382 So. 2d 1111 | Ala. | 1980
This is an appeal from a judgment in favor of the plaintiff, State Farm Mutual Automobile Insurance Company, Inc. (State Farm), in its declaratory judgment action against the City of Birmingham (Birmingham) and the latter's counterclaim. We affirm.
The action grew out of Birmingham's interpretation and application of Code of 1975, §
§
11-51-120 . Insurance companies — Fire and marine insurance companies.No license or privilege tax . . . shall be imposed by any municipal corporation upon any fire or marine insurance company doing business in such municipality except upon a percentage of each $100.00 of gross premiums, less return premiums, on policies issued during the preceding year on property located in such municipality. Such percentage shall not exceed four percent on each $100.00 or major fraction thereof of such gross premiums, . . .
. . . . .
§
11-51-121 . Same — Insurance companies other than fire and marine insurance companies.(a) No license or privilege tax . . shall be imposed by any municipal corporation upon any insurance company, other than fire and marine insurance companies, . . . which shall exceed . . the following amounts:
. . . . .
(4) Each such insurance company, in cities and towns having a population of more than 50,000, $50.00 and $1.00 on each $100.00 and major fraction thereof of gross premiums, less return premiums, received during the preceding year on policies issued during said year to citizens of said cities and towns.
The basis of the lawsuit is Birmingham's assertion that §
Having been unable to resolve the question administratively, State Farm brought *1113
this action to have the Jefferson County Circuit Court declare that it should be taxed under §
The issues presented by the parties focus initially upon the interpretations to be given these two statutes. Birmingham insists that these statutes and their predecessors, Act No. 163, Acts of Alabama, 1927, pp. 150-151; Act No. 194, Acts of Alabama, 1935, pp. 552-553; Tit. 37, §§ 736 ("other than fire and marine insurance companies") and 739 ("any fire or marine insurance company"), established classifications based upon "property" or "people." There is, states Birmingham, one classification authorizing a tax measured by four percent of premiums received from policies "on property located in [the] municipality" (see §
The decisions in the Sheffield cases were based upon stipulations of facts. It is apparent that neither of those cases dealt with the nature of the insurance companies involved therein — it appears to have been assumed for the question in issue that the insurance companies were "fire and marine" companies and thus subject to the rate of up to four percent of gross premiums. The basic question litigated concerned the municipality's right to tax the companies at all because of the novel way in which the policies were sold. This Court held in both cases that the city could impose the tax, even though the policies were issued outside the city, because the nature of the transactions involved insurance business conducted in Sheffield where the insured property, automobiles, was located.
In Motors this Court held that for the purpose of the municipal license statute Birmingham could classify Motors Insurance Corporation as a "fire insurance" company even though the only insurance it had issued since its organization was automobile physical damage insurance. That decision was based upon several considerations. For one thing, the insurance issued covered risk of loss by fire, as well as theft, collision and "comprehensive" coverage. For another, Motors had represented to the State Department of Insurance for many years that it was a "fire or marine" company and paid a premium tax accordingly. And finally, Motors itself was chartered as a fire insurance company. It is significant, also, that Motors Insurance Corporation insisted that automobile physical damage insurance had become a separate class of insurance from ordinary fire insurance and, therefore, that a company which issued the former could not be classified as a fire insurance company. The Court in Motors referred (at
The case is significant, . . . in that it refutes entirely, . . . the insistence *1114 of able counsel for Motors . . . that it cannot be reasonably asserted that a company which issues and sells only automobile physical damage insurance is a fire insurance company within the meaning of § 739, Title 37, [now §
11-51-120 ]. . . .
That is, an insurance company selling automobile physical damage insurance might be classified, nevertheless, as a fire insurance company, as was Motors Insurance Corporation under the evidence noted above. But what is also significant is that, in determining the character of the insurance company, reference was made not only to its charter but also to the conduct and character of its business.
We have also been cited to State Farm Mutual Auto InsuranceCompany v. Board of Trustees of Firemen's Pension ReliefFund,
[W]e are not convinced that the legislature, in Act 307, intended the words "fire insurance company" to be so broad. . .
. . . . .
We conclude that the legislature intended in Act 307 that every insurance company insuring property against loss by fire would be considered to be a "fire insurance company" and that it would be liable to pay into the Firemen's Pension and Relief Fund "a sum equal to one and one-half percentum of the gross premiums, less returned premiums, received by such fire insurance company for and on account of business, including all renewals of fire insurance." The Motors case is also partly distinguishable, in that in Motors the company was chartered as a fire insurance company and so listed itself for state tax purposes and paid a lower rate of tax to the state because of such classification. Conversely, State Farm was not chartered as a fire insurance company and paid a higher state tax as a company other than a fire or marine or fire and marine insurance company.
This Court then determined that taxable liability existed under Act 307, not because State Farm wrote automobile damage insurance, but because part of its business was insuring property against the risk of fire, and it was that part of itspremium income which was held to be subject to the pension tax. The significance of Relief Fund lies in the fact that the statutory classifications established in §§
That is not the issue in the instant case, however. As theSheffield, Motors and Relief Fund cases recognize, the legislature has established two categories of insurance which may be subject to the municipal privilege tax: fire and marine, and other than fire and marine. Motors, at
Birmingham also asserts a constitutional issue, viz., that it would be an unlawful discrimination to hold that a municipality could apply the 4% tax to a fire insurance company writing only automobile physical damage insurance and to apply the 1% tax to casualty companies writing those coverages and others. This argument is made to buttress Birmingham's position that its construction of the statutes is constitutional, while State Farm's position is not. It is appropriate to note that the trial court found that this issue had been untimely raised,i.e., without pleading and after trial. Although we are in accord with that finding, nevertheless we are prompted to observe that we perceive no discrimination in the application of these statutes. They create two classifications. The tax applicable to each is equal and uniform to the companies falling within either classification. Nachman v. State TaxCommission,
Having decided the controlling issue, it is unnecessary to reach the other points raised by the defendant. The trial court's judgment must be, and is, affirmed.
AFFIRMED.
TORBERT, C.J., and MADDOX, JONES and SHORES, JJ., concur.