United Pacific Insurance Co. v. Bakes

• Decision Date: 31 March 1937
• Docket Number: 6428
• Citation: 57 Idaho 537,67 P.2d 1024
• Parties: UNITED PACIFIC INSURANCE COMPANY, a Corporation, Respondent, v. W. H. BAKES, as Director of the Bureau of Insurance of the State of Idaho
• Court: Idaho Supreme Court

67 P.2d 1024

57 Idaho 537

UNITED PACIFIC INSURANCE COMPANY, a Corporation, Respondent, v. W. H. BAKES, as Director of the Bureau of Insurance of the State of Idaho

No. 6428

Supreme Court of Idaho

March 31, 1937

STATUTES CONSTRUCTION OF - TAXATION - INSURANCE COMPANIES - CLASSIFICATION.

1. Reparagraphing, in compilation of statutes, of sections of statute providing for tax on gross premiums collected by insurance companies, held not to affect construction placed thereon.

2. "Gross premiums received and collected" by designated classes of insurance companies within statute imposing tax thereon held to include gross premiums received without deduction for refunds or repayments because of cancelation, in view of express authorization of such deductions by other classes of insurance companies, other statutory provisions, construction of statute by Director of Bureau of Insurance, and subsequent amendment of statute authorizing such deductions, as against contention that such construction of statute would render statute unconstitutional.

3. In construction of statute imposing tax on gross premiums received and collected by designated classes of insurance companies, statute providing that resident agent should receive full commission when premium is paid, to end that state may receive tax required by law to be paid on premiums collected for insurance on all persons and property, would be considered as demonstrating legislative intent.

4. Construction placed on statute imposing tax on gross premiums collected by certain classes of insurance companies by Director of Bureau of Insurance charged with duty of enforcing statutes was entitled to consideration and carried weight in construction of statute, since it was practical and administrative construction of act and lead to conclusion that such construction had received tacit approval of legislature after extending over period of time.

5. Amendment of statute carries presumption that legislature intended statute as amended to have different meaning than theretofore accorded it.

6. Legislature has right and power to classify for taxation purposes and in so classifying to make exceptions, and such power is limited only by rule that classification must be reasonable and founded on differences between parties.

7. Tax on gross premiums received and collected by designated classes of insurance companies held "excise lieu property tax" and not "license tax," the words "gross premiums received and collected" being merely a measuring stick for determining amount and how property of chargeable insurance companies shall be determined and fixed for assessment, since license fees are separately provided for by statute.

APPEAL from the District Court of the Third Judicial District for Ada County. Hon. Chas. F. Koelsch, Judge.

Appeal from declaratory judgment. Judgment for plaintiff. Reversed.

Judgment reversed. Costs awarded to appellant.

J. W Taylor, Attorney General, Bert H. Miller, former Attorney General, and Ariel L. Crowley, Assistant Attorney General for Appellant.

The true legislative intent is that the whole amount received is taxable without deduction of premiums returned on cancelation of policies. It has so been held in other jurisdictions. (Massachusetts Bond & Ins. Co. v. Chorn, 274 Mo. 15, 201 S.W. 1122; Fire Assn. of Philadelphia v. Love, 101 Tex. 376, 108 S.W. 158, 810; State v. Hyde, 304 Mo. 447, 264 S.W. 381; Jefferson Stand. Life Ins. Co. v. King, 165 S.C. 219, 163 S.E. 653.)

In case of doubt as to the meaning of statutes, contemporaneous construction by the authorities administering them constitutes a persuasive guide. (25 Ruling Case Law, 1047; State v. Omaechevviaria, 27 Idaho 797, 152 P. 280; Bashore v. Adolf, 41 Idaho 84, 238 P. 534, 536, 41 A. L. R. 932.)

In construction of revenue measures the controlling element is the literal meaning of the words used. In this relation the rule varies somewhat from the more liberal rules sometimes applied to other classes of statute. (Heiner v. Beatty, 17 F.2d 743; United States v. Merriam, 263 U.S. 179, 44 S.Ct. 69, 68 L.Ed. 240, 29 A. L. R. 1547; 59 C. J. 1134 and cases in note 95.)

J. F. Martin for Respondent.

The statute section 40-804, Idaho Code Annotated, as amended by chapter 168, 1933 Session Laws, should be construed in the light of the intention of its enactment, and the legislature intended to levy the tax only upon the gross earned premiums. (In re Continental Casualty Co., 189 Iowa 933, 179 N.W. 185; German Alliance Ins. Co. v. Van Cleave, 191 Ill. 410, 61 N.E. 94; People v. Miller, 177 N.Y. 515, 70 N.E. 10; State v. Continental Ins. Co., 67 Ind.App. 536, 116 N.E. 929.)

The construction as placed upon a statute by one of the executive department heads has never been given persuasive influence by a court, except where valuable property rights have been gained by reason of such construction. (25 R. C. L. 1043 et seq.; 59 C. J. 1029 and 1032; Douglas v. Edwards, 298 F. 229, at p. 245.)

GIVENS, J. Morgan, C. J., Holden and Ailshie, JJ., concur.

OPINION

GIVENS, J.

--Respondent contends that in the portion of section 40-804, I. C. A., as amended by chapter 168, 1933 Session Laws, p. 302, ^[1] preceding the proviso therein, "gross premiums received" and "collected" means gross premiums less refunds or repayments because of cancellations, alleging in its complaint that for 1935 it received total premiums of $ 101,254.64, and that:

". . . . plaintiff (respondent) deducted and took credit for the further sum (further that is than other deductions not involved or pertinent to the issues herein) of $ 28,019.50 which represented business placed upon its books during the year 1935, and done in the State of Idaho, but upon a part of which no premium was ever paid by the various assureds nor any money collected; and this plaintiff thereupon made a flat cancellation of said policies. That the remaining portion of the sum of $ 28,019.50 represents insurance premiums which were returned to various assureds during the year 1935 by this plaintiff where the policies of insurance were either cancelled by the plaintiff herein or by the various assureds at their request, but in either event, the returned unearned premiums were actually due to the various assureds and this plaintiff had no right either in law or in equity to retain or hold the same; that every policy of insurance written by this plaintiff herein constitutes a contract between the plaintiff and the assured, and that each policy so written by this plaintiff during the year 1935 contains among other things a provision to the effect that upon the cancellation of a policy, the plaintiff herein would return to the assured the unearned portion of the premiums so paid, and in harmony and in compliance with said provision, this plaintiff did in each instance, return the unearned portion of said cancelled policies.

"V.

"That this plaintiff collected as earned premiums during the year 1935, in the State of Idaho, the total sum of $ 72,275.35 and upon this amount paid within due time, the statutory three (3%) per cent. premium tax as provided by the statutes of the State of Idaho, but did not pay, and has refused to pay, and still refuses to pay to the State of Idaho, a premium tax upon the sum of $ 28,019.50 which represents the unearned premiums on policies cancelled flat by this plaintiff company and upon which it collected no premium whatsoever, and upon the unearned premiums returned to the various assureds in the State of Idaho, because of the cancellation of policies either by plaintiff or by the various assureds, and the question in controversy between this plaintiff and the defendant is, whether this plaintiff is liable for and shall be required to pay to the State of Idaho a premium tax on the total gross amount of business placed upon its books or whether the tax is levied upon its gross earned premiums collected."

further alleging that if the tax is collected in accordance with appellant's views it is unconstitutional.

Appellant admitted the facts and in addition there was filed this stipulation:

"A. Defendant has been Director of the Bureau of Insurance of the State of Idaho since March, 1931, and to the best of his knowledge all of the insurance companies of similar classification except the plaintiff writing business under class '6,' that is, those insurance companies writing general liability insurance in the State of Idaho have paid to the State of Idaho a tax on the premiums received by them in the State of Idaho without deducting in their returns from the gross premiums received those premiums which they have returned to the various assureds where the policies of insurance have been cancelled either by the company or ordered cancelled by the assured. . . ."

From a declaratory judgment adopting respondent's view, this appeal is taken.

The sole initial question is one of legislative intent as expressed in the statute. The first appearance of this enactment is section 18, chapter 228, 1911 Session Laws, page 739, as follows:

"Sec 18. All life and miscellaneous insurance companies now doing business in this State, or that may hereafter do business in this State, must file with the Insurance Commissioner, annually on or before the fifteenth day of March of each year, a statement, under oath, stating the amount of all gross premiums received by said company during the year ending December thirty-first preceding, in this State, and shall pay to the Insurance Commissioner a tax of two (2) per cent on all such gross premiums collected.

"All fire insurance companies now doing business in this State or that may hereafter do business in this State, must file with the Insurance Commissioner annually on or before the fifteenth day...