State ex rel. American Automobile Ins. Co. v. Gehner

• Citation: 8 S.W.2d 1057,320 Mo. 702
• Decision Date: 03 July 1928
• Docket Number: 27492
• Parties: The State ex rel. American Automobile Insurance Company v. Frederick Gehner, Assessor of City of St. Louis and as President, and A. R. Schollmeyer et al as Members of Board of Equalization of City of St. Louis
• Court: United States State Supreme Court of Missouri

8 S.W.2d 1057

320 Mo. 702

The State ex rel. American Automobile Insurance Company v. Frederick Gehner, Assessor of City of St. Louis and as President, and A. R. Schollmeyer et al as Members of Board of Equalization of City of St. Louis

No. 27492

Supreme Court of Missouri

July 3, 1928

Motion for Rehearing Denied and Opinion Modified July 30, 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. Central 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 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. (3) The statute above referred to 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. Central 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 entirely disregarded the decisions of this court and, instead of assessing the relator in the manner provided in the above statute, 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 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. Central 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. Building & Loan 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 that Section 6386 is unconstitutional is without merit. State ex rel. Am. Central 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. Building & Loan Assn., 145 Mo. 50; Masonic Aid Assn. v. Waddill, 138 Mo. 628; City of Aurora v. McGannon, 138 Mo. 38; Stumpf v. Storz, 156 Mich. 228; State ex rel. v. Smith, 158 Ind. 543; Laub v. Furnas County, 104 Neb. 402; Maryland Casualty Co. v. United States, 251 U.S. 342; State ex rel. v. 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. Central Ins. Co. v. Brinkop, 238 Mo. 298.

Julius T. Muench and Charles J. Dolan for respondents.

(1) Relator is subject to taxation on its money in bank, its solvent bonds, whether state, county, town, city, township, incorporated or unincorporated companies, and its office furniture and fixtures, in the same way and to the same extent as any other taxpayer. The Legislature having repealed the tax on its shares of stock in 1911, relator is now subject to a tax on its property like any other corporation whose shares of stock are not subject to taxation. Life Assn. of Am. v. Bd. of Assessors, 49 Mo. 512; St. Louis Life Ins. Co. v. Bd. of Assessors, 56 Mo. 503; State ex rel. v. Brinkop, 238 Mo. 321; Secs. 12752, 12756, 12766, 12775, 12802, 12858, 12967, R. S. 1919. (2) Relator, not being subject to taxation on the value of its shares of stock, is necessarily subject to taxation on its property. Property subject to taxation can be lawfully assessed in one way only, which is in proportion to its value. Constitution, Art. 10, sec. 4. Sec. 12802, R. S. 1919, gives effect to the constitutional requirement of taxation "in proportion to value" by providing that all personal property shall be valued at the cash price of such property at the time and place of listing the same for taxation. The Legislature is powerless to provide that some property shall be valued at its "net value," while property generally shall be valued at its gross value. It is powerless to divide property into different classes for the purposes of taxation. State ex rel. Tompkins v. Shipman, 290 Mo. 65. (3) Sec. 6386, R. S. 1919, which is the corner stone of relator's case, is unconstitutional, null and void. It recognizes that the property of domestic insurance companies is subject to the property tax like the property of individuals, but instead of requiring such companies to return their property for taxation at the true value in money of their industrial bonds, their secured notes and their money deposited in bank, requires them to return only so much of the value thereof as may be in excess of the reinsurance reserve and the unpaid policy claims of such companies. Life Assn. of Am. v. Bd. of Assessors, 49 Mo. 512; St. Louis Life Ins. Co. v. Bd. of Assessors, 56 Mo. 503; Standard Life Ins. Co. v. Atlanta, 151 Ga. 153; State ex rel. v. Board of Assessors, 256 Mo. 455; Judson on Taxation in Missouri, p. 217. (4) Money in bank, industrial and municipal bonds and office furniture and fixtures are made taxable by Secs. 12766 and 12756, R. S. 1919, in the hands of every person owning or holding them on the first day of June of each year. The Revenue Law does not specify that these subjects of taxation shall be taxed only in the hands of particular persons and corporations. They are made taxable generally except when held by the State itself or one of its subdivisions, or by the United States, or by a corporation whose shares of stock are taxable by law. State ex rel. v. Burr, 143 Mo. 209; State ex rel. v. Packard, 250 Mo. 686; Northern Pac. Railroad Co. v. Walker, 47 F. 686. (5) Section 4 of Article 10 of the Constitution requires that all property "subject to taxation" shall be taxed in proportion to its value. Money deposited in bank, municipal and industrial bonds and office furniture and fixtures have been "subjected to taxation" by Section 12766. Relator admits that it had money in bank, taxable bonds and office furniture and fixtures on June 1, 1925. Not being a corporation whose shares of stock are subject to taxation, it must pay the property tax on its money, its taxable bonds and on its office furniture and fixtures. Life Assn. of Am. v. Board of Assessors, 49 Mo. 519.

White, J. Blair, Ragland, Atwood and Gantt, JJ., concur; Gentry, J., not sitting; Walker, C. J., dissents.

OPINION

WHITE

An original proceeding in certiorari, wherein the relator prays this court to quash an assessment for taxes for June, 1925, approved by the respondents, constituting the Board of Equalization for the City of St. Louis.

On the petition and return the relator filed a motion for judgment. After a former hearing and ruling by this court a motion for rehearing was sustained, the case reargued and again submitted, with eight other cases. On the rehearing nine cases were argued as one, counsel on both sides seeming to consider that a single issue common to all the cases was determinative of them all. In doing so the reason for granting a rehearing was entirely lost sight of. Some of those cases involve tax assessments against life insurance companies, and others against fire and liability insurance companies. This particular company insures against fire, theft and liability. The one issue common to all the companies turned upon the constitutionality of Section 6386, Revised Statutes 1919. The argument was mainly presented by attorneys for life insurance companies.

I. The principal point made by counsel for relators in the argument was that the reserve of a life insurance company is not the property of the company, but the property of the policyholders, in the sense that bank deposits are the property of the depositors, and taxable as such to the policy-holders. No claim is made that fire and indemnity insurance policies are taxable. One thing in common to the two policies is that each may be canceled or surrendered for a certain cash value. But if they are not so canceled, the life insurance policy is certain to be paid in the end; whether the loss secured by a fire insurance policy shall ever be paid is contingent. The beneficiary in a life insurance policy has a vested interest, so to speak, in the reserve which must be paid at the death; an event certain to occur. But a fire insurance policy, particularly automobile insurance, usually runs for a year. It is a remote contingency only that payment for loss would be demanded during that period. So, the interest in the reserves of the policyholders in a life insurance company is different, both in kind and degree, from that of a policyholder in the reserves of a fire insurance or liability insurance company. This distinction should be borne in mind in considering Section 6386, and the oral argument in the case.

This case, however, can be determined upon another principle.

II. The Board of Equalization in passing upon the tax return of the relator found that the amount of the legally required reserve of the company, and the amount of unpaid claims against the company, were correctly stated therefore, the relator contends, the only question for consideration is whether Section 6386 is unconstitutional. We cannot agree to that conclusion. The construction of Section 6386 was before the Board of Equalization, and is...