Honorable George H. Sheppard

Comptroller~ofPublic Accounts Austin, Texas
Dear Sir: OpinionNo. O-4263.' - Re: Liability of a corporation organizea and existingunder 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 followingquestion and supporting factual sltuatlon, w~hich we quote therefrom:

_. "A~corporationlocated in Kansas City, Missouri, and operating'u~er the laws of Kansas sells new -. radios-'inTexason the following plan; Its salesmen in Texas take orders~ in Texas fro,mlnaivlauals in Texas'.At the time the salesmantakes the order the purchaserdepositswith 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'eitheraccepts or rejects the same. If accepted the raalo is sene direct to the purchaser c.o.6. for the balance au&;'-'-Iiodeliveries are ever made by the salesmen, and none of the merchandise is stocked or warehoused in Texas.

"Is the corporationdue the t.axrequired by ArticleX~of H.B. 8, Regular Session.'of the FortgseventhLegislature?" ,.A-plan

or system of business operation,~ identical to the above, tias

been heretofore.submitteato state and-federal courts of .lastresort to determine if various state sales, pri' vileges, license or excise taxes, generally, would constitute an unconstitutionalburden upon interstate commerce under the"socalled "commerce clause" of the Federal Constitution. These aeclsionshave **SO** uniformly held the method of doing business describedabove, to constitute 'interstatecommerce,within theHonorable George H. Sheppard, page 2 o-4263

meaning and protection of the Federal Constitution; that we deem itunnecessary to unduly lengthen this opinionby a ,fullaiscusslon bf the Individual case,s.'owethink it sufflces“'to stat&the generalunquestioned rule of law governing the instant situation:

"Thenegotiation 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 interstatecommerce, and'cann'dt be Interferedwith, regulated; or-taxed by the state in which the negotiationwas made, though there be no discrimlnatlon between such business and dome&tic commerce, and this rule applies to personswho engage in the business of solicitingorders by sample or othervise for goods to be shlpped'froiti

another state, such as agents of'iionresidentmanufacturers 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~followingpertinent statement:

"Amanufacturer 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 cannotbe 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 passuntll.de-'~ livery. So a1so.a foreign corporationwhich manufacturers and ships goods into a state is not liable to an excise for the privilege of carrying on business thereinmerely 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 enjoyinga privilege deperdentupon 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.Crenshawvs. Arkansas, 227 u.s, 389, 33 s. ct. 294, 57 Li Ed. 565; Robblns vs. TaxingDist. 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 statutebefore page 3 O-4263

us stems from the general tax -. powers resldlng In the state and 1s not predicatedupon 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 regulationunder the reserved police power of the state, although it be a burden on interstate commerce,but." unite, as exempllfied'bythe cases cited, supra, ln'condemninga state tax which burdens or impedes interstate commerce.

Moreover, the Incidence of this tax falls squarely,-. under Section 1 thereof,upon "eachperson, partnership, assoclation br corporation selling, at retail, new radios," etc.; on the basis-of two per cent of the'grossreceipts shown by a required quarterly report. Such tax is not a-. 'use"tax~or any-. other'type of tax levied directlyupon and against the purchaser,. so as to allow its collection,under"constitutiona1principles, after interstatecommerce .hasterminated?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/GroverSellers FIRST ASSISTANT ATTORNEY GENERAL Approved Opinion CommitteeBy s/BWB Chairman