Equitable Life Assur. Soc. of United States v. Thulemeyer, Insurance Com'r

Decision Date17 December 1935
Docket Number1875
Citation49 Wyo. 63,52 P.2d 1223
PartiesEQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES v. THULEMEYER, INSURANCE COM'R
CourtWyoming Supreme Court

Petition for rehearing denied February 18, 1936, Reported at 49 Wyo. 63 at 97.

ERROR to District Court, Laramie County; SAM M. THOMPSON, Judge.

Suit by the Equitable Life Assurance Society of the United States against Theodore Thulemeyer, State Insurance Commissioner of the State of Wyoming. To review an adverse judgment plaintiff brings error. Petition for rehearing denied February 18, 1936. See 54 P.2d 896.

Judgment modified.

For the plaintiff in error there were briefs by Alexander & Green, of New York City; N.E. Corthell, of Laramie and John U. Loomis, of Cheyenne, and oral arguments by Messrs. Corthell and Loomis.

The premiums paid to plaintiff for group insurance are not taxable under the statute because they do not constitute insurance within the state. The statute relied upon is Sec. 115-117, R. S. 1931, imposing a tax upon gross premiums received for insurance within this state. The Railroad Company did not act as the agent of the Insurance Company. Duval v. M. L. I. S., (N. H.) 136 A. 400; Leach v. M. L. I. Co., (Kan.) 261 P. 603; Conn. Gen. Life Ins. Company v. Speer, (Ark.) 48 S.W.2d 553; E. L. A. S. v. Hall, (Ky.) 69 S.W.2d 977. Employees are not parties to these group contracts, but mere third party beneficiaries. Gallagher v. Company, (Mo. App.) 258 S.W. 16; E. L. A. S. v. Hall, (Ky.) 69 S.W.2d 977; Seavers v. M. L. I. Co., 230 N.Y.S. 366. The presence of a third party beneficiary does not bring the contract within the state. Austin v. M. L. I. Co., (La.) 142 So. 337. Non-payment of premiums terminates the policy. Stoner v. E. L. A. S., 28 Dauphin County (Penn.) Reporter, 235; Hartford A. & I. Company v. Land Company, 292 U.S. 143. The subject matter is without the state. State v. Jay, 37 Wyo. 189. Plaintiff's license cannot be cancelled arbitrarily. State v. Loucks, 30 Wyoming 485. A taxing act is to be strictly construed. U. S. v. Merriam, 263 U.S. 179; Gould v. Gould, 245 U.S. 151; Higley v. Commissioner, 69 F.2d 160 (8th Cir.); City v. Conner, 55 Ohio St. 82; Commonwealth v. Power Company, 271 P. 456; Manning v. Board, (R. I.) 127 A. 865. Tax statutes will not be extended by implication. Ry. Company v. City, (Iowa) 178 N.W. 905; Bradley v. People, (Colo.) 9 P. 783, 785; Duggan v. Bay State Ry. Co., (Mass.) 119 N.E. 757. Group insurance is social in character and differs from other insurance. Leach v. M. L. I. Company, supra. Certificates issued to individual employees are not insurance contracts. Austin v. M. L. I. Co., supra., Thull v. E. L. A. S., (Oh. App.) 178 N.E. 850; Wann v. M. L. I. Company, (Tex.) 41 S.W.2d 50; E. L. A. S. v. Austin, (Ky.) 72 S.W.2d 716. Taxation of plaintiff on group insurance transactions outside the state violates the Fourteenth Amendment to the Constitution of the United States and Article I, Section 6 of the Wyoming Constitution, in taking property without due process of law and denying equal protection of the laws. Wyoming Constitution, Article I, Section 6. McCulloch v. Maryland, 17 U.S. 316; Ferry Company v. Kentucky, 188 U.S. 385; R. R. Company v. Pennsylvania, 198 U.S. 341; Buck v. Beach, 206 U.S. 392; W. U. T. Company v. Kansas, 216 U.S. 1; U. S. v. Bennett, 232 U.S. 299; N.Y. L. I. Company v. Head, 234 U.S. 149; Assurance Society v. Kentucky, 239 U.S. 103; International Paper Company v. Massachusetts, 246 U.S. 135; Compress Company v. Arkansas, 260 U.S. 346; Air-Way Corp. v. Day, 266 U.S. 71; Aetna Life Insurance Co. v. Dunken, 266 U.S. 389; Frick et al. v. Pa., 268 U.S. 473; Trust Company v. Doughton, 270 U.S. 69; Trust Company v. Doughton, 272 U.S. 567; T. Company v. Virginia, 280 U.S. 83. A state may not extend the effect of its laws beyond its own borders. Hartford Company v. Land Company, supra; N.Y. L. I. Company v. Head, supra; Life Ins. Company v. Dunken, supra; Allgeyer v. Louisiana, 165 U.S. 578; Home Ins. Co. v. Dick, 281 U.S. 397. A state may not exact as a condition of a foreign corporation engaging in business within its limits an infringement of its rights. F. & D. Co. v. Tafoya, 270 U.S. 427; Terral v. Burke Company, 257 U.S. 529; Looney v. Crane Company, 245 U.S. 178; N.Y. L. I. C. v. Head, supra; Air-Way Corp. v. Day, 266 U.S. 71. Chattel property may be taxed only in the state of the owner's domicile. Southern Pacific Company v. Kentucky, 222 U.S. 63; Ferry Company v. Kentucky, supra; Bank v. Maine, 284 U.S. 312; Frick v. Pa., 268 U.S. 473; Company v. Virginia, supra; Farmers Loan Company v. Minnesota, 280 U.S. 204. An insurance company cannot be compelled to pay a license tax based upon life insurance premiums when it is not doing business within the state, although persons whose lives had been previously insured by the insurance company continue to reside therein. Provident Life Assurance Soc. v. Ky., supra. A tax may not be imposed upon property of a corporation outside the taxing state. W. U. T. Company v. Kansas, supra. The case of E. L. A. S. v. Pa., 238 U.S. 143, relied upon by defendant and also the case of Compania de Tabacos, 275 U.S. 87, are clearly distinguishable on the facts. Palmetto Fire Insurance Company v. Conn and companion cases reported in 272 U.S. 295 relied on by defendant are based on acts done within the respective states. Defendant's position is similar to that of the state in New York Life E. Company v. Pa., 153 U.S. 628, and to that of the state in Western Union Tel. Company v. Kansas, 216 U.S. 1; Hanover Fire Insurance Company v. Carr, 272 U.S. 494; Cab Company v. Pa., 272 U.S. 399; Corporation v. Alabama, 288 U.S. 218; Hyatt v. Lumber Company, (Idaho) 173 P. 1083; N.Y. Life Insurance Company v. Dodge, 246 U.S. 357. The findings of fact and conclusions of law are not sustained by the evidence and are contrary to law. A failure to find upon material issues is reversible error. Bancroft's Code Practice & Remedies, Vol. 9, page 9756; Produce Company v. Dennert, (Ohio) 135 N.E. 531; Hall v. Sabey, (Utah) 198 P. 1110. Plaintiff is entitled to an injunction. Sec. 89-4201, 3, 4, R. S. Board of Commissioners v. Searight Cattle Company, 3 Wyo. 778; Bunten v. Association, 29 Wyo. 461; Horton v. Driskell, 13 Wyo. 66; Steese v. Oviatt, 24 Ohio St. 248.

For the defendant in error there was a brief by Ray E. Lee, Attorney General, and James A. Greenwood, Special Counsel, of Cheyenne, and oral arguments by Messrs. Greenwood and Thomas F. Shea, Deputy Attorney General.

It is admitted that the group insurance policy contracts in question have all been in force during the period of time involved, but it is contended that they are not Wyoming contracts. The insured employees are parties to these group insurance contracts. Smith v. E. L. A. Soc. of the United States, 171 S.E. 346; Peyton v. M. L. Ins. Co., 148 So. 721; Fearon v. M. L. I. Co., et al., 246 N.Y.S. 701; Hamblin v. E. L. A. Soc., 248 N.W. 397. If it is agreed that the policy and other documents shall constitute the contract, courts will not look further to determine what constitutes the agreement. Boyer v. U. S F. & G. Co., 274 P. 57. Laws of the state are a part of the contract. N.Y. L. Ins. Company v. Fukushima, 220 P. 994; Turley v. Insurance Company, 168 A. 356; Steffen v. E. L. A. Soc., 64 S.W. 2d 302; Sun Life Assur. Company of Canada v. Coker, 61 S.W.2d 447; Leach v. Metropolitan Life Ins. Company, 261 P. 603; Wann v. M. L. I. Company, 41 So.2d 50; M. L. I Company v. Wann, 28 S.W.2d 196. Certificates issued to individuals are not a part of the contract. Seavers v. Insurance Company, 230 N.Y.S. 366. The cases of Equitable Life Assurance Soc. v. Pa., 238 U.S. 143 and Seavers v. Insurance Company are squarely against plaintiff's contentions. Plaintiff has willingly paid the tax required on these policies by the states of Nebraska and Utah, but refuses to pay a premium tax upon premiums received for insurance on the number of lives covered by these group insurance contracts that are domiciled in Wyoming. The obligations of the plaintiff-in-error under these group policy contracts as to individuals residing in Wyoming insured thereunder, are performed in Wyoming. The employer was the agent of the insurer in procuring the insurance. E. L. A. Soc. v. Florence, 171 S.E. 317. The insurance is in force within Wyoming as to every employee therein receiving benefits. Duval v. M. L. I. Company, 50 A. L. R. 1276, 136 A. 400. The excuse offered for not paying to Wyoming a premium tax, on the ground that plaintiff does not show how many employees resided in Wyoming, is without merit, for the reason that plaintiff keeps an insurance record. Fontana v. Integrity Mutual Casualty Company, 243 P. 1035. The suggestion that the threatened cancellation of plaintiff's license is in violation of the Fourteenth Amendment to the United States Constitution and Article I, Section 6 of the Wyoming Constitution is untenable. E. L. A. Soc. v. Pa., supra. Plaintiff's business in Wyoming is shown by its reports made to the Insurance Commissioner. The tax imposed by the statute is a privilege tax. City of Sheridan v. Litman, 32 Wyo. 14; Sec. 115-117, R. S., 26 R. C. L. 35; State v. Bond, 122 S.E. 539; State v. Conn, 155 N.E. 139; Hyatt v. Company, 173 P. 1083; Insurance Company v. Smart, 267 U.S. 126. Plaintiff admits liability when it pleads payment of taxes on the premiums of these policies in the states of Nebraska and Utah. A failure to make special findings is not reversible error, unless prejudicial to the appellant. Produce Company v. Dennert, supra. The findings and conclusions made in this case substantially complied with plaintiff's request. Hall v. Sabey, 198 P. 1110. Plaintiff was not entitled to specific findings on matters in issue as to which there...

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