The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-05-25
POLICIES AS TAXABLES
INJUNCTION CASE AGAINST STATE
BOARD NOW BEING ARGUED.
Points Made by Charles A. KOrbly, Al
bers-Other Court Affairs.

Judge Allen, of the Circuit Court is hear
ing argument IN the suit of John H. Holli-
day and others to have the State Board of
Tax Commissioners enjoined from assess
| ing life insurance policies for taxation. 1t
is expected the argument will continue for
| four days.
Charles A. Korbly, one of the attorneys
for the plaintiffs opened the argument yes
terday morning. He took the ground, first,
that the Tax Board, in authorizing the list
ing of insurance policies by assessors as
| sumed to legislate. He argued that that
part of the tax law mentioned by the de-
PENDANT as giving the tax commissioners
the right to add TO the tax lists more speci-
| fic questions could not be construed to en-
| power the Tax Board to name new subjects
of taxation bat only to give to the lists
greater clearness in the mention of things
| included under subjects already named. 1t
| would be unconstitutional, the attorney
held for the Legislature to delegate its
| power to the Tax Board. The Legislature
alone has the power to tax.
The attorney held that even if insurance
| policies have a surrender value that value is
contingent upon the use by the holder of
his option to demand it and should not be
taxed until he obtains the money by the de-
| mand.
Smiley n Chambers for the State Board
of Tax Commissioners, replied to Mr. Kor-
bly,. The attorney said he would take for
| his text a recent decision of the Supreme
| Court in the case of the Adams Express
| Company against the Ohio state treasurer
Justice Brewer, in writing the opinion, said :
| Now it is cardinal rule which should
| never be forgotten that Whatever property
= worth Of in an 9. II,
| II Is also worth for the purpose of taxa
| ton This rule, the attorney commended
was inc lopnpdtIon principle OF the present
| case He held that every policy oil large
| insurance which is issued on the level pre-
MUM plan has IN Ii an element of value to
! the holder or the policy, of value for the
| purpose OF taxation ana for the purpose of
sale. The attorney quoted Benton, who,
| in his Theory OF Legislation" said The
| IDEA or property consists in establishing
| expectation In the persuasion of being able
to draw such and such an advantage from
the thing possessed according to the ma
ture Of the case"
In the opinion of the attorney, no more
comprehensive definition of the meaning of
property has ever been expressed. lie neld
1t could make no difference whether proper
ty is tangible or intangible, whetherit mas all
the qualities that attach to other kinds of
property, II there Is IN ii the element of
expectation of advantage to come to the
holder OF it, to be drawn from it in the use
OF 1t. The attorney declared 1t would be
shown before the State was through with
its argument that the posses5or of a policy
OF life insurance issued upon the level pre-
MUM plan has the exclusive right to its
possession, to its enjoyment ana its tax
alton.
Attorney A. J. Beverage who replied to
MI. Chambers, said that the plaintiff S
case rests on two fundamental PROPOSE
tons: FIRST, that an insurance policy was
not IN ils nature, thlng Whlch any tax
law could reach, and, second, that even if
policy were taxable the tax law of In
| diana does not provide for its taxation as
! the state board proposes to tax it, but on
| the contrary, forbids such taxation. He
then discussed at length the nature of a
| policy. 1t Is simply contract-a contract
or indemnity-a contract of contingencies
contract of uncertainties" said he. "A
policy may have four or five options
among which the holder may choose. Who
can tell which the holder will choose? The
surrender value option is only one of these
| policy privileges. And as long as a man
Keeps his policy he can't get its surrender
| value AS long as he keeps mis- policy ne
has nothing but life Insurance Yet it is
now proposed to tax him every wear on a
surrender value which he does not get
| While he holds his policy 1t Is impossible
| for man to get his surrender value and
| keep his life insurance. And so the states
| proposition is that man shall be taxed
| on something he has not got and may never
| have"
The theories advanced by Mr.. Chambers
| were called conflicting. The difference be-
| tween a policy and stock certificate was
| shown. The state" said Mr.. Beverdge
| claims that because a policy has Value
| and is a contract, it should be taxed. But
| a contract to build this courthouse or con-
struct a railroad has value; an option con-
| tract has no value; many forms of con-
tracts have value and still are not taxa
This was illustrated by a will which be-
queaths person a sum of money if that
| person does certain things within his
power That will has a value the moment
| tons, and he has the power to perform
| those conditions any moment and thus get
| the money.
But" continued Mr. Beveridge. "the at
| torney general will not dare say that that
Iegatee ought to be or can be taxed on that
| legacy before he elects to perform the con-
| ditlons Of the will. That would be mon
| strous. Because he may choose never to
| perform those conditions and thus never
| get the money. So with the surrender
| value of policy. The holder can elect to
surrender the policy and get its surrender
| value but he may elect not to do So He
may elect to keep his policy to protect his
| WIFE at his death, instead of surrendering
1t and getting its surrender value. Shall
| he be taxed on that surrender value just
| because he has the power to get it. al
though he does not get it, but keeps his
| life insurance.
on the second proposition Mr. Beveridee
| SAID the Legislature had three times
amended the tax list and had neveS in
serted the item of insurance policies. The
Legislature had been asked to do so and
| refused, because the policy holder was al
ready twice taxed on his premiums in the
| only way he could be taxed. 1t is clear.
| he said, that the law forbids this form of
| taxation because the law forbids a man
to credit himself with any Indebtedness he
! may owe on a policy. Yet the State now
proposes to tax policy holder on the sur
render value of his policy, although he can
not deduct what he has borrowed on his
Poncy. You cannot sell a policy for de-
| iinquent taxes" said be. IF man has a
! policy whose surrender value IS 81 900 and
| he has nothing else, you cannot sell it as
| you can any other personal property to
make the taxes assessed against it, Be
cause the law forbids the speculative pur-
chase OF policies. The supreme Court of
| Indiana says that such a purchase Of poll
| cies puts premium on murder and there
| fore, forbids such dealings. This tax is a
| tax on prudence. 1t is a tax on charity
! Insurance prevents the widow from becom-
| ing a burden on the State. And yet, al
| though no mind in the world has ever be-
| fore thought that an insurance policy can
| be or ought to be taxed and, although our
| Legislature has positively refused to tax
| them, it is now proposed to tax them any
| how All the considerations of Justice
| charity, mercy and wise public policy for
! bid it."