Nw. Mut. Life Ins. Co. v. Murphy

• Decision Date: 09 March 1937
• Docket Number: No. 43711.,43711.
• Parties: NORTHWESTERN MUT. LIFE INS. CO. v. MURPHY et al.
• Court: Iowa Supreme Court

223 Iowa 333
271 N.W. 899

NORTHWESTERN MUT. LIFE INS. CO.
v.
MURPHY et al.

No. 43711.

Supreme Court of Iowa.

March 9, 1937.

Appeal from District Court, Polk County; Russell Jordan, Judge.

Suit in equity involving construction of section 7022, Code of 1931. From decree for plaintiff, defendants appealed.

Reversed and remanded.

Edward L. O'Connor, Atty. Gen., and Lehan T. Ryan, Asst. Atty. Gen., for appellants.

Stipp, Perry, Bannister & Starzinger and Henry & Henry, all of Des Moines, for appellee.

RICHARDS, Chief Justice.

There is presented on this appeal a controversy as to the extent of the liability of plaintiff insurance company for taxes for the year 1934. During that year numerous residents of Iowa paid to plaintiff varying amounts in consideration of receiving plaintiff's written undertakings to pay annually to such persons, respectively, while living, an agreed sum of money. The aggregate amount so paid to plaintiff was $209,362.62. During 1934 plaintiff also realized a further sum of $3,828,770.08, which was due plaintiff upon contracts that both parties concede were life insurance policies. Upon this larger amount plaintiff admits, and has satisfied, its tax liability. The specific question is whether the item of $209,362.62 derived as above indicated should have been included in computation of the tax for 1934 imposed by section 7022, Code 1931, the material portions of which are the following:

“7022. Foreign companies-tax on gross premiums. Every insurance company incorporated under the laws of any state of the United States other than the state of Iowa * * * shall, at the time of making the annual statements as required by law, pay into the state treasury as taxes two and one-half per cent of the gross amount of premiums received by it for business done in this state, including all insurance upon property situated in this state and upon the lives of persons resident in this state during the preceding year.”

At all times that are material plaintiff was incorporated under the laws of Wisconsin with power granted in its articles of incorporation to make and offer insurance pertaining to or connected with life risk, and to grant and purchase annuities. Plaintiff admits it is amenable to the provisions of section 7022, but contends that there is nothing in this statute to justify defendants' demand for payment of

[271 N.W. 900]

the tax upon the item of $209,362.62. Plaintiff denominates the contracts from which the $209,362.62 was derived as contracts for annuities, and says they are to be distinguished from contracts for life insurance. So distinguishing, plaintiff's claim is that section 7022 exhibits a legislative intent that there be taxed only premiums received from the business of insurance, and that consequently revenues received as considerations for annuity contracts are not taxable. The contrary contention of defendants is that the legislative intent was to tax the gross amount of all premiums received by plaintiff for business done in this state and that the making of annuity contracts was a part of the business done in this state and that the amounts received in consideration for such contracts were premiums within the intendment of section 7022.

[1] The contracts for which the $209,362.62 was paid to plaintiff were quite simple in their terms, plaintiff undertaking in each such contract to pay to the other party to the contract an agreed sum annually during the then remaining lifetime of such other party, the latter paying at the time of the execution of the contract an agreed amount as the full consideration for plaintiff's such undertaking. There were but two parties to each of these contracts, no third party being named as entitled to any recovery in event of a cessation of a human life. We are not here confronted with a form of contract in which the terms may appear to contemplate both life insurance and provisions for annuities. We think it is obvious, without discussion, that it should be conceded to plaintiff that these contracts, from which the $209,362.62 was derived, lacked some of the essentials of, and in other respects differed from, life insurance contracts in the ordinary usage of those words and were in fact undertakings for the payment of annuities, and were not life insurance contracts. See Hult v. Home Life Ins. Co., 213 Iowa 890, 240 N.W. 218.

Such concession opens the way to...