State v. Gehner

• Decision Date: 10 February 1926
• Docket Number: No. 26533.,26533.
• Parties: STATE ex rel. AMERICAN CENTRAL INS. CO. v. GEHNER et al.
• Court: Missouri Supreme Court

280 S.W. 416

STATE ex rel. AMERICAN CENTRAL INS. CO. v. GEHNER et al.

No. 26533.

Supreme Court of Missouri, in Banc.

February 10, 1926.

Certiorari proceeding by the American Central Insurance Company against Frederick Gehner, President of Board of Assessors, City of St. Louis, and others, to test the validity of an assessment. Record of assessment quashed.

Bryan, Williams & Cave, of St. Louis, for relator.

Oliver Senti and Charles J. Dolan, both of St. Louis, for respondents.

WALKER, J.

This is an original proceeding by certiorari to test the validity of an assessment made by the assessor and the board of equalization of the city of St. Louis upon the capital stock of the relator, a domestic fire insurance company, as of June 1, 1924, for the taxes of 1925.

In the fall of 1924 the assessor served a notice upon the relator in the statutory form for the making of a return of its state, city, and school taxes for 1925. The return made by the relator showed that it owned no real estate, and that the net value of all of its other assets in excess of the legally required reserve necessary to reinsure outstanding risks and to satisfy any unpaid policy claims was $127,304.63.

The assessor ignored this return and assessed the relator in the sum of $1,000,000, the par value of its capital stock. The relator appealed from this assessment to the board of equalization of the city of St. Louis. A hearing was had before the board and the showing was made that the net value of all of relator's assets in excess of its legally required reserve necessary to reinsure its outstanding risks and to satisfy any unpaid policy claims was as stated in its return of $127,304.63.

The board annulled and held for naught the relator's return, confirmed the action of the assessor, and ordered the assessment of $1,000,000, for the purpose of taxation, be made and extended against the relator. The assessor thereupon extended said assessment upon the tax books of said city. The relator was permitted to have entered upon the record of the board its protest against said action, and it thereupon filed with the comptroller of said city a petition, asking that this error in the assessment be corrected, which was refused.

Respondents thereupon filed as their return a stipulation which sets forth the tax return of the relator, shows the action of the assessor and the board of equalization, the appeal by the relator from the action of the assessor, and that the citation of the board is correctly set out in the relator's petition for certiorari, as well as the order of the board, and that the assessor of said city proceeded, in conformity with the order of the board, to assess and did assess the relator for taxes as of June 1, 1924, in the sum of $1,000,000, on the tax books in the office of the assessor, and that as such assessor he has extended that assessment as of said date against the relator in the tax books of the city. The stipulation further sets forth that the rate of taxation in the city of St. Louis for the year 1925 is $2.57 on each $100 assessed valuation. Thereafter relator filed its motion for a judgment on the pleadings.

The gross assets of the relator as shown by its return made to the assessor of June 1, 1924, amounted to $7,872,706.26. From this it deducted its reserve for its policy holders and unpaid losses, its uncollected premiums, stock in other corporations, money deposited outside of the state, special deposits, foreign securities, and United States government securities, all of which amounted to $7,745,401.63, leaving a balance of $127,304.63, which the relator contends was the amount of its taxable assets under the statute.

I. A tax upon whatever character of property it is sought to be levied is a pecuniary burden imposed by legislative authority upon the property of a citizen for the support of the government. The Legislature, subject to the constitutional limitation upon state power in this respect, alone has the authority to determine the time, amount, nature, and purpose of the taxes to be levied. The power of taxation, while a sovereign right of the state, may be exercised with respect to all persons, things, and business activities which exist under the protection, of its laws, provided clear and express statutes have been enacted for that purpose. American Mfg. Co. v. St. Louis, 192 S. W. 402, 270 Mo. 40; State ex rel. Karrenbrock v. Trust Co., 108 S. W. 97, 209 Mo. loc. cit. 490; Carondelet v. Picot, 38 Mo. 130. Such statutes operate in invitum and they should be strictly construed—this upon the presumption that the Legislature, in the comprehensive exercise of this exclusive authority and the searching nature of its extent as to the power of taxation, has not only freed the statute from any doubt or ambiguity, but has so framed it that everything necessary to the assessment, levy, and collection of the taxes on the property upon which the burden is sought to be imposed may be clearly indicated. Guided by these general rules of interpretation, a review of the statutes authorizing the taxation of domestic insurance companies should enable the question here seeking a solution to be determined.

II. These statutes are sections 12775 and 6386, R. S. 1919. The relevant portion of section 12775 is as follows:

"The property of manufacturing companies and other corporations named in article VII, chapter 90, insurance companies organized under the laws of this state and all other corporations, the taxation of which is not otherwise provided for by law, shall be assessed and taxed as such companies or corporations in their corporate names."

The remainder of this section has reference to the making of returns of stock in banks and the duties of county clerks in regard thereto.

Section 6386 is as follows:

"The property of all insurance companies organized under the laws of this state shall be subject to taxation for state, county, municipal and school purposes, as provided in the general revenue laws of this state in regard to taxation and assessment of insurance companies. Every such company or association shall make returns, subject to the provisions of said laws: First, of all the real estate held or controlled by it; second, of the net value of all its other assets or values in excess of the legally required reserve necessary to reinsure its outstanding risks and of any unpaid policy claims, which net values shall be assessed and taxed as the property of individuals: Provided, that the premium notes held by fire insurance companies organized on the mutual plan shall not be returned as assets; and provided further, however, that nothing herein shall operate to exempt from such taxation the paid-up capital stock of such companies."

No mention is made in section 12775 of the form or method of return for taxation required to be made by any of the corporations therein named, except banks, to which, as stated, the remainder of the section is devoted.

The returns of business and manufacturing companies is provided for in section 12774 and the returns required to be made by insurance companies of their assessable property is found in section 6386, supra. There is no lack of harmony between sections 12775 and 6386. The one simply provides that the property of an insurance company shall be assessed under its corporate name, while the other prescribes the form of the return and the manner of the assessment. The purpose of section 6386 was to provide for a detailed method by which the value of the taxable property (other than real estate) of insurance companies might be subjected to taxation. The determination of the value of the property for taxation was entirely aside from the question as to whether the company itself or its shareholders was to be assessed. This method of assessment of insurance companies does not ignore the words "which net values shall be assessed and taxed as the property of individuals" any more than the method of assessing shares of stock in banks (section 12775, by deducting deposits of the bank from its assets) ignores the words that¶

"Such shares, reserve funds, undivided profits, premiums or earnings and all other values so listed to the assessor shall be valued and assessed as other property at their true value in money. * * *"

The above-quoted provision in section 12775 has the same meaning in that section as the words "assessed and taxed as the property of individuals" does in section 6386. To assess property in the corporate name, as provided in section 12775, does not necessarily mean to assess it as the property of individuals, nor does it necessarily mean to assess it as all other property is assessed. The section (12775) does not relate to the method of assessment or valuation of the property, but merely to the name under which the assessment is to be made. Unless the provisions of section 6386 are invoked, the assessment and taxation of insurance companies would be incomplete, in that no other statute prescribes the manner in which they are to be assessed. This section supplements 12775, so far as concerns insurance companies, and provides for the method of their assessment and taxation. Section 12775 is a general statute relating not only to insurance companies, but to business and manufacturing companies and incorporated banks, private bankers, brokers, money brokers and exchange dealers, whereas section 6386 deals exclusively with the assessment of insurance companies in an express and definite way. The rule of law in the interpretation of statutes under the facts in this case is as follows:

"Where there is one statut...