Untitled Texas Attorney General Opinion ( 1948 )

EA~PI‘ORNEY GENERAL
'ow TEXAS
AUC~T~N``.TEXAB
PRICE DANIEL
ATTORNEYGENERAL
June 3, 1948
Hon. Geo. Ha Sheppard
Comptroller of Public Accounts
Austin, Texas Opinion No. V-596
Re: The taxability of coin-
operated machines which
vend aircraft accident in-
surance policies.
Dear Mr. Sheppard:
Your letter requesting our opinion in reference to the
above-captioned matter reads as follows:
“The Associated Aviation Underwriters have
in various air ports certain coin-operated vending
machines that vend insurance policies, that is, the
purchaser of the ticket may insert a c6in into this
coin-ope~rated machine and receive therefrom an
accident insurance policy covering any loss by ac-
cident that may be sustaine,d by him en the trip au-
thorized by his ticket.
“The question has arisen in this department as
to whether this machine is taxable under Article
7047a-2 which recites in part as follows:
“‘(d) The term “merchandise or music coin-
operated machine Was used herein shall mean and
include every coin-operated machine of any kind
or character, which dispenses or vends or which
is used or operated for dispensing or vending mer-
chandise, commodities, confections or music and
which is operated by or with coins or metal slugs,
tokens or checks. The following are expressly in-
cluded within said term: candy machines, gum ma-
chines, sandwich machines, handkerchief machines,
sanitary drinking cups, phonographs, pianos, graph-
ophones, radios, and all other coin-operated ma-
chines which dispense or vend merchandise, com-
modities, cenfections or music.’
“. .
Hon. Geo. H. Sheppard, lage 2 (V-596)
“I shall thank you to advise me whether, un-
der the facts stated, the machine is subject to the
tax. ”
Such coin-operated machine is not taxable under the
quoted subdivision (d) of Article 7847a-2, in that an insurance
policy isnot included within the meaning of “merchandise, com-
modities, confections or music.” The Supreme Court of Texas
in Queen Ins. Co. v. State, 86 Tex. 250, 24 S.W. 397, held that
an insurance policy is not a commodity. It is evident that it is
not merchandise, confections or music.
Subdivision (e) of said Article reads as follows:
“(e) The term ‘skill or pleasure coin-operated
machines’ as used herein shall mean .and include
every coin-operated machine of any kind or char-
acter whatsoever, when such machine or machines
dispense or are used or are capable of being used or
operated for amusement or pleasure or when such
machines are ooerated
I for the ouroose
L L of disoensinn
L
or affording skill or pleasure, or for any other pur-
pose other than the dispensing or vending of ‘mer -
chandise or music or ‘service exclusively, as those
terms are defmed herein. The followmg are express-
ly included within said term: marble machines;mar-
ble table machines, marble shooting machines, minia-
ture race track machines, miniature football machines,
miniature golf machines, miniature bowling machines,
and all other coin-operated machines which dispense
or afford skill or pleasure. Provided that every ma-
chine or device of any kind or character which dis-
penses or vends merchandise, commodities or con-
fections or plays music in connection with or in ad-
dition to such games or dispensing of skill or pleasure
shall be considered as skill or pleasure machines and
taxed at the higher rate fixed for such machines.’ (Em-
phasis added)
It is evident that under subdivision (e), where the Leg-
islature used the phrase “for any other purpose” that it intended
to tax all coin-operated machines, except those which dispense or
vend “merchandise or music, w which are taxed under subdivision
(4 9 o= “service” exclusively.
As stated above, the machine does not dispense or vend
“merchandise or music.” If it dispenses or vends “service” ex-
clusively, then it is exempt from taxation, in that Article 7047a-4
reads as follows:
Hon. Geo. H. Sheppard, Page 3 (V-596)
“Gas meters, pay telephones, pay toilets, and
cigarette vending machines which are now subject
to an occupation or gross receipts tax and ‘serv-
ice coin-operated,machines’ as that term is defin-
ed, are expressly exempt from the tax levied here-
in, and the other ‘provisions of this Section.”
“Service cein-operated machines” is defined by sub-
divisien (f) of said Article 7047a-2 as follows:
“The term ‘service coin-operated machines’
shall mean and include pay toilets, pay telephones
and all other machines or devices which dispense
service only and not merchandise, music, skill or
pleasure.”
The machine does not prepare the contract of insur-
ance, but merely performs the service of delivery. You have
orally advised us that it has been your departmental construc-
tion for the past twelve years that a coin-operated machine
that dispenses postage stamps is not taxable for the reason
that such a machine dispenses “service” only. It appears to
us that the office performed by the postage and insurance pol-
icy machines 4re very similar. You are therefore advised
that it. is the opinion of this Department that coin-operated
machines that dispense or vend insurance policies are not
taxcble under the provisions of Article 7047 et seq., V.C.S.
Coin-operated machines that dispense or vend
insurance policies are not taxable under the provi-
sions of Article 7047 et seq., V.C.S.
Yours very truly
ATTORNEY GENERALOF TEXAS
W. V. Geppert
Assistant
WVG/JCP