,,. .
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.
. -
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
Untitled Texas Attorney General Opinion
Combined Opinion