Davis v. Metropolitan Life Ins. Co.

• Decision Date: 07 July 1943
• Docket Number: 14555.
• Citation: Davis v. Metropolitan Life Ins. Co., 196 Ga. 304, 26 S.E.2d 618 (Ga. 1943)
• Parties: DAVIS, Tax Assessor, et al. v. METROPOLITAN LIFE INS. CO.
• Court: Georgia Supreme Court

26 S.E.2d 618

196 Ga. 304

DAVIS, Tax Assessor, et al. v. METROPOLITAN LIFE INS. CO.

No. 14555.

Supreme Court of Georgia

July 7, 1943

Syllabus by the Court.

1. According the previous decisions by this court construing Georgia statutes, a promissory note executed by a resident of this State, but owned by a non-resident and held by him at his domicile out of this State, is to be taxed here only if it is derived from or is used as an incident of property owned or of a business conducted by the non-resident or his agent in Georgia; and this is true although the note may be secured by a mortgage on land situated in this State.

2. Where notes and mortgages are so owned and held by a non-resident, the maintenance of an office and agency in this State for the purpose merely of protecting the security and ultimate collection or liquidation of the indebtedness, the papers themselves being sent into this State only when needed for cancellation, renewal, or foreclosure, would not be using them in this State, within the rule enunciated.

3. Where a non-resident life-insurance company made loans secured by Georgia real estate, without reference to policyholder relationship, and through a channel entirely separate from that through which it issued insurance policies to Georgia residents, doing so merely as part of its general plan of investment, for protection alike to all of its policyholders, and with no other reference to its Georgia insurance business, the loans thus made by the company were not so connected with its Georgia insurance business as to render credits arising therefrom taxable here merely on the theory that they were a part of such insurance business.

4. By using intermediaries as channels of transmission for papers relying upon their inspection of property and examination of titles, made at the borrower's instance, and forwarding the money through them also at his instance, the lender does not constitute them his agents to make the loan, and is not chargeable with the consequences of dealings between them and the borrower, whether those dealings be public or private known or unknown.

5. Agency can not be proved by the declarations of the alleged agent.

6. The request to review and overrule the decisions in Columbus Mutual Life Insurance Company v. Gullatt and Guardian Life Insurance Company of America v. Gullatt, 189 Ga. 747, 8 S.E.2d 38, and National Mortgage Corporation v Suttles, 194 Ga. 768, 22 S.E.2d 386, is denied.

On October 22, 1937, Metropolitan Life Insurance Company, a New York corporation, filed its petition against the members of the board of tax assessors of Fulton County, the tax receiver and the tax collector of that County, to enjoin threatened assessment of certain of plaintiff's notes or credits for ad valorem State and county taxes for the years 1931 to 1937, inclusive, and to enjoin the tax receiver from entering any assessments on the tax digest, and to enjoin the tax collector from issuing executions against the plaintiff alleging that the intangibles in question had no tax situs in Fulton County, Georgia. The petition set out in detail the facts showing how the plaintiff acquired its notes or credits, why they were not taxable in Fulton County, and alleged that the threatened assessments if carried out would deprive the plaintiff of its property without due process of law, contrary to the fourteenth amendment of the constitution of the United States, and to the due-process clause of the constitution of Georgia.

The tax assessors answered admitting that they were preparing to assess the credits represented by the notes owned by the plaintiff and secured by Fulton County real estate, and alleging that the property to be taxed arose out of a business conducted by the plaintiff through a local agent in Georgia, and that it accrued out of or as an incident to property owned or a business conducted in this State.

Loans which evidence the property it is sought to tax fall into four groups. By stipulation a sample loan was selected from each of the four, as follows:

1. Frank B. Archer Loan No. 146974, made and transferred during the time that Trust Company of Georgia was loan correspondent. This Archer loan is representative of 57 loans made during the existence of a contract between Metropolitan Life Insurance Company and Trust Company of Georgia.

2. E. E. Bengston Loan No. 152740, made and transferred during the time that C. D. LeBey & Company was loan correspondent. This Bengston loan is representative of 43 loans made during the existence of a contract between Metropolitan Life Insurance Company and C. D. LeBey & Company.

3. Isaac Sinkovitz Loan No. 13621, made and transferred during the time that Adair Realty & Trust Company was loan correspondent. This loan is representative of a group of six loans made during the existence of a contract between Metropolitan Life Insurance Company and Adair Realty & Trust Company.

4. The fourth group differs radically from loans in the other three. It consists of thirteen loans closed at the office of Georgia Title and Guaranty Company in Fulton County; and in this group Metropolitan Life Insurance Company was the grantee and payee without transfer.

Besides others referred to in the opinion, the following undisputed facts were shown by the evidence:

It was stipulated by the parties that the plaintiff is a New York corporation organized as a life insurance company, and is domiciled in New York; that before the filing of the petition the defendants had threatened to assess and tax for State and county ad valorem taxes in Fulton County, the credits owned by the plaintiff on January 1 of each of the years 1931 to 1937, inclusive; that plaintiff had paid taxes on its real estate located in said county, excepting the credits, notes, or mortgages referred to; that for the purpose of collecting the taxes on said credits the defendants had threatened to seize any property of the plaintiff located in said county; and that when the petition was filed and ever since the plaintiff has owned real estate in Fulton County.

The group 3 loan was made to the borrower by Adair Realty & Trust Company. The note and security deed signed by Sinkovitz in favor of the Adair Company were assigned by the Adair Company to the plaintiff under the written contract between the Adair Company and the plaintiff, dated October 26, 1920, a copy of the contract being attached as exhibit A to the plaintiff's amendment filed on November 9, 1942. It was admitted that the contract remained in force from October 26, 1920, until July 1, 1927, when a similar contract was entered into between the plaintiff and Trust Company of Georgia.

The contract between the Adair Company and the plaintiff under which the Sinkovitz loan was purchased by the plaintiff provides that: 'It is expressly understood and agreed by and between the parties hereto that the said Adair Realty & Trust Company, in consideration of the purchase by Metropolitan Life Insurance Company of said mortgage from it, does hereby covenant and agree with the Metropolitan Life Insurance Company to guarantee, protect, and indemnify the said Metropolitan Life Insurance Company from and against any loss or damage that the said Metropolitan Life Insurance Company may suffer or incur because of any default in payment of principal or interest or in any of the covenants or conditions of any such mortgages; and in case any of such mortgages shall be or become in default, the said Adair Realty and Trust Company agrees to repurchase any of such mortgages within sixty days after such default.'

The Sinkovitz loan papers, which the parties admit were typical of all notes and security deeds which were transferred by the Adair Company to the plaintiff, showed that the loan was evidence by a note signed by Sinkovitz, payable to the order of the Adair Company. It was secured by a deed signed by Sinkovitz in favor of the Adair Company, and was endorsed by the Adair Company to the order of the plaintiff. Documents and letters relating to the Sinkovitz loan were introduced in evidence, from which it appeared without dispute that the Adair Company made the loan to Sinkovitz on January 3, 1923, with its own funds, and afterwards endorsed the note and transferred the security deed to the plaintiff under the terms of the contract referred to, and delivered the papers to a bank to be submitted to plaintiff in New York for acceptance or rejection. The Sinkovitz loan was one of nine loans which had been assigned to the plaintiff by the Adair Company. On January 31, 1933, the plaintiff deposited with the Chase National Bank of New York, to the credit of the Adair Company, $38,800, the purchase price of nine mortgage loans, including the Sinkovitz Loan, which the Adair Company had assigned to it. A letter from the Metropolitan Company to the Adair Company stated that the Metropolitan Company was to receive interest on the loans from January 31, 1923, and that the Metropolitan Company's Law Division had not completed its examination of the papers securing the loans; and that inasmuch as the acceptance of the loans was subject to the approval of the Law Division, the payment was made upon the express condition that the Adair Company would repurchase any of the loans in case the papers did not meet with the approval of the law division.

The Frank B. Archer loan was made to the borrower by the Trust Company of Georgia. The note and security deed signed by Archer in favor of Trust Company of Georgia were assigned by that company to the plaintiff under the contract between them dated July 1, 1927, a copy of the contract being attached as exhibit B to the plaintiff's amendment of November 9 1942. It was admitted that the contract remained in force from July 1,...