State ex rel. Smrha v. General Am. Life Ins. Co.

• Decision Date: 03 April 1937
• Docket Number: 30078.
• Citation: 272 N.W. 555,132 Neb. 520
• Parties: STATE EX REL. SMRHA, DIRECTOR OF DEPARTMENT OF INSURANCE, v. GENERAL AMERICAN LIFE INS. CO.
• Court: Nebraska Supreme Court

272 N.W. 555

132 Neb. 520

STATE EX REL. SMRHA, DIRECTOR OF DEPARTMENT OF INSURANCE, v. GENERAL AMERICAN LIFE INS. CO.

No. 30078.

Supreme Court of Nebraska.

April 3, 1937

Syllabus by the Court.

1. Under the uniform declaratory judgments act (Comp.St.1929, §§ 20-21,140 to 20-21,155), power is given to this court to declare the rights, status, and legal relations of " any person" arising out of statute, etc. Held, that the state of Nebraska and executive departments thereof may seek relief thereunder.

2. When a concrete, contested issue is presented, clearly within this act, where there is a definite assertion of legal rights and a positive denial thereof, the required condition of being a justiciable issue is met.

3. Proceedings under the uniform declaratory judgments act are governed by applicable established rules of pleading.

4. A tax upon gross premiums of foreign insurance companies under section 77-902, Comp.St.1929, is not a tax upon property, but is an excise tax on the privilege of doing business in this state.

5. Plaintiff may not refuse on ground set out in petition to issue certificate of authority to defendant to do business in Nebraska.

Original proceeding by the State, on the relation of Charles Smrha Director of the Department of Insurance of the State of Nebraska, against the General American Life Insurance Company.

Judgment in accordance with opinion.

John S. Logan, of Lincoln, and Milton C. Murphy, of North Platte for plaintiff.

Loren H. Laughlin, of Lincoln, and Allen May and John R. Griffiths, both of St. Louis, Mo., for defendant.

Heard before GOSS, C. J., and ROSE, GOOD, EBERLY, DAY, PAINE, and CARTER, JJ.

PAINE Justice.

This is an original action, praying for a declaratory judgment and decree of this court adjudging $4,623.59, with interest, due as gross premium tax from defendant to plaintiff, and also finding that plaintiff is authorized to refuse to issue a certificate of authority if defendant fails to pay said sum.

This original proceeding in this court is brought under authority of section 2, art. 5 of the Constitution as amended, giving this court jurisdiction in all cases relating to revenue. The action is alleged to be within the provisions of the uniform declaratory judgments act, as found in sections 20-21,140 to 20-21,155, inclusive, Comp.St.1929.

The action was begun in this court on January 12, 1937, by the State of Nebraska, ex rel. Charles Smrha, director of the department of insurance, as plaintiff, filing an application for leave to file petition for declaratory judgment against General American Life Insurance Company, a corporation, defendant, and on February 19, 1937, said plaintiff filed an amended petition, and on February 23, 1937, the defendant filed a demurrer to such amended petition.

The amended petition alleges that the Missouri State Life Insurance Company, hereinafter referred to as the old company, was first licensed to do business in the state of Nebraska March 11, 1902, and thereafter, on or before March 1, in each year, made the annual statements required by law, and paid into the state treasury 2 per cent. of the gross amount of premiums received by it during the preceding calendar year for business done in Nebraska. The last date said gross premium tax was so paid by said old company was at the time of filing its annual report on March 1, 1933, which made annual statement for the full year 1932; that 2 per cent. of the gross premiums collected in Nebraska from January 1, 1933, to September 7, 1933, amounted to the sum of $4,623.59; that the superintendent of the insurance department of the state of Missouri, pursuant to an order of court, had taken over said old company and all of its assets, and on September 7, 1933, he had entered into a written contract and purchase agreement with the Great American Life Insurance Company, defendant herein, by which said defendant company acquired title to all of the assets of the old company, and said contract provided, as part of the consideration, that the defendant would assume and agree to pay all lawful taxes and debts due by the old company to the United States, the state of Missouri, and to all other states in which the old company did business; that the plaintiff herein had made repeated demands upon the defendant to pay said unpaid taxes upon the gross premiums collected, which taxes amounted to $4,623.-59 with interest at 7 per cent. from March 1, 1934, and defendant denies liability therefor, either on the part of the old company or on the part of the defendant company under the assumption agreements, and denies that the plaintiff has any lawful right to revoke the authority of the defendant to do business in Nebraska by reason of the nonpayment thereof. The plaintiff alleges that it is charged by law with the enforcement of section 77-902, Comp.St.1929, and that the defendant, in disregard of said section of the statute, has failed to pay the same, and plaintiff has notified defendant that unless said taxes are paid prior to March 1, 1937, its certificate of authority will be revoked and said defendant will be prohibited from conducting any business of any kind in the state of Nebraska.

The amended petition further alleges that the defendant denies the authority of the director of the department of insurance to revoke said certificate of authority and prohibit the defendant to continue in business in Nebraska, and that defendant would suffer severe loss and injury by any attempt to exercise such power and authority on the part of the director of the department of insurance. It is further alleged that there is an actual controversy between the parties, and that the two justiciable issues presented are: (1) Whether said gross premium taxes, in the amount of $4,623.59, with interest at 7 per cent. from March 1, 1934, are now due and owing from defendant to plaintiff; (2) whether by reason of the failure of the defendant to pay said amount of taxes the director of plaintiff has the power and authority to revoke the certificate of authority of defendant company to continue in business in Nebraska, and the plaintiff prays for a declaratory judgment of the supreme court determining the issues involved.

To this amended petition the defendant company files its demurrer, alleging that said amended petition does not state facts sufficient to constitute a cause of action for a declaratory judgment as prayed, and further alleging that the old company was not transacting business in Nebraska in 1934, and therefore was not required to make, and did not make an annual statement required under said section 77-902, and that the tax of 2 per cent. of the gross amount of the premiums received by the old company up to September 7, 1933, which is sought to be imposed upon the defendant company by reason of its assumption of all lawful taxes due the state of Nebraska from the old company is unconstitutional, unlawful, and void as an attempt to collect a privilege or license tax for a privilege or license not asked or granted, and is an attempt to deprive the defendant company of its property without due process of law, contrary to section 3, art. 1 of the Constitution, and contrary to section 1 of the Fourteenth Amendment to the Constitution of the United States of America.

It is further set out in said demurrer that domestic life insurance companies, incorporated under the laws of the state of Nebraska under the provisions of section 77-904, Comp.St.1929, were only required to pay four mills upon the gross premiums collected in the state during the preceding calendar year, less reinsurance paid on Nebraska business and dividends paid policyholders in Nebraska during that period, which taxes were in lieu of all other taxes upon intangible property, and the requirement under said section 77-902 that the defendant should pay 2 per cent. of the gross amount of premiums received by it during 1933 on business done in the state of Nebraska is unconstitutional, unlawful, and void, in that a tax is thereby imposed upon the defendant which tax is greater than that imposed upon similar domestic insurance corporations, and which tax is in lieu of other intangible taxes, and which therefore discriminates against this defendant in favor of similar domestic insurance corporations, contrary to section 1, art. 1, and section 1, art. 8 of the Constitution of Nebraska, and contrary to section 1, of the Fourteenth Amendment of the Constitution of the United States, and that therefore said section 77-902 is unconstitutional, unlawful and void.

We deemed it necessary to present this brief summary of the amended petition and the general demurrer thereto by defendant.

The plaintiff in this action is an executive department of the state of Nebraska, and section 20-21,141, Comp.St. 1929, provides that " any person" may have any legal question determined under the uniform declaratory judgments act. Does the plaintiff have a right to bring this action?

In Moeller, McPherrin & Judd v. Smith, 127 Neb. 424, 255 N.W. 551, it was held that " any taxpayer" who had an actual and justiciable controversy was entitled to have such controversy determined under this act, and the first proposition of law presented by the defendant is whether the legislature intended to include the state under the term " any person."

There are a multitude of cases on both sides of this proposition and many cases hold that " person" in its...