Great Northern Life Ins Co v. Read

Decision Date24 April 1944
Docket NumberNo. 235,235
Citation322 U.S. 47,64 S.Ct. 873,88 L.Ed. 1121
PartiesGREAT NORTHERN LIFE INS. CO. v. READ, Insurance Com'r of Oklahoma
CourtU.S. Supreme Court

Messrs. Charles R. Holton, of Chicago, Ill., and John A. Johnson, of Oklahoma City, Okl., for petitioner.

Mr. Fred Hansen, of Oklahoma City, Okl., for respondent.

Mr. Justice REED, delivered the opinion of the Court.

This writ brings here for review the action of petitioner, a foreign insurance company, to recover taxes paid to respondent, the Insurance Commissioner of Oklahoma, which were levied by Section 10478, Oklahoma Statutes 1931, as amended by Chapter 1(a), Title 36, Session Laws of Oklahoma 1941, 36 O.S.1941 § 104. This was an annual four per cent tax on premiums received by foreign insurance companies in Oklahoma, and it, together with certain specified fees, was in lieu of all other taxes and fees in Oklahoma. Petitioner paid the tax under protest and, alleging diversity of citizenship, 28 U.S.C. § 41, 28 U.S.C.A. § 41, brought suit against the Insurance Commissioner in the District Court of the United States. The procedure for recovery is laid down by Section 12665, Oklahoma Statutes 1931, 68 O.S.A. § 15.50.1 The percentage of premiums due was increased from two to four per cent by the amendment of 1941, effective April 25th of that year. The District Court refused recovery. The Circuit Court of Appeals affirmed. Great Northern Life Insurance Co. v. Read, 10 Cir., 136 F.2d 44. Certiorari was granted on petitioner's assertion of error in requiring it to pay a tax allegedly discriminatory under the Fourteenth Amendment as compared with the taxation of domestic insurance companies, and also unconstitutional as levied after the company's admission to the state and on premiums collected during the business year for which a license was already in force. A conflict in principle was suggested with Hanover Fire Insurance Company v. Harding, 272 U.S. 494, 47 S.Ct. 179, 71 L.Ed. 372, 49 A.L.R. 713. We granted certiorari, 320 U.S. 726, 64 S.Ct. 62, and asked discussion of the right of petitioner to maintain its suit in a Federal court. As we conclude that this suit could not be maintained in the Federal court, we do not reach the merits of the issue as to the validity of the tax.

The right of petitioner to maintain this suit in a Federal court depends, first, upon whether the action is against an individual or against the State of Oklahoma. Secondly, if the action is determined to be against the state, the question arises as to whether or not the state has consented to suit against itself in the Federal court.

Respondent challenged the right of petitioner to seek relief in the District Court by the defense in its answer that the complaint fails to state a claim upon which relief can be granted. R.C.P. 12(b) and (e), 28 U.S.C.A. following section 723c.2 This challenge on the ground that the state had not consented to be sued, was sustained by the District Court. The contention is available here to sustain the judgment on appeal. LeTulle v. Scofield, 308 U.S. 415, 60 S.Ct. 313, 84 L.Ed. 355.

In Smith v. Reeves, 178 U.S. 436, 20 S.Ct. 919, 44 L.Ed. 1140, an action was instituted in the Federal trial court by railroad receivers against the defendant 'as treasurer of the state of California' to recover taxes assessed against the paid by the railroad. The proceeding was brought under Section 3669 of the California Political Code, as amended by California Statutes, 1891, p. 442, which authorized a suit against the State Treasurer for the recovery of taxes which were illegally exacted. The defendant could demand trial of the action in the Superior Court of the County of Sacramento, California. If the final judgment was against the Treasurer, the Comptroller of the state was directed to draw his warrant on state funds for its satisfaction.

As the suit was against a state official as such, through proceedings which were authorized by statute, to compel him to carry out with the state's funds the state's agreement to reimburse moneys illegally exacted under color of the tax power, this Court held, page 439 of 178 U.S., page 920 of 20 S.Ct., 44 L.Ed. 1140, it was a suit against the state. The state would be required to pay.3 The case therefore is plainly distinguishable from those to recover personally from a tax collector money wrongfully exacted by him under color of state law, Atchison, etc., Ry. Co. v. O'Connor, 223 U.S. 280, 32 S.Ct. 216, 56 L.Ed. 436, Ann.Cas.1913C, 1050; cf. Matthews v. Rodgers, 284 U.S. 521, 528, 52 S.Ct. 217, 220, 76 L.Ed. 447; to recover under general law possession of specific property likewise wrongfully obtained or held, Tindal v. Wesley, 167 U.S. 204, 221, 17 S.Ct. 770, 777, 42 L.Ed. 137; Virginia Coupon Cases, 114 U.S. 269, 285, 5 S.Ct. 903, 962, 29 L.Ed. 185, 207; United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171; to perform a plain ministerial duty, Board of Liquidation v. McComb, 92 U.S. 531, 541, 23 L.Ed. 623; Rolston v. Missouri Fund Com'rs, 120 U.S. 390, 411, 7 S.Ct. 599, 610, 30 L.Ed. 720, or to enjoin an affirmative act to the injury of plaintiff, Sterling v. Constantin, 287 U.S. 378, 393, 53 S.Ct. 190, 193, 77 L.Ed. 375; Tomlinson v. Branch, 15 Wall. 460, 21 L.Ed. 189; Davis v. Gray, 16 Wall. 203, 220, 21 L.Ed. 447; In re Tyler, 149 U.S. 164, 190, 13 S.Ct. 785, 792, 37 L.Ed. 689. Only in Smith v. Reeves was the action authorized by statute against the officer in his official capacity. In the other instances relief was sought under general law from wrongful acts of officials. In such cases the immunity of the sovereign does not extend to wrongful individual action and the citizen is allowed a remedy against the wrongdoer personally.

This ruling that a state could not be controlled by courts in the performance of its political duties through suits against its officials has been consistently followed. Chandler v. Dix, 194 U.S. 590, 24 S.Ct. 766, 48 L.Ed. 1129; Fitts v. McGhee, 172 U.S. 516, 529, 19 S.Ct. 269, 274, 43 L.Ed. 535; Murray v. Wilson Distilling Co., 213 U.S. 151, 167, 29 S.Ct. 458, 462, 53 L.Ed. 742; Lankford v. Platte Iron Works, 235 U.S. 461, 468 et seq., 35 S.Ct. 173, 59 L.Ed. 316; Ex parte State of New York, No. 1, 256 U.S. 490, 500, 41 S.Ct. 588, 590, 65 L.Ed. 1057; Worcester County Co. v. Riley, 302 U.S. 292, 296, 299, 58 S.Ct. 185—187, 82 L.Ed. 268. Efforts to force, through suits against officials, performance of promises by a state collide directly with the necessity that a sovereign must be free from judicial compulsion in the carrying out of its policies within the limits of the Constitution. Principality of Monaco v. Mississippi, 292 U.S. 313, 320, 54 S.Ct. 745, 746, 78 L.Ed. 1282; State of Louisiana v. Jumel, 107 U.S. 711, 720, 2 S.Ct. 128, 135, 27 L.Ed. 448. A state's freedom from litigation was established as a constitutional right through the Eleventh Amendment. The inherent nature of sovereignty prevents actions against a state by its own citizens without its consent. Hans v. Louisiana, 134 U.S. 1, 10, 16, 10 S.Ct. 504, 505, 507, 33 L.Ed. 842.

Oklahoma provides for recovery of unlawful exactions paid to its collectors under protest. Section 12665 Oklahoma Statutes 1931. Note 1, supra. In our view of this case it is unnecessary for us to pass upon whether this method of protecting taxpayers was intended to be exclusive of all other remedies, including actions against an individual who happened to be a tax collector, or whether if it were so intended it would surmount all constitutional objections. Compare Burrill v. Locomobile Co., 258 U.S. 34, 42 S.Ct. 256, 66 L.Ed. 450, and Anniston Mfg. Co. v. Davis, 301 U.S. 337, 341, 343, 57 S.Ct. 816 819, 81 L.Ed. 1143. See also Antrim Lumber Co. v. Sneed, 175 Okl. 47, 49-51, 52 P.2d 1040, 1043—1045.

A suit against a state official under Section 12665 to recover taxes is held to be a suit against the state by Oklahoma and the remedy exclusive of other state remedies. Antrim Lumber Co. v. Sneed, supra, 175 Okl. at page 51, 52 P.2d at page 1045. This interpretation of an Oklahoma statute by the Supreme Court of the state accords with our view, as set out above, of the meaning of a suit against a state. Petitioner brought this action against the collector, the Insurance Commissioner, in strict accord with the requirements of Section 12665. It alleged that there was no appeal provided by Oklahoma laws from defendant's action in collecting and gave notice of protest and suit to defendant at the time of payment in the language of the Section. By so doing petitioner was relieved of the necessity of establishing that the payment was not voluntary4 and obtained the advantage of a statutory lien lis pendens on the tax payment.

By Section 12665, Oklahoma creates a judicial procedure for the prompt recovery by the citizen of money wrongfully collected as taxes. It is the sovereign's method of tax administration. Oklahoma designates the official to be sued, orders him to hold the tax, empowers its courts to do complete justice by determining the amount properly due and directs its collector to pay back any excess received to the taxpayer. The state provides this procedure in lieu of the common law right to claim reimbursement from the collector. The issue of coercion and duress was eliminated at the pre-trial conference without objection by the petitioner. The section makes sure the taxpayer's recovery of illegal payments. The section is like the California statute involved in Smith v. Reeves, supra, except for the immaterial difference that the money collected is directed to be held separate and apart by the collector instead of being held in the general funds of the State Treasurer. See § 3669, California Political Code, as amended by California Statutes 1891 p. 442. In the Reeves case, as here, the suit was against the official, not the individual. The Oklahoma section differs from the Colorado law, Section 6, Chapter 211, Session Laws of...

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