’
                                                                             871



         .OFFICE   OF   THE     ATTORNEY     GENERAL   OF   TEXAS
                                    AUSTIN




Honorable Arthur B:\%nlokerbocker
Adjutant General of Texas
Austin,  Texas
                              Opinion X0. O-7199
                              Be:   Legal status                     Guard
                                    Post Erohanges
Dear General:



                Attaohed here
     the Rar Asaete   Colporat
     sion, Fort 'ilorth, Texas
     on the status of Texas
                                                   submit to this
                                                    e with the at-


                                          ence referred to contains     a
                                          nsumer Goods Division,
                                          xas State Guard Post Ex-
                                         reek, Texas, in which Mr.

                        have been advised       by our General



     opinion from the Attorney General, or other com-
     petent authority,  that the State Guard Post XX-
     changes are lnstrumentallties   of the State.
          *It was our thou&t that inasnuah as the Amy
     Post Exahanges and the ETavyShip Serviae Stores
.    ’



    Iron .’ Arthur   B. ,ICniokerboaker - Page 2


          were.eligIble  to make purchases of surplus prop-
          erty for subsequent resale,   the same ruling would
          apply to the State Guard Post Exohanges.
                “Ii you will submit this question to the State
          Adjutant,  Brig dier General Arthur B. Kniokerbooker,
          he oan request % ruling from the Attorney General,
          and if favorable,   we shall be glad to oomply with
          your previous requsst for purohases of surplus
          property,
                 n* + *n

               In a subsequent letter   you stats that       “this Depart-
    ment has Issued  no Rules,~ Regulations,  or’orders       governing
    Post Exohanges of the Texas State Guard.”
                The Texas .State Guard,.*as the same is. organized and
    functioning   under our statutes,   (Vernon’s Ann. CIv. Stat.,
    Art. 5891e, as amended by the 48th Legislature,      (1943)) Is
    en Inatrumentelity   or the State ot Texas.    Sea. l(a) insofar
    as pertinent   ia as roilows:
                  Whenever any pert of the National Guard of
          this State is in eotive Federal service,         the
          Governor is hereby authorized to organize and
          maintain within this State during suoh period,
          under suoh regulations       as the Seoretary of ‘Nar
          or the United States may presoribe        ror thefr or-
          ganization;     standards of training,    instruotion
          and.dIsoIpline,     suoh military   roroes as the
          Governor may deem neoessary to defend this
          State.    Suoh foroes shall be oomposed or or-
          fioers   appolnted and oommisaionsd and assigned
          by the Governor OF under his authority,         to hold
          oifioe   and essignmsnt during the pleesure of the
          Governor, end suoh able-bodied       male oitizens    of
          the State and suoh able-bodied       residents   of the
          State vho shall have dealered their Intention
          to beacme oltizens      of the United States, as
          shall volunteer for service therein,         supple-
          mented, If neoessarg,      by men of the reserve
          militia   enrolled   b drart or otherwise es pro-
          vlded by law. * * g*
                Seo6 2(a)    deolares:
                                                                      873   i
                                                                            !




Hon. Arthur B. ,KnIokerbocker-          Page 3


             *The Governor la hereby authorized        to pre-
      aorlbe rules end regulations        not inconsistent
      with the provisions       of this Aot governing the
      enlistment,     organization,    edministratIon,    unl-
      forms    equipment, maintenance,       oomorand, training
      and 6 i soipline   or suoh roroes;     provided auoh
      rules end regul~tlone,        In so far es he deema
      preotloable     end desirable,    shall oonrorm to ex-
      isting law governing and pertaining          to the
      Netlcnel    Guard and the rules and regulations
      promulgated thereundert*
            Sea.   4 prescribes:
              “For the use or suoh ioroes,      the Governor is
      hereby authorized      to requisition    rrom the Seore-
      tery of War such arms       and equipment as may be in
      possession     of, and oen be spared by, the War De-
      partment; and ,to make available        to suoh foroes the
      feoIlIties     of State armories end their equipment
      and such other State premises and property es may
      be available.      Authorization    is hereby provided
      ior sohool authorities       to permit the use oi school
      buildings     by the Texas Defense Guard; provided fur-
      ther that County Commissioners Courts,         oity euthori-
      itlea,     oommunltles, and civic and patriotlo       organl-
      zetions are empowered and authorized by this Aot
      to provide runas, armories,        equipment, material,
      transportation,      or other appropriate    servioes   or
      raoIlities,     to the Texas Derense Guerd.”
            Seo.   5 contains      the following:
            “(a)   Upon the request (i the Governor of
      another State, the Governor of.thIs     Stat9 may, In
      his dfsoretion,   order any portion oral1 or suoh
      foroes to aaeist the military    or police roroes of
      such other State, who are eotually    en,Seged Ins de-
      fending suoh other State.    Suoh foroes nay be ,re-
      oalled by the Governor et his dIsoretlon.n
             These provlalone or the atatute make olear the b gls-
letive   intention  to oreete and constitute such body a govern-
mental   agency In the discharge of its authorized   duties.
            However,    the status of Post Exohenges is quite 6
dirrerent   question.     Sane oourts have held that an Amy Post
                                                                                 874
    Hon. Arthur B. Knickerbooksr          - Page 4
                /

    Exohenge is not an instrumentality       or department     or the
    federal    government,    Peovle v. Standard Oil Co., 22 P. (26)
    2 (Calir. sup. ct., 19331, reversed       on other grounds, 291
    lip”.   2421 Keene v. United States, 272 Fed. 577 (Clrc.          Ct.
            192111   end oases oited.   H            in Standard oil
    CO.‘<.   Johnson, 316 U. 3. 481 (l~~~~r~he         Supreme Court
    of the United States held that an Ar~y Post Xxohange Is
    an ana of the Government, an integral pert ot the ‘War De-
    partment, and, as kuoh, partakes or whatever          immunities
    the War Department m%y~     have under ‘the Constitution     and
    federal .statutes.     As shown by the rollowing      language
    quoted from its opinion In that case, the Supreme Court
    based its deoision upon the federal       statutes    and Army Regu-
    lations    authorleing  suoh post exohanges:
                *SInoe I#10 or the CaliforniaAot made the tax
          inapplloable     *to any uotor vehlole fuel         aold   to
          the government or the United States or any depart-
\        ment thereof, * it was necessary ror the Supreme
          Court or Oalirornie       to determine whether the lung-
         Qage Of this %xempt$On inoluded Stir38to OBt ex-
          changes.     Ii the oourtls construotion         or i 10 or
          the Aot had been based purely on looal law, this
          oonBtruction.wOu~d have been oonolualve,             and we
         should have to determine whethar the statute so
         oonstrued and applied Is repugnant to the Federal
         Constitution.       But in dcalding that post exohenges
         were not 'the government of the,UnitedStates or
         any department thereof,’         the oourt did not rely upon
         the law of f&lIfornia.          On the contrary,      It relied
         upon its determination        conoerningthe relationship
         between post exchanges and the Government of the
         United States, a relationship           whioh la oontrolled
         by federal     law. Bor poat exahenaes overate under
         reaulettons     or the Secretary of #ar pursuant to
         federal     authority.    These regulations      and the DMLO-
         tioes under them establish          the relationship      between
         the post exohange and the United States Government,
         and together with the relevant statutory              and oon-
         stitutlonal     provisions    from whloh they derive,          errord
         the data upon which the legal status or the wet
         exohange may be determined.           It waa upon a deter-
         mination of a federal question,           therefore,     that the
         Supreme Court      of California     rested Its conclusion
         that, by B 10, sales to post exoh+.Ig88 W8r8 not
         exempted from the tax.          Since this determination
         or a tederal question was by 6 state court, we are
         not bound by it.        We prooeed to oonsider whether
         it is oorreot.


               ‘\
                ‘?
                                                                           8’75
.



    Hon. Arthur D. Knickerbocker      - Page 5


                *On July 25, 1895, the Seoretary of War, under
         authority    of Congressional       enactments promulgated
         regulations     providing ror the establishment       of
         post exohanges.       These regulations     have sinoe been
         amended from t $me to time and the exchange has be-
         oo.me a regular feature of Army posts.           That the es-
         tablishment     $Pd oontrol of post exahanges have
         been in aoaordanoe with regulations          rather than
         speoifio    statutory    direotions    does not alter their
         status,   for authorlzed.War Department regulations
         have the roroe of law,

                *Congressional    recognition    that the aotivitlea
         of post exohanges are governmental has been fre-
         quent.    Slnoe ,1903, Congress      has repeatedly made
         su&antial     appropriations    to be expended under the
         direotion    of the Seoretary or War ror construotlon,
         equipment ) end maintenenoe of suitable .buildings
         for post exehangee.       In 1933 and 1934, Congress
         ordered certain    moneys, derived from disbanded ex-
         ohangesto     be handed over to the Federal Treasury.
         And in 1936,    Congress gave oonsent to state taxa-
         tion of gasoline     sold by or through post exohanges,
         when the gasoline was not for the exolusive          use of
         the United States.
                “The oommanding offioer      of an Arny Post, sub-
         jeot to the regulations       and the oommands of his own
         superior orrfoers,      has oomplete authority       to eatab-
         liah and maintain an exahange.         He details     a post
         exohange orrfoer to manage its affairs.            This Offioer
         and the commanding offioers       of the various company
         units make up a oouncll which supervises            exohange
         aotivitles.      None  of these  Officers  reoeives     any
         compensation other than his regular salary.             The
         object of the exohangea is to provide convenient
         and reliable     sources where soldiers    can obtain their
         ordinary n8edS at the lowest possible         priCeS.     Sol-
         diers,    their families,   and oivlllans    employed on
         military    posts here and abroad can buy at exohanges.
         The Government assumes ~none of the financial           obli-
         gations of the exchange.        But government offioers,
         under government regulations,        handle and are rea-
         ponsible for all funds of the exohange which are
         obtained from the oompanies       or detaohments 005QOSing
                                                                                   -1



                                                                             876

Hon. Arthur B. Kniokerbooker     - Page 6
              I


       its membership.   Profits, ii any, do not go to
       individuals.   They are used to improve the soldiers*
       meaa, to provide various types of reoreation,   and
       in general to add to the pleasure and comfort of
       the troops.
              "From a,.ll of this, we oonclude that post ex-
       ohanges as nbw operated are arms of the Government
       deemed by it asaantlal      for the performanoe of govern-
       mental funotions.      They are integral   parts of the
       War Department, share in fulfilling       the duties sn-
       trusted to it, and partake of whatever immunities
       It may*h$v$vunder the Constitution       and,federal stat-
       utes.
               Your  aupplamental letter    states that you have
 lsaued no rules,      regulations,    or orders govsrning,Post      Rx-
 ohanges.      We have found no Texas statutes      on the subjeot.
 lharetore,     we must assume tha,t any enterprises     operating
 under that     name  are doing so without the sanotion or authority
 or the State or Taxas.         Zven assuming that the general stat-
 utes setting up the Texas Stats Guard impliedly           authorize
 the Governor, through the Adjutant         General of Tsxas, to
 establish     post .exohanges as instrumentalities     of the State
 (whloh question ws do not hare deolde),          wo understand that
 no suah action has been taken, that no regulations            have
 been issued by the Governor or the Adjutant General pertain-
 ing to post exohangea, that the Leglalature          has not reoog-
 nlzed post exohanges as State aotivities,          and that rvhatever
 aotfon has been taken towards their astablishment            has been
 purely voluntary aotion on the part of individual            offloera
 and members of looal units of the Texas State Guard. There-
 rore,    having neither statutes     nor regulations   affording     data
 upon whioh the legal status        of suoh post exohanges may be
 determined, we must oonoluds that they are not instrumen-
 talities    or agenoiea of the State. of Taxes.
                                 Very truly   yours
                           ATTCRNEYGEIERALOF TZXAS



                           BY @ed$&
                                              Assistant

 RAL?jt




                                                                                        /
