Relfe v. Columbia Life Ins. Co.

• Decision Date: 24 January 1882
• Parties: WILLIAM S. RELFE, SUPERINTENDENT, ETC., Respondent, v. COLUMBIA LIFE INSURANCE COMPANY, N. C. HUDSON, COLLECTOR, ETC., Appellant.
• Court: Missouri Court of Appeals

11 Mo.App. 374

WILLIAM S. RELFE, SUPERINTENDENT, ETC., Respondent,

v.COLUMBIA LIFE INSURANCE COMPANY, N. C. HUDSON, COLLECTOR, ETC., Appellant.

St. Louis Court of Appeals, Missouri.

Jan. 24, 1882.

1. The assessment for taxes required to be made upon shares of stock in a corporation is not a charge against the corporation, and the tax is not payable by the receiver of an insolvent and dissolved corporation.

2. An assessor cannot increase an assessment for taxes without notice to the owner or custodian of the properly assessed.

3. Where property under the control of another is, through fraud or mistake, not returned for taxation, the assessor has no authority to list it without notice to the custodian thereof.

APPEAL from the St. Louis Circuit Court, THAYER, J.

Affirmed.

LEVERETT BELL, for the appellant.

JOHN D. POPE, for the respondent: The taxes which insurance and other companies are required by law to pay on shares of stock are not payable out of the assets of such companies after they have been ascertained to be insolvent and put into liquidation.-- Lionberger v. Rowse, 43 Mo. 67; Bank v. The Commonwealth, 9 Wall. 353; Cummings v. Bank, 101 U. S. 157; Curran v. Arkansas, 15 How. 304; Barings v. Dabney, 19 Wall. 1; Gill v. Balis, 72 Mo. 429. A false and fraudulent return, made by the president of a corporation, of shares of stock held by third parties, is not conclusive on creditors, either as to amount, value, or ownership of shares.-- Dodge v. Woolsey, 18 How. 331. The act of the assessor's chief clerk, in adding $100,000 to the amount which had been returned by the receiver of the Columbia Life Insurance Company, without notice to the receiver, was unlawful and invalid, even if it is considered to have been done by the assessor himself.-- Alexander v. Life Assn. 73 Mo.--; Pacific R. Co. v. Cass County, 53 Mo. 18, 29; Coolbaugh v. Huck, 86 Ill. 600; Ferguson v. Moss, 69 Mo. 495.BAKEWELL, J., delivered the opinion of the court.

This is a proceeding to charge the assets of the Columbia Life Insurance Company, formerly the St. Louis Life Insurance Company, which assets were in the hands of a receiver, with the payment of certain personal tax-bills in favor of the state, the city and county of St. Louis, and the public schools. The intervening petitioner is the collector holding the tax-bills. Three of the bills were allowed. As to them there is no question here, since the receiver did not appeal. Tax-bill No. 563, for $2,600, was allowed as to one-half only; and tax-bill No. 788, for $11,075.76, was disallowed.

The answer of the receiver presented three defences, to each of which the collector demurred. The trial court sustained the demurrer to the first defence, and overruled the others, and the parties declining to plead further, the cause was submitted and judgment entered.

The first defence, which went to all the bills, and which was held to be insufficient by the court, was to the effect that the personal property in the possession of the receiver is held by him under the authority of the court; that his possession is the possession of the court; that the property belongs ratably to the creditors of the insurance company, who are to return for taxation all interest which they have in the property so situated, and to pay all taxes on it. Therefore, the receiver says, the property is not taxable against him.

The second defence applies to the bill No. 788, for $11,075.76. The answer sets up that this tax-bill does not represent taxes due by the insurance company, or on property which it owned; that the amount is claimed to have been payable only on account of the stock that different persons held in the company, taxable for that year, which tax was a debt of the stockholders, and not of the company; that, under the statute as it existed at that date, the president of the company was required to furnish to the assessor a list of all persons owning stock in the company, and to add thereto a statement of the value of their stock; that the company was required by the statute to advance for the stockholders the amount due by them on their shares, which advances the stockholders were required to pay to the company; that the statutes did not make these taxes a debt of the company, or a lien upon its assets; that, after the president had furnished this list of stockholders, and before the company had advanced the amounts alleged to be due on the stock, the company was dissolved by decree of court, and all its assets placed in respondent's hands for the benefit of creditors, and no one has, since the dissolution, been required or authorized to advance these taxes for the stockholders; that the president, in furnishing said list of stockholders, attached thereto an untrue statement of the value of the stock; that the company was then insolvent, and its stock worthless; that this was known to the president, and the fictitious valuation was placed on the stock by him for the fraudulent purpose of making the company appear to be solvent, so that it could do business contrary to law.

The third defence applies to bill 563, being a tax of $2,600, for 1878. The answer sets up that, the company being dissolved and respondent its receiver, the respondent, being required to do so by the assessor, made a return for 1878, of all the property in his possession, power, or control, and gave the true value thereof; that the bill is based on that return; that after respondent had been assessed on this return in the amount stated in the bill, the chief clerk in the assessor's office added $100,000 to the return, which the clerk claimed to be the face value of the securities which the company, before its dissolution, had deposited with the insurance department for the security of its policy-holders; that these securities, since the dissolution of the company, were never worth more than $50,000; that respondent had no notice of this addition to his return, and knew nothing of it; that the board of equalization was never notified that respondent's return was false or fraudulent; that respondent never received any notification from that board, and never had a hearing as to the correctness of the return.

The receiver did not appeal. The only questions for us to consider are, whether upon the facts set out in the answer and admitted by the demurrers, tax-bill 788 was a valid charge against the assets in the receiver's possession; and, whether the court committed error to the prejudice of appellant in not rendering judgment for the full amount of tax-bill No. 563.

1. The law governing the assessment for $11,075.76, made on the capital stock of the company represented by tax-bill 788, for the year 1876, was passed in 1872. Its provisions have been the law of this state ever since, and are to be found in the Session Acts of 1871 (p. 90), and Wagner's Statutes (p. 1165 et seq., sects. 35-37), and Revised Statutes of 1879 (p. 1313, sects. 6692-6694). These provisions to the effect that persons owning shares of stock in incorporated companies are not required to deliver to the assessor a list, but the chief officer of the corporation shall deliver to the assessor a list of all the shares of stock and the names of persons who hold the same; that the taxes on these shares shall be paid by the corporations, who may recover the amounts from the owners of the shares, and imposing a penalty upon the chief officer if he fails to make the return to the assessor, are to be found also in the revenue law of 1864. Acts 1863, p. 69, sects. 19-21. It is held that this assessment is not upon the capital stock, but distinctly and separately against the shares; that by these provisions of the revenue law, no charge is made against the corporation...