Court Opinion

ID: 4141952
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:16:30.47068+00
Date Added: 2024-06-11T14:21:53.137884
License: Public Domain

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        Honorable George H. Sheppard
        Comptroller of Public Accounts
        Austin, Texas
        Dear Sir:                        opinion mo. o-4392
                                         Re: Are Army Post Exchanges
                                              subject to the Texas
                                              Store Tax.
                  You have requested the opinion of this department as
        to whether or not Army Post Exchanges are subject to the Texas
        Store tax.
                  Army Post Exchanges have been established by the
        United States Army for msny years past and, therefore, they
        have acquired a well defined and essential position in the
        hY.    Army Post Rxchsnges as they now exist are created in
        accordance with the United States Army Regulations No. 210-65
        promulgated by the War Department. Said Army regulations
        are lengthy and in detail,. We believe they are well stated
        and summarized in the case of United States v. Query, 37 F.
        Supp. 972,~as follows:
                 "AS set forth In the findings of fact this day
            filedherein, the Post Exchange at Fort Jackson is
            created and functions under United States Army regu-
            lations No. 210-65, C-l.and C-3, promulgated by the
            Secretary of War; under the authority given him by
            Congress. By these regulations the commanding of-
            ficer of each post Is directed to establish and main-
            tain a Post Exchange uhenever there is need for it,
            membership in which is limited to companies, troops,
            batteries, aero squadrons, or other similarly organ-
            ized units and detachments. The commanding officer of
            each army post has complete jurisdiction over the con-
            duct of all Post Rxchsnges 'tithinhis command, subject
            to the genera3 supervision of superior authority, and
            is held strictly responsible for their efficient
            operation and for the enforcement of army regulations
            applicable to Post Exchanges.. Under these regula-
            tions sales art made only to officers and enlisted
            men of the regular army, army nurses, contract sur-
            geons, members of the Reserve Corps while on active
            duty, officers and enlisted men of the Rational Guard
Honorable George H. Sheppard, Page 2, (O-4392)

    when in federal service, clvllian employees authoriz-
    ed for service abroad, having a status recognized by
    the War Department as part of an expeditionary force,
    and civilians employed or serving at military posts.
         "The primary purposes of an exchange are to sup-
    ply troops at the lowest possible prices with articles
    of ordinary use, wear and consumption not supplied by
    the Government, to afford them means of rational
    recreation and amusement, and through exchange profits
    to provide, when necessary, the means for improving
    the company messes. The commanding officer of each
    army post is charged with the maintenance of recrea-
    tional athletics, entertainments, service clubs, li-
    braries, and community cooperation which are to be
    centered about the Post Exchsnge which provides the
    financial support necessary ~for their maintenance.
    !ChePost Exchange is governed by a council consisting
    of a Post Exchange officer and commanding officer of
    each company, troop, battery; hospital detachment, or
    similar organization participating therein. The Post
    Exchange officerX,s detailed by the commanding officer
    and receives no compensation for his services other
    than his regularArmy pay.
          "Dnder the Regulations of the Secretary of War
     the duties imposed upon officers in the management of
     exchange affalrs.are as binding upon them as any duty
     to which they may be assigned under competent military
     authority. Five per cent of Post Exchange profits, if
     any, are set aside as a fund which is'divided among
     the organizations which constitute the membership of
     the exchsnge, that is, the companies, troops, batteries,
     squadrons or units and detachments, and not individuals,
     and the balance is set aside as a portion of the recre-
     ation fund for the laying out, preparing and cultivating
     gardens, for the purchase of books, newspapers, period-
     icals, stationery, and similar articles for the ex-
     change library, gymnastic appliances, and prizes for
     athletic sports. These funds belong to no particular
     individual and those portions which are set aside for
     the participating orgsnI.zationshave membership in the
     Post Exchanges are held by such member organizations
     in trust, subject to the orders of the Secretary of War
     or congressional command. Where Post Exchange buildings
     have not been provided for from funds otherwise avail-
     able, the commanding officer is authorized to construct
     temporary buildings by the labor of troops and the us4
     of necessary teams and such tools, wtidows, sashes,
     doors and other material as can be spared by the Quar-
.   .

        Honorable George H. Sheppard, Page 3, (O-4392)

            termaster Corps of the Army. The Post Quartermaster
            is authorized to sell to the exchange at cost any
            subsistence stores except exceptional articles, to
            furnish heating and suitable apparatus therefor for
            Post Exchsnge rooms and buildings, and to provide
            supplies for interior and exterior illumination.
            Messages on Post Exchange business over telegraph,
            radio and cable lines owned and operated by the War
            Department may be transmitted without charge, and
            penalty snvelopes may be used in the mails in con-
            ducting Post Exchange correspondence. United States
            Army Regulations specify what books and records
            shall be kept by Post Exchanges and the manner of
            auditing them."
                  The Texas Store Tax, commonly referred to as the
        Chain store tax, is codified by Vernon as Article lllld of
        Vernon's Annotated Penal Code. It provides in part as
        follows:
                 '!3eotion~2. Any person agent, recsiver, trustee,
            firm, corporation, association or copartnership desir-
            ing to operats, maintain, open or establish a store or
            mercantile establishmsnt in this State shall apply to
            the Compt$oller of Public Accounts for a license so go
            do.* * *

                 "Section 5. Every person, agent, r4c4iv4r, trustee,
            firm, corporation, association or copartnership opening,
            establishing, operating or maintaining one or more
            stores or mercantile establishments within this State,
            under the same general management, or ownership, shall
            pay the license fees hereinafter prescribed for the
            privilege of opening, establishing, operating or main-
            taining such stores or mercantile establishments. * * *
                 "Section 7. The term 'store' as used in this Act
            shall be construed to mesn and include sag store or
            stores or any mercantile establishment or establishments
            not specifically exempted within this Act which are
            owned, operated, maintained, or controlled by the same
            person, agent, receiver, trustee, firm, corporation,
            copartnership or association, either domestic or foreign,
            in which goods, wards or merchandiss of any kind are
            sold, at retail or wholesale."
                  There can be no doubt but that the Army Post Rx-
        changes sell the type of commodities which would bring them
Honorable George H. Sheppard, Page Qr (O-4392)

within the definition of the term "store" as defined in
Section 7 above and that they are being "operated and main-
tained" in this state.
          The chain store tax is an occupation tax. The
Commission of Appeals of Texas in Hurt v. Cooper, 110 S. W.
(2d) 899, stated as follows:
          n * * + We experience no difficulty in
     reaching the conclusion that the so-called
     license fees levied thereby are primarily
     occupation taxes.'
The tax is levied directly on the individual, corporation,
association, etc., that opens and operates the stores. If
the Army Post Exchanges are governmental instrumentalities
they are opened and operated by the United States Govern-
msnt.
          The United States Supreme Court in McCulloch v.
Maryland, 4 Wheat 316, held that the State of Maryland could
not tax the operation by the United States Government of a
bank in Maryland. Mr. Chief Justice Marshall,  in speaking
for the Court, concluded as follows:
         "But this is a tax on the operations of the
    bank, and is, consequently, a taxon the operation
    of an instrument employed by the government of
    the union to carry its powers into execution. Such
    a tax must be unconstitutional."
It follovs, of necessity, that if the Army Post Exchanges
are instruments employed by the Government of the United
States to carry one of its powers into execution they are
exempt from the Texas tax, supra, which tsxes the operation
of stores.
          One of the powers given Congress by Section 8 of
the Constitution of the United States is as follows:
         "To raise and support armies, but no appropria-
    tion of money to that use shall be for a longer
    term than two years; * * * To m&4 rules for the
    Government and regulation of the land end naval
    forces; * * * .'
          If Congress had enacted   legislation which specifi-
cally authorized the creation and   maintenance of Army Post
Exchanges there vould be no doubt   but that Congress would
be acting within the above-Quoted   power granted t0.i.t. We
.

    Honorable George K. Sheppard, Page 5, (O-4392)

    think that the operation of Army Post Exchanges is a very
    vital
    -     feature of the support and maintenance
          _._                        _.          of the Army.
    Through them a service Is rendered to the army personnel
    which service must of necessity be furnished them because
    of their being under army orders and supervision twenty-
    four hours a day. We believe that the supplying at the
    lowest possible price of certain articles of ordinary use,
    wear and consumption which are not supplied by the Govern-
    ment to the men in the army is the exercise of a govern-
    mental function authorized by the Constitution just as is
    the furnishing to them by the Government of food and shelter.
              A more serious question, however, is presented
    by the fact that Congress has not enacted specific legis-
    lation for the creation of Army Post Exchanges but that the
    same are in existence pursuant to regulations issued by the
    Secretary of War. In this connection the history of the
    existence of Army Post Exchanges is important. A short
    summary of the same is contained in United States v. Query,
    supra, and reads as follows:
              In 1870, Acts of July 15, 1870, c. 294,
         j 20, 1.6Stat. 319, 10 U.S.C.A. i 1.6,Congress
         directed that the Secretary of War should pre-
         pare a system of general regulations for the
         administration of the affairs of the Army, which,
         when approved by Congress, should be enforced
         until altered or revoked b the same authority.
         In 1875, Act of March 1, 18 75, c. 115, 18 Stat.
         337, 10 U.S.C.A., 1 16, Congress repealed that
         part of the Act which required that such regu-
         lations be reported to and approved by that
         body, and authorized the President to make and
         publish regulations for the government of the
         Army in accordance with existing laws. On
         July 25, 1895, Post Exchanges were established
         under regulatizns promulgated by the Secretary
         of War. + * *
              "Congressional approval of the creation and
         operation of Army Post Exchanges will be found
         in the several appropriation acts, commencing
         with the year 1903 until the present time. In
         1903, Act of March 2, 1903, c.975, 52 Gtat.927, 937,938,
         Congress appropriated $500,000 'for continuing
         the construction, equipment, and maintenance of
         suitable buildings at military posts and stations
         for the conduct of the post exchange, school,
         library, reading, lunch, amusement rooms and
         gymnasium, to be expended in the discretion and
         under the direction of the Secretary of War,* and
Honorable George II. Sheppard, Page 6, (O-4392)

    every year theresfter various appropriations for
    the same purposts were made. In 1933 and 1934
    Congress required the balances of disbanded
    organization funds, amounting to $298,068, which
    had been derived from Post Exchange activities
    covered into the federal Treasurv. Act of
    March 4, 1933, ch. 281, 47 Stat."i573;Act of
    June 26, 1934, c. 756, 48 Stat. 1224, 1229, 31
    U.S.C.A. p 725g."
          The duties of the Chief of Staff of the Army have
been defined by Congress and are contained in 10 U.S.C.A.,
Sec. 33. Said Section reads as follows:
         "The Chief of Staff shall preside over the
    War Department Gensral Staff and, under the :
    direction of the President, or of the Secretary
    of War under the direction of the President,
    shall cause to be made, by the War Department
    General Staff, the necessary plans for recrmlting,
    Org-Qing,   supplying, eQuipPi%, mobilizing,
    training, and demobilizing the Army of the United
    States, and for the use of the military forces
    for national defense. II4 shall transmit to the
    Secretary of War the plans and recommendations
    prepared for that purpose by the War Department
    General Staff and advise him in regard thereto;
    upon the approval of such plans or recommendations
    by the Secretary of War, he shall act as the agent
    of the Secretary of War in carrying the same into
    effect. (June 3, 1916, c. 134, 1 5, 39,Stat. 167;
    June 4, 1920, c. 227, subchapter~l, 1 5, 41 Stat.
     764."
Section 16 of 10 U.S.C.A. reads as follows:
         "Ths ,Prekidentis authorized to mske.and
    publish regulations for the government of the
    Army in accordance with existing laws, which
    shall be in force and obeyed until altered or
    revoked by the same authority: Provided, That
    said regulations shall not be inconsistent with
    the laws of the United States. (July 15, 1870,
    c. 294, j 20, 16 Stat. 319; Mar. 1, 1875, C. 115,
    18 Stat. 337.)
          In accordance with the above authority granted by
Congress Army Regulations No. 210-65 were issued on July 1,
1941. Said regulations were promulgated by General G. C.
Marshall, Chief of Staff, by order of the Secretary of War
and they supersede all previous letters and instructions
Honorable George R. Shsppard, Page 7, (O-4392)

pertaining to exchanges.   Said regulations read in part as
follows:
         "1. Pu+oses;d;sz;hTys        ~s;e;;l;;~d
    for the fo o
    persons to whom sales are authorizsd (par. 13), at
    the lowest possible prices, with articles of ordinary
    use, vear, and consumption not supplied by the
    Government.
         "(2) To afford to military personnel facili-
    ties for comfort, recreation, and amusement to in-
    clude, as may be desirable, the financial support
    and maintenance of recreational athletics, enter-
    tainmsnts, service clubs, libraries, and community
    cooperation within the limits prescribed in AR
     210-50
          "(3) To provide, when necessary, the means
     for improving organization messes. b. Exchanges
     should be conducted in such a manner-as to be of
     real assistance and convenience to enlisted men
     and not as large profit making institutions.~
          "2. Establishment - a. Whenever conditions
     make it desirable and prac5icable, the commanding
     officer of a post, camp, or station will establish
     and maintain an exchange to include such number of
     branches, departments, and subordinate activities
     thereof as may be necessary to serv4 the military
     personnel."
          Further, it is a ~411 settled rule of law that rules
and regulations like the above have the force.of law the same
as specific Congressional enactments if they pertain to
matters within the rule making power delegated to the authority
promulgatin the same. See Rx parte Reed, 100 U, 3. 13; Denby
v. Berry, 2t 3 U.S. 29; and Smith v. Whitney, 116 U.S. 167.
          Congress has delegated the authority to make rules
and regulations for the Government of the Army. It has placed
on the Chief of Staff, as agent of the Secretary of War, the
duty of supplying the Army of the United States. Army Post
Exchanges have been established pursuant to such authority
for the purpose of supplying to the Army personnel certain
commodities not supplied by the Army itself. We believe,
therefore, that the regulations issued concerning Army Post
Exchanges were promulgated under the authority of Congress.
Our opinion in this respect is bolstered by the fact that from
time to time Congress has appropriated money for the construction
and maintenance of buildings to be used as post exchanges.
Another Congressional recognition of the existence of Post
Exchanges existing by order of the Secretary of War is the
Honorable Georgs H. Sheppard, Page 8, (O-4392)

Buck Resolution which was passed by th4 76th Congress,
Third Session. It reads in part as follows:
          "Section 3. (a) * * *
          "(b) A person shall be deemed to be an
    authorizpd purchassr under this section'only
    with respect to purchases which he is permitted
    to make from commissaries, ship's stores, or
    voluntary unincorporated organizations of Army
    or Navy personnel, under regulations promulgated
    by the Secretary of War or the Secretary of the
    Navy. "
The cas4 of United States v. Cordy, 58 F. (2d) 1013, is au-
thority for the proposition that Army Post Rxchanges are main-
tained pursuant to statutory authority. The court stated as'
follovs:
         "Armv Post Rxchanzes are mediums established
    and maint&ned by army-regulations,
    statutory authority, for the convenience
                                        -    o
    officers snd.enlisted men whereby. at reasonable
    cost to them, certain creature comforts in th4
    vay of clothing, food, etc., as well as recreation
    and amusement, not otherwise provided by regu-
    lations, may be secured." (Rmphasls ours)
          There is a conflict between the courts which have
passed on the question of whbther or not these exchanges are
governmental instrum4ntalities. ti 1921 the Circuit Court
of Appeals, Fourth Circuit, decided the~case'of Keank v.
United States; 272 Fed. 577.   The.Court consisted of two
Circuit Judges snd one District Judge. The District Judge
wrote the main opinion of the Court and held that an Army
Post Exchange as it was then known was not a "department of
the governm4nt" within the meaning of a Federal Criminal
Statute concerning conspiracies to defraud the United States.
One of the Circuit Judges, howev4r, concurred in the reversal
of the trial court's decision but disagreed with the majority
of the Court as to the status of a post sxchange. Circuit
Judgs Woods stated as follows:
            q * * * The system of post exchanges vas a
     government undertaking of the War Department and is
     universally rscognized as sn adjunct of that depart-
     ment. It had its foundation and has its existence
     in an order of the Secretary of War for the pro-
     motion   of the welfare of the soldiers of the United
     States army. Regulations for the managsment of all
     post exchanges 8~4 prescribed by authority of the
Honorable George H. Sheppard, Page 9, (O-4392)

     President, as Commander in Chief of the Army,
     through the Secretary of War. The exchanges
     are conducted by officers and soldiers desig-
     nated and assigned as such under authority of
     the Secretary of War to perform that official
     military duty. Every post commander is re-
     quired by the regulations to institute a post
     exchange. No soldier or other person has any
     authority or control of the affairs of post
     exchanges, except by military order. The
     regulations for their management have force of
     law under Section 161 of the Revised Statutes
     of the United States. U.S. v. Eaton, 144 U.S.
677, 12 S. Ct. 764, 36 L. Ed. 591; U.S. v.
     ;;st;;;423' U.S. 515, 34 sup.ct. 666, 58 L.
       .     .
          "The mere:facts that the government does not    ..
     assume the debts or claim the profits, and that
     soldiers are not r4QUir4d to join the post ex-
     changes, are not controlling; for even the distri-
     bution of their profits and assets and the pay-
     ment of their debts are regulated by the War
     Department. It can hardly be doubted that an
     officer refusing to perform the military duty
     of establishing or maintaining a post exchange
     would be subject to court-martial."
The last statement above was apparently made in snswer to the
factor relied on most by the majority of the court; that is,
that the United States Government was not liable for the debts
nor entitled to the profits of the post exchanges.
            In 1933 the Supreme Court of California decided the
case of People v. Standard Oil Co. of California, 22 Pac.
(2d) 2. The Court held that Army Post Exchanges were volun-
tary, unincorporated, cooperative associations for whose debts.
the government was not liable.. Therefore, the Court con-
cluded, sales   of gasoline to them were not sales "to ths
government of the United States or any department thereof for
official use of ,said government." The Supreme Court of the
United States reversed the California Supreme Court in
Standard Oil Co. of California, 291 U.S. 242, 78 L. Ed. 775,
on the grounds that the military reservation grounds had
been ceded to the United States and, therefore, Californials
tax was not collectible thereon. The court did not pass on
the status of an Army Post Exchange, however.
          Later in 1933 the Circuit Court of Appeals, Fifth
Circuit, decided the case of Pan American Petroleum Corporation
Honorable George H. Sheppard, Page 10, (O-4392)

v. Alabama, 67 Fed. (2d) 590. The question involved in
the case was the right of Alabama to tax gasoline sold to
post exchanges. The Court concluded, first, that the
Alabama tax became due and payabls upon the withdraw1 of
gasoline from storage within the state whether the same
be for sale or other use. Secondly, the Court relied on
the California Supreme Court case of People v. Standard
Oil co., supra, and stated as follows:
            ' * * * Furthermore, a post exchange is,
     of cours4,   not the government; nor is it a de-
     partment or instrumentality thereof. On the
     contrary, a post exchange is a voluntary, un-
     incorporated, cooperative association of army
     organizations in which all share as partners
     in the profits and losses. !I%4 government has
     no shars in the profits, and is not bound by
     the losses. We are therefore of opinion that
     salas   made by appellant to the post exchanges
     at Camp McCellsn and Naxwell Field are not ex-
     empt from the stat4 exise taxes.
     Standard Oil Co. (Cal. sup.) 22 P.p9$e2v;
          In 1937 the Federal District Court, Eastern Dls-
trict, South Carolina, decided the c&s4 of United States v.
Query, 21 Fed. 3upp. 784. In that case the court passed
on the status of Civilian Conservation Corps camp exchanges
whfuh were established by speciffc congressionsl authority
to perform the same service and purpose that Army Post Ex-
changes serve in the Army. !I314 Court concludsd as follows:
          "in performing its constitutional functions,
     the United Statea must operate through sn in-
     stmuaentality or agency. Here It operates through
     the agency of ths camp exchange as an integral
     part of the Civilian Conversation Corps. The tax
     falls directly upon the camp exchange and the
     provisions of th4 state statute directly affect
     this instrum4ntality of the federal governm4nt
     selected for the exercise of its powers. The
     state tax in effect is upon the government's
     transactions in tha exercise of its lawful pow-
     4r. The Civilian Conservation Corps camp ex-
     change is of such a character and so intimately
     connected with the exercise of the operation of
     the Civilian Conservation Corps, the,exercise of
     a powtr granted by the Act of Congress authorized
     by the Federal Constitution, that it is such a
     direct interference with the functions of the
     government itsslf as to be clearly beyond the
     taxing power of the state."
Honorable George H. Sheppard, Page 11, (O-4392)

          In March, 1941, the same District Court decided
another case also styled United States v. Query, reported
In 37 Fed. Supp. 972. Excerpts from the Court's opinion
concerning the facts surrounding the operation of post
exchanges and their history have been previously quoted
herein. The Court made what we think is the most thorough
analysis of the status of Army Post Rxchanges mad4 in any
of the cases and concluded that they were Federal ln-
strumentalities. On June 27, 1941, the Circuit Court of
Appeals, Fourth Circuit, affirmed the judgment of the lower
court upon the opinion of the District Judge. See Query v.
United States 121 F. (2d) 631.~ Application for writ of
certiorari vas made in which both parties asked the Supreme
Court of the United States to review the case snd pass on
the question bscause of Its public importance. On Rovember
17, 1941, the Supreme Court denied the petition. It is
important to note that the same Circuit Court of Appeals
that affirmed the Query case decided the K4sne case back In
1921. In effect, therefore, the earlier case is overruled
on this point.
          After the Query case had been decided in the
District Court, but prior to the time the Supreme Court
denied application for writ of certiorari therein, tht
Supreme Court of California decided the case of Standard
Oil Co. of California v. Johnson, 119 P. (2d) 329. The
California Court reviewed the .authoritiesand concluded
as follows:
          "It seems to us after a study of the
     authorities upon the.question before us, that
     the great weight of authority is,in favor of
     the riilingof the trial court, holding that an
     army post exchange is not an instrumentality
     or department of the federal government, but
     on the other hand, 'is an organization largely
     engaged in business of a private nature and
     that sales to it should not be beyond the reach
     of the taxing pover of the state wherein it is
     located.' People v. Standard Oil Company of
     California, supra, 218 Cal. at page 128, 22 P.
     (2d) at page 4."
          All of the cases that hold post exchanges not to
be Federal instrumentalities seem to base their conclusion
on the assumption that they are voluntary cooperative
associations in which the United States has neither a share
In the profits nor is liable for the loss4s.  While it is
true that the Army Regulations specifically provide that
the creditors of an exchange may not look beyond the assets
Honorable George PI. Sheppard, Page 12, (O-4392)

of ths exchange for the satisfaction of their debts the
expenditure of the profits in certain specific ways to
inure to the benefit of the Army is also required. In
this way the United States Government is receiving the
profits just as much as if they vere deposited ln the
Federal Treasury, in our opinion. In this connection we
agree with the statement of the Federal District Court in
Falls City Brewing Co. v. Reeves, 40 F. Supp. 35, as
follows:
          ' * * * It is clear from the facts in
    this case that a Post Exchange Is an integral.
    part of sn army organization and is au es-
    sential factor in military life. They are not
    purely voluntary org.anizations,as is con-
    tended by the State in this case, but they are
    set up, organized and operated pursuant to
    military authority. It is the duty of the
    commanding officer of the post to establish
    and maintain a post exchange whenever there
    is a need for it; the duties of a post 4x-
    chsnge officer are his official duties as an
    army officer, and he receives entire compen-
    sation for the performance of these duties in
    the salary received by him from the United
    States Government as an army officer. The post
    exchange officer, the post exchange steward,
    and the post exchange assistants perform their
    respective duties under official assignments of
    duty; the option does not exist for them to re-
    fuse the assignment. The Post Exchange occupies
    a building constructed and maintained by the
    Federal Government and equipped with federal
    funds. Ths general welfare and morale of the
    personnel In a military training camp 1s a very
    important part of any military program looking
    -to a well-trained and efficient army. The view
    is nowvmll established that adequate recre-
    ational facilities for soldiers in training are
    as important   as adequate drill fields. Much
    energy and large expenditures are devoted by
    those in civilisn life in providing such.faclli-
    ties for soldiers in nearby posts. Some 4x-
    penditures for this purpose come by way of
    directsappropriations by the United States Con-
    gress, but a large portion can be attributed to
    the proceeds that are made available by the
    operations of the Post Rxchsnge, which proceeds
    inurs  .to the benefit of the Government thereby
    relieving the Government from additional appropri-
    ations to this extent. * * * Considered ln this
Honorable George H. Sheppard, Page 13, (O-4392)

     light it is certainly a subordinate or
     auxiliary agency and falls easily within
     the accepted definition of an lnstrumental-
     ity of the United States."
          Hovever, even if the statement frequently used by
some of the Courts were true that post exchanges are volun-
tary, unincorporated associations in whose profits the
Government has no interest and for whose losses the Govern-
ment is notliable, w4 still do not understand that this
would.prevent them from being Government instrumentalities
if, as we conclude, they are performing a Governmental
function undtr Congressional authority.
           These recent Federal cases ar4 in accord with the
recent Federal administrative rulings. On August 5, 1939,
Acting Attorney General of the United Statss, Robtrt PI.
Jackson, ruled that Army Post Exchanges were Government
instrumentalities and he cited the additional cases of Thomas
B. Dugan v. U. 5. 34 Ct. Cls. 458, and Henry Woog, Adminis-
trator, vs. U. S., 48 Ct. 01s. 80. The Social Security Tax
Unit, Bureau of,~Internal Revenue, has ruled the same way.
See 298-s.s.‘P. 269. The Army Regulations themselves, pro-
mulgated by order of the Secretary of War, state that 4x-
changes 4x4 Governmental instrumentalities.
          In reaching our conclusion w4 arc inclined to
follow the r4cent Fsderal decisions rather than the older
cases and the California 3upreme Court. We do so for two
reasons. In the first place the question discussed herein
is essentially a Federal question and the interpretation
placed on such a question by the Federal courts and by the
Federal administrative agencies should be given more weight
than the decisions of a state court. This is especially
true because the case of United Statss v. Query, supra,
directly passed on this question and the Supreme Court of
the United States denied an application for writ of
certiorari in November, 1941. We adopt this vitw for the
second reason that in our opinion a full  analysfs of the
operation of Army Post Rxchanges leads to the conclusion
that they are Federal instrum4ntalities perfoiming a
necsssary and vital Governmental function under Congressional
authority. As such they are exempt from the payment of the
Texas Chain Store Tax.
          Our Opinion No. O-2317, which was written prior
to the decisions in th4 Query case and the Falls City
Honofable George H. Sheppard, Page 14, (O-4392)

Brewing Company case, insofar as the ssme holds post 4x-
changes not to be Federal lnstmunentalltles, is hereby ex-
pressly overruled.
                                 Yours very truly
                            ATTORNEY GENERAL OF TEXA3
                            By   /$/ Billy Goldberg
                                     Billy~G;;~;~
BG:ej:eac

             13, 1942
A.PPROVED,F'EB                          APPROVED
                                         OPINION
/a/ Grover Sellers                      COMMITTEE
FIRST ASSISTANT                         BY B.W.B.
ATTORI?EYGEI'?ERAL                      C-