’ 871 

.OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

Honorable Arthur B:\%nlokerbocker 

Adjutant General of Texas 

Austin, Texas 

Opinion X0. O-7199 

Be: Legal status 

Post Erohanges 

Dear General: 

Guard 

Attaohed here 

the Rar Asaete Colporat 

sion, Fort 'ilorth, Texas 

on the status of Texas 

submit to this 

e with the atence referred to contains a 

nsumer Goods Division, 

xas State Guard Post Exreek, Texas, in which Mr. 

have been advised by our General 

opinion from the Attorney General, or other competent authority, that the State Guard Post XXchanges are lnstrumentallties of the State. 

*It was our thou&t that inasnuah as the Amy 

Post Exahanges and the ETavy Ship Serviae Stores 
. ’ 

Iron .’ Arthur B. ,ICniokerboaker - Page 2 

were.eligIble to make purchases of surplus property for subsequent resale, the same ruling would 

apply to the State Guard Post Exohanges. 

“Ii you will submit this question to the State 

Adjutant, Brig dier General Arthur B. Kniokerbooker, 

he oan request % ruling from the Attorney General, 

and if favorable, we shall be glad to oomply with 

your previous requsst for purohases of surplus 

property, 

n* + *n 

In a subsequent letter you stats that “this Department has Issued no Rules,~ Regulations, or’orders governing 

Post Exohanges of the Texas State Guard.” 

The Texas .State Guard,.*as the same is. organized and 

functioning under our statutes, (Vernon’s Ann. CIv. Stat., 

Art. 5891e, as amended by the 48th Legislature, (1943)) Is 

en Inatrumentelity or the State ot Texas. Sea. l(a) insofar 

as pertinent ia as roilows: 

Whenever any pert of the National Guard of 

this State is in eotive Federal service, the 

Governor is hereby authorized to organize and 

maintain within this State during suoh period, 

under suoh regulations as the Seoretary of ‘Nar 

or the United States may presoribe ror thefr organization; standards of training, instruotion 

and.dIsoIpline, suoh military roroes as the 

Governor may deem neoessary to defend this 

State. Suoh foroes shall be oomposed or orfioers appolnted and oommisaionsd and assigned 

by the Governor OF under his authority, to hold 

oifioe and essignmsnt during the pleesure of the 

Governor, end suoh able-bodied male oitizens of 

the State and suoh able-bodied residents of the 

State vho shall have dealered their Intention 

to beacme oltizens of the United States, as 

shall volunteer for service therein, supplemented, If neoessarg, by men of the reserve 

militia enrolled b drart or otherwise es provlded by law. * * g* 

Seo6 2(a) deolares: 
873 i 

! 

Hon. Arthur B. ,KnIokerbocker- Page 3 

*The Governor la hereby authorized to preaorlbe rules end regulations not inconsistent 

with the provisions of this Aot governing the 

enlistment, organization, edministratIon, unlforms 

and 6 i 

equipment, maintenance, oomorand, training 

soipline or suoh roroes; provided auoh 

rules end regul~tlone, In so far es he deema 

preotloable end desirable, shall oonrorm to existing law governing and pertaining to the 

Netlcnel Guard and the rules and regulations 

promulgated thereundert* 

Sea. 4 prescribes: 

“For the use or suoh ioroes, the Governor is 

hereby authorized to requisition rrom the Seoretery of War such arms and equipment as may be in 

possession of, and oen be spared by, the War Department; and ,to make available to suoh foroes the 

feoIlIties of State armories end their equipment 

and such other State premises and property es may 

be available. Authorization is hereby provided 

ior sohool authorities to permit the use oi school 

buildings by the Texas Defense Guard; provided further that County Commissioners Courts, oity euthoriitlea, oommunltles, and civic and patriotlo organlzetions are empowered and authorized by this Aot 

to provide runas, armories, equipment, material, 

transportation, or other appropriate servioes or 

raoIlities, to the Texas Derense Guerd.” 

Seo. 5 contains the following: 

“(a) Upon the request (i the Governor of 

another State, the Governor of.thIs Stat9 may, In 

his dfsoretion, order any portion oral1 or suoh 

foroes to aaeist the military or police roroes of 

such other State, who are eotually en,Seged Ins defending suoh other State. Suoh foroes nay be ,reoalled by the Governor et his dIsoretlon.n 

These provlalone or the atatute make olear the b glsletive intention to oreete and constitute such body a governmental agency In the discharge of its authorized duties. 

However, the status of Post Exohenges is quite 6 

dirrerent question. Sane oourts have held that an Amy Post 
874 

Hon. Arthur B. Knickerbooksr - Page 4 

/ 

Exohenge is not an instrumentality or department or the 

federal government, 

2 (Calir. sup. ct., 

Peovle v. Standard Oil Co., 22 P. (26) 

19331, reversed on other grounds, 291 

lip”. 2421 Keene v. United States, 272 Fed. 577 (Clrc. Ct. 

192111 end oases oited. H in Standard oil 

CO.‘<. Johnson, 316 U. 3. 481 (l~~~~r~he Supreme Court 

of the United States held that an Ar~y Post Xxohange Is 

an ana of the Government, an integral pert ot the ‘War Department, and, as kuoh, partakes or whatever immunities 

the War Department m%y~ have under ‘the Constitution and 

federal .statutes. As shown by the rollowing language 

quoted from its opinion In that case, the Supreme Court 

based its deoision upon the federal statutes and Army Regulations authorleing suoh post exohanges: 

*SInoe I# 10 or the California Aot made the tax 

inapplloable *to any uotor vehlole fuel aold to 

the government or the United States or any depart- 

\ ment thereof, * it was necessary ror the Supreme 

Court or Oalirornie to determine whether the lungQage Of this %xempt$On inoluded Stir38 to 

i 

OBt exchanges. Ii the oourtls construotion or 10 or 

the Aot had been based purely on looal law, this 

oonBtruction.wOu~d have been oonolualve, and we 

should have to determine whethar the statute so 

oonstrued and applied Is repugnant to the Federal 

Constitution. But in dcalding that post exohenges 

were not 'the government of the,United States or 

any department thereof,’ the oourt did not rely upon 

the law of f&lIfornia. On the contrary, It relied 

upon its determination conoerning the relationship 

between post exchanges and the Government of the 

United States, a relationship whioh la oontrolled 

by federal law. Bor poat exahenaes overate under 

reaulettons or the Secretary of #ar pursuant to 

federal authority. These regulations and the DMLOtioes under them establish the relationship between 

the post exohange and the United States Government, 

and together with the relevant statutory and oonstitutlonal provisions from whloh they derive, errord 

the data upon which the legal status or the wet 

exohange may be determined. It waa upon a determination of a federal question, therefore, that the 

Supreme Court of California rested Its conclusion 

that, by B 10, sales to post exoh+.Ig88 W8r8 not 

exempted from the tax. Since this determination 

or a tederal question was by 6 state court, we are 

not bound by it. We prooeed to oonsider whether 

it is oorreot. 

‘\ 

‘? 
8’75 

. 

Hon. Arthur D. Knickerbocker - Page 5 

*On July 25, 1895, the Seoretary of War, under 

authority of Congressional enactments promulgated 

regulations providing ror the establishment of 

post exohanges. These regulations have sinoe been 

amended from t $me to time and the exchange has beoo.me a regular feature of Army posts. That the establishment $Pd oontrol of post exahanges have 

been in aoaordanoe with regulations rather than 

speoifio statutory direotions does not alter their 

status, for authorlzed.War Department regulations 

have the roroe of law, 

*Congressional recognition that the aotivitlea 

of post exohanges are governmental has been frequent. Slnoe ,1903, Congress has repeatedly made 

su&antial appropriations to be expended under the 

direotion of the Seoretary or War ror construotlon, 

equipment ) end maintenenoe of suitable .buildings 

for post exehangee. In 1933 and 1934, Congress 

ordered certain moneys, derived from disbanded exohangesto be handed over to the Federal Treasury. 

And in 1936, Congress gave oonsent to state taxation of gasoline sold by or through post exohanges, 

when the gasoline was not for the exolusive use of 

the United States. 

“The oommanding offioer of an Arny Post, subjeot to the regulations and the oommands of his own 

superior orrfoers, has oomplete authority to eatabliah and maintain an exahange. He details a post 

exohange orrfoer to manage its affairs. This Offioer 

and the commanding offioers of the various company 

units make up a oouncll which supervises exohange 

aotivitles. None of these Officers reoeives any 

compensation other than his regular salary. The 

object of the exohangea is to provide convenient 

and reliable sources where soldiers can obtain their 

ordinary n8edS at the lowest possible priCeS. Soldiers, their families, and oivlllans employed on 

military posts here and abroad can buy at exohanges. 

The Government assumes ~none of the financial obligations of the exchange. But government offioers, 

under government regulations, handle and are reaponsible for all funds of the exohange which are 

obtained from the oompanies or detaohments 005QOSing 
-1 

876 

Hon. Arthur B. Kniokerbooker - Page 6 

I 

its membership. Profits, ii any, do not go to 

individuals. They are used to improve the soldiers* 

meaa, to provide various types of reoreation, and 

in general to add to the pleasure and comfort of 

the troops. 

"From a,.ll of this, we oonclude that post exohanges as nbw operated are arms of the Government 

deemed by it asaantlal for the performanoe of governmental funotions. They are integral parts of the 

War Department, share in fulfilling the duties sntrusted to it, and partake of whatever immunities 

It may*h$v$vunder the Constitution and,federal statutes. 

Your aupplamental letter states that you have 

lsaued no rules, regulations, or orders govsrning,Post Rxohanges. We have found no Texas statutes on the subjeot. 

lharetore, we must assume tha,t any enterprises operating 

under that name are doing so without the sanotion or authority 

or the State or Taxas. Zven assuming that the general statutes setting up the Texas Stats Guard impliedly authorize 

the Governor, through the Adjutant General of Tsxas, to 

establish post .exohanges as instrumentalities of the State 

(whloh question ws do not hare deolde), wo understand that 

no suah action has been taken, that no regulations have 

been issued by the Governor or the Adjutant General pertaining to post exohangea, that the Leglalature has not reoognlzed post exohanges as State aotivities, and that rvhatever 

aotfon has been taken towards their astablishment has been 

purely voluntary aotion on the part of individual offloera 

and members of looal units of the Texas State Guard. Thererore, having neither statutes nor regulations affording data 

upon whioh the legal status of suoh post exohanges may be 

determined, we must oonoluds that they are not instrumentalities or agenoiea of the State. of Taxes. 

Very truly yours 

ATTCRNEY GEIERAL OF TZXAS 

BY @ed$& 

Assistant 

RAL? jt 

/