Mutual Reserve Fund Life Ass'n v. City Council of Augusta

• Decision Date: 30 January 1900
• Citation: 35 S.E. 71,109 Ga. 73
• Parties: MUTUAL RESERVE FUND LIFE ASS'N v. CITY COUNCIL OF AUGUSTA et al.
• Court: Georgia Supreme Court

35 S.E. 71

109 Ga. 73

MUTUAL RESERVE FUND LIFE ASS'N v. CITY COUNCIL OF AUGUSTA et al.

Supreme Court of Georgia

January 30, 1900

Syllabus by the Court.

1. A tax imposed by a municipal corporation on the gross premiums of an insurance company doing business in the city where the tax is imposed is not a property tax, in the sense of the constitution, so as to require the ad valorem system to be applied. While, by a municipal ordinance, a tax on the gross premiums of an insurance company doing business in the city at a given rate per cent., may be lawfully imposed, if the authority to do so be clearly given, an ordinance which by its terms only imposes such tax on nonresident companies, and expressly excludes resident companies from its operation, is void for the want of the uniformity required by the constitution.

2. A license tax of a given sum imposed upon every agent of a fire or life insurance company is payable by an agent of an association which has no capital stock, but insures the lives of its members under the assessment plan; and this is true notwithstanding such agent is the employé of the company, and does not represent any other company.

Error from superior court, Richmond county; E. L. Brinson, Judge.

Suit by the Mutual Reserve Fund Life Association against the city council of Augusta and others. Decree for defendants. Plaintiff brings error. Reversed.

King & Anderson, for plaintiff in error.

Wm. H Barrett, for defendants in error.

LITTLE J.

The Mutual Reserve Fund Life Association made application to the judge of the superior court of Richmond county to enjoin the city of Augusta from proceeding to collect from it certain taxes and license fees which the city alleges that petitioner and the agent of the petitioner doing business in the city of Augusta are due to it. By an ordinance duly passed, the city imposed a tax of 1 1/4 per centum "on the gross premiums of every insurance company not located in this city" and under this ordinance executions have been issued against plaintiff in error for the years 1894, 1895, 1896, and 1897. In addition to the tax so levied, the city, through its officials, demands of petitioner that it pay into the city treasury an annual license tax of $100. Petitioner alleges that the ordinance imposing the tax on its gross premiums is unconstitutional, illegal, and void, and that its agent in the city of Augusta is its employé, and not a broker representing different life insurance companies, and the license fee of $100 is demanded under an ordinance of said city which provides that a license tax shall be assessed "upon every agent of a fire or life insurance company, for each company, of one hundred dollars," and that under said ordinance it is not legally liable to pay said sum. It was admitted that 1 1/4 per cent. (the rate charged on the gross premiums of insurance companies not located in Augusta) is the same as the rate charged upon real and personal property in said city, and that there is no insurance company with its principal office in the city of Augusta. It was also admitted that the petitioner had been licensed to do business in the state of Georgia as a mutual life association, furnishing insurance upon the assessment plan, and that it had complied with all the laws of the state entitling it to do business. On the hearing, the judge denied the injunction, and the plaintiff in error excepted.

In order to properly determine whether the plaintiff in error is liable for the payment of the tax imposed upon its gross premiums, it may be well to consider whether such a tax is to be classed as a tax on property or a tax on business. The history of the legislation of this state since the present system of taxation was adopted will show that the general assembly has invariably treated a tax upon sales or receipts as a business tax. In each of the general tax acts since the adoption of the present constitution, and for a number of years prior to that time, a tax has been imposed upon the gross receipts of insurance, sleeping-car, telegraph, and express companies, and at a rate different from that which is imposed by the state upon property in general. If these provisions of our general tax laws should be considered as a property tax, there would be but little question that they would be obnoxious to the provision of our constitution which declares that taxation shall be uniform and ad valorem.

But, if they are to be considered as a business tax, then, under previous adjudications made by this court, if all subjects belonging to the same class were made subject to the same rate of taxation such provisions would not come within the constitutional inhibition. Leading text writers, and adjudications of other states, with a considerable degree of unanimity, declare such a tax to be a business tax, and not a property tax. Cooley, Tax'n, § 495 et seq.; Desty Tax'n, pp. 229, 303, 304, 375, citing a large number of adjudicated cases. The supreme court of Pennsylvania has directly passed upon the question involved, and held in the case of Insurance Co. of North America v. Com., 87 Pa. St. 181, that a tax upon the gross premiums of insurance companies was a business, and not a property, tax. There is, however, a seeming conflict in some of the cases passed upon by this court where this question was involved. In one case (that of Pearce v. City of Augusta, 37 Ga. 597) it was apparently held that a tax on gross sales of cotton, and on the gross amount of all sales of goods, and on the gross receipts for storage, and on every $100 of commissions received by commission merchants and cotton factors, was a property tax. Subsequent rulings, to which we shall hereafter refer, held such a tax to be a business tax. This conflict was referred to by Chief Justice Bleckley in the case of Gould v. Mayor, etc., 55 Ga. 678; but in the decision in the latter case no attempt was made to reconcile the conflict, nor was the question now in issue directly decided. If the decision rendered in the Augusta Case, supra, be critically examined, it will be easy, we think, to show that the ruling of the court cannot be held as authority for the proposition that the tax imposed by the ordinance being considered was a property tax. The ruling made was that the city council of August, under its charter, had the power and authority to enact the ordinance under which the taxes were imposed, and to assess and collect the same. It is true that Chief Justice Warner, who delivered the opinion, in the discussion of the question treated the tax imposed as a property tax; but, unless the decision of the court held it so to be, the words used in the reasoning of the judge are not sufficient of themselves to adjudicate that the tax imposed by the ordinance was a tax on property. The part of the charter invoked to support the ordinance levying the tax vests the city council of Augusta with power and authority to make such assessments on the "inhabitants of Augusta, or those who held taxable property within the same, for the safety,...