Honorable George H. Sheppard 

Comptroller~of Public Accounts 

Austin, Texas 

Dear Sir: OpinionNo. O-4263.' - 

Re: Liability of a corporation organizea and existing under the-laws 

of another state, and transacting 

business as outlined, for the 

luxury excise tax levied by Article 

7047-1, Vernon's Texas Civil .. 

Statutes; upon the sale, at retail, 

:'of new radios. 

Your letter of December 9, 1941, submits-.for our 

opinion the following question and supporting factual sltuatlon, 

w~hich we quote therefrom: 

_. "A~corporation located in Kansas City, Missouri, 

and operating'u~er the laws of Kansas sells new -. 

radios-'inTexas on the following plan; Its salesmen 

in Texas take orders~ in Texas fro,m lnaivlauals in 

Texas'. At the time the salesmantakes the order the 

purchaser deposits with the salesman a small payment 

which the salesmankeeps as his cormnisslon. .'The 

salesman then forwards the order to the company In 

Kansas City; where the compang'either accepts or rejects the same. If accepted the raalo is sene direct 

to the purchaser c.o.6. for the balance au&;'-'-Iio deliveries are ever made by the salesmen, and none of 

the merchandise is stocked or warehoused in Texas. 

"Is the corporation due the t.ax required by 

Article X~of H.B. 8, Regular Session.'of the Fortgseventh Legislature?" 

,.A-plan or system of business operation,~ identical to 

the above, tias been heretofore.submittea to state and- federal 

courts of .last resort to determine if various state sales, pri' 

vileges, license or excise taxes, generally, would constitute an 

unconstitutional burden upon interstate commerce under the"socalled "commerce clause" of the Federal Constitution. These 

aeclsions have SO uniformly held the method of doing business 

described above, to constitute 'interstate commerce, within the 
Honorable George H. Sheppard, page 2 o-4263 

meaning and protection of the Federal Constitution; that we deem 

it unnecessary to unduly lengthen this opinion by a ,full aiscusslon bf the Individual case,s. 'owe think it sufflces“'to stat&the 

general unquestioned rule of law governing the instant situation: 

"The negotiation of sales of goods which are in 

other states, for the'mrpose of 1iitroducing'~ttiem '. 

into the state in-which the negotiatlon.is‘made, is 

interstate commerce, and'cann'dt be Interfered with, 

regulated; or-taxed by the state in which the negotiation was made, though there be no discrimlnatlon 

between such business and dome&tic commerce, and this 

rule applies to persons who engage in the business of 

soliciting orders by sample or othervise for goods to 

be shlpped'froiti another state, such as agents of'iionresident manufacturers or dealers; drummers, or canvassers, whether the orders are taken by residents 

or non-residents, and whetherthe orders are taken 

from Indlvlduals..or from manyfacturers or licensed 

merchants or dealers. * * * (5 R.C.L., p. 768) 

Again at 26 R.C.L., p. 122, we find the~following pertinent statement: 

"A manufacturer located in one state cannot be 

required to pay a license tax for the'.privlIege of 

placing his goods in the hands of retail dealers in-. 

aiiother state; and a manufacturer Iocated Inone state 

cannot be subjected to a license tax for engaging In 

the business of selling goods in another, merely because he sends goods under a C.O.D. consignment on the 

written order of a purchaser in such state, although 

property in the thing so&d. does not pass untll.de-'~ 

livery. So a1so.a foreign corporation which manufacturers and ships goods into a state is not liable to 

an excise for the privilege of carrying on business 

therein merely because it maintains a local office as 

a~ heac?quarters for its salesmen, but if It maintains 

an office for the general use of Its employees, agents 

and customers, and for the storage and display of 

samples of its products, it Is enjoying a privilege 

deperdent upon the will of+tp+ztate for the exercise 

of which it may be taxed. 

The,text is supported by numerous declslons of the-' 

Supreme Court of the United States, among which we cite the cases 

of.Crenshaw vs. Arkansas, 227 u.s, 389, 33 s. ct. 294, 57 Li Ed. 

565; Robblns vs. Taxing Dist. 120 U.S. 489, 30 L. Ed; 694; Brennan vs:Titusville, 153 U.S. 289, 38 L. Eda 719; Caldwell Vs: 

North Carolina, 187 U.S. 622, 47 L. Ea. 336; Asher vs. Texas, 128 

U.S. 129, g s. ct’. 1, 32 L. ~a. 368. 
~. .~ 

Honorable George II. Sheppard, 

The statute before 

page 3 O-4263 

us stems from the general tax -. 

powers resldlng In the state and 1s not predicated upon the policepowers of the state, as-~belng in furtherance of'the health, safety, 

morals and general welfare of the people. The authorities often 

uphold-a reasonable regulation under the reserved police power of 

the state, although it be a burden on interstate commerce, but. " 

unite, as exempllfied'by the cases cited, supra, ln'condemning a 

state tax which burdens or impedes interstate commerce. 

Moreover, the Incidence of this tax falls squarely, -. 

under Section 1 thereof, upon "each person, partnership, assoclation br corporation selling, at retail, new radios," etc.; on 

the basis-of two per cent of the'gross receipts shown by a required quarterly report. Such tax is not a-. 'use" tax~or any-. 

other'type of tax levied directly upon and against the purchaser,. 

so as to allow its collection, under"constitutiona1 principles, 

after interstate commerce .has terminated? within the rule announced in Ex parte Kimberlin, 86 S.W. (26) 717, and Sheppard vs. 

ksser, 92 S.W. (2d) 219. 

_. 

are 

We accordingly answer your Inquiry in the negative. 

Trusting the foregoing fully answers sour inquiry, we 

Yours very truly 

ATTORNEYGENBFMLOF'TEXAS 

By s/Pat M. Neff, Jr. 

Pat M:'Neff, Jr. 

Assistant 

PMN:ej:wc 

APPROW FBB 18, 1942 

s/Grover Sellers 

FIRST ASSISTANT 

ATTORNEY GENERAL 

Approved Opinion Committee By s/BWB Chairman