State ex rel. Gully v. Mutual Life Ins. Co. of New York

• Decision Date: 25 November 1940
• Docket Number: 33934
• Citation: 189 Miss. 830,196 So. 796
• Court: Mississippi Supreme Court
• Parties: STATE ex rel. GULLY, STATE TAX COLLECTOR, v. MUTUAL LIFE INS. CO. OF NEW YORK

196 So. 796

189 Miss. 830

STATE ex rel. GULLY, STATE TAX COLLECTOR, v. MUTUAL LIFE INS. CO. OF NEW YORK

No. 33934

Supreme Court of Mississippi

November 25, 1940

June 10, 1940

Suggestion Of Error Overruled In Part And Sustained In Part November 25, 1940.

APPEAL from the chancery court of Hinds county, HON. V. J. STRICKER Chancellor.

Suit by the State, on the relation of J. B. Gully, State Tax Collector, against the Mutual Life Insurance Company of New York, to recover premium tax. From a decree dismissing the bill, complainant appeals. Reversed and remanded.

On suggestion of error, suggestion of error overruled in part and sustained in part, and cause reversed with judgment for appellant.

Reversed and remanded. Reversed and judgment here for appellant.

May &amp Byrd and Creekmore, Creekmore & Capers, all of Jackson, and Walker & Hooker, of Nashville, Tenn., for appellant.

Payments made on annuity policies are premium receipts within the meaning of the taxing statute, and taxable as such; the statute imposes a privilege tax on insurance companies "upon the business done within the state;" and the writing of annuities is an integral part of life insurance business.

Sec. 111(b), Chap. 89, and Sec. 103(b), Chap. 98, Laws of 1932; Sec. 115, Chap. 118, Laws of 1934; Sec. 103, Chap. 88, Laws of 1930; Secs. 108 and 263, Chap. 20, Laws 1935, Extraordinary Session; Secs. 5128, 5159, 5170, 5274, Code 1930; Northwestern Mutual Ins. Co. v. Murphy, Com'r., etc., 271 N.W. 899, 109 A. L. R. 1054, 223 Iowa 333; Mutual Benefit Life Ins. Co. v. Commonwealth (Mass.), 227 Mass. 63, 116 N.E. 469; N.Y.Life Ins. Co. v. Sullivan et al., 192 A. 297, 89 N.H. 21; State of Ark. ex rel. v. N.Y.Life Ins. Co., 131 S.W.2d 639; Equitable Life Assurance Society of the U.S. v. Johnson, State Treasurer of the State of Calif., decided by the Superior Court at San Francisco, Sept. 29, 1939.

The following cases are, we respectfully submit, all clearly distinguishable from the case at bar and do not, in our opinion, compare favorably in point of sound reasoning with the opinions of the Courts of Iowa, New Hampshire, Massachusetts, Arkansas and California, which we have cited.

Daniel et al. v. Life Ins. Co. of Va. (Tex.), 102 S.W.2d 256; State of Wyoming ex rel. v. Hamm (Wyo.), 88 P.2d 484; People v. Knapp, 184 N.Y.Supp. 345, 231 N.Y. 630, 132 N.E. 916; Commonwealth v. Metropolitan Life Ins. Co., 98 A. 1072, 254 Pa. 510; State of N. D. v. Equitable Life Assurance Society, 282 N.W. 411, 68 N.D. 641.

The statute imposes no unreasonable burden upon insurance companies writing annuities and no reason exists on the ground of public policy on account of benefits that might result to Mississippi residents for the failure of the legislature to exempt annuity premiums from taxation.

The State of Mississippi is not barred from collecting the taxes sued for by any alleged administrative ruling.

Miss. Cotton Seed Products Co. v. Stone et al., 184 So. 428, 306 U.S. 656; Virden v. State Tax Com., 180 Miss. 467, 177 So. 784; Manhattan Co. v. Com'r of Internal Rev., 297 U.S. 129, 80 L.Ed. 528; Anderson v. Love, 169 Miss. 219, 151 So. 366; State ex rel. v. Cotton Compress Co., 123 Miss. 191, 55 So. 137.

Penalties and interest on the taxes sued for are recoverable as a matter of law.

Sec. 263, Chap. 20, Laws of 1935, Extraordinary Session; Sec. 5128, Code of 1930; Britton & Henry v. Robertson, 120 Miss. 684, 83 So. 4; Hamel v. Marlow, 171 Miss. 552, 157 So. 905, 96 A. L. R. 924; Texas Co. v. Dyer, Com'r., etc., 179 Miss. 135, 174 So. 80.

The appellant concedes that the six-year statute of limitations is a bar to any recovery of taxes due for the period between January 1, 1932 and June 30, 1932.

In the majority opinion of the court it was held that the Insurance Company was liable for 6% interest per annum on the tax from the dates due. The question now raised is a serious one and, in frankness to the court, we must say that in our opinion the right to interest is doubtful. In saying this we, of course, have in mind the decision of the court in the case of I. C. R. R. Co. v. Adams, 78 Miss. 895, 29 So. 996.

There is a respectable line of authority in this country to the effect that when a taxpayer causes delay, either by a defense which he files in a suit by the state for taxes, or by an action brought by himself staying the hands of the state and prevents the state from collecting its tax and he is defeated, interest will be allowed from the time the taxes would have been payable if no legal action had been taken by the taxpayer to prevent their collection.

26 R. C. L. 386, sec. 343; 33 C. J. 182, sec. 14.

The appellant respectfully submits that if the court should be of the opinion that the Adams case is controlling, then the court should correct the judgment previously entered so as to give appellant a final judgment in this court as of the date of the judgment entered reversing the case. In any event, however, if interest should be denied, we think it would be proper that the court enter judgment in favor of the appellant without the case being remanded to the lower court.

Wells, Wells & Lipscomb, of Jackson, for appellee.

Under the plain meaning of the Mississippi statutes imposing premium taxes on life insurance contracts, it was never the legislative intent to convey thereby so broad a meaning as to apply such tax and impose such tax on annuity considerations.

Chap. 104, sec. 3, p. 115, Laws of Miss. of 1920; Chap. 118, sec. 134, p. 156, Laws of Miss. of 1926; Chap. 88, sec. 103 (b), p. 173, Laws of Miss. of 1930; Chap. 98, sec. 103 (b), p. 276, Laws of Miss. of 1932; Chap. 89, sec. 111 (b), p. 121, Laws of Miss. of 1932; Chap. 118, sec. 115, p. 114, Laws of Miss. of 1934; Chap. 117, sec. 10, Laws of Miss. of 1938; Sec. 108, Chap. 20, Laws of Mississippi, Extraordinary Session of 1935.

The tax is to computed only upon such receipts as are comprehended in the words "premium receipts, " taking into consideration other language used elsewhere in the same section and other language used in other statutes to be construed along with these words in this statute. It, therefore, becomes of primary importance to determine the precise meaning of the word, "premium." The definitions clearly show that this word is generally used specifically in relation to a contract of insurance. They contain no indication that it is also used specifically with respect to an annuity contract; moreover, the definition of "insurance" in the Mississippi law is such that there can be no such implication.

Sec. 5131, Code of 1930; Webster's Dictionary; Century Dictionary; Anderson's Dictionary of Law; Bouvier's Law Dictionary; Sec. 108, Chap. 20, Laws 1935 Extraordinary Session.

The fact that the definitions of "insurance" provided by the laws of Mississippi and Oregon are very similar gives particular weight to a decision of the Supreme Court of Oregon in 1934, holding that the Oregon definition precludes annuity contracts.

Hall v. Met. Life Ins. Co., 146 Ore. 32, 28 P.2d 875.

The fundamental differences between insurance policies and annuity contracts have been uniformly recognized by the courts.

N. Y. Life Ins. Co. v. Majet, 173 Miss. 870, 161 So. 156; Henry v. Henderson, 81 Miss. 743, 33 So. 960, 964, 63 L. R. A. 616; Wellman v. Bd. of Com'rs of Jewell County et al., 122 Kan. 229, 252 P. 193; In Re Thornton's Estate, 186 Minn. 351, 243 N.W. 389; People v. Knapp, 184 N.Y.Supp. 345, decision affirmed, 231 N.Y. 630, 132 N.E. 916; Commonwealth v. Met. Life Ins. Co., 254 Pa. 510, 98 A. 1072; Carroll v. Equitable Life Assur. Society of the U.S., 9 F.Supp. 223.

Counsel for appellant in their brief have repeatedly asserted that annuities can be granted alone by life insurance companies. There is no warrant in law for this statement. Life insurance companies are authorized expressly not only to write life insurance on the one hand, but on the other hand are also authorized to grant annuity contracts. But there is no statute prohibiting the granting of annuities by natural persons or by corporations other than life insurance companies.

2 R. C. L. 2, sec. 2; Rishel v. Pac. Mutual Life Ins. Co. (10 C. C. A.), 78 F.2d 881; Cannon v. Nicholas, Collector of Int. Rev. (10 C. C. A.), 80 F.2d 934; Daniel et al. v. Life Ins. Co. of Va., 102 S.W.2d 256; Old Colony Trust Co. v. Com'r. of Int. Rev., 37 B. T. A. 435; N. D. v. The Equitable Life Assur. Society, 68 N.D. 641, 282 N.W. 411; Old Colony Trust Co. v. Com'r. of Int. Rev. (1 C. C. A.), 102 F.2d 380.

Examination of other sections in which the term "annuity" is employed further strengthens this conclusion. Thus it seems clear that the word "premium" as used in the Mississippi tax statute is not intended and cannot be construed to apply to considerations for annuities.

Secs. 5144, 5159, 5170, 5171, 5172, 5175, 5219, 5274, Code of 1930.

The decisions of the courts of other states construing similar statutes, to-wit: Pennsylvania, New York, Texas, Wyoming, and North Dakota, and the opinions of the attorneys general interpreting Hawaii, Ohio, Oregon, and Rhode Island statutes similar to those of Mississippi, holding the considerations for annuities not taxable as premiums, should be considered as either controlling or of great weight upon the same question in Mississippi.

Commonwealth v. Met. Life Ins. Co., 254 Pa. 510, 98 A. 1072; People v. Knapp, 184 N.Y.Supp. 345, affirmed 231 N.Y. 630, 132 N.E. 916; Daniel et al. v. The Life Ins. Co. of Va., 102 S.W.2d 256; N. D. v. The Equitable Life Assur. Society, 68 N.D. 641, 282 N.W. 411; State of Wyoming, ex rel. Equitable Life Assur. Society, v. Hamm, Ins. Com'r., decided March, 21, 1939.

If there is any doubt as to whether or not the statutes of Mississippi impose such...