28 Mont. 484 | Mont. | 1903
Lead Opinion
prepared the opinion for the court.
This action was commenced in the district court on the 21st day of May, 1902, by the filing of an agreed case, and was instituted for the purpose of determining the validity of a tax claimed to be due from the plaintiff to the defendant “upon the excess of premiums received over losses and ordinary expenses incurred within the state” during the previous year. The name of the plaintiff expresses the character of business transacted. Judgment was rendered for plaintiff, and from this judgment defendant appeals.
The agreed case complies with the provisions of Section 2050 et seq. of the Code of Civil Procedure, and the record shows that all steps have been taken and all proceedings had necessary t(. present for determination the questions involved in the error assigned. The points of controversy upon which the decision of the supreme court is asked are as follows: (1) Does Section
Section 681 of the Civil Code reads as follows: “Each and exery insurance corporation or company transacting business in this state must be taxed upon the excess of premiums received over losses and ordinary expenses incurred within the state during the year previous to the year of listing in the county where the agent conducts the business, properly proportioned by the corporation or company at the same rate that all other personal property is taxed, and the agent shall render the list, and be personally liable for the tax; and if he refuse to. render the list or to make affidavit that the same is correct, to the best of his knowledge and belief, the amount may be assessed according to the best knowledge and discretion of the assessor. Insurance companies and corporations are subject to no other taxation under the laws of this state, except taxes on real estate and the fees imposed by law.”
1. Does this provision apply to foreign life insurance companies? This section is a part of Chapter I, Title IV, Part IV, Division I, of the'Civil Code, and is entitled “Stock and Mutual Insurance Corporations.” The agreed case contains the statement that the respondent was doing the business of a foreign mutual life insurance company. Sections 650 to 668, both inclusive, of this chapter, provide for the formation and regulation of domestic mutual insurance companies. Sections 669 to 680, inclusive, apply to foreign insurance companies and societies. Section 681, as will be seen, applies to “each and every insurance corporation or company transacting business in this state.” The conclusion must be that it was the intention of the legislature to extend the provisions of this latter section to insurance companies doing business of the character specified in'the agreed case.
Section 7 of this Article of the Constitution provides that “all corporations in this state; or doing business therein, shall be subject to taxation * * *■ on real and personal property owned or used by them.” Section, 11 of the same Article provides that taxes shall be “uniform upon the same class of
The provisions of the section of the statute under consideration apply indiscriminately to “each and every insurance corporation or company transacting business in this state.” This includes domestic, as well as foreign, insurance companies. The law is therefore “uniform upon the same class of subjects.” The legislature- has the right to prescribe reasonable terms upon which foreign corporations may do business in this state. (Paul v. Virginia, 8 Wall. 168, 19 L. Ed. 351; Southern B. & L. Association v. Norman, 98 Ky. 294, 32 S. W. 952; Scottish U. & N. Ins. Co. v. Herriott, 109 Iowa, 606, 80 N. W. 665, 77 Am. St. Rep. 548.) The character, kind and amount of business done by the company, as well as the situs of its tangible property, may be considered in applying the various systems of taxation.
The franchise of a corporation is granted by the jurisdiction where the company is incorporated, and its situs is in the state or country of its origin; but before the company can do business in this state it must comply'with the terms of the statute relating thereto, and upon such compliance a certificate of authority is issued to it. It then stands, -under this law, on the same footing with domestic companies, and is subject to the same taxation on the same class of property. This certificate of authority issued to a foreign insurance company confers upon such - company a privilege or right not possessed or en
Judge Cooley, in considering the subject of taxing business and privileges, says: “And what is true of property is true of privileges and occupations also; the state may tax all, or it may select for taxation certain classes.” (Cooley on taxation, 2d. E!d., page 570.) Further on he says: “Taxes, which are most customary are: (1) 0:n the privilege of carrying on the business. (2) On the amount of business done. (3) On the gross profits of the business. (4) On the net profits or profits divided. * * * It has been seen that it is no conclusive objection to any such tax that it duplicates the burden to the person who pays it. To tax a merchant upon his stock as property, and also upon his gross sales, may seem burdensome; but it is not unconstitutional, when the people have not seen fit expressly to forbid it. The
The nature of, the business transacted by an insurance company does not require it to have any tangible property within the state on the first Monday in March of each year, when property becomes liable for taxation. Tet its business is here; it owns or possesses the privilege pf doing that business within this state; and under the provisions of Section 681, supra, the business transacted must result in a profit to the company before taxes can be levied. If the privilege granted, which has the force and effect of a franchise, and is therefore property under the constitution, proves to be valuable, it is a proper subject for taxation within the meaning of Article XII of the State Constitution. Whether this is regarded as a tax upon the value of the franchise right of the company to do business in this state, measured by the net income, or as a tax on the business established and done, regarded as property separate from the money received as premiums, the value of which is measured by the same standard, is immaterial. The tax remains the same.
The Act of March 4, 1897 (Sess. Laws 1897, p. 76), is a general license law, relating to insurance companies, both do
As supporting or discussing the general views herein expressed, we cite the following authorities: Cooley on Taxation, 2d Ed., 570 et seq.; Southern Building & Loan Association v. Norman, 98 Ky. 294, 32 S. W. 952; Scottish U. & N. Insurance Co. v. Harriott, 109 Iowa, 606, 80 N. W. 665, 17 Am. St. Pep. 548; Porter et al. v. Rock Island, etc. Railroad Co., 76 Ill. 561; People v. Equitable Trust Co., 96 N. Y. 387; People v. Home Insurance Co., 92 N. Y. 328; Western Union Tel. Co. v. State Board of Assessment, 80 Ala. 273, 60 Am. Rep. 99; U. S. Express Co. v. Ellyson et al., 28 Iowa, 370; Insurance Co. of North America v. Commonwealth, 87 Pa. 173, 30 Am. Rep. 352; Kittanning Coal Co. v. Commonwealth, 79 Pa. 100; Connecticut Mutual Life Ins. Co. v. Commonwealth, 133 Mass. 161.
4. It is next contended that Section 681 is in conflict with the state Constitution, and is therefore void. In investigating the history of the law for the discovery, if possible, by both intrinsic and extrinsic evidence, the intent of the legislature in enacting this section, we find that the section is practically the 'same as the first half of Section 37 of the Act of 1883 (Sess.
Section 7 of Article XII of the Constitution provides, among other things, that “the power to tax corporations or corporate property shall never be relinquished or suspended.” The evident meaning of this constitutional provision is that the property of corporations shall bear its equal share of the burdens of taxation, and that the provisions of Section 1 of this Article of the Constitution, that the legislature “shall prescribe such regulations as shall secure a just valuation for taxation of all property,” applies to artificial as. well as to natural persons. Said Section 681, after providing for the taxation of insurance companies on the excess of premiums over losses and expenses, contains another sentence which reads : “Insurance companies and corporations are subject to no other taxation under the laws of this state, except taxes on real estate and the fees imposed by law.” Under this latter provision an insurance company may be the owner of a vast amount of personal property situated within this state, on which it cannot be taxed, because the same cannot be classified under the head of “excess premiums,” whether the term “excess premiums” means surplus money or the value of the company’s franchise or business regarded as
The remaining part of this section is not invalid, as conflicting with the organic law, unless made so by the unconstitutionality of the clause above considered. The effect of the conclusion reached with reference to the exemption clause of this section, upon the section as a whole, and the chapter of which it is a part, remains to be considered. “When the valid and invalid portions of the legislative enactment are capable of being separated, and the valid part is a complete act, and not dependent upon, that which is void, the latter alone will-be-rejected, and the rest sustained, if it is manifest that the void part was not an inducement to the legislature to pass the part which is valid; but if it is manifest, from an inspection of the law itself, that the invalid portion formed an inducement to its passage, the entire act will fall.” This rule of construction has been so- long recognized and so universally applied that it is now regarded as elementary law. (State ex rel. Cornell v. Poynter, 59 Neb. 417, 81 N. W. 431; Warren v. Mayor, etc. of Charlestown, 2 Gray, 84; Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 601, 15 Sup. Ct. 912, 39 L. Ed. 1108.) In the application of this rule, however, the court must take into--consideration the various provisions of the organic law of the land where the statute is sought to be enforced.
The Constitution prescribes the duties of the various coordinate departments of the state government. Each department is supreme within its proper sphere, and is subordinate only to the provisions- of the organic act, which the people have adopted as the fundamental law, and the laws enacted in pursuance thereof. To the legislative department is delegated the
The first part of this section (681) is a complete enactment within itself, without reference to the second part, and does not depend for its validity upon the second part, unless that was the inducement or compensation for the enactment of the first part of- the section. In the enactment of the first part of this section the legislature provided for the taxation of a certain class of property, and provided a method of ascertaining its value. This was in accordance with constitutional provisions. In the last part of the section the legislautre exempted certain other property from taxation. This was in contravention of constitutional provisions. Can this disregard of the Constitution in the one instance be a sufficient inducement and compensation to render invalid and unconstitutional the obedience to the Constitution in the other instance ? Can a duty properly performed and completed with reference to one class of property be invalidated by a disregard of duty with reference to another class of property belonging to the same individual ? If the matter of taxation were solely one of legislative discretion, not controlled as to duty of action and uniformity of levy and assessment by constitutional provisions, an exemption of one class or item of property might have the effect of an “inducement” or “compensation” for the taxation of another class or item, with
One of the cases chiefly relied upon by respondent is State ex rel. Cornell v. Pointer, 59 Neb. 417, 81 N. W. 431. In this case the Supreme Court of Nebraska had under consideration the constitutionality of an Act of the legislature providing for the organization, incorporation and taxing of insurance companies, and for their admission from other states. Sections 36 and 3Y of the Act were the only ones Avhich provided for the payment of taxes, filing fees, and licenses by the corporations. These sections contained provisions similar to thqt 'found in the exemption clause of Section 681 of our Civil Code; but an examination of this Act of the Nebraska legislature will disclose the fact that its termes are somewhat different from that of the section of the Civil Code now. under consideration. The court, in passing upon the case, says: “Section 36, Chapter 4Y, Session Laws 1899, provides that each domestic insurance company organized under said law shall be taxed upon the excess of premiums over losses and ordinary expenses incurred in the state during the preceding year, in the county where the agent conducts the business, properly apportioned by the company, at the same rate other personalty is taxed, and that the fees and taxes specified in said section shall be in lieu of all fees and
It will be noticed that this Nebraska statute provided in part for the payment of a fixed sum to be levied and paid, without reference to the value of the companies’ business, that it provided for the levy of taxes- which were unequal between the two classes of insurance companies, that it also provided for the filing fees to be paid by the companies and for the payment of license by the companies^ and that the provisions respecting all these various taxes and fees were so united as to constitute an entity; and the court therefore held that the entire sections were void, and that the Act of which they were a part must necessarily be void, for the reason that it was apparent that the legislature did not intend to wholly exempt insurance companies from the payment of taxes. In the section of the law now
In Slauson et al. v. City of Racine, 13 Wis. 398, certain lands were .annexed' to the city.of Hacine under a provision that they should be exempt from a certain tax; and the court held that this exemption was void,. and that, it appearing that that was the condition on which the lands were annexed to .the city, the entire Act providing for their annexation was void.
The exemption in this case was clearly an inducement to the parties owning the lands to permit them to be brought within a-jurisdiction, and make them subject to ordinances, regulations and bur dens, which they did not bear before.
. In State v. Duluth Gas & Water Co., 76 Minn. 96, 78 N. W. 1032, 57 L. R. A. 63, the court, in considering a statute providing for the listing and assessing for taxation of franchises and other intangible property of certain corporations, held that the provision of the section deducting the total amount of indebtedness of a corporation from the value of its stock was unconstitutional and void, but that the same did not invalidate the remaining part of the Act. The court says, in part: “Again, while it' cannot be denied that the legislature intended the provision for deducting the indebtedness from the value of the capital stock to be a part of the system of listing and assessing the property of these corporations, * * * yet this, provision is -easily separable from other* provisions of this section. What would remain would constitute a complete system of taxation, fully capable of - being executed in accordance with what we think was the apparent legislative intent. The fact that this Void provision is in the same section with other provisions is not important, for the distribution into sections is purely arbitrary. The test is, rather, whether the provisions • are so essentially and inseparably connected and interdependent that the one may not operate without the other, or that it is impossible to suppose that the legislature would have passed the one without the other. There' is no such essential and inseparable connection
We also cite the following cases where revenue laws have been held valid after the unconstitutional provisions attempting to exempt certain property from taxation were eliminated: People v. McCreery, 34 Cal. 432; People v. Whyler, 41 Cal. 351; City of Dubuque v. C. D. & M. R. Co., 47 Iowa, 216.
It is a fundamental rule that a reasonable doubt as to the constitutionality of a statute will be resolved in favor of its validity, and that the judiciary will not declare an A‘et of the legislature unconstitutional unless it is clear that such Act is inhibited by the fundamental law. (University of California v. Bernard, 57 Cal. 612; Young v. City, 24 Utah, 321, 67 Pac. 1066; Stale ex rel. Cornell v. Poynter, supra; Western Ranches v. Custer County, 28 Mont. 278, 72 Pac. 659.) This section was' incorporated in the general codification of the laws adopted in 1895, and it is reasonable to infer that it did not receive that specific consideration it would have received, had it been a part of a separate bill. Certainly no inference can be entertained that the legislature intended to enact a provision inhibited by the Constitution, nor can it be maintained that an excessive tax has been imposed or levied on one class of property as an inducement for the exemption of another class, for the reason that no such authority is given or recognized by the Constitution, and for the further reason that in this case no excessive tax is imposed or levied. This property is taxed “at the same rate that other personal property is taxed.” The conclusion reached is that the part of Section 681 of the Civil Code providing for a tax “upon the excess of premiums received over losses and ordinary expenses incurred within the state” is not
Tbe other queries enumerated in tbe transcript are not discussed in tbe briefs, and are not noticed therein, except to be waived by appellant by reason of tbe decision in Mutual Life Insurance Co. v. Martien, 27 Mont. 437, 71 Pac. 470, decided since tbe commencement of this action.
Tbe county of Lewis and Clarke being made tbe party deu fendant by stipulation, we have assumed, without deciding, tbat it is tbe proper party" against whom tbe action should have been brought.
Under tbe views herein expressed, we are of tbe opinion that, omitting tbe last sentence, Section 681 of tbe Civil Code is constitutional, has not been repealed, and does apply to foreign mutual life insurance companies doing business in this state. But tbe right to enforce the collection of this tax at the time this suit was commenced was dependent on tbe authority conferred by Section 3940 of tbe Political Code; and, as this section has been declared unconstitutional in tbe case above cited, it follows tbat there was no- authority vested in any officer or party in tbe county where tbe suit was instituted to collect this tax at that time, and tbat under tbe agreed case tbe plaintiff was entitled to a judgment in its favor for its costs.
We recommend tbat tbe cause be remanded, with directions to the district court to modify tbe judgment in accordance with tbe views herein expressed, and, when so modified, that it be affirmed.
Per Curiam:. — For tbe reasons given in tbe foregoing opinion, it is ordered that this cause be remanded to tbe district court, with directions to enter judgment in accordance with tbe views therein expressed, and, upon tbe entry of the judgment as modified, the judgment appealed from be affirmed.
Concurrence Opinion
I concur; but I do- not agree with all that is said as to the intention of the legislature at the time it passed the said Section 681. I am not convinced that the legislature was not induced to put the income tax provided for in said sectioii upon the companies in consideration of their being made “subject to no other taxation under the laws-of this state, except taxes on real estate and the fees imposed by law.” I am in doubt, and I think reasonable, as to whether the unconstitutional sentence was ’the inducement for the taxing of the income; that is, “the excess of premiums received over losses and ordinary expenses,” etc. Having such a doubt, I do not hold the statute unconstitutional. (Young v. Salt Lake City, 24 Utah, 321, 67 Pac. 1066, citing many eases; People ex rel. Robertson v. Van Gaskin, 5 Mont. 352, 6 Pac. 30.)