150 Ind. 216 | Ind. | 1898
Lead Opinion
This suit was brought by appellees for ■themselves and on behalf of many other persons, citizens of Indiana, similarly situated, who, it is alleged, are too numerous to be brought before the court, the
The cardinal question lying at the bottom of the whole controversy is whether life insurance policies are legally subject to taxation in this State. The extreme length to which the argument of that question has been extended has made it needlessly burdensome. It is conceded by the appellants that no insurance policies of any description have ever been taxed in this State heretofore. Section 3 of the tax law of 1891 provides that “all property within the jurisdiction of this State, not expressly exempted, shall be subject to taxation.” Section 8410, Burns’ R. S. 1894. In section 50 of that act, specifying what shall be embraced in the schedule, the last specification is “all other goods, chattels and personal property, not heretofore specifically mentioned, and their value, except property specifically exempt from taxation.” These provisions are relied on by the appellants’ counsel as including life insurance policies, if they are personal property.
The Attorney-General, on behalf of the State, says:
Appellants’ learned counsel also contend that section 1 of article 10 of the State constitution requires the taxing officers to assess for taxation life insurance policies, they being property within the meaning of the tax law and that provision of the constitution. It reads as follows: “The General Assembly shall provide, by law, for a uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only for municipal, educational, literary, scientific, religious or charitable purposes, as may be especially exempted by law.”
This constitutional provision does not confer the power of taxation, because that power being sovereign, it is inherent in the legislature. But the provision is rather a limitation upon the power to tax. It is, therefore, a legislative power to select the subjects for taxation, and this constitutional provision imposes the duty and limitation upon the legislature of providing by law regulations or methods for a just valuation of all property, both real and personal, for taxation. Where the legislature has not exercised this power, no other department of the State government can supply the omission; and where no such regulation has been prescribed by law as to any particular species of property, then such property cannot be thxed. This conclusion may rest either on the inference from such failure to prescribe such regulations that the legislature did not intend to select that particular species of property as a subject for taxation, or regardless of the'legislative intent the failure to prescribe such regulations leaves such property unselected as a subject for taxation. Riley
As to the first objection to appellants’ contention, we note that the statute makes annuities and royalties subject to taxation, and provides a regulation for the valuation of them for taxation, thus: “In making the valuation, annuities and royalties shall be valued at their present cash value.” In the absence of this regulation annuities would only be taxable on the annual installments that were due and payable, and the bond itself would not be taxable. State v. Cornel, 31 N. J. L. 374.. There are many other regulations as to the method of valuation of certain classes of property. The difficulty arising out of the absence of any statutory regulation for the just valuation of such property as life insurance policies seems to have been keenly appreciated by the State Board of Tax Commissioners, and so they attempted to supply the omission by the following order: “Instructions to County Assessors. .Office of State Board of Tax Comm mi ssioners. Indianapolis, Ind., May 19th, 1897. The following tables, based upon the combined experience of actuary’s tables, have been prepared for your guidance in arriving at the taxable value of insurance policies. The tables are based upon policies for the sum of $1,000.00 — the computations being made at the universally recognized rate of four per cent. By reference to, and a careful study of the tables and the
It is conceded by the appellees that the legislature may, in the exercise of its sovereign power, tax the citizen’s interest in a policy of life insurance ad valorem. What they contend for is that life insurance policies are of such a nature, and the interest of the person insured, or the beneficiary therein named, is so contingent, so dependent, not only upon the methods and plan of the insurer and his solvency, but upon complicated mathematical calculations to determine the net value of his interest in the reserve fund, that the ordinary methods of listing and valuing property, notes, accounts, shares of stock, and the like, are wholly inadequate to secure a just valuation thereof for taxation.. They say the action of the State Board of Tax Commmissioners in compiling and publishing tables to be used by township assessors in valuing the interest of holders or beneficiaries of life
The second objection urged to appellants’ contention is of still greater force. It is that the legislature in the enactment of the present tax law, by the language we have quoted, did not intend to include life insurance policies as subjects of taxation. It may be conceded that it was a duty devolved on the legislature by the constitutional provision quoted to provide for the taxation of all property, both real and personal, except such only for municipal, educational, literary, scientific, religious, or charitable purposes as it might especially exempt by law. Cooley on Taxation (2nd. ed.), 326, says: “It is sometimes a serious question whether a constitutional provision is so far complete and specific in itself as to constitute a sufficient law without assistance from legislation. If it is, it must be considered mandatory and self-executing, and effect must be given to it accordingly. If it is not, it simply lays its mandate upon the legislature, and will fail if that body neglects to pass the necessary laws to carry out the will of the people expressed in it.” And the same author in his work on Constitutional Limitations (6th ed.), p. 98, says: “Sometimes the constitution in terms requires
According to these principles, and we think they are correct, the constitutional provision quoted is not self-executing, but requires appropriate legislation to carry it into effect. Neither is there any question of the constitutionality of the tax law for failure to carry out in full the constitutional mandate. If the present tax law includes in the words we have quoted life insurance policies as subjects for taxation, then every tax law that ever was enacted under the present constitution has likewise included them, and yet never before was it supposed that they were so included. Such laws have uniformly been construed and acted upon as if they were not intended to select such policies as subjects for taxation, nor has any attempt ever before been made by any of the officers charged with the duty of executing such laws in this State to assess and value for taxation such policies. 'This is' practically conceded by the learned counsel for the appellees. Black on the Interpretation of Laws, p. 221, says: “The executive and administrative officers of the government are bound to give effect to the laws which regulate their duties and define the sphere of their activities, and, in so doing, they must necessarily put their own construction
In order to ascertain the intention of the legislature the court should look to the letter of the statute, to it as a whole, to the circumstances under which it was enacted, to the old law, if any, to the mischief to be remedied, to other statutes, to the rules of the common law, and to the condition of affairs when the statute was enacted. Humphries v. Davis, 100 Ind. 274, 50 Am. Rep. 788; Middleton v. Greeson, 106 Ind. 18; Wasson v. First National Bank, 107 Ind. 206; May v. Hoover, 112 Ind. 455; Parvin v. Wimberg, 130 Ind. 561, 15 L. R. A. 775. Sutherland on Stat. Const., section 311, says: “The contemporary and subsequent action of the legislature in reference to the subject-matter has been accepted as controlling evidence of the intention of a particular act.” Here for a period of over forty years numerous tax laws in effect as broad and comprehensive in the language employed as to the property embraced as the tax law of 1891, had been constantly acted upon and construed by both officers and property owners as not including life insurance policies as subjects for taxation. And the taxing officers and taxpayers of the several states of the Union had construed similar taxing laws in a similar way. Up to that time no attempt had been made, so far as we are advised, by any civilized government, either by legislation, executive, or administrative action to select and treat life insurance policies as property which ought to be taxed and
Therefore, the legislature, with knowledge that all the previous tax laws, practically the same as the tax law it passed in 1891, had been construed by all the officers charged with their execution, as well as by the people affected by them, as not including life insurance policies, it would be most unreasonable to suppose that the legislature, by the use of the words we have quoted from that act, intended to include such policies as subjects for taxation. In the light of all these facts, the intent .not so to include them seems apparent, because, as is said by Sutherland on Stat. Const., section 333, “if it were intended to exclude any known construction of a previous statute, the legal presumption is that its terms would be so changed as to effectuate that intention.” Nor do we mean by this that in order to subject property to taxation that it shall be specifically named in the statute. Far from it. Much the larger part of personal property is subjected to taxation by legislative action under the general designation of personal property. But we are dealing with the question of interpretation and legislative intent.
But there is still a stronger reason for the conclusion that the legislature did not intend to include life insurance policies by the tax law of 1891 as subjects for taxation, and that is the fact that the act provides
made for the manner of assessing the stock of foreign corporations, and this would seem to be a pretty strong reason for inferring that the legislature did not intend by sections 84 and 85 to assess the capital stock of foreign telegraph companies.”
We therefore conclude that'the legislature did not intend to make life insurance policies subjects of taxation, and failing to provide any regulations for, or manner of assessing or valuing such policies for taxation, if they do fall within the literal words of the tax law of 1891, we hold that the act of the State Board of Tax Commissioners, in providing regulations for, and ordering them to be assessed for taxation was without authority of law, and void. It follows that the complaint was sufficient, and the evidence supports the finding, and hence the circuit court did not err in overruling the motion for a new trial. The judgment is affirmed.
Dissenting Opinion
Being unable to agree with the majority of the court in the conclusion reached by them in this case, I desire, on account of the importance of the questions involved, to give my reasons for dissenting.
The appellees, in their elaborate and carefully prepared briefs, have advanced many arguments, and cited numerous authorities, in support of propositions which do not seem to be at all in dispute. That the power of the legislature over the subject of taxation is a sovereign power and admits of no limitation except that which is imposed by the constitution; that section 1, article 10, of the constitution which declares that “The General Assembly shall provide, by law, for a uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only, for municipal, educational, literary, scientific, religious, or charitable purposes, as may be specially exempted by law,” though mandatory, is not self-executing, but requires legislative action to vitalize its provisions; that it is a legislative power, limited.only by the constitution, to select the subjects of taxation and to provide by lqw rules and'regulations to secure, a just valuation thereof; that article 5 and section 1, article 14 of the amendments to the constitution of the United States strip the State of all power to lay a tax on either person or property, except by authority of law, under which every person within the jurisdiction of the State shall be entitled to the equal protection of the laws and to the due process of the law; that it hni been the policy of the legislature to avoid double taxation wherever possible, and that, while the legisla
By clause.first of section 120 of the tax law (section 8538, Burns’ R. S. 1894), it is made the duty of the State Board of Tax Commissioners, “To prescribe all forms of books and blanks used in the assessment and collection of taxes, and to change such forms when prescribed by law, in case any such changes shall be necessary.” And in section 258 of the law (section 8676, Burns’ R. S. 1894), it is further provided that, “The State Board of . Tax Commissioners is hereby authorized to prepare for the use of assessors a more
It is practically conceded by appellees that the legislature has no power to exempt any property from taxation, save that only for which express provision is made in the constitution itself, namely: property used “for municipal, educational, literary, scientific, religious, or charitable purposes;” and it is not contended that the property here in question belongs to any of these classes. This court has more than once held that no exemptions from taxation, save those so expressly provided for in the fundamental law, can be made by the legislature. By section 7 of the act of December 21, 1872 (Acts 1872, p. 57, 1 Davis’ R. S. 1876, 73), the legislature had attempted to exempt from taxation property to the amount of $500.00, owned by widows and others there named having less
Other apparent exceptions found in the statute, and to which counsel refer with so much confidence, as showing the exercise by the legislature of the right to select property for and exempt it from taxation, otherwise than as provided for in the constitution, are in truth but provisions for avoiding double taxation, or for avoiding attempts to tax property not within the jurisdiction of the State. Senour v. Ruth, 140 Ind. 318, and other like cases relied upon by counsel, give illustrations of such apparent selections and exemptions, but are no authority for holding that any property but that expressly provided for in the consti
In re Denny, 2 Hill (N. Y.) 220, it was said that the word demand was of much broader import than debt, and embraced rights of action beyond those that can
In 3 Am. and Eng. Ency. of Law, 235, following Rapalje & Lawrence Law Dic., a chose in action is defined to be. “a right of proceeding in a court of law to procure the payment of a sum of money.” As examples of choses in action, policies of insurance are there included with promissory notes, bills of exchange, debts, and annuities; and authority for thus classifying policies of insurance as choses in action is found in Ex parte Ibbetson, 8 Ch. Div. 519, where it is said: “It is clear beyond all argument that a policy of assurance is a ‘thing in action.’” Does it seem reasonable that some such choses in action, as promissory notes, bills of exchange, and debts should be taxable, but that a policy of life insurance, though found in the same class should not be taxable?
It was said by this court in Hutson v. Merrifield, 51 Ind. 24,19 Am. Rep. 722, that: “A policy of insurance is a chose in action governed by the same principlés applicable to other agreements involving pecuniary obligations. * * * A life policy is an agreement to pay a sum of money at the termination of the life insured. The party holding and owning such a policy, whether on the life of another or-on his own life, has a valuable interest in it, which he may
Ahother untenable position assumed by counsel for appellees is, that “all kinds of insurance policies must be taxed or none can be taxed.” It is not a
Nor is it any reason why this property should not be taxed that it was not heretofore returned for taxation. The legislature, as we have seen, has provided that all property, not expressly exempted under authority of the constitution, shall be taxed; it has provided, moreover, that all personal property of the class to which this belongs shall be taxed. New forms of property are constantly presenting themselves, and because taxing officers have not had their attention drawn £o this or that species of property it by no means follows that such property should not be taxed as soon as observed or discovered. So it was said by the Supreme Court of the United States in Vicksburg, etc., R. R. Co. v. Dennis, 116 U. S. 665: “The omission of the taxing officers of the State in previous years to assess this property cannot control the duty imposed by law upon their successors, or the power of the legislature, or the legal construction of the statute under which the exemption is claimed.” See, also, Lee v. Sturges, 46 Ohio St. 153, 19 N. E. 560, 2 L. R. A. 556, where it is said: “The fact that this kind of property has not heretofore been listed, affords no reason for continuing to omit it. Laches is not to be imputed to the State.” See, further, Black Interpretation of Laws, at p. 223, and Denney v. State, 144 Ind. 503, at 538, 539, 31 L. R. A. 726.
Counsel for appellees strive to make something out of the case of Riley v. Western Union Tel. Co., 47 Ind. 511. The court there simply decided that the capital stock of an interstate telegraph company could not be taxed in Indiana. That is as true under the law of 1891 as it was under the law of 1872. The reason why the telegraph property in this State was not taxable, under the facts stated in the Riley case, is, that the method
Another contention of counsel for appellees, if I understand it, is that it was a usurpation of legislative authority for the State Board of Tax Commissioners to publish certain “rules and regulations by which the value of life insurance policies is to be ascertained by the assessors.” But, by clause 9 of section 120 of the tax law (section 8538, Burns’ R. S. 1894), the board is not only given the power, but it is made its duty, “To make such rules and regulations as the board shall deem proper to effectually carry out the purposes for which the board is constituted.” One of the purposes for which the board is constituted is stated in clause 3 of said section to be, “To see that all assessments of property in this State are made according to law.” The mere circumstance that it may be difficult to determine the true cash value of any species of property, is not, of-itself, sufficient to show that the legislature must determine by law all the details as to the manner in which the assessment shall be made. Of course, in so far as the legislature has provided a method, that must be pursued. But the details of any method may well be,, in great measure, as, indeed, they have been in many cases, left to be worked out by the practical experience of the administrative officers. As to railroad property, for illustration, the state board is given power in section 137 of the law (section 8555, ^Burns’ R. S. 1894), to assess
It may be noted that the method thus, without express legislative direction, adopted by the state board, and so approved by the courts, and extolled by counsel, for the assessment and taxation of railroad property, was afterward followed by the legislature
The rules and regulations for the assessment of. property here in controversy are quite in harmony with the whole scheme of our laws and practice for the assessment of all property. The legislature has simply provided, in obedience to the constitution, that all property not expressly exempted shall be taxed; that it shall be assessed at its true cash value; that different classes of property shall be assessed by different assessors and assessing boards; and that the State Board of Tax Commissioners shall have general supervision over the whole subject of taxation, and shall frame such rules and regulations as may aid in carrying out the purposes of the law. Certainly, therefore, the board ■ might provide rules by which assessors should be guided in determining the true cash value of life insurance policies. Such rules do not, as counsel intimate, deprive the taxpayer of the right, as in other cases, of first returning and valuing his policy at what he believes to be its true cash value. Neither do they relieve the assessor of his duty to assess the same property at what he believes to be such true cash value; but the rules are a practical guide to enable the assessor to arrive at the sole end had in view by the legislature in framing our tax laws, namely, that this, as every other kind of property, should be assessed at its true cash value.
Another argument made by appellees is to be noticed. Section 67 of the tax law (section 8477, Burns’ R. S. 1894), requires that three per cent, of the gross receipts, less losses paid, of all insurance companies not organized under the laws of this State, and doing
What counsel have said of the tax schedule does not seem to be of controlling force. While some form of schedule is a convenience for the taxpayer, to enable him to make return of all his property for taxation, yet the schedule is not a necessary part of the tax law, but only a convenience for its due administration. For nearly sixty years after the organization of the State government, or until 1872, under both the old and the new constitution, no schedule of property was set out in the tax law, but the taxing officers furnished their own forms. R. S.
Here may be noted what seems rather an ingenious than an ingenuous assumption by counsel for appellees. In the amendment of 1895 (Acts 1895, p. 24), item third of credits in section 50 of the tax law (section 8460, Burns’ R. S. 1894), is made to read: “All bona fide indebtedness owing to such person, which
To conclude: It is conceded that “paid-up” and “non-forfeitable and partly paid-up” life insurance policies constitute “property.” It is conceded that
Monks, J., concurs in the dissenting opinion.