Honorable George H. Sheppard
Comptroller~of Public Accounts
Austin, Texas
Dear Sir:                OpinionNo. O-4263.'       -
                         Re: Liability of a corporation organ-
                              izea 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,
                             :'ofnew radios.
           Your letter of December 9, 1941, submits-.forour
opinion the following question and supporting factual sltuatlon,
w~hichwe 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,mlnaivlauals 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 re-
    jects the same. If accepted the raalo is sene direct
    to the purchaser c.o.6. for the balance au&;'-'-Iio
                                                     de-
    liveries are ever made by the salesmen, and none of
    the merchandise is stocked or warehoused in Texas.
           "Is the corporation due the t.axrequired by
    Article X~of H.B. 8, Regular Session.'ofthe Fortg-
    seventh Legislature?"
          ,.A-planor system of business operation,~identical to
the above, tiasbeen heretofore.submittea to state and-federal
courts of .lastresort to determine if various state sales, pri'
vileges, license or excise taxes, generally, would constitute an
unconstitutional burden upon interstate commerce under the"so-
called "commerce clause" of the Federal Constitution. These
aeclsions have SO uniformly held the method of doing business
described above, to constitute 'interstatecommerce, 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 ,fullaiscus-
slon bf the Individual case,s.'owethink it sufflces“'tostat&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'dtbe Interfered with,
    regulated; or-taxed by the state in which the nego-
    tiation 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'iion-
    resident manufacturers or dealers; drummers, or can-
    vassers, whether the orders are taken by residents
    or non-residents, and whetherthe orders are taken
    from Indlvlduals..orfrom manyfacturers or licensed
    merchants or dealers. * * *    (5 R.C.L., p. 768)

           Again at 26 R.C.L., p. 122, we find the~following per-
tinent statement:
           "A manufacturer located in one state cannot be
    required to pay a license tax for the'.privlIegeof
    placing his goods in the hands of retail dealers in-.
    aiiotherstate; and a manufacturer Iocated Inone state
    cannot be subjected to a license tax for engaging In
    the business of selling goods in another, merely be-
    cause 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 manufac-
    turers 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?quartersfor 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; Bren-
nan 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, page 3            O-4263


            The statute before us-.stems from the general tax
powers resldlng In the state and 1s not predicated upon the police-
powers of the state, as-~belngin 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, assocla-
tion br corporation selling, at retail, new radios," etc.; on
the basis-of two per cent of the'gross receipts shown by a re-
quired 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 an-
nounced in Ex parte Kimberlin, 86 S.W. (26) 717, and Sheppard vs.
ksser, 92 S.W. (2d) 219.
              We accordingly answer your Inquiry in the negative.
_.
              Trusting the foregoing fully answers sour inquiry, we
are
                                  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
