People ex rel. Connecticut Mutual Life Insurance Company v. State Treasurer

• Decision Date: 06 January 1875
• Court: Michigan Supreme Court
• Parties: The People on the relation of the Connecticut Mutual Life Insurance Company v. The State Treasurer

31 Mich. 6

The People on the relation of the Connecticut Mutual Life Insurance Company v. The State Treasurer

Supreme Court of Michigan

January 6, 1875

Heard October 28, 1874

Application for Mandamus.

Application for mandamus denied.

C. I Walker and Ashley Pond, for the relator.

Isaac Marston, Attorney General, for the respondent.

Graves Ch. J. Christiancy and Cooley, JJ., concurred. Campbell, J., did not sit in this case.

OPINION

Graves, Ch. J.:

This application for mandamus has originated in a difference of opinion between the treasurer and the relator, respecting the amount of specific tax which was by law demandable from the company for the year 1873.

The company is a Connecticut corporation, doing business in this state under the regulations prescribed by the legislature, and it claims to be working as a mutual company, without capital stock issued to shareholders, but embracing the holders of policies as members, who are rendered proportionably interested in the property and profits.

It further claims that it aims to afford life insurance to the members at actual cost, and in keeping with this aim, that it sets down in each policy what amounts to a maximum annual premium to be paid, but subject to an "understanding" that no more shall be exacted for any year that is found necessary to pay the cost of insurance for that year.

That the aggregate of such maximum premiums for the year eighteen hundred and seventy-three, against Michigan parties, was two hundred eighty-seven thousand nineteen dollars and twenty-five cents, but that the company conforming to the "understanding" and "aim" before mentioned, to restrict exactions from the policy-holders to the cost of insurance, reduced the collections for that year to one hundred and sixty-nine thousand two hundred and seventy-five dollars and fifty-eight cents, by crediting on premiums due from policy-holders one hundred and seventeen thousand seven hundred and forty-three dollars and sixty-seven cents, the latter sum having been collected in the preceding year, and being the balance left beyond the cost of insurance.

The point of the case is, whether the tax of three per cent. imposed by the legislature should be calculated on the sum of one hundred and sixty-nine thousand two hundred and seventy-five dollars and fifty-eight cents, actually paid in hand in 1873, or upon the amount made up of that and the sum credited to policy-holders.

The treasurer insists that the tax was required to be on the larger, and the relator that it should be on the smaller of these amounts. The question is one of strict law, and does not depend upon equities, or any individual judgments in regard to state policy in matters of taxation.

We cannot ascertain from the record the precise nature or form of what is generally and vaguely referred to as the "aim" of the company, and the "understanding" that the exactions from policy-holders should be cut down from the definite and certain sums written in the policies, to amounts not predetermined, and depending upon fluctuating circumstances.

Whether this "understanding" is something in a shape to invest the policy-holders with a legal right to resist a call inconsistent with what is said to be the "aim" and "intention", or whether it is a bare expectation, encouraged by the company, that its controlling agencies, acting upon a sense of what is politic and expedient, will not absolutely retain the excess of collections on premiums over and above the necessities of the company, is in no manner explained. This part of the case is extremely dubious and uncertain.

It was observed in argument by relator's counsel, that in carrying out this scheme of keeping the collections from the policy-holders in each year down to the cost of insurance for the same year, the company get at the cost for the current year, by referring to the preceding year, and adopting the ratable difference between the cost of insurance thereof and the aggregate of maximum premiums.

Without stopping to see what consequences ought to be drawn from this exposition, if well based, it cannot, of course, be expected that in dealing with the case we should espouse any theory or explanation not appearing to us to be fairly warranted by the facts; and, upon consideration, we find it quite impossible to reconcile this argumentative explanation with the interior and implicit nature of the transaction as depicted by the record.

The reasoning referred to assumes or requires that the sum of one hundred and seventeen thousand seven hundred and forty-three dollars and sixty-seven cents was the real difference between the aggregate of maximum premiums and actual cost of insurance in 1873, though ascertained by a standard afforded by the experience of 1872; and that this sum of one hundred and seventeen thousand seven hundred and forty-three dollars and sixty-seven cents was an actual deduction on account of actual operations in 1873, whereby, as insisted, the sum demandable in that year was reduced to one hundred and sixty-nine thousand two hundred and seventy-five dollars and fifty-eight cents. In this view the account for 1873 could not have been affected at all by carrying to it and allowing to policy-holders a claim in their favor actually produced by the operation of 1872. On the contrary, it must have been complete in itself, and been dealt with as exclusively embodying the operations of 1873. It could neither have been saddled with any demand created and established in 1872, or carved out of the transactions of that year, nor could it have produced any demand to be carried over to 1874.

When we recur, however, to the explicit stipulation made in the case, we find that, by whatever name called, the deduction, credit or rebate in 1873 was not caused or brought about in this way. The fact, as there set forth, appears to be, that in making up the account for 1873, the balance was not ascertained by relinquishing what there was between the aggregate of written premiums and the cost of insurance for 1873, but by deducting from the aggregate of written premiums for that year the balance in favor of policy-holders brought over from the previous year.

Passing this feature for the present, we observe that the relator insists that the right to tax it rests on the act of 1869,--L. 1869, Vol. 1, p. 124; and that by the provisions of that law, the relator was only taxable on the sum of its actual cash receipts on premiums in 1873, and therefore only on the sum of one hundred and sixty-nine thousand two hundred and seventy-five dollars and fifty-eight cents.

They contend that the act of 1871 (L. 1871, Vol. 1, p. 172) could not influence the question, because, first, as they urge, that act does not assume to change the pre-existing rule or redeclare the rule as to the basis of taxation; and second, that if the terms could be considered adequate for such purpose, no such effect could be sanctioned, since to allow the law that operation would be to disappoint the object as expressed in the title, and introduce into the body of the statute an incongruous element.

But even if these difficulties were overcome, they still argue that this act will only permit a tax on actual receipts and such additional amounts, if any, as policy holders are under agreement in the same year to pay on premiums; that the facts in the record show that the true contract relations between the policy-holders and the company involved nothing further than an agreement that the policy-holders should pay in 1873 whatever sum should be ascertained, according to the course of the company, to be sufficient to meet the cost of insurance for that year; and that this sum was so ascertained to be one hundred and sixty-nine thousand two hundred and seventy-five dollars and fifty-eight cents, and that in paying it the policy-holders paid all they were under agreement to pay, and all the company had any right to exact.

Without admitting what is contended for by the relator in regard to the scope of the act of 1869, the attorney general urges that the terms of the act of 1871 distinctly establish that the relator's tax for 1873 was required to be computed, not only on the cash receipts paid in hand in 1873, but also on that portion of the premiums written as payable in that year, and which portion the relator treated as compensated by the equal cash claim against the company held by the policy-holders for excessive collections made and retained in 1872. And he likewise maintains that the statute is susceptible of valid operation in that way, and is not subject to the objections and difficulties drawn by relator's counsel from the provisions of the constitution.

This reference to the opposite and conflicting positions taken renders it apparent that, independently of the diversity of views in other particulars, the parties are widely at variance concerning the construction...