158 N.E. 849 | Ill. | 1927
Lead Opinion
Appellant, the Hanover Fire Insurance Company, a corporation of New York, filed its bill in the superior court of Cook county against Patrick J. Carr, county treasurer andex-officio tax collector of Cook county, for an injunction *592
to restrain the collection of certain taxes levied against it under and by virtue of section 30 of an act of March 11, 1869, entitled "An act to incorporate and to govern fire, marine and inland navigation insurance companies doing business in the State of Illinois." The prayer of the bill was in the alternative. It prayed (1) that the collection. of the whole amount of the tax extended be enjoined because section 30 was unconstitutional, or, (2) in case section 30 was valid, that the collection of approximately one-half of the tax extended be enjoined because the assessment and extension were against the "full amount" of net receipts, while the section directs "an assessment," namely, upon net receipts at the same rate of taxation as against other personal property. The collector filed an answer denying the claims of the bill, and after replication the cause was heard by the trial court, which in its decree made findings of fact based on a stipulation by the parties and made the injunction permanent as to a certain amount of the tax not in dispute in this court and dismissed the bill of complaint as to the remainder for want of equity. Appellant appealed from this decree to this court, which by a divided court affirmed the decree of the superior court inHanover Fire Ins. Co. v. Carr,
The section in question reads as follows:
"Foreign companies — Tax on net receipts.] Sec. 30. Every agent of any insurance company, incorporated by the authority of any other State or government, shall return to the proper officer of the county, town or municipality in which the agency is established, in the month of May, annually, the amount of the net receipts of such agency for the preceding year, which shall be entered on the tax lists of the county, town and municipality, and subject to the same *594 rate of taxation, for all purposes — State, county, town and municipal — that other personal property is subject to at the place where located; said tax to be in lieu of all town and municipal licenses; and all laws and parts of laws inconsistent herewith are hereby repealed: Provided, that the provisions of this section shall not be construed to prohibit cities having an organized fire department from levying a tax, or license fee, not exceeding two per cent, in accordance with the provisions of their respective charters, on the gross receipts of such agency, to be applied exclusively to the support of the fire department of such city." (Cahill's Stat. 1925, sec. 159, p. 1405.)
This section has been in force since 1869 and was part of the act of March 11 of that year, entitled "An act to incorporate and to govern fire, marine and inland navigation insurance companies doing business in the State of Illinois." The section was amended to the above form by an act approved May 31, 1879.
This suit presents the question of the validity of the assessment made by a taxing officer under section 30 for the year 1922. At the time this statute was passed all personal property was required by law to be listed and taxed at its cash value. By the general Revenue act of Illinois in force since February 25, 1898, (Cahill's Stat. 1925, sec. 329, p. 2042,) personal property is to be valued at its fair cash value, which value is to be set down in one column to be headed "Full value," and one-half part thereof is to be ascertained and set down in another column headed "Assessed value." The one-half value of all the property so ascertained and set down is to be the value for all purposes of taxation. It is stipulated in this case and was found by the trial court that for the year 1923, and for many years prior thereto, there has been what is called an equalization, which systematically and intentionally reduces the amount set down in the column headed "Full value" to not more than sixty per cent of the actual market value of the personal *595 property returned, and by further reducing this by fifty per cent to make the assessed value accord with the statute, the tax is collected only on thirty per cent of the full value.
The superior court found that the actual amount of net cash receipts of appellant was $90,824, (less by $45,000 than the amount reported by the board of review,) so that its decree forbade the collection of more than $7184.18, instead of $10,678.50, for which the warrant had issued, but denied further relief. Appellant insisted that under the previous practice and proper construction of section 30 as a property tax with due equalization and debasement, the tax assessed should have been $2155.24, and that this, if anything, is all that should be collected from it. The Supreme Court of the United States in its opinion herein states: "The Supreme Court of Illinois for many years held the payment of a tax on the net receipts was a tax on personal property. (Walker v. City ofSpringfield,
There is an essential difference between foreign and domestic companies with reference to their property in this State. The property of a domestic company consists of its franchise, capital stock and other tangible property, resultant, in part, from its net receipts, and it is taxed thereon, while foreign companies in any given year have no tangible property of any consequence subject to taxation under the general law. There is therefore no way in which they can *598
be taxed at all upon their property unless upon their net receipts from business transacted. It was the intention of the framers of the constitution that every person or corporation should pay a tax in proportion to the value of his or its property. The Revenue act provides different methods for making returns to the taxing official of different kinds of property and of different classes of corporations. The character of the property in this State of foreign insurance companies differing so widely from that of domestic companies, section 30, in providing different methods for the return of their properties, does not offend against the constitutional requirement that such taxes shall be uniform as to the class on which the law operates. Pacific Express Co. v. Seibert,
It is contended by appellant that section 30 cannot be sustained as the net receipts are not valued by some taxing officer, as required by the first part of section 1 of article 9 of the constitution. When the return is made to the taxing officer, since net receipts, like money, have a fixed value, the placing of the amount so returned on the assessment roll and the scaling and debasing of the same by the taxing officer are a valuing thereof by such officer as in the case of moneys or other property having a fixed value, and when scaled and debased by the taxing officer and the amount on which the tax is levied is so fixed, this is a valuing thereof within the meaning and intent of the constitutional requirement. When this statute was enacted, and as construed by the insurance companies and taxing bodies until People v. Kent, supra, andPeople v. Barrett, supra, section 30 of the statute, while it provided a method of taxing the property of foreign insurance companies different from that applying to domestic companies, did not discriminate against foreign insurance companies admitted to do business in Illinois in favor of domestic insurance companies *599 of the same class and in the same business, which pay only a tax on personal property at a valuation reduced to one-half of sixty per cent of the full value of that property, and it was not a denial of the equal protection of the laws to such foreign insurance companies.
Where it is contended that a section of a statute is in contravention of the constitution and it is susceptible of two constructions, one of which would render it constitutional and the other unconstitutional, it is the duty of the court before which the question of its constitutionality is raised, to so construe the section as to uphold its constitutionality and validity if the same can be done by any legitimate rule of construction, and if the construction is doubtful the doubt will be resolved in favor of the validity of the law. (People v. Newcom,
In the instant case, when section 30 of the act of 1869 was passed it was not subject to the objection that it discriminated against foreign insurance companies admitted to do business in Illinois in favor of domestic companies of the same class and in the same business, and it was not a denial of the equal protection of the laws to such companies. Prior to the passage of the general Revenue act in 1898 its operation had no such effect. The taxes upon the net receipts of foreign insurance companies and the personal property of domestic companies were levied in exactly the same manner and at the same rates. After the passage of the act of 1898 and prior to 1922, by reason of the construction placed upon the Revenue act of 1898 and section 30 by the taxing bodies that the amount of the net receipts of foreign insurance companies should be entered on the tax lists of the county, town and municipality and be subject to the same rate of taxation for all purposes that other personal property was subject to at the place where located, that the several entries on the tax list should be treated in exactly the same manner, and that the provision in the law of 1898 for scaling or debasing the values on the tax list applied to all entries on that list, whether entered thereon as the result of a schedule of personal property given to the assessor or as the return of the net receipts of the agency for a foreign insurance company, its *601
constitutionality was unquestionable. To adopt any other construction would render the law of 1898, and not section 30 of the law of 1869, unconstitutional, and thus create chaos among all taxing bodies. This construction was not alone placed upon these laws by the insurance companies and the taxing officials of the State, but in People v. Cosmopolitan Ins. Co.supra, (a case in which the net receipts had been scaled, debased and treated the same as other personal property,) this court upheld the tax, and said: "The net receipts are personal property and are to be listed by the board of assessors and board of review and taxed the same as other property. —National Fire Ins. Co. v. Hanberg,
Section 30 has been considered by this court many times and its constitutionality was never raised from the time of its enactment until 1922. It has never been held unconstitutional by this court. It was not held unconstitutional by the Supreme Court of the United States in Hanover Fire Ins. Co. v. Carr,supra. The holding of that court was that the construction placed by this court upon section 30 in the Kent and Barrettcases and in this case would cause discrimination and that the tax of $10,678.50 was not a valid tax. Appellant in its brief says: "From 1898 down to and including 1922 net receipts were assessed and taxed equally and uniformly with personal property and upon the same basis as a like amount in value of personal property. The same principles, practices, procedure and rules were applied to the assessment of net receipts as were applied to the assessment of personal property. This practice from 1898 to 1922, inclusive, was uniform, unbroken, consistent and notorious. Every assessing officer in the State pursued this method. Every tax-levying authority acquiesced in this construction as the true and proper one. Every fiscal officer in the State construed, interpreted and applied the statute to mean equality of taxation as between net receipts and personal property. No assessment against net receipts was made upon any other basis than that of equality until the assessment made by the board of review of Cook county in 1923, involved in this litigation. During *603 all the years from 1898 to 1923, inclusive, the General Assembly held eleven sessions. It knew that this system of taxation was universal. The law was not changed."
Long continued acquiescence in the constitutionality of a statute may property be considered as a factor which sometimes influences the court in upholding its constitutionality. (State v. Narragansett,
Section 30 having been constitutional when it was passed, being susceptible of a construction which would sustain its constitutionality, and its constitutionality having been acquiesced in by all parties for over fifty years, *604 it could not be rendered unconstitutional by reason of theHanover, Kent and Barrett cases, which held it constitutional but at the same time erroneously placed thereon a construction which might render it otherwise.
The constitutionality of section 30 was not necessarily involved in the review of this case by the Supreme Court of the United States. As stated in its opinion, "this suit presents the question of the validity of the assessment made by taxing officers under section 30 for the year 1922." It held that a tax "imposed upon 100 per cent of the net receipts of foreign insurance companies admitted to do business in Illinois is a heavy discrimination in favor of domestic insurance companies of the same class and in the same business, which only pay a tax on the assessment of personal property at a valuation reduced to one-half of sixty per cent of the full value of the property," and therefore held that a tax so levied was invalid. This same result would be attained whether section 30 was constitutional or unconstitutional. It reversed the case and remanded it to this court "for further proceedings not inconsistent with this opinion." There is no inconsistency between that opinion and our present holding that section 30 should be so construed that when the net receipts are returned to the taxing officers they should be treated as personal property and the assessment thereon as a personal property tax subject to the same reductions for equalization and debasement and treated in exactly the same manner as the valuations upon other personal property.
While, as suggested by appellant in its opposition to the motion herein, this court has no power to make a tax assessment, and it and the superior court, from which this cause came, have power to set aside taxes which are unlawfull, it has likewise, in cases like the present, the power and the duty to determine what portion of a tax, if any, is lawful, where such fact can be determined from the record. Appellant alleged in its bill herein, and both parties have *605 stipulated, that appellant's net receipts for the year in question, after reduction, debasement and equalization the same as other personal property, would have been $27,247 and that the tax thereon would have been $2155.24. Appellant in its brief states: "Appellant contends that if section 30 is valid, $2155.24 is the correct amount of tax which it should pay."
The decree of the superior court of Cook county herein is reversed and the cause remanded to that court, with directions to enter a decree dissolving the temporary injunction issued June 7, 1924, directing that appellant pay appellee the sum of $2155.24 together with the costs, interests and penalties thereon, if any be found legally due, and that upon such payment being made appellee be enjoined and restrained from demanding and collecting or receiving of or from appellant any amount of taxes on its net receipts in the town of South Chicago for the year 1923 in excess of the sum of $2155.24 and the costs, interest and penalties thereon, if any be legally due, and that so much of appellant's bill of complaint as relates to said sum be dismissed for want of equity.
Reversed and remanded, with directions.
Dissenting Opinion
In People v. Kent,
This court by the opinion of the majority overrules its former decisions in the Kent and Barrett cases as to the meaning of section 30 of the statute, deliberately adjudged after full consideration, not because the conclusion is reached that those decisions did not arrive at the correct meaning of the section, but because it is now determined by the supreme authority on the question that the section is unconstitutional. The reason given for the acquiescence of the State authorities and the foreign insurance companies in the improper construction of section 30 and in the practice under it may have been regarded by the taxing authorities and the companies as a sufficient reason for such acquiescence, but it is not a sufficient reason for this court, in order to save a part of the tax, giving to the section a *609 construction inconsistent with its true meaning, and enforcing the law not as it was made by the legislature but as the court by an improper construction of its meaning has amended it. The Supreme Court of the United States has held the tax not to be a privilege tax, but, as was held in the Kent case, an occupation tax; a tax on the business; an excise. The Kent case holds that the general Revenue act for the assessment of personal property has nothing to do with it. The Supreme Court of the United States does not hold to the contrary. If it is an occupation tax, the rules for the assessment of property can have nothing to do with it and the provisions of the general Revenue act no application. The Supreme Court does not hold that they have any application. Its holding is, that under the practice which it is stipulated prevailed, of reducing the amount of the net receipts upon which the occupation tax was based in the same proportion as the assessed full value of property was reduced, it might have been said that there was no substantial inequality between domestic and foreign companies, but no basis appears for holding that an occupation tax imposed upon fifty per cent or thirty per cent of the net receipts of foreign companies would be fairly equivalent to the tax which domestic companies would have to pay on all their personal property, including their net receipts or what they were invested in, or would be more or less than fairly equivalent, or that the same tax imposed upon one hundred per cent of the net receipts of the foreign companies would be a heavy discrimination in favor of domestic insurance companies.
The two methods of taxation are entirely different: one based upon the valuation of property, having no reference to the business transacted; and the other upon the basis of business transacted, having no reference to the value of property. They have no common measure — no standard of comparison. There is nothing in this record to show the relation of the net receipts of foreign insurance companies *610 as subjects of taxation to the property of domestic insurance companies as subjects of taxation, and there is nothing to show that there was no substantial inequality as between domestic corporations and foreign corporations, for the reason that the net receipts received during the year would yield a tax fairly equivalent to that which the domestic companies would have to pay on all their personal property. The Supreme Court of the United States has held, in substance, that this court erred in holding the tax imposed by section 30 to be a privilege tax; that it is not a privilege tax but a tax on the insurance business; that the foreign insurance company, upon complying with the law of 1919 and receiving the license of the Department of Trade and Commerce, is admitted to do business in Illinois upon a level with domestic companies doing business of the same character; that the imposition upon such foreign corporations of the tax upon their net receipts imposed by section 30 in addition to the tax on their property which they must pay under the general Revenue law, while domestic insurance companies pay a tax only upon their property and none upon their net receipts, is a violation of the constitution of the United States.
The cause has been remanded to this court for further proceedings not inconsistent with the opinion of that court. We cannot comply with this mandate by overruling our former decisions and directing the rendition of a decree for a part of the tax imposed by this unconstitutional law. This tax on the business of foreign companies is not separable. The General Assembly either had power, within the limitations of the State and Federal constitutions, to pass it or it had not, and it is inconsistent with the decision of the Supreme Court to hold that it had such power.
In our opinion the decree should be reversed and the cause remanded to the superior court, with directions to make the temporary injunction perpetual. *611