General Am. Life Ins. Co. v. Bates

• Decision Date: 09 June 1952
• Docket Number: No. 42286,42286
• Citation: 249 S.W.2d 458,363 Mo. 143
• Parties: GENERAL AMERICAN LIFE INS. CO. et al. v. BATES et al.
• Court: Missouri Supreme Court

Page 458

249 S.W.2d 458

363 Mo. 143

GENERAL AMERICAN LIFE INS. CO. et al. v. BATES et al.

No. 42286.

Supreme Court of Missouri, en Banc.

June 9, 1952.

J. E. Taylor, Atty. Gen., Will F. Berry, Jr., Asst. Atty. Gen., for appellants.

Frank P. Aschemeyer, Jefferson City, E. R. Morrison, John A. Morrison, Martin J. Purcell, Kansas City, Franklin E. Reagan, St. Louis, for respondent General American Life Ins. Co.

Morrison, Hecker, Buck, Cozad & Rogers, Kansas City, of counsel for respondent and interveners-respondents.

Kenneth Teasdale, St. Louis, Cobbs, Blake, Armstrong, Teasdale & Roos and Charles E. Dapron, Jr., St. Louis, of counsel, for Life Ins. Ass'n of America.

Dupuy Warrick, Kansas City, Boyd Ewing, Nevada, Warrick, Brewer & Lamkin, Kansas City, Ewing, Ewing & Ewing, Nevada, of counsel, for Missouri Savings & Loan League, Farm and Home Savings & Loan Ass'n and First Federal Savings & Loan Ass'n amici curiae.

BOHLING, Commissioner.

The General American Life Insurance Company instituted this declaratory judgment action against G. H. Bates and R. E. Copher, Director and Collector of Revenue, respectively, of the State of Missouri and charged with the collection and disbursement of State taxes on intangible personal property. The General American Life Insurance Company is a corporation organized under the provisions of Art. 2, Ch. 37, R.S. 1939, See Ch. 376, R.S. 1949, V.A.M.S. The following corporations, organized under Art. 2 aforesaid, filed intervening petitions, to-wit: Kansas City Life Insurance Company; National Fidelity Life Insurance Company; Old American Insurance Company; Postal Life & Casualty Insurance Company; State National Life Insurance Company; Mutual Savings Life Insurance Company; Business Men's Assurance Company of America, and The Reliable Life Insurance Company. The purpose of the litigation is to enjoin the collection of intangible property taxes levied or threatened to be levied against plaintiff and interveners and to test the constitutionality and applicability of two statutes hereinafter set out and designated in the record as the 'in lieu' statute and the 'yield' statute. The parties stipulated that the only issues submitted were those relating to the constitutionality of the 'in lieu' and the 'yield' statutes. Other matters mentioned in the stipulation are not determinative here and need not be set forth.

The court held the two statutes constitutional and entered judgment accordingly.

The defendants appealed, and contend said statutes are unconstitutional on the grounds stated in the discussion of the particular statute.

Respondents contend the 'in lieu' statute, under which they tender their tax, is constitutional and applicable, but, if not, then the 'yield' statute is constitutional and applies.

I. The 'in lieu' statute. The respondents rely primarily upon the 'in lieu' statute. The 'in lieu' provision relates to the intangible personal property tax act and we first briefly mention that act.

The intangible personal property tax act was approved April 19, 1946. Laws 1945, p. 1914; Mo.R.S.A., Secs. 11456.1-11456.15; Ch. 146, Secs. 146.010-146.130, R.S. 1949, V.A.M.S. It was enacted under Sec. 4, Art. 10, Mo.Const. 1945, quoted hereinafter. It applied to 'any individulal, firm, * * * association, corporation, company * * *.' Laws 1945, p. 1914, Sec. 1(A). It defined intangible property as, so far as material, '* * * moneys on deposit; bonds * * *; certificates of indebtedness * * *; notes, debentures, annuities, accounts receivable; conditional sales contracts * * *, and real estate and chattel mortgages.' Id., Sec. 1(B). It stated: 'Yield means the aggregate proceeds received as a result of ownership or beneficial interest in intangible property whether received in money, credits or property, exclusive of any return of capital.' Id., Sec. 1(C). Sections 2 and 4 of said act open with the statement: 'Except as otherwise provided by law, intangible personal property having a taxable situs in the State of Missouri * * * shall be subject to a property tax * * *'; and imposed a tax of 4% upon 'such yield.'

The 'in lieu' statute was also approved on said April 19, 1946. See Laws 1945, p. 1023, Sec. 6098a; Mo.R.S.A., Sec. 6098a; Sec. 148.370, R.S. 1949, V.A.M.S. It repealed and reenacted Sec. 6098a as theretofore enacted and approved on April 28, 1945, Laws 1945, p. 993, by adding the 'in lieu' provision to said act of April 28, 1945. ¹ We set it out, emphasizing the 'in lieu' provision:

'Every insurance company or association organized under the laws of the State of Missouri and doing business under the provisions of Articles 2, 7 and 17, of Chapter 37, Revised Statutes of Missouri, 1939, and every mutual fire insurance company organized under the provisions of Article 6, Chapter 37, Revised Statutes of Missouri, 1939, shall, as hereinafter provided, annually pay, beginning with the year 1945, a tax upon the direct premiums received by it from policyholders in this state, whether in cash or in notes, or on account of business done in this state, for insurance of life, property or interest in this state, at the rate of two per cent (2%) per annum, which amount of taxes shall be assessed and collected as hereinafter provided, and shall be in lieu of all taxes upon intangible personal property owned by such insurance companies or associations: Provided, that fire and casualty insurance companies or associations shall be credited with cancelled or returned premiums actually paid during the year in this state, and that life insurance companies shall be credited with dividends actually declared to policyholders in this state but held by the company and applied to the reduction of premiums payable by the policyholder.'

Appellants contend the 'in lieu' statute violates the exemption provision of Sec. 6, Art. 10, Mo.Const. 1945, 1 Mo.R.S. 1949, p. 80, which, after enumerating certain property as proper subject matter for exemption from taxation but not embracing the property here involved, provides:

'All laws exempting from taxation property other than the property enumerated in this article shall be void.'

Said Sec. 6 is of identical legal effect, so far as here involved, with Secs. 6 and 7, Art. 10, Mo.Const. 1875, 1 Mo.R.S. 1939, p. 142c.

Sections 3 and 4 of Art. 10, Mo.Const. 1945, 1 Mo.R.S. 1949, p. 80, bear upon the issues and are quoted here.

'Section 3. * * * uniformity * * *. Taxes * * * shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax. * * *

'Section 4(a). Classification of taxable property--taxes on franchises, incomes, excises and licenses.--All taxable property shall be classified for tax purposes as follows: class 1, real property; class 2, tangible personal property; class 3, intangible personal property. The general assembly, by general law, may provide for further classification within classes 2 and 3, based solely on the nature and characteristics of the property, and not on the nature, residence or business of the owner, or the amount owned. Nothing in this section shall prevent the taxing of franchises, privileges or incomes, or the levying of excise or motor vehicle license taxes, or any other taxes of the same or different types.

'Section 4(b). Basis of assessment of tangible property--taxation of intangibles--limitation.--Property in classes 1 and 2 and subclasses of class 2, shall be assessed for tax purposes at its value or such percentage of its value as may be fixed by law for each class and for each subclass of class 2. Property in class 3 and its subclasses shall be taxed only to the extent authorized and at the rate fixed by law for each class and subclass, and the tax shall be based on the annual yield and shall not exceed eight per cent thereof.

'Section 4(c). Assessment, levy, collection and distribution of tax on intangibles.--All taxes on property in class 3 and its subclasses, and the tax under any other form of taxation substituted by the general assembly for the tax on bank shares, shall be assessed, levied and collected by the state and returned as provided by law, less two per cent for collection, to the counties and other political subdivisions of their origin, in proportion to the respective local rates of levy.'

Respondents cite many authorities in support of their position and the subdivisions thereof: 'That the statute imposing a premium tax in lieu of an intangible tax does not create an exemption but constitutes the substitution of a tax which is a just and equitable equivalent for the intangible property tax and bears more equitably on the taxpayers involved.' ²

We consider the nature of the tax before taking up respondents' cases most directly in point. Taxes fall into three natural classifications: capitation or poll taxes, taxes on property, and excises. State ex. rel. Missouri Portland Cement Co. v. Smith, 338 Mo. 409, 413[1, 2], 90 S.W.2d 405, 406; State ex rel. Tompkins v. Shipman, 290 Mo. 65, 75(III), 234 S.W. 60, 62(III). The instant case involves a property tax, expressly so designated in the constitution, Art. 10, Sec. 4, quoted supra, and made subject to specific constitutional inhibitions. Excises include "* * * every form of taxation which is not a burden laid directly upon persons or property; in other words, excises include every form of charge imposed by public authority for the purpose of raising revenue upon the performance of an act, the enjoyment of a privilege, or the engaging in an occupation." State ex rel. Missouri Portland Cement Co. v. Smith, supra [338 Mo. 409, 413[1, 2], 90 S.W.2d 407]; State ex rel. Tompkins v. Shipman, supra; Viquesney v. Kansas City, 305 Mo. 488, 495(I-V), 266 S.W. 700, 702[1-10]; 51 Am.Jur. 61, Sec. 33; 33 C.J.S., Excise, page 110. Excises are not subject to all the constitutional inhibitions applicable to taxes on property. They are valid as revenue measures if they operate alike upon all within...