Western & Southern Life Ins. Co. v. Commonwealth

• Citation: 133 Ky. 292,117 S.W. 376
• Parties: WESTERN & SOUTHERN LIFE INS. CO. v. COMMONWEALTH.
• Decision Date: 25 March 1909
• Court: Court of Appeals of Kentucky

117 S.W. 376

133 Ky. 292

WESTERN & SOUTHERN LIFE INS. CO. v. COMMONWEALTH.

Court of Appeals of Kentucky.

March 25, 1909

Appeal from Circuit Court, Franklin County.

"To be officially reported."

Action by the Commonwealth against the Western & Southern Life Insurance Company. Judgment for the Commonwealth, and defendant appeals. Reversed and remanded, with instructions to dismiss the petition.

T. L Edelen and D. W. Lindsey, for appellant.

Jas Breathitt, Atty. Gen., and Jno. F. Lockett, Asst. Atty. Gen for the Commonwealth.

HOBSON J.

Section 637 of the Kentucky Statutes (Russell's St. § 4284) is as follows: "When by the laws of any other state any taxes fines, penalties, deposits of money, or of securities or other obligations, prohibitions or requirements, are imposed upon insurance companies organized or incorporated under any general or special law of this state, and transacting business in such other state, or upon the agents of such insurance company, greater than those imposed upon similar companies by the laws of this state, or when such laws of other states shall require insurance companies of this commonwealth to deposit money or security for the benefit or protection of citizens of such other states, or when the laws of any other state, or the officers thereof, shall prohibit companies of this commonwealth from transacting business in said state without a special examination of said companies, or a computation of their liabilities by the officers of said state, the same taxes, fines, penalties, deposits, examinations, obligations and requirements shall be imposed upon all insurance companies doing business in this state, which are incorporated or organized under the laws of such state, and upon their agents." The Western & Southern Life Insurance Company is a corporation organized under the laws of Ohio, having its principal office in Cincinnati. It paid its taxes regularly to the state under section 4226, Ky. St. (Russell's St. § 6096), which provides that every insurance company shall pay a tax of $2 upon each $100 of premiums collected by it. The laws of Ohio provide that life insurance companies doing business in that state must pay a tax of 2 1/2 per cent. of the annual gross premiums. This suit was brought by the commonwealth against the Western & Southern Life Insurance Company to recover the amount of one-half of 1 per cent. of the annual gross premiums received by it in the state, on the ground that, as Kentucky companies are required to pay at the rate of 2 1/2 per cent. in Ohio, Ohio companies should pay at a like rate in this state. The circuit court entered judgment against the defendant for the amount claimed, and it appeals.

The only question to be determined on the appeal is the validity of section 637, Ky. St., in so far as it makes the amount of the taxes which the taxpayer is to pay dependent upon the law of the state where the taxpayer has his domicile. We have no doubt that the Legislature may require of foreign companies the same deposits, examinations, obligations, and the like which are required by the state of their domicile from Kentucky companies; but whether the amount of taxes to be paid here may be made to depend upon the law in force at the residence of the foreign companies is a different question. It would not be contended that, if Ohio taxed insurance companies at 1 per cent. of the yearly premiums, Ohio companies could do business here by paying at the rate of 1 per cent., although other companies paid taxes at the rate of 2 per cent. We have been referred to a number of decisions upholding this retaliatory legislation; but in a number of the cases the question of taxation was not presented, and in others the decision of the court turned upon provisions of the Constitution different from our Constitution. Thus the case of Talbott v. Fidelity & Casualty Co., 74 Md 563, 22 A. 395, 13 L.R.A. 584, involved simply the question whether Maryland might exclude New York companies when New York excluded Maryland companies. Phillips v. Fidelity & Casualty Co., 77 Iowa 648, 42 N.W. 509, turned upon the question whether Iowa might prohibit a foreign insurance company from making more than one kind of insurance in that state, when by the law of its domicile foreign companies were permitted there to make only one kind of insurance. Union Central Life Insurance Co. v. Durfee, 164 Ill. 186, 45 N.E. 441, was rested upon a provision of the Constitution of Illinois, which, as held, gave the General Assembly full power to so regulate the matter. Such a statute was upheld in People v. Fire Association, 92 N.Y. 311, 44 Am.Rep. 380, Ph nix Ins. Co. v. Welch, 29 Kan. 672, Goldsmith v. Home Ins. Co., ...