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## THEAYTORNEY

'OF-WAS

W’ILL WIILSON *-l-rORNEY GICNERAL May 23, 1961

Honorable Coke R. Stevenson Administrator Texas Liquor Control Board Austin, Texas

Dear Mr. Stevenson: OpinionNo. WW-1067
Re: Whether a person who solicits and takes orders in Texas for liquor that is stored in a United States CustomBonded warehouse, underthe facts submitted, is required to procure a permit under Article 1, Section 4(a) of the Texas Li uor ControlAct (Article 66&(a), Vernon's Penal Code)?
Your request for an opinion reads as follows:
"We are confrontedwith the following situation. A person seeks to establisha United States Bonded Warehouse in the State of Texas for the purpose of supplying liquor to individualtravelers destined for foreign countries,and for the purpose of supplying liquor to sea-going vessels, and for the purpose of exporting liquor. In so doing he expects to avoid Federal taxes and State taxes on this commodity. To conduct this business itwill, of course,be necessary for him to solicit and take orders for liquorwithin the State of Texas. "Section &(a) of Article 1 of the Texas Liquor ControlAct provides as follows:

'It shall be unlawful for any person to manufacture, distill,brew, sell, possess for the purpose of sale, import into this State, export from this State, transport,distribute, warehouse, store, solicit orders for, take orders for, or,for the purpose of sale to bottle, rectify,blend, treat, fortify,mix, or process any liquor in any wet area without first having procured a permit of the class required for such privilege.'Honorable Coke R. Stevenson, Page 2 (hWl067) "Withoutraising the question of whether the tax of the State of Texasmay be so avoided we are of the opinion that this person will violate the above quoted Section of the Texas Liquor Control Act if he engages in this business in the State of Texas without first having procureda proper permit issuedby the Texas Liquor ControlBoard.

"We respectfullyrequestyour valued opinion on the following question:

"Does a person who solicitsand takes orders in Texas for liquor that is stored in a United States CustomBonded warehouse for the purpose of supplying individualtravelers destined for foreign countriesor for the purpose of supplying sea-goingvessels or for the purpose of exportationviolate Section 4(a) of Article 1 of the Texas Liquor ControlAct, if he does so without first having procured a proper permit issued by the Texas Liquor Control Board?" The Commerce Clause,Article 1, Section 8, Clause 3 of the Constitutionof the United States, says:

"The Congress shall have 

### powerto lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and generalWelfare of the United States;but all Duties, Imposts and Excises shall be uniform throughout the United States;

II

. . . 'ITo regulate Commerce with foreignNations, and among the several States, andwith the IndianTribes." The Import-ExportClause, Para. 2, Article 1, Section 10, reads as follows:

I, D
. . "NO State shall,without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, exceptwhat may be absolutelynecessary for executing its inspectionLaws; and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shallbe for the Use of the Treasury of the United States; and all such Laws shallbe subject to the Revision and Control of the Congress.Honorable Coke R. Stevenson, Page 3 (WW-1067) I, 1,

. . . Section 2 of the Twenty-FirstAmendment - Repeal of Prohibition Amendment - of the Constitutionof the United States reads as follows: "Section 2. The transportationor importation

into any State, Territory, or possession of the United States fordelivery or use therein of intoxicating liquors in violation of the laws thereof, is hereby prohibited." The State of Texas has the right to tax or regulate intoxicating beveragesmoving into or through the State of Texas in the exerciseby the State of Texas of itspolice power, Gordon v, Statq, 310 S.W.2d 328 (Tex.Crim.1956), JudgmentAffirmed, 355 U.S. 369, Rehearing Benied,.,355 U.S. 967; Carter v. Vyinia, 321 U.S. (1944),Affirming 181 Va. 306, 24 S E 2d 56

. Therefore,any131, intoxicatingbeveragesmoving from ih;! United States CustomBonded Warehouse through the State of Texas afterthe importation into the State of Texas has.been completed,by passing throughUnited States Customs Inspection or the equivalentthereof, are subject to regulation by the State of Texas.

The U. S. Supreme Courthas held that, since the Twenty-First Amendment, each statehas the right to prohibit orregulate the importation of intoxicatingliquors for delivery or use therein unlimited by the Commerce Clause. IndianapolisBrewing Co. v. Liquor Control Commission, 305 U.S. 391 (19391.Joseph S. Finch & Co. Y. McKittrick, Attornev General. 305U.S, 395 11939). It has also held that since __.. the adoption of ihe Twenty-FirstAmendment the "EqualProtection Clause" is inapplicableto intoxicatingliquors imported into a state. Mahbney Liquor Control Commissionv. Joseph Trinemrp., 304 U.S. 401 (1938). While it has been held that the Twenty-FirstAmendment does not apply to intoxicatingbeverages transported through a-state, Collins v. Yosemite Park & CurrvCo., 304 U.S. 578 (1938), it seems clear that the Twenty-FirstAmendment overrides the Commerce Clause or any other part of the Constitution in conflictwith the TwentyFirst Amendmentwhere the intoxi,cating beveragesare imported into a state fordelivery or use in said state. While the fact that an itemmaintains its characteras a "foreign import"might remain important in the determination of the extent of the police powers of the state, the question of whether~or not an itemmaintains its characteras an import is not importantto the applicabilityor non-applicabilityof the Twenty-FirstAmendment since the purpose ofHonorable Coke R. Stevenson,Page 4 (~~-1067)

the Twenty-FirstAmendment is to allow the regulation and control of importsby the various states,

In the present case the intoxicatingbeverageswill be imported into the State of Texas and if delivery or use of said beverages occureswithin the State of Texas, the Twez-First Amendmentrequires that the laws of the State of Texas be followed.,Under the fact situationwhich you present for our considerationyou do not statewhether delivery or use occurs within the State of Texas; however, if the ships being supplied or upon which the individualbeing suppliedtravels are within the territorialbounds of the State of Texas when the beverages are deliveredby the person selling the beverages from the United States Custom Bonded Warehouse it would seem clear that the State of Texas has the right to regulate such transaction since it falls within the area contemplatedby the Twenty-FirstAmendment. If delivery or use does not OCCUT within the State of Texas, but the goods are shipped out of the United States without a sale or delivery occurring and while the goods maintain their characteras a foreign import such transactionswould not be subject to regulation by the State of Texas.

In the exercise of its authority to regulate, the State of Texas is clearly allowed to exact a license fee for the privilege of importing,possession,distributing,or any other activity connectedwith intoxicatingbeverages. State Board of Equalization of Californiav. Young's Market Co., 299 U.S. 59 (1936). In those areas which Texas has the right to regulate the traffic in liquor, Texas has done so by the passage of the Texas Liquor ControlAct and any action in the areasmentioned above of a commercialnature without first procuring a permit of the class required from the Texas Liquor Control Board would be a violation of the Texas Penal Code,
SUMMARY
A person who solicitsand takes orders in Texas for liquor that is stored in a United States Custom Bonded Warehouse,under the facts submitted, is required to procure a permit under Article 1, Section 4(a) of the Texas Liquor ControlAct.
Yours very truly,
WILL WILSON Attorney General of Texas.

Honorable Coke R. Stevenson, Page 5 (WW-1067)



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BY Cecil Cammack, -9 Jr. AssistantAttorney General CC:ca
APPROVED:
OPINION COMMITTEE W. V. Geppert, Chairman Virgil Pulliam L. P. Lollor Maston Courtney Dudley .McCalla
REVIEWED FOR THE ATTORNEY GENERAL BY: Morgan Nesbitt