Hanover Fire Ins. Co. v. Harding

• Decision Date: 20 December 1927
• Docket Number: No. 16301.,16301.
• Citation: 327 Ill. 590,158 N.E. 849
• Parties: HANOVER FIRE INS. CO. v. HARDING, County Collector.
• Court: Illinois Supreme Court

327 Ill. 590

158 N.E. 849

HANOVER FIRE INS. CO.

v.HARDING, County Collector.

No. 16301.

Supreme Court of Illinois.

June 22, 1927.

Rehearing Denied with Modification Dec. 20, 1927.

Suit for injunction by the Hanover Fire Insurance Company against George F. Harding, County Collector. On motion of defendant for judgment in accordance with mandate of the Supreme Court of the United States after decision (272 U. S. 494, 47 S. Ct. 179, 71 L. Ed. 372).

Motion granted; judgment reversed and remanded, with directions.

Farmer, Dunn, and Thompson, JJ., dissenting.

Appeal from Superior Court, Cook County; Charles M. Foell, judge.

Charles S. Deneen, Oscar B. Ryon, and Hicks & Folonie, all of Chicago, Charles E. Woodward, of Ottawa, and Silber, Isaacs, Silber & Woley, of Chicago (C. J. Doyle, of Springfield, and E. M. Griggs, of Chicago, of counsel), for appellant.

Robert E. Crowe, State's Atty., Francis X. Busch, Corp. Counsel, Leon Hornestein, Hiram T. Gilbert, Clair E. More and Harris F. Williams, all of Chicago, for appellee.

HEARD, C. J.

Appellant, the Hanover Fire Insurance Company, a corporation of New York, filed its bill in the superior court of Cook county against Patrick J. Carr, county treasurer and ex officio tax collector of Cook county, for an injunction to restrain the collection of certain taxes levied against it under and by virtue of section 30 of an Act of March 11, 1869 (Laws 1869, p. 209), entitled:

‘An act to incorporate and to govern fire, marine and inland navigation insurance companies doing business in the state of Illinois.’

The prayer of the bill was in the alternative. It prayed (1) that the collection of the whole amount of the tax extended be enjoined because section 30 was unconstitutional; or (2) in case section 30 was valid, that the collection of approximately one-half of the tax extended be enjoined because the assessment and extension were against the ‘full amount’ of net receipts, while the section directs ‘an assessment,’ namely, upon net receipts at the same rate of taxation as against other personal property. The collector filed an answer, denying the claims of the bill, and after replication the cause was heard by the trial court, which in its decree made findings of fact, based on a stipulation by the parties, and made the injunction permanent as to a certain amount of the tax not in dispute in this court, and dismissed the bill of complaint as to the remainder for want of equity.

Appellant appealed from this decree to this court, which by a divided court affirmed the decree of the superior court in Hanover Fire Ins. Co. v. Carr, 317 Ill. 366, 148 N. E. 23, to the opinion in which case reference is made for a fuller statement of the pleadings, facts and holdings of the court. Appellant obtained a review of the decision of this court by the Supreme Court of the United States upon a writ of error under section 237 of the Judicial Code of the United States (U. S. Comp. St. § 1214). That court reversed the judgment of this court, and remanded the case to this court for further proceedings not inconsistent with the opinion filed in the cause. Hanover Fire Ins. Co. v. Harding, 272 U. S. 494, 47 S. Ct. 179, 71 L. Ed. 372.

Upon the mandate of the Supreme Court of the United States in this cause being filed in this court, appellee entered a motion that a judgment be entered herein, reversing the decree of the superior court of Cook county and remanding the cause to that court, with directions to enter a decree providing as follows: First, that the temporary injunction heretofore issued be dissolved; second, that the Hanover Fire Insurance Company pay to George F. Harding, county treasurer of Cook county, and ex officio county collector of that county, successor in office to Patrick J. Carr, the sum of $2,155.24, together with the costs, interest, and penalties thereon provided by law, and that upon such payment being made the county collector be enjoined and restrained from demanding, collecting, or receiving of or from appellant any amount of taxes on its net receipts for the year 1923 in excess of the sum of $2,155.24, and the costs, interest, and penalties thereon provided by law; third, that so much of appellant's bill of complaint as relates to the sum of $2,155.24 of taxes, together with the costs, interest, and penalties thereon as authorized by law, be dismissed for want of equity.

Appellant filed its suggestions in opposition to the motion, in which it claimed that the Supreme Court of the United States has held that section 30 of the act of 1869 violates the Fourteenth Amendment; that the claim now made by appellee is inconsistent with its previous contention; that the tax is a tax for revenue, and, so considered, is in violation of section 1 of article 9 of the Constitution of Illinois; and that the court has no power to make a tax assessment, and hence cannot ascertain and fix the debased and equalized value of the net receipts, or the amount of the tax appellant must be required to pay.

The section in question reads as follows:

‘ Foreign Companies-Tax on Net Receipts. Sec. 30. Every agent of any insurance company, incorporated by the authority of any other state or government, shall return to the proper officer of the county, town or municipality in which the agency is established, in the month of May, annually, the amount of the net receipts of such agency for the preceding year, which shall be entered on the tax lists of the county, town and municipality, and subject to the same rate of taxation, for all purposes-state, county, town and municipal-that other personal property is subject to at the place where located; said tax to be in lieu of all town and municipal licenses; and all laws and parts of laws inconsistent herewith are hereby repealed: Provided, that the provisions of this section shall not be construed to prohibit cities having an organized fire department from levying a tax, or license fee, not exceeding two per cent. in accordance with the provisions of their respective charters, on the gross receipts of such agency, to be applied exclusively to the support of the fire department of such city.’ Cahill's Stat. 1925, § 159, p. 1405.

This section has been in force since 1869 and was part of the act of March 11 of that year, entitled:

‘An act to incorporate and to govern fire, marine and inland navigation insurance companies doing business in the state of Illinois.’

The section was amended to the above form by an act approved May 31, 1879. Laws 1879, p. 179.

This suit presents the question of the validity of the assessment made by a taxing officer under section 30 for the year 1922. At the time this statute was passed all personal property was required by law to be listed and taxed at its cash value. By the general Revenue Act of Illinois in force since February 25, 1898 (Cahill's Stat. 1925, par. 329, p. 2042), personal property is to be valued at its fair cash value, which value is to be set down in one column to be headed ‘Full Value,’ and one-half part thereof is to be ascertained and set down in another column headed ‘Assessed Value.’ The one-half value of all the property so ascertained and set down is to be the value for all purposes of taxation. It is stipulated in this case, and was found by the trial court, that for the year 1923, and for many years prior thereto, there has been what is called an equalization, which systematically and intentionally reduces the amount set down in the column headed ‘Full Value’ to not more than 60 per cent. of the actual market value of the personal property returned, and by further reducing this by 50 per cent. to make the assessed value accord with the statute, the tax is collected only on 30 per cent. of the full value.

The superior court found that the actual amount of net cash receipts of appellant was $90,824 (less by $45,000 than the amount reported by the board of review), so that its decree forbade the collection of more than $7,184.18, instead of $10,678.50, for which the warrant had issued but denied further relief. Appellant insisted that under the previous practice and proper construction of section 30 as a property tax, with due equalization and debasement, the tax assessed should have been $2,155.24, and that this, if anything, is all that should be collected from it. The Supreme Court of the United States in its opinion herein states:

‘The Supreme Court of Illinois for many years held the payment of a tax on the net receipts was a tax on personal property. Walker v. City of Springfield, 94 Ill. 364;City of Chicago v. James, 114 Ill. 479, 2 N. E. 475;City of Chicago v. Phoenix Ins. Co., 126 Ill. 276, 18 N. E. 668;National Fire Ins. Co. v. Hanberg, 215 Ill. 378, 74 N. E. 377;People v. Cosmopolitan Fire Ins. Co., 246 Ill. 442, 92 N. E. 922. The net receipts were the gross receipts from each agency after the operating expenses had been deducted. The losses from fire and other risks assumed were not deducted. National Fire Ins. Co. v. Hanberg, supra.’

It is quite apparent from reading these cases that in practice the net receipts were treated as personal property and their assessment was by equalization and debasement reduced from full value as all other personal property, until the decisions in People v. Kent, 300 Ill. 324, 133 N. E. 276 (decided in 1921), and People v. Barrett, 309 Ill. 53, 139 N. E. 903. These latter cases, upon the principle of stare decisis, were followed by this court in this case. Hanover Fire Ins. Co. v. Carr, supra. The Supreme Court of the United States in its opinion in this case construes People v. Barrett, supra, People v. Kent, supra, and Hanover Fire Ins. Co. v. Harding, supra, as holding that the ‘tax under section 30 was an occupation tax and that no reduction should be permitted to foreign insurance companies in the assessment for taxation of their annual net receipts,’ and held that:

‘An occupation tax imposed upon 100 per cent. of the net receipts of...