                               *%rrcaTlN   11.   -rExan
PRICE    DANIEL
,\TT”RYEY GF.NERAL
                                     January 23, 1950

         Ron. Robert S. Calvert         Opinion NO. v-986.
         Comptroller of Public Acoounts
         Austin, Texas                  Re: Whether “owner.” of
                                            coin-operated eleotric
                                            scoFcboard is subject
                                            to ocoupatlon tax lm-
                                            posed on ‘owners” of
                                            certain oofn-operated
         Dear Sir:                          machines e
                     You have requested the opinion of this oSSlce
         aa to whether the occupation tax imposed on the “owner”
         of coin-operated     vending maohines by Articles   7047a-2 to
         7047a-18,   v.c.s.,   would be applLcsble to owners of coin-
         operated electric     scoreboards used in connection wLth
         shuffleboard     games. From the file sttached to your FO-
         quest we have gathered the following      Sects with regard
         to such scoreboards.
                    The Regal Electric   Scoreboard is advertised
         as havLng the following   features:   “Wall mounting type -
         Hardwood cebinet   . e - - 4 color silk stzeen panel- D . a
         Ace lO$ coin chute - Full Anti-Cheat Protection     - Large
         easily read figures   e e V -All At a Price Which Will Be
         More TZlan Cowered By Increased Returns From Your ShuSSle-
         board *” OraQre of shuSSleboard games am queried thus:
                        ‘%hy spend so muah of your time keeping
                 tracks of ths play, and %ncome, Srom your
                 shuffleboard?    A Regal scoring unit will act
                 as an automatic collecting    device and save
                 you unlimited . o . time ana trouble    . . e
                 eltiinate   misunderstandings  over number of
                 games played- e . q It will definitely     in-
                 crease your incorae Srom your shuffleboard e’
                   The manufacturers of these machfnes contend
         that ther are not coin-opereted   amusemeE&devices inas-
         much as they are not games and do not oontrol the play-
         ing of shuffleboati  but merely register   the scores end
         supply the servloe of collection   for the merchant in
         whose eatablfshment  shuffleboard  is being played.
Eon. Robert S. Calvert,         pege 2     (v-986)


            Artlale 7047a-3 provides thet “Rvery ‘Owner’
as that term is hemfnebove defined,     who.owns, controls,
. e . or who permits to be exhibited    or displayed  . e .
eny ‘coin-opereted   machines ’ as that term is defined
herein, shall peg e . . an annual occupation tex.”
            Article  7047a-4 exempts from the tax levied
by the Act “gas meters, pay telephones,    pay toilets,
and cigarette    vending mechines whioh are now subject to
an occupation or gross receipts    tex and ‘service coin-
operated machines ’ as that term is defined,    a . a‘I
              Article    7047a-2(c)   provides .as Sollows:
           “(c) The term ‘aoln-opereted    machine’ as
     used herein shall meen end include every me-
     ohtne or device of any kind or character
     which Is operated by or with coins,      or metal
     slugs, tokens or checks,     ‘merohandise or
     music coin-operated    machines’ and fskfll   or
     pleasure coin-operated    machines ’ as those
     terms ere hereinafter    defined,  shall be in-
     cluded in such terms.”
           The statutory   definition  of a “merchandise or
music coin-operated    machine” is clearly  not applicable
to the electric   scoreboards here being consIderad.
              Sections    (e)   and (I)   of Article   7047e-2   reed
as Sollowsa
           “(e) The term ‘skill     or pleesure ooln-
     operated machines ’ as used herein shell meen
     and Inelude every coin-operated       machine of
     any Lind OF oharaoter whatsoever, when such
     aaohine or machines dispense or are used or
     are capable of being used or opereted for
     amusement or pleasure or when srrah machines
     are operated for the purpose of dispensing
     or affording    skill  or pleasure,   or SOP any
     other purpose other than the dispensing or
     vending of ‘merohendise or muslo’ or ‘ser-
     vice ’ exclusively,    as those terms are defin-
     ed herein.     The SollowIng are expressly    ln-
     eluded within seid terms marble maohines,
     marble table machines, marble shooting ma-
     ahines, minleture race track machines, mini-
     ature football     machines, mlnature golf ma-
     chines, miniature bowling maohines, and all
Hon. Robert S. Calvert,       page 3      (v-986)



       other  coin-operated   machines which dis-
       pense  or afford skill   or pleasure.    Provid-
       ed that every machine or device of any kind
       or character which dispenses or vends mer-
       chandise, commodities OF confections      or
       plays music in connection with or in addi-
       tion to such games or dispensing OS skill
       or pleasure shall be considered      as skill or
       pleasure machines and taxed at the higher
       rate fixed for such machines.
             "(S) The teno 'service   coin-operated
       machines' shall mean and include pay toilets,
       peg telephones and all other machines or de-
       vices which dispense service only and not
       merchandise, music, skill    or pleasure."
            IS the scoreboards do not come within the stat-
utory definition     of "service    coin-operated  machines" they
must automatically     be classified     as "skill or pleasure
coin-operated    machines", and the "otiner" thereof will
therefore   be liable for the occupation tax imposed by
these articles.
             House Bill 223, Acts 44th Leg., R.S. 1935, ch.
354,  p.905, which attempted to impose an occupation tax
on the "owner" of coin-operated      vending machines, was
held invalid in Sheppard v. Giebel, 110 S.W.2d 166 (Tex.
Civ.App.1937) o This Aot, which we will hereinafter         re-
fer to as the original     Act, was deolered unconstitution-
al in toto by reason of the ambiguity of those provisions
providing for payment of the tax.       Other provisions    of
the statute    were disoussed by the oourt in the course of
the opinion and because the exemption provisions         of the
original    Act and the exemption provisions   of our present
statute are very similar,     we will be guided by the court's
construction    thereof.
               The original   Act   provided,   in psrt,   as Sollowsn
               "Sec. 4.  Gas meters, pay telephones,
       cigarette   vending maohines, pay tolleta   in-
       stalled   and used for sanitary purposes, and
       all maahines engaged in vending a service are
       expressly   exempt from the provisions   of this
       Act.
             "Sec.  4a. The exemptions provided here-
       in are recognized and made by reason of the
                                                         I     .




Hon. Robert 3.     Calvert,   pege 4     (v-986)


      Sect that gas meters, pay telephones and cig-
      arette  vending machines ere now subject to
      the psyment of an occupation tax under exist-
      ing laws, end pay toilets  being service vend-
      lna machines. are not covered by the levy made
      he&by."       -
With regard to these provisions         the oourt said:
             n. * . it is manifest .that the only ma-
     chines exempted in section 4 because deemed
      lservice   vending machines' were pay toilets;
     the other
           .    _ exemptions
                           ..    named being
                                        -    _. exoluded
                                                       _    from
                                                            _
     nne tax oecause tney were already taxea unaer
     existing    laws.    While tservice vending machines'
     were exempt, the act nowhere undertook to de-
     Sine what should be deemed such machines, and
     the only type of machine named as falling              with-
     in this olass was pay toilets.           In defining the
     classes of machines to be taxed in section le
     of the act9 it is to be noted that *service
     vending machines' are not mentioned as such.
     On the contrary,       the act is limited to machines
     vending fmerchandise, oompodities,           conSections,
     amusement, or pleasure.'          It reasonably appears,
     therefore,     that it was the legislative         intent
     to include within the taxing act, other than
     maohines vending some sort of commodity or
     merchandise, only machines designed to afford
     amusement or pleasure.         Following this gener-
     al deSinition      were speclSically     named numer-
     ous mechines aoming within the terms of the
     act, the first      one of whioh was a 'phonograph'
     operated by inserting        a coin, slug, token, or
     oheck.     Rven if it be oonoeded, therefore,            that
     the appellees'      machines be oonsidered service
     vending maohines as oontradistinguished             from
     machines vending articles         of meFchandfse, the
     Sect that maohlnes vending that oharacter of
     service olassed as amusement or pleesure were
     expressly     included in the act, end, further,
     the speoific      lnolusion   of phonographs so oper-
     ated, manifests a olear legislative            intent that
     suoh machines were to be taxed and not exempt-
     ed. Manifestly        there is e clear and reasonable
     basis of classiSication        in separating this class
     of vending maehines Srom such service vending
     maohines es pay toilets,        pay telephones,       etc.;
     and such reasonable basis of classification                is
Hon. Robert 8. Calvert,              page 5     (v-986)



      suSSicient             to sustain   the validity    of the
      act.
            11
                 .   .   .



             "We think that there can be no doubt
     that there is, because of the difference      in
     the nature, manner of operation,     and purpose,
     a reasonable basis for a difference     of clas-
     sification    between the type of machines used
     merely for amusement and pleasure,     such as
     those named in section la of the act, and
     those designed to serve the public health,
     convenience,     and necessity, such as pay toi-
     lets.     That being true, the act should not
     be stricken down for that reason."
            It is noteworthy that the present act adds but
one speciSic    example, i.e.,   pay telephonesr  in its defi-
niti .on of "service  coin-operated   machines.'    (Those in-
cluded in the "occupation      tax" group in the original   ex-
emption provision    era still   given as examples of this
class in the present statute.)
             Thus we have little   or no more by way of statu-
tory definition    of a "service"   machine than had the court
in the Giebel case.      We are therefore     inclined   to adopt
the view of the court that "service"        machines are "those
deslgned to serve the public health, convenience and nec-
essity,    such as pay toilets."    We find no service of
this character in coin-operated      electric     scoreboards.    In-
deed, it is apparent that the chief service is not for
the convenience of the public but for the convenience of
the "owner" of such machines.       We further thfnk that such
service as is rendered the public by the electric            score-
boards would be that character      of service classed as amuae-
ment or pleasure and therefore      within the statutory       defi-
nition of a "skill     or pleasure coin-operated       machine".
Surely the manufacturer of these machines would not per-
mit the suggestion that they do not contribute           to the
pleasure of playing the game they are designed to score.
When so used we think they become an Integral part of
the game, rendering imaterial       the fact that the game
could be played without them. We are therefore             of the
opinion that an "owner", as that term la defined in the
Act,    of one of these machioes would be required to pay
;$e r;uFtion      tax imposed by Articles      7047a-2 to 7047a-
   ,    . D.
                                                    1   .   .




ROU. Robert 3. Calvert,    page 6 (v-986)


                          SUMMARY
           A coin-operated    electric    scoreboard
     used to score shuffleboard        games Is not a
     "service   coin-operated    machlne"; and an
     "owner", as that term is defined by Artf-
     cle 7047a-2, V.C.S.,     must pay the occupa-
     tion tax Imposed by Articles        70478-2 --
     7047a-18,   v.C.8.
APPROVED:                   YOUPSvery truly,
W. V. Geppert                  PRICE DANIEL
Taxation Division           Attorney General
Charles D. Mathewa
Executive Assistant
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