k 

; 

r ’ OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 9 

O”OYIR SLLLCII 

:- 1 rFO”*L* o=*r”C‘ 

Hon. Geo 8. 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 oonU. 9. War Department, 

ey haul perishable merohandlse, 

rnment seals, between Fort Worth Quartervarious Texas Army oamps. 

Work Market Center Is one of five in Texasr 

the various ouaps In its territory requlsie 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 oommodlties transported by him. If Interstate, then oonoMedlyln0::~ 

tax is due. We have reaohed the oonolusion that all the oommodlties 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 uomIndful 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. 

-at Fo.rt Worth? We think not. 

Does suoh a transition take plaoe 

One oogent faotor must be kept In mind, and that 

that Fort !Vorth is merely the central situs for distribution 

IS 

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 substanoe, fiction for truth. In thus oonoluding, we are not 
.~ 

1 Hon. Geo. H. Sheppard, page 3 

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, quoting 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 Interferenoe 1s deemed neoessary for the proteotlon of oommeroe 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 exerelse 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 warehouse 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 respondent’s truoks wou.1.d pick 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 subsequent 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 0 213 B 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.. ~No ritual of plaalng goods. In a warehouse 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 ternporary 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 warehouse. 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 instruatIons~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 
~$, 

?. 

/, 

I 

I 

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 inoldents may be 

Important evidenae bearing upon that question. But 

where it is admitted that the shipment made to the 

ultimate destination had at all times been intended, 

these lnoldente are without legal slgnlflaanoe as 

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 

lnoldente are absent, and yet the through interstate 

ttdfr8 applp."(oltlng oases) 

To the %ame effect la the oase of Blndsrup '1. 

Pathe Erohange, 68 L, Ed.. 308, (Supreme Court of the United 

Statee) In the r0n0wing languager 

"The Intermediate delivery to the agenoy did not 

end, and was not Intended to enU, the movement at the 

oommodity. It was merely halted ae a oonvenlent atop 

In the prooeae or getting It to Its rlnal deatlnatlon. 

The general rule Is that. where transportation has 

aoqulred an lnteratate oharacter, *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 

4 

7th Leglslature ineoiar as applicable to the produots 

perishable fruits 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, originating within the State, and admittedly lntrastate, the tax la due and owing by 0. S. Weekrr, and you 

are accordingly 80 advised* 

Y0ur.e very truly