Iowa Mut. Tornado Ins. Ass'n v. Fischer

• Decision Date: 15 June 1954
• Docket Number: No. 48447,48447
• Citation: 65 N.W.2d 162,245 Iowa 951
• Parties: IOWA MUT. TORNADO INS. ASS'N v. FISCHER et al.
• Court: Iowa Supreme Court

Page 162

65 N.W.2d 162

245 Iowa 951

IOWA MUT. TORNADO INS. ASS'N v. FISCHER et al.

No. 48447.

Supreme Court of Iowa.

June 15, 1954.

Leo A. Hoegh, Atty. Gen., and Kent Emery, Asst. Atty. Gen., for appellants.

Bradshaw, Fowler, Proctor & Fairgrave, Des Moines, for appellee.

GARFIELD, Justice.

The question for decision is whether sections 518.35 or 432.1(2), Code 1950, I.C.A., compel plaintiff, a mutual insurance assessment association organized under Code chapter 518, to pay a two per cent premium tax upon post-loss assessments against policyholders which are not collected. The trial court held plaintiff is not liable for a premium tax upon such uncollected assessments. We affirm the decision.

The case comes here upon the allegations of plaintiff's petition which are admitted by defendants' motion to dismiss. When plaintiff issues a policy against loss by windstrom and tornado the member insured pays a 'policy and survey fee' of one dollar and a 'contingent fee' of 10 cents for each $100 of insurance on dwelling houses and contents and twice thatrate for insurance on barns and other outbuildings. From time to time plaintiff's board of directors levies assessments against its members to provide funds for payment of losses previously occurring or to restore sums used for payment of losses or for other lawful purposes. If such assessment is not paid within 30 days from the mailing of the third notice thereof the policy is canceled.

In 1950 on account of two serve windstorms plaintiff levied two such assessments. The first was for about $1,470,000 of which $49,000 was never received by plaintiff or paid by insured members. (Amounts stated herein are in round figures.) The second assessment was for about $2,800,000 of which $76,000 was never received by plaintiff or paid by insured members. The policies of all members who did not pay assessments after three notices thereof were canceled. In 1951 an assessment of $1,800,000 was levied on December 1, 1951, of which $432,000 was not collected by plaintiff by December 31, 1951.

For 1950 plaintiff paid a premium tax of $95,000 and for 1951 a tax of $53,000 on fees, premiums and assessments actually collected by plaintiff in those years. Defendant insurance commissioner required plaintiff to pay in February, 1952, an additional tax of $2,400 for 1950 and $8,500 for 1951 upon the amount of uncollected assessments. This added tax was paid under protest.

Since the enactment in 1900 of a law providing for a tax against companies such as plaintiff it had always reported and paid the tax on assessments collected, not on those which were not paid, until 1951. The insurance commissioner did not object to plaintiff's paying the tax on such basis until 1951 when the attorney general's office advised the commissioner that in its opinion an association operating under Code chapter 518 'is liable for a premium tax on post-loss assessment which has been levied but not yet collected.'

The petition further alleges that insofar as the commissioner requires plaintiff to pay premium tax on assessments levied but not collected he is acting mistakenly and because of an erroneous interpretation of the applicable statutes and he should be required to refund the added tax of $10,900 plaintiff paid under protest.

The ground of defendants' motion to dismiss is that the interpretation of the statutes under which the additional tax was asserted is not error.

It seems to be conceded that this action will lie if as the trial court held, Code sections 518.35 or 432.1 do not subject plaintiff to a premium tax upon assessments levied but not collected. Plaintiff's liability for such a tax upon uncollected assessments is therefore the only matter presented.

Code chapter 518 is the chapter under which plaintiff was organized and exists. Section 518.35 thereof which the commissioner contends imposes the added tax plaintiff was compelled to pay provides, so far as material here: 'Every state mutual association doing business under this chapter shall * * * pay * * * a sum equivalent to two percent of the gross receipts from premiums, assessments, fees, and promissory obligations for business done within the state * * * without including or deducting any amounts received or paid for reinsurance, but after deducting the amount returned upon canceled policies and rejected applications covering property situated within the state, and dividends returned to policyholders on property situated within the state.' (Italics added.)

Code section 432.1, so far as here material, reads: 'Every insurance company or association of whatever kind or character, * * * shall, * * * pay * * * as taxes, an amount equal to * * *.

'Two percent of gross amount of premiums, assessments, and fees received * * * on contracts of insurance other than life for business done in this state, * * * after deducting the amounts returned upon cancelled policies, certificates and rejected applications.' (Italics added.)

It is not suggested that section 432.1 imposes on plaintiff a two per cent premium tax in addition to a like tax provided for by section 518.35. In other words, there is no contention plaintiff is subject to premium taxes totaling four per cent under 518.35 and 432.1.

It would seem section 518.35 is in the nature of a special statute applicable solely to mutual assessment insurance associations such as plaintiff and therefore would control and take precedence over the general statute, 432.1, which applies to 'Every insurance company or association of whatever kind or character,' with certain exceptions not here material. This would appear particularly true since 518.35 is the later enactment. See State ex rel. Weede v. Iowa Southern Utilities Co., 231 Iowa 784, 830, 2 N.W.2d 372, 396, 4 N.W.2d 869, and citations; 82 C.J.S., Statutes, § 369.

A fundamental rule is that where a general statute, if standing alone, would include the same matter as a special act and thus conflict with it, the special act will be considered an exception to the general statute, whether it was passed before or after such general enactment. Yarn v. City of Des Moines, 243 Iowa 991, 998, 54 N.W.2d 439, 443, and citations; 82 C.J.S., Statutes, § 369, pages 843, 844.

The rules just mentioned that a special statute will prevail over a general one apply only where the two are repugnant or inconsistent. Of course it is not necessary to apply such a rule where the two acts are consistent. See authorities supra, and Ervin v. Triplett, 236 Iowa 272, 276, 18 N.W.2d 599, 601. It would seem that if section 518.35 does not impose the tax here involved and section 432.1 purports to do so, the two provisions would conflict and 518.35 would control.

It is perhaps not important here that section 518.35 would prevail in the event of conflict with 432.1 because we think neither section imposes the added tax plaintiff paid under protest.

Under numerous decisions in Iowa and the authorities generally sections 518.35 and 432.1 should be strictly construed against the taxing body--liberally in favor of the taxpayer. It must appear from the language of the statute the tax assessed was clearly intended. Taxing statutes will not be extended by construction or implication beyond the clear import of the language used. See Dain Mfg. Co. v. Iowa State Tax Comm., 237 Iowa 531, 533, 22 N.W.2d 786, 788; Merchants Supply Co. v. Iowa Employment Security Comm., 235 Iowa 372, 378, 16 N.W.2d 572, 576; Moorman Mfg. Co. v. Iowa Unemployment Compensation Comm., 230 Iowa 123, 130, 296 N.W. 791, 794; Palmer v. State Board of Assessment and Review, 226 Iowa 92, 94, 283 N.W. 415, 416; Gould v. Gould, 245 U.S. 151, 153, 38 S.Ct. 53, 62 L.Ed. 211, 213; Cochrane v. Bankers' Life Co., 8 Cir., 30 F.2d 918, 921; Converse v. Northern Pac. R. Co., 8 Cir., 2 F.2d 959, 960; 2 Colley Taxation, Fourth Ed., section 503; 84 C.J.S., Taxation, § 58b, page 158; 82 C.J.S., Statutes, § 396(b) and (c), pages 948 et seq.; 51 Am.Jur., Taxation, sections 308, 310.

Section 518.35 taxes 'the gross receipts from premiums, assessments, fees, and promissory obligations for business done within the state'. The disputed tax here was upon assessments. But the statute imposes a tax only upon the gross receipts from assessments--not upon assessments. We cannot say from the language of 518.35 that a tax upon uncollected assessments was clearly intended.

The effect of defendants' argument is to ask us to read out of the statute the words 'gross receipts from' and give them no meaning. Presumably these words were used advisedly. If fairly possible, it is our duty to give them effect. See Chappell v. Board of Directors, 241 Iowa 230, 232, 39 N.W.2d 628, 629; In re Guardianship of Wiley, 239 Iowa 1225, 1228, 34 N.W.2d 593, 594, and citations; Hartz v. Truckenmiller, 228 Iowa 819, 824, 293 N.W. 568; 82 C.J.S., Statutes, § 346; 50 Am.Jur., Statutes, sections 231, 358.

Defendants argue that the insured agrees when his policy is written to pay such assessments as may properly be made. It is said this amounts to the extension of credit for the assessments which are taxable to the same extent as assessments that are collected.

If it be true that insured members are obligated to pay assessments properly levied such agreements are in the nature of 'promissory obligations,' within the meaning of section 518.35. Just as the statute does not impose a tax upon assessments but only upon the gross receipts therefrom, so does it not impose a tax upon promissory obligations but only upon the gross receipts from the obligations. Statutory authority for a tax upon the gross receipts from promissory obligations affords no clear basis for a tax upon the obligations which are not collected. If the legislature desires to tax the assessments, rather than the receipts therefrom, it can readily do so. It is not our province to do it under the guise of interpretation.

Assuming, without deciding, plaintiff would be liable for the...