John Hancock Mut. Life Ins. Co. v. Neill

Decision Date11 December 1957
Docket NumberNos. 8399,8423,s. 8399
Citation319 P.2d 195,79 Idaho 385
PartiesJOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a life insurance corporation, Plaintiff-Respondent, v. P. G. NEILL, as Tax Collector of the State of Idaho, Defendant-Appellant. The UNION CENTRAL LIFE INSURANCE COMPANY, a life insurance corporation, Plaintiff-Respondent, v. P. G. NEILL, as Tax Collector of the State of Idaho, Defendant-Appellant.
CourtIdaho Supreme Court

Graydon W. Smith, Atty. Gen., Edward J. Aschenbrener and Elbert E. Gass, Asst. Attys. Gen., Boise, for appellant.

Ralph R. Breshears, Boise, for respondents.

Claude Marcus, Oscar W. Worthwine, Lloyd E. Haight and Carey H. Nixon, Boise, Alan G. Paine, Spokane, Wash., F. Gerald Irvine, Salt Lake City, Utah, A. L. Merrill, Pocatello, and Parry, Robertson & Daly, Twin Falls, and Franklin J. Allen, Salt Lake City, Utah, amici curiae.

TAYLOR, Justice.

Subsequent to the first opinion filed February 8, 1957, rehearing was had on November 4, 1957. The first opinion is withdrawn and the following substituted.

Plaintiffs (respondents), both life insurance companies (§ 63-3038, I.C.), brought separate actions against defendant (appellant) state tax collector, to recover taxes alleged to have been erroneously paid. The issues being the same in each, the cases were consolidated. The refunds sought are claimed to have arisen out of overpayment by plaintiffs of taxes levied and collected under the 'Property Relief Act of 1931', Title 63, Chap. 30, I.C. The causes were submitted to the district court upon an agreed statement of facts, from which the following appears.

The John Hancock Mutual Life Insurance Company was, and is, a Massachusetts corporation with its principal place of business at Boston. It was authorized to engage, and was and is engaged, in the business of writing life, and health and accident insurance in this state. During the years involved it was the owner of bonds of the Idaho Power Company and the Boise Water Corporation. The bonds were purchased and held outside this state as an investment of its reserves and other funds. The principal and interest thereon were payable to the trustee in New York City, or, in the case of Boise Water Corporation, optionally, at Philadelphia. In making its returns to the state tax collector, required by Title 63, Chap. 30, I.C., for the years 1950, 1951 and 1952, plaintiff in its returns included interest received from the Idaho Power Company and the Boise Water Corporation upon the bonds of these corporations held by it, and paid the tax thereon required by that statute.

The facts in the case of The Union Central Life Insurance Company are the same, except that The Union Central was and is an Ohio corporation with its principal place of business in Cincinnati. It held bonds of the Idaho Power Company only and is claiming refund of overpayment for four years--1950, 1951, 1952 and 1953.

The Idaho Power Company, during the years involved, was a corporation organized under the laws of Maine, with its principal office at Augusta, where its stockholders' meetings were held. It was authorized to, and did, do business in the state of Idaho as a public utility, with its principal office in Boise. All of the electric power generated by it was generated within the state of Idaho. It did no business as a public utility in either of the states of Maine or New York. It derived all of its revenues from its business operations in the states of Idaho, Oregon and Nevada. All of its principal officers resided, and all of its directors' meetings were held, and all of its books of account and records were kept and maintained, and the general offices of its management were maintained, at Boise, Idaho. During the same period over 92% of its net operating revenue was derived from its business operations in Idaho, and more than 92% of the value of its total plant in service was located in Idaho.

The Boise Water Corporation during the period involved was a corporation organized under the laws of Idaho, with its principal place of business at Boise. It was doing business as a public utility and all of its operating property was located within, and all of its revenue were derived from its business operations in, the state of Idaho.

The bonds held by the plaintiffs were secured by trust indentures covering all of the properties of the respective issuing corporations, and were recorded in the counties of this state where such properties were located.

Pertinent provisions of Chap. 30, Title 63, I.C., affecting plaintiffs, are as follows:

'Life insurance companies shall pay a tax for each taxable year according to and measured by their net income at the rate and on the basis specified in section 63-3028 of this chapter.' § 63-3039, I.C.

'a. In the case of a life insurance company the term 'gross income' means the gross amount of income received during the taxable year from interest, dividends and rents arising within the state of Idaho.' § 63-3040, I.C.

The pertinent portions of § 63-3028, I.C., providing the rate and basis of the tax, are:

'A tax shall be levied, assessed, collected, and paid for each taxable year upon:

'a. All corporations as defined in this chapter, except as herein otherwise expressly provided, for the privilege of carrying on and doing business within this state, in addition to license taxes levied under any law of this state and taxes levied upon the real and personal property of such corporations:

'b. * * *

'1. That the tax so imposed, levied and assesed [assessed] upon corporations and national banking associations shall be in addition to any license tax now or hereafter authorized by law, and taxes authorized upon the real or personal property of such corporations and national banking associations, but it shall be in lieu of any tax on the shares of stock of such corporations and national banking associations.

'2. The amount of the tax levied under this section shall be according to and measured by the net income for each taxable year of such corporations and national banking associations from all sources, including the interest on bonds issued by or under authority of the federal government, and bonds issued by the state of Idaho or any of the municipal or other subdivisions thereof, and such tax shall be computed at the following rates, to-wit:' Then follows the rate of the tax graduated according to income.

Section 63-3041, I.C. defines net income as gross income less certain deductions therein enumerated. One of such deductions (subsection 5) allows a credit for investment expenses paid within the state of Idaho, and for an allocated portion of general expenses included in such investment expenses.

The John Hancock company claimed and was allowed deductions for investment expenses as follows: for 1950, $42,633.60; for 1951, $54,489.26; for 1952, $47,070.35. The Union Central claimed and was allowed deductions for investment expenses: for 1950, $6,489.02; for 1951, $4,674.22; for 1952, $4,814.40; for 1953, $4,413.96.

These companies are required by our law to invest, and keep invested, in approved securities, their minimum cash capital. §§ 41-602 and 41-603, I.C. They are permitted by our law to invest any of their funds in approved securities of the quality approved for domestic insurers (§ 41-640, I.C.), including bonds of Idaho corporations. §§ 41-623 and 41-627, I.C. Thus they are both required and permitted to make investments under the by virtue of the franchise granted them by the state. And they are allowed to deduct from the measure of their tax the expenses incurred, including an allocated portion of their general investment expenses. It is apparent the legislature has recognized that investment of their funds is an essential part of the business of a life insurance company, and a part of the business authorized by the franchise for which the tax is exacted.

The agreed statement of facts contains the following:

'That neither the purchase nor the ownership of any of said bonds by the plaintiff nor the interest received therefrom by the plaintiff bears or has any relationship to the life insurance business done by the plaintiff in the State of Idaho or any property owned by the plaintiff in the State of Idaho.'

If this stipulation is intended to mean that neither the bonds nor the interest thereon are employed by plaintiffs in their life insurance business in this state, the fact may be conceded for purposes of this decision. We understand it to be plaintiffs' position that the bonds and the interest thereon, not being purchased or held in this state and not being in any way employed by them in, or in connection with, the insurance business carried on by them in this state, have not acquired a business or tax situs in this state. This proposition may also be conceded. The tax involved being a franchise tax and not a tax upon the interest, the tax situs of the interest is immaterial.

If the stipulation was intended to mean that the bonds and their interest have no relation to the business which plaintiffs are authorized by their franchises to carry on in this state, then it would be ineffective because, as so construed, it would be a conclusion of law contrary to the statutes above noted and not binding upon the court. Hart v. Turner, 39 Idaho 50, 226 P. 282; Hahn v. Nat. Casualty Co., 64 Idaho 684, 136 P.2d 739; Cox v. City of Pocatello, 77 Idaho 225, 291 P.2d 282; Valdez v. Taylor Auto. Co., 129 Cal.App.2d 810, 278 P.2d 91; North Platte Lodge v. Board of Equalization, 125 Neb. 841, 252 N.W. 313, 92 A.L.R. 658, and Annotation 663, II e. page 670; National Bank of Colchester v. Murphy, 384 Ill. 61, 50 N.E.2d 748; Hitchins v. Mayor, 177 Md. 72, 8 A.2d 626; Swift & Co. v. Hocking Valley R. Co., 243 U.S. 281, 37 S.Ct. 287, 61 L.Ed. 722.

It is to be noted that § 63-3028, I.C., containing the tax schedule, provides that the tax be levied upon net income 'from all sources'. In the case of insurance companies,...

To continue reading

Request your trial
16 cases
  • Michigan State AFL-CIO v. Secretary of State
    • United States
    • Court of Appeal of Michigan — District of US
    • 22 May 1998
    ...Court in Diefendorf v. Gallet, 51 Idaho 619, 10 P.2d 307 (1932) (later superseded by statute as stated in John Hancock Mut. Life Ins. Co. v. Neill, 79 Idaho 385, 319 P.2d 195 [1957] ). In Diefendorf, the court found that the judiciary could not second-guess the governor's determination that......
  • Humble Oil & Refining Co. v. Calvert, A--11574
    • United States
    • Texas Supreme Court
    • 15 March 1967
    ...1339 (1938); Consolidated Title Corp. v. District of Columbia, 107 U.S.App.D.C. 221, 275 F.2d 885 (1960); John Hancock Mutual Life Ins. Co. v. Neill, 79 Idaho 385, 319 P.2d 195 (1957); Union Electric Co v. Morris, 359 Mo. 564, 222 S.W.2d 767 (1949); Petition of Union Electric Co., 349 Mo. 7......
  • McNeal v. Idaho Public Utilities Com'n
    • United States
    • Idaho Supreme Court
    • 22 March 2006
    ...State v. Ankney, 109 Idaho 1, 704 P.2d 333 (1985); Herndon v. West, 87 Idaho 335, 393 P.2d 35 (1964); John Hancock Mut. Life Ins. Co. v. Neill, 79 Idaho 385, 319 P.2d 195 (1957). Where the language is unambiguous, there is no occasion for the application of rules of construction. Airstream,......
  • Rydalch v. Glauner
    • United States
    • Idaho Supreme Court
    • 15 August 1960
    ...reference to a general provision which otherwise would be controlling.' (Emphasis supplied.) In the case of John Hancock Mut. Life Ins. Co. v. Neill, 79 Idaho 385, 319 P.2d 195, 199, this Court said: 'We recognize the rule that a particular statute, in case of conflict or inconsistency, con......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT