Liverpool London Globe Insurance Company of New York v. Board of Assessors For the Parish of Orleans

Decision Date15 May 1911
Docket NumberNo. 92,92
Citation221 U.S. 346,55 L.Ed. 762,31 S.Ct. 550
PartiesLIVERPOOL & LONDON & GLOBE INSURANCE COMPANY OF NEW YORK, Plff. in Err., v. BOARD OF ASSESSORS FOR THE PARISH OF ORLEANS, the City of New Orleans, and the State Tax Collector for the First District of the City of New Orleans
CourtU.S. Supreme Court

Messrs. Monte M. Lemann, Alex. C. King, J. Blanc Monroe, and Harry H. Hall for plaintiff in error.

[Argument of Counsel from pages 347-349 intentionally omitted] Messrs. Harry P. Sneed, George H. Terriberry, and H. Garland Dupre for defendants in error.

Mr. Justice Hughes delivered the opinion of the court:

This suit was brought by the Liverpool & London & Globe Insurance Company of New York, a foreign corporation doing business in the state of Louisiana, to cancel an assessment made by the board of assessors for the parish of Orleans for the year 1906.

The assessment itself is not shown by the record, but, from the testimony, the supreme court of the state concluded 'that the property intended to be assessed was the amount due plaintiff by its policy holders in this state for premiums on which credit of thirty and sixty days had been extended.' Dealing with the case from this standpoint, that court affirmed a judgment dismissing the suit, giving as its reasons 'that the said credits are due in this state, and have arisen in the course of the business of the plaintiff company done in this state, and are therefore part and parcel of the said business in this state, and as a consequence are taxable here.' 122 La. 98, 47 So. 415.

The insurance company brings this writ of error, insisting that the premium accounts did not constitute property taxable in Louisiana, and that in consequence the assessment violated the 14th Amendment of the Constitution of the United States in depriving the company of its property property subject to taxation, includes 'all

The assessment was laid under act 170 of 1898. Section 1 of this act, in definding property subject to taxation, includes 'all rights, credits, bonds, and securities of all kinds; promissory notes, open accounts, and other obligations . . . and all movable and immovable, corporeal and incorporeal, articles or things of value, owned and held and controlled within the state of Louisiana by any person, in any capacity whatsoever.' Section 7 makes it the duty of the tax assessors to place upon the assessment list all property subject to taxation, and provides as follows:

'Provided further, that in assessing mercantile firms the true intent and purpose of this act shall be held to mean the placing of such value upon the stock in trade, all cash, whether borrowed or not, money at interest, open accounts, credits, etc., as will represent in their aggregate a fair average of the capital, both cash and credit, employed in the business of the party or parties to be assessed. And this shall apply with equal force to any person or persons representing in this state business interests that may claim a domicil elsewhere, the intent and purpose being that no nonresident, either by himself or through any agent, shall transact business here without paying to the state a corresponding tax with that exacted of its own citizens; and all bills receivable, obligations, or credits arising from the business done in this state are hereby declared assessable within this state, and at the business domicil of said nonresident, his agent or representative.'

In construing this statute, the supreme court of Loui- siana in Metropolitan L. Ins. Co. v. Board of Assessors, 115 La. p. 708, 9 L.R.A.(N.S.) 1240, 116 Am. St. Rep. 179, 39 So. 846, said: 'There can be no doubt that the 7th section of the act of 1898 . . . announced the policy of the state touching the taxation of credits and bills of exchange representing an amount of the property of nonresidents equivalent or corresponding to said bills or credits which was utilized by them in the prosecution of their business in the state of Louisiana. The evident object of the statute was to do away with the discrimination theretofore existing in favor of nonresidents as against residents, and place them on an equal footing.' Again, in General Electric Co. v. Board of Assessors, 121 La. 116, 46 So. 122, where open accounts arising on the sale of merchandise were the subject of the assessment, the court said: 'There can be no serious question but that the legislature has provided that credits due upon open accounts arising out of business done in this state by nonresidents shall be taxed. . . . The state imposes this tax because of her need of the revenue to be derived from it; she extends to the business the protection of her laws, and seeks to make the business bear its just proportion of the burden of taxation. The situation would be, we repeat, unfortunate, not to say deplorable, if the state were left no choice between having to forego his needed revenue, or else handicapping with this tax the business of her own citizens and home corporations in their competition with foreigners for the business to be done here.' And his decision was followed in the present case.

This court has had repeated occasion to consider the validity of taxes imposed under the Louisiana act. The case of New Orleans v. Stempel, 175 U. S. 309, 44 L. ed. 174, 20 Sup. Ct. Rep. 110, arose under chapter 106 of the Statutes of 1890, but the pertinent features of the act were the same. There it appeared that the assessed credits were evidenced by notes secured by mortgages on real estate in New Orleans; that these notes and mortgages were in that city, in the possession of an agent, who collected the proceeds and the interest as it became due, and deposited the same in a bank in New Orleans to the cridit of the plaintiff, the guardian of infant owners, who, like herself, were domiciled in the state of New York. The tax was sustained. In State Assessors v. Comptoir Nat. D'Escompte, 191 U. S. 388, 48 L. ed. 232, 24 Sup. Ct. Rep. 109, the question arose under the statute of 1898. In that case, a foreign banking company did business in New Orleans and there made loans through a local agent. The loans were made upon collateral security, the customer drawing his check, which was treated as an overdraft and held as a memorandum of the indebtedness. The court decided that the credits so evidenced, created in the Louisiana business, were taxable in that state. In Metropolitan L. Ins. Co. v. New Orleans, 205 U. S. 395, 51 L. ed. 853, 27 Sup. Ct. Rep. 499,—also arising under the act of 1898,—the validity of a similar tax was upheld. That case was one of loans made through the local agent of the insurance company, a New York corporation doing business in Louisiana, to its policy holders upon the security of their policies. The course of business was that, on the approval of a loan at the home office of the company, the company forwarded to the agent a check for the amount, with a note to be signed by the borrower. The agent procured the note to be signed, and forwarded both note and policy to the home office. The agent collected and transmitted the interest, and when the notes were paid, it was to the agent to whom they were sent to be delivered back to the makers. At all other times the notes and the policies securing them were kept at the home office in New York. In Board of Assessors v. New York L. Ins. Co. 216 U. S. 517, 54 L. ed. 597, 30 Sup. Ct. Rep. 385, the so-called credit consisted, in fact, of a payment to the policy holder of a portion of the amount for which the company was bound by its policy. It was found that, despite that fact that notes were given, there was no per- sonal liability but simply a deduction in account. As there was no loan, there was no credit to be taxed; and a decree in the circuit court restraining the collection of the tax was affirmed.

Here an indebtedness actually existed. This is assumed in the objections to the assessment. The indebtedness had its origin in the course of business transacted by the foreign corporation in Louisiana under the laws of that state. If the Louisiana policy holders had biven notes for the premiums, which were to be collected through the local agents, there could be no question as to the validity of the tax. The difference between notes given for loans on policies, and notes given for premiums, could not be regarded as a material one so far as the taxing power of the state is concerned. In both cases, the obligations to pay would represent...

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