Mass. Bond. & Ins. Co. v. Chorn.

The only other exception to argument properly preserved was taken to this statement: "Don't encourage these wealthy, greedy corporations to justify that which cannot compensate this boy simply according to law and according to your duty to the law." This is probably incorrectly reported, but we must deal with it as presented. That this incoherent and meaningless sentence could have "distracted the minds of the jury from a calm deliberation of facts," as counsel argue, is beyond comprehension. Other portions of the argument for respondent are shown to contain an express disclaimer that anything was asked because appellant was a corporation or because of anything save the law and the evidence. Appellant was not prejudiced.

The judgment is affirmed. All concur except Bond, P. J., absent.

MASSACHUSETTS BONDING & INSURANCE COMPANY, Appellant, v. WALTER K. CHORN, Superintendant of Insurance.

Division One, March 29, 1918.

1. INSURANCE TAXATION: Returned Premiums: Reinsurance. A foreign insurance company engaged in issuing indemnity policies, health and accident policies and surety bonds in this State, is taxable on the entire amount of premiums received by it during the previous year, including premiums refunded on policies cancelled and premiums received from other companies for reinsur

2.

3.

ance.

-: Foreign Corporation: Subject to Laws of State. The right of a foreign corporation to engage in business within this State depends upon the will of this State, except where its business involves interstate commerce.

-: Citizenship. The only rights of citizenship which a State is forbidden by the Fourteenth Amendment of the U. S. Constitution to abridge pertains to birth or naturalization. The clause of that amendment declaring that "all persons born or

4.

5.

6.

Mass. Bond. & Ins. Co. v. Chorn.

naturalized in the United States and subject to the jurisdiction thereof are citizens of the United States and of the State wherein they reside" does not include such citizenship as is possessed by a corporation in its corporate capacity. Such a corporation is the creature of the State creating it, and the laws of its creation do not have any extra-territorial force, except in so far as it may be the instrument of the Government in the exercise of powers with which it is invested by the U. S. Constitution.

-: Due Process and Equality: Penalty. A statute which fixes a tax of two per cent on "the premiums received, whether in cash or notes, in this State, or on account of business done in this State," is broad enough to embrace all premiums received by a foreign corporation, including the premiums returned on cancelled policies and the premiums received from other companies for reinsurance, makes a reasonable exaction for the protection afforded to the entire business transacted by the foreign corporation licensed to do business in this State, and does not, because it authorizes a cancellation of its license for failure to pay the entire tax, violate that provision of the Fourteenth Amendment which declares that no State shall "deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws."

-: Classification: Uniformity: Accident and Indemnity Companies. Separate classification of fire insurance companies and com. panies engaged in issuing indemnity policies, health and accident policies and surety bonds, violates no just rule; and the fact that the statute authorizes the Superintendent of Insurance, in imposing the two-per-cent tax on the premiums received by fire insurance companies, to deduct the amount paid for reinsurance, while it does not authorize him to reduce the premiums on which such other companies are to pay taxes by the amount paid for reinsurance, does not violate that provision of the Missouri Constitution which requires that taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax. That constitutional provision refers to property taxes, and as to excise taxes is met by a reasonable classification of the subjects of taxation and the imposition of a tax that is uniform as to all subjects within the class. There is a reasonable ground, demonstrated by great fires in large cities, for an exception in the statute that encourages fire insurance companies to reinsure their risks, which is not pertinent in indemnity and accident in

surance.

: Excise Tax. A tax of two per cent of all premiums received in this State, or collected on account of business done in this State, by a foreign insurance company, is not a property tax, but an excise tax, and is payable although no dollar of the premiums ever came within the jurisdiction of the State.

Mass. Bond. & Ins. Co. v. Chorn.

7.

-: On Business Done. Said excise tax is, by the statute, imposed "on the business done," and not upon the insurance furnished. When a contract of insurance has been executed and the consideration paid, the business has been done. Therefore said statute does not express the legislative intention that premiums received and returned upon the cancellation of the policies, together with all sums expended for reinsurance, or contracts of indemnity against the companies' own losses, are to be deducted from the amount of the receipts upon which the tax is to be computed.

Appeal from Cole Circuit Court.-Hon. J. G. Slate, Judge.

AFFIRMED.

lant.

Harding, Deatherage, Murphy & Harris for appel

(1) Sec. 7099, R. S. 1909, is unconstitutional and void. Sec. 3, Art. 10, and Sec. 4, Art. 10, Constitution of Missouri; Sec. 1, Art. 14, U. S. Constitution. (2) Even though Sec. 7099, R. S. 1909, be valid, it does not require appellant to pay a tax upon: (a) Premiums it never did receive; (b) premiums returned because of the refusal of the assured to take the policy; (c) premiums which were never earned and which were returned to the policy-holders. Insurance Co. v. Van Cleave, 191 Ill. 410; People ex rel. v. Miller, 177 N. Y. 515; State ex rel. v. Fleming, 70 Neb. 540; State v. Ins. Co., 38 La. Ann. 465; Ins. Co. v. Commonwealth, 128 Ky. 174; Ins. Co. v. Herold, 198 Fed. 199. (3) Section 7099 should be so construed as to allow appellant to deduct from its gross premium receipts either the amount paid by it to other companies in this State for reinsurance or the amount received by it from other companies. In other words, appellant should not be compelled to pay a double tax. Authorities above.

Frank W. McAllister, Attorney-General, and John T. Gose, Assistant Attorney-General, for respondent.

(1) The proviso to Sec. 7099, R. S. 1909, is not obnoxious to Sec. 3, Art. 10, of the Mo. Constitution,

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requiring uniformity upon the same classes of subjects. The Legislature had the right to place fire insurance companies in a class by themselves because they do not follow the same business under the same conditions and circumstances as do life, bonding, or casualty insurance companies. The difference between fire insurance companies and other insurance companies is of such character as to justify the Legislature in making a separate class thereof if it so chooses. People v. Insurance Co., 24 N. Y. Supp. 192; Aurora v. McGannon, 138 Mo. 49. "The requirement of equality and uniformity does not preclude the division of things taxable into classes and the imposition of taxes which, while bearing equally upon different members of each class, bear unequally upon the classes in the aggregate; and a legislative division of this sort cannot be interfered with by the court." Kansas City v. Richardson, 90 Mò. App. 456; Glasgow v. Rouse, 43 Mo. 479; St. Louis v. Green, 7 Mo. App. 468; City v. Green, 70 Mo. 562; Masonic Aid v. Waddell, 138 Mo. 637; Express Co. v. City, 66 Mo. 680; 2 Dill. on Municipal Corporations, sec. 593; Veazie Bank v. Fenno, 8 Wall. (U. S.) 533; McCrary v. United States, 195 U. S. 27; State ex rel. v. Henderson, 160 Mo. 216. That there are fundamental and well-defined differences between fire insurance companies and life insurance companies and premium insurance companies and assessment insurance companies is too well known to admit of question. (2) The contention of appellant that said section 7099 violates section 4 of article 10 of the Constitution, which requires all property to be taxed in proportion to value, is based upon a misconception of the nature of the tax imposed. This constitutional guaranty is limited to a property tax. Section 7099 does not impose a tax upon property, but upon an occupation or privilege. Kansas City v. Richardson, 90 Mo. App. 456; St. Joseph v. Ernst, 95 Mo. 367; Glascow v. Rowse, 43 Mo. 479; City v. Green, 7. Mo. App. 473; Flint v. StoneTracy, 220 U. S. 163. (3) Appellant's contention that section 7099 is in violation of section 1 of article 14

Mass. Bond. & Ins. Co. v. Chorn.

of the Constitution of the United States, which guarantees the equal protection of the laws of the State to every citizen of the United States, is based upon the same misconception that led it to contend that such section of the statutes was in violation of the constitutional requirement relating to taxation in proportion to value. Southern B. & L. Assn. v. Norman, 31 L. R. A. 42; Society v. Coite, 73 U. S. (6 Wall.) 594; People v. Ins. Co., 92 N. Y. 328; Flint v. Stone-Tracy Co., 220 U. S. 107; Express Co. v. Seibert, 142 U. S. 350; State ex rel. v. Henderson, 160 Mo. 216. (4) Appellant's contention that, even though section 7099 be valid, it should be so construed as to permit appellant to make deductions on account of premiums returned, must be denied. In order to give the section such a construction, appellant interprets the words "premiums received" to mean premiums received, earned and retained, and cites cases from other states in which those words have been so interpreted. But those decisions of other states are not even persuasive in this case, because this is an act of the Missouri Legislature and that Legislature has by its different enactments upon this subject precluded such an interpretation of the words "premiums received.' Sec. 6057, R. S. 1879; Sec. 5958, R. S. 1889; Laws 1895, p. 198, sec. 2; Sec. 8043, R. S. 1899; Laws 1905, p. 172; Sec. 7099, R. S. 1909. The failure of the Legislature through all these years to reincorporate in subsequent enactments returned premiums which it had once permitted insurance companies to deduct is not the only evidence of the intent of the Legislature. The last enactment specifically provides that in the case of fire insurance companies credits may be given for premiums paid for reinsurance. This proviso in itself and apart from the history of prior legislation precludes the idea that other deductions or credits were to be permitted. Appellant is concluded by the maxim of statutory interpretation, Expressio unius est exclusio alterius.