Hon. Geo. H. Sheppard Opinion No. V-616 Comptroller ofPublic Accounts Austin, Texas Re: Market value of carbon black for computing the occupation taxdue on the production thereof under facts submitted. Dear Mr. Sheppard :

Your letter requesting our opinion relative to the abovecaptioned matter reads as follows:

“1am attaching hereto: “A. Copy of contract between Crown Carbon Co., a corporation of the State of Delaware, and the Canada Carbon Black Co. Ltd., a corporation organized under the laws ofthe Dominion of Canada. “B. Copy of Contract between Continental Carbon Co., a corporation of the State ofDelaware, and the Witco Chemical Co., a corporation oftheState ofIllinois ~ “C. Copy of contract between the Panhandle Carbon Co. Inc., a Delaware Corporation, andWisbnickTumpeer, Inc. an Illinois Corporation. “D. Copy of contract between Continental Carbon Co., a corporation ofthe State of Delaware, and Witco Chemical Co., a corporation ofthe State ofIllinois for your study in answering the following questiens -

“Is themanufacturer or praducer of carbon black authorized to deduct the commissions or fees as described inthe foregoing contracts from the sales price of carbon black before computing the tax levied under Section 46 ofArticle 7047 R.C.S. “For your further study in answer to the above question, I am enclosingmemoranda showin the percentages of stock ownership in these various corporations.Hon. Geo. H. Sheppard, Page 2 (v-616)

“I donot have a copy ofthe contracts between producers and Carbon Black Expert Inc. ofNew York, a Delaware Corporation, organized for engaging solely in export trade as defined by anAct of Congress, approved April 10, 1918, commonly knownas the ‘Webb Act’

. The stockholders of Carbon Black Export Inc. are the producers who sell their black far export to this association. The Centinental Carben Cempany is a producer arida steckkelder ewning 8bput 7% of the stock in the Carbon Black Export Inc. “Since the Carban Black Export Inc. purchases the black from the @reducers at substantially the same price as it receives from its customers, each manth, a ckarpe is made by the Carban Black Export Inc. to its prducers for a Ire-rata test of its operations. Hence, the price received by the Continental Carbon Company is greater thanthat received from sales in the damestic market because ef the above charge in addition toexpert packaging costs andfreight to seaboard. “The facts inthe last two paragraphs are furnisked this Department by Mr. Seligman of the Continental Carbon Cempariy. “Would the amsunt paid Carbon Black Expert Inc. by Cantinental Garbon Company be deductible from the sales value before computing the tax en export sales.” The following is 

### a c.py rf the memorandum enclosed with yeur letter: “PANHANDLE CARKIN CO.

“In 1942when current sales contract was made withWishnick-Tumpeer new Witcr Chemical anduatil September 1947 the stock of Panhandle was owned by **-5,s** - Phillips Petroleum Campany

“!w% - R. I. Wishnick as trustee under the Pa&an&?

Carbon Co. Securities Trust. Ofthis 5p% A.I. Wishnick had

### abeneficial interest intke trust sf 747, or 377. lf the stack.

“InSeptember, 1947 - Philli~ps **seld** outto Wishnick and the present stsck is held by ft. I. Wishnick, Trustee for 100%.Hon. Geo. H. Sheppard, Page 3 (v-616)

CONTINENTAL CARBON “Since organization in 1937, stock of Continental has been held by

“30% - Shamrock Oil &Gas Corp.
“20% - Continental Oil Co.
“50’$, or less by R. I. Wishnick as trustee under the Continental Carbon Company Securities Trust. “At present the holdings are -50% by Shamrock & Continental Oil

“ai% by U. S. Schwartz family

“41+% by R. I. Wishnick as Trustee”
At our request you have secured andfurnished us a copy of the contract between the producers and Carbon Black Export, Inc. The term “market value” as used in the carbon black production tax act is defined inArticle 7047(46), V.C.S. as follows:

“The market value of a particular type or grade of carbon black shall be theaverage sales price of thattype or grade of all bonafide sales made during the month onwhich the tax is being paid less the cost of packing, freight, and cartage. Ifno carbon black of the particular type or grade has been sold during the month for which the tax is being paid thenthe actual market value of the same shall be the average sales price of thattype or grade ofall bona fide sales during the last preceding month in which a bona fide sale of that particular type or grade of carbon black was made, less packing, freight, and cartage.” Itwill be noted thatthe market value of each particular type or grade of carbon black is the.average sales price ofthat type or grade of all bona fide sales made during the month less the cost of packing, frei,ght and cartage. The cost ofmaking-es is notto be deducted from the sales price inarriving at the market value. Although the term “all bonafide sales” is not expressly limited to the sales made by each separate producer of carbon black, it is our opinion thatitwas the legislative intent to SO limit it. A reading of the entire act and construing it as a whole clearly reflects such intent. The tax is dueand payable onthe 25th of each succeeding month, and is tobe reported to the Comptroller onforms prescribed by the Comptroller; and the tax is to be computedby the producer.- -

Hon. Geo. H. Sheppard, Page 4 (V-616)

We have examined the submitted copies ofthe contracts. Itappears that in two of the contracts the “seller” is expressly made the agent ofthe producer ,andreceives a percentage of the sales price for his services in making the sales. Although from certain provisions contained in the other contracts, it appears thatanactual sale is made by the producers to the other contracting parties, a reading ofthe entire contracts and construing them from their four corners makes it clear to us thata sale is not made under such contract, in that neither the title or possession ofany carbon black ever passes from the producers tothe other contracting parties. The sales are made as agent ofthe producer. A “sale” is an agreement by which one oftwo contracting parties, called the “seller,” gives the thing, and passes title to it for a certain price in current money. See Skirvin v. O’Brien, 95 S.W. 696. Both ofyour questions are therefore answered in thenegative.
SUMMARY

The amount paid to anagent of the producer of carbon black for making sales should notbe deducted from the sales price indetermining themarket value of such carbon black in computing the tax levied under Article 7047, V.C.S.
Yours very truly, ATTORNEYGENERAL@FTEXAS

W. V. Geppart Assistant WVG/JCP
APPROVED

EY GENERAL