State v. Equitable Life Assurance Society of United States

• Decision Date: 23 May 1938
• Docket Number: 6499
• Citation: 282 N.W. 411,68 N.D. 641
• Court: North Dakota Supreme Court

282 N.W. 411

68 N.D. 641

THE STATE OF NORTH DAKOTA and Oscar E. Erickson, Commissioner of Insurance of the State of North Dakota, Appellants-Respondents, v. EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a Corporation, Respondent-Appellant

No. 6499

Supreme Court of North Dakota

May 23, 1938

On Rehearing November 14, 1938, Reported at 68 N.D. 641 at 673.

Syllabus by the Court.

1. Under section 4924, 1925 Supplement to the 1913 Compiled Laws, providing: " Every insurance company doing business in this state, except stock and mutual companies organized under the laws of this state, shall at the time of making annual statement of business done as required by law pay to the commissioner of insurance two and one-half per cent of the gross amount of premiums received in this state during the preceding year. Upon payment of such sum the commissioner of insurance shall issue the annual certificates provided by law," a life insurance company is not taxable on considerations received for granting annuities.

2. In construing a statute of doubtful meaning the court will give weight to the long-continued practical construction placed thereon by the officers charged with the duty of executing and applying the statute.

Appeal from District Court, Burleigh County; Fred Jansonius, Judge.

Action by the State of North Dakota and Oscar E. Erickson Commissioner of Insurance of the State of North Dakota against the Equitable Life Assurance Society of the United States to recover certain tax charges claimed to be due from the defendant on money received as considerations or premiums for annuity contracts. From a judgment holding that the money received as considerations or premiums was taxable, but that limitations had run as to considerations or premiums received prior to the year 1930, the plaintiffs and the defendant appeal.

Judgment reversed, and case remanded, with directions that judgment be entered for the defendant.

Francis Murphy and Harold Hopton, for appellants-respondents.

The power of taxation rests upon necessity, and is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent state or government. 61 C.J. 76.

As the obligation to pay taxes does not rest upon any contract express or implied, or upon the consent of the taxpayer, a tax is not a debt in the ordinary sense of that word. 61 C.J. 70.

No statute of limitations runs against the right of the sovereign to collect taxes, unless expressly made applicable. 61 C.J. 1058; Ex parte State ex rel. Davis (Ala.) 90 So. 871; State v. N.Y. Life Ins. Co. (Ark.) 171 S.W. 871; Wastenay v. Schott (Ohio) 51 N.E. 34; Crane v. Reeder, 21 Mich. 24, 4 Am. Rep. 430; Hoover v. Engles, 63 Neb. 688, 88 N.W. 869; Eel River R. Co. v. State, 57 N.E. 388.

It is only private rights of municipal corporations to which the statute of limitations can be successfully pleaded. Pew v. Litchfield, 115 Ill.App. 13.

There is no power more distinctly sovereign and governmental than that of levying and enforcing payment of taxes. St. Paul v. St. Paul & N.W.R. Co. 45 Minn. 387, 48 N.W. 17.

The government is exempted from the operation of the statute of limitations, because it ought not to be injured by the neglect of its officers, and because of a presumption that it will not disturb the repose of society by unfounded or suspicious claims. Money v. Miller, 21 Miss. 531; State Bd. v. Lee, 84 Or. 431, 165 P. 372.

No statute of limitations runs against the state, and it is a matter of discretion with it to determine how far into the past it will reach to compel performance of this obligation. Florida C. & P.R. Co. v. Reynolds, 183 U.S. 471, 46 L. ed. 283.

The payment of taxes is an obvious and insistent duty. Bankers' Trust Co. v. Blodgett, 260 U.S. 647, 67 L. ed. 439.

A tax is not a debt in the ordinary sense in which that term is used, but is a charge or burden imposed upon property for the benefit of the public. Iowa Land Co. v. Douglas County, 8 S.D. 491, 67 N.W. 52.

An action to recover a tax is an action to enforce a public right and is not affected by the statute of limitations, although the latter is applicable to counties and municipalities. Brink v. Dann, 33 S.D. 81, 144 N.W. 734.

Action brought for the sole benefit of the state, though not brought in its name, is not barred by statute of limitations. Perley v. Heath, 201 Iowa 1163, 208 N.W. 721; People v. Hibernian Bkg. Asso. 245 Ill. 522, 92 N.E. 305; Holt v. State (Tex. Civ. App.) 176 S.W. 743; Whittemore v. People, 227 Ill. 543.

A statute imposing a tax upon a corporation will not be construed literally, if it is susceptible of any other reasonable construction. Cooley, Taxation, 4th ed. 1631, § 788.

Dullam & Young, for respondent-appellant.

The legislative body must express its intention to tax in distinct and unambiguous language. The language employed cannot be extended by implication, beyond its clear import, and well founded doubts engendered in attempting to apply the statute must be resolved in favor of the taxpayer. Ohio v. Harris, 229 F. 892; Eidman v. Martinex, 184 U.S. 578, 46 L. ed. 697; United States v. Wigglesworth, 2 Story, 368, Fed. Cas. No. 16,690; People ex rel. New York M. & N.T. Co. v. Gaus, 198 N.Y. 250, 255, 91 N.E. 634; Martin L. Hall Co. v. Com. 215 Mass. 326, 102 N.E. 364; Supervisors v. Tallant, 96 Va. 623, 32 S.E. 479; Converse v. N.P.R. Co. 2 F.2d 959.

The diverse forms of annuity contracts do not contain the elements of insurance contracts. The distinction between insurance and annuity contracts is generally recognized. Hall v. Metropolitan L. Ins. Co. 146 Or. 32, 28 P.2d 875; Wellman v. Board of Commissioners, 122 Kan. 229, 252 P. 193; Re Thornton's Estate, 186 Minn. 351, 243 N.W. 389; People v. Knapp, 184 N.Y.S. 345, 231 N.Y. 630, 132 N.E. 916.

An annuity contract is defined as a term applied to an obligation to pay the annuitant a certain sum of money at stated times during life or a specified number of years in consideration of a gross sum paid for such obligation. 3 C.J.S. 1374; University of Vermont v. Wilbur's Estate, 105 Vt. 147, 163 A. 572; Carroll v. Equitable Life Assur. Soc. 9 F.Supp. 223; Com. v. Metropoliatan L. Ins. Co. 254 Pa. 510, 98 A. 1072.

A difference is recognized between the ordinary insurance contract and the granting of an annuity. Com. v. Provident Bicycle Asso. 178 Pa. 636, 36 A. 197, 36 L.R.A. 589; Com. v. Equitable Beneficial Asso. 137 Pa. 412, 18 A. 1112.

An annuity in its strict sense is a yearly payment of a certain sum of money granted to another in fee or for life or for years and chargeable only on the person of the grantor. 2 Am. & Eng. Enc. Law & Proc. 459.

An annuity contract is not a contract of insurance and the price paid for the annuity is not a premium paid for an insurance policy. People ex rel. Metropolitan L. Ins. Co. v. Knapp, 193 A.D. 413, 184 N.Y.S. 345; 63 A.L.R. 719, annotation.

The value of practical construction of statutes by officers charged with the administration thereof has been recognized repeatedly by this court. Edgerly v. Currie, 3 N.D. 310, 55 N.W. 858; Barrett v. Stutsman County, 4 N.D. 175, 59 N.W. 964; Mahon v. Leach, 11 N.D. 164, 90 N.W. 799; State ex rel. Kinzer v. Hall, 50 N.D. 708, 197 N.W. 770.

Where the meaning of a statute is doubtful, the construction placed upon it by officers charged with the administration thereof is entitled to considerable weight. State ex rel. Gammons v. Sorlie, 56 N.D. 650, 219 N.W. 105; New York L. Ins. Co. v. Burbank, 209 Iowa 199, 216 N.W. 742; Bankers' Mut. Casualty Co. v. First Nat. Bank, 131 Iowa 456, 108 N.W. 1046; Huntsville Trust Co. v. Noel (Mo.) 12 S.W.2d 751.

The general rule that statutes of limitation do not run against the sovereign applies only in the absence of statute to the contrary. 37 C.J. 710; 17 R.C.L. 971.

The phrase "liability created by statute" means a liability which does not exist but for a statute. Frank E. Shepard Co. v. Zachary P. Taylor Pub. Co. 234 N.Y. 465, 138 N.E. 409; Hocking Valley R. Co. v. New York Coal Co. 217 F. 727.

An action to collect an ordinary tax is an action upon a liability created by statute. State v. Yellow Jacket Silver Min. Co. 14 N.W. 220; Redwood County v. Winona & St. P. Land Co. 40 Minn. 512, 41 N.W. 465; Morganton v. Avery, 179 N.C. 551, 103 S.E. 138.

Nuessle, J. Hutchinson and R. G. McFarland, Dist. JJ., concur. Christianson, Ch. J., and Morris and Burr, JJ., disqualified, did not participate. Honorable Wm. H. Hutchinson, Judge of the Third Judicial District, Honorable R. G. McFarland, Judge of the Fourth Judicial District, and Honorable A. J. Gronna, Judge of the Fifth Judicial District, sitting in their stead. McFarland, Dist. J. (concurring specially). Gronna, Dist. J. (dissenting).

OPINION

NUESSLE

This action was brought to recover certain tax charges claimed to be due from the defendant to the state of North Dakota on money received as considerations (also hereinafter designated as premiums) for annuity contracts in 1926 and subsequent years. The defendant, answering plaintiff's complaint, denied that the premiums in question were taxable under the statute, § 4924, Supplement to the 1913 Compiled Laws of North Dakota, on which the plaintiffs rely, and further as to the claimed tax charges on premiums received during the years prior to 1930, pleaded the statute of limitations.

The case was tried to the court without a jury. The court held that the premiums in question were taxable, but also held with respect to the tax on premiums paid prior to 1930, that the statute of limitations had run and that the plaintiffs were not entitled to recover the same. Judgment was ordered and entered accordingly. Whereupon the plaintiffs appealed from the portion of the...