Hanover Fire Ins. Co. v. Carr

• Decision Date: 18 June 1925
• Docket Number: No. 16301.,16301.
• Parties: HANOVER FIRE INS. CO. v. CARR, County Collector.
• Court: Illinois Supreme Court

317 Ill. 366

148 N.E. 23

HANOVER FIRE INS. CO.

v.CARR, County Collector.

No. 16301.

Supreme Court of Illinois.

April 24, 1925.

Rehearing Denied with Modification June 18, 1925.

Injunction suit by the Hanover Fire Insurance Company against Patrick J. Carr, County Collector, to restrain the collection of taxes. From a decree on stipulated facts, making injunction permanent as to certain tax items, and dismissing bill as to the remainder, complainant appeals.

Affirmed.

Duncan, C. J., and Thompson and Dunn, JJ., dissenting.

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

Charles S. Deneen, Oscar B. Ryon, and Bates, 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., of Chicago (Francis X. Busch, Leon Hornstein, Hiram T. Gilbert, William H. Duval, and Bulkley, More & Tallmadge, all of Chicago, of counsel), for appellee.

STONE, J.

Appellant, a private corporation organized under the laws of the state of New York for the purpose of carrying on the business of fire, marine, and inland navigation insurance, filed its bill against appellee, as county treasurer and collector of Cook county, praying for an injunction to restrain the collection of a certain tax hereinafter referred to. A temporary injunction was granted as prayed, and on final hearing a stipulation of facts was entered into, and the court entered a decree making the injunction permanent as to a certain amount of the tax not in dispute here, and dismissed the bill of complaint as to the remainder for want of equity.

The tax complained of was that assessed under section 30 of the Fire and Marine Insurance Act of 1869 as amended. Cahill's Stat. par. 169, p. 73. It is shown by the stipulation of facts that from May 1, 1922, to April 30, 1923, and for some years prior thereto, appellant conducted the business of fire insurance in the town of South Chicago, in Cook county, through agencies which it maintained there. It regularly procured the license issued by the department of trade and commerce, and has annually paid the tax of 2 per cent. on its gross premium receipts to the state under an act in relation to the taxation of nonresident corporations, etc., approved June 28, 1919. Laws [317 Ill. 368]1919, p. 628. In 1923 the agents of appellant in the town of South Chicago made no return of net receipts to the board of assessors of Cook county. That board therefore entered as appellant's net receipts the sum of $90,000, added thereto a penalty of $45,000, and took one-half of this total amount, or $67,500, upon which to assess the tax required. The board of review fixed the net receipts of appellant at the sum of $90,824, and took the same at its full amount for assessment purposes. All personal property in Cook county, except the net receipts of foreign fire insurance companies, was scaled and debased in value; one-half the ‘full value’ being taken for assessment purposes.

It is contended by appellant that section 30 of the Fire, Marine, and Inland Navigation Insurance Act is unconstitutional and void, for the reason that it violates section 1 of article 9 of the Constitution of Illinois, by imposing a tax which is not imposed on domestic fire insurance companies or casualty companies; that such tax is not a privilege tax, but is either a tax on property or a tax on business; and that, as either, it violates the constitutional provision as to uniformity. It is also said this section is void, in that it violates the equal protection and due process clauses of the Fourteenth Amendment to the Constitution of the United States. The further contention is made that, even though the statute be held valid, the tax on net receipts must be assessed as personal property, and scaled and debased as such.

Section 30 is as follows:

‘Every agent of any insurance company, incorporated by the authority of any other state or government, shall return of 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 a 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.’

Section 1 of article 9 of the state Constitution is as follows:

‘The General Assembly shall provide such revenue as may be needful by levying a tax, by valuation, so that every person and corporation shall pay a tax in proportion to the value of his, her or its property-such value to be ascertained by some person or persons, to be elected or appointed in such manner as the General Assembly shall direct, and not otherwise; but the General Assembly shall have power to tax peddlers, auctioneers, brokers, hawkers, merchants, commission merchants, showmen, jugglers, innkeepers, grocery keepers, liquor dealers, toll bridges, ferries, insurance, telegraph and express interests or business, vendors of patents, and persons or corporations owning or using franchises and privileges, in such manner as it shall from time to time direct by general law, uniform as to the class upon which it operates.’

[1] Some of the questions involved here were before this court in People v. Kent, 300 Ill. 324, 133 N. E. 276, and People v. Barrett, 309 Ill. 53, 139 N. E. 903, and were there decided against appellant's contentions here. Appellant argues, however, that what was said in the Kent Case pertaining to the questions involved here was not necessary to the decision of the case, and was wrong, and should not be adhered to, and that the Barrett Case, having been based on the Kent Case, is wrong, and should be overruled. In that case, as in the case at bar, extended briefs were filed by able counsel, some of whom appear here, and the points involved were fully argued. An examination of the briefs filed in the Barrett Case shows that counsel for various foreign insurance companies, appearing either as representing parties or as amici curiae, there attacked this act on the ground that it is unconstitutional, as violating section 2 or article 4 and sections 9 and 10 of article 9 of the state Constitution and the Fourteenth Amendment of the United States Constitution. It was there also contended, if the statute was valid, the net receipts must be taxed as personal property, to be scaled and debased as in other cases of personal property taxed. It was argued in the Barrett Case, as here, that contemporaneous construction on the part of the executive department of the state has continued for a sufficient length of time to be of controlling force.

People v. Kent, supra, was an action in mandamus against the respondent, as agent for various foreign fire insurance companies, to require him to make return of net receipts to the board of review in accordance with section 30 of the Fire, Marine, and Inland Navigation Insurance Act. In awarding the writ of mandamus it was held as a basis of that decision, and not as obiter dictum,as is argued, that the tax levied on the net receipts of such foreign insurance companies was not a property tax, but was assessed on the business of insurance done; that the regulations relating to personal property tax had no application to the tax there provided. It was also held that there existed in the Legislature power and authority to adopt the methods prescribed by which the amount of the tax is to be determined. In People v. Barrett, supra, it was again held that the tax on net receipts of foreign insurance companies is not a personal property tax, and not entitled to be scaled or reduced. It was also there held that section 30 is not unconstitutional, as violating section 10 of article 9 of the Illinois Constitution, requiring uniformity of taxation, and that since the tax was not a property tax, but a tax on the business of insurancedone, it does not violate section 1 of article 9 of the Constitution.

Appellant contends that, if the Barrett Case is right in holding that the tax in question in that case is a tax on insurance business done in the state, then such tax is a property tax, and not an excise tax, and that, since this is so, the act, which requires foreign fire insurance companies to pay this tax, while foreign casualty companies and domestic fire insurance companies are not required to pay the same, is void, as against the uniformity clause of section 1 of article 9 of the state Constitution, and in violation of the equal protection clause of the Fourteenth Amendment to the Constitution of the United States. It is said that, this court having held that this is a tax on business, either a logical or legal possibility of its being considered a privilege tax is precluded; that a privilege tax was by the act of 1919, hereinbefore referred to, levied as the consideration for the privilege of coming into the state to do business, while a tax on business is that levied after the insurance company has been allowed to do business in the state, and is therefore levied on the property of a person within the state, and, whether it be considered a property tax or a business tax, it is under either view subject to the constitutional requirement of uniformity, and is not in any view a privilege tax, such...