  k
  r’            OFFICE   OF THE ATTORNEY GENERAL         OF TEXAS
                                   AUSTIN
   9
   O”OYIR SLLLCII               ;
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1 rFO”*L* o=*r”C‘



        Hon. Geo8. H. Sheppard
        Comptrol ,ler of Public Aooounts
        Austlni~ Texas
        Dear Sir ':




                                                       s depar tlbdas    b0
                                                       ntraotor, for grow
                                                       11 8 of the 47th
                                                      tter la quoted in'

                                                      f the 47th Legislature
                                                       reeslpts   earned by
                                                       lrOhaptrr    277, Aots
                                                       egldhature.
                                             Q business as 0. S. Weeks
                                             rth, Texas., operates under
                                             ermlt Wo. 11509.    Taie oon-
                                              U. 9. War Department,
                                           ey haul perishable   merohandlse,
                                rnment seals, between Fort Worth Quarter-
                                 various Texas Army oamps.
                                Work Market Center Is one of five in Texasr
                                 the various ouaps In its territory      requlsi-
                                e in speolflc   amounts, for dellveriss,    at
                            es;   These requisitions     are supposed to reaoh
              the Fort Worth Center at least twenty days before the
              expeoted date of delivery     to the various   oamps. The Fort
              Worth Center supplies either oamps too small to buy in
              oarload lots,  or fill  in orders between oarload shipments
              to the larger oamps.
                                                                              650


       ,Eon. Geo. H. Sheppard,   page 2


                    *Mr. Weeks states that 90$    of    al.J. goods handled
             at the Fort Worth Center originate        from without the
             State.
                    “I am herewfth handing you a brief submitted by
             the attorney f’or bbr. K’eeks. Kx. Yeeks oontends that
             his operations  are Interstate  and that he 1s not liable
             for the gross reoelpts    tax.
                    “Your Department has previously ruled on two
             oooaslons with referenoe to oontraot motor oarrlera
             who oontended they were operating Interstate,  and I
             reier you to your Opinions O-5335 and O-5468, of which
             I am enolosing oopies.
                    “1 wIl1 appreciate It if   you will give me your
             opinion as to the tax llablllty    of C. S. Weeks, TruokIng
             Contraotor.”
                   The answer to your question must depend upon whether,
       under the state of Paots applloablo   to Weeks operations,  he IS
       engaged In interstate  or intrastate  oommeroe as to the oommodl-
       ties transported by him. If Interstate,    then oonoMedlyln0::~
       tax is due. We have reaohed the oonolusion    that all the oommodl-
       ties transported by Weeks havirig a point of origin without the
       State are ininterstate   oommeroe, and, therefore,   the gross
       receipts  therefrom exempt from tax.
‘1.                 lia reaching this oonoluslon,  we have not been uomInd-
       ful   of thebreak In the shipments at Fort worth, from *hIoh
       point Weeks begins his transportation.     Unless this bre& 1s
       of suoh nature as to convert the shipments from Interstate      Into
       Intrastate fin prooeedlng from Fort Worth, we mus.t still   treat
       the shipments as interstate.    Does suoh a transition   take plaoe
      -at Fo.rt Worth? We think not.

                   One oogent faotor must be kept In mind, and that IS
      that Fort !Vorth is merely the central situs      for distribution
      Or the products    by one government agenoy to another, and not
      a point of ultimate d&stInatIon.      The respective     Army oamps
      t0 whioh ‘ the produots are distributed   OonstItute the fIna1
      destination;   and thi$ fa ire understood by all the parties,
      whioh unders%andIng is oonsumaated in truth and in fact,           To
      OonJluda otherwise we would hnve to substitute        form for sub-
      stanoe, fiction   for truth.    In thus oonoluding,    we are not
         Hon. Geo. H. Sheppard,      page 3
.~

     1




         unmlndtul   that   our Courts, Including the Supreme Court of
         the United States, reoognlze a dlstinotIo!z      in tar oases
         from other fields wherein only reasonable and eolltary
         regulations   may be involved.     This 1s manliest rrom the
         following   taken from the aaae of Stafford    v. Mllaoe.
         (Supreme Court of the United Stat+)       23 A. L. R. 229, quot-
         ing with approval from Swirt & Co. v. U. S., 49 L. Ed. 518:
                      *‘But we do not mean to imply that the rule
              rhIoh mark6 the point at whloh state taxation or
              regulation    beoomer permissible  neoesserl%y 1s bayon@
              ths eoope or lntsrferenoe     by Congress where suoh Inter-
              ferenoe 1s deemed neoessary for the proteotlon     of oom-
              meroe among the et&es.*
                      ".    . .
                     **The questlon, it should be obnervsd, Is not with
              respeot ~to the extsnt of the pewer of ~Oongress to rag?-
              Zate' Interstate oom5sro0, but whether a partloular  exer-
              else of state power, ln view @ lts~ natme and opmtlon,
              aust  be deemed to be In cionfllot with this paramount
              authority.'"
                      Rut the Court In this   same ease said:
                     *Moreover, it will bb poted that even ln tax oases,
              where the tax is dlreoted &alnst     a oomamdlty in aa a&u&
              flowing and oonstant stream out of a state, from whloh the
              owner may.wlthdraw part of It for use or sale ln the state
              before it reaohes the state border, we hava.held that a
              tar on the flow 1s a burden on interstate.oolllmeroe    whloh
              the state may not impose beoause euoh flow I.n interstate
              oommeroe 1s an established    ooutse of buslnese.    United
              Fuel Gas Co. v."Ekllanan,    deolded Deoenber 12, 1921 (257
              U. S. 277, 66 L; ed. 234, 42 Sup. Ct. Rep. 105); Eureka
                                 Xallanan   deolded Deoember 12 1921 (257
              ~?~.%$,%       z: 'ed. 227,'42 Sup. Ct. Rep. 1011. . . .a
                     Th& very recent ease of Walling v. Jaokeonvllle
         Paper Co.,(Supreme Court of the Unitsd Statee) 87 L. Ed. 393,
         makes clear the rule whioh we think applioable  to this 0868.
         ne quote:
$   Bon. gee.   H. Sheppard,    page 4


                   “The Adk&nIstra.tor oontends in the’ first        plaoe
           that under the deolslon below any pause at thv ware-
          house is suffloient      to deprive the remainder of the
           journey of its Interstate      status.    In that oonneatlon
          it 1s pointed, out that prior to this litigation            re-
          spondent’s    truoks wou.1.dpick up at the terminals of
          the interstate     oarrlors goods destined to speoiflo
          oustomers,    return to the warehouse for oheoklng and
          prooaed Immediately to the oustomer’s p&aoe of business
          without unloading,       That praotloe was ohanged;         The
          goods were unloaded from the truoks, brought into the
          warehouse,, oheoked, reloaded,       and sent on to the
          oustomer during the same day or as early as oonvenlent.
          The opinion of the Ciroult       Court of Appeals la susoeptible
          of the Interpretation      that such a pause at the warehouses
          1s sufriolent     to make the Aot lnapplloable       to the subse-
          quent movement of t&e goods to their Intended destination.
          We believe,    however, that the adoption ,of that rig           ;;uld
          rssulult ln too narrow a oonetruotlon        of the Aot.
          oXear that the purpose of the Aot was to: extend federal
          oontrol ln th.ls field     throughout the farthest       reaohee
    ..    of tha ohannels of lntrrstate        oommeroe~. There Is no
          lndloatlon    (a art from the exeunptlons oontained in 0 13,
          29 USCA 0 213B that, once the goods entered the ohannels
          of Interstate     oommeroe,Congress stopped short of oontrol
          over the entlre movement of them until tholr Interstate
          journey was ended.. ~Noritual of plaalng goods. In a ware-
          house oan be allowed to defeat that purpose.             The entry
          of the goods into the warehouse Interrupts           but does not
         .neoeasarlly    terminate   their interstate     journey.     A tern-
          porary pause In their transit ~does not mean .fhat they
          are no longer ‘in oommeroe* within the meanlng of the Aot.
          As In the oaee of an agenoy (of. De Loaoh v. Growley’s,
          Ino. (WA 5th) 128 F(2d) 378) if the halt In the movement
          or’the goods Is a oonvenlent Intermedlate’step            ln the
          prooess of getting them to their fIna           destinations,      they
          remain *In oomceroe* until they reaoh those points.                Then
          there Is a praotioal      oontinulty    of laovenuvnt of the goods
          until they reach the customers for whom they are Intended.
          That is suffloient,       Any other test would allow formalities
          to oonoeal the continuous nature of the interstate              transit
          whi.oh aonstitutes    oonvneroe.
Ron. Gee. H. Sheppard,    Page 5


              "        Ii thsre Is a praotioal     oontlnulty   of
     movemen; &m the menufaoturers or suppliers without
      the state, through respondent's         warehouse and on to
      customers whose prior orders or oontraats are being
      filled,   the interstate    journey Is not ended by reason
      of a temporary holding of the goods at the warehouse.
     The.faot that.respondent       may treat the goods as stook
      In trade or the olroumstanoe that title          to the goods
     passes to b&apondent on the intermediate           delivery does
     not mean that the Interstate         journey ends at the ware-
     house.     The oontraot or understanding pursuant to whIoh
     goods are ordered, like a speolal order, lndloates where
      it was intended that the interstate         movement should
      terminate.   . . . ."
                                                        I
              The oase of Baltimore & 0. 9. W. R. Co. v. Settle,
(Supreme Oourt of the United States) 67 L. Ed. 166, Is typical
of the rule that the intention        of the parties as to when and
where the shipment oomee to its ultimate end la of &uxmwunt
Fmportanoe In determining whether' the shipment la Interstate
or intrastate    rr0m an Intermediate point of lntsrrttptlon        or
pause wlthln the State.        We quote,from    tNs oase as follows:

             *If the intention    with whIoh the shipment was made
    had been aatually In issue, the faot that possession            of
     th6 aars was taken by the shzpper at Oakley, and that
    they were not rebilled       for several days, would have
    justified    the jury In finding that it was orIglnsJ.ly
     the intention    to end the movement at Oakley, and that
    the rebIlllng     to Madlsonvllle    was an afterthought.      But
    the defenUant Clephane admitted at the trial           thet it was
    Intended from the beginning that the oars should go to
    Maabiaonvllle; and this faot was assumed In the instrua-
    tIons~oomplaIne% of.        In other words, Madlsenvllle      was
    at all tImas the destination        of the oars; Oakley was
    to be merely an intermediate        stopping place; and.the
    original    Intention persisted     In was carried out.     That
    the interstate      journey might end at Oakley was never
    more than a posslblllty.         Under these alrcumstanoes,
    the intention,     as It was oarried out, determined, as
    matter of law, the essential        nature of the movement;
    and:hencg,that     the movement through to Madlsonville        was
    an interstate     shipment.     For neither through billing,
    uninterrupted movement, oontinuous p,ossessIon by the
    carrier,    nor unbroken bulk, is an essential       of a through
    Interstate    shipment.     These are aommon Inoldents of a
         ~$,
          ?.
               eon. &SO. H. Sheppard, page 6


                   through shipments and when the Intention with whloh
                   a shipment was made ia in leaue, the preeence or
/,                 absenoe of one or all of these inoldentsmay be
     I             Important evidenae bearing upon that question. But
                   where it is admitted that the shipment made to the
     I
                   ultimate destinationhad at all times been intended,
                   these lnoldente are without legal slgnlflaanoeas
                   bearing on the oharaoter or the tratrlo. For lnstanae,
                   in many oaaea involving tranelt or reoonalgnment
                   prlvile~ea In blanket territory,moat or all oi theee
                   lnoldenteare absent, and yet the through interstate
                   ttdfr8  applp."(oltlngoases)
                         To the %ame effect la the oase of Blndsrup '1.
               Pathe Erohange, 68 L, Ed..308, (SupremeCourt of the United
               Statee) In the r0n0wing languager
                         "The Intermediatedelivery to the agenoy did not
                    end, and was not Intended to enU, the movement at the
                    oommodity. It was merely halted ae a oonvenlentatop
                    In the prooeae or getting It to Its rlnal deatlnatlon.
                    The general rule Is that.where transportationhas
                    aoqulred an lnteratateoharacter, *It oontlnues at
                    lea& until the load reaohee the polntwhere the partlee
                    origlnally intended that the movement ehoald finally
                    end."' (Loo. Cit. 68 L. Rd. 3161
                          We deem the foregoing eufiloient to support our
               oonolu~~lon that the operations of a. S. Weeks, under the
               ?aots submitted, are not subjeot to gross receipt8 tax
               lmpoeed by Artlole 14 of House Bill No. 8, Aota of tthe
                 7th Leglslature ineoiar as applicable to the produots
               4 perishablefruits and vegetables) ahlpped from without
               the State, and henoe interstate shipmenta; but a8 to that
               portion of the shipments,whether ten per oent, more or
               less, originatingwithin the State, and admittedly lntra-
               state, the tax la due and owing by 0. S. Weekrr,and you
               are accordingly80 advised*
                                                   Y0ur.every truly
