Philadelphia Association, &c. v. Wood

• Decision Date: 06 May 1861
• Citation: 39 Pa. 73
• Parties: The Philadelphia Association for the Relief of Disabled Firemen <I>versus</I> Wood.
• Court: Pennsylvania Supreme Court

39 Pa. 73

The Philadelphia Association for the Relief of Disabled Firemen versus Wood.

Supreme Court of Pennsylvania.

May 6, 1861.

ERROR to the District Court of Philadelphia.

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Morton P. Henry, for plaintiff in error.—The true construction of the Act of 12th May 1857 is, that it does not apply to companies or associations which had taken out licenses under the Act of 1856, prior to the passage of the act, because,

I. If the Act of 1857 is held to apply to such previously established agencies, an unconstitutional intention must be imputed to the legislature of the state; as its terms would require the payment of the additional two per cent. on all premiums received after May 12th 1857, during the year of existing licenses. This construction is proper under the rule which requires such a construction as will violate no principle of natural equity, or constitutional provision: Commonwealth v. McCloskey, 2 Rawle 369.

The Royal Insurance Company had, at the time of the passage of the Act of 1857, a license for one year, from January 28th 1857, which constituted a contract by the state with the company and its agent: Gordon v. The Appeal Tax Court, 3 How. 153; The Piqua Bank v. Knoop, 16 Id. 369; Dodge v. Wolsey, 18 Id. 331.

The Act of 1857, if held to apply to agencies previously established, violated the obligation of the contract of the state under those licenses, by imposing additional burdens: Winter v. Jones, 10 Geo. 190. Beside this, the Act of 1856 provides for a renewal of licenses granted under that act. The companies and associations embraced under the provisions of this act, are such as establish branch offices or agencies; it does not apply to mere transient agents for receiving applications for risks: Thornton v. The Western Reserve Farmers' Insurance Co., 7 Casey 529.

The nature of such an agency or establishment requires an organization, and an expenditure of capital and labour, by the companies accepting its provisions; and although the Act of 1856 may not constitute a contract by the state, to grant such a renewal, yet, the injustice of supposing the state intended, within one year after the establishment of an agency under the invitation contained by the Act of 1856, to add a tax as onerous as that imposed by the Act of 1857, is so manifest, as to require express words to justify a court in making such a construction.

If applied to companies which establish agencies after the passage of the Act of 1857, it violates neither the constitutional provision against impairing the obligation of contracts, nor any natural sense of justice. See Norman v. Heist, 5 W. & S. 171; The Commonwealth v. McCloskey, 2 Rawle 369; 1 Bl. Com. 91.

II. The Act of 1857 is unconstitutional and void, because it is an attempt to take the property of one set of individuals, and transfer it to another, without compensation. It is in violation of Art. VII. sec. 4, and Art. IX. sec. 9 and 10 of the Constitution: See Norman v. Heist, 5 W. S. 171; Brown v. Hummel, 6 Barr, 86; McMasters v. The Commonwealth, 3 Watts 292; Calder v. Bull, 3 Dall. 386; Williamson v. Leland, 2 Peters 658; Sharpless v. The Mayor of Philadelphia, 9 Harris 147.

This Act of 1857 does not pretend to be a tax. It is a gratuity given by the legislature to The Society for the Relief of Disabled Firemen, out of premiums received by The Royal Insurance Company, on fire risks in the city of Philadelphia.

A tax is defined to be a burden or charge upon person or property, to raise money for public purposes: In the matter of the Mayor of New York, 11 Johns. R. 77, 80; The People v. The Mayor of Brooklyn, 4 Comst. 419: Sharpless v. The City of Philadelphia, 9 Harris 147.

The state can delegate the taxing power to local corporations, for local purposes; but it must be for a purpose in which the community taxed has an interest: Talbot v. Dent, 9 B. Monroe 508. See also Cheany v. Hoover, Ibid. 345; Vanch v. Smith, 5 Paige, Ch. R. 159; see McMasters v. The Commonwealth, 3 Watts 292; Stetson v. Kempton, 13 Mass. 272; 2 Shepley 373. These authorities show that the purposes of taxation must be for subjects of public interest.

The plaintiffs below are a private corporation, in no way connected with any department of the government: Angell & Ames on Corporations, § 14.

The view taken by the court below, that The Royal Insurance Company had no property in their future premiums, it is respectfully submitted, cannot be sustained. It is a tax on business or occupation: Biddle v. The Commonwealth, 13 S. & R. 405.

The premiums to be received by the company are as much a part of the product of their capital, and therefore to be treated as property, as the interest on their investments. It is not admitted by the case stated, that the plaintiffs in error are a foreign corporation. The case admits them to be an "association of individuals, not incorporated by the laws of this state." The words are taken from the Act of 1857. No intendment that the plaintiffs in error are a corporation, is to be made from the use of a corporate name: Williams v. The Bank of Michigan, 7 Wend. 546: See also, Welland Canal Company v. Hathaway, 8 Id. 48.

The supplement to the Act of 11th April, passed the 12th May 1857, embraces within the provisions of the former act "all foreign associations, companies, firms, individuals, or copartnerships entered into, formed, or established, for insuring fire, marine, inland, or life risks."

The question, therefore, raised by the court below, as to the right to admit foreign corporations upon terms, does not arise See also the opinion of Black, C. J., in Sharpless v. The Mayor.

John Hamilton, Jr., and G. W. Biddle, for defendants in error.— There was no contract with the insurance company which the Act of 7th May 1857 infringed. The company took a new license on the 28th January 1858, and again on the 28th January 1859, and, therefore, what is said on this point has no application. If the granting of the license constituted a contract, there was a new contract entered into by the Commonwealth each time of the issue and receipt of the license.

The plaintiff in error, however, contends that the property of the insurance company was taken for private use, in violation of the provisions of the state constitution.

The direction to pay to the Association for the Relief of Disabled Firemen a percentage of their future premiums, was not a taking of the property of the insurance company, but a lawful diversion of a tax on its way to the public treasury, into the hands of a charitable corporation. The insurance company was in no wise injured by this course; nor, if there was an illegal drawing of money from the public treasury, does it lie in this company's mouth to object to it, when its agent is sued for a non-compliance with his bond. None of the authorities cited by the plaintiff in error resemble or have direct application to the case in hand. They announce general constitutional principles, the value of which no one is disposed to question, but do not touch the present case. We have, however, the judgment of a highly respectable court of another state, sustaining the decision of the District Court; and as the subject is discussed in all its bearings in this case, it would be superfluous to do more than refer to it. In The Fire Department v. Noble, 3 E. D. Smith's (N. Y. C. P.) Rep. 440, it is held that a tax like the present one may be levied for the benefit of the Fire Department of the City of New York, and be made payable directly to the persons having the direction thereof. See, also, The Fire Department v. Wright, 3 E. D. Smith 453.

The opinion of the court was delivered, May 6th 1861, by LOWRIE, C. J.

In April 1856, the legislature regulated the terms on which agencies of insurance companies incorporated by other states or foreign governments might transact their business within this state, and imposed an annual license fee of $200 on such as should be established in Philadelphia. In January 1857, the Royal Insurance Company of Liverpool conformed to the terms of the law, paid the license fee, and commenced business there. In May 1857, a law was passed imposing on all such agencies in Philadelphia the duty of paying two per cent. on all their receipts to the Philadelphia Association for the Relief of Disabled Firemen, and requiring the payment thereof to be secured by bond, with a special and appropriate condition, and with proper sureties. In July 1857, the defendant, as agent of the Royal Insurance Company, gave a bond with sureties, not exactly with the condition required by the law, but generally for the performance of everything required of him by the Relief Association under the law. He is now sued on this bond, his sureties not being served with process, and defends on the ground that the law is ineffectual and unconstitutional, as a means of imposing this duty upon him, and that the bond is void.

We notice that the legislature does not call this burden upon the agencies of foreign insurance companies a tax, and we think it cannot properly be so called. Nor is it called a condition on which such agencies are to be allowed, and it is not a condition, for it is totally independent of the license and by a different Act of Assembly; the license is complete without the law imposing this burden. It is simply the creation of a relation or duty that had before no existence, and not the regulation of an existing one.

Such legislation is manifestly very extraordinary, and it is well to study all its peculiarities, in order that we may the better estimate its soundness.

It is a burden imposed upon agents of companies not incorporated by our state. It is therefore intended to distinguish between our own corporations and those of other people, so as to impose heavier burdens on the latter than on the former. So far as this relates...