January      22,    1952



Hon. Robert    S. Calvert                       Opinion   No.   V-1389.
Comptroller    of Public       Accounts
Austin,  Texas                                  Re:   Applicability     of the chain
                                                      store tax “exemption         fee”
                                                      to businesses       operating
                                                      for the purpose      of -parking
                                                      automobiles,      parking    lots,
                                                      garages,      and radio    sta-
                                                      tions which      duo not sell
                                                      goods, wares,,or      ,merc~‘2an-
Dear   Mr.   Calvert:                                 disc.

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

               “Because        of the following        language:       ’ * * * or
       any business         operating     for the purpose           of parking
       automobiles,        parking    lots, garages;        or any radio sta-
       tion’;   contained      in Subsection       5 (a) of Section        1, of
       SECTION        XVI,    of Z-Iouse Bill No. 285, 52nd Legisla-
       ture,   Regular       Session,     this department           has made
       demand      on both operators          of parking       lots and radio
       stations     for the exemption          certificate       required     by
       said act.       It is, now argued        by a great many           of the
       operators       of parking     lots, as well as the operators
       of certain      broadcasting        companies,       that the law does
       not apply to those parking             lots where        goods,    wares
       and merchandise           are not sold nor to a radio station
       where no commodities              or articles       are sold.       There
       are other reasons           set out in the briefs           of these op-
       erators     for the non-compliance              with our demand.          I
       shall,    therefore,     thank you to advise           this department
       whether      or not any business            operating       for the pur-
       pose of parking         automobiles,        parking      lots,   garages:
       or any radio station,          are required         to obtain the ex-
       emption      certificate     provided      for in the act regardless
       of whether        such place of business           sells     goods,   wares,
       or merchandise.

              “Is the payment   to the parking               lot operator   for
       the space   occupied by the car a sale                of goods,   wares
       and merchandise?      There   may also               be a service    ren-
       dered by the operator    in parking  the              car.
                                                                                      ,   .


Hon.    Robert   S. Calvert,   Page   2 (V-1389)




               “Is the payment   made to the operator             of    a
        radio station  for a commercial     advertisement              a sale
        of goods,  wares   and merchandise?     ”

                It will be necessary     for us to answer     your second       and
third   questions    before  answering      the first question   submitted       to
us.

               The phrase       “goods,  wares,   and merchandise”    is one
of large   signification,     both at common     law and under various    stat-
utes.   It is of flexible    meaning    and is to be construed   with refer-
ence to the subject       matter   and context  in which it appears.    38 C.
J.S. 944, Goods.

                ” ‘Goods,    wares,   and merchandise’    means all
        movable     property    that is ordinarily  bought and sold,
        . . . m 18 Words      and Phrases    (Perm.  Ed. 1940) 543.

             We have made an exhaustive           research    and have been
unable to find a construction       by the courts    of the term     ‘goods,
wares,   and merchandise”       which embraces      anything    similar    to
automobile   parking    or advert&&g      over a radio station.        Even if
the term were broad enough to embrace            those privileges,       we
could not so construe      “goods,   wares,   and merchandise”        as used
in the chain store    tax act to include    such privileges     inasmuch      as
the term is used therein      in connection    with sales    at stores    and
mercantile   establishments.

                 You are therefore      advised      that the payment    to the op-
erator    of a parking    lot for the space       to be occupied     by an automo-
bile is not a sale of goods,        wares,   or     merchandise     under the pro-
visions    of House Bill 285, A,cts 52nd          Leg.,   R.S.  1951, ch,,402,   p.
695.    Likewise,     the payment     made to      the operator    of a radio sta-
tion for commercial         advertisements        does not constitute     a sale of
goods,    wares,    or merchandise      under      the act.

              The first question       submitted    to us is whether      or not
any businesses    operating     for the purpose      of parking    automobiles,
parking  lots, garages,     or any radio stations      are required      to obtain
the exemption    certificate     provided     for in paragraph      5(a) of sub-
section  1 of Section XVI of House Bill 285, supra,             regardless      of
whether   such places     of business     sell goods,   wares,    or merchan-
dise.

              The original   chain store act (H.B.    18, Acts 44th Leg.,
ist C.S. 1935, ch. 400, p. 1589, codified     as Article    lllld, V.P.C.)
is in twelve  sections  and in substance    provides,    so far as material
to a decision   of your first question,  as follows:
.   ,


        Han,   Robert   S. Calvert,     Page   3 (V-1389)




                        Section   1 makes    it unlawful     for any person,    agent,
        receiver,    trustee,   firm,   corporation,     association,    or copartner-
        ship, either    foreign    or domestic,     to operate,    maintain,   open, or
        establish    any store or mercantile         establishment     in this State
        without first having obtained         a license    from the Comptroller        of
        Public    Accounts.

                       Section  2 provides     that any person,     etc., desiring      to
        operate,    maintain,   open,    or establish    a store or mercantile        es-
        tablishment    in this State shall apply to the Comptroller             of Public
        Accounts    for a license,    accompanying       each application     with a fil-
        ing fee of SO$ for each store or mercantile            establishment       oper-
        ated or to be opeiated,     which filing fees are declared           to be for
        the purpose    of defraying    the cost of the administration          of the act.
        (This filing fee was raised       to $1.00    for each store by ‘1cous.e 3ill
        285, supra.)

                        Section   3 relates    to the duty of the Comptroller       to
        issue  licenses     and further     provides    that the licensee    shall dis-
        play the license      in a conspicuous      place in the store    for which
        same   is issued.

                       Section    4 provides     for   a renewal’license      for   each
        calendar    year.

                       Section   5 provides    that the term. “store,     stores,   mer-
        cantile  establishment      or mercantile     establishments,”       wherever
        used in the act, shall not include ,certain         designated    occupations.
        (House   Bill 285 amended       Section   5 by including    within the exemp-
        tions Uany business      operating    for the purpose     of parking    automo-
        biles,  parking   lots,  garages:    or any radio station.“)       This section
        also prescribes      the annual license     fees.

                       Section   7 defines    the term    “store”      as used in the act
        “to mean    and include      any store    or stores     or any mercantile         es-
        tablishment     or establishments       not specifically       exempted     within
        this tact which are owned,        operated,    maintained,       or controlled     by
        the same    person,    agent,   receiver;   trustee,     firm,    corporation,     co-
        partnership    or association,      either domestic        ,o? fo!,cign,  in which
        goods,   wares    or merchandise       of any kind are sold at retail          or
        wholesale.   ”

                       T.le Supreme       Court of Texas        in Hurt v. Cooper,      130
Tex. 433,   110 S.W.2d 896 (1937),     specifically    held that the license
        fees and filing fees levied by the chain store act constituted                 an
        occupation    tax levied    for the privilege       of operating,    maintaining,
        and controlling     stores    as defined     by the act.     This case further
        held that the language       contained    in Section      5 which reads)     “Pro-
        vided that the terms,      ‘store,   stores,    mercantile     establishment       or
Hon.   Robert     S. Calvert,    Page    4 (V-1389)




mercantile   establishments,’            wherever    used in this Act, shall not
include ” certain   enumerated           businesses,    although  called exclu-
sions were in fact intended             as exemptions.

                 Based    upon our answer        to your second question,       the
businesses       about which you ask clearly          do not come within the
affirmative      operation    of Article     111 Id, V.P.C.,    and therefore    no
express     exemption      is required     to relieve   them from      the burden
of the tax, Hurt v. Cooper,           supra.    The exemption       provisions   of
Article    lllld    exclude    from    the provisions    of the tax only those
stores    or mercantile       establishments       which ordinarily      sell goods,
wares    and merchandise.          The only exception        to this is contained
in the amendments          added by House       Bill 285 and which are the
businesses       made the subject       of your inquiry.

                  House Bill 285 further       amended   Section  5 of Article
111 Id,    V.P.C.,   by adding subsection       (c) which provides:

                  “All those establishments,       except   religious
          bookstores,     exempted   from    the above schedule       by
          this Act shall file an application      as required      by Sec-
          tions 2 and 4 of this Act.      If they meet the require-
          ments    of this Act for exemption,      they shall pay an
          exemption     fee of Four   Dollars   ($4) for one store       and
          Nine Dollars     ($9) f or each additional     store in excess
          of one.”

               You will note that subsection     (c) above provides    that
the establishments   exempted shall fil~e application   as required   by
Sections    2 and 4 of the act. Section   2 of the act reads   in part as
follows:

                   “(a)   Any person,      agent,  receiver,    trustee,   firm,
          corporation,       association     or copartnership     desiring    to
          operate,      maintain,    open or establish     a store   or mer-
          cantile    establishment       in this State shall apply to the
          Comptroller        of Public    Accounts   for a license     so to do.
                3,
          . . .

                 By the very language        of Section    2 only those persons,
etc., who desire        to operate,    maintain,    open, or establish        stores
are required        to make an application       for a license     or an applica-
tion for an exemption         from    the payment     of the license     fee.     It is,
therefore,      our opinion     that the Legislature      in the use of the fol-
lowing language        which they added to Section          5 of Article     lllld:
-or any business         operating    for the purpose      of parking    automobiles,
parking     lots, garages;      or any radio station;”       meant those business-
es operating       for the purpose      of parking    automobiles,     parking       lots,
garages,      and radio    stations,    which in connection      with such busi-
nesses     are conducting       businesses    in the meaning       of the chai~n store
Hon.   Robert    S. Calvert,     Page    5 (V-1389)




act by selling     goods,    wares,     and merchandise.

               It is an elementary       rule of statutory    construction    that
where a statute      is open to two constructions,        one of which would
render   it invalid    or unconstitutional,     the statute should be given
the construction      which would uphold it.        This for the reason     that
in construing     statutes  we should seek the legislature          intent, and
it is presumed      that the Legislature      intended   to enact a valid law.

               It is our opinion       that inasmuch       as the chain store         tax
is an occupation       tax levied    for the privilege       of selling   goods,wares,
or merchandise        at a store     or mercantile      establishment,       it would
be unconstitutional,        under said act,       to levy   an occupation        tax a-
gainst certain     classes     of business     for the privilege       of not selling
goods,  wares,     or merchandise         at a store    or mercantile       establish-
ment as defined       in the act.     It would violate      the “due course of
law” provision      of Article     I, Section    19, of the Texas       Constitution;
the equal and uniform         occupation      tax provision      of Article     VIII,
Section  2 of the Texas        Constitution;     the provision       of Article    I, Sec-
tion 3 of the Constitution        of Texas      which guarantees        equal rights
and prohibits     special    privileges;     and the “due process”          and the
 “equal protection”       clause    of the Federal      Constitution.

               To construe    this act in such a way that persons     oper-
ating parking    lots and radio stations    at which no goods,  wares,    or
merchandise     are sold would have to pay an occupation       tax for the
privilege   of not operating    a store or stores,  while exempting     all
other classes     of business   from paying an occupation    tax for the
privilege   of not operating    a store, would be an arbitrary   discrim-
ination.

                The Supreme      Court of the United States in Ohio Oil
Co. v.   Conway,     281 U.S. 146 (1930),      in reference to the power of
states   to classify    subjects  of taxation,    said:

                  “The applicable       principles     are familiar.      The
         States have a wide discretion             in the imposition     of tax-
         es.   When dealing        with their proper       domestic    concerns,
         and not trenching        upon the prerogatives         of the nation-
         al government       or violating      the guarantees      of the Fed-
         eral Constitution,        the States have the attribute         of sov-
         ereign    powers     in devising     their fiscal    systems     to in-
         sure revenue       and foster     their local interests.        The
         States,    in the exercise      of their taxing power,        as with
         respect     to the exertion      of other powers,       are subject
         to the requirements          of the due process       and the equal
         protection     clauses     of the Fourteenth       Amendment,       but
         that Amendment          imposes     no iron rule of equality,        pro-
         hibiting    the flexibility    and variety      that are appropriate
Hon.   Robert   S, Calvert,      Page    6 (V-1389)




       to schemes       of taxation.     The State may tax real and
       personal     property     in a different      manner.        It may grant
       exemptions.        The State is not limited           to ad valorem
       taxation,     It may impose        different     specifz      taxes upon
       different    trades    and professions         and may vary the
       rates   of excise     upon various       products.       In levying      such
       taxes,    the State is not required          to resort     to close     dis-
       tinctions    or to maintain       a precise,      scientific     uniform-
       ity with reference        to composition,         use or value.        To
       hold,,otherwise      would be to subject          the essential       taxing
       power of the State to an intolerable               supervision,        hos-
       tile to the basic      principles      of our Government           and
       wholly beyond       the protection       which the.general          clause
       of the Fourteenth        Amendment        was intended         to assure.
       [citing    cases]

                 “With all this freedom          of action,   there is a point
       beyond which the State can not go without violating                     the
       equal protection        clause.      The State may classify         broad-
       ly the subjects       of taxation,     but in doing so it must pro-
       ceed upon a rational          basis.     The State is not at liberty
       to resort      to a classification       that is palpably     arbitrary.
       The rule is gen&rally           stated to be that the classifica-
       tion ‘must       rest upon some ground           of difference    having
       a fair and substantial          relation    to the object    of the leg-
       islation,     so that all persons        similarly    circumstanced
       shall be treated       alike.’     Royster     Guano Company         v.
       Virginia,      253 U.S. 412, 415;        . . Dv

                 We can conceive       of no basis      for requiring       operators
of parking     lots and radio stations,       who do not sell goods,           wares
or merchandise,         to obtain an exemption         certificate    in that they
are not operating        stores   as defined    by the act.       This would like-
wise be true of other businesses            which do not operate          stores--
for instance,      skating    rink operators,     operators       of bowling    alleys,
collection     agencies,     lawyers,   doctors,     etc., who in the normal
course     of their business      do not sell either       goods,    wares,    or mer-
cha,ndise    at stores     or mercantile     establishments.

                 You are therefore     advised   that the owners    of parking
lots for parking      automobiles    and the owners     of garages   and the
owners      of radio stations   are not required     to obtain an exemption
certificate     provided   for in House    Bill 285 unless    at such places
of business      goods,  wares,   and merchandise      are sold at either    re-
tail or wholesale.
-   .


        Hon.   Robert   S. Calvert,   Page   7 (V-1389)




                                      SUMMARY

                       The operator      of a parking     lot does not make a
               sale of goods,     wares,    or merchandise        in charging     a
               customer     for the privilege       of parking    his automobile.
               The operator      of a radio station      does not make a sale
               of goods,   wares,     or merchandise        by charging    for com-
               mercial    advertisements.         The owners      of parking    lots
               for parking     automobiles      and the owners       of garages
               and the owners       of radio stations      are not required      to
               obtain an exemption        certificate    provided     for in I-Iouse
               Bill 285, Acts     52nd Leg.,      R.S.  1951,   ch. 402, p. 695,
               unless   at such places      of business      goo