The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-01-13
First Attempt in Any State to Make
Life Policies Pay Tribute
Thwarted.
THE OPINIONS PRO AND CON
TAX BOARD ATTEMPTED TO UsURP A
LEGISLATIVE FUNCTION.
Minority, however, Says 1t Didn't--No
Regulations Prescribed for
Taxing the Policies.


| day decided the celebrated insurance tax
case in favor of the holders of policies and
against the State Board of Tax Commits
sioners The court, however, was not a
unit on the case there being a dissenting
opinion written by Justice Howard and con-
CURED in by Justice Monks. The con-
trolling opinion was written by Justice Nc
Cabe and supported by Justices Hackney
and Jordan.
The litigation over the taxation Of life in
surance policies had its inception in the
action of the State Board of Taxation in in
sorting in the assessment blanks of 1896 two
schedules providing for the listing of the
number of paid-up life policies and their
value, and the number of nonforfeitable
and partly paid-up life policies and their
value This attempt to tax life insurance
was resisted from the start by the insur-
ance companies and holders of heavy poll
cies, and a suit to enjoin the state board
from carrying out its purpose was brought
by John II. Holiday and others in the Cir
cult Court of this county. The decision of
this court was adverse to the state board,
and the latter appealed to the Supreme
Court. The majority opinion rendered yes
terday sustains the decision of the lower
court.
The case has attracted worldwide atten-
ton in insurance circles, and the final rul-
ing Of the court of last resort is more far
reaching in its results than perhaps any de-
cision that has ever been rendered in insur-
ance cases. This is the first time that any
attempt has ever been made to tax life in
surance policies anywhere in the world, and
if the action of the state board had been
sustained it would have meant a reversal
of the universal policy of exempting life in
surance from taxation.
WHAT THE DECISION SAVES.
Insurance men claim that had the state
board been successful it would have re-
suited in the wiping out of an enormous
quantity of life insurance and serious dis
turbance of the accurate and delicate adj
justments upon which life companies must
always do business.
The State Board Of Tax Commissioners
in attempting to assess life policies pro-
ceeded on the theory that they were per-
sonal property not expressly exempted from
taxation, and under the law were therefore
taxable.
Lieutenant Governor Haggard, speaking
of the decision yesterday, said that it es-
sideration by the committee ways and
means of the Legislature He said that
unless a kind of property is specifically
cannot now be considered subject to taxa
ton. 1t was also his opinion that were in
surance policies taxed it would only result
in raising the cost of insurance to policy
holders
The attorneys for the insurance COM
panies in the case just decided were Albert
j. Beveridge, Smith q Korbly and Finch
& Finch. Those for the state were w. A.
ketcham, SilaS M. Shepard and Smiley N.
Chambers: Mr. Beveridge gave the insur-
ance companies an opinion some time be-
fore the suit was brought that the Law was
invalid, and the courts sustained this view.
The opinion-in-chief, after outlining the
case, says that the cardinal question lying
at the bottom of the whole controversy is
whether life insurance policies are legally
subject to taxation in this State. Proceed
ing, it says:
ut is conceded by the appellants that no
insurance policies of any description have
ever been taxed In this State heretofore
Section Of the tax law of 1891 provides
that all properly within the jurisdiction of
this State, not expressly exempted, shall be
act, specifying what shall be embraced in
the schedule, the last specification Is all
other goods, chattels and personal proper
ty not heretofore specifically mentioned
and their value, except property specifically
exempt from TAXATION These provisions
are relied on by the appellants counsel as
including life-insurance policies, if they are
personal property"
The claim set up that life-insurance poll
cies come under the definition of personal
property is then further enlarged upon, and
the opinion, continuing, says:
1.-THE power of taxation is a sovereign
power and belongs exclusively to the legis-
lative department of the government The
power of the Legislature over the subject of
taxation admits no limitation except where
specially imposed by the Constitution itself
Appellants contend that Section of Article
10 of the State Constitution requires the
taxing officers to assess for taxation life
insurance policies, they being properly with
in the meaning of the tax law and that pro-
vision of the Constitution. 1t reads as fol-
lows: The General Assembly shall provide
ERry lou q n oil a
sessment and taxation, and shall prescribe
such regulations as shall secure a just yalu-
alton for taxation of all property both real
and personal. excepting such only for mu-
nicipaL educational, literary, scientific, re-
ligious or charitable purposes as may be
especially exempted by law
BOARD NO LEGISLATIVE POWER.
''This constitutional provision does not
confer the power of taxation, because that
power, being sovereign, is inherent in the
Legislature. But the provision is rather a
limitation upon the power to tax. 1t is,
therefore legislative power to select the
subjects for taxation and this constitutional
provision imposes the duty and limitation
upon the Legislature of providing by law
regulations or methods for a just valuation
of all property. both real and personal. for
taxation. Where the Legislature has not
exercised this power no other department
of the state government can supply the
has been prescribed by law as to any par
| ticular species of property, then such prop
| erty cannot be taxed This conclusion may
| rest either on the inference from such fall
| to prescribe such regulations that the
| Legislature did not intend to select that par
| ticular species of property as a subject for
| taxation or regardless of the legislative in
| tent. the failure to prescribe such regula-
| tons leaves such property unsolicited q
| subject for taxation.
The statute must not only provide what
property shall be taxed but 1T must provide
| methods for the valuation of such property.
| and clothe some person, officer or tribunal
with power and authority to assess such
valuation. and if the statute contains no
such provisions. it will be insufficient to
subject such property to taxation .
But it is in effect contended by the
| learned counsel for appellants that life in
| surance policies, being personal property,
| the township assessors are clothed with the
| power and authority to assess and value
1 them for taxation by the statute. TO this
| two objections, namely: First, that assum-
ing that such policies are personal property
of such nature as to fall within the literal
terms of the tax law above quoted, yet
| that the Legislature has provided no regu-
| latons for the valuation OF such policies.
And in the absence of such regulations, the
State Board of Tax Commissioners cannot,
as appelees contend usurp the functions of
/ the Legislature and discharge the duties en-
| ioined upon IL by the Constitution to pre-
/ inst valuation of all property.
| And, second That the Legislature did not
| intend to include life insurance policies
| the language above quoted: All property
| goods, chattels and personal property or
n Sec. So, providing the form of the
| schedule, by the words, credits, demands
and claims.