Fidelity Deposit Company of Maryland v. Commonwealth of Pennsylvania

• Decision Date: 21 February 1916
• Docket Number: No. 114,114
• Citation: 240 U.S. 319,60 L.Ed. 664,36 S.Ct. 298
• Parties: FIDELITY & DEPOSIT COMPANY OF MARYLAND, Plff. in Err., v. COMMONWEALTH OF PENNSYLVANIA
• Court: U.S. Supreme Court

240 U.S. 319

36 S.Ct. 298

60 L.Ed. 664

FIDELITY & DEPOSIT COMPANY OF MARYLAND, Plff. in Err.,

v COMMONWEALTH OF PENNSYLVANIA.

No. 114.

Argued January 6, 1916.

Decided February 21, 1916.

Messrs. Charles Markell and Charles F. Patterson for plaintiff in error.

Mr. William M. Hargest and Mr. Francis Shunk Brown, Attorney General of Pennsylvania, for defendant in error.

Mr. Justice McReynolds delivered the opinion of the court:

We are asked to reverse a judgment of the supreme court of Pennsylvania which denied plaintiff in error's claim that, in becoming surety upon bonds required by the United States, it acted as a Federal instrumentality, and was not subject to taxation on the premiums received. 244 Pa. 67, 90 Atl. 437.

Incorporated under the laws of Maryland, the Fidelity & Deposit Company is empowered by its charter to act as surety. It was duty licensed to transact business in Pennsylvania. In pursuance of the act of Congress referred to below, the Attorney General granted it authority to enter into obligations required by laws of the United States.

Contracting within Pennsylvania, the company became surety, during 1909, on bonds in the following matters: 'Internal Revenue, customs, United States government officials, United States government contracts and banks for United States deposits, bonds given in courts of the United States in litigation there pending.' Gross premiums thereon amounting to $17,646.86 were collected. Within the same period it also became party to other bonds and received therefor $198,199.19. The state demanded 2 per centum of such total receipts, basing its claim on the proviso in § 1, act of Assembly, June 28, 1895, P. L. 408, which declares: 'That hereafter the annual tax upon premiums of insurance companies of other states or foreign governments shall be at the rate of 2 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 amount demanded because of premiums on bonds not authorized or required by the United States was paid; but liability for $352.92, assessed in respect of those so authorized was denied, and to enforce it the present suit was instituted in the common pleas court, Dauphin county.

The act of Congress entitled, 'An Act Relative to Recognizances, Stipulations, Bonds, and Undertakings, and to Allow Certain Corporations to be Accepted as Surety Thereon,' approved August 13, 1894 (chap. 282, 28 Stat. at L. 279, Comp. Stat. 1913, § 3293), provided:

Sec. 1. 'That whenever any recognizance, stipulation, bond or undertaking conditioned for the faithful performance of any duty, or for doing or refraining from doing anything in such recognizance, stipulation, bond, or undertaking specified, is by the laws of the United States required or permitted to be given with one surety or with two or more sureties, the execution of the same or the guarantying of the performance of the condition thereof shall be sufficient when executed or guaranteed solely by a corporation incorporated under the laws of the United States, or of any state having power to guarantee the fidelity of persons holding positions of public or private trust, and to execute and guarantee bonds and undertakings in judicial proceedings: Provided, That such recognizance, stipulation, bond, or undertaking be approved by the head of department, court, judge, officer, board, or body executive, legislative, or judicial required to approve or accept the same. But no officer or person having the approval of any bond shall exact that it shall be furnished by a guarantee company or by any particular guarantee company.'

Sec. 2, that 'no such company shall do business under the provisions of this act beyond the limits of the state or territory under whose laws it was incorporated and in which its principal office is located . . . until it shall, by a written power of attorney, appoint some person residing within the jurisdiction of the court for the judicial district wherein such suretyship is to be undertaken, . . . as its agent, upon whom may be served all lawful process against such company, . . .' Sec. 3, that every company, before transacting business under the act, shall deposit with the Attorney General of the United State a copy of its charter and a statement showing assets and liabilities, and 'if the said Attorney General shall be satisfied that such company has authority under its charter to do the...