                      EA~PI‘ORNEY    GENERAL
                           'ow TEXAS
                                AUC~T~N~~.TEXAB
PRICE  DANIEL
ATTORNEYGENERAL
                                    June 3, 1948


        Hon. Geo. Ha Sheppard
        Comptroller   of Public Accounts
        Austin, Texas                        Opinion No. V-596

                                             Re:   The taxability of coin-
                                                   operated machines which
                                                   vend aircraft accident in-
                                                   surance policies.

        Dear Mr.   Sheppard:

                   Your letter requesting our opinion    in reference     to the
        above-captioned    matter reads as follows:

                   “The Associated    Aviation Underwriters   have
             in various air ports certain coin-operated     vending
             machines    that vend insurance policies,  that is, the
             purchaser    of the ticket may insert a c6in into this
             coin-ope~rated machine and receive therefrom        an
             accident insurance policy covering any loss by ac-
             cident that may be sustaine,d by him en the trip au-
             thorized by his ticket.

                  “The question has arisen in this department       as
             to whether this machine is taxable under Article
             7047a-2  which recites in part as follows:

                   “‘(d) The term “merchandise       or music coin-
             operated machine Was used herein shall mean and
             include every coin-operated      machine of any kind
             or character,    which dispenses    or vends or which
             is used or operated for dispensing      or vending mer-
             chandise,   commodities,    confections   or music and
             which is operated by or with coins or metal slugs,
             tokens or checks.      The following are expressly    in-
             cluded within said term:      candy machines,     gum ma-
             chines, sandwich machines,       handkerchief   machines,
             sanitary drinking cups, phonographs,        pianos, graph-
             ophones, radios, and all other coin-operated        ma-
             chines which dispense or vend merchandise,          com-
             modities,   cenfections   or music.’
                                                                         “.   .




Hon. Geo. H. Sheppard,    lage   2 (V-596)




           “I shall thank you to advise me whether, un-
     der the facts stated, the machine is subject to the
     tax. ”

          Such coin-operated      machine is not taxable under the
quoted subdivision    (d) of Article 7847a-2,  in that an insurance
policy isnot included within the meaning of “merchandise,         com-
modities,  confections    or music.”    The Supreme Court of Texas
in Queen Ins. Co. v. State, 86 Tex. 250, 24 S.W. 397, held that
an insurance   policy is not a commodity.     It is evident that it is
not merchandise,    confections    or music.

         Subdivision   (e) of said Article   reads   as follows:

          “(e) The term ‘skill or pleasure coin-operated
    machines’ as used herein shall mean .and include
    every coin-operated     machine of any kind or char-
    acter 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 ooerated
                      I         for the ouroose
                                         L   L     of disoensinn
                                                          L
    or affording   skill or pleasure,    or for any other pur-
    pose other than the dispensing or vending of ‘mer -
    chandise or music      or ‘service     exclusively,   as those
    terms are defmed herein.        The followmg are express-
    ly included within said term:       marble machines;mar-
    ble table machines,    marble shooting machines,         minia-
    ture 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.      Provided that every ma-
    chine or device of any kind or character which dis-
    penses or vends merchandise,         commodities     or con-
    fections or plays music in connection with or in ad-
    dition to such games or dispensing of skill or pleasure
    shall be considered    as skill or pleasure machines and
    taxed at the higher rate fixed for such machines.’          (Em-
    phasis added)

          It is evident that under subdivision   (e), where the Leg-
islature used the phrase “for any other purpose” that it intended
to tax all coin-operated    machines,  except those which dispense or
vend “merchandise      or music, w which are taxed under subdivision
(4 9 o= “service”   exclusively.

           As stated above, the machine does not dispense or vend
“merchandise     or music.”  If it dispenses or vends “service”   ex-
clusively,  then it is exempt from taxation, in that Article  7047a-4
reads as follows:
Hon. Geo.   H. Sheppard,    Page 3 (V-596)



           “Gas meters,   pay telephones,   pay toilets, and
     cigarette vending machines which are now subject
     to an occupation or gross receipts tax and ‘serv-
     ice coin-operated,machines’      as that term is defin-
     ed, are expressly    exempt from the tax levied here-
     in, and the other ‘provisions   of this Section.”

            “Service   cein-operated  machines”  is defined    by sub-
divisien   (f) of said Article 7047a-2 as follows:

           “The term ‘service   coin-operated    machines’
     shall mean and include pay toilets, pay telephones
     and all other machines   or devices which dispense
     service   only and not merchandise,     music, skill or
     pleasure.”

            The machine does not prepare the contract of insur-
ance, but merely performs       the service    of delivery.   You have
orally advised us that it has been your departmental          construc-
tion for the past twelve years that a coin-operated         machine
that dispenses    postage stamps is not taxable for the reason
that such a machine dispenses        “service”   only. It appears to
us that the office performed     by the postage and insurance pol-
icy machines 4re very similar.         You are therefore    advised
that it. is the opinion of this Department that coin-operated
machines that dispense or vend insurance policies are not
taxcble under the provisions      of Article 7047 et seq., V.C.S.



          Coin-operated    machines that dispense or vend
     insurance policies are not taxable under the provi-
     sions of Article   7047 et seq., V.C.S.

                                  Yours   very   truly

                           ATTORNEY    GENERALOF         TEXAS




                                    W. V. Geppert
                                      Assistant
WVG/JCP
