Central Life Assur. Soc. v. City of Des Moines
| Decision Date | 05 October 1931 |
| Docket Number | No. 40133.,40133. |
| Citation | 212 Iowa 1254,238 N.W. 535 |
| Parties | CENTRAL LIFE ASSUR. SOC. v. CITY OF DES MOINES ET AL. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Polk County; F. S. Shankland, Judge.
In this proceeding an assessment for the year 1928 was made by the city assessor against furniture owned by the plaintiff and valued at $17,000. On the recommendation of said assessor, thereafter made, the city council of Des Moines, acting as a board of review, increased the original assessment, on May 19, 1928, by including, as the assessable property of the plaintiff, moneys and credits said to be worth $1,120,627. Objections were duly presented to such board of review by the plaintiff asking that the assessment should not be increased, but remain on the $17,000 worth of furniture. The board of review, however, feeling that the assessment should be increased, overruled the objections made by the plaintiff and made the foregoing assessment a finality, from which action the plaintiff appealed to the district court. That court, on April 9, 1929, set aside the action of the board of review, and left the assessment against the plaintiff's property as originally fixed by the assessor. From this action of the district court, the defendants have appealed to this court.
Affirmed.George P. Comfort, C. R. S. Anderson, Charles Hutchinson, and C. A. Weaver, all of Des Moines, for appellants.
Fred P. Carr and Carr, Cox, Evans & Riley, all of Des Moines, for appellee.
Before the existence of the plaintiff-appellee, the Central Life Assurance Society of the United States (Mutual), a stock company was organized for the purpose of writing nonparticipating life insurance on the level premium plan. This stock company was called the Central Life Assurance Society of the United States.
On May 10, 1919, the appellee, Central Life Assurance Society (Mutual), was organized under chapter 6, title 9, of the 1897 Code (sections 1768-1783), as amended. The purpose of the appellee mutual insurance company was to do a legal reserve life insurance business on the mutual plan. Participating insurance is written by this company, while nonparticipating insurance was carried by the stock company, as before suggested. Immediately after the mutual company was organized, that is to say, on May 15, 1919, the appellee reinsured the nonparticipating insurance in force with, and which had been written by, the Central Life Assurance Society of the United States, a stock company. As part of the reinsurance contract, the assets and properties of the former stock company were transferred to the appellee company. Appellee, in addition to assuming the obligation of reinsurance, also agreed to pay certain named persons, who were stockholders of the stock company, specified earnings from the nonparticipating business for a period of twenty-two years.
First there was to be reserved from such earnings on the nonparticipating business $100,000 at the close of each year of the twenty-two, and the balance of the earnings on that nonparticipating business was to be prorated to the aforesaid stockholders in the ratio of their holdings. Following its organization, as above explained, appellee had written, December 31, 1927, participating insurance to the amount of $144,659,063, while at that time it carried nonparticipating insurance of the former stock company under the reinsurance agreement to the extent of $30,504,108. According to the level premium plan, premiums were paid on this insurance, and in the year 1927 appellee collected in premiums the total sum of $5,739,853.75. That includes both the participating and nonparticipating policies. From the participating policies, appellee, during that year, received $4,896,346.46, and from the nonparticipating policies, $843,507.29.
Reports were duly made to the insurance department for the year 1927, and a duplicate was furnished the assessor, as required by section 7027 of the 1927 Code. Said reports show gross assets, “including ledger and non-ledger,” of $26,722,764.10. After deducting from said gross sum “not admitted assets” of $457,773.38, there remains a total “admitted assets” of $26,264,990.72. To be subtracted from the foregoing admitted assets are liabilities in the amount of $24,585,965.30, thereby leaving a balance of $1,679,025.42, known as a surplus. Such surplus, however, is claimed by appellee as a liability. By so considering the surplus to be a liability, the admitted assets and the liabilities balance.
With the foregoing report and statement before him, the assessor in Des Moines assessed no property of the appellee mutual company except furniture valued at $17,000. An increase of the assessment, however, was made by the board of review. It added, to the assessable property of the appellee company, moneys and credits said to be worth $1,120,627. In arriving at that assessment on the moneys and credits, the board of review calculated as follows: It allowed the total value on the gross assets made by appellee, to wit, $26,722,764.10, and then deducted therefrom, as did appellee in its statement, $457,773.38 not admitted assets, and arrived at the net total of admitted assets fixed in appellee's report of $26,264,990.72. Consequently appellee and the board of review agreed concerning the assets.
A disagreement, however, arose over the liabilities in two particulars, for the board refused to allow item 30 on the report, which aggregates $230,158.61, set aside for the purpose of paying taxes, and likewise the board refused to allow as a liability the surplus item of $1,679,025.42. So the agreed admitted assets exceed the liabilities allowed by the board to the extent of $1,909,184.03. But the board deducted from the last-named amount $788,556, covering the value of the real estate and tax-exempt bonds, which, subtracted from $1,909,184.03, leaves a balance of $1,120,627. That is the amount of the assessment fixed by the board on the moneys and credits.
As before stated, the appellee appealed from this action of the board to the district court, and that tribunal set aside the board's assessment on moneys and credits. Therefore the defendants and appellants, city of Des Moines and city council, sitting as a board of review, appealed from the action of the district court to this court. Although only two items passed upon by the board of review were objected to by the appellee, nevertheless appellants complain about four items relating to appellee's moneys and credits. Their complaint is that appellee should be assessed on moneys and credits in the sum of $2,272,726.92. Appellants arrive at that conclusion by adding to the admitted assets contained in the aforesaid report $457,773.38, which is the amount of the previously named nonadmitted assets. Then appellants propose to substract from the liabilities claimed by appellee three items, as follows: First, $704,326.52, dividends paid to the participating policyholders for the year 1928; second, $230,158.61, the amount estimated for federal, state, and other taxes during the business year of 1928; and, third, $1,679,025.42, before-named, as the unassigned surplus. By way of answer to appellants' claim, appellee in brief asserts: First, that the controversy concerning the nonadmitted assets of $457,773.38, and the dividends to participating policyholders of $704,326.52 is not involved in this appeal, for the reason that appellee made no complaint thereof before the board of review; and, second, an appeal was taken by appellee from the action of the board, and consequently the two items mentioned could not be and were not affected on the appeal because they were not in dispute before the local board. Furthermore, appellee maintains that the items relating to the state, federal, and other taxes, and the surplus were properly disposed of by the district court, for the reason that they are debts and liabilities properly deductible from moneys and credits under sections 7029 and 7030 of the 1927 Code.
These propositions will now be considered in the order named.
[1][2] I. Is it proper on this appeal to consider the controverted item of assets known as nonadmitted assets, and the disputed item of dividends to participating policyholders, even though neither of those propositions was complained of by appellee before the local board of review? Not having been complained of by appellee before that board, those items were not in controversy. Both items were allowed by the local board of review, and, when appellee appealed from the other adverse rulings of that board, the nonadmitted assets and the dividends to participating policyholders were not involved.
The appeal taken from the board of review by appellee to the district court had to do with two propositions, as before explained. They were that the item of $230,158.61, reserved for state, federal, and other taxes, and the item of $1,679,025.42 unassigned surplus, were not taxable for the reason that they were proper debts and liabilities under the above-named statutory provisions. No appeal was taken from the board of review to the district court by appellants, and therefore the only controversy in that court related to the propositions embraced in appellee's appeal. Due to the fact, then, that appellee's appeal did not involve the nonadmitted assets or dividends paid to policyholders, that controversy could not possibly be before the district court. Because the appellants did not appeal, the propositions could only become material in the district court through appellee's appeal; for appellee's objection before the board of review did not relate to the nonadmitted assets or the dividends paid to policyholders, and hence appellee's appeal did and could not embrace those propositions. Contrary to this declaration, however, appellants argue that, although appellee's objections before the board of review did not embrace the nonadmitted assets or dividends to...
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