k

;

r ’ OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN 9 O”OYIRSLLLCII :- 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 amherewfth 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 amenolosing 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 uponwhether, 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. Wehave 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? Wethink 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 Armyoamps 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 

### mark6the 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 ~tothe 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 maynot 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, 

### 66L; 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&egoods to their 

### Intendeddestination. We believe, however, that the adoption ,of that rig ;;uld rssulult ln too 

### narrowa oonetruotlon of the Aot. oXear that the 

### purposeof 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 ~doesnot 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 themto their fIna destinations, they remain *In oomceroe* until they reaoh those points. Then there Is a praotioal oontinulty of laovenuvntof the goods until they reach the customers for whomthey 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 rr0man 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 aommonInoldents of a~$, ?.

/, I

I 

### eon.&SO.H. Sheppard,page 6

throughshipmentsandwhen the Intentionwithwhloh a shipmentwas made ia in leaue,thepreeenceor absenoeof one or all of these inoldentsmay be Importantevidenaebearingupon thatquestion. But where it is admittedthat the shipmentmade to the ultimatedestination had at all timesbeen intended, theselnoldentearewithoutlegal slgnlflaanoe as bearingon the oharaoteror the tratrlo. For lnstanae, inmany oaaea involvingtraneltor reoonalgnment prlvile~eaIn blanketterritory, moat or all oi theee lnoldenteare absent,and yet the throughinterstate ttdfr8 

### applp."(oltlng oases)

To the %ame effectla the oase of Blndsrup'1. PatheErohange,68 L, Ed.. 308, (SupremeCourt of theUnited Statee)In the r0n0wing 

### languager

"TheIntermediate

deliveryto theagenoydidnot end,andwas not Intendedto enU, themovementat the oommodity. It wasmerelyhalted 

### ae a oonvenlentatop In theprooeaeor gettingIt to Its rlnaldeatlnatlon. Thegeneralrule Is that. where transportation has aoqulredan lnteratateoharacter,*Itoontlnuesat lea& untilthe load reaoheethepolntwhere thepartlee origlnallyintendedthat themovementehoaldfinally end."' (Loo.Cit. 68 L. Rd. 3161



### We deem the foregoingeufiloientto supportour oonolu~~lon

that theoperationsof a. S. Weeks,under the ?aotssubmitted,are not subjeotto grossreceipt8tax lmpoeedbyArtlole14 of HouseBillNo. 8, Aota 

### oftthe

4

### 7thLeglslatureineoiaras applicableto the produots perishablefruitsandvegetables)ahlppedfromwithout theState,and henoe interstateshipmenta;but a8 to that portionof the shipments, whethertenper oent,more or less,originating

within the State,and admittedlylntrastate,the tax la due and owingby 0. S. Weekrr, and you are accordingly80 advised*
Y0ur.e very truly