Aetna Fire Ins. Co. v. Jones

• Decision Date: 06 November 1907
• Citation: 59 S.E. 148,78 S.C. 445
• Parties: AETNA FIRE INS. CO. et al. v. JONES, Comptroller General.
• Court: South Carolina Supreme Court

59 S.E. 148

78 S.C. 445

AETNA FIRE INS. CO. et al. v. JONES, Comptroller General.

Supreme Court of South Carolina

November 6, 1907

Petition by the AEtna Fire Insurance Company and others against A. W Jones, as Comptroller General of the state, to enjoin respondent from collecting a tax. Granted.

Smythe Lee & Frost, and King, Spaulding & Little, for petitioners.

J. F Lyon, Atty. Gen., Geo. F. Von Kolnitz, and Mitchell & Smith for respondent.

POPE C.J.

This is a petition to this court in its original jurisdiction whereby the plaintiff insurance companies, for themselves and others in like situation, seek to have the Comptroller General enjoined from proceeding to collect certain taxes provided for by an act of the General Assembly approved May 9, 1906, on the ground that the said act is unconstitutional, null, and void. Counsel for petitioners discuss at length the preliminary question as to the jurisdiction of this court to hear the cause, but an identical question having been passed upon in the recent case of Ware Shoals Mfg. Co. v. Jones, Comptroller General (S. C.) 58 S.E. 811, September 20, 1907, we proceed at once to the merits of the case.

The title of the act is: "An act requiring the payment of certain premiums to the fire departments of incorporated cities and towns by the fire insurance companies doing business in the state, for the purpose of creating a fund for the benefit of the members of the fire departments of such cities and towns, and providing for the collection and distribution of the same." The act is as follows: "Section 1. Be it enacted by the General Assembly of the state of South Carolina: Every fire insurance company, corporation or association doing business in any incorporated city or town of this state, having or that hereafter may have a regularly organized fire department under the control of the mayor and council, or intendant and council of said city or town, and having in serviceable condition for fire duty fire apparatus and necessary equipments belonging thereto to the value of ($1,000) one thousand dollars, and upwards, shall return to the Comptroller General a just and true account verified by oath that the same is a true account of all premiums received from fire insurance business done in such incorporated cities or towns during the year ending December the 31st, or such portion thereof as they may have transacted such business in such cities and towns. Such returns must be made by said companies, corporations or associations within sixty days after the 31st day of December of each year." Section 2 requires such companies to pay within the said 60 days to the State Treasurer the sum of $2 on every $100 premiums collected on fire or lightning insurance business done in said cities and towns. Sections 3 and 4 require said insurance companies to keep accurate books of account of all business done in said cities and towns, and provide a penalty for failure so to do. Section 5 enacts that, in case of failure to pay said tax or any penalty imposed, the Comptroller General shall have power to revoke any license previously issued to said companies. Section 6: "That the State Treasurer shall pay over the money so collected from the insurance companies, associations or corporations doing business within the cities or towns having or that may hereafter have a regularly organized fire department as aforesaid in section 1 of this act, to the treasurer of the Firemen's Relief Association to be composed of the members of the fire departments of such cities or towns, and to be incorporated under the laws of this state; provided that all money so collected from the insurance companies, corporations or associations doing business within the cities or towns having or that may hereafter have a paid department, being such department in which the members are paid for full time or part of their time employed as firemen, and on duty at all times to respond to all duties required of them, and otherwise in accordance with the provisions of section 1 of this act, shall be paid by the State Treasurer to the treasurer of such city, and all the money so received shall be set apart and used by such cities or towns solely and entirely for the objects and purposes of this act by the Firemen's Relief Association of (or) Board of Trustees of Firemen's Pension funds of such cities or towns under such provisions as shall be made by the mayor and council or board of trustees thereof." Section 7: "All money collected and received under the provisions of this act shall be held in trust and used as a fund for the relief of any member of the fire department of such city or town who may be injured or disabled, and for the relief of, or the payment of gratuities to the widow or those dependent upon any member of such fire department who may be killed; for the payment of necessary funeral expenses of any member of such fire department, and for the purchase of accident insurance upon the members of such fire departments: Provided further that the boards of trustees of such cities having pension funds may also use said money for pensions to superannuated and disabled firemen: Provided that the fire department of such city or town should also be a member of the State Firemen's Association of this state."

The act is attacked on numerous grounds, but we think the pivotal question is: Has the General Assembly power to enact such legislation? In other words: Is the Constitution violated, in that the tax here under consideration is not uniform and for no public purpose? That the imposition is an attempted exercise of the taxing power conferred by the Constitution the respondent practically admits, in that it is sought to sustain the exaction on the ground that it is for a public purpose. "A tax," according to Webster's Dictionary, "is a rate or sum of money assessed on the person or property of a citizen by the government for the use of the nation or state." Cooley in his Constitutional Limitations, § 479, says: "Taxes are burdens or charges imposed by the Legislature upon persons or property to raise money for public purposes." Applying either of these rules to the legislation here in question, if it be conceded that the aid of firemen is a public purpose, it clearly falls under the head of taxation for all of the requirements are fulfilled, namely, that it is an imposition on person or property by the government for a public purpose. In the case of Henderson v. Insurance Co., 135 Ind. 23, 34 N.E. 565, 20 L. R. A. 827, 41 Am. St. Rep. 410, where a question almost identical was under consideration, it is said that the decided weight of authority holds that such impositions are attempts at taxation and the cases of San Francisco v. Insurance Co., 74 Cal. 113, 15 P. 380, 5 Am. St. Rep. 425, State v. Wheeler, 33 Neb. 563, 50 N.W. 770, Philadelphia Association for Relief of Disabled Firemen v. Wood, 39 Pa. 73, and State v. Merchants' Ins. Co., 12 La. Ann. 802, are quoted as sustaining that view. The respondent here contends, however, that the imposition is not a tax, but is one of the conditions upon which foreign insurance companies are permitted to do business in this state. Such a contention we think cannot be sustained. In the first place, the act is general, applying both to domestic and foreign corporations. In the second place, the act itself does not purport to be conditional. It applies to "every fire insurance company, corporation or association doing business in incorporated cities or towns in this state." The participle "doing" is important here as throwing light on the intention of the Legislature.

The word implies that the corporations are already in existence, and are carrying on business. The license has already issued. True, the act does provide that under certain circumstances the certificate shall be revoked, but we regard this as merely a means for securing the collection of the imposition, and not as a condition subsequent. That the Legislature might have imposed such a condition upon foreign corporations, as well as domestic corporations, it is not our duty here to decide. Suffice it to say that no such condition was imposed.

Again the respondent contends that the present enactment is a lawful exercise of the police power inherent in the state as a sovereignty, the exercise looking to the protection of the property of all the citizens of the state. Perhaps no subject is more fraught with difficulty than is the proper limiting and defining of the police power of a sovereign...