Union Cent. Life Ins. Co. v. Mann, 7932.

• Decision Date: 31 December 1941
• Docket Number: No. 7932.,7932.
• Citation: 158 S.W.2d 477
• Parties: UNION CENT. LIFE INS. CO. v. MANN, Attorney General, et al.
• Court: Texas Supreme Court

Page 477

158 S.W.2d 477

UNION CENT. LIFE INS. CO. v. MANN, Attorney General, et al.

No. 7932.

Supreme Court of Texas.

December 31, 1941.

Original proceeding by the Union Central Life Insurance Company for a writ of mandamus to compel Gerald C. Mann, Attorney General of Texas, and another to approve a money claim of relator against the state. On a motion to file petition for mandamus.

Motion and writ granted.

Henry, Bickett & Bickett and Johnson & Rogers, all of San Antonio, for relator.

Thompson, Knight, Harris, Wright & Weisberg, of Dallas, and F. L. Kuykendall, of Austin, Amici Curiae.

Gerald C. Mann, Atty. Gen., and D. Burle Davis, Ocie Speer, R. W. Fairchild, and Geo. W. Barcus, Asst. Attys. Gen., for respondents.

CRITZ, Justice.

This is a mandamus proceeding, instituted directly in this Court by Union Central Life Insurance Company, of Cincinnati, Ohio, a life insurance corporation duly licensed to do business in this State, against Honorable Gerald C. Mann, Attorney General of Texas, and Honorable George H. Sheppard, State Comptroller of Public Accounts of Texas, to compel such officers to approve a certain money claim of the Insurance Company against the State of Texas. The facts of this case are undisputed, leaving only law questions to be decided.

The 47th Legislature of this State made an appropriation to pay this insurance company the sum of $13,899.64, as a "refund on occupation tax[es] erroneously collected." Acts 47th Leg.1941, p. 1367. The Bill making the above appropriation contains the following provision:

"Section 2. It is specifically provided herein that before any claim shall be paid from funds hereby appropriated the same shall have the approval of the State Comptroller, and the Attorney General. It is further provided that any claim involving the refund of a franchise tax shall also carry the approval of the Secretary of State in addition to the other officials herein named." Acts 47th Leg.1941, p. 1372.

As will later appear, the claim involved in this action is not for refund of a franchise tax. It follows that the Secretary of State is neither a necessary nor a proper party to this suit.

The agreed statement of facts in this case shows that the Insurance Company has paid to this State taxes that it did not owe, in the following sums for the years indicated: For the year 1933, the sum of $2,774; for the year 1934, the sum of $3,887.12; and for the year 1935, the sum of $7,243.27. It is agreed that the $2,774 payment made in 1933 was made voluntarily and without any character of duress. The payments made in 1934 and 1935 were paid under circumstances which constituted them payments under duress, as defined by this Court in Austin National Bank v. Sheppard, 123 Tex. 272, 71 S.W.2d 242, and National Biscuit Co. v. State, 134 Tex. 293, 135 S.W.2d 687. This explains why the Insurance Company is only here contending for its right to collect the sum of $11,130.39, instead of $13,899.64, the amount appropriated. This statement regarding duress is made subject to the matter which we will later state and discuss.

In further explanation of this case, it appears that during the years above mentioned this Insurance Company was a life insurance company, duly incorporated under the laws of the State of Ohio. It is now, and has been throughout the times involved in this action, transacting business in this State, under certificates of authority duly issued by the proper authorities of Texas. During the years 1933, 1934, and 1935 this Insurance Company paid to the State Treasurer of this State all the annual occupation taxes provided by Article 4769, R.C.S.1925, to be paid by it on its gross life insurance premium receipts. Also, for each of such years the Insurance Company paid to the State Treasurer taxes on the gross receipts on premiums collected by it on its annuity contracts. The taxes collected on annuity contract gross receipts amounted to the several sums already indicated. The taxes collected on gross premium receipts on annuity contracts were not owing by the Insurance Company. Daniel v. Life Ins. Co. of Virginia, Tex. Civ.App., 102 S.W.2d 256.

As already stated, the taxes paid by the Insurance Company on its annuity policy premiums for 1933 were paid voluntarily, and are not here involved. The taxes paid on such annuity premiums for the years 1934 and 1935 were paid under protest, and only after demand was made for the payment thereof by the State, and while the State officers were withholding the Insurance Company's certificate of authority to do business in this State, and were threatening such Company with the loss of such authority unless it paid such taxes. Taxes paid under such circumstances are taxes paid under duress. Austin National Bank v. Sheppard, supra; National Biscuit Co. v. State, supra.

It is settled as a law of this State that a person who pays money into the State treasury under duress has a legal and valid claim against the State for its refund. It is also settled that in such instances the Legislature has the lawful right to make refund appropriations. Austin National Bank v. Sheppard, supra; National Biscuit Co. v. State, supra. It follows that this appropriation is legal, as applied to so much thereof as is required to refund the taxes paid in 1934 and 1935, in the sum of $11,130.39, unless such appropriation is invalid for reasons we shall now discuss and decide.

At the time the taxes here involved were wrongfully demanded and paid, Chapter 214, Acts 43rd Legislature, 1933, page 637, was in force. This Act is generally termed a protest statute. We shall not burden this opinion with an extended statement of the provisions of this Act, but we will here mention such salient provisions as we deem necessary to make plain the questions of law we shall decide.

Section 1 of the above Act provides: "Section 1. Any person, firm or corporation who may be required to pay to the head of any department of the State Government any occupation, gross receipt, franchise, license or other privilege tax or fee, and who believes or contends that the same is unlawful and that such public official is not lawfully entitled to demand or collect the same shall, nevertheless, be required to pay such amount as such public official charged with the collection thereof may deem to be due the State, and shall be entitled to accompany such payment with a written protest, setting out fully and in detail each and every ground or reason why it is contended that such demand is unlawful or unauthorized."

Section 2 gives the party paying taxes or fees under protest ninety days from the date of payment within which to file suit for the recovery thereof.

Section 3, in effect, requires the State Treasurer to place the tax or fee money paid under protest in the State depositories in a suspense account. This section and other sections of the Act require that such suspense account money must remain in such account, and not be placed in the State treasury, until its ownership is adjudicated in the court action provided by the Act.

Considering the Act as a whole, it provides that when money is paid under protest and suit is filed to recover it within ninety days, such money must remain in the suspense account, and out of the State treasury, until the suit is finally decided. If the final judgment in such suit adjudges that the money was lawfully demanded and paid, the State Treasurer must deposit same in the State treasury, and allocate it to the funds to which it belongs. On the other hand, if money covered by this statute is paid under protest, and is placed in the suspense account provided by the statute, and the party paying fails to file suit for recovery within ninety days from the date of payment, as provided by the statute, it becomes the duty of the State Treasurer to deposit same in the State treasury, and allocate it to the several State funds to which it belongs. If suit is filed and the money is adjudged to have been wrongfully demanded and paid, it is returned to the party paying, and no legislative appropriation is required, because such money has never become the property of the State or gone into the State treasury. This statute applies only to instances in which any person, etc., may be required to pay to the head of any department of the State Government "any occupation, gross receipt, franchise, license or other privilege tax or fee."

In this case the Insurance Company paid the taxes for 1934 and 1935 here involved under protest, as required and provided by the above protest statute. Also, we gather from the agreed facts that the State Treasurer in all things obeyed the law by placing such money in the suspense account above mentioned, and allowed it to remain therein for the ninety days provided by law. The Insurance...