Connecticut Mutual Life Insurance Co. v. Commonwealth

• Decision Date: 29 June 1882
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Connecticut Mutual Life Insurance Company v. Commonwealth. New York Life Insurance Company v. Daniel A. Gleason & another

133 Mass. 161

Connecticut Mutual Life Insurance Company v. Commonwealth.

New York Life Insurance Company v. Daniel A. Gleason & another

Supreme Court of Massachusetts

June 29, 1882

Suffolk.

Judgment for the defendants.

W. G Russell & J. Fox, for the plaintiff in the first case.

J. C Ropes & W. C. Loring, for the plaintiff in the second case.

G. Marston, Attorney General, (C. H. Barrows, Assistant Attorney General, with him,) for the defendants.

Morton C. J. Endicott & C. Allen, JJ., absent.

OPINION

Morton, C. J.

The only question argued in these cases is as to the constitutionality of the St. of 1880, c. 227, which provides in the first section that "every corporation and association engaged within this Commonwealth, by its officers or by agents as defined by chapter one hundred and fourteen of the acts of the year eighteen hundred and sixty-four, in the business of life insurance, whether incorporated by authority of this Commonwealth or otherwise, shall annually pay an excise tax of an amount to be determined by assessment of the same upon a valuation equal to the aggregate net value of all policies in force on the thirty-first day of December then next preceding, issued or assumed by such corporation or association, and held by residents of the Commonwealth, at the rate of one half of one per centum per annum."

The power of the Legislature to impose taxes, duties and excises is not an unrestricted one, but is derived from and limited by the Constitution, which provides that "full power and authority are hereby given and granted to the said General Court" "to impose and levy proportional and reasonable assessments, rates and taxes, upon all the inhabitants of, and persons resident, and estates lying, within the said Commonwealth; and also to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise and commodities whatsoever, brought into, produced, manufactured or being within the same." Const. Mass. c. 1, art. 4.

It is clear that the tax in question cannot be justified as a tax on property under the first clause above cited. That clause provides that all taxes levied under its authority shall be "proportional and reasonable." It forbids the imposition of a tax upon one class of property at a different rate from that which is applied to other classes. The assessment which is the subject of controversy is not laid according to any rule of proportion, but is laid upon the corporations specified in the act, without any reference to the whole amount required to be raised for public purposes, or to the actual value of the property of the corporations, or to the whole amount of property in the Commonwealth liable to be assessed for the public service. Oliver v. Washington Mills, 11 Allen 268. Commonwealth v. Hamilton Manuf. Co. 12 Allen 298. Cheshire v. County Commissioners, 118 Mass. 386.

It is equally clear that the Legislature in laying this assessment did not intend to exercise the power conferred by this clause of imposing "proportional and reasonable" taxes upon property. The statute expressly declares it to be "an excise tax;" it is not based upon the actual property of the corporations named, or upon any proportion which it bears to other property; the statute requires returns from each corporation, not of its property, but of the aggregate net value of all its policies held by residents of the Commonwealth, for the purpose of furnishing a standard or measure of a special tax or excise upon the franchises or privileges of the corporation. The only question, therefore, is whether this tax can be justified under the other clause of the Constitution, authorizing the General Court "to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise and commodities whatsoever," within the Commonwealth.

It has been uniformly held, since the formation of our government, that, under this provision of the Constitution, the Legislature has the power to impose an excise upon any business or calling exercised in the Commonwealth, and upon any franchise or privilege conferred by or exercised within the Commonwealth. Portland Bank v. Apthorp, 12 Mass. 252. Commonwealth v. People's Five Cents Savings Bank, 5 Allen 428.

The power to impose an excise upon corporations or associations engaged within this Commonwealth in the business of life insurance, whether incorporated here or incorporated elsewhere and allowed by comity to carry on business here, cannot now be doubted. The only limitation of the power is that contained in the constitutional provision, that the duty or excise shall be "reasonable."

The power to determine what callings, franchises or privileges, or, to use the language of the Constitution, "commodities," shall be subjected to an excise, and the amount of such excise, belongs exclusively to the Legislature. The provision that it must be "reasonable" was not designed to give to the judicial department the right to revise the decisions of the Legislature as to the policy and expediency of an excise. Great latitude of discretion is given to the Legislature in determining, not only what "commodity" shall be subjected to excise, but also the amount of the excise and the standard or measure to be adopted as the foundation of the proposed excise. The court cannot declare a tax or excise illegal and void, as being unreasonable, unless it is unequal, or plainly and grossly oppressive, and contrary to common right.

Judged by these principles, the excise in controversy does not seem to us to be unreasonable and illegal. It is not unequal, but it operates alike upon all corporations or associations which exercise the franchise or function which is intended to be taxed. The mode of fixing the amount of the tax, by an assessment upon the aggregate of the net...