State v. Continental Assur. Co.

• Decision Date: 02 March 1940
• Parties: STATE v. CONTINENTAL ASSUR. CO.
• Court: Tennessee Supreme Court

137 S.W.2d 277

176 Tenn. 1

STATE v. CONTINENTAL ASSUR. CO.

Supreme Court of Tennessee.

March 02, 1940

Rehearing Denied April 6, 1940.

See 138 S.W.2d 447.

Appeal from Chancery Court, Davidson County; James B. Newman Chancellor.

Suit by the State of Tennessee against the Continental Assurance Company to enforce payment of tax on premiums for policies issued by defendant company while company was in the State but upon which premiums were paid after company's withdrawal. From decree dismissing defendant's plea in abatement, the defendant appeals.

Affirmed.

Cornelius McKinney & Gilbert and J. H. Ballew, all of Nashville, for complainant.

Trabue Hume, Davis & Gale, of Nashville, for defendant.

COOK Justice.

Statutes re-enacted by Code sections 6118, 6120, and 6122, in force when defendant qualified to do an insurance business in the state, provide:

Section 6118--

"Each foreign insurance company doing business under the provisions of this article, shall, in January and July of each year, report, under oath of the president and secretary, or other chief officer of such company, to the commissioner, the total amount of gross premiums received in this state within the six months next preceding the first of January and July, or since the last return of such premiums were made by such company; and shall, at the same time, pay into the treasury of the state the sum of two dollars and fifty cents upon each one hundred dollars of said gross premiums so ascertained, which shall be in lieu of all other taxes. ***"

Section 6120--

"All foreign insurance companies, which shall take out or renew a license to transact business in this state, shall, upon the expiration of their licenses for any cause, or upon their ceasing to transact new business in this state, continue to pay the same tax upon their business remaining in force in this state, and in like manner, and at like times, as other insurance companies of the same class, which are duly licensed, are required to pay by any current law in force at such time."

Section 6122--

"A compliance with the provisions of the last two sections shall be a condition upon which any foreign insurance company shall be authorized to obtain or renew a license, and the acceptance of these terms or conditions shall be conclusively presumed from the taking out or the renewing of such license."

The defendant company applied for and was granted a license to do a life insurance business in the state in 1926, and withdrew in 1931, leaving unmatured policies on which premiums were sent by the persons insured to the company's office in Chicago, Illinois. The bill was filed to enforce payment to the tax on premiums for policies issued while the company was in the state, but upon which premiums were paid after its withdrawal.

The defendant insists that after it withdrew from the state it was not subject to payment of the tax on policies it had issued while in the state, and that the imposition of the privilege tax on premium receipts after withdrawal from the state is a tax on business done outside the state and is violative of the due process clause of the Fourteenth Amendment to the Constitution of the United States, U.S.C.A. This insistence was presented first by a plea in abatement which challenged the right of the state to obtain jurisdiction by service of process on the insurance commissioner. That defense arises from defendant's insistence that the claim for taxes by the state is not valid and therefore not enforceable by exercise of the jurisdiction acquired under the power of attorney executed by defendant authorizing the insurance...