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### 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 ewith the atence referred to contains a nsumerGoods Division, xas State GuardPost Exreek, Texas, in which Mr.

have been advised by our General

opinion from the Attorney General, or other competent authority, that the State GuardPost XXchanges are lnstrumentallties of the State. *It was our thou&t that inasnuah as the Amy Post Exahanges andthe ETavy Ship Serviae Stores. ’

Iron.’Arthur B. ,ICniokerboaker - Page 2

were.eligIble to makepurchases of surplus property for subsequent resale, the sameruling would apply to the State GuardPost 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, weshall be glad to oomplywith your previous requsst for purohases of surplus property, n*+ *n
In a subsequent letter you stats that “this Departmenthas Issued no Rules,~Regulations, or’orders governing Post Exohanges of the Texas State Guard.”

TheTexas .State Guard,.*as the sameis. organized and functioning under our statutes, (Vernon’s Ann. CIv. Stat., Art. 5891e, as amendedbythe 48th Legislature, (1943)) Is en Inatrumentelity or the State ot Texas. Sea. l(a) insofar as pertinent ia as roilows:

Whenever anypert of the National Guardof 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 maypresoribe ror thefr organization; standards of training, instruotion and.dIsoIpline, suoh military roroes as the Governor maydeemneoessary to defend this State. Suohforoes shall be oomposed or orfioers appolnted andoommisaionsd and assigned by the Governor OFunder 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, bymen of the reserve militia enrolled b drart or otherwise es provlded by law. * * g*
Seo6 2(a) deolares:

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Hon. Arthur B.,KnIokerbocker- Page 3

*TheGovernor la hereby authorized to preaorlbe rules end regulations not inconsistent with the provisions of this Aot governing the enlistment, organization, edministratIon, unlforms and 6i 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 Guardand the rules and regulations promulgated thereundert* Sea. 4prescribes:

“For the use or suoh ioroes, the Governor is hereby authorized to requisition rrom the Seoretery of Warsuch arms and equipment as maybe in possession of, and oen be spared by, the WarDepartment; and,to makeavailable 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,SegedInsdefending suoh other State. Suohforoes nay be ,reoalled by the Governor et his dIsoretlon.n These provlalone or the atatute makeolear the b glsletive intention to oreete and constitute such body agovernmental 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

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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., 22P. (26) 19331,reversed on other grounds, 291 lip”

. 2421 Keenev. United 

### States,272Fed. 577 (Clrc. Ct.

192111 end oases oited. H in Standard oil CO.‘<. Johnson, 316U. 3. 481 (l~~~~r~he SupremeCourt of the United States held that an Ar~y Post Xxohange Is an ana of the Government, an integral pert ot the ‘WarDepartment, and, 

### askuoh, partakes or whatever 

### immunities the WarDepartment m%y~ have under ‘the Constitution and federal .statutes. As shownby the rollowing language quoted from its opinion In that case, the SupremeCourt 

### baseditsdeoisionupon the federal statutes andArmyRegulations authorleing suoh post exohanges:



### *SInoeI#

10ortheCalifornia Aot made 

### thetax inapplloable *to anyuotor vehlole fuel aold to the government or the United States or any depart- \ mentthereof, * it was necessary ror the Supreme

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

### toiOBt exchanges. Ii the oourtls construotion or 10 or the Aot had been based purely on looal law, this oonBtruction.wOu~dhave been oonolualve, andwe 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 

### 'thegovernmentofthe,UnitedStates**or** anydepartment thereof,’ the oourt did not rely upon the law of f&lIfornia. Onthe contrary, It relied upon its determination 

### conoerningtherelationship between post exchanges andthe Government of the United States, a relationship whioh 

### laoontrolled by federal law. Bor poat exahenaes overate under reaulettons orthe Secretary of #ar pursuant to federal authority. These regulations and the DMLOtioes under themestablish the relationship between the post exohange and the United States Government, andtogether with the relevant statutory and oonstitutlonal provisions from whloh they derive, errord the data uponwhich the legal status or the wet exohange maybe determined. It waaupon 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 atederal question was by 6state court, weare not bound by it. Weprooeed to oonsider whether it is oorreot.



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### 8 ’75

.
Hon. Arthur D. Knickerbocker - Page 5

*OnJuly 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 amendedfrom t$meto time and the exchange has beoo.mea regular feature of Army posts. That the establishment $Pdoontrol 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 Warror 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. Andin 

### 1936, Congress gave oonsent to state taxation of gasoline sold by or through post exohanges, whenthe gasoline was not for the exolusive use of the United States.

“The oommandingoffioer of an Arny Post, subjeot to the regulations and the oommandsof his own superior orrfoers, has oomplete authority to eatabliah andmaintain an exahange. Hedetails a post exohange orrfoer to manage its affairs. This Offioer and the commandingoffioers of the various company units makeup aoouncll which supervises exohange aotivitles. Noneof these Officers **reoeives** any compensation other than his regular salary. The object of the exohangea is to provide convenient andreliable 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. TheGovernment assumes ~noneof 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 

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Hon. Arthur B. Kniokerbooker - Page 6

I

its membership. Profits, ii any, do not go to individuals. Theyare 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.
"Froma,.ll of this, weoonclude that post exohanges as nbwoperated are arms of the Government deemedby it asaantlal for the performanoe of governmental funotions. They are integral parts of the WarDepartment, share in fulfilling the duties sntrusted to it, andpartake 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, wemust 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 Guardimpliedly authorize the Governor, through the Adjutant General of Tsxas, to establish post .exohanges as instrumentalities of the State (whloh question ws donot hare deolde), wounderstand that no suah action has been taken, that noregulations 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 andmembers of looal units of the Texas State Guard. Thererore, having neither statutes nor regulations affording data uponwhioh the legal status of suoh post exohanges maybe determined, wemust oonoluds that they are not instrumentalities or agenoiea of the State. of Taxes. Very truly yours ATTCRNEY

GEIERALOFTZXAS

BY@ed$& Assistant RAL? jt



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