State ex rel. American Cent. Ins. Co. v. Gehner
| Decision Date | 30 July 1928 |
| Docket Number | 27495 |
| Parties | The State ex rel. American Central Insurance Company v. Frederick Gehner, As Assessor, and As President, and A. R. Schollmeyer et al. As Members, of Board of Equalization of City of St. Louis |
| Court | Missouri Supreme Court |
Motion for Rehearing Overruled October 2, 1928.
Writ quashed.
Bryan Williams & Cave, for relator.
(1) Sec. 6386, R. S. 1919, prescribes the method for the return and assessment and taxation of domestic insurance companies and the method provided therein is exclusive of all other methods. State ex rel. Am. Cent. Ins. Co. v. Gehner, 280 S.W. 416; State ex rel. Am. Automobile Ins. Co. v Schramm, 271 Mo. 223. (2) Under the provisions of that Section 6386, every domestic insurance company must return and be assessed, first, on the real estate held or controlled by it; second, on the net value of all its other assets or values in excess of the legally required reserve necessary to reinsure its outstanding risks and of any unpaid policy claims, which net value shall be assessed and taxed as the property of individuals. Sec. 6386, R. S. 1919. (3) This section thus prescribes a system of taxation of net assets and requires such net assets to be assessed and taxed as the property of individuals. State ex rel. Am. Cent. Ins. Co. v. Gehner, 280 S.W. 416; State ex rel. Am. Automobile Ins. Co. v. Schramm, 271 Mo. 223. (4) The order and finding of the Board of Equalization of the City of St. Louis entirely disregarded the decisions of this court and, instead of assessing the relator in the manner provided in Section 6386, has undertaken, without any authority of law, to assess relator on its gross assets. In so doing, the board disregarded, not only the plain provisions of the statute and the clear and positive decisions of this court, but the board also entirely disregarded the well-known principle of law that, in order that property may be taxed, it must, by law, be subjected to taxation. State ex rel. Am. Cent. Ins. Co. v. Gehner, 280 S.W. 416; State ex rel. Am. Automobile Ins. Co. v. Schramm, 271 Mo. 223; Valle v. Zeigler, 84 Mo. 214; Kansas City v. B. & L. Assn., 145 Mo. 50; Leavell v. Blades, 237 Mo. 700; State ex rel. v. Lesser, 237 Mo. 318; State ex rel. v. Schryack, 179 Mo. 424; Cooley on Taxation (4 Ed.) sec. 939. (5) The claim of the city that Section 6386, R. S. 1919, is unconstitutional is without merit. State ex rel. Am. Cent. Ins. Co. v. Gehner, 280 S.W. 416; State ex rel. Am. Automobile Ins. Co. v. Schramm, 271 Mo. 223; State v. North, 27 Mo. 483; Judson on Taxation (2 Ed.) sec. 496, p. 544; Cooley on Taxation (4 Ed.) secs. 153, 154, 160, 296; Kansas City v. B. & L. Assn., 145 Mo. 50; State ex rel. v. Title Guaranty Trust Co., 261 Mo. 448; State ex rel. v. Buder, 295 Mo. 63; State ex rel. v. Citizens Bank, 274 Mo. 60; State ex rel. Am. Cent. Ins. Co. v. Brinkop, 238 Mo. 298.
Julius T. Muench and Charles J. Dolan for respondents.
(1) Sec. 12775, R. S. 1919, imposes a tax on the property of relators. (2) Secs. 6386 and 6397, R. S. 1919, subjecting the property of relators to taxation and providing that "net assets" only shall be assessed for taxation, violate Section 4 of Article 10 of the Constitution, which requires that all property subjected to taxation shall be taxed in proportion to its value. Standard Life Ins. Co. v. City of Atlanta, 151 Ga. 153; Life Assn. of America v. Board of Assessors, 49 Mo. 512; St. Louis Ins. Co. v. Board of Assessors, 56 Mo. 503; Railway v. Worthen, 46 Ark. 312, 120 U.S. 97; In re Assessment and Collection of Taxes, 4 S. Dak. 6; State ex rel. v. Shipman, 290 Mo. 65. (3) Since Secs. 6386 and 6397, R. S. 1919, violate the Constitution of Missouri and are null and void, and since there is no valid special law providing for the assessing of the property of relators, the assessment of their property for taxation is provided for and governed by the provisions of Sec. 12766, R. S. 1919. (4) The assessments levied on relators by respondents are made mandatory by the provisions of Secs. 12775 and 12766, R. S. 1919. Life Assn. v. Board of Assessors, 49 Mo. 512; St. Louis Ins. Co. v. Board of Assessors, 56 Mo. 503; Judson, Taxation in Missouri, p. 52.
The relator brings this proceeding to quash the record of the Board of Equalization of the City of St. Louis. Relator in its statement for taxation, June 1, 1925, listed its taxable assets at $ 288,145.01. The matter came before the Board of Equalization of the City of St. Louis and the amount of taxable assets of the relator was found to be $ 500,000, and it was assessed accordingly.
On a hearing before the Board of Equalization the classified schedule of assets of the relator was introduced, as follows:
AMERICAN CENTRAL INSURANCE COMPANY.
June 1, 1925.
Unearned Premium or
Reinsurance Reserve
$ 4,659,804.05
Reserve for Unpaid
Losses
944,819.28
$ 5,604,623.33
$ 5,604,623.33
The assessment of $ 500,000 increased the amount returned as assessable by about $ 222,000.
Among the assets returned as non-taxable on account of location, it will be noted, are the following:
Deposited in banks outside of Missouri
$ 115,387.23
Municipal bonds on special deposit
203,575.60
State, Prov. and County Bonds on Special Deposit
These altogether would more than make the balance between the amount returned for taxation and the amount assessed. As pointed out in the American Automobile Insurance Company Relator, v. Gehner et al., Respondents, 320 Mo. 702, the money in bank and the municipal and other bonds claimed to be non-taxable on account of the location in other states, are credits and are taxable at the domicile of the owner.
Then we have further the items returned as non-taxable on account of class:
"Uncollected Premiums in Missouri, $ 79,280.51" and "Uncollected Premiums outside Missouri $ 1,338,704.04." These are listed as assets. Being assets they are credits and taxable. The fact that they are due from policyholders outside of Missouri would not prevent their being taxable in this State, as was decided in the American Automobile Insurance Company case.
It is quite remarkable if premiums to that amount are uncollected, for premiums are usually paid in advance. We have them listed in the original return with this explanatory characterization of the two items aggregating $ 1,417,984.55.
"Uncollected Premiums Subject to Cancellation and Return of Policies Not Taken."
We need a glossary to make that cryptic statement intelligible. By what sort of magic can a policy not taken be returned? Are we to understand that the relator makes insurance contracts before policies are "taken" and before premiums are paid? Or, is that a method of dressing for exhibition the unearned premiums on deposit in the banks of other states?
I. We pointed out, with a review of the authorities, in the American Automobile Insurance Company v. Gehner, 320 Mo. 702, that such assets have a taxable situs at the domicile of the owner. The rule is stated in 37 Cyc. at page 955, as follows:
"Property of an intangible nature, such as credits, bills receivable, bank deposits, bonds, promissory notes, mortgage loans, judgments, and corporate stock, has no situs of its own for the purpose of taxation, and is therefore assessable only at the place of its owner's domicile."
State ex rel. v. Brinkop, 238 Mo. 298, is cited as a holding contrary to that rule. In that case the assessment of the property of an insurance company was quashed on certiorari. The property assessed, about which the ruling is claimed to be in point, consisted of premiums on policies issued by the insurance company outside of Missouri "on which sums the insurance company was assessed and paid taxes in the states in which said non-residents lived;" and bank deposits subject to check in banks outside of Missouri "and taxable in the state where kept." It appears that the court had nothing before it except the bare statement of the relator's petition that such property was taxed and taxable in other states. The board of assessors, whose record was attacked, did not contest the fact in making the assessment. The quashing of the assessment was based squarely on the theory that taxes had already been paid on the property and the court declined to impose a double taxation.
The situation is entirely different from that which appears in this case and the other cases, including the American Auto Insurance case, recently decided by ...
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