Cochrane v. National Life Ins. Co.
| Decision Date | 06 April 1925 |
| Docket Number | 11066. |
| Citation | 235 P. 569,77 Colo. 243 |
| Parties | COCHRANE, State Com'r of Insurance v. NATIONAL LIFE INS. CO. |
| Court | Colorado Supreme Court |
Rehearing Denied May 4, 1925.
Department 3.
Error to District Court, City and County of Denver; Charles C Butler, Judge.
Suit by the National Life Insurance Company against Jackson Cochrane as State Commissioner of Insurance. Decree for plaintiff, and defendant brings error.
Reversed with instructions.
Wayne C. Williams, Atty. Gen., Charles Roach, Deputy Atty. Gen and Oliver Dean, Asst. Atty. Gen., for plaintiff in error.
Smith & Brock and John P. Akolt, all of Denver (George B. Young, of Montpelier, Vt., of counsel), for defendant in error.
Suit brought by defendant in error, as plaintiff in the court below, and so designated here, against plaintiff in error, as defendant there, to enjoin defendant from annulling plaintiff's certificate of authority to do business in this state, and from invoking any of the penal provisions of the Insurance Code, on account of the failure and refusal of plaintiff to pay the 2 per cent. tax, or any other tax, on the sum of $4,714 mentioned in the complaint.
The defendant filed a general demurrer to the complaint, which was overruled. Defendant having elected to stand on his demurrer, the court rendered a decree of injunction as prayed for, and defendant prosecutes this writ of error.
The plaintiff is a mutual life insurance company without stock or stockholders and operated solely for the benefit of its policy holders. Each policy holder is required annually to pay to plaintiff a premium on his policy as provided by the policy terms, based upon an expected mortality loss among the company policy holders, an assumed interest earning on plaintiff's invested assets of 3 per cent., and upon an estimate of the operating expenses of the company. The company accumulates from time to time a surplus from the premiums, interest earnings in excess of 3 per cent. per annum, in excess of what is needed to defray mortality losses and operating expenses.
The company annually declares from the surplus a dividend in such amount as the board of directors may determine. The policy holder participates in this surplus upon payment of the premium due on his policy on its first anniversary date, and such dividend becomes the property of the policy holder or the beneficiary thereunder, with the option in the policy holder or beneficiary either (1) to withdraw the same in cash; or (2) to have same applied toward payment of any premium thereafter to become due on the policy; or (3) to convert the same into additional paid-up participating insurance; or (4) deposit the same with the company, subject to the payment annually of 3 per cent. interest thereon, together with the share of surplus interest apportioned thereto by the directors of the company.
The provisions of the policy are set out in the complaint. The face amount of premiums called for by policies issued to policy holders in Colorado prior to and during the year 1923, to be paid in the year 1923, was the sum of $67,625.07. The sum of $4,714, upon which the plaintiff declined to pay the 2 per cent. tax, is the amount which the policy holders elected in the year 1923, to apply, and which was applied by the company, toward payment of their premiums due in that year, and was their share of the divisible surplus. The defendant contends that plaintiff is liable for the 2 per cent. tax on the $4,714, under section 16, chapter 99, Session Laws, 1913, which, so far as necessary to insert the same here, reads:
'All insurance companies doing business in this state shall pay to the state treasurer, through the commissioner's office a tax of 2 per cent. (2%) on all premiums collected or contracted for in this state or from the residents thereof during the year ending 31st day of December next...
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