State v. Hyde

• Decision Date: 11 March 1922
• Docket Number: No. 22899.,22899.
• Parties: STATE ex rel. NATIONAL LIFE INS. CO. OF MONTPELIER, VT., v. HYDE, Superintendent of Insurance Department, et al.
• Court: Missouri Supreme Court

241 S.W. 396

292 Mo. 342

STATE ex rel. NATIONAL LIFE INS. CO. OF MONTPELIER, VT., v. HYDE, Superintendent of Insurance Department, et al.

No. 22899.

Supreme Court of Missouri, in Banc.

March 11, 1922.

Original mandamus proceeding by the State, on relation of the National Life Insurance Company of Montpelier, Vt., against Ben C. Hyde, Superintendent of the Insurance Department of the State of Missouri, and another. Alternative writ made peremptory.

Jones, Rocker, Sullivan & Angert, of St. Louis (George B. Young, of Montpelier, Vt., of counsel), for relator.

Jesse W. Barrett, Atty. Gen., and Merrill E. Otis, Asst. Atty. Gen., for respondents.

DAVID E. BLAIR, J.

This is an original proceeding in mandamus in which Alfred L. Harty, then superintendent of the insurance department of this state, was named as one of the respondents. Upon his retirement from that office his successor, Ben C. Hyde, was substituted as a party respondent. Realtor is seeking to compel the superintendent of the insurance department to certify to the state auditor that the tax due, owing, and payable by relator on premiums received by relator during the year 1920 in the state of Missouri and on business done in this state is $7,368.14, and to compel respondent L. D. Thompson as state treasurer to receive and accept from the relator the said sum in payment and discharge of said tax.

In response to our alternative writ of mandamus, respondents filed their amended return. Relator has filed motion for judgment on the averments of the alternative writ admitted to be true in said amended return of the respondents.

The undisputed facts in the case, as gleaned from the alternative writ and the return of respondents, are as follows: Relator, the National Life Insurance Company of Montpelier, Vt., is a corporation of that state, organized as a mutual life insurance company, having no capital stock or stockholders and engaged in the business of writing life insurance. Said relator has for a number of years been duly authorized and licensed to do a life insurance business in this state. Alfred L. Harty was, and respondent Ben C. Hyde now is, superintendent of the insurance department of the state of Missouri, and respondent L. D. Thompson is and was the state treasurer of this state. The policies of insurance issued by relator are what is known as participating, annual dividend plan of life insurance. The contractual, nominal premiums on such policies are based on an assumed or expected mortality, an estimated expense of operation, and an assumed or expected rate of interest earnings on the funds of relator. Savings out of the contractual premiums and from actual expenses incurred proving less than those anticipated and from interest earnings on the funds of relator, in excess of those anticipated in the calculation of the premium, become what is termed "surplus" and are apportioned to policy holders annually by means of what are known as "dividends."

The provisions of the policies issued by relator respecting the surplus are as set out in the alternative writ of mandamus, to wit: That such policies shall participate in the surplus of the company, and the company will annually determine and account for the portion of the divisible surplus accruing thereon, and that dividends when declared shall become absolutely the property of the insured and at his option may be, first, paid in cash, second, applied toward any premium or premiums, third, converted into additional participating insurance, or fourth, deposited with the company, subject to the payment annually of 3 per cent. interest thereon, together with the share of the surplus interest apportioned on account of said policy by the directors of the company. The contractual or stipulated premiums payable during the year ending December 31, 1920, on all policies issued by the relator in this state and in force during all or any part of that year, aggregated $417,325.54, and no more. During said year relator declared so-called dividends aggregating $48,918.06, which various Missouri policy holders elected to have applied toward the payment of premiums due on their respective policies during 1920 and which were so applied by relator during said year. The collections by relator on account of such premiums during the year 1920 of said Missouri policies were as follows: By cash or note, $368,407.48, by dividends applied as above stated, $48,918.06, making up the above aggregate sum of $417,325.54.

On and prior to March 1, 1921, as required by section 6388, R. S. 1919, relator made its return to the insurance department of this state of premiums on policies in this state during the year 1920, and such return showed the gross contractual premiums for said year to be said sum of $417,325.54, and relator claimed a reduction of said gross contractual premiums by dividends amounting to said sum of $48,918.06, and relator claimed that it had actually received as premiums during said year and on such insurance policies only the sum of $368,407.48.

Relator demanded that the superintendent of the insurance department certify to the state auditor and the state treasurer that relator owed as said tax the sum of $7,368.14, and said superintendent of insurance refused and still refuses so to certify the amount of said tax as said sum. Said superintendent of insurance did certify that relator owed a tax of $8,346.51, that sum being 2 per cent. upon said sum of $417,325.54, and this amount has been demanded of relator as the proper tax due from it under penalty of the suspension of the license of relator to do business in this state unless such payment be made.

Said respondent L. D. Thompson, as state treasurer, has refused to receive said sum of $7,368.14 in payment of said tax and, unless ordered by this court to refrain from so doing, will certify to the superintendent of the insurance department that relator is delinquent, and said insurance department will suspend relator from the further transaction of business in this state because of its failure to pay said tax.

Respondents make certain denials in their return to the alternative writ of mandamus, which amount only to denials of legal conclusions from the facts actually admitted. Such denials may be summarized as follows; That the Missouri policy holders of relator have elected to have said dividends applied in payment and reduction of their respective premiums, payable in and during 1920, in any other sense than that they elected to have their dividends applied in payment of their premiums as aforesaid; that relator received premiums on policies in force in this state aggregating $368,407.48; and that the amount of the tax due and payable under section 6387, R. S. 1919, is 2 per cent. upon the sum of $368,407.48, and no more. Relator also denies that it is the duty of the superintendent of the insurance department to certify to the state auditor and to the state treasurer that all the tax relator is required to pay is the said sum of $7,368.14.

The section of the statute under which provision is made for the payment of the above tax is section 6387, R. S. 1919, and reads as follows:

"Every insurance company or association, not organized under the laws of this state. shall, as hereinafter provided, annually pay tax upon the premiums received, whether in cash or in notes, in this state, or on account of business done in this state, for insurance of life, property or interest in this state at a rate of two per cent. per annum in lieu of all other taxes, except as in this article otherwise provided, which amount of taxes shall be assessed and collected as hereinafter provided: Provided, that fire insurance companies shall be credited with canceled or return premiums, actually paid during the year in this state, and with premiums on reinsurance with companies, authorized and licensed to transact business in Missouri, which reinsurance shall be reported by the company reinsuring such business; but no credit shall be allowed any fire insurance company for reinsurance in companies not licensed to transact business in Missouri,"

The facts are undisputed. The only question for determination is the proper construction to be given the words "premiums received," as found in said section 6387. The precise question has never been decided by this court. There are, however, several cases from other jurisdictions wherein similar statutes containing almost the exact words of our own have been construed.

In the case of State ex rel. v. Wilson, 102 Kan. 752, 172 Pac. 41, L. R. A. 1918D, 955, the Supreme Court of Kansas construed a very similar provision of the statute of that state and held that the words "premiums received" meant the net Premium paid the insurance company after crediting the so-called dividend upon the amount of the contractual premium. The Kansas statute, being section 5467 of the General Statutes of 1915, reads as follows:

"Every insurance, guaranty and accident company or association not organized under the laws of this state shall, as hereinafter provided, annually pay a state tax upon all premiums received, whether in cash or in notes, in this state, or on account of business none in this state, for insurance of life, property or interests in this state, or guaranty companies, at the rate of two per cent, per annum, which amount of tax shall be assessed by the superintendent of the insurance department, as hereinafter provided."

After citing a large number of decisions from the several state and federal courts and reciting that "with almost an entire unanimity the courts which have had occasion to consider this question have determined that the tax only reaches the sum retained and kept for the company's business and does not apply to such portion of the sum as is returned to the policy holder or abated to his account," the conclusion of the court was announced as follows:

"The court holds that such moneys not actually devoted as premiums...