State v. Union Cent. Life Ins. Co.

• Decision Date: 23 January 1902
• Parties: STATE v. UNION CENTRAL LIFE INSURANCE COMPANY
• Court: Idaho Supreme Court

67 P. 647

8 Idaho 240

STATE v. UNION CENTRAL LIFE INSURANCE COMPANY

Supreme Court of Idaho

January 23, 1902

CONSTITUTIONAL LAW.-By constitution, section 2, article 7, which, after authorizing the legislature to provide revenue for state purposes by the levy of taxes, also provides that the legislature may impose a license tax upon persons and upon corporations doing business in the state, the license tax so imposed is not restricted to the single purpose of raising revenue for state purposes.

SAME-LICENSE TAXES-POWER TO LEVY.-By constitution, article 7, section 6 providing that the legislature shall not levy taxes upon the inhabitants or property in any county, city, town or municipal corporation for county, town or municipal purposes but it may, by law, vest in the corporate authorities thereof, respectively, power to assess and collect taxes for such purposes, applies only to taxation proper and not to license taxes.

LIFE INSURANCE COMPANIES-LICENSE.-A license authorizing a life insurance company to transact business in this state does not authorize it to engage in the business of loaning money.

(Syllabus by the court.)

APPEAL from the District Court, Bingham County.

Affirmed, with costs to respondent.

E. E Chalmers and F. S. Dietrich, for Appellant.

"A license tax required for the sale of goods is, in effect, a tax upon the goods themselves." (Welton v. Missouri, 91 U.S. 275, 23 L. ed. 347.) Requiring payment for "licenses is only a mode of imposing taxes on the licensed business, etc." (License Tax Cases, 5 Wall. 462, 18 L. ed. 497; Fatjo v. Pfister, 117 Cal. 83, 48 P. 1013; Board of Commrs. v. Dunn, 21 Colo. 185, 40 P. 357; State v. Doherty, 3 Idaho 384, 29 P. 855; 11 Dillon on Municipal Corporations, sec. 768; Desty on Taxation, 64, 303-305; 25 Am. & Eng. Ency. of Law, p. 479.) Section 2 of article 7 of the constitution of Idaho recognizes a "license tax." The situation is that the legislature has provided a tax, nine-tenths of which is for counties, cities, towns, and school districts. This, as appellant contends, is in direct violation of article 7, section 6, of the constitution, which is as follows: "Sec. 6. The legislature shall not impose taxes for the purposes of any county, city, town or other municipal corporation, but may by law invest the corporate authorities thereof, respectively, with the power to assess and collect taxes for all purposes of such corporation." (People v. Martin, 60 Cal. 153.)

Attorney General Frank Martin and N. H. Clark, for Respondent.

We presume that but one contention will be seriously presented in this case on appeal, and that is the unconstitutionality of the law. In support of this contention appellants cite largely from California. This argument we will in no way attempt to enter into, for the reason that none of the California cases are in point, or can be in this case, for the reason that the constitution of our state is entirely different from California on the point involved here. Section 2, article 7, of the constitution of the state of Idaho is as follows: "The legislature shall provide such revenue as may be needful, by levying a tax by valuation, so that every person or corporation shall pay a tax in proportion to the value of his or her or its property, except as in this article hereinafter otherwise provided. The legislature may also impose a license tax (both upon natural persons and upon corporations, other than municipal, doing business in this state); also a per capita tax. Provided, the legislature may exempt a limited amount of improvements upon land from taxation." Now, this section gives the legislature power to impose a license tax on corporations doing business in this state. California constitution does not contain this provision. California decisions are not in point on this subject. The Montana constitution is exactly like ours in every particular, and the Montana supreme court sustains this license tax. (State v. Camp Sing, 18 Mont. 128, 56 Am. St. Rep. 551, 44 P. 516.) This license is embraced within the police power of the state (18 Am. & Eng. Ency. of Law, 1st ed., 758, and cases there cited), and the provisions of the constitution regarding tax are not applicable.

STOCKSLAGER, J. Quarles, C. J., and Sullivan, J., concur.

OPINION

STOCKSLAGER, J.

This is an appeal from the judgment of the district court of the fifth judicial district, Bingham county. The complaint alleges that the defendant is a corporation organized and existing under and pursuant to the laws of the state of Ohio and since the first day of January, 1899, has been engaged in the business of loaning money at interest under and pursuant to its corporate powers; that defendant did not at any time designate any agent upon whom process could be served in Bingham county; that since January 1, 1899, defendant corporation has been, and is, engaged in the occupation of loaning money at interest at Idaho Falls, Bingham county, and has loaned large sums of money at interest within said county; that ever since January 1, 1899, said corporation has failed and refused to pay any license tax, or to procure any license to authorize it to engage in such business; that said corporation since said date has been, and now is, engaged in the occupation of loaning money at interest in the amount under $ 50,000 per quarter, and each and every quarter since said date has loaned money at interest in an amount less than $ 50,000 per quarter, and has at all times refused, and now refuses, to procure license as required by section 1644 of the Revised Statutes of Idaho. Then follows a prayer for judgment for $ 180, being thirty dollars per quarter from January 1, 1899, and twenty dollars damages, and costs of suit. To this complaint the defendant interposed the following demurrer: "1. Plaintiff has not the capacity to maintain this action, and has no interest, directly or indirectly, therein; 2. Said complaint does not state facts sufficient to constitute a cause of action in favor of the plaintiff or against this defendant." This demurrer was overruled by the court, and defendant answered, denying that it is now engaged, or ever has been engaged, in the business of loaning money at interest under and pursuant to its corporate powers, or otherwise, except as hereinafter admitted and alleged. Admits that it had no designated agent in Bingham county, but alleges that it did have an agent duly designated, residing in Boise, Ada county, Idaho at all the times mentioned in the complaint. Admits that since January 1, 1899, it has loaned money at interest as alleged, but only under the circumstances and the conditions and for the purposes hereinafter stated. The answer further alleges: That it is a corporation organized under and by virtue of the laws of Ohio for the primary purpose of doing a general life insurance business. That, as an incident of said general purpose, it is necessary, and it is required by its articles of incorporation and bylaws, that said company loan at interest moneys received by it as premiums upon its life insurance policies--said moneys being held in trust by it for the use and benefit of its policy holders; and pursuant to its said general purpose it has loaned said moneys at interest, and during the last two years, prior to the filing of this answer it has loaned divers sums of said money to various persons residing in Bingham county, Idaho. That it has loaned no other moneys, except such as has been received as premiums, and only for the purposes and under the circumstances as above stated. That before the defendant transacted any business in Idaho or negotiated any loans, it filed with the state treasurer of Idaho a statement, sworn to by its proper officer, showing the name, locality, etc., of the company; amount of capital stock; capital paid up; its assets and liabilities; net surplus over all liabilities; name of its agent for Idaho; a resident thereof upon whom service might be made; receipts and expenditures of said company during the preceding year--and in all respects complied with section 2753 of the Revised Statutes of Idaho and thereupon there duly issued to defendant a certificate of authority from the treasurer of the state as provided in said section. That in April in each year thereafter defendant has renewed said statement. That, in addition to filing said statements and procuring said certificate of authority as hereinbefore alleged, defendant has from time to time paid all fees required by chapter 7, title 4, of Civil Code, and has paid the license fee provided for in ...