,,. .




                           TEIEATTORNEYGENERAL

                                       OFTEXAS
                                      Ausnni   1s. We
        WILL      WILSON
    A’XTORNEY       GENERAL            October 6, 1960

           Honorable Robert S. Calvert             Opinion No. w-949
           Comptroller of Public Accounts
           Capitol Station                         Re:   Constitutionality of
           Austin, Texas                                 occupation tax as levied
                                                         by Art. 19.01 (8), H.B.
                                                         11, 3rd C.S., 56th Leg.
          Dear Mr. Calvert:                              (Title,l22-A, R.C.S.)
                You have requested that we advise you upon the constitu-
           tionality of Art, 19.01 (8), H.B. 11, 3rd C.S., 56th Leg.
           (Title 122-A, R.C.S.), which reads as follows:
                            "Nine and Ten Pin Alleys. From every
                         person, firm, association of persons, or
                         corporation, owning or operating for profit
                         every nine or ten pin or other alley, by
                         whatever name called constructed or operated
                         upon the principle of a bowling alley, upon
                         which pins, pegs, balls, rings, hoops, or
                         other devices are used, &    where the player
                         thereof does not or is -+--
                                                 not re uireno   make
                         aa.Ud=i~-~      causin an e ec r cal connec-
                         mn    of a; nature or kind before such game
                         m   & actually commenced, there shall be
                         collected an annual tax of Ten Dollars
                         for each track or alley." (Emphasis aidAil;))
               We understand that a contention has been made by certain
          taxpayers that this article is violative of,Secs. 1 and 2 of
          Art. VIII, Constitution of Texas,l and that you desire our
          opinion upon the question so that you can determine a proper
          assessment of taxes upon this group. Our conclusion is that
          the questioned provision is not violative of the cited constitu-
          tional limitations. For clarity in discussion Where    set out
          a brief review of the events culminating in this request:
                The emphasized portion of ,Art. lg.01 (8) above excludes
           from the tax machines sometimes referred to as "coin-operated
           1
            Sec. 1:       "Taxation shall be equal and uniform. . . ."
               Sec. 2:    "All occupation taxes shall be equal and uniform
                          upon the same class of subjects within!,thelimits
                          of the authority levying the tax;. a .
Honorable Robert S. Calvert, Page 2     Opinion No. WW-949


bowling machines."2 Prior to February of 1958, an occupation
tax was levied upon owners of such machines under the provisions
of Arts. 7047a-2 et seq., V.C.S., levying a tax on certain
coin-operated machines. These provisions insofar as here
material were carried over substantially intact as Chapter 13
of the new Title 122-A, from which we quote the following
definition:
          "The term ~skill or pleasure coin-
        operated machines' means every coin-
        operated machine of any kind or character
        whatsoever, when such machine or machines
        dispense or are used or are capable of
        being used or operated for amusement or
        pleasure or when such machines are operated
        for the purpose of dispensing or affording
        skill or pleasure, or for any other purpose
        other than the dispensing or vending of
        'merchandise or music' or 'service' ex-
        clusively, as those terms are defined in
        this Chapter. The following are expressly
        included within said term: marble machines,
        marble table machines, marble shooting
        machines, miniature race track machines,
        miniature football machines. miniature golf
        machines, miniature bowling-machines, and
        all other coin-operated machines which
        dispense or afford skill or pleasure."
        (Bnphasis added.)
     Article 13.02 declares the amount of tax to be levied,
from which we quote:
           "(1). . . .
           "(b) A fee of,Sixty Dollars ($60) shall
         be paid on each 'skill or pleasure coin-
         operated machine' where the coin, fee or
         token used, or which may be used, in the
         operationthereof is one of the value in
         excess of five cents (5qi) or represents a
         value in excess of five cents (54)."

2
 These machines are ordinarily from 10 to 20 feet in length.
The player deposits a coin, usually a dime, which activates
the mechanism for play. At the far end of the machine pins
are automatically spotted, whi.chthe player attempts to knock
down with the small balls provided.. Scoring is by means of
an electric scoreboard either on or near the machines.
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        Honorable Robert S. Calvert, Page 3     Opinion No. WW-949


             On February 10, 1958, a rather cryptic judgment was
        entered by the Justice Court, Precinct 1, Place 1, Dallas
        County, Texas, in Cause No. 59286, in which one Fred Weeks
        had been charged with displaying a "Shuffle Alley" without
        a valid license. Apparently the license referred to was that
        authorized to be issued by the Comptroller's Office to evidence
        pa ent of the coin-operated machine tax under the then Arts.
        70r7a-2 et seq., V.C.S. This judgment held the defendant not
        guilty of the alleged misdemeanor "for the reason that,the
        devices alleged in the complaints were not in the scope and
        are not covered by Article 7047a-2 to Article 7047a-18, R.C.S.,
        also known as the Texas Coin Operation (sic.) Machine Tax Law,
        as the offenses alleged do not come under the specifications
        of the Law being machines and instruments not covered under
        this Law." Following this statement, a bit of dictum is
        indulged In, stating that "If any Tax at all is to be collected
        it should be for an Occupation Tax and not under the present
        Texas Coin Operated Machine Tax Law."
             Apparently in observance of this judgment and as a result
        thereof, owners of such machines were, from that time, con-
        sidered taxable under the provisions of Art. 7047, Section
        36, the predecessor of the presently questioned Art. 19.01(8),
        which subdivision then read as follows:
                   "Nine and Ten Pin Alleys. From every
                 person, firm, association of persons, or
                 corporation, owning or operating for profit
                 every nine or ten pin or other alley, by
                 whatever name called, constructed or operated
                 upon the principle of a bowling alley, upon
                 which pins, pegs, balls, rings, hoops or
                 other devices are used, there shall be collected
                 annual tax of Ten Dollars ($10) for each track
                 or alley, provided, however, that said tax
                 shall not exceed One Hundred Dollars ($100)
                 in any such year. Acts 1917 'p. 385; Acts 1943,
                 48th Leg., p. 654, Ch. 372, & 1."
             This subdivision was expressly repealed by Sec. 7(b) of
        the new Title 122-A, being replaced by Art. 19.01 (8). Com-
        paring the two provisions it will be seen that they are
        identical, except that (lj the exclusionary language in
        question was added, and (2) the limiting proviso at the end
        of the section was removed. Your specific question, reiterated,
        is whether or not the Insertion of this exclusionary clause now
                                                                   -   ,




Honorable Robert S. Calvert, Page 4      Opinion No. WW-949


renders the provision obnoxious to Sees. 1 and 2 of Art.
VIII, Constitution of Texas, and therefore void.3
     It has long been the settled rule in this State that
the Legislature is vested with wide discretion in the
classification of occupations for the purpose of taxation.
The landmark cases in this area are Texas Company v. Stephens,
100 Tex. 628, 103 S.W. 481 (1907) and H t     C       10T
433, 110 S.W.2d 896 (1937).  Sacrificin~ampviif~~~etr;m?or "t$
sake of brevity, we will forego extensive quotation from these
authorities. It is sufficient to state that this legislative
discretion will only be questioned where the classification
is clearly arbitrary.
     Looking at Art. 19.01 (8) as independent and new legis-
lation, we think it evident that the Legislature was well
within its discretionary bounds in classifying nine and ten
pin alleys for taxation, and only taxing thereunder that class
of devices "where the player thereof does not or is not or is
not required to make a coin deposit causing an electrical connec-
tion." As said in the Stephens case, supra:
           "The mere fact that discrimination
         is made'proves nothing against a classifi-
         cation which is not, on its face, an
         arbitrary, unreasonable or unreal one."
     However,,we be,lievethat there is a further justification
of this provision as it now exists. As stated, until February


3
 It appears from your request and from subsequent conferences
that the taxpayers involved put forth the following proposition:
If, as they contend, Art. 19.01(8) is unconstitutional,,its
companion repealer provision, repealing the original Art. 7047,
Section 36, also fails, thereby leaving the original provision
in full force and effect. Authorities are cited in support of
this theory. In view of our decision, we deem it unnecessary
to discuss this contention further than to here set it out.
We do point out, however, that their view presupposes automatic
re-establishment of the original status quo; that is, that your
office will continue to classify the machines in question as
falling within the definition of "Nine and ten pin alleys"
instead of within the definition of "skill or pleasure coin-
operate'dmachines."
.   -




        Honorable Robert S. Calvert, Page 5     Opinion No. WW- 949


        of 1958 the class of coin-operated bowling machines described
        above were considered as and taxed as coin-operated machines.
        Such action received the implied approval of the Legislature,
        through acquiescence. Associated Indemnity Corp. v. Oil Well
        Drilling Co., 258 S.W.2d 523;aff'd. 153 Tex. 153, 264 S.W.2d
        697 (1953); Texas & N.O.R. Co. v. Railroad Commission, 145
        Tex. 541, 200 S.W.2d 626 (1946). However, when an abrupt
        change was made in that year, and such devices were suddenly
        considered taxable as "Nine and Ten Pin Alleys," the very next
        session of the Legislature found it necessary to further clarify
        their intent in this area. Since the coin-operated machine
        tax provision had already long contained language including
        "miniature bowling machines," the Legislature apparently felt
        that any further clarification should be made by language
        specifically excluding the group of devices under consideration
        from the scope of the nine and ten pin alley tax. The result
        was the addition of the questioned clause in Art. 19.01(8),
        not as an exception provision, but rather as an indication
        that it did not intend the class 'nine and ten pin alleys" to
        include the devices described.
             We have been referred to several cases holding attempted
        classification for tax purposes unconstitutional under Sets.
        1 and 2 of Art. VIII of the Constitution. We have likewise
        found many cases upholding questioned classifications. These
        are all, in effect, specific applications of the rule expressed
        by the Stephens and Cooper cases. Although each would bear
        in some degree upon the present question, a review of them
        would unduly len then this opinion. As stated, we believe
        that Art. 19.01 78) is a sound exercise of legislative dis-
        cretion and not obnoxious to the cited constitutional sections.
             A supplement to your original request herein has recently
        been received by us, containing two further questions. The
        first such question is as follows:
                  "I . Can two or more coin operated
                machines that are bolted together,
                boarded together, or connected in any
                like manner, having separate coin chutes
                and each machine operating individually,
                operate under one license or will each
                machine be required to have a license?"
             Chapter 13 of Title 122-A clearly contemplates a tax
        upon each coin-operated machine within its scope. The license
        referred to, of course, signifies payment of the tax (Art. 13.06).
        To allow evasion of the tax by so frail a subterfuge as bolting
        or boarding together two or more of these machines would be
Honorable Robert S. Calvert, Page 6      Opinion No. WW-949


a mockery of the plain legislative intent. You are there-
fore advised that, under the situation described in your
question, each machine ~~111be required to have a license.
     Your second supplementary question makes the inquiry
           "2 . Does the Attorney General Opinion
         No. S-122 and No. V-986 apply to the
         revision of the coin machine law now
         found in Chapter 13 of 122A-'Taxation-
         General'?"
     Opinion No. V986 (1950) held that a coin-operated
electric scoreboard used to score suffleboard games is not
  "service coin-operated machine" and that the "owner" there-
tf is required to pay the o'ccupationtax under Articles 7047a-
2--7047a-18 (now Chp. 13, Title 122-A), V.C.S. You are advised
that this Opinion is still applicable to the present law.
     Opinion No. S-122 (1954) held that coin-operated machines
which are installed solely as services to customers of various
business establishments are "service coin-operated machines,"
within the definition of that term as used in Arts. 7047a-2
and 7047a-4 (now Arts. 13.01 (6) and 13.03, Title 122A,) V.C.S.,
and therefore not subject to tax. Of course, any machine which
dispenses service only and not merchandise, music, skill or
pleasure is specificall exempted from the coin-operated
machine tax (Art.,l3.033 ; however, this would, in every case,
be a question of fact. Even in situations similar to that
prompting Opinion No. S-122 there could exist widely varying
circumstances, which would determine whether such machines
as discussed therein were being furnished solely as services
or whether they were for the ,purpose of dispensing "skill or
pleasure." Therefore, in the absence of a particular fact
situation, we are unable to make a categorical statement con-
cerning the applicability of Opinion No. S-122.
                   ,SUMMARY

              Art. 19.01 (8), H.B. 11, 3rd C.S.,
         56th Leg. (Title 122A, R,C.S.) is not
         violative of the provisions of Art. VIII,
         Sees. 1 and 2, Constitution of Texas.
         When two or more separate coin-operated
         machines, subject to the tax imposed by
         Chp. 13, Title 122A, are joined together
         by some method, each machine is still
Honorable Robert S. Calve?.+,Page 7     Opinion No. SJW-949


         required to have a license evidencing
         payment of the tax. Attorney General's
         Opinion No. V-986 is still applicable
         to the provisions of Chp. 13, Title 122A;
         Attorney Oeneral's Opinion No. v-986 may
         be applicable to specific situations
         arising under this Chapter.
                          Yours very truly,
                          WILL WILSON
                          Attorney General of Texas




JRI:cm
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
Martin DeStefano
Elmer McVey
Iola Wilcox
REVIEWED FOR THE ATTORNEY GENERAL
By:   Leonard Passmore
