State v. Southern Farm Bureau Life Ins. Co.
| Decision Date | 07 October 1975 |
| Docket Number | No. 20101,20101 |
| Citation | 265 S.C. 402,219 S.E.2d 80 |
| Court | South Carolina Supreme Court |
| Parties | STATE of South Carolina, Plaintiff-Appellant-Respondent, v. SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, Defendant-Respondent-Appellant(two cases). |
Atty. Gen. Daniel R. McLeod, H. Kelley Jones and G. Ron Wenzell, Columbia, for plaintiff-appellant-respondent.
Roberts, Jennings & Thomas, Columbia, for defendants-respondents-appellants.
These actions were brought February 20, 1973, for the collection of retaliatory fees alleged to be due the State of South Carolina under § 37--132 of the Code of Laws of South Carolina for 1962, as amended, often referred to as the Retaliatory Statute. The defendants are two Mississippi insurance corporations, Southern Farm Bureau Life Insurance Company (Life), and Southern Farm Bureau Casualty Insurance Company (Casualty), doing business in South Carolina. By consent, the two cases were tried together and are here on appeal together, raising the same issues for determination by this Court.
Sixteen causes of action have been asserted against Life and fourteen causes of action against Casualty. For the purpose of this appeal the actions may be summarized as claims for additional license fees due by reason of the defendants' improperly taking investment credits pursuant to Code §§ 37--123 and 37--125, interest and penalties, plus fees due the State because the defendants failed to include in their calculation of the retaliatory fee schedule a sum equal to the amount of income tax a South Carolina insurer would have paid to the State of Mississippi. The claims involve the years 1963 to 1971, inclusive.
The lower court ordered that the defendants pay additional amounts for a three-year period only, ruling that our three-year statute of limitations, set out in § 65--5.1, applies. 1 The plaintiff and both defendants have appealed. It is the contention of the defendants that the lower court erred in ordering additional amounts paid; it is the position of the plaintiff that the lower court erred in applying the three-year statute of limitations instead of a ten-year statute of limitations.
South Carolina has two investment credit statutes which provide for the reduction of the 2% Graded license fee applied to foreign insurance corporations; § 37--123 applies to foreign life insurance companies, and § 37-- 125 applies to foreign fire, accident and health, casualty, surety, or other companies.
In 1965 and again in 1966, the Attorney General of South Carolina filed opinions in which he interpreted § 37--132 as not permitting retaliation against insurance companies whose states did not have investment credit statutes similar to those in South Carolina. He reasoned that foreign insurance companies, by investing in South Carolina bonds, etc., were paying a tax in an alternate form, and therefore retaliation should not be allowed. In 1969, the Attorney General overruled his former opinions and took the position that retaliation was appropriate.
In 1972, the Insurance Department of South Carolina, in Lindsay v. Southern Farm Bureau Cas. Ins. Co., 258 S.C. 272, 188 S.E.2d 374 (1972), sought and obtained a declaratory judgment to determine the interaction between § 37--132 (the Retaliatory Statute) and §§ 37--123 and 37--125 (the Investment Credit Statutes). That action was initiated because Mississippi (which had a 3% License fee) did not allow South Carolina insurers, licensed in Mississippi, to receive reductions for investments in that state. This court held that the Retaliatory Statute applied, thereby denying Mississippi insurance companies the right to receive reductions because of their investments in South Carolina. It was held that the purpose of the Retaliatory Statute is to protect South Carolina insurance companies doing business in other states. By so holding, we subjected foreign insurance companies to the same burdens experienced by South Carolina insurance companies doing business in the foreign state. Pursuant to Lindsay v. Southern Farm, supra, the South Carolina Insurance Department made demand upon Life and Casualty for the monies now sought in these actions. It is the contention of the plaintiff herein that monies are due as a result of Mississippi's failure to allow investment credits to, and by reason of Mississippi's assessment of income taxes against, South Carolina Insurance Companies.
At the time of this Court's ruling in Lindsay v. Southern, supra, § 37--132 read as follows:
'Increase of fees, etc., to those charged by other states.--Whenever the laws of any other state of the United States shall require of insurance companies chartered by this State and having agencies in such other state, or of the agents thereof, any deposit of securities in such state for the protection of policyholders or otherwise or any payment of penalties, certificates of authority, license fees or otherwise, greater than the amount required for such purposes from similar companies of other states by the then existing laws of this State, all such similar companies of such states establishing or having theretofore established an agency or agencies in this State shall make the same deposit for a like purpose with the Commissioner and pay to the Commissioner, for penalties, certificates of authority, license fees, filing fees or any other fees, an amount equal to the amount of such charges imposed by the laws of such state upon companies of this State and the agencies thereof.'
After our decision in Lindsay v. Southern, supra, and General Assembly, on July 14, 1972, amended this section by adding the following:
'Provided, However, that all license fees and charges made pursuant to this Section shall be reduced to the extent of investment credits granted by Sections 37--123 and 37--125.'
In their answers, filed in November 1973, Life and Casualty took the position that the amendment of July 14, 1972, was retroactive in its effect. Thereafter, on July 9, 1974, in the case of Lindsay v. National Old Line Insurance Company, 262 S.C. 621, 207 S.E.2d 75 (1974), this Court held that the amendment was not retroactive. Life and Casualty now concede that our ruling was dispositive of the issue.
Life and Casualty now take the position that Lindsay v. Southern Farm, supra, being a declaratory judgment only, is not retroactive in its effect. They ask the Court to hold that our opinion is to be applied prospectively only. We think the position is untenable. Our ruling was not the making of new law for prospective application; it was the construction of a statute which had been the law since its enactment in 1934 and was the law until the July 14, 1972 amendment. Accordingly, we find the exception without merit and hold that our opinion in Lindsay v. Southern Farm, supra, was retroactive in its nature and effect.
Life and Casualty next contend that the State should be estopped from bringing this action because of the 1965 and 1966 opinions of the Attorney General. This contention cannot be sustained because, first, the defendants have not proved the essential elements of estoppel, see Frady v. Smith, 247 S.C. 353, 147 S.E.2d 412 (1966). Secondly, and more importantly, the position cannot be sustained because the doctrine of estoppel should not be applied to deprive the government of the due exercise of its police power, or to affect revenues. Heyward v. South Carolina Tax Commission, 240 S.C. 347, 126 S.E.2d 15 (1962); Powell v. Board of Commissioners of Police & Annuity Fund of State, 210 S.C. 136, 41 S.E.2d 780, 1 A.L.R. (2d) 330 (1947).
Life and Casualty next argue that the lower court erred in holding that the Retaliatory Statute, § 37--132, permits the State to take into consideration, in assessing fees, the fact that Mississippi imposes an income tax upon South Carolina companies doing business in the State of Mississippi, whereas South Carolina does not impose an income tax upon Mississippi companies doing business in South Carolina.
They first submit that there was no finding of fact that Mississippi did require payment of income taxes by South Carolina companies, and no evidence to support the contention. We think that it is implicit in the judge's order that he considered both the computations of the State and the contentions of Life and Casualty that the computations were incorrect, and found the State's computations credible. We cannot say that his findings were unsupported by the record.
They next argue that the income tax imposed by the State of Mississippi upon South Carolina companies doing business in Mississippi is ot, as a matter of law, an item for consideration under our Retaliatory Statute. A reading of the statute, quoted hereinabove, reflects that the words 'taxes' and 'income taxes' are not used. The statute does refer to 'penalties, certificates of authority, license fees or otherwise.' If requires payment to the South Carolina Insurance Commissioner 'for penalties, certificates of authority, license fees, filing fees or any other fees, an amount equal to the amount of such charges imposed by the laws of such state.' In Lindsay v. Southern, supra, this Court declared that it was the legislative intent of the Retaliatory Statute to equalize the burdens. The statute should not be construed so as to defeat that purpose. Life and Casualty argue with some persuasiveness that the rule of ejusdem generis should apply, and argue that there is sufficient ambiguity to require a holding that the statute does not apply to income taxes. We think, however, that the intent of the legislature is clear to the effect that the burdens imposed upon Mississippi companies doing business in South Carolina should be equalized with the burdens of South Carolina companies doing business in Mississippi. The interpretation of the lower court, with which we agree, does just that.
Having disposed of the appeal of Life and Casualty, we now proceed to consider the appeal...
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