Sovereign Camp, WOW v. Casados

• Decision Date: 13 January 1938
• Docket Number: 2926.,2924,No. 2917,2917
• Parties: SOVEREIGN CAMP, W. O. W. v. CASADOS et al. SECURITY BENEFIT ASS'N v. SAME. THE PRAETORIANS v. SAME.
• Court: U.S. District Court — District of New Mexico

21 F. Supp. 989

SOVEREIGN CAMP, W. O. W. v. CASADOS et al.

SECURITY BENEFIT ASS'N v. SAME.

THE PRAETORIANS v. SAME.

Nos. 2917, 2924, 2926.

District Court, D. New Mexico.

January 13, 1938.

No. 2917:

Rainey T. Wells, O. S. Wells, and Earle R. Stiles, all of Omaha, Neb., and J. O. Seth, of Santa Fe, N. M., for plaintiff Sovereign Camp, W. O. W.

No. 2924:

Gilbert & Hamilton, of Santa Fe, N.M., and Arthur W. Fulton, of Chicago, Ill., for plaintiff Security Ben. Ass'n. No. 2926:

J. W. Randall, of Dallas, Tex., and Wilson & Watson, of Santa Fe, N. M., for plaintiff The Praetorians.

Frank H. Patton, Atty. Gen., state of New Mexico, and Fred J. Federici and Richard E. Manson, Assts. Atty. Gen., state of New Mexico, for defendants.

Before BRATTON, Circuit Judge, and NEBLETT, and MURRAH, District Judges.

MURRAH, District Judge.

This is a bill in equity to permanently enjoin the enforcement of an amendment, Laws N.M.1937, c. 69, § 1, to section 30, chapter 105, Session Laws of New Mexico 1931, upon the grounds and for the reason that said amendment offends article 5 and section 1 of article 14, Amendments to the Constitution of the United States and section 18, article 2, of the Constitution of the state of New Mexico, commonly referred to as the due process and equal protection clauses of the Constitution of the United States and similar provisions of the State Constitution; section 11, article 2, of the Constitution of New Mexico in respect to the freedom of religious worship; section 26, article 4, of the Constitution of the state of New Mexico in respect to special privileges; and section 1, article 8, of the Constitution of the state of New Mexico relating to equality and uniformity of taxation.

The complainants further contend that under the provisions of the act, if valid, no taxes or assessments provided to be paid by the complainants under the terms of the act are due until March 1, 1938, because the act is prospective only and should not be given a retroactive or retrospective effect as is contended by the defendants and that any other construction would contravene section 10, article 1, of the Constitution of the United States or section 19, article 2, of the state of New Mexico because it would impair the obligation of contract.

The jurisdiction of this court is invoked under section 266 of the Judicial Code, as amended, 28 U.S.C.A. § 380, because of diversity of citizenship and the presence of a substantial federal question, plus the requisite amount in controversy, and because the complainant seeks to restrain state officers from enforcing the state statute upon the ground that the statute is unconstitutional.

The jurisdiction of this court to decide all issues raised in the bill of complaint is not disputed. This court sitting as a specially constituted court, under section 266, Judicial Code, as amended, 28 U.S.C.A. § 380, will take cognizance of all the issues raised in the bill of complaint. Modern Woodmen of America v. Casados, D. C., 15 F.Supp. 483; Sovereign Camp, W. O. W. v. Murphy, D. C., 17 F.Supp. 650; Siler v. Louisville & N. R. Co., 213 U.S. 175, 29 S. Ct. 451, 53 L.Ed. 753.

Subsequent to the filing of this case and the hearing on the same, Congress amended section 24 of the Judicial Code with respect to the jurisdiction of the District Court of the United States over suits relating to the collection of state taxes. Public—No. 332—75th Congress, Statutes 1551, 50 Stat. 738, 28 U.S.C.A. § 41(1), approved August 21, 1937. The act provides:

"Notwithstanding the foregoing provisions of this paragraph, no district court shall have jurisdiction of any suit to enjoin, suspend, or restrain the assessment, levy, or collection of any tax imposed by or pursuant to the laws of any State where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such State."

Section 2(b) of said act, 28 U.S.C.A. § 41(1a), (b), provides:

"The provisions of this Act shall not affect suits commenced in the district courts, either originally or by removal, prior to its passage; and all such suits shall be continued, proceedings therein had, appeals therein taken, and judgments therein rendered, in the same manner and with the same effect as if this Act had not been passed."

The act does not affect the jurisdiction of this court over the subject-matter of this suit and this case will be considered under the provisions of the law existing at the time the same was commenced and heard.

The legislation which the bill of complaint seeks to have declared unconstitutional and injunctive relief granted in respect thereto is chapter 69 of the New Mexico Session Laws of 1937, the pertinent parts of which follow:

"Section 1. That Section 30 of Chapter 105, New Mexico Session Laws of 1931 be and the same hereby is amended to read as follows:

"`Section 30. (Taxation) Except as hereinafter provided, every fraternal Benefit Society organized and licensed under this Act, or doing business in the State of New Mexico, shall pay to the Superintendent of Insurance the following taxes and fees. * * * and every such society shall also pay annually on or before the 1st day of March of each year, for the privilege of doing business in the State of New Mexico, two per cent. (2%) of the gross premiums collected by it in New Mexico during the preceding calendar year, less all return premiums and premiums paid to insurance companies licensed to transact business in the State of New Mexico for re-insurance on New Mexico risks. * * *

"The failure to pay any taxes or fees imposed under the provisions of this Act shall render such companies liable to the state of New Mexico for the amount thereof and for the penalties now provided in Section 71-121, New Mexico Statutes Annotated, Compilation of 1929. * * *

"Exceptions: Every such society which (1) issues certificates or benefits strictly in accordance with Section 5, and (2) which limits its membership to members of one religious faith, or to persons engaged in one or more hazardous occupations in the same or similar lines of business, and (3) which does not employ paid solicitors or salesmen either on a salary or commission basis for procuring new insurance or members, and (4) which does not solicit insurance applications from the general public, but limits its solicitation of insurance applications to persons who are members in good standing in such society, shall be exempt from the fees and taxes hereinbefore imposed, but shall pay the following fees. * * *

"All monies collected by the Superintendent of Insurance from fraternal benefit societies under the provisions of this Act shall be by him paid to the State Treasurer, and by the State Treasurer converted into the maintenance fund of the Carrie Tingley Hospital for Crippled Children, at Hot Springs, New Mexico."

The foregoing statute repealed all sections of chapter 105, Session Laws of 1931, in conflict therewith and declared an emergency. The act received executive approval and became a law on March 6, 1937.

The cases in the caption have been consolidated for the purposes of trial and decision of this court and the parties have filed a stipulation of the pertinent facts necessary for the determination of the legal issues raised by the bill in equity. A temporary injunction was entered by consent and this court is asked to permanently enjoin the enforcement of the foregoing act. The pertinent parts of the stipulation are as follows:

"That complainant does not limit its membership to members of one religious faith, but accepts members and issues benefit certificates of insurance to persons of every religious faith and creed, as well as to those of no religious faith and creed, without discrimination; and does not limit its membership to persons engaged in one or more hazardous occupations in the same or similar lines of business; that complainant does solicit members from the general public, subject in all cases to such persons meeting the requirements of the constitution, laws and by-laws of the complainant; that substantially all members of complainant hold insurance certificates issued by complainant; that complainant does employ said solicitors, salesmen or organizers either on a salary or commission basis for procuring new insurance but such solicitors, salesmen, or organizers receive no salary or commission for soliciting membership; that complainant solicits insurance applications from persons who with their applications for insurance make application for membership in the society, and to persons who are members of the society; and it issues no certificates of insurance to any person who has not at the time of such issuance been duly constituted a member of such society in compliance with its constitution, laws and by-laws; and if for any reason a member's application for insurance is rejected, he can and does continue as a social member of the Society, and it is not necessary that any applicant make application for insurance in order to become a social member."

"That the form of application used by Complainant combines in one instrument an application for membership and an application for insurance, and which application for membership in Complainant includes in the single instrument executed by the applicant, an application for insurance in Complainant, with the understanding that no insurance will be granted unless the applicant is accepted as a member of the Society, and unless he passes a satisfactory medical examination; and conversely, if the applicant is accepted for insurance and fails to pay his assessments for insurance when due, he becomes suspended and forfeits all of his rights as a social or beneficiary member in the society, except as otherwise provided in the certificate or in the constitution and by-laws of the society."

It is agreed that the complainants comply with section 5 of chapter 105, Session Laws of New Mexico 1931. It is also admitted that certain...