Mutual Life Ins. Co. of New York v. Washburn
| Decision Date | 01 June 1989 |
| Docket Number | No. 4-88-0816,4-88-0816 |
| Citation | 183 Ill.App.3d 978,539 N.E.2d 1278 |
| Court | United States Appellate Court of Illinois |
| Parties | , 132 Ill.Dec. 472 The MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, Plaintiff-Appellant, v. John WASHBURN, Director of Insurance of the State of Illinois, and James Donnewald, State Treasurer of the State of Illinois, Defendants-Appellees. |
William S. Hanley, Patrick V. Reilly, Sorling, Northrup, Hanna, Cullen & Cochran, Ltd., Springfield, for plaintiff-appellant.
Neil F. Hartigan, Atty. Gen., Robert J. Ruiz, Sol. Gen., Robert E. Wagner, Sp. Asst. Atty. Gen., Pfeifer & Kelty, P.C., Springfield, for defendants-appellees.
This is an appeal by plaintiff the Mutual Life Insurance Company of New York (MONY), a life insurance company organized under the laws of the State of New York and authorized to do business and doing business in Illinois, from an order of the circuit court of Sangamon County granting summary judgment in favor of defendants John Washburn, Director of Insurance of the State of Illinois (Director), and James Donnewald, State Treasurer of the State of Illinois (Treasurer). The action was initiated by MONY pursuant to the State Officers and Employees Money Disposition Act (Act) (Ill.Rev.Stat.1987, ch. 127, par. 170 et seq.) to contest the assessment of the foreign insurance company retaliatory tax for the year 1980 of $321,129.54 pursuant to section 444 of the Illinois Insurance Code (Ill.Rev.Stat.1987, ch. 73, par. 1056). Plaintiff paid this sum under protest, and plaintiff's complaint sought a temporary restraining order, a preliminary injunction and a permanent injunction, each without bond, to: (1) restrain the Treasurer from transferring the monies out of the protest fund; (2) restrain the Director from depositing the monies into any fund other than the protest fund or disposing of the monies in any way other than as provided by the Act; and (3) restraining defendants from assessing against, imposing on, or collecting from plaintiff any tax, deficiencies, interest, or penalties connected with this matter and from taking any action to collect or recover from plaintiff the monies paid under protest. The complaint further prayed the court to declare the collection of the tax to be unwarranted and to order a refund of all monies paid under protest, plus interest.
On April 23, 1984, the Illinois Department of Insurance (Department) assessed plaintiff $234,401.12 as a retaliatory tax for the calendar year 1980, plus $86,728.42 interest thereon. Plaintiff paid the assessment under protest and obtained an injunction prohibiting the Treasurer from dispersing the funds pending a resolution of this action.
MONY was audited for the years 1980, 1981, and 1982 and was found by the Department to owe a retaliatory tax for 1980 only. At the time of the audit, the Department requested MONY to furnish it with New York's Franchise Tax Form CT 33 which would reflect the calculation of the New York tax against the substituted Illinois amounts for each of the years under audit. On April 12, 1984, MONY complied. However, the plaintiff objected to the application of the retaliatory tax against its experience "[u]nless or until the Insurance Department can establish that Illinois domiciled insurers are more heavily burdened by the New York tax formula than they would be under Illinois law." The Department responded by submitting a letter and invoice for the retaliatory tax in 1980, stating "we feel that the State of New York, in certain instances, charges insurance companies a premium tax at the rate of 2.6% which is a rate higher than that of Illinois." Again MONY objected, on the basis of the 1981 decision of the Fourth District Appellate Court in Minnesota Mutual Life Insurance Co. v. O'Connor (1981), 98 Ill.App.3d 1040, 54 Ill.Dec. 526, 425 N.E.2d 38, contending the Illinois retaliatory tax could only be invoked against New York insurers after a determination had been made of the impact of New York taxes on actual insurers domiciled in Illinois. Subsequently, the Department's legal staff reviewed this matter and explained that where the Minnesota Mutual case involved only one method utilized by a foreign State to assess privilege taxes against Illinois companies, New York employs seven or eight different methods. Therefore, the Department examines the business experience of each New York insurer to ascertain which of the New York tax computation methods is to be applied and then computes the retaliatory tax by applying the New York calculation method employed to the company's Illinois business experience for the given tax year. For this reason, some, but not all, New York companies pay a retaliatory tax, although all are subject to it.
On April 10, 1986, MONY paid the assessment under protest and thereafter commenced this action challenging the Department's interpretation of the retaliatory act. Upon cross-motions for summary judgment and after extensive briefing and oral argument, the circuit court found there was no genuine issue of material fact and entered summary judgment for the defendants. The trial court specifically found:
"The State of New York imposes a tax on Illinois insurance companies, when stripped of all its apparent complexities, of as much as 2.6 percent of gross premiums; whereas Illinois imposes a tax of not more than 2 percent of gross premiums."
The trial court's findings were entered on July 20, 1988, as a docket entry, with the special assistant Attorney General to prepare a written order. The written order was entered on July 29, 1988. On August 26, 1988, MONY filed a motion to vacate judgment and reopen the record. At the hearing on the motion, the record was reopened and MONY was allowed to file a copy of plaintiff's 1980 IL 1120 and copies of estimated 1980 privilege tax returns. Following the hearing held on October 24, 1988, the motion to vacate was denied.
In Reed v. Bascon (1988), 124 Ill.2d 386, 393, 125 Ill.Dec. 259, 262, 530 N.E.2d 417, 420, the Illinois Supreme Court recently reviewed the standards for granting summary judgments:
The trial court is not obliged to enter summary judgment just because the parties file cross-motions for summary judgment alleging there exists no genuine issue of material fact. Haberer v. Village of Sauget (1987), 158 Ill.App.3d 313, 110 Ill.Dec. 628, 511 N.E.2d 805.
In this case, the facts are undisputed. The determination by the trial court required the construction of the statutes and their application to the facts. Since the matter before the trial court could be determined as a question of law, this was a proper case in which to enter a summary judgment. See Lewis v. Illinois Institute of Technology (1977), 50 Ill.App.3d 418, 8 Ill.Dec. 693, 365 N.E.2d 1079.
In this appeal, two issues are raised. These issues are: (1) whether, as a condition precedent to the application of the Illinois retaliatory statute to plaintiff, the laws of New York must be shown to "invariably or even generally" impose a more onerous tax burden on Illinois insurance companies than New York companies would incur under the laws of Illinois; and (2) whether under the facts of this case the uniformity section of the revenue article of the Illinois Constitution of 1970 (Ill. Const.1970, art. IX, sec. 2) was violated.
The United States Supreme Court has reviewed constitutional challenges to a California statute which imposed a retaliatory tax on foreign insurers doing business in California when the State of incorporation of the insurer imposed higher taxes on California insurers conducting business in the foreign State than California ordinarily imposes on such other State's insurers doing business in California. The United States Supreme Court found: (1) the statute does not violate the commerce clause of the United States Constitution (U.S. Const., art. I, sec. 8, cl. 3) because the McCarran-Ferguson Act (15 U.S.C. sec. 1011 et seq. (1982)) removed the State's power to regulate and tax the insurance industry from commerce clause restrictions; (2) the privileges and immunities clause of the United States Constitution (U.S. Const., art. IV, sec. 2) is inapplicable to corporations; and (3) the statute does not violate the fourteenth amendment prohibition against denying any person equal protection under the law since the classification is reasonable and rationally related to a legitimate State purpose, to wit: the promotion of the California insurance industry by deterring barriers to the interstate business of domestic insurers. (Western & Southern Life Insurance Corp. v. State Board of Equalization of California (1981), 451 U.S. 648, 101 S.Ct. 2070, 68 L.Ed.2d 514.) Of course, plaintiff's constitutional challenge to the Illinois statute comes under the Uniformity Clause of the Revenue Article of the Illinois Constitution...
To continue reading
Request your trial
-
Kellner v. Bartman
... ... Mutual Life Insurance Co. v. Washburn (1989), 183 Ill.App.3d 978, ... ...
- Mutual Life Ins. Co. of New York v. Washburn
-
People ex rel. Adams Elec. Co-op. v. Village of Camp Point
... ... Mutual Life Insurance Co. v. Washburn (1989), 183 Ill.App.3d 978, ... ...
-
Johnson v. American Family Mut. Ins. Co., 4-89-0590
...material fact, the trial court is not obligated to enter summary judgment. (Mutual Life Insurance Co. of New York v. Washburn (1989), 183 Ill.App.3d 978, 132 Ill.Dec. 472, 539 N.E.2d 1278.) Where the only issue concerns the construction of an insurance contract, the cause may properly be de......