Untitled Texas Attorney General Opinion ( 1944 )

k
r’ OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
9
O”OYIR SLLLCII ;
:-
1 rFO”*L* o=*r”C‘
Hon. Geo8. H. Sheppard
Comptrol ,ler of Public Aooounts
Austlni~ Texas
Dear Sir ':
s depar tlbdas b0
ntraotor, for grow
11 8 of the 47th
tter la quoted in'
f the 47th Legislature
reeslpts earned by
lrOhaptrr 277, Aots
egldhature.
Q business as 0. S. Weeks
rth, Texas., operates under
ermlt Wo. 11509. Taie oon-
U. 9. War Department,
ey haul perishable merohandlse,
rnment seals, between Fort Worth Quarter-
various Texas Army oamps.
Work Market Center Is one of five in Texasr
the various ouaps In its territory requlsi-
e in speolflc amounts, for dellveriss, at
es; These requisitions are supposed to reaoh
the Fort Worth Center at least twenty days before the
expeoted date of delivery to the various oamps. The Fort
Worth Center supplies either oamps too small to buy in
oarload lots, or fill in orders between oarload shipments
to the larger oamps.
650
,Eon. Geo. H. Sheppard, page 2
*Mr. Weeks states that 90$ of al.J. goods handled
at the Fort Worth Center originate from without the
State.
“I am herewfth handing you a brief submitted by
the attorney f’or bbr. K’eeks. Kx. Yeeks oontends that
his operations are Interstate and that he 1s not liable
for the gross reoelpts tax.
“Your Department has previously ruled on two
oooaslons with referenoe to oontraot motor oarrlera
who oontended they were operating Interstate, and I
reier you to your Opinions O-5335 and O-5468, of which
I am enolosing oopies.
“1 wIl1 appreciate It if you will give me your
opinion as to the tax llablllty of C. S. Weeks, TruokIng
Contraotor.”
The answer to your question must depend upon whether,
under the state of Paots applloablo to Weeks operations, he IS
engaged In interstate or intrastate oommeroe as to the oommodl-
ties transported by him. If Interstate, then oonoMedlyln0::~
tax is due. We have reaohed the oonolusion that all the oommodl-
ties transported by Weeks havirig a point of origin without the
State are ininterstate oommeroe, and, therefore, the gross
receipts therefrom exempt from tax.
‘1. lia reaching this oonoluslon, we have not been uomInd-
ful of thebreak In the shipments at Fort worth, from *hIoh
point Weeks begins his transportation. Unless this bre& 1s
of suoh nature as to convert the shipments from Interstate Into
Intrastate fin prooeedlng from Fort Worth, we mus.t still treat
the shipments as interstate. Does suoh a transition take plaoe
-at Fo.rt Worth? We think not.
One oogent faotor must be kept In mind, and that IS
that Fort !Vorth is merely the central situs for distribution
Or the products by one government agenoy to another, and not
a point of ultimate d&stInatIon. The respective Army oamps
t0 whioh ‘ the produots are distributed OonstItute the fIna1
destination; and thi$ fa ire understood by all the parties,
whioh unders%andIng is oonsumaated in truth and in fact, To
OonJluda otherwise we would hnve to substitute form for sub-
stanoe, fiction for truth. In thus oonoluding, we are not
Hon. Geo. H. Sheppard, page 3
.~
1
unmlndtul that our Courts, Including the Supreme Court of
the United States, reoognlze a dlstinotIo!z in tar oases
from other fields wherein only reasonable and eolltary
regulations may be involved. This 1s manliest rrom the
following taken from the aaae of Stafford v. Mllaoe.
(Supreme Court of the United Stat+) 23 A. L. R. 229, quot-
ing with approval from Swirt & Co. v. U. S., 49 L. Ed. 518:
*‘But we do not mean to imply that the rule
rhIoh mark6 the point at whloh state taxation or
regulation beoomer permissible neoesserl%y 1s bayon@
ths eoope or lntsrferenoe by Congress where suoh Inter-
ferenoe 1s deemed neoessary for the proteotlon of oom-
meroe among the et&es.*
". . .
**The questlon, it should be obnervsd, Is not with
respeot ~to the extsnt of the pewer of ~Oongress to rag?-
Zate' Interstate oom5sro0, but whether a partloular exer-
else of state power, ln view @ lts~ natme and opmtlon,
aust be deemed to be In cionfllot with this paramount
authority.'"
Rut the Court In this same ease said:
*Moreover, it will bb poted that even ln tax oases,
where the tax is dlreoted &alnst a oomamdlty in aa a&u&
flowing and oonstant stream out of a state, from whloh the
owner may.wlthdraw part of It for use or sale ln the state
before it reaohes the state border, we hava.held that a
tar on the flow 1s a burden on interstate.oolllmeroe whloh
the state may not impose beoause euoh flow I.n interstate
oommeroe 1s an established ooutse of buslnese. United
Fuel Gas Co. v."Ekllanan, deolded Deoenber 12, 1921 (257
U.S. 277, 66 L; ed. 234, 42 Sup. Ct. Rep. 105); Eureka
Xallanan deolded Deoember 12 1921 (257
~?~.%$,% z: 'ed. 227,'42 Sup. Ct. Rep. 1011. . . .a
Th& very recent ease of Walling v. Jaokeonvllle
Paper Co.,(Supreme Court of the Unitsd Statee) 87 L. Ed. 393,
makes clear the rule whioh we think applioable to this 0868.
ne quote:
$ Bon. gee. H. Sheppard, page 4
“The Adk&nIstra.tor oontends in the’ first plaoe
that under the deolslon below any pause at thv ware-
house is suffloient to deprive the remainder of the
journey of its Interstate status. In that oonneatlon
it 1s pointed, out that prior to this litigation re-
spondent’s truoks wou.1.dpick up at the terminals of
the interstate oarrlors goods destined to speoiflo
oustomers, return to the warehouse for oheoklng and
prooaed Immediately to the oustomer’s p&aoe of business
without unloading, That praotloe was ohanged; The
goods were unloaded from the truoks, brought into the
warehouse,, oheoked, reloaded, and sent on to the
oustomer during the same day or as early as oonvenlent.
The opinion of the Ciroult Court of Appeals la susoeptible
of the Interpretation that such a pause at the warehouses
1s sufriolent to make the Aot lnapplloable to the subse-
quent movement of t&e goods to their Intended destination.
We believe, however, that the adoption ,of that rig ;;uld
rssulult ln too narrow a oonetruotlon of the Aot.
oXear that the purpose of the Aot was to: extend federal
oontrol ln th.ls field throughout the farthest reaohee
.. of tha ohannels of lntrrstate oommeroe~. There Is no
lndloatlon (a art from the exeunptlons oontained in 0 13,
29 USCA 0 213B that, once the goods entered the ohannels
of Interstate oommeroe,Congress stopped short of oontrol
over the entlre movement of them until tholr Interstate
journey was ended.. ~Noritual of plaalng goods. In a ware-
house oan be allowed to defeat that purpose. The entry
of the goods into the warehouse Interrupts but does not
.neoeasarlly terminate their interstate journey. A tern-
porary pause In their transit ~does not mean .fhat they
are no longer ‘in oommeroe* within the meanlng of the Aot.
As In the oaee of an agenoy (of. De Loaoh v. Growley’s,
Ino. (WA 5th) 128 F(2d) 378) if the halt In the movement
or’the goods Is a oonvenlent Intermedlate’step ln the
prooess of getting them to their fIna destinations, they
remain *In oomceroe* until they reaoh those points. Then
there Is a praotioal oontinulty of laovenuvnt of the goods
until they reach the customers for whom they are Intended.
That is suffloient, Any other test would allow formalities
to oonoeal the continuous nature of the interstate transit
whi.oh aonstitutes oonvneroe.
Ron. Gee. H. Sheppard, Page 5
" Ii thsre Is a praotioal oontlnulty of
movemen; &m the menufaoturers or suppliers without
the state, through respondent's warehouse and on to
customers whose prior orders or oontraats are being
filled, the interstate journey Is not ended by reason
of a temporary holding of the goods at the warehouse.
The.faot that.respondent may treat the goods as stook
In trade or the olroumstanoe that title to the goods
passes to b&apondent on the intermediate delivery does
not mean that the Interstate journey ends at the ware-
house. The oontraot or understanding pursuant to whIoh
goods are ordered, like a speolal order, lndloates where
it was intended that the interstate movement should
terminate. . . . ."
I
The oase of Baltimore & 0. 9. W. R. Co. v. Settle,
(Supreme Oourt of the United States) 67 L. Ed. 166, Is typical
of the rule that the intention of the parties as to when and
where the shipment oomee to its ultimate end la of &uxmwunt
Fmportanoe In determining whether' the shipment la Interstate
or intrastate rr0m an Intermediate point of lntsrrttptlon or
pause wlthln the State. We quote,from tNs oase as follows:
*If the intention with whIoh the shipment was made
had been aatually In issue, the faot that possession of
th6 aars was taken by the shzpper at Oakley, and that
they were not rebilled for several days, would have
justified the jury In finding that it was orIglnsJ.ly
the intention to end the movement at Oakley, and that
the rebIlllng to Madlsonvllle was an afterthought. But
the defenUant Clephane admitted at the trial thet it was
Intended from the beginning that the oars should go to
Maabiaonvllle; and this faot was assumed In the instrua-
tIons~oomplaIne% of. In other words, Madlsenvllle was
at all tImas the destination of the oars; Oakley was
to be merely an intermediate stopping place; and.the
original Intention persisted In was carried out. That
the interstate journey might end at Oakley was never
more than a posslblllty. Under these alrcumstanoes,
the intention, as It was oarried out, determined, as
matter of law, the essential nature of the movement;
and:hencg,that the movement through to Madlsonville was
an interstate shipment. For neither through billing,
uninterrupted movement, oontinuous p,ossessIon by the
carrier, nor unbroken bulk, is an essential of a through
Interstate shipment. These are aommon Inoldents of a
~$,
?.
eon. &SO. H. Sheppard, page 6
through shipments and when the Intention with whloh
a shipment was made ia in leaue, the preeence or
/, absenoe of one or all of these inoldentsmay be
I Important evidenae bearing upon that question. But
where it is admitted that the shipment made to the
I
ultimate destinationhad at all times been intended,
these lnoldente are without legal slgnlflaanoeas
bearing on the oharaoter or the tratrlo. For lnstanae,
in many oaaea involving tranelt or reoonalgnment
prlvile~ea In blanket territory,moat or all oi theee
lnoldenteare absent, and yet the through interstate
ttdfr8 applp."(oltlngoases)
To the %ame effect la the oase of Blndsrup '1.
Pathe Erohange, 68 L, Ed..308, (SupremeCourt of the United
Statee) In the r0n0wing languager
"The Intermediatedelivery to the agenoy did not
end, and was not Intended to enU, the movement at the
oommodity. It was merely halted ae a oonvenlentatop
In the prooeae or getting It to Its rlnal deatlnatlon.
The general rule Is that.where transportationhas
aoqulred an lnteratateoharacter, *It oontlnues at
lea& until the load reaohee the polntwhere the partlee
origlnally intended that the movement ehoald finally
end."' (Loo. Cit. 68 L. Rd. 3161
We deem the foregoing eufiloient to support our
oonolu``lon that the operations of a. S. Weeks, under the
?aots submitted, are not subjeot to gross receipt8 tax
lmpoeed by Artlole 14 of House Bill No. 8, Aota of tthe
7th Leglslature ineoiar as applicable to the produots
4 perishablefruits and vegetables) ahlpped from without
the State, and henoe interstate shipmenta; but a8 to that
portion of the shipments,whether ten per oent, more or
less, originatingwithin the State, and admittedly lntra-
state, the tax la due and owing by 0. S. Weekrr,and you
are accordingly80 advised*
Y0ur.every truly