Hon. Geo. H. Sheppard Opinion No. V-616 

Comptroller of Public Accounts 

Austin, Texas Re: Market value of carbon 

black for computing the 

occupation tax due on 

the production thereof 

under facts submitted. 

Dear Mr. Sheppard : 

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

“1 am 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 of the Dominion of Canada. 

“B. Copy of Contract between Continental Carbon 

Co., a corporation of the State of Delaware, and the 

Witco Chemical Co., a corporation of the State of Illinois ~ 

“C. Copy of contract between the Panhandle Carbon Co. Inc., a Delaware Corporation, and WisbnickTumpeer, Inc. an Illinois Corporation. 

“D. Copy of contract between Continental Carbon 

Co., a corporation of the State of Delaware, and Witco 

Chemical Co., a corporation of the State of Illinois 

for your study in answering the following questiens - 

“Is the manufacturer or praducer of carbon black 

authorized to deduct the commissions or fees as described in the foregoing contracts from the sales price 

of carbon black before computing the tax levied under 

Section 46 of Article 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 do not have a copy of the contracts between producers and Carbon Black Expert Inc. of New York, a Delaware Corporation, organized for engaging solely in export trade as defined by an Act of Congress, approved 

April 10, 1918, commonly known as 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 

arid a 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 

than that received from sales in the damestic market because ef the above charge in addition to expert packaging 

costs and freight to seaboard. 

“The facts in the 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 1942 when current sales contract was made with Wishnick-Tumpeer new Witcr Chemical and uatil 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. Of this 5p% A.I. 

Wishnick had a beneficial interest in tke trust 

sf 747, or 377. l f the stack. 

“In September, 1947 - Philli~ps seld out to 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 and furnished 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 in Article 7047(46), V.C.S. as follows: 

“The market value of a particular type or grade 

of carbon black shall be the average sales price of 

that type or grade of all bona fide sales made during 

the month on which the tax is being paid less the cost 

of packing, freight, and cartage. If no carbon black of 

the particular type or grade has been sold during the 

month for which the tax is being paid then the actual 

market value of the same shall be the average sales 

price of that type or grade of all 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.” 

It will be noted that the market value of each particular 

type or grade of carbon black is the.average sales price of that 

type or grade of all bona fide sales made during the month less 

the cost of packing, frei,ght and cartage. The cost of making-es 

is not to be deducted from the sales price in arriving at the market value. Although the term “all bona fide sales” is not expressly limited to the sales made by each separate producer of carbon 

black, it is our opinion that it was 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 due and payable on the 25th of 

each succeeding month, and is to be reported to the Comptroller 

on forms prescribed by the Comptroller; and the tax is to be computed by the producer. 
- - 

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

We have examined the submitted copies of the contracts. 

It appears that in two of the contracts the “seller” is expressly made 

the agent of the producer ,and receives a percentage of the sales 

price for his services in making the sales. Although from certain 

provisions contained in the other contracts, it appears that an actual 

sale is made by the producers to the other contracting parties, a 

reading of the entire contracts and construing them from their four 

corners makes it clear to us that a sale is not made under such contract, in that neither the title or possession of any carbon black ever 

passes from the producers to the other contracting parties. The sales 

are made as agent of the producer. A “sale” is an agreement by 

which one of two 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 of your questions are therefore 

answered in the negative. 

SUMMARY 

The amount paid to an agent of the producer of carbon black for making sales should not be deducted from 

the sales price in determining the market 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