State ex rel. Mitchell v. Hobbs

• Decision Date: 08 April 1944
• Docket Number: 36024.
• Citation: 147 P.2d 721,158 Kan. 320
• Parties: STATE ex rel. MITCHELL, Atty. Gen., v. HOBBS, Commissioner of Insurance, et al.
• Court: Kansas Supreme Court

147 P.2d 721

158 Kan. 320

STATE ex rel. MITCHELL, Atty. Gen., v. HOBBS, Commissioner of Insurance, et al.

No. 36024.

Supreme Court of Kansas

April 8, 1944

Syllabus by the Court.

"Waiver" means voluntary and intelligent renunciation or relinquishment of a known right.

The Supreme Court must assume that word "waiver" in statute authorizing provision in life insurance policy for waiver of premiums, if insured becomes totally and permanently disabled, was used in sense of voluntary and intelligent relinquishment of known right. Gen.St.1935 40-401.

The tax on premiums received by foreign life insurance companies does not attach to amount of premiums waived because of insureds' total disability, pursuant to provisions in policies issued by such a company, though shown as both income and disbursements in its reports on forms prepared by state insurance commissioner. Gen.St.1935, 40-225, 40-252 40-401.

1. A waiver is the voluntary and intelligent renunciation or relinquishment of a known right.

2. Under the provisions of G.S.1935, 40-401, a life insurance company may include in a policy of insurance a provision for waiver of premium in the event the insured becomes totally and permanently disabled.

3. The annual tax of two percent upon premiums received by a foreign insurance company under the provisions of G.S.1935, 40-252 B subd. 1, should be computed upon the total amount of premiums collected, retained and devoted to the business of the company, but should not include the amount of any premium the payment of which was waived under a policy providing therefor as authorized by G.S. 1935, 40-401.

Original proceedings in mandamus by the State, on the relation of A B. Mitchell, Attorney General, to compel the New York Life Insurance Company to show cause why the amount of its protested payment of a tax, assessed by Charles F. Hobbs, as state Commissioner of Insurance, should not be paid into the state's general fund, and to require Walter E. Wilson, as State Treasurer, to pay the amount into such fund.

Writ denied, and defendant treasurer directed to repay the amount of the tax to defendant insurance company.

Eldon Wallingford, Asst. Atty. Gen. (A. B. Mitchell, Atty. Gen., on the brief), for plaintiff.

George M. Brewster, of Topeka (J. L. Hunt, Lester M. Goodell, Margaret McGurnaghan, and John H. Hunt, all of Topeka, on the brief), for defendant New York Life Ins. Co.

THIELE Justice.

This is an original proceeding in mandamus brought to secure an authoritative interpretation of the statute relating to the taxation of insurance companies. A similar course of practice and procedure was tacitly approved in State ex rel. v. Wilson, 102 Kan. 752, 172 P. 41, L.R.A.1918D, 955.

Briefly stated, the motion for the writ sets forth the status of plaintiff and the various defendants and that defendant New York Life Insurance Company issued policies containing or not containing provisions for waiver of premium, copies of the two types of policies, each issued at age thirty-five in the amount of $10,000, being attached. Summarized, the provision for waiver reads: "Upon receipt by the Company *** of due proof *** that the Insured has become totally disabled *** the Company will waive the payment of each premium falling due after the commencement of such total disability ***" and "The sum payable in any settlement of this Policy shall not be reduced by premiums waived under the above provisions."

The extra premium required for the provision for waiver of premium under the illustrative policy is $13.50. Then follows allegations that a company makes its annual return to the state insurance department, and when a policyholder pays a premium including the extra amount for the waiver provision the extra amount is accounted for separately from the premium for the life insurance, and when a premium is waived by reason of the disability of the insured, the amount thereof is required by the form of annual statement to be included as a disbursement at one place and as an item of income at another place in the annual statement made by the company. Then follows an allegation that under G.S.1935, 40-252, the life insurance company shall pay a tax upon all premiums received at the rate of two percent per annum and that the commissioner of insurance required the company to make return of all premiums waived "under so-called waiver of premium disability riders or endorsements". The commissioner then asserts "that notwithstanding the designation of these benefits as 'waiver of premium for disability,' in truth and in fact the company continues to receive the premium on the life policy by the application of the benefit which is due the insured under the disability feature to the payment of premiums on the life policy." Omitting details, it is alleged that pursuant to demand the company returned information that it had waived payment of premiums totaling $26,634, and the commissioner of insurance assessed a tax of $532.68, which the company paid under...