City of Dallas v. Texas Employers' Ins. Ass'n

• Decision Date: 08 November 1922
• Docket Number: (No. 1632.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: City of Dallas v. Texas Employers' Ins. Ass'n, 245 S.W. 946 (Tex. App. 1922)
• Parties: CITY OF DALLAS v. TEXAS EMPLOYERS' INS. ASS'N.
• Court: Texas Court of Appeals

245 S.W. 946

CITY OF DALLAS v. TEXAS EMPLOYERS' INS. ASS'N.

(No. 1632.)^*

Court of Civil Appeals of Texas. Amarillo.

November 8, 1922.

Rehearing Denied December 6, 1922.

Appeal from District Court, Dallas County; Kenneth Foree, Judge.

Action by the City of Dallas against the Texas Employers' Insurance Association. Judgment for defendant and plaintiff appeals. Affirmed.

Allen Charlton and Carl B. Callaway, both of Dallas, for appellant.

Homer Mitchell, of Dallas, for appellee.

HALL, J.

The city of Dallas brought this suit against the appellee for ad valorem taxes alleged to be due for the years 1915, 1916, and for penalties and interest on the amount of taxes and for foreclosure of its tax lien. The taxes were assessed against the surplus, less the reserve in the hands of the appellee according to the rule prescribed for certain domestic insurance companies. The appellee association defended upon the grounds: (1) That it was a public agency, created by legislative enactment, carrying out the terms of what is known as the Employers' Liability Act (Vernon's Ann. Civ. St. Supp. 1918, arts. 5246 — 1 to 5246 — 91), and as a governmental state agency its funds were not subject to taxation; (2) that its domicile was in the city of Austin, Tex.; that the situs of its property was in such city; that its property was all personal, and, if subject to taxation at all, could only be taxed in Travis county. Appellee further set out the terms of the Acts of the Thirty-Third Legislature (chapter 179), and the amendment thereto by the Thirty-Fifth Legislature (chapter 103), alleging that the various steps and requirements of said acts had been complied with; that the funds of the association so illegally sought to be taxed by the said city are funds arising under and wholly derived from the operation of its powers in the exercise of public functions; that the same are indispensable for the proper and efficient operation of its public functions; that if the illegal charge of the appellant should be held valid against appellee, it would greatly hinder, obstruct, impede, and embarrass appellee in the proper operation and conduct of its public affairs and destroy its powers and efficiency as an agency for the public good. In answer to this contention appellant city replied that the property assessed was held as a surplus, subject to be divided among private persons, and that the same was not public property used for public purposes, and was not used exclusively for the public benefit, and was subject to taxation under the Constitution of Texas, and could not be exempted from taxation under the terms of the Constitution; that the said association was a private corporation, engaged in the insurance business, and was not a public agency; that, even if the Constitution of Texas exempted the property of all public agencies from taxation, said property was expressly taxable under the organic laws of Texas and under the statutes; that the appellee had its home office, its domicile, and its principal office at Dallas; that all of its business was transacted in and from the city of Dallas; and that the property assessed was actually situated in such city when assessed. The trial was before the court without a jury, and resulted in a judgment in favor of appellee, holding that the association was a governmental agency, and that its property was not subject to taxation. The trial court further held, however, that if its property was subject to taxation, the situs was in the city of Dallas. To this part of the court's judgment the appellee presents and urges a cross-assignment. The court's findings and conclusions are as follows:

"I find that the Texas Employers' Insurance Association was created and organized by virtue of an act of the Legislature, passed by the Thirty-Third Legislature, and was thereafter amended by the Thirty-Fifth Legislature; that the act became effective, creating the association September 1, 1913; that the act provides for the appointment by the Governor of a board of directors of said association, consisting of 12 members, who serve for a term of one year and until their successors are elected. I find that pursuant to the act, the Governor appointed said board of directors. I further find in accordance with the terms of the act there was appropriated by the state Legislature at one time the sum of $5,000, and at another time the amount of $3,500 of the state's funds was appropriated by the Governor of Texas to the association for the purpose of carrying out the provisions of the act. I further find that all the provisions of the act were duly carried out, and that the association was duly and regularly acting under the provisions of the act at the time and during the years the city of Dallas, plaintiff, sought to impose the taxes sued upon, to wit, for the years 1915 and 1916. I further find that the funds and moneys sought to be taxed were derived from and arose out of the operation of said association in carrying out the purposes of said act, and were in its possession, and did not arise otherwise. I further find that said funds or moneys are necessary and indispensable for the uses of the association in carrying out the terms of the said act, and as conducted under the terms of the said act is a public agency of the state, and that said funds sought to be taxed are necessary for the proper and efficient operation of its public functions, and that the taxation of same would operate to hinder, obstruct, and impede the proper operation and discharge of its public function. I further find that the act creating the association does not provide for any detailed method of keeping its books and funds, and that for the purpose of convenience the officers of the association are keeping its funds after the manner of private insurance companies. I further find in accordance with the act the rates of premiums for all such insurance are first proposed by the association to the Insurance Commissioner, and, when approved by him, are the only rates allowed to be charged by other companies under the act. I further find that the association provides rules for the prevention of accidents on the premises of all subscribers of all companies, and enforces the same by appropriate penalties.

"(2) I find in accordance with the terms of the act the board of directors of the association appointed by the Governor duly passed a by-law, providing that the home office of the association should be located and domiciled at Austin, Travis county, Tex. I find that the association transacts its corporate business in accordance with the provisions of said by-laws at its home office in Austin, Travis county, Tex., by meeting and electing its officers annually and deciding the policy of the association, and was so conducting its business during the years 1915 and 1916 when the tax hereinafter mentioned was sought to be levied by the city of Dallas. I further find that the said association has subsidiary offices throughout the state of Texas at various points, and that its principal office is located, and was located during the years 1915 and 1916, in the city of Dallas, Dallas county, Tex., from which its principal business was conducted. I find that the association keeps on deposit at its various subsidiary offices located throughout the state certain portions of its funds for use, and I find that the funds herein sought to be taxed by the city of Dallas were maintained by the said association during the said years 1915 and 1916, by its principal subsidiary office located in the city of Dallas, Dallas county, Tex. I find that the funds so located in the city of Dallas and sought to be taxed by the city of Dallas were in the city of Dallas on deposit to meet the demands and emergencies required by the act to be done by the association. I find that the association did not voluntarily render said funds to the tax assessor for assessment, but, on the contrary, the said tax assessor made his own assessment of them for said years as hereinafter set out. I find that the association does not render any taxes to the state on its fund or any subdivision thereof, and has not-paid any taxes to the state for the reason that the officers of the state recognize the funds of the association are not amenable to taxation. I further find that the officers of the state and the officers of the association co-ordinate in carrying out the functions of the agency. I further find that if said fund is taxable its situs for taxation was at Dallas, Tex.

"(3) I find that the city of Dallas, a municipal corporation, during the years 1915 and 1916, as shown by their pleading, assessed the funds of the association in accordance with and after the plan prescribed by article 4764 of the Statutes, providing for the taxation of domestic insurance companies, that pursuant to said article of the statutes the city tax assessor assessed the funds of the said association for the year 1915 and for the year 1916, respectively, in the following manner:

 For the year 1915
                The total assets of said association of the
                 value of ........................................... $59,347 78
                Less the reserve held by said association
                 of the value of ....................................  41,234 42
                                                                       _________
                Less the net assets of said association .............  18,113 36
                Less 40 per centum ..................................   7,245 34
                                                                       _________
                Leaving assessed value of such assets ............... $10,868 02
                 For the year 1916
                Net surplus of said association, consisting
                 of net assets of said association after deducting
                 reserve, of the value of ........................... $58,986 49
                Less bills receivable ..................... $213 74
                Less overdue premiums .....................  120 86       334 60
                                                                       _________
                Leaving net assets of

...