Tobin v. Estes

• Decision Date: 23 February 1935
• Citation: 79 S.W.2d 550
• Parties: TOBIN, Commissioner of Insurance, v. ESTES.
• Court: Tennessee Supreme Court

Page 550

79 S.W.2d 550

TOBIN, Commissioner of Insurance, v. ESTES.

Supreme Court of Tennessee.

February 23, 1935.

Error to Circuit Court, Davidson County; A. B. Neil, Judge.

Action by R. L. Estes against J. S. Tobin, Commissioner of Insurance. From a judgment in favor of plaintiff, defendant appeals.

Reversed, and decree dismissing suit entered.

Roy H. Beeler, Atty. Gen., and W. H. Eagle, Asst. Atty. Gen., for plaintiff in error.

Higgins & Moore, of Nashville, for defendant in error.

CHAMBLISS, Justice.

Estes is an agent whose occupation is soliciting for a foreign fraternal benefit association, Woodmen of the World, domesticated and licensed to do the business of insuring its members in Tennessee. Required to pay the privilege tax provided for in the second paragraph of item 100, subdivision (b), section 2, article 3, p. 141 of the Revenue Act of 1931, he sued to recover the tax as unlawfully exacted of him. He was given judgment by the circuit court, and Tobin, commissioner of insurance, appeals.

The pertinent portion of the subdivision in question, found in section 2, art. 3, chapter 13, Public Acts of the Second Extra Session of 1931, reads as follows:

"Each insurance agent, solicitor, member of a firm except those representing domestic, State and county mutual fire insurance companies, shall, for the purpose of soliciting or writing insurance in this State, pay a privilege tax direct to the Commissioner of Insurance and Banking in lieu of all other taxes before a license to transact such business shall be issued as follows:

"In counties having a population of 50,000 or more, per annum....$20.00."

It is insisted for Estes that "each insurance agent, solicitor," etc., does not embrace him, because (1) his association is not an insurance company, and he is not, therefore, an insurance agent; (2) that, since every fraternal benefit society is declared by the statute (section 6424 of the Code) to be a charitable and benevolent institution, with its funds exempt from all taxes, except on real estate and office equipment, this privilege tax may not be exacted of agents and solicitors working for such institutions; and (3) that the legislative history of this privilege tax law amounts to a legislative construction that this tax should not be taken to include agents of fraternal organizations; (4) that exception of agents for such associations from the tax under this provision finds support in the executive construction heretofore given by the enforcement officials of the State; and, finally (5) that the provisions of the subsection before us contained in the preceding paragraph indicate a purpose to except such associations and their agents.

1. We are unable to agree with the learned argument of counsel for Estes that fraternal benefit societies, treated of in article 9 of the Code, under this heading, are not, in the generally accepted sense, within the descriptive term "Insurance Companies." Title 14 Art. 9 (section 6357 et seq.) treating of insuring fraternal societies, is a subdivision of chapter 6 of the Code, headed, "Insurance and Insurance Companies." This chapter deals with insurance, of all forms and types, the insurers and their agents. The benefits provided for under the certificates issued by fraternal associations are frequently referred to in this chapter as insurance; for example, see regulatory article 13 (section 6443 et seq.), violations of which are made a misdemeanor. And note this language of Code, § 6138: "Insurance Agents Licensed without Recommendation of Other Agents. — The commissioner of insurance and banking is given the power, upon application to him by any insurance company, association, fraternal benefit society, or other insurance organization, or agent or general agent, to license any person to transact the business of an insurance agent or solicitor," etc. Use of the language, "fraternal benefit society, or other insurance organization," clearly classes fraternals as one form of insurance organization. The power conferred "to license any person to transact the business of an insurance agent or solicitor" undoubtedly embraces agents and solicitors of fraternal organizations.

Section 6140, requiring "every insurance company, including fraternal benefit associations," to obtain a "certificate of authority for every agent or solicitor writing or soliciting insurance for it," exressly denominates one soliciting insurance for a fraternal organization as an insurance agent or solicitor. Illustrations might be multiplied. A fraternal benefit society is defined by the Code (section 6357) as a "voluntary association * * * which shall make provision for the payment of benefits," etc., and the learned annotator (Williams) says, under this section, that these "societies are insurance companies and their contracts are properly termed `policies,'" citing cases; and in Littleton v. Sain, 126 Tenn. 461, 150 S. W. 423, 424, 41 L. R. A. (N. S.) 1118, Mr. Justice Buchanan, treating of a fraternal society, speaks of its contract as one of "insurance," and says "that his membership in this order amounted to an insurance upon his life in the event of death by accident is quite clear." Argument is presented to defeat the effect of this opinion and of those cited in the annotation above mentioned, but it is with nomenclature that we are now dealing; the issue is one of phraseology, rather than legal principles decided. The description of fraternal societies in these opinions as "insurance" organizations or associations, therefore, has a...