Ass'n v. Hill

• Decision Date: 10 June 1893
• Citation: 51 Kan. 636,33 P. 300
• Parties: THE KANSAS MUTUAL LIFE ASSOCIATION v. O. C. HILL, as Treasurer of Brown County, et al
• Court: Kansas Supreme Court

33 P. 300

51 Kan. 636

THE KANSAS MUTUAL LIFE ASSOCIATION v. O. C. HILL, as Treasurer of Brown County, et al

Supreme Court of Kansas

June 10, 1893

Error from Brown District Court.

THIS action was brought by The Kansas Mutual Life Association against O. C. Hill, as treasurer of Brown county, and another, to enjoin the collection of certain taxes. Special findings of fact and conclusions of law were made by the court, as follows:

"FINDINGS OF FACT.

1. The plaintiff is a corporation organized and doing business under the laws of the state of Kansas.

"2. It filed its charter in the office of the secretary of state of the state of Kansas on January 16, 1882, and organized as a mutual life association on the assessment plan.

"3. It so continued to do business until January 1, 1886, when its plan of assessments was changed to quarterly payment in advance of premiums, based upon the American experience tables of mortality, without filing a new charter or otherwise changing its plan of organization.

"4 O. C. Hill, at the time of the commencement of this suit, was the duly-elected, qualified and acting treasurer, and John F Cashman was at said time, and now is, the duly-elected qualified and acting sheriff of Brown county, Kansas.

"5 J. K. Klinefelter was the duly-appointed and acting assessor of the city of Hiawatha, Brown county, Kansas, for the year 1889.

"6. On the 11th day of March, 1889, John E. Moon, secretary of said corporation, made out, verified, and delivered to said assessor, a statement of personal property belonging to said corporation March 1, 1889, and subject to taxation for said year, of the aggregate value of $ 1,000, and returned the same to the county clerk, and said secretary refused to list any other property.

"7. On the 30th day of April, 1889, the said J. K. Klinefelter assessor for the city of Hiawatha, without notice to any of the officers or agents of said corporation, made another and different statement and returned the same to the county clerk, containing, in addition to the $ 1,000, the following:

Assets

$ 84,750 00

Less reserve fund

$ 29,590 00

Less other personal property

2,000 00

31,590 00

One-half

53,160 00

$ 26,580 00

$ 27,580 00

and that the county clerk extended the taxes on this statement.

"8. Said corporation owned and possessed the following personal property, on the 1st day of March, 1889, and subject to taxation for the year, to wit:

Real-estate securities

$ 17,267 00

Cash in hand and deposited in bank

25,294 21

Furniture, blank books, etc

2,000 00

Total

$ 44,561 21

which said cash and securities were derived by setting aside 20 per cent. from each assessment as a guaranty fund, in accordance with 10 of the law governing mutual life insurance companies, and did not exceed 1 per cent. of the insurance in force.

"9. Said property was assessed at one-half of its cash value, to wit, $ 22,280.60.

"10. The rate of taxation for all purposes in the city of Hiawatha for the year 1889 was 45 1/4 mills.

"11. The plaintiff tendered to the defendant O. C. Hill, county treasurer, on December 20, 1889, $ 50, in full of all taxes due from said corporation for all purposes for the year 1889, which tender has been kept good by the deposit of said amount with the clerk of this court.

"12. There was due, December 20, 1890, from the plaintiff, as taxes for the year 1889, the sum of $ 1,008.19 7/10."

"CONCLUSIONS OF LAW.

1. The property added by the assessor to the statement being subject to taxation, injunction will not lie to restrain the collection of the taxes on account of the irregularity of the assessor in making the assessment.

"2. The injunction should be modified and discharged as to the $ 1,008.19 7/10 taxes actually due, and made perpetual as to all over that amount."

To these findings and conclusions plaintiff excepted, and also requested the court to further find as to the amount of outstanding policies of insurance, the amount of reserve, and present value of each policy, and whether it would exceed in amount a sum that might be purchased at the age of 30 years on the continuous-payment life-rate, American mortality, 4 1/2 per cent., net premium $ 500. This request was refused by the court, and judgment entered in accordance with the special findings.

The testimony of John E. Moon, secretary of the company, shows the assets of the company on the 1st of March, the date as of which the assessment was made, to have been as follows:

Cash in office and treasury

$ 25,291 31

Mortgage loans

47,697 00

Premium notes

2,694 03

Furniture

1,190 19

Due from agents and others

438 69

Books, blanks, etc., about

$ 800 or 900 00

Of the securities held by the company, there were deposited in the state treasury $ 30,430, of which $ 28,735.18 belonged to what is termed the natural-premium fund, and the balance, of $ 1,694.87, belonged to the assessment policies. There were outstanding 239 assessment policies, amounting to $ 633,000, and 2,795 natural-premium policies, amounting to $ 5,767,000. It appears, also, that the company owed $ 10,000 on unpaid death losses. The corporation had no capital stock, and all its assets were derived from setting apart a portion of the premiums and assessments collected, and interest on investments.

Judgment according to the foregoing findings. The plaintiff brings the case to this court.

H. H. Jackson, for plaintiff in error:

Shortly after March 1, 1889, plaintiff in error, by its secretary, made out, verified and delivered to the proper assessor a statement of all its property subject to taxation, which property was then assessed at the value of $ 1,000, and which was all of the property of which said company was the owner, and all that was subject to taxation for the year 1889. Plaintiff did not refuse to make out and deliver to the assessor a statement of its property; but said assessor, not regarding his duties, without notice to the plaintiff, made out another statement, assessing other and different property to the plaintiff, amounting to the sum of $ 26,580, in addition to the sum of $ 1,000 above mentioned, which amount of $ 27,580 was by the county clerk extended upon the tax rolls of said county. The tax levy for all purposes upon said valuation of $ 1,000 was $ 45.25, full tender of which was duly made to the treasurer. The tax levy extended upon said assessment of $ 27,580, as extended upon the tax roll of 1889, was $ 1,247.99.

The assessor has the power to increase or diminish the value of property listed; to make out a list of property if the owner refuses to make a statement or to be sworn thereto; and to return the statements received from persons to the county clerk; but in case of differences as to what property should be returned, or the correction of false statements, the assessor has no authority. It is left to the county clerk or commissioners to correct such returns, upon due notice. Coal Co. v. Emlen, 44 Kan. 117, 120.

The question presented is whether the funds found and proved to have been held by the company were exempt from taxation. The plaintiff company, though incorporated on the "assessment plan" under the statute, issued policies of that form until January, 1886, when it began to issue policies on the natural-premium plan, for cash payments. Its liability for taxation was determined by the business in which engaged. Mu. Benev. Life Co. v. Marye, 8 S.E. 481. And as to assessment-plan policies and assets, the exemption from taxation was fixed by the law applying to such companies; and as to natural-premium policies, and assets to meet the same, by the law applying to such policies.

The item, $ 1,694.87, securities in the hands of the state treasurer, was a guaranty or reserve fund, and was the sole property of the policy holders, and could only be paid out for payment of claims under certificates or policies. Insurance Law, §§ 132, 133; Gen. Stat. of 1889, PP 3459, 3461. It was, therefore, the property of the policy holders or beneficiaries only, and not the property of the company; but if the property of the company, it was a fixed in indebtedness, to be deducted from assets, under § 6, tax law. The item, $ 1,674.39, cash in hands of company treasurer, was held for the same purpose. The small number of such policies made it necessary to increase the amount of guaranty or reserve fund. It was collected for that purpose, and, under the condition of the policy, held for that purpose under the law cited, and could be used for no other purpose. All of such fund, securities and cash, was properly held for a reserve fund for the purpose stated. It was the fund of the policy holders, due to them, and not the fund or property of the corporation. It could make no claim to it until the policies were first discharged. It was a debt which the policy holders could have recovered. Life &c. Soc. v. Welch, 26 Kan. 632.

It further appears from the testimony that the present worth of such policies, on the computation stated in the insurance law, (§ 77, P 3401, Gen. Stat. of 1889,) was over $ 85,000, and the whole thereof was, under such section, exempt from taxation. The spirit of such law is to make such funds the property of the policy holders and beneficiaries, and not the fund of the company, and also to exempt the same from taxation.

"The premium reserve fund of an insurance company is the amount set apart by the company for the payment of losses occurring from the deaths of its policy holders. . . . Under a statute which declares that 'the indebtedness of the taxpayer shall be deducted, and the excess only taxed,' the premium reserve fund of an insurance company is exempt from taxation." Insurance Co. v. Lott, 54 Ala. 499; same case, 5 Ins. L. J. 897. See, also, Equitable Life Ins. Co. v Board of...