Great Southern Life Ins. Co. v. City of Austin

Citation243 S.W. 778
Decision Date24 June 1922
Docket Number(No. 3389.)<SMALL><SUP>*</SUP></SMALL>
PartiesGREAT SOUTHERN LIFE INS. CO. v. CITY OF AUSTIN.
CourtSupreme Court of Texas

Suit by the City of Austin against the Great Southern Life Insurance Company. From a judgment of the Court of Civil Appeals, reversing a judgment for it, defendant brings error. Judgment of the Court of Civil Appeals (211 S. W. 482) reversed and that of trial court affirmed.

L. A. Carlton, of Houston, N. A. Stedman, of Austin, Williams & Neethe, of Galveston, J. N. Gallagher, of Waco, Brooks, Hart & Woodward, of Austin, A. J. Bell, of San Antonio, Seay & Seay, of Dallas, Oliver J. Todd, of Beaumont, and Chas. L. Black, of Austin, for plaintiff in error.

J. Bouldin Rector, City Atty., J. W. Maxwell, and Lightfoot, Brady & Robertson, all of Austin, and E. B. Robertson, of Fort Worth, for defendant in error.

Locke & Locke, of Dallas, amici curiæ.

CURETON, C. J.

This suit was filed on April 14, 1917, by the city of Austin, a municipal corporation, incorporated by special act of the Legislature, against the Great Southern Life Insurance Company, a domestic private corporation, chartered for the purpose of doing a life insurance business, with its main office and principal place of business located in the city of Houston, in Harris county, Tex. The purpose of the suit was to recover taxes alleged to be due by plaintiff in error on certain securities deposited by it under the laws of the state with the state treasurer. The taxes sued for were for the years 1911 to 1916, both inclusive. The securities deposited with the treasurer were promissory notes. The total amount of the taxes claimed is $51,236.45. These securities were deposited in the state treasury under section 38 of chapter 108, Acts of the Regular Session of the Thirty-First Legislature, passed in 1909, and the principal question involved is the constitutionality of a portion of this section of that act.

Judgment was rendered by the trial court on December 20, 1917, in favor of the plaintiff in error. The case was appealed by the city of Austin, and the Court of Civil Appeals held that the act under which the deposit was made, in so far as it required the securities on deposit to be taxed at the domicile of the insurance company, was in violation of section 11, art. 8, of the state Constitution, and reversed and rendered the case in favor of defendant in error. 211 S. W. 482.

Chapter 108 of the Acts of the Legislature previously named, not only provided a method for the deposit of securities, which was followed in the instance of the plaintiff in error, but set forth a plan of taxation of insurance companies subject thereto. Section 38, which become article 4749, Revised Statutes of 1911, prescribing the method and effect of depositing securities with the state treasurer, declares in substance that an insurance company, such as the plaintiff in error, might, at its option, deposit with the state treasurer securities representing investments of its capital stock, with the privilege of withdrawing them, or substituting other securities therefor; that, upon such deposit being made, the state treasurer should issue his receipt for the securities, and the company making the deposit and holding such receipt should have the right to advertise such fact and print it upon its policies of insurance; and that the proper officers and agents of the company making the deposit should be permitted at all reasonable times to examine the securities, detach coupons therefrom, and collect the interest thereon, under such reasonable rules as might be prescribed by the treasurer and the commissioner of insurance and banking. The last clause in the article reads as follows:

"For the purpose of state, county and municipal taxation, the situs of all personal property belonging to such companies shall be at the home office of such company."

Section 25 of this act, which became article 4764 of the Revised Statutes of 1911, provides for the special plan of taxation previously mentioned. The taxes claimed by the city of Austin were not assessed until eight years after the enactment of the statute under which the securities were deposited in this case, and after the plaintiff in error had rendered and paid all its taxes at its domicile in accordance with Revised Statutes, arts. 4749 and 4764.

It is contended by defendant in error that the clause quoted from Revised Statutes, art. 4749, to the effect that the taxable situs of personal property belonging to insurance companies shall be at the home office of the company, is in violation of section 11, art. 8, of the Constitution of this state, which declares:

"All property, whether owned by persons or corporations, shall be assessed for taxation, and the taxes paid in the county where situated."

The law complained of must be held valid, unless its enactment was expressly or by necessary implication prohibited by the Constitution. Ashford v. Goodwin, 103 Tex. 491, 495, 131 S. W. 535, Ann. Cas. 1913A, 699; State v. McAlister, 88 Tex. 284, 287, 31 S. W. 187, 28 L. R. A. 523; Brown v. Galveston, 97 Tex. 1, 75 S. W. 488; Lytle v. Halff, 75 Tex. 128, 12 S. W. 610.

The Constitution is not to be given a technical construction, but must be construed in an equitable manner, so as to carry out the great principles of the government. Black on Interpretation of Laws, p. 13; Nolan v. San Antonio Ranch Co., 81 Tex. 315, 317, 16 S. W. 1064.

State Constitutions are construed in the light of the common law, since the common law is generally in force in the United States. Cooley's Constitutional Limitations (7th Ed.) p. 94.

The common law, as declared by the courts of the several states, is the rule of decision in this state, and has been so by statute since January 20, 1840. Revised Statutes, art. 5294; Grigsby v. Reib, 105 Tex. 597, 600, 153 S. W. 1124, L. R. A. 1915E, 1, Ann. Cas. 1915C, 1011.

Where the Constitution is merely declaratory of common-law principles, and does not define rights and remedies, the common law, so far as not inconsistent with the Acts of the Legislature or the Constitution, is to be applied. City National Bank v. Laughlin (Tex. Civ. App.) 210 S. W. 617.

The Constitution was framed with reference to the common law, and in judging what the Constitution means we should keep in mind that it is not the beginning of the law of the state, but that it assumes the existence of a well-understood system, which was still to remain in force and be demonstrated, and that the constitutional definitions are in general drawn from the common law. Hewitt v. State, 25 Tex. 722, 727; Gordon v. State, 43 Tex. 330, 340; Henderson v. Beaton, 52 Tex. 29, 60; Ex parte King, 35 Tex. 658.

It has always been the primary and fundamental rule that no sovereignty or taxing district could exercise the power of taxation, except as to property actually or constructively within its jurisdiction. This rule applies to counties and municipalities, as well as states. 27 American & English Encyclopedia of Law, p. 648; 26 R. C. L. § 234, p. 267; State Tax on Foreign-Held Bonds, 15 Wall. (U. S.) 300, 21 L. Ed. 179; Tappan v. Merchants' National Bank, 19 Wall. (U. S.) 490, 22 L. Ed. 189; New York, etc., R. Co. v. Pennsylvania, 153 U. S. 628, 14 Sup. Ct. 952, 38 L. Ed. 854; Metropolitan Life Ins. Co. v. New Orleans, 205 U. S. 395, 27 Sup. Ct. 499, 51 L. Ed. 853; Cooley on Taxation (3d Ed.) p. 84; People v. Townsend, 56 Cal. 633; Corn v. City of Cameron, 19 Mo. App. 573; Wells v. City of Weston, 22 Mo. 384, 66 Am. Dec. 627; City of St. Charles v. Nolle, 51 Mo. 122, 11 Am. Rep. 440; Matter of Lands in Town of Flatbush, 60 N. Y. 406, 407; Ham v. Sawyer, 38 Me. 37.

Our Constitution, therefore, in declaring that property shall be taxed where situated, has done no more than declare the common-law rule. The purpose of the Constitution in declaring that property should be taxed in the county where situated, was merely to define the general jurisdictional unit for the exercise of the taxing power, and to confine the exercise of that power to the subjects of taxation within that unit. It did not define what was meant by the words "where situated." Since it had reference to the taxing power, it evidently meant property where situated for the purposes of taxation under the general principles of law as then understood. County Treasurer v. Webb & Harrison, 11 Minn. 500 (Gil. 378); San Francisco v. Lux, 64 Cal. 481, 2 Pac. 254; San Francisco v. Mackey (C. C.) 22 Fed. 602, 607.

Having determined that the constitutional provision under examination is to be construed in the light of the common law, we will next enter upon an inquiry as to the situs of property for taxation, as determined by the common law as developed and applied in this country. The authorities heretofore cited hold that taxes could only be imposed upon persons resident within the taxing district, or property situated therein, or business carried on, acts performed, or privileges enjoyed, within its limits. 26 R. C. L. § 234, p. 267, and other authorities supra.

It is well settled that real estate may only be taxed in the municipality, county, or state in which it is actually located. 26 R. C. L. § 236, p. 269; Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194, 204, 26 Sup. Ct. 36, 50 L. Ed. 150, 4 Ann. Cas. 493. See the case of Fort Smith Bridge Co. v. Hawkins, 54 Ark. 509, 16 S. W. 565, 12 L. R. A. 487, and other cases cited in the note in 18 Annotated Cases, p. 713.

Under the common law, "mobilia sequuntur personam" was a well-established maxim, and personal property of every description was taxable only at the domicile of its owner, regardless of its actual location. This is still the basic principle upon which the taxation of personal property rests. 26 R. C. L. § 241, pp. 273, 274. But even prior to the Revolution the principle had been abrogated to the extent that, as between different towns and...

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