Commonwealth v. Equitable Life Assur. Society of United States

• Decision Date: 24 February 1913
• Docket Number: 23
• Citation: 86 A. 787,239 Pa. 288
• Parties: Commonwealth, Appellant, v. The Equitable Life Assurance Society of the United States
• Court: Pennsylvania Supreme Court

86 A. 787

Commonwealth, Appellant, v. The Equitable Life Assurance Society of the United States

239 Pa. 288

No. 23

Supreme Court of Pennsylvania

February 24, 1913

Argued May 20, 1912

Appeal, No. 23, May T., 1912, by Commonwealth of Pennsylvania, from order of C.P. Dauphin Co., Com. Docket 1910, No. 436, directing judgment in favor of defendant in case of Commonwealth of Pennsylvania v. The Equitable Life Assurance Society of the United States. Reversed.

Appeal by defendant from account of the insurance commissioner settling tax on gross premiums. Before McCARRELL, J., without a jury, under the Act of April 22, 1874, P.L. 109.

The facts are stated in the opinion of the Supreme Court.

The court entered judgment for the defendant. The plaintiff appealed.

Error assigned, inter alia, was the action of the court in entering judgment in favor of the defendant.

The assignments of error are sustained. The judgment of the court below is reversed, and the record is remitted that judgment may be entered in the court below for the balance due to the Commonwealth in accordance with the settlement made by the accounting officers.

Wm. M Hargest, Assistant Deputy Attorney General, with him John C. Bell, Attorney General, for appellant. -- The language of the statute was intended to include and does include the payment of premiums by residents of this Commonwealth, whether collected through agencies in Pennsylvania or not: Swing v. Munson, 191 Pa. 582; Com. Mut. Fire Insurance Company v. Sharpless, 12 Pa.Super. 333; Penna. Lumbermen's Mutual Fire Insurance Co. v. Meyer, 197 U.S. 407 (25 S.Ct. Repr. 483).

M. E. Olmsted, with him Alexander & Green, Thos. DeWitt Cuyler and A. C. Stamm, for appellee.

Before FELL, C.J., BROWN, MESTREZAT, POTTER, ELKIN, STEWART and MOSCHZISKER, JJ.

OPINION

MR. JUSTICE POTTER:

The Act of June 28, 1895, P.L. 408, Section 1, provides that "hereafter the annual tax upon premiums of insurance companies of other states or foreign governments, shall be at the rate of two per centum upon the gross premiums of every character and description received from business done within this Commonwealth within the entire calendar year preceding." The Equitable Life Assurance Society of the United States, whose home office is in New York, transacts business in Pennsylvania. From a deposition of its president, made part of the record in this case, by agreement, it appears that the society does business in all the states of the Union except two, and that in each state where it does business it is licensed under the laws thereof, and in all of the states save one, in which it is licensed, the laws require it to pay a tax upon premiums. The business transacted by the society is the soliciting of insurance on lives by means of agents, and the issuing and renewing of policies of insurance, and collecting premiums thereon. In the State of Pennsylvania the society maintains three so-called cashier agencies, one at Philadelphia, one at Pittsburgh, and one at Allentown, and in each of said agencies there is a cashier whose business it is to receive renewal premiums. It seems, however, that the premiums for insurance written and maintained upon the lives of residents of Pennsylvania, are not all paid to these agencies in Pennsylvania. Some of them are sent to the home office in New York, or are paid to the society through agencies outside the State of Pennsylvania. In making up its returns for taxation for the years 1906 to 1910, inclusive, the society did not include these premiums paid by residents of Pennsylvania for insurance upon their lives, which were sent to points outside the State. The accounting officers of the Commonwealth made a settlement of the amount due for taxes during the years in question, in which they claimed the tax upon all premiums received by the society from the business of life insurance done within the Commonwealth, no matter whether the premium therefor was paid to an officer within or without the State. From the settlements thus made, the society appealed to the Court of Common Pleas of Dauphin County, contending that it was liable only for the tax upon premiums paid to an agency within the State; and, having paid these, it was not liable for anything further. By stipulation between the parties, a trial by jury was waived, and the case was tried before a court under the provisions of the Act of April 22, 1874, P.L. 109. The trial judge sustained the contention of the society, and held that it was subject to taxation only upon premiums paid to an agency within the State, and directed judgment to be entered, subject to exception, for the defendant, and against the Commonwealth. Exceptions were filed, which were overruled, by the court below, and judgment was ordered to be entered in accordance with the opinion of the trial judge. The Commonwealth has appealed, and assigns for error the dismissal of its exceptions, and the order directing judgment to be entered for the defendant.

In order to determine the question in controversy we must ascertain the source of the premiums which were paid to agencies outside the State. If they were received by the society from business done within the Commonwealth, then they were subject to the tax. If they did not come from such business they were not subject to the tax. What, then, is the meaning of the words "business done within this Commonwealth" as used in the statute taxing gross premiums of every character and description, received from such business? Manifestly the business in which the society is engaged is that of insuring lives; that is, in furnishing protection to the beneficiaries named in the policies against loss from the death of the insured, to the amount designated in the policy. Furnishing this protection is the business to be done by the...