Fire Ass'n of Philadelphia v. Love

• Decision Date: 26 February 1908
• Citation: 108 S.W. 158
• Parties: FIRE ASS'N OF PHILADELPHIA v. LOVE, Commissioner.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Supreme Court

108 S.W. 158

FIRE ASS'N OF PHILADELPHIA v. LOVE, Commissioner.^*

Supreme Court of Texas.

February 26, 1908.

Original petition for mandamus by the Fire Association of Philadelphia against Thomas B. Love, Commissioner of Insurance and Banking, to require respondent to certify to the Treasurer of the state the amount of taxes to be paid by relator. Refused.

Crane, Gilbert & Crane and Carden & Starling, for relator. R. V. Davidson, Atty. Gen., Wm. E. Hawkins, Asst. Atty. Gen., and Thos. B. Love, for respondent.

BROWN, J.

The Fire Association of Philadelphia instituted this proceeding in this court, praying for a mandamus to Thos. B. Love, Commissioner of Insurance and Banking for the state of Texas, requiring him to certify to the Treasurer of the state of Texas the amount of taxes to be paid by the said fire association in order that it may obtain a permit to do business in the state of Texas during the year 1908 upon the report filed by the relator.

The facts stated in the petition are substantially as follows: Relator is a corporation organized under the laws of the state of Pennsylvania, and, empowered to do a fire insurance business. Under the laws of the state of Texas, it was regularly authorized by permit to do business in this state during the year 1907, and, in pursuance of that authority, did transact its business within this state during that year. Under the existing law, it is necessary for the association to pay its occupation tax for the year 1908 before it can secure a permit to do business in this state for that year. It is required by law to make a report to the Commissioner of Insurance and Banking, stating the gross amount of premiums received by it during the year 1907, upon which report the Commissioner is required to give a certificate of the amount of tax to be paid by the said corporation, which certificate is to be presented to the Treasurer, and the tax paid. The fire association in the transaction of its business during the year 1907 paid to other insurance companies for reinsuring risks taken by the said association the sum of $110,262, and it also returned during the said year to the holders of policies the sum of $54,841.28 on account of the cancellation of policies issued by it during that year. It is alleged that in each policy there was a clause by which either the fire association or the policy holder might demand its cancellation, and a return of the unearned portion of the premium must then be made to the policy holder, and, in pursuance of this clause of the policy and in the transaction of its business, it is alleged that the said fire association did make a return of the amount above stated. It is also alleged that it was necessary in the transaction of its business, in order to protect it against the competition of other companies, that it should take risks upon property in larger amounts than was prudent for it to carry, and that, in order to secure itself in such risks, it was necessary and in accordance with the usual manner of transacting the business of such companies that it reinsure such risks in other companies for which it was required to pay the sum before stated. In making its report to the Commissioner, the fire association claimed a deduction of the amount paid for reinsurance and the sum returned to policy holders from the gross amount of the premiums received by it during the year 1907 and shown in its report, which the Commissioner declined to allow, refusing to certify the amount of the tax upon that basis, and the relator prays for the writ of mandamus to compel the Commissioner to certify the amount of its tax after deducting the sums so claimed by it.

It is claimed by the relator that the language, "the gross amount of premiums received in this state, upon property located in the state," should be construed not to include the sums which the fire association should pay for reinsurance, or upon canceled policies, and this presents the only question there is in the case. It is assumed by counsel that the Legislature intended to levy a tax only upon such sums as should be retained by the insurance companies. In support of this position, counsel refer to the German Alliance Ins. Co. v. Van Cleave. 191 Ill. 410, 61 N. E. 94; State v. Fleming, Tax Com'r, 70 Neb. 523, 97 N. W. 1063; State, by relation of Palmer, v. Fleming, Tax Com'r, Id. The first case cited from Nebraska did not involve this question, but the second is very similar to the case of German Alliance Co. v. Van Cleave, and, in fact, follows the Illinois case. They are so similar that a review of one will be sufficient. In the state of Illinois the Legislature passed a law entitled "An act providing for a tax on gross premium receipts of insurance companies and associations other than life." It required also the making of a report to the Commissioner of Insurance and the levy by him of a tax upon "the gross amount of premiums received by it for business done in this state." The Supreme Court of Illinois held that the language of the statute of that state did not include the money returned on canceled policies. There is a marked distinction between the law of Illinois and the statute of this state. In the Illinois statute the levy was made upon the gross premiums received as property, while in this state the tax is imposed for the privilege of doing business in Texas. Granting that the Illinois...