| Wis. | Jun 13, 1916
Lead Opinion
The following opinions were filed December 1, 1915:
The plaintiff, a domestic mutual life insurance corporation, doing business on the level-premium plan, brings action in this court against the state to recover license taxes paid to the state under protest amounting to $482,193.23 in 1912 and $505,643.22 in 1913.
The license taxes were levied under sec. 1220, Stats. 1911 (being sec. 51.32, Stats. 1913), and the plaintiff’s claim is that the statute is void (1) because it denies the equal protection of the laws guaranteed by the state constitution and by the Fourteenth amendment to the federal constitution, and (2) because it unlawfully interferes with interstate commerce. The complaint shows that the claims were duly presented to the state legislature and disallowed. The state demurs (1) because this court has no jurisdiction of the defendant’s person, (2) because it has no jurisdiction of the subject of the action, and (3) because the complaint does not state a cause of action.
In support of the first two grounds of demurrer it is argued that sec. 3200 of the Statutes, under the terms of which this action is brought by original action in this court, is void because it attempts to confer original jurisdiction upon this court in violation of sec. 3 of art. YII of the state constitution,
It is sufficient to say in answer to this objection that sec. 27 of art. IY of the constitution provides that “the legislature shall direct by law in what manner and in what courts suits may be brought against the state,” and that it was decided by this court in 1853 (Dickson v. State, 1 Wis. 122" court="Wis." date_filed="1853-06-15" href="https://app.midpage.ai/document/dickson-v-state-6596926?utm_source=webapp" opinion_id="6596926">1 Wis. 122) that this section gave power to the legislature to designate the supreme court as the court in which such suits might be brought, such designation being considered as one of the exceptions referred to in sec. 3 of art. VII.
This decision has never been overruled or questioned. It directly sustained the constitutionality of ch. 249 of the Laws of 1850, which has been upon our statute books ever since, and with unsubstantial changes now appears as secs. 3200-3203 of the Statutes. This decision has also been uniformly recognized in numerous instances by all departments of the state government, legislative, executive, and judicial, as correctly construing the constitution from the time of its rendition up to the present time, a period of more than sixty years. To overrule it now would be hardly permissible even if we were convinced (which we are no!) that it was incorrect as an original proposition.
The law in question provides in substance that every company transacting the business of life insurance in this state (except fraternal societies having lodge organizations and insuring only their own members) shgll annually pay as license fees for transacting such business and in lieu of all other taxes, except taxes on real estate, the following amounts:
Domestic level-premium or old-line companies three 'per centum of the gross income for the year, excepting therefrom rentals of real estate on which the taxes have been paid, and premiums collected outside the state on policies held by nonresidents ;
Stipulated premium companies, foreign or domestic, $300;
Assessment companies, foreign or domestic, and fraternal associations having no lodge organizations, $300;
Fraternal associations having lodge organizations and insuring only their own members, nothing.
The plaintiff’s first claim is that this law denies to it the equal protection of the laws because it makes arbitrary discrimination (1) as between it and foreign level-premium companies, (2) as between level-premium companies and fraternal insurance organizations, and (3) as between domestic level-premium companies and assessment and stipulated premium companies.
The plaintiff’s second claim is that the law unlawfully hampers and interferes with interstate commerce.
These claims will be discussed in their order.
It is clear that this so-called license fee is a privilege or occupation tax, and that, while it is not subject to that clause of
The disparity between the annual license fee required of domestic companies by the law in question and the fee required of foreign companies is admittedly very great, and the question arising is simply whether there is any substantial difference, other than the difference between foreign and domestic corporations, which differentiates the two classes and which justifies such great difference in treatment.
The question is by no means an easy one. A corporation is a person within the meaning of the Fourteenth amendment, and a state eannot under that amendment discriminate against its own citizens and in favor of citizens of other states any more than it can do the reverse. Yick Wo v. Hopkins, 118 U.S. 356" court="SCOTUS" date_filed="1886-05-10" href="https://app.midpage.ai/document/yick-wo-v-hopkins-91704?utm_source=webapp" opinion_id="91704">118 U. S. 356, 6 Sup. Ct. 1064; State v. Hoyt, 71 Vt. 59" court="Vt." date_filed="1898-01-26" href="https://app.midpage.ai/document/state-v-hoyt-6584937?utm_source=webapp" opinion_id="6584937">71 Vt. 59, 42 Atl. 973. Every person, whatever-his citizenship, is protected against unequal laws.
On the face of it this law seems to allow foreign life insurance companies to do business in this state upon payment of a mere nominal fee, while exacting from domestic companies for the same privilege a very large fee. Are there any real differences between the two classes which bear a just and proper relation to the attempted classification and justify this difference of treatment? If there are such differences the
The question whether there are substantial differences of condition reasonably suggesting the propriety of difference of treatment is primarily a legislative question, and the legislative judgment thereon is not to be disturbed by the courts unless legislative action has clearly passed the boundaries of reason. Given the differences of condition above referred to and the field of legislative action is very broad. The legislative judgment is not to be interfered with merely because the judicial mind might reach a different conclusion as to the policy or wisdom of the law nor unless the, court can confidently say that no reasonable ground can be discovered to support the classification.
In approaching this question it is important to note at the outset that the license tax in question is levied in lieu of all other state taxes except taxes on real estate owned by the company. It covers all the contributions which the state demands from the company or its business except real-estate taxes, which are relatively small in amount. It is common knowledge that all of the great level-premium insurance companies of the present day have vast reserve funds, to protect their liabilities on policies, running up into the hundreds of millions of dollars, and that these reserves are invested in interest-bearing securities, of which real-estate loans secured by mortgage generally form the largest part. In the complaint in the present case it appears that on December 31, 1911,
The power of the state under the constitution to levy occupation taxes in the shape of license fees in lieu of other taxes cannot now be questioned. Chicago & N. W. R. Co. v. State, 128 Wis. 553" court="Wis." date_filed="1906-06-21" href="https://app.midpage.ai/document/chicago--northwestern-railway-co-v-state-8188534?utm_source=webapp" opinion_id="8188534">128 Wis. 553, 589, 108 N. W. 557; Nunnemacker v. State, 129 Wis. 190" court="Wis." date_filed="1906-06-21" href="https://app.midpage.ai/document/nunnemacher-v-state-8188564?utm_source=webapp" opinion_id="8188564">129 Wis. 190, 108 N. W. 627. Having determined on the license system of taxation for all life insurance corporations, the state faced this situation: on one hand were the domestic level-premium companies (of which the plaintiff is by far the most conspicuous example), having their reserves invested in securities or credits, all of which were not only taxable in Wisconsin but'should, in justice to other taxpayers, contribute to the expenses of the government which created and protects their owners; and on the other hand were the foreign level-premium companies, also having great reserves, practically none of which were taxable in Wisconsin and which were presumably subjected to just and adequate taxation in their respective domiciles. The essential difference was not the difference in residence but the difference in the location for taxing purposes of the reserves. This difference is certainly a very real one, germane to the subject of license-fee taxation, and it plainly suggests, if it does not indeed demand, some substantial difference of treatment in the matter of the amount of the fees exacted. It would be indefensible to subject both classes to the merely nominal fee of $300, thus allowing the great reserves of the local companies to escape taxation entirely, and it would be equally indefensible to exact of
Plainly, the only course which could be followed, if just taxation were to be approximated under the license system of taxation, was a course which should in some way compel the domestic company to make a fair contribution to the support of its home government, while recognizing and allowing for the fact that presumably every foreign company is compelled by its home state to do substantially the same thing.
Whether this be done by personal property taxation, by income taxation, or by license-fee taxation was, we think, a question for the state to decide. We are unable to say that the state has not acted within the bounds of reason in fixing the license fees in the present case. It seems quite certain that a personal property tax would have exacted far larger contributions from the plaintiff to the public revenues than the license fee provided by this law.
It is not to be expected that any precedent exists exactly on all-fours with the present case, but we think it clear that the principle upon which the classification in question is based has been approved in a number of cases decided by the federal supreme court in recent years. Pacific Exp. Co. v. Seibert, 142 U.S. 339" court="SCOTUS" date_filed="1892-01-04" href="https://app.midpage.ai/document/pacific-express-co-v-seibert-93220?utm_source=webapp" opinion_id="93220">142 U. S. 339, 12 Sup. Ct. 250; Kidd v. Alabama, 188 U. S. 130, 23 Sup. Ct. 401; Brown-Forman Co. v. Kentucky, 211 U. S. 563, 30 Sup. Ct. 578.
The conclusion reached on this branch of the argument-renders it unnecessary to consider at length the question whether the law is in any respect aided by the retaliatory feature. Retaliatory laws have been held valid by the fed
This brings us to the contention that there is unlawful discrimination between level-premium companies and fraternal benefit associations having lodge organizations, which, under the terms of the law, are exempted from the payment of any license .fees. We do not feel that we should be justified in consuming any considerable amount of time or space in meeting this contention.
That there is much difference of condition between the great level-premium company with its great reserves and the Ordinary fraternal benefit association cannot be questioned. That the differences are such as to justify classification and difference of treatment so far as license taxation is concerned seems to us quite evident. The level-premium company is purely a business concern; the true fraternal benefit association is a banding together of many groups of neighbors primarily for social purposes, but with the further idea of rendering mutual help in misfortune, sickness, or death and inculcating the principles of brotherhood among the members. Such associations have no great expense account, they conduct the insurance feature of their organizations at comparatively small cost, and they have no such immense volume of reserve funds. Probably the lodge organization is their most marked differentiating characteristic. It is this characteristic which the legislature has -chosen as decisive of their character, and we do not feel that we can say that the choice was made without reason. It avails not to say that there may be some instances where the lodge organization is almost or quite a pretense and the supposed fraternal association really approaches very closely to an insurance company. Nearly all classification possesses this defect. Individual cases near the border line
This state has recognized the distinct and exceptional character of fraternal associations and treated them as forming a class which should he subject to its own legal code since 1889. and still continues to do so. Sec. 1956 et seq. Stats. The brief of the state informs us that the laws of forty-two states recognize the same distinction and that twenty-nine of these states have specified the lodge system as one of the distinguishing features of such organizations. We have not verified all of the citations, but have no douht of their substantial accuracy. We see no reason to doubt that the differences between these organizations as a class and level-premium insurance companies as a class are so real and substantial as amply to justify classification. This conclusion receives support in the ease of German Alliance Ins. Co. v. Lewis, 233 U.S. 389" court="SCOTUS" date_filed="1914-04-20" href="https://app.midpage.ai/document/german-alliance-insurance-v-lewis-98166?utm_source=webapp" opinion_id="98166">233 U. S. 389, 34 Sup. Ct. 612.
We now reach the alleged illegal discrimination between domestic level-premium companies on the one hand, and assessment and stipulated premium companies, whether foreign or domestic, on the other. The following statements from insurance writers are quoted with apparent approval in the plaintiff’s brief:
“The assessment system ... is that one under which, theoretically, the cost of the insurance is annually collected from the members by assessing on them the costs. In practice there have been so many modifications of this theory that it is difficult to characterize the assessment plan, hut the essential idea in this system is that no resérve is collected.” Gephart, Principles of Insurance, pp. 100, 101.
“For a long time they [assessment companies] were all agreed that a reserve was not merely unnecessary but useless and dangerous. But after a time the simple science of the*496 natural premium tables made it clear that, whether a society regarded it or not, there is a gradual and inevitable advance in the cost of insurance with the increase of hazard because of the advancing ages of the insured; and, consequently, several co-operative companies gave up the principle of ‘pay as you go’ and collected such amounts in excess of current expenses and losses as in the varying opinions of their managers would be likely to hold the premiums stable. The variety of views as to the cause of alterations in current cost and the mode of remedying them is indicated by various terms adopted to designate the reserve accumulations — emergency fund, guarantee fund, mortuary reserve fund, special reserve fund, and the like. This is a very great change from the original basis and utterly invalidates the narrow and specific definition of assessment insurance which, has been given. The new definition must cover practically all forms of insurance which do not make compliance with legal reserve laws fundamental; in fact, such compliance or noncomplianee may be made the shibboleth to distinguish the two forms of insurance.” Dawson, Assessment Life Insurance, pp. 4, 5.
“The assessment companies . . . are less scientific in their operations. No mortality tables are used, no interest rates are assumed, and no technical reserves maintained. The original plan of the purely assessment companies was to wait until one or more losses had occurred and then levy an assessment sufficient to cover such loss or losses. This, however, proved uncertain and so annoying to the members that they invariably withdrew, the young and healthy withdrawing first. This left the old and decrepit to pay the consequent increasing assessments and finally to meet with disaster. A variety of methods have been tried to obviate this difficulty. In late years most of these associations have collected advance assessments in the form of stipulated premiums and have accumulated so-called ‘reserves.’ ” Wisconsin Insurance Report, 1901 (Life and Casualty), 39, 40.
“A term [stipulated premium] somewhat vaguely applied to the premium charge of sundry assessment associations. Instead of irregular assessments, a stipulated amount yearly is charged, the same to remain level until found inadequate for the payment of increasing death losses, when an additional charge may be made. The original charge, the so-called ‘stipulated premium,’ varies in different associations according to the guess of the management. It serves the purpose*497 for a few years, blit sooner or later proves inadequate, and must be increased in amount or an additional assessment must be made.” Jackson, Definitions in Life Insurance, p. 24, No. 51.
It is quite apparent from these three excerpts that assessment insurance pure and simple, except so far as the fraternal orders are concerned, has broken down, and that experience has demonstrated that a premium plan having some resemblance at least to the level-premium plan must be adopted if assessment companies are to live. The legislature of Wisconsin recognized the inherent weaknesses of assessment insurance as early as 1899, and by ch. 270 of the laws of that year authorized the formation of companies on the stipulated premium plan and provided for the reincorporation of assessment associations or societies under the act. This act required the charge by such companies of net premiums calculated on mortality tables equal to that of yearly term insurance at the age of entry and increased at least twenty-five percent. It also provided for the accumulation of certain reserves. This act was evidently not satisfactory and was repealed by ch. 121, Laws 1907. By ch.- 447 of the laws of the same year two sections were added to the Statutes which are now numbered secs. 1955y — 1 and 1955y — 2.
The first of these sections provides that- no life insurance company (other than fraternal associations) “which issues contracts, the performance of which is contingent upon the payment of assessments or calls made upon its members, shall do business within this state except such companies or associations as are noiv authorized to do business within this state and which shall value their assessment policies or certificates of membership as yearly renewal term policies according to the standard valuation of life insurance policies prescribed by the laws of this state.” The section further provides for the details of the required valuation and also compels the company to keep a certain reserve.
By this section all assessment companies were forbidden to
There were but three foreign assessment companies doing business in tbe state in 1907 and there is said to be but one now. This company must, of course, be doing business on tbe stipulated premium plan and must- constitute tbe entire class. Tbe reasons already given for upholding classifications as between domestic and foreign level-premium companies apply with greater force to tbe classification as between domestic level-premium and foreign assessment or stipulated premium companies.
It is said that the foreign investment branch of the business is not interstate commerce because it is a mere necessary incident of, and cannot be considered apart from, the insurance business, which, as we have seen, is held by the federal supreme court not to be interstate commerce. The argument may be sound, but we do not pass upon it. We shall undertake no voyage of discovery on the sea of interstate commerce unless we are compelled to do so. That sea. is a troubled one, full of rocks and shoals, as yet imperfectly charted. We do not find ourselves compelled to embark upon it in this case.
If, as argued by the plaintiff, the investment business be a separate business and a form of interstate commerce, the answer is that the law places no burden upon that business. It requires the payment of a licc.ise fee for transacting life insurance business in this state. The plaintiff is not required to transact this last named business; it may do so or not, as it pleases. If it does not do so, it may transact all the investment business which it desires to transact without paying any license fee under this law.
It is very well established by federal decisions that when the state exercises its legitimate and rightful power of taxation of an occupation or' privilege it may rightfully measure that taxation either by property or the receipts from property neither of which are in themselves taxable. Maine v. G. T. R. Co. 142 U.S. 217" court="SCOTUS" date_filed="1891-12-14" href="https://app.midpage.ai/document/maine-v-grand-trunk-railway-co-93211?utm_source=webapp" opinion_id="93211">142 U. S. 217, 12 Sup. Ct. 121, 163; Flint v. Stone Tracy Co. 220 U.S. 107" court="SCOTUS" date_filed="1911-03-13" href="https://app.midpage.ai/document/flint-v-stone-tracy-co-97378?utm_source=webapp" opinion_id="97378">220 U. S. 107, 31 Sup. Ct. 342; Baltic M. Co. v. Massachusetts, 231 U.S. 68" court="SCOTUS" date_filed="1913-11-03" href="https://app.midpage.ai/document/baltic-mining-co-v-massachusetts-97979?utm_source=webapp" opinion_id="97979">231 U. S. 68, 34 Sup. Ct. 15. In the last cited case it is said in the opinion:
“It is the commerce itself which must not be burdened by state exactions which interfere with the exclusive federal authority over it. A resort to the receipts of property or capital employed in part at least in interstate commerce, when such receipts or capital are not taxed as such but are taken as*500 a mere measure of a tax of lawful authority within the state, has been sustained” (citing cases).
These cases seem to us decisive of the question here. The receipts from the foreign investment business are simply used as measuring in part the amount of the tax to be levied, not on that business nor on the receipts themselves, but on the business of life insurance conducted by the plaintiff, a subject of taxation which is unquestionably within the legitimate taxing power of the state.
It appears by the complaint that the total income of the company by which the license fee for the year ending .December 31, 1911, was measured was $16,013,101.16, of which sum $2,163,808.84 consisted of interest on premium notes and policy loans or liens. Receipts of the same character, though differing somewhat in amount, were included in the income of the following year. The plaintiff’s claim is that these receipts are not “income within the meaning of the law,” and hence that a ratable proportion of the license fee paid should be recovered, irrespective of the result on the general question of the constitutionality of the law.
It appears that the so-called policy loans are made to policyholders by virtue of a clause in the. policies which declares that, on request of the assured and upon sole security of the policy properly assigned, the company will advance, at a rate of interest not exceeding six per cent, per annum, an amount which, with interest, shall equal the cash surrender value of the policy. The argument is that, while these arrangements are called “loans,” they are in fact but advance payments of amounts already owing to the policyholder and the so-called interest is simply an additional premium for continued insurance, and reliance is placed on the case of New York L. Ins. Co. v. Assessors, 158 F. 462" court="None" date_filed="1908-01-11" href="https://app.midpage.ai/document/new-york-life-ins-v-board-of-assessors-for-the-parish-of-orleans-8766003?utm_source=webapp" opinion_id="8766003">158 Fed. 462, affirmed in Orleans Parish v. New York L. Ins. Co. 216 U. S. 511, 30 Sup. Ct. 385.
We are not disposed to draw fine lines on this question. While tbe plaintiff’s claim did not go into details, it did certainly make tbe distinct assertion tbat there were portions of tbe fee which were illegal and which it sought to recover even if tbe law itself were to be held constitutional.
Tbe plaintiff argues tbat, if these so-called interest payments be in fact premiums, they are premiums collected outside of tbe state on policies held by nonresidents and hence are not part of tbe income made by tbe law tbe measure of tbe taxation.
Tbe complaint charges tbat “tbe proportionate part of tbe business transacted by it through commercial intercourse with residents of states other than Wisconsin was on December 1, 1911, approximately as follows:
“1.
“2.
“3. t
“4. Of tbe total amount of outstanding policy loans or advances more than 93 per cent.”
Eor tbe purposes of tbe case we assume tbat this should be
In the case cited (Orleans Parish v. New York L. Ins. Co. 216 U.S. 517" court="SCOTUS" date_filed="1910-02-28" href="https://app.midpage.ai/document/board-of-assessors-of-the-parish-v-new-york-life-insurance-97197?utm_source=webapp" opinion_id="97197">216 U. S. 517, 30 Sup. Ct. 385) the state legislature of Louisiana had passed a law attempting to tax a foreign insurance company on such policy loans as “credits” within the state. The trial court and the United States supreme court held that they were in fact but advance payments made by the insurance company, and that the so-called note given as evidence of the advance did not represent a debt because there was no debt created, and if no debt no credit.
Accepting this doctrine fully it nevertheless does not control this ease. The question here is simply, What did the legislature mean by the words “gross income” and “premiums collected” ?
If they used these words in their ordinary everyday sense (and there is nothing to show to the contrary), then the case cited has no appreciable bearing on the present controversy, because it must be admitted at once that the interest payments on policy loans have never been called premiums either by the plaintiff or by the public generally. If they are not “premiums” within the meaning of that word as used in the act they are necessarily a part of the “gross income” upon which’ the three per centum must be calculated.
The fact that in a logical sense they may possess more of the characteristics of premiums than of credits cuts no figure. The controlling question is whether the legislature intended to include them when it used the word “premiums.” We are clearly of opinion that there was no such legislative thought.
Our conclusion is that the complaint states no cause of action.
Dissenting Opinion
(dissenting). I am unable to agree with the disposition of this case made by the majority of the court and shall state as briefly as possible the grounds of my dissent.
1. The case of International T. Co. v. Peterson, 133 Wis. 302" court="Wis." date_filed="1907-11-05" href="https://app.midpage.ai/document/international-textbook-co-v-peterson-8188931?utm_source=webapp" opinion_id="8188931">133 Wis. 302, 113 N. W. 730, was decided (not without misgiving) before the decision in International T. Co. v. Pigg, 217 U.S. 91" court="SCOTUS" date_filed="1910-04-04" href="https://app.midpage.ai/document/international-textbook-co-v-pigg-97222?utm_source=webapp" opinion_id="97222">217 U. S. 91, 30 Sup. Ct. 481. The latter was a default ease, and the Peterson Case also went by default in that high court. But both cases were, after full argument, reviewed and confirmed in New York L. Ins. Co. v. Deer Lodge Co. 231 U.S. 495" court="SCOTUS" date_filed="1913-12-15" href="https://app.midpage.ai/document/new-york-life-insurance-v-deer-lodge-county-98020?utm_source=webapp" opinion_id="98020">231 U. S. 495, 510, 34 Sup. Ct. 167, and it was there affirmed, contrary tO’ the decision of this court in the Peterson Case, that the transmission, for a cash consideration paid or promised, of didactic written or printed discourse with explanatory diagrams and charts and with text-books, not for resale, from a person in one state to a person in another state, constituted interstate commerce. These decisions were not alone precedents, they were also events in the development of federal and state relations under the federal constitution. Another event which has since occurred is the enactment of the currency bill with its chain of banks and the necessity of a continual transmission of money, notes, bonds, and securities from one state to another. So that,'without going into any further specification or analysis of federal decisions, I think there can no longer be any doubt that carrying on a loan business involving the transmission of money and securities with the necessary correspondence, instructions, vouchers, and other writings, constitutes interstate commerce. I do not know of any principle or precedent that would warrant us in saying that, because the plaintiff is an insurance company
2. I think the statute in question, sec. 1220, Stats. 1911, could and should have been so construed as to save it from all taint of unconstitutionality. This would, of course, permit some recovery by the plaintiff. Why does the statute exempt from the base upon which the amount of license fee is computed “premiums collected outside of the state of Wisconsin on policies held by nonresidents of the state of Wisconsin” ? I do not think we can say with any confidence that it was be
3. AVith the interpretation given to this statute by the taxing officers of the state and approved by the majority opinion, I think, with all deference to that opinion, the statute is un
A I think tbe classification made by tbe act in question could be upheld if there were no questions of interstate'commerce involved.
On January 11, 1916, upon motion of tbe plaintiff, tbe mandate was amended so as to allow an amended complaint to be received and filed. The defendant demurred to such complaint on tbe ground that it did not state facts sufficient to constitute a cause of action.
For tbe plaintiff there was a brief by Olin, Butler, Stebbins & Stroud, and oral argument by Harry L. Butler and Byron H. Stebbins.
The following opinion was filed June 13, 1916:
Pursuant to leave of court an amended complaint has been filed in this action to which the state has demurred and argument has been had thereon.
While many new allegations have been added to the complaint we do not regard the situation as essentially changed. The new allegations, for the most part, merely add details to facts alleged in general terms in the original complaint or assumed to exist by the former decision.
We deem it necessary to refer to but two points which are urged by the plaintiff.
The great disparity between the taxation of foreign and do-, mestic level-premium companies is very strongly urged and said to be so great as to be manifestly unconscionable and arbitrary. In this connection it is argued that if a personal property tax had been levied on the plaintiff’s reserve, consisting of securities and credits, there would have been deducted from the amount thereof, under the existing policy of the state with regard to the taxation of such property, its liabilities to policyholders, i. e. the present value of its outstanding policies valued as required by law, which is about ninety per cent, of the reserve. It is also argued that if the plaintiff had been subjected to income taxation under the state law it would have paid much less than under the three per cent, license fee requirement.
We do not regard either contention as well founded. Our statutes governing the taxation of securities and credits for many years provided that there should be exempted from taxation so much thereof as “shall equal the amount of bona fide and unconditional debts by him owing.” This provision was repealed by the Income Tax Law, which marked the abandon
It seems entirely clear that the liability to policyholders which the plaintiff refers to is not in any sense an “unconditional debt,” and as the policy of the state has never extended the exemption to any liability short of an unconditional debt we are unable to see any sound basis for the argument made.
As to the contention that if the plaintiff were taxed under the income tax system its tax burden would be far less than under the present license system, we shall not attempt to go into the arguments and figures presented in detail. It is sufficient to say that we do not think it appears from the allegations of the amended complaint that the plaintiff now pays substantially greater sums than it would pay under either the income taxation system or.the former personal property taxation system.
At all events there does not affirmatively appear to be any such disparity as would condemn the law as arbitrarily discriminatory.
The interstate commerce feature of the case is reargued and the recent case of Kansas City, Ft. S. & M. R. Co. v. Botkin, 240 U. S. 221, 36 Sup. Ct. 261, is called to our attention as in conflict with the previous opinion in the present case. We have been unable to see in what respect the cases conflict. There are no other contentions made which we deem it necessary to comment upon.
Upon the opinion previously rendered as supplemented by the present opinion the demurrer must be sustained.
By the Court. — The demurrer to the amended complaint is sustained, and judgment ordered dismissing the action on the merits without costs.