The Honorable Robert S. Calvert Opinion No. M-300

Comptrollerof PublicAccounts Austin, Texas Re: Constitutionality of deletion of SubSections (l), (2), and (3) from Texas Taxation-General Art. 20.01(T)by Texas Acts 60th Legislature, 1st Called Session, 1968, Chapter 2, Section 12 DearMr. Calvert: at 9.

you have requested our opinion concerning the,constitutionality of the deletion of Sub-Sections (1) (3) from Texas Taxation-GeneralArticle 20.01(T) t 2), andhereinafter referred to as the original act) by,Texas Acts 60th Legislature, 1st Called Session, 1968, Chapter 2, Section 12 at 9 (hereinafterreferred to as the amendment). It Is the opinion of this office that the amendment,as it relates to the exclusion of Sub-Sections (l), (2),and (3)without' proper notice in the title is invalid.

Section bT) of Article 20.01, Texas Taxation-General, prior to the 19 8 amendmentprovided:

"Contractoror Repairman. 'Contractor'
or 'Repairman'shall mean any person who performs any repair servicesupon tangiblepersonal property or who performs any improvement upon real estate, and who, as a necessary and incidentalpart of performing such services, incorporatestangiblepersonalproperty belonging to him into the property being so repaired
or improved. Contractor or repairman shall be considered to be the consumer of such tangible personal property furnishedby him and incorporated Into the property of his customer, for all of the purposes of this Chapter.

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# cThe numbered sub-sectionsdeleted from the. 1968 amendment read as follows:7

"(1) The above provision shall apply only If the contract between the person performing the services and the person receiving them contains a lump sum price coveringboth the performance of the services and the furnishing of the necessary incidentalmaterial.
"(2) If the contract between the person providing the services and the person receiving them contains separate amounts applicable to the performance of the services and the furnishing of the materlal then the above Section shall not apply, and the person furnishing the materials shall be liable for the limited sales tax upon the agreed price of~the materials as thus set forth In the.contract. Provided,however, that the agreedprice of. the materials shall not be less than the actual cost of such materials to the person so providing them.
"(3). In any case where thepersbn
so providing suchmaterials has paid the limited sales tax to his supplierwhen purchasing the tangible personalproperty, he shall be entitled to credit the tax so paid to his supplier against any tax imposed by this Chapterwith respect to his subsequent sale of that tangiblepersonal property.'

The 1968 Amendmentreads as follows:

"Sec.12. Section (T) of Article 20.01, Chapter 20, Title 122A, Taxation-General.Revised Civil Statutes of Texas, 1925, as amended, Is amended to read
as follows:

"20,01(T)Contractoror Repairman. 'Contractoror Repairman' shallmean any person who performs any repair services upon

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tangiblepersonal property or who performs any improvementupon real estate and who,
as a necessary and incidentalpart of performing such services, incorporates tanglble personal property belonging to him into the property being so repaired or improved. Contractoror repairman shall be considered to be the consumer of such tangiblepersonal property furnished by him and incorporated into the property of his customer, for all the purposes of this Chapter.

"Thereare exempted from the computation of the amount of taxes imposedby this Chapter, the receipts from the sale, lease or rental of any tangiblepersonal.propertyto, or the storage,use or other consumptionof tangible personalproperty by any contractorfor the performance of a contract for the improvement of realty for an exempt or anization as defined in Section 20.04(F 7 of this Chapter
or otherwise exempt from the taxes imposed by this Chapter to,the extent of the value of the tangiblepersonal property so used and/or consumed in the performance of such contract. Any such contractor may purchase; rent or lease all materials, supplies, equipment and other items incorporated into the, project or any such item used and/or consumedby the contractor in performing said contractby issuing to the retailer from whom thematerials, supplies, equipment or other Itemswere purchased, rented or leased an exemption certificate in lieu of any tax imposedby this Chapter."

Considerabledoubt has been raised as to exactlywhat the intent of the legislaturewas in amending Article 20.01(T); that is, whether Section 12 of the Session Laws completely replaced the original act or whether It merely added an additionalprovision. Without a proper record or historical note having been developed by the committeewhich passed upon this section as well as the whole amendment, this office is constrained to conclude that the true intention of the Legislaturewas ambiguous. However, it Is well settled that a statutewill be c,onstrued in such a manner

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as to make all of its components effective and operative. See, e.g., Inde 124 Tex. 281 7 16 Tex. 382 [18 be regarded as merely an additionalprovision since repeals by implicationare not favored and laws relating to the same subjects should be considered as though incorporated in-the same act. Gordonv. Lake, 163 Tex. 392, 356 S.W.2d 153 (1962).

However, this leaves the enigma of the deletion of sub-sectionsone, two, and three from the original act. This deletion is of prime concern for among other things, it removes the previously existing exclusion afforded to parties who segregate thematerialsfrom the servicesperformed in their contracts. Of course, such an action is within the province of the legislature
so long as ample notice is given in the titlepursuant to Texas Constitution,Article III, Section 35:

"Nobill, (exceptgeneral approprlation bills,which may embrace the various subjects and accounts, for and on account

. of which moneys are appropriated)shall containmore than one subject,which shall be expressed in its title. Rut if any subject shall be embraced in an act,which shall not be expressed in the title, such act shall be void only as to so much thereof, as shall not be so expressed."

The Title of the amendment states:

“ An Act raising revenue for the operation of state government; amending Chapter 20, Title 122A, Taxation-General, Revised Civil Statutes of Texas, 1925,
as amended, to Increase the limited sales, excise and use tax,provide certain exemptions; and provide for the exclusion of certain transoortationcharnes from the tax base unde; certain conditions;making temporary saving provisions for certain written contracts and bids; making the necessary conforming amendments to the

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Local Sales, Excise and Use Tax Act (Article1066c, Vernon's Texas Civil Statutes); amending Chapter 6, Title 122A, Taxation-General,Revised Civil Statutes of Texas, 1925, as amended, to increase the sales and use tax on motor vehicles and to amend the definition of retail sale; amending Chapter 12, Title 122A, TaxationGeneral, Revised Civil Statutes of Texas, 1925, as amended, to increase the corporate franchise taxes;providingan effzctive date; and declaring an emergency. (Emphasis added.)

Even though the title of the amendmentmay refer to the
new exemptive language added to Article 20,01(T) by the
use of the words. 'providecertain exemptions";the title is fatally defective to the extent it fails to mention the deletion of sub-sectionsone, two, and three from the original act, which are not termed exemptionsbut
are separate exclusions from the coverageof the law. We find the followingpertinent statementof the law to be as follows:

"DJ title that expressesa purpose to change a prior law by adding or extending a provisionor conferring a right-doesnot warrant an

-- amendment that omits

. . . a provsion of the ori inal act or destFo s a -- ~-w;;o;J? TFbEhasis

foo no e de e ed.) 53 Tex.Jur.2d Statutes, Section 61 at 112; see, e.g.,

Furthermore, the title to an amendmentmust more strictly conform to the body than to the title of an original act (Praetoriansv. State, 184 S.W.2d 299, aff'd. 143 Tex. 596, T56-S.W.2d 971 (1944) ),notwithstanding the rule that a liberal constructionwill be indulned~to uphold the title of a legislativeact. Harris Co&y Fresh Water Supply District No. 55 v. Carr, 37’2S.W.2d 523 525 ‘(Tex.Sup. Ct. 1963). The purposes of Article 3 Section 35 of the Constitutionof Texashave been well stated as follows:

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"Thepurpose of the title-subject provision f

of Texas ConstitutionArticle 3,. Se~ction35 Is threefold: First, it Is designed to prevent log-rolling legislation, to prevent the writing of several %i&ts having no connectionwith each other in one bill for the purpose of comblning various interests in support of the whole. Second, it prevents surprise or fraud upon legislators by means of provisions in bills of which the titlesgive no intimation,and which might thereforebe overlookedand carelessly and unintentionallyadopted. Third, it permits the people to be fairly apprised of the subjects of legislation under consideration,so that theymay have
an opportunity of being heard, if they so desire." Texas Constitution.Article 3. Section 35, interpretivecommentaryat-609

. see Shannonv. Rogers, 159 Tex. 29, $i5h 2d 817 enschmidtv. International& G. N.'R Company, 100 Tex. 532, ]
Today these purposes especiallypertaining to the s~econdfold,

are even more importantwith the increased volume of bills that Ishandled by the legislature. "Obviouslythis purpose is not accomplished, if the caption, for lack of sufficientprovision therein or by the mlsleadina character of its orovlsionsdoes not convex to the reader the necessary information." Schlichtingv Texas State Board of Medical Examiners, 158 Tex. 279 310 S W

. .2d

, 5bl (1958). When a title to an smendment'describes part of then

amendment'spurpose, but fails to describe another which substantiallychanges the original version,
our courtshave characterizedthe action as surreptitious in nature and in violation of the Constitution. See, ConsolidatedUnderwritersv. Kirby Lumber Company, f(Tex.-Comm'n.; Holman v. C;wden & Sutherlan%T'i58S.h. 571 (Tex. civ. App. 1913, error ref'd).

In Holman, supra, the court was confrontedwith an analogousmm involving the Thirty-secondLegislature amending the act of a previous legislatureand excluding from the application of the amendment three counties, one of

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which was included in theprevious act and was not mentioned in the title of the amendment as an excluded county as the two other countieshad been. The court at page 573 of its opinion,held that "somuch of the act of the Thirty-secondLegislatureas excludesMatagorda County from the operation of the stock law referred to is inoperativeand void, for the reasons indicated,'and that thereforeMatagorda County remainswhere the act of the Thirty-first Legislatureplaces it."

Therefore,we must necessarily conclude that by the Sixtieth Legislaturefailing to include in the title of the amendment the notice that sections one, two, and three of the original act were to be deleted, in derogation of Article III, Section 35 of the Constitutionof Texas, those sections still stand as they did prior to the amendment. Consequently,Texas Comptrollerof PublicAccount's Ruling Nun?berg5-C.O9Ais incorrect to the extent that it interprets Article 20.01(T)as not includingsub-sections one,,two, and three.

SUMMARY

Texas Acts 60th Legislature,1st Called Session, 1968, Chapter 2, Section 12 did not eliminate Sub-Sections (1),.(2),~and (3) of the originalact, Texas TaxationGeneral Art. 20.01(T).

s very truly,

rney. General of Texas
Prepared by Alvin Louis Zimmerman AssistantAttorney General

APPROVED: OPINION COMMITTEE

Hawthorne Phillips,Chairman Kerns Taylor, Co-Chairman Charles Aycock Ralph Rash John Grace Alfred Walker

A. J. Carubbi, Jr. Executive Assistant

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