*%rrcaTlN 11. -rExan
PRICE DANIEL
,\TT”RYEY GF.NERAL
January 23, 1950
Ron. Robert S. Calvert Opinion NO. v-986.
Comptroller of Public Acoounts
Austin, Texas Re: Whether “owner.” of
coin-operated eleotric
scoFcboard is subject
to ocoupatlon tax lm-
posed on ‘owners” of
certain oofn-operated
Dear Sir: machines e
You have requested the opinion of this oSSlce
aa to whether the occupation tax imposed on the “owner”
of coin-operated vending maohines by Articles 7047a-2 to
7047a-18, v.c.s., would be applLcsble to owners of coin-
operated electric scoreboards used in connection wLth
shuffleboard games. From the file sttached to your FO-
quest we have gathered the following Sects with regard
to such scoreboards.
The Regal Electric Scoreboard is advertised
as havLng the following features: “Wall mounting type -
Hardwood cebinet . e - - 4 color silk stzeen panel- D . a
Ace lO$ coin chute - Full Anti-Cheat Protection - Large
easily read figures e e V -All At a Price Which Will Be
More TZlan Cowered By Increased Returns From Your ShuSSle-
board *” OraQre of shuSSleboard games am queried thus:
‘%hy spend so muah of your time keeping
tracks of ths play, and %ncome, Srom your
shuffleboard? A Regal scoring unit will act
as an automatic collecting device and save
you unlimited . o . time ana trouble . . e
eltiinate misunderstandings over number of
games played- e . q It will definitely in-
crease your incorae Srom your shuffleboard e’
The manufacturers of these machfnes contend
that ther are not coin-opereted amusemeE&devices inas-
much as they are not games and do not oontrol the play-
ing of shuffleboati but merely register the scores end
supply the servloe of collection for the merchant in
whose eatablfshment shuffleboard is being played.
Eon. Robert S. Calvert, pege 2 (v-986)
Artlale 7047a-3 provides thet “Rvery ‘Owner’
as that term is hemfnebove defined, who.owns, controls,
. e . or who permits to be exhibited or displayed . e .
eny ‘coin-opereted machines ’ as that term is defined
herein, shall peg e . . an annual occupation tex.”
Article 7047a-4 exempts from the tax levied
by the Act “gas meters, pay telephones, pay toilets,
and cigarette vending mechines whioh are now subject to
an occupation or gross receipts tex and ‘service coin-
operated machines ’ as that term is defined, a . a‘I
Article 7047a-2(c) provides .as Sollows:
“(c) The term ‘aoln-opereted machine’ as
used herein shall meen end include every me-
ohtne or device of any kind or character
which Is operated by or with coins, or metal
slugs, tokens or checks, ‘merohandise or
music coin-operated machines’ and fskfll or
pleasure coin-operated machines ’ as those
terms ere hereinafter defined, shall be in-
cluded in such terms.”
The statutory definition of a “merchandise or
music coin-operated machine” is clearly not applicable
to the electric scoreboards here being consIderad.
Sections (e) and (I) of Article 7047e-2 reed
as Sollowsa
“(e) The term ‘skill or pleesure ooln-
operated machines ’ as used herein shell meen
and Inelude every coin-operated machine of
any Lind OF oharaoter whatsoever, when such
aaohine or machines dispense or are used or
are capable of being used or opereted for
amusement or pleasure or when srrah machines
are operated for the purpose of dispensing
or affording skill or pleasure, or SOP any
other purpose other than the dispensing or
vending of ‘merohendise or muslo’ or ‘ser-
vice ’ exclusively, as those terms are defin-
ed herein. The SollowIng are expressly ln-
eluded within seid terms marble maohines,
marble table machines, marble shooting ma-
ahines, minleture race track machines, mini-
ature football machines, mlnature golf ma-
chines, miniature bowling maohines, and all
Hon. Robert S. Calvert, page 3 (v-986)
other coin-operated machines which dis-
pense or afford skill or pleasure. Provid-
ed that every machine or device of any kind
or character which dispenses or vends mer-
chandise, commodities OF confections or
plays music in connection with or in addi-
tion to such games or dispensing OS skill
or pleasure shall be considered as skill or
pleasure machines and taxed at the higher
rate fixed for such machines.
"(S) The teno 'service coin-operated
machines' shall mean and include pay toilets,
peg telephones and all other machines or de-
vices which dispense service only and not
merchandise, music, skill or pleasure."
IS the scoreboards do not come within the stat-
utory definition of "service coin-operated machines" they
must automatically be classified as "skill or pleasure
coin-operated machines", and the "otiner" thereof will
therefore be liable for the occupation tax imposed by
these articles.
House Bill 223, Acts 44th Leg., R.S. 1935, ch.
354, p.905, which attempted to impose an occupation tax
on the "owner" of coin-operated vending machines, was
held invalid in Sheppard v. Giebel, 110 S.W.2d 166 (Tex.
Civ.App.1937) o This Aot, which we will hereinafter re-
fer to as the original Act, was deolered unconstitution-
al in toto by reason of the ambiguity of those provisions
providing for payment of the tax. Other provisions of
the statute were disoussed by the oourt in the course of
the opinion and because the exemption provisions of the
original Act and the exemption provisions of our present
statute are very similar, we will be guided by the court's
construction thereof.
The original Act provided, in psrt, as Sollowsn
"Sec. 4. Gas meters, pay telephones,
cigarette vending maohines, pay tolleta in-
stalled and used for sanitary purposes, and
all maahines engaged in vending a service are
expressly exempt from the provisions of this
Act.
"Sec. 4a. The exemptions provided here-
in are recognized and made by reason of the
I .
Hon. Robert 3. Calvert, pege 4 (v-986)
Sect that gas meters, pay telephones and cig-
arette vending machines ere now subject to
the psyment of an occupation tax under exist-
ing laws, end pay toilets being service vend-
lna machines. are not covered by the levy made
he&by." -
With regard to these provisions the oourt said:
n. * . it is manifest .that the only ma-
chines exempted in section 4 because deemed
lservice vending machines' were pay toilets;
the other
. _ exemptions
.. named being
- _. exoluded
_ from
_
nne tax oecause tney were already taxea unaer
existing laws. While tservice vending machines'
were exempt, the act nowhere undertook to de-
Sine what should be deemed such machines, and
the only type of machine named as falling with-
in this olass was pay toilets. In defining the
classes of machines to be taxed in section le
of the act9 it is to be noted that *service
vending machines' are not mentioned as such.
On the contrary, the act is limited to machines
vending fmerchandise, oompodities, conSections,
amusement, or pleasure.' It reasonably appears,
therefore, that it was the legislative intent
to include within the taxing act, other than
maohines vending some sort of commodity or
merchandise, only machines designed to afford
amusement or pleasure. Following this gener-
al deSinition were speclSically named numer-
ous mechines aoming within the terms of the
act, the first one of whioh was a 'phonograph'
operated by inserting a coin, slug, token, or
oheck. Rven if it be oonoeded, therefore, that
the appellees' machines be oonsidered service
vending maohines as oontradistinguished from
machines vending articles of meFchandfse, the
Sect that maohlnes vending that oharacter of
service olassed as amusement or pleesure were
expressly included in the act, end, further,
the speoific lnolusion of phonographs so oper-
ated, manifests a olear legislative intent that
suoh machines were to be taxed and not exempt-
ed. Manifestly there is e clear and reasonable
basis of classiSication in separating this class
of vending maehines Srom such service vending
maohines es pay toilets, pay telephones, etc.;
and such reasonable basis of classification is
Hon. Robert 8. Calvert, page 5 (v-986)
suSSicient to sustain the validity of the
act.
11
. . .
"We think that there can be no doubt
that there is, because of the difference in
the nature, manner of operation, and purpose,
a reasonable basis for a difference of clas-
sification between the type of machines used
merely for amusement and pleasure, such as
those named in section la of the act, and
those designed to serve the public health,
convenience, and necessity, such as pay toi-
lets. That being true, the act should not
be stricken down for that reason."
It is noteworthy that the present act adds but
one speciSic example, i.e., pay telephonesr in its defi-
niti .on of "service coin-operated machines.' (Those in-
cluded in the "occupation tax" group in the original ex-
emption provision era still given as examples of this
class in the present statute.)
Thus we have little or no more by way of statu-
tory definition of a "service" machine than had the court
in the Giebel case. We are therefore inclined to adopt
the view of the court that "service" machines are "those
deslgned to serve the public health, convenience and nec-
essity, such as pay toilets." We find no service of
this character in coin-operated electric scoreboards. In-
deed, it is apparent that the chief service is not for
the convenience of the public but for the convenience of
the "owner" of such machines. We further thfnk that such
service as is rendered the public by the electric score-
boards would be that character of service classed as amuae-
ment or pleasure and therefore within the statutory defi-
nition of a "skill or pleasure coin-operated machine".
Surely the manufacturer of these machines would not per-
mit the suggestion that they do not contribute to the
pleasure of playing the game they are designed to score.
When so used we think they become an Integral part of
the game, rendering imaterial the fact that the game
could be played without them. We are therefore of the
opinion that an "owner", as that term la defined in the
Act, of one of these machioes would be required to pay
;$e r;uFtion tax imposed by Articles 7047a-2 to 7047a-
, . D.
1 . .
ROU. Robert 3. Calvert, page 6 (v-986)
SUMMARY
A coin-operated electric scoreboard
used to score shuffleboard games Is not a
"service coin-operated machlne"; and an
"owner", as that term is defined by Artf-
cle 7047a-2, V.C.S., must pay the occupa-
tion tax Imposed by Articles 70478-2 --
7047a-18, v.C.8.
APPROVED: YOUPSvery truly,
W. V. Geppert PRICE DANIEL
Taxation Division Attorney General
Charles D. Mathewa
Executive Assistant
MMC:ebm:mw
Untitled Texas Attorney General Opinion
Combined Opinion