Lincoln Nat. Life Ins. Co. v. Read

• Decision Date: 21 November 1944
• Docket Number: 31338.
• Citation: 156 P.2d 368,194 Okla. 542,1944 OK 317,1944 OK 318
• Parties: LINCOLN NAT. LIFE INS. CO. v. READ, Insurance Com'r, et al.
• Court: Oklahoma Supreme Court

156 P.2d 368

194 Okla. 542, 1944 OK 317, 1944 OK 318

LINCOLN NAT. LIFE INS. CO. v. READ, Insurance Com'r, et al.

No. 31338.

Supreme Court of Oklahoma

November 21, 1944

Appeal from District Court, Oklahoma County; Lucius Babcock, Judge.

Action by the Lincoln National Life Insurance Company against Jess G. Read, Insurance Commissioner of the State of Oklahoma, and Carl B. Sebring, State Treasurer, to recover a sum theretofore paid by plaintiff as a permit or license tax wherein A. S. J. Shaw in the meantime becoming State Treasurer was substituted for defendant last named. Judgment of dismissal, and plaintiff appeals.

Affirmed in part and in part reversed and rendered.

Syllabus by the Court.

1. A state may, subject to paramount authority of the Federal Constitution, withhold from foreign corporations the privilege of doing business within the state, or grant such privilege on such conditions as the state may deem fit provided such conditions to not require the surrender of rights guaranteed by the Federal Constitution.

2. A state may exact a gross premium tax from foreign insurance companies for the privilege of doing business within the state.

3. It is not an essential of a privilege tax exacted by a state from a foreign corporation for the privilege of doing business within the state that it be paid before the exercise of the privilege. Payment may precede or follow the exercise to the privilege.

4. The long-continued construction of a statute by department of government charged with its execution is entitled to great weight and should not be overturned without cogent reasons. Great Northern Life Ins. Co. v. Read, Insurance Commissioner of Oklahoma, 10 Cir., 136 F.2d 44.

5. Payment of gross premium tax by foreign insurance companies on or before the expiration of the license year is exacted for the privilege of doing business within the State of Oklahoma during that license year, and a showing that such tax has been paid is a condition precedent for the issuance of a license for the ensuing year.

6. It was within the power of the State of Oklahoma to change the requirements for the privilege of a foreign insurance company to do business within the State by increasing the rate of gross premium tax exacted for such privilege during the license year as to premiums collected after the effective date of the Act increasing the tax.

7. Imposition of gross premium tax on foreign insurance companies for the privilege of doing business within the State as provided by Sections 1 and 2 of Article 19 of the Constitution of the State of Oklahoma and Section 10478 O.S.1931, and 36 O.S.1941 § 104, does not violate the 14th Amendment of the Federal Constitution, though no like tax is exacted from domestic insurance companies.

8. An insurance company's payment of cash surrender value of life insurance policies to the holders thereof and their surrender of the policies to the company does not effect cancellation of the policies within the meaning of Section 2, Article 19, of the Constitution and the statutes of Oklahoma requiring payment of a tax on all premiums collected in the State 'after all cancellations are deducted.'

9. Statutes are to be construed as having a prospective operation unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used. In every case of doubt the doubt must be resolved against the retrospective effec. Good et al. v. Keel et al., 29 Okl. 325, 116 P. 777.

10. 36 O.S.1941 § 104, by which the rate of the gross premium tax on foreign insurance companies was increased from 2% to 4%, effective April 25, 1941, was not specifically, nor by necessary implication, retroactive so as to apply the increased tax to the premiums collected in the year 1941, prior to the 25th day of April of that year.

GIBSON, V. C.J., dissenting in part.

Miley, Hoffman, Williams, France & Johnson, of Oklahoma City, for plaintiff in error.

Mac Q. Williamson, Atty. Gen., Fred Hansen, Asst. Atty. Gen., and Andy Crosby, Jr., of Oklahoma City, for defendants in error.

RILEY Justice.

The Lincoln National Life Insurance Company is a corporation, organized under the laws of the State of Indiana, and is engaged in the life insurance business. Honorable Jess G. Read is the duly elected Insurance Commissioner of the State of Oklahoma.

On March 27, 1942, the Lincoln National Life Insurance Company, hereinafter referred to as plaintiff, commenced this action against Jess G. Read, Insurance Commissioner, and Carl B. Sebring, the then State Treasurer, hereinafter referred to as defendants, to recover the sum of $6,238.94 theretofore paid by plaintiff as the 4% premium or license tax, under the provisions of Sections 1 and 2, Article 19, of the Constitution of the State of Oklahoma, and Section 10478, O.S.1931, as amended by Title 36, Chapter 1a, § 1, Session Laws 1941, 36 O.S.1941 § 104, and also referred to in the record as House Bill No. 353.

After the judgment herein reviewed was rendered, Honorable A. S. J. Shaw, who had in the meantime become State Treasurer, was substituted for Carl B. Sebring, State Treasurer, as party defendant. Plaintiff paid the license tax (or a part thereof) under protest, and brought this action to recover the entire amount of the taxes so paid. Defendants' demurrer to plaintiff's second amended petition, consisting of three alleged causes of action, was sustained. Plaintiff elected to stand on the petition as amended, whereupon the court entered judgment dismissing the cause. Plaintiff appeals.

The first cause of action assails the validity of the annual tax of 2% on all premiums collected by plaintiff in the State under the provisions of Sections 1 and 2, Article 19, of the Constitution, and Section 10478, O.S.1931. A tax of 4% on such premiums was provided by Section 1, Chapter 1a, Title 36, Session Laws 1941, 36 O.S.1941 § 104, House Bill No. 353, supra, amendatory of Section 10478, effective April 25, 1941. These provisions of statute were constred by the State Insurance Commissioner and deemed applicable to the premiums collected by plaintiff in this State during the entire year of 1941.

Plaintiff alleges that the provisions of Sections 1 and 2, Article 19, of the Constitution of Oklahoma, and the statutory provisions, as construed and applied by the Insurance Commissioner, unlawfully discriminate against plaintiff and in favor of life insurance companies organized under the laws of the State of Oklahoma which are not required to pay a gross premium tax, or any other similar tax. Thereby it is alleged that there is violation of the 14th Amendment of the Constitution of the United States, and that plaintiff is deprived of equal protection of the law.

The second cause of action assails that part of the tax (if any other part thereof is valid) which was claimed by the State Insurance Commissioner and paid by plaintiff which represents 4% on $73,408.21 of plaintiff's premium collections, which plaintiff claims should have been deducted on account of cash surrender values paid to policyholders upon surrender, return, and cancellation of policy contracts.

The third cause of action assails that part of the tax represented by the increase of the rate from 2% to 4% on premiums collected by plaintiff during the year 1941, and prior to April 25, 1941, the effective date of the Act amending Section 10478, supra.

Defendants' demurrer to the petition as amended is upon three grounds: (1) Want of jurisdiction in the court of the subject matter of the action; (2) that the suit is one against the State and that there is no legislative authority or grant of the right to sue the State; and (3) that the petition as amended does not state facts sufficient to constitute a cause of action in favor of plaintiff and against defendant. The court sustained the demurrer upon the third ground. It is not contended here that either the first or second ground of the demurrer is well taken.

Section 1, Article 19, of the Constitution of the State of Oklahoma provides:

'No foreign insurance company shall be granted a license or permitted to do business in this State until it shall have complied with the laws of the State, including the deposit of such collateral or indemnity for the protection of its patrons within this State as may be prescribed by law, and shall agree to pay all such taxes and fees as may at any time be imposed by law or act of the Legislature, on foreign insurance companies, and a refusal to pay such taxes or fees shall work a forfeiture of such license.'

Section 2 of Article 19 provides:

'Until otherwise provided by law, all foreign insurance companies * * * shall pay to the Insurance Commissioner for the use of the State, an entrance fee as follows:

'Each foreign Life Insurance Company, per annum, two hundred dollars; * * *

'Until otherwise provided by law, domestic companies excepted, each insurance company, including surety and bond companies, doing business in this State, shall pay an annual tax of two per centum on all premiums collected in the State, after all cancellations are deducted, and a tax of three dollars on each local agent.'

Section 10478, O.S.1931 (first adopted in 1909), prior to the 1941 amendment, provided:

'Every foreign insurance company doing business in this State under the provisions of this article shall, annually, on or before the last day of February, report under oath of the president or secretary or other chief officer of such company to the insurance commissioner, the total amount of gross premiums received in this State within the twelve months next preceding the first of January or since the last return of such premiums was made by such company;...