Davis v. Penn Mut. Life Ins. Co.

• Decision Date: 09 January 1947
• Docket Number: 15638.
• Citation: Davis v. Penn Mut. Life Ins. Co., 41 S.E.2d 406, 201 Ga. 821 (Ga. 1947)
• Parties: DAVIS et al. v. PENN MUT. LIFE INS. CO.
• Court: Georgia Supreme Court

41 S.E.2d 406

201 Ga. 821

DAVIS et al. v. PENN MUT. LIFE INS. CO.

No. 15638.

Supreme Court of Georgia

January 9, 1947

Rehearing Denied Feb. 6, 1947.

Syllabus by the Court.

1. A promissory note executed by a resident of this State, but owned by a nonresident and held by it at its domicile out of the State, is to be taxed here only if derived from or used as an incident of property owned or of a business conducted by the nonresident or its agent in Georgia; and this is true although the note may be sesured by a mortgage on land situated in this State.

2. 'Where there is no conflict in the evidence, and that introduced, with all reasonable deductions or inferences therefrom, shall demand a particular verdict, the court may direct the jury to find for the party entitled thereto.' Code, § 110-104.

3. It is not error to exclude immaterial evidence.

On October 22, 1937, the Penn Mutual Life Insurance Company, a nonresident corporation with its home office in Philadelphia filed a petition in the superior court of Fulton County Georgia, against C. H. Gullatt, Reese Perry, and H. W Gilbert, as members of the Board of Tax Assessors of Fulton County; Standish Thompson, as attorney for the Board of Tax Assessors; Guy Moore, as Fulton County Tax Receiver and T. E. Suttles, as Fulton County tax collector, to enjoin a threatened assessment by the board of tax assessors and its attorney of certain credits belonging to the plaintiff for ad valorem State and county taxes for the years 1931 to 1937, inclusive; to enjoin the tax receiver from entering any assessment against its property on the tax digest; and to enjoin the tax collector from issuing an execution against it with respect therto. Later, by amendment, the names of C. H. Gullatt and H. W. Gilbert were stricken as parties, and W. Comer Davis and John C. Townley, as successor members of the board of tax assessors, were made parties defendant in their stead. The petition attacked the constitutionality of the statutes under which the tax assessors acted, but by further amendment the plaintiff struck from its petition all allegations concerning the validity of the statutes. The petition as it then stood alleged that the plaintiff had been licensed to carry on a life-insurance business in the State of Georgia, and incident to that business, which had been conducted for more than seven years, it owned valuable property in Fulton County on which it had annually paid all taxes, State and county, required of it. The credits sought to be taxed were not connected in any way with its insurance business. The intangibles involved were evidenced by promissory notes signed by various citizens of Fulton County and secured by deeds to lands located in that county. They were owned by the plaintiff, a non-resident corporation, and held at its domicile in Pennsylvania. They were not derived from or used as an incident of property owned or of a business conducted by the plaintiff or its agent in Georgia. The notes representing the credits referred to were payable at the plaintiff's office in Philadelphia, Pennsylvania, and at no time during the period for which an assessment was threatened had it engaged in any loan business in Georgia or had any agent in the State authorized to invest its funds or to deal in any manner with the notes. During the entire period of time involved, its notes and deeds had been physically situated and kept without the State of Georgia. The taxing authorities of Fulton County had threatened to assess such credits for State and county ad valorem tax, to collect taxes thereon, and that they would do so unless enjoined. Its credits had no tax situs in Georgia for those years, and the imposition of such a tax would violate the due-process clauses of both the State and Federal constitutions.

The defendants filed general demurrers to the petition as amended, alleging that it stated no cause of action for the relief sought and was without equity. The tax assessors filed an answer 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 alleged that the property sought to be assessed for tax purposes arose out of a business conducted by the plaintiff through a local agent in Georgia. The tax receiver answered that he had no intention of making an entry of any assessment against the plaintiff's credits, except when the same could be properly done. The tax collector answered that, when the assessments were properly made, he would issue executions. The demurrers were overruled by the trial court. An exception to that judgment brought the case to this court in 1944. This court affirmed the judgment of the lower court. See Davis v. Penn Mutual Life Insurance Co., 198 Ga. 550, 32 S.E.2d 180, 160 A.L.R. 778.

In January, 1946, the plaintiff amended its petition by setting out more fully how the notes were acquired. The amendment alleged in substance: Weyman and Connors, later known as Lipscomb-Weyman-Chapman Company, and afterwards as Lipscomb-Ellis Company, a real-estate dealer or broker of Atlanta, Georgia, would be employed in writing by a prospective borrower as his agent to negotiate a loan to be secured by certain land. Weyman and Connors submitted applications to various lenders. If the application was to be submitted to the plaintiff, Weyman and Connors would send it to Howard D. Graf, a salaried employee of the plaintiff who had an office in Fulton County furnished him by the plaintiff. Graf would inspect the applicant's property and would mail the application and his appraisal to the plaintiff's home office in Philadelphia. The action of the plaintiff's finance committee in Philadelphia in accepting, rejecting, or modifying the application was communicated by the plaintiff from its home office to Weyman and Connors. The applicant, through Weyman and Connors, would then arrange with Alston, Alston, Foster and Moise, attorneys at law, of Atlanta, if the terms of the loan were satisfactory to the applicant, for the examination of title and the preparing of the proposed loan papers, at the applicant's expense. The attorneys would mail an opinion of title and the proposed note and loan deed to the plaintiff at Philadelphia. If the title and loan papers were approved by the plaintiff at its home office, it would return the note and loan deed to the attorneys with the plaintiff's check to cover the proceeds of the loan. The attorneys would have the papers signed and would deliver the proceeds of the loan to the borrower, would have the loan deed recorded, and would send all the papers to the plaintiff at Philadelphia, where they were kept at all times except when needed in Fulton County for cancellation, collection, or foreclosure. Neither the attorneys, nor Weyman and Connors (or its successors), nor Graf had authority to approve any application for a loan, or fix the terms of a loan, or to decide for the plaintiff whether or not the value of the property offered as security was sufficient, or to deal with the notes or credits, and they never did so. Graf had no authority to solicit applications for loans or to consummate a loan, and he never did so. The right to pass upon all such questions was at all times in the plaintiff's finance committee, which always met in Philadelphia.

The court overruled the defendants' renewed general demurrers to the petition as amended in January, 1946. The case was tried in that month before the judge and a jury. There was no disputed issue of fact raised by the evidence. The court directed a verdict for the plaintiff and entered a final decree enjoining the threatened assessment. The defendants' motion for new trial as amended was denied, and they filed their bill of exceptions.

The following undisputed facts were shown by the evidence: The parties stipulated that the plaintiff is a Pennsylvania corporation organized as a life-insurance company; that the defendants had threatened to tax as alleged; that the plaintiff had paid tax on all real estate and other property owned by it in Fulton County, with the exception of the notes and credits referred to; that, to collect the taxes on the credits, the defendants had threatened to seize the property of the plaintiff in Fulton County; that, when the petition was filed and since then, the plaintiff has owned real estate in Fulton County; that the method used by the plaintiff in acquiring the Jacob Batt loan in 1938 illustrates how the plaintiff acquired all of the loans in question.

The undisputed evidence showed that on January 19, 1938, Jacob Batt signed a written agreement employing Lipscomb-Weyman-Chapman Company, a real estate broker of Atlanta, as his agent to negotiate, for a consideration of $250, a loan of $12,500 to be secured by a loan deed conveying to a lender, or such person or corporation as Lipscomb-Weyman-Chapman Company might direct, certain property known as 168 Moreland Avenue, N.E., in Atlanta Georgia. The loan deed was to be a first encumbrance, and Lipscomb-Weyman-Chapman Company was authorized by Batt to have the property appraised and surveyed and the title abstracted. That company would submit applications for loans to various prospective lenders. In this case it decided to have an application signed by Batt submitted to the Penn Mutual Life Insurance Company. The application was directed 'To the Penn Mutual Life Insurance Company, Philadelphia, Penna.' It showed that there was an outstanding first mortgage of $10,850 on the property in favor of Peoples Savings Bank of Rhode Island. The applicant agreed in the application that he would furnish a full brief of title and would pay all expenses of the loan, including counsel fees, cost of examining property and preparing papers, and...