The State ex rel. American Central Insurance Company v. Gehner

• Citation: 280 S.W. 416,315 Mo. 1126
• Decision Date: 10 February 1926
• Docket Number: 26533
• Parties: The State ex rel. American Central Insurance Company v. Frederick Gehner, President of Board of Assessors of City of St. Louis, et al
• Court: United States State Supreme Court of Missouri

280 S.W. 416

315 Mo. 1126

The State ex rel. American Central Insurance Company v. Frederick Gehner, President of Board of Assessors of City of St. Louis, et al

No. 26533

Supreme Court of Missouri

February 10, 1926

Record quashed.

Bryan Williams & Cave for relator.

(1) Since 1911 insurance companies organized under the laws of this State are taxed in their corporate names. Laws 1911, p 417; R. S. 1919, sec. 12775. (2) Under the provisions of Sec 6386, R. S. 1919, every domestic insurance company must return and be assessed, first, on the real estate held or controlled by it; second on 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 value shall be assessed and taxed as the property of individuals. State ex rel. Am. Auto. Ins Co. v. Schramm, 271 Mo. 223. (3) Sec. 6386, R. S. 1919, prescribes the system of taxation of net assets, and requires such net assets to be assessed and taxed as the property of individuals. State ex rel. v. Schramm, 271 Mo. 223. (4) There is no law which subpects the capital stock of domestic insurance companies to taxation and, "in order that property may be taxed it must, by law, be subjected to taxation." State ex rel. v. Schramm, 271 Mo. 223; Valle v. Zeigler, 84 Mo. 214; Kansas City v. Building & Loan Assn., 145 Mo. 50; Leavell v. Blades, 237 Mo. 700; State ex rel. v. Lesser, 237 Mo. 318; State ex rel. v. Schyrack, 179 Mo. 424; Cooley on Taxation (4 Ed.) sec. 939; City of Waco v. Ins. Co., 248 S.W. 332. (5) An omission to tax may not be supplied by the courts. Kansas City v. Building & Loan Assn., 145 Mo. 50.

Oliver Senti and Charles J. Dolan for respondents.

(1) Relator's contention is based solely on the provisions of Sec. 6386, R. S. 1919, the proviso to which he seeks to have eliminated. The elimination of a proviso to a statute cannot be accomplished by judicial action, but by legislative action only. If effect cannot be given to Section 6386 as a whole it must be disregarded. (2) The alternative to the assessment laid on relator on the basis of its paidup capital stock is an assessment on all of relator's property. Sec. 12775, R. S. 1919. (3) Taxation of net values such as relator contends for is prohibited by the Constitution of Missouri if the tax on net values is the sole tax imposed. If the tax on net values is merely a supplementary tax and the property upon which it is imposed is already fully taxed by a tax on capital stock or shares of stock, or otherwise, the tax on net values is permissible, otherwise not. (Constitution of Missouri, art. 10, sec. 4; Judson on Taxation in Missouri, 217. (4) The Constitution of Missouri does not confer upon relator any special privileges in the matter of taxation, and the Legislature is without authority to do so. Relator's property is subject to assessment for taxation like the property of any other corporation or natural person. Its assessment is governed by Secs. 12752, 12756, 12766, 12775, R. S. 1919. (5) Section 6386, as construed by relator, is unconstitutional and void for the reason that it violates Sections 3, 4, 6 and 7, Article 10, Constitution of Missouri. State ex rel. v. Shipman, 290 Mo. 65; Standard Ins. Co. v. Atlanta, 151 Ga. 153; Railway v. Worthen, 46 Ark. 312, 120 U.S. 97; In re Assessment & Collection of Taxes, 4 S. Dak. 6; Life Assn. of America v. Board of Assessors, 49 Mo. 512; St. Louis Ins. Co. v. Board of Assessors, 56 Mo. 503; Judson on Taxation in Missouri, p. 217. (6) The assessment in this case is not an assessment of relator's capital stock, but of its solvent notes secured by mortgage or deed of trust, and solvent bonds, whether state, county, town, city, township, incorporated or unincorporated companies. (7) To permit relator to withhold its taxable bonds and its cash on hand and in banks from assessment for taxation would be to amend the Constitution by nullifying the general property tax. State v. Ry. Co., 77 Mo. 202; Judson on Taxation, p. 52.

OPINION

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 hundred dollars' 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 policyholders 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. [Amer. Mfg. Co. v. St. Louis, 270 Mo. 40; State ex rel. Karrenbrock v. Trust Co., 209 Mo. l. c. 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, Revised Statutes 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 provision of said laws: First, of all the real estate held or...