Untitled Texas Attorney General Opinion ( 1974 )

December 18. 1974
The Honorable Bernard Solomon Opinion No. H- 479
Criminal District Attorney
P. 0. Box 776 Re: When under article 7150f,
Marshall, Texas 75670 V. T. C. S. rak materials
purchased outside the atate
are exempted from taxation
as property moving in inter-
state commerce.
Dear Mr. Solomon:
We have received your request concerning the construction of
article 7150f, V. T. C. S., which provides a tax exemption for property
moving in interetate commerce.
Article 7150f 16 ae follows:
All property consigned to a conrignee in this
State from outside this State to be forwarded to a
point outside this State, which is entitled under
the tariffs. rules, and regulations approved by
the Interetate Commerce Commierion to be for-
warded at through rater, from the point of origin
to the point of destination. if not detained within
this State for a period of more than ninety (90)
day@, shall be deemed to be property moving in
inter&ate commerce, and no such property shall
be subject to taxation in this State: provided, that
gooda, wares and merchandise, whether or not
moving on through ratee, shall be deemed to move
in interetate commerce, and not subject to taxation
in this State if not detained more than nine (9) months
where such goods, waree and merchandioe are 80
held for aneembly, storage, manufacturing, proceseing
p. 2176
. .
The Honorable Bernard Solomon page 2 (H-479)
or fabricating purposes; providing further that
personal property consigned for sale within this
State must be assessed as any other personal
property. Provided further, that all laws and
parts of laws in conflict herewith are hereby repealed
to the extent of such conflict only.
The first portion of the statute exempts some property consigned
to one in this State when it is entitled to pass through the State at
through rates subject to a 90 day limitation. The second portion of the
statute exempts some property detained for less than nine months for
the purpose of assembly, storage, manufacturing, processing, or
fabrication. While thie portion is not expressly limited to consigned
materiale, it is our opinion that the statute should be so construed.
Ordinarily “a proviso is limited to the clause that next precedes it
and to which it is attached . . . I’ White v. City of Quanah. 28 S. W.
1065 (Tex. Sup. 1894); Fenet v. McCuistion, 147 S. W. 867 (Tex. Sup.
1912); Galveston & W. Ry. Co. v. City of Galveston, 155 S. W. 273(Tex. Civ. App. --Galveston 1913, no writ). In addition, tax exemptions
are to be strictly construed against the exemption. Radio Bible Hour,
Inc. v. Hurst-Euless Independent School District, 341 S. W. 2d 467(Tex. Civl App. --Ft. Worth 1960, writ ref. n. r. e.); Citv of Amarillo
v. Love, 356 S. W. 2d 325 (Tex. Civ. App. --Amarillo 1962, writ ref.
n.r.e.). The second portion of article 7150f should ther-efore be construed
as modifying the first portion and consequently exempts only consigned
goods. The third portion of article 7150f expressly states that goods
consigned for sale within this State are not exempted from taxation.
Whether property is consigned rather than sold is a question of
fact. Consigned property is that which is deposited with another for
care or sale, title to which remains with the consignor. Sturm v.
w, 150 U.S. 312 (1893); Dittmar v. Norman, 118 Mass. 319 (Sup.
Jud. Ct. Mass. 1875); Rolker v. Great Western Ins. Co., N.Y., 4
Abb. App. Dec. 76 (N. Y. 1866); Edwards v. Baldwin Piano Co., 83
So. 915 (Fla. 1920); F. F. Ide, Mfg. Co. v. Sager Mfg. Co., 82 Ill. App.
685 (Ill. 1899). Therefore, article 7150f excepts from taxation only
that property deposited with another for care, processing, or sale
outside this State, title to which is not transferred to the recipient of
the property.
p. 2177
The Honorable Bernard Solomon page 3 (H-479)
The different time limitations of article 7150f are applicable to
different dispositions of the property consigned. If the property is
consigned for the primary purposes of assembly, storage, manufacturing,
processing, or fabrication, the nine month limitation is applicable;
however, if the property is consigned for some other primary purpose,
such as transportation or sale, the 90 day limitation is applicable. The
primary use of the property, as distinguished from an incidental use,
determines the extent to which it is exempt from taxation. Attorney
General Opinion H-342 (1974). Hilltop Village, Inc. v. Kerrville Independent
School District, 426 S. W. 2d 943 (Tex. Sup. 1968).
SUMMARY
If property ‘is not’consigned it does not qualify
for the tax exemption provided in article 7150f.
Consigned property is that which is deposited
with another for care or sale, title to which
remains with the consignor.
Very truly yours,
/ / Attorney General of Texas
APPROVED:
DAVID M. KENDALL, First Assistant
C. ROBERT HEATH, Chairman
Opinion Committee
p. 2178