27 S.D. 164 | S.D. | 1911
Lead Opinion
This action was instituted by the plaintiff, a fire insurance company, organized and existing under the laws of this state, to enjoin the collection by the defendant Basford, insurance commissioner of this state, of 'the 23/2 per cent, tax upon plaintiff’s gross earnings provided for by chapter 65, § 1, of the Session Laws of 1907, -and also to enjoin the other defendants from the collection -of taxes imposed by the local authorities of Minnehaha county upon the tangible property of plaintiff corporation; and, the judgment of the circuit court being in favor of the plaintiff and against the said Basford as insurance commissioner, he has appealed to this court. The defendants interposed demurrers to the complaint, and, the demurrer of defendant Basford being overruled, he elected to stand upon his demurrer, and judgment was thereupon rendered against him. The complaint sets out the laws and proceedings of the insurance commissioner and alleges the same was in violation of the state Constitution.
The law under which the commissioner was proceeding to collect the 23^ per cent.' upon said insurance company -is contained in chaper 65, § 1, of the Laws of 1907. The material parts of the section, as applicable to this controversy, read as follows: “Every fire insurance company doing business in this state, except mutual companies organized under the laws of this state, shall, at the -time of making the annual statement, pay into the state treasury as taxes two and one-half per cent, of the gross amount of premiums received in this state during the preceding year, * * * and the said sum of two and one-half per cent, shall be in full of all taxes, state and local, from such insurance company. Provided, that all mutual companies organized or operating under the laws of this state shall, at the time of making the annual statement, pay into the state treasury as taxes one per cent, of the gross amount of premiums received in this state during the pre
I-t is contended by the plaintiff and respondent that this law is unconstitutional, in that it violates certain provisions of the state Constitution relating to assessment and levy of taxes, and in that it exempts all other taxation upon insurance companies so paying the 2,y¿ per cent, as provided by the section; the theory of the plaintiff being that the 2yí per cent, specified in the section to be paid by the insurance companies is a tax levied upon said companies, and that the exemption from taxation provided for was intended to include all the tangible property of the corporation, including both real estate and personal property.
On the other hand, it is contended by the appellant that the 2,y2 per cent, provided for in the section to be paid by insurance companies is not levied upon them as a tax -in the ordinary meaning of that term, but is in the nature of an occupation or license tax imposed upon such companies, and therefore it does not come within the provisions of the Constitution applicable to- ordinary taxation, and that the exemption clause does not have the effect of exempting the corporations from the payment of taxes upon their tangible property.
It will thus be seen that the only question to be considered on this appeal is as to the constitutionality of the act of 1907. The power of the court to> declare an act of the Legislature unconstitutional is an extraordinary power and should only be exercised in a case free from all reasonable doubt. Such has 'been the rule uniformly held by this court. State v. Becker, 3 S. D. 29, 51 N. W. 1018; Bon Homme County v. Berndt, 15 S. D. 494, 90 N. W. 147; In re Watson, 17 S. D. 486, 97 N. W. 463.
The original section as enacted in 1885 reads as follows: “Every insurance company doing business in this territory, except in joint-stock and mutual companies organized under the laws of this territory, shall, at the time of making the annual statement, as required by law, pay into the (territorial) state treasury, as- -taxes', two and a half per cent, of the gross amount
This section, with two or three slight changes not material to this controversy, remained as the law of the territory and state, constituting section 675 of the Civil Code of 1903, until its -amendment in 1907. The effect of th-e amendment of 1907, it will be noticed is -simply to make the law applicable to all fire insurance -companies, and to include insurance corporations organized under the laws of -this state, as well as foreign fire insurance -companies, and to -impose a tax of 1 per cent, upon mutual insurance companies organized within this state, both of which were excluded under the section as it was originally enacted and -carried into the Code of 1903. Practically, therefore, the law' that we are required now to hold unconstitutional has been in force and acted upon for the past quarter of a century so far as it applies to corporations organized without the state.
The law, so far as relates to imposing an occupation or license tax upon foreign insurance corporations, is settled by the decision of the Supreme Court -of the United States in Paul v. Virginia, 8 Wall. 168, 19 L. Ed. 357, in which that learned court speaking by Mr. Justice Field, says: “The corporation, being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created. As said by this court in Bank of Augusta v. Earle: Tt must dwell in the place of its creation, and cannot migrate to- another sovereignty.’ The recognition of its existence even by other states, and the enforcement -of its contracts made therein, depend purely upon the -comity of those states — a comity which is never extended where the. existence -of the corporation or the exer-cis-e of its powers -are prejudicial to their interests or repugnant to their policy. Having no absolute right of recognition in other states, but depending for -such recogni
This decision has never been overruled by the Supreme Court of the United States or questioned by that learned court other than to limit it to corporations not engaged in interstate commerce. Pensacola Tel. Co. v. Western Union Tel. Co., 96 U. S. 1, 24 LEd. 708. The power of the Legislature to impose the payment of such a tax upon foreign corporations does not seem to be seriously questioned by the respondent in this case.
The power vested in the Legislature to -impose an occupation or license tax upon the business of parties or corporations within the state was very fully discussed by this court in the case of In re Watson, supra, and in our opinion -the decision in that case, in effect, clearly establishes the right of the Legislature to classify insurance corporations and impose an occupation or license tax upon such corporations organized within the state, and, as the questions here involved were so fully considered and discussed in that case, we do not deem it necessary to again enter upon a discussion of the same.
It seems to have been. -the theory of -the plaintiff and respondent in this action, and the entire argument of -the learned counsel for -the plaintiff seems to be based upon the theory before stated, that the occupation or license tax provided for by the section, is to be regarded as an ordinary -tax upon the corporation. Clearly under the decision of In re Watson, supra, such a theory is without foundation and cannot be supported, and the original law as enacted in 1885 clearly disproves such a theory as section 40 of the law in which’ that section is contained is found in chapter 69 of the Laws of that year, and is entitled “An act -to revise and amend article 11 of chapter 3, title 2 of part 3 of
While the fact that the section originally was in the insurance law and was carried into the insurance law of 1903 is not conclusive, it is certainly very strongly indicative of the intention of the Legislature to impose the tax as an occupation or license tax and not as a part of the taxes to be derived under the revenue laws of the territory or state. And the fact that the form of the tax is upon the gross amount of premiums received clearly indicates that it was not intended by the Legislature to impose a property or ordinary tax within -the provisions of the general law taxing property, and we may reasonably conclude that the Legislature of 1907, in amending -the law, had no intention the same should apply to ordinary faxes. The contention -therefore of the plaintiff and respondent that the law is in conflict with various sections of the Constitution of this state relating to taxation of property generally is without merit, as those sections, as is clearly shown by the opinion of In re Watson, have no application to an occupation or license tax.
The only serious question, therefore, presented on this appeal, is as to that provision- of the law which provides: “And the said sum of two and one-half per cent, shall be in full of all taxes, state and local, from such insurance company.”
It is contended by the respondent that, under the terms of this clause of the section, the -state is without power to collect further -taxes upon the property of fire insurance -corporations, notwithstanding they may be possessed of much -real and personal property within the state, and hence in making this exemption- the law is rendered -clearly unconstitutional, in that the ' Constitution prohibits such -exemption.
It is contended, however, by the appellant that inasmuch as the Constitution makes a distinction between the taxing of corporations and the taxing of corporate property, and inasmuch as
Section 2 of article n of the Constitution provides that: “All taxes to be raised in this state shall be uniform on all real and personal property, according to its value in money, * * * so that every person and corporation shall pay a tax in proportion to the value of his, her or its property.” And by section 3 it is provided: “The power to tax corporations and corporate property shall not be surrendered or suspended by any contract or grant to which the state shall be a party.”
It will be observed that by'the provisions of section 3 a distinction is made between the power to tax corporations and corporate property. It is quite clear, therefore, that while corporations, as such, may be required to pay an occupation or license tax and may be exempted, upon the payment of such tax, from further occupation faxes or license taxes, such exemption in no manner affects the power to tax the corporate property. Such property is to be assessed and taxed the same as property of individuals. Hence it is quite clear that it was not the'intention of the Legislature to exempt insurance corporations from the payment of taxes
If is the further contention of the respondent that there is ,a distinction -between joint-stock and mutual insurance companies organized within the s-tate, and therefore that the law is unconstitutional, There is clearly no merit, however, in this contention, as it was perfectly competent for the Legislature, in levying occupation or license taxes, to- distinguish between the different classes of corporations, a-s well as different classes of occupations.
Conceding to the Legislature the power to impose occupation -or license taxes, the exercise of that power is a matter within its discretion, and cannot be questioned by the courts. In our view, therefore, the law in controversy in this action is clearly constitutional, and -the decision of the -circuit court holding otherwise cannot be 'sustained.
The learned counsel for the plaintiff and respondent has cited and quoted from a number of decisions in support of the theory advanced by it in the presentation of this case; but the decisions upon this question are based -so largely upon the peculiar Constitutions found in the different states, and discussed by the courts, and are so -conflicting, that a review of them in this opinion would serve no useful purpose, and we therefore omit such a review.
We are clearly of the opinion, as before -stated, that the law we are considering applies -only to occupation or license taxes, and that it was not the intention of the Legislature, in imposing this tax, to exempt -the tangible property of corporations from taxes upon their real or tangible propeiffy, and -that it -was -perfectly competent for the Legislature to classify insurance companies and impose upon them different rates as might be deemed proper in the judgment of the Legislature. Hence the distinction made between joint-stock companies and mutual insurance companies does not render the law unconstitutional.
Dissenting Opinion
I am unable to concur in the views expressed in the foregoing opinion. While it must.be presumed that the Legislature intended to pass only constitutional laws, and while it must be conceded that no statute passed by a Legislature should be declared unconstitutional unless it clearly and palpably conflicts with some provision of the Constitution, on the other hand, it must be conceded' — and as we read the foregoing opinion it is therein conceded — that, if the effect of the statute under consideration is an exemption from the payment of property faxes by those insurance companies who are required by such law to pay the 2 'per cent, tax, this statute must be held unconstitutional, as it would, under such construction, be in direct conflict with section 7, art. 11, of the Constitution of this stat(e, forbidding any law exempting property other than in such Constitution designated.
The foregoing opinion calls attention to the use of the terms “corporations” and “corporate property” as used in the Constitution of this state, and it is the view of the majority of this court that the Legislature must have had those terms as so used in mind, and that, when it used the term “taxes” in the exempting clause, by such word “taxes” it meant “corporation taxes”; that therefore the statute should be construed as if if read that the insurance companies shall “-pay into the state treasury as taxes two and one-half per cent. * * * and the said two and one-half per cent, shall be in full of all corporation taxes, state and local, from such insurance company.” I am unable to find in the wording of this statute anything that justifies the insertion by implication of any word. It seems to me 'that it would be impossible to use any plainer language to indicate an intent on the part of the Legislature to exempt such companies from property taxes, and certainly it could have been made no plainer unless by the use of
In the case of State v. Franklin County Savings Bank & Trust Co., 74 Vt. 246, 52 Atl. 1069, the question arose as to how the word “deposits,” as the same was used in a taxation law, should be construed; it being claimed upon the one hand that it should be construed as though referring to only one class of deposits, while on the other hand it was held that as used it included all classes of deposits, and in construing such statute the court uses the following language: “It specifies that the tax shall be ‘upon the average amount of its deposits, including money or securities received as trustee under order of court or otherwise/ with certain specified deductions therefrom. We discover nothing in any of the provisions of the law indicating that any particular class of general deposits was intended to be excluded therefrom. There is no ambiguity in the law in this regard. In Perkins v. Cummings, 66 Vt. 485, 29 Atl. 675, it is said 'that, ‘where a statute is plain and unambiguous, courts cannot supply supposed omissions nor correct supposed mistakes, but must administer it as the Legislature made it.’ ” The words of the learned justice who wrote the dissenting opinion in Reed v. Todd, 25 S. D. 421, 127 N. W. 527, might well be quoted here: “The only possible thing that any future Legislature might with propriety add to the language used * * * is that the courts of this state shall not construe this section -to mean anything else than just what it says.”
I am unable to see the slighest ambiguity in the words used in the statute before us, and find nothing in the law that to my mind justifies this court in departing from the clear language of such statute in order to find an intent on the part of the Legislature such as would render the law constitutional. On the other hand, I find within the law itself a word which to my mind absolutely removes any doubt regarding what was in the minds of the legislators when they inserted this provision for exemption from other taxes. It will be noted that the law reads that “said two and one-half per cent, shall be in full of all taxes, state and local,
Concurrence Opinion
I concur in the views expressed in the foregoing opinion by Justice WHITING.