
2-66 certificate of origin, certificate of title, or other basic
2-67 evidence of ownership of a motor vehicle owned by him and which he
2-68 is not otherwise prohibited by law from selling only if he has
2-69 complied with Subdivision (vii) of this subsection or is licensed
2-70 by the <Texas> Motor Vehicle Board of the Texas Department of
3-1 Transportation <Commission>.
3-2 (x) <(vi)> The Department may not issue a
3-3 general distinguishing number to a person until the person has
3-4 filed with the Department a sworn application showing and swearing
3-5 to the truth of the following:
3-6 (A) that the location for which the
3-7 applicant seeks the issuance of a general distinguishing number is
3-8 an established and permanent place of business situated on real
3-9 property owned, or leased by him under a written lease for a term
3-10 of not less than one year, on which the applicant maintains a
3-11 permanent furnished office for the sale of vehicles of the type
3-12 specified in his application and equipped as required by the
3-13 Department, a conspicuous sign with letters at least six inches in
3-14 height showing the name of the applicant's business, and on which
3-15 the applicant has sufficient space to display at least five (5)
3-16 vehicles of the type specified in his application, except that a
3-17 wholesale motor vehicle dealer <who buys, sells, or exchanges
3-18 vehicles with no person other than another dealer holding a general
3-19 distinguishing number> is not required to maintain display space;
3-20 (B) that the applicant intends to remain
3-21 regularly and actively engaged in business as a dealer of the type
3-22 of vehicle for which he seeks a general distinguishing number for
3-23 at least one year at the specified location and that the applicant
3-24 or his bona fide employee will be on the location for the purpose
3-25 of buying, selling, leasing, or exchanging vehicles and will be
3-26 available to the public or the Department at that location during
3-27 reasonable and lawful business hours;
3-28 (C) that the applicant has complied with
3-29 all applicable state laws and municipal ordinances; and
3-30 (D) other information required by the
3-31 Department.
3-32 (xi) <(vii)> In addition to other requirements
3-33 provided by law, the Department may not issue or renew a general
3-34 distinguishing number as a motor vehicle dealer or a wholesale
3-35 motor vehicle auction to an applicant until the applicant shows
3-36 proof satisfactory to the Department that the applicant has
3-37 purchased a properly executed surety bond in the amount of $25,000
3-38 with good and sufficient surety approved by the Department. The
3-39 bond shall be approved as to form by the attorney general and shall
3-40 be conditioned on the applicant's payment of all valid bank drafts,
3-41 including checks, drawn by the applicant for the purchase of motor
3-42 vehicles and the applicant's transfer of good title to each motor
3-43 vehicle the applicant offers for sale. In lieu of the bond
3-44 otherwise required by this subdivision, the Department may accept
3-45 and receive the pledge of cash, a cash deposit, a certificate of
3-46 deposit, or other instrument determined by the Department to be
3-47 adequate security for the obligations of the bond. Recovery
3-48 against the bond or other security may be made by a person who
3-49 obtains a judgment against a dealer or wholesale motor vehicle
3-50 auction assessing damages and reasonable attorney's fees for an act
3-51 or omission on which the bond is conditioned if the act or omission
3-52 occurred during the term for which the general distinguishing
3-53 number will be valid. The liability imposed on the surety under
3-54 this section is limited to the face amount of the bond for the
3-55 amount of the valid bank drafts, including checks, drawn by the
3-56 applicant for the purchase of motor vehicles or the amount paid to
3-57 the applicant for the motor vehicle for which good title was not
3-58 delivered, and for attorney's fees which are reasonable in relation
3-59 to the work performed and which are incurred in the recovery of a
3-60 judgment for an act or omission on which the bond was conditioned.
3-61 The surety on a bond shall not be liable for successive claims in
3-62 excess of the bond amount, regardless of the number of claims made
3-63 against the bond or the number of years the bond remains in force.
3-64 The requirements of this subdivision do not apply to a person
3-65 licensed by the Motor Vehicle Board of the Texas Department of
3-66 Transportation.
3-67 (xii) <(viii)> The Department shall deny an
3-68 application for a general distinguishing number, or renewal
3-69 thereof, if it is satisfied from the application and other
3-70 information before it that any of the facts in the application are
4-1 untrue or that the applicant has been guilty of any conduct that
4-2 would result in cancellation under Subsection (5-A) of this
4-3 section.
4-4 (xiii) <(ix)> The Department or any interested
4-5 person may bring an action in a court of competent jurisdiction to
4-6 enforce the provisions of this subsection and to prohibit the
4-7 operation of a dealer in violation of the terms of his application
4-8 for a general distinguishing number. In an action brought under
4-9 this subdivision, the plaintiff may seek an injunction and, if a
4-10 plaintiff other than the Department, may recover his attorney's
4-11 fees.
4-12 SECTION 2. Subsection (a), Article 6686, Revised Statutes,
4-13 is amended by adding Subsection (2-B) to read as follows:
4-14 (2-B) Motor Vehicle Dealers. (i) The holder of a
4-15 franchised motor vehicle dealer's general distinguishing number may
4-16 buy, sell, or exchange new or used motor vehicles and reassign a
4-17 manufacturer's certificate of origin, certificate of title, or
4-18 other basic evidence of ownership of any type of vehicle owned by
4-19 him if the holder is not otherwise prohibited by law from selling
4-20 or offering the vehicle for sale.
4-21 (ii) The holder of an independent motor vehicle
4-22 dealer's general distinguishing number may reassign a certificate
4-23 of title or other basic evidence of ownership of any type of
4-24 vehicle owned by the dealer which the dealer is not otherwise
4-25 prohibited by law from selling or offering for sale.
4-26 (iii) The holder of a wholesale motor vehicle
4-27 dealer's general distinguishing number may sell or offer to sell
4-28 motor vehicles to no person except a dealer holding a general
4-29 distinguishing number or a foreign dealer otherwise authorized by
4-30 Texas law or interstate reciprocity agreement to purchase a vehicle
4-31 in Texas without remitting the motor vehicle sales tax.
4-32 SECTION 3. Subsection (5-A), Section (a), Article 6686,
4-33 Revised Statutes, is amended to read as follows:
4-34 (5-A). Cancellation. The Department may cancel a
4-35 general distinguishing number if:
4-36 (A) the dealer has filed a false or forged title
4-37 or tax document, including sales tax affidavit or affidavit making
4-38 application for a certified copy of a title;
4-39 (B) the dealer has failed to take assignment of
4-40 all certificates of title, manufacturer's certificates, or other
4-41 basic evidence of ownership for vehicles acquired by the dealer or
4-42 failed to assign the certificate of title, manufacturer's
4-43 certificate, or other basic evidence of ownership for vehicles
4-44 sold;
4-45 (C) the dealer has used or permitted the use of
4-46 a metal dealer's plate or a Dealer's Temporary Cardboard Tag on a
4-47 vehicle which the dealer does not own or control or on a vehicle
4-48 which is not in stock and offered for sale;
4-49 (D) the dealer has made a material
4-50 misrepresentation in any application or other information filed
4-51 with the Department;
4-52 (E) the dealer has failed to maintain the
4-53 qualifications for a general distinguishing number;
4-54 (F) the dealer has willfully failed to comply
4-55 with this Act or any rule or regulation of the Department;
4-56 (G) the dealer has not assigned at least five
4-57 (5) vehicles in the prior twelve (12) months. This paragraph does
4-58 not apply to dealers who have been licensed less than twelve (12)
4-59 months; <or>
4-60 (H) the dealer has failed to demonstrate
4-61 compliance with the provisions of Sections 23.12, 23.12A, and
4-62 23.12B, Tax Code; or
4-63 (I) the dealer has used or allowed the use of
4-64 his general distinguishing number, or used or allowed the use of a
4-65 location for which a general distinguishing number is held, for the
4-66 purpose of avoiding the provisions of this article.
4-67 SECTION 4. Subsection (7), Section (a), Article 6686,
4-68 Revised Statutes, is amended to read as follows:
4-69 (7) Fees and Forms. Each applicant for an original
4-70 general distinguishing number shall pay to the Department a fee of
5-1 $500 <Two Hundred and Fifty Dollars ($250)>. Each applicant for
5-2 renewal of a general distinguishing number shall pay to the
5-3 Department an annual fee of $200 <One Hundred Dollars ($100)>.
5-4 Each applicant for a dealer's plate or plates shall pay a fee of
5-5 $20 <Ten Dollars ($10)> for each metal dealer's plate desired.
5-6 Each applicant for a manufacturer's plate or plates shall pay a fee
5-7 of $40 <Twenty Dollars ($20)> for each plate. All such fees shall
5-8 be deposited in the State Highway Fund. Applications for a
5-9 dealer's or manufacturer's license plate or general distinguishing
5-10 number, and for renewals thereof, shall be made in writing on forms
5-11 prescribed and furnished by the Department, and each such
5-12 application shall contain a statement to the effect that the
5-13 applicant agrees to permit the Department to examine during working
5-14 hours the ownership papers for each vehicle, registered or
5-15 unregistered, in the possession of the applicant or under his
5-16 control. All facts stated in an application shall be sworn to
5-17 before an officer authorized to administer oaths and no dealer's
5-18 general distinguishing number shall be issued until this Act is
5-19 complied with. All such applications, accompanied by the
5-20 prescribed fee, should be made to the Department by January 15 of
5-21 each year and the license plates for those applications meeting the
5-22 provisions of this Act will be mailed to the applicants during the
5-23 succeeding months of February and March. Unless otherwise provided
5-24 by law or rule of the Motor Vehicle Board of the Texas Department
5-25 of Transportation, each <Each> general distinguishing number and
5-26 each dealer's and manufacturer's license plate shall expire on
5-27 March 31 of each year.
5-28 SECTION 5. The importance of this legislation and the
5-29 crowded condition of the calendars in both houses create an
5-30 emergency and an imperative public necessity that the
5-31 constitutional rule requiring bills to be read on three several
5-32 days in each be suspended, and this rule is hereby suspended, and
5-33 that this Act take effect and be in force from and after its
5-34 passage, and it is so enacted.
5-35 * * * * *