Life Ass'n of America v. Bd. of Assessors of St. Louis Cnty.

• Citation: 49 Mo. 512
• Parties: THE LIFE ASSOCIATION OF AMERICA, Appellant, v. THE BOARD OF ASSESSORS OF ST. LOUIS COUNTY, Respondent.
• Decision Date: 31 March 1872
• Court: United States State Supreme Court of Missouri

49 Mo. 512

THE LIFE ASSOCIATION OF AMERICA, Appellant,

v.THE BOARD OF ASSESSORS OF ST. LOUIS COUNTY, Respondent.

Supreme Court of Missouri.

March Term, 1872.

Appeal from St. Louis Circuit Court.

Irwin Z. Smith, for appellant.

The assessment levied was illegal and void, and the remedy prayed for should be granted. The provision in the constitution (§ 16, art. XI), that “no property, real or personal, shall be exempt from taxation,” is not infringed by the law of 1869, which provides that mutual insurance companies doing business in this State shall pay certain sums of money in lieu of the regular amount assessed. Under that clause of the constitution the Legislature has a right to commute the amount and say that the corporation shall pay a definite, certain sum, in prosperity or adversity. This plaintiff came into existence under the guarantees of that law. The courts of other States have upheld similar statutory provisions enacted under constitutions similar to our own. (See 30 Ill. 146; 17 Ill. 291.) It is a wise policy on the part of the Legislature to make such a provision. It not only prevents capital from flowing out of the State, but brings in large amounts from other States. Under the old order of things, a few colossal institutions in New York and Connecticut establish their agencies here and draw out our money, which returns to us only by being secured by mortgage and upon the payment of interest at ten per cent. This was rendered possible by the fact that these foreign corporations could do business here through agencies, mainly by paying fees, while our companies were subjected to the payment of heavy taxes.

Appellant submits that though the court may be of opinion that the act of 1869 was unconstitutional, yet as no power had been given by the Legislature to levy this tax, the levy was void. The board of assessors cannot make laws, and in the absence of law they can make no assessment, although the Legislature have the right to impose the tax or no right to give exemption.

T. T. Gantt, for appellant.

I. No tax can be imposed or collected without a law or declaration of legislative will authorizing and directing its imposition and collection.

II. The failure of the Legislature to impose a tax will not justify either assessors or collectors, or courts of justice, in assuming to supply its omission.

III. The exemption from State, county and municipal taxation, which is provided by section 40 of the act of March 10, 1869, is no contravention of section 16 of article XI of the constitution, because this is not an absolute exemption but a commutation which the State has undoubted power to make. (Illinois Cent. R.R. Co. v. McLean County, 17 Ill. 291; O'Kane et al. v. Treat et al., 25 Ill. 561; Hunsaker et al. v. Wright et al., 30 Ill. 146; Cool. Const. Lim. 517.)

IV. Nor is the provision in section 40 of the act of March 10, 1869, in opposition to section 30 of article I, which declares that “all property subject to taxation ought to be taxed in proportion to its value,” which provision has been repeatedly the subject of judicial examination, and has been declared to mean only that property shall be taxed in proportion to its value and not specifically, and that no idea of uniform or equal taxation is conveyed by it. (Hamilton & Treat v. St. Louis County Court, 15 Mo. 1; State v. North et al., 27 Mo. 464, 483.)

V. So far as we have any declaration of legislative will on the subject of taxing the property of this defendant, it declares that no tax shall be collected on the property of the Life Association, commutation having been made therefor. Now whether the Legislature has kept itself within the proper bounds in thus declaring, seems to be scarcely a material inquiry. If it has, then the property of the Life Association is not taxable. If it has not, it remains true that there is no legal provision for assessing and collecting taxes upon it. Either way, the action of the board of assessors was illegal, and the judgment of the Circuit Court must be reversed.

F. & L. Gottschalk, for respondent.

I. The construction of section 40, Wagn. Stat. 752, as contended by appellant, renders the same clearly unconstitutional. By the constitution it is provided that, 1st, “no property, real or personal, shall be exempt from taxation” (art. XI, § 16); 2d, “that all property subject to taxation ought to be taxed in proportion to its value.” (Art. 1, § 30.)

The first clause appears for the first time in the new constitution; the second clause appears in the former constitution, and has received a judicial construction in Hamilton & Treat v. The St. Louis County Court, 15 Mo. 3, where the court says: “This clause is evidently mandatory upon the general assembly, when exercising the taxing power, and furnishes a rule which is not to be departed from.” (See also State v. North, 27 Mo. 464.) The words used, “ought to be,” should be construed as mandatory. They are evidently so used in that instrument in art. I, section 14, about elections; section 15, about courts of justice; section 16, that no private property ought to be taken for public use without just compensation; section 23, that the people ought to be secure in their persons. It was the evident intention of the framers of the constitution that all property should bear its proportionate share of the burdens of government. But the construction of this section by appellant would lead to the conclusion that every company, where it owns property to the amount of millions or to the amount of ten thousand dollars, must pay the same taxes. This property, taxed according to the rates fixed by law, and as all other property is taxed, according to its value, would yield:

The amount returned by the vice-president being

$294,000

State tax, at the rate of 0.50-100 per cent., or 5 mills

$1,470

County tax, at the rate of 0.40-100 per cent., or 4 mills

1,176

School tax, at the rate of 0.40-100 per cent., or 4 mills

1,176

City tax, at the rate of 1.50-100 per cent.,

4,410

Total

$8,232

But appellant contends that by paying $150 fees to the superintendent of the insurance department, it is exempt from paying any further tax whatever

II. The agreement of appellant that, notwithstanding the constitutional provisions cited, the general assembly can commute the taxes, and that it did so in this instance, cannot be sustained.

( a) Because there is no commutation in this case, as the law simply requires the payment of certain fees to assist in maintaining an insurance department; nor do these fees bear any proportion to the value of the property.

( b) Because the commutation is contrary to the spirit of the constitution, and would be the same thing as claiming that the Legislature can virtually exempt from taxes; for, if it commute $8,000 taxes for $150, why not for $1?

The cases holding that the Legislature has such power are either not passed upon like constitutional provisions, or are erroneous. The weight of the authorities is inconsistent with this doctrine. (City of Zanesville v. Richard, 5 Ohio St. 539; Kneeland v. City of Milwaukee, 15 Wis. 454; Cool. Const. Lim. 494; 16 Mich. 269; 3 Ohio St. 15; 10 Wis. 258; 22 Wis. 660; 12 Allen, 504; 15 B. Monr. 498.)

III. The proper construction of section 40 is, however, this: that the company shall, by paying the fees therein provided, be exempt from paying any taxes on its business or its franchise. The section does not state that the property shall not be further taxed, it only speaks of the company; and it evidently means that no further license tax, or tax on its business, shall be levied. See Goodin v. Appeal Tax Court, 3 How. 133, in which the court say that “the corporate property is separable from the franchise.” The Legislature of Maryland continued the charter of several banks in 1845, upon condition that they would make a new one and pay a school tax. This would have exempted their franchise, but not their property, from taxation. (West River Bridge Co. v. Dix, 6 How. 507; Providence Bank v. Billings, 4 Pet. 514.)

IV. The company, admitting that it owns this amount of property, was liable to taxation for it; and the provisions of the statute authorizing it to be taxed, although no particular way of assessing mutual companies, are still sufficient. (Wagn. Stat. 1159, ch. 2, § 1.)

Thos. C. Reynolds, for respondent.

I. The insurance law must be interpreted in subordination to the constitutional provisions that no property, except of the kind the constitution specifies, shall be exempt from taxation, and that all property subject to taxation shall be taxed in proportion to its value. Therefore, the fees charged insurance companies are merely for the license to trade; their property must be taxed in addition.

II. The insurance law, in connection with the revenue, cannot be construed as amounting to an omission to tax, which the courts cannot supply without usurping legislative power. If the clause of the insurance law, which appellant claims to exempt it from tax, is unconstitutional if taken alone, it is as if never created, and does not repeal the revenue law to the extent of creating an omission to tax. It must be strictly construed. (Dwar. Stat. 367; Cool. Const. Lim. 178; Blackw. Tax Tit. 409.)

III. The immunity claimed by appellant is an exemption, not a commutation. The legislative right to commute a tax under a constitution like ours rests on a slim authority, slightingly cited in Cool. Const. Lim. 517.

IV. In our constitution the word “ought” is mandatory. (Compare sections 9, 14-16, 23, 32 of article I.)

V. The insurance law can be reasonably construed merely as an exemption from taxes on the companies or persons, that being constitutional.

WAGNER, Judge, delivered the opinion of the court.

The assessors of St. Louis county assessed for the year 1870, furniture, money on hand, and bonds and notes of the value of $294,000, belonging to the appellant. To obtain relief from this assessment the proceeding was taken to the Circuit Court by ...