Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-01-24
CURATIVE ACT Invalid
Insurance Law Of the Twenty
eighth General Assembly De-
clared of no Effect.
Polk County Judge Says He will
Decide II Is Unconsti.
tutional.
Millions of Dollars of Insurance
Affected by the De-
Cision.


stated to counsel yesterday that he
would declare unconstitutional the cura-
tive insurance law, passed by the last
Iowa legislature. which provides that
the amount due on policies and shares Oh
stock shall be considered as debts of the
Insurance corporations and deducted
passed as a remedial act to the former
law that made double assessments and
possible The decision, which Will De
banded down in a few days, will be the
first of it's kind in the state, being test
of the insurance law of the Twenty
eighth general assembly, and an appeal
will be taken to the supreme court to get
the higher courts ruling on this ques-
ton of taxation of insurance companies
and insurance policy and share holders.
The decision will affect about $5,0OO,00o
worth Of insurance moneys and credits
of individual share and policy holders in
Des Moines alone. to say nothing of the
great moneyed interests turnout the
state that will be affected, the decision
therefore being one of the most impor-
tant of the past two years. The decision
will be handed down in the cases
brought by the Hawkeye Insurance
Company of Des Moines against the
board of supervisors and the board of
review of the city COUNSEL, which cases
were consolidated and tried to Judge
Prouty yesterday by Messrs. j. B. john
son, G. r. Sanderson, J. E. Mershon and
John j. Halloran.
The decision Will leave the insurance
companies of the state between the devil
and the deep sea and no better off than
they were before the last legislature
passed the curative act, as under Judge
Prouty's decision the insurance compa-
MES must still pay their state taxes and
the shareholders, who form the COM
pany, must pay taxes on the individual
accounts held by them as members OF
the company II is probable that anoth-
er effort will be made by the present leg
lslature now in session to grant relief to
the insurance companies of the state and
straighten out the taxation muddle.
AT the conclusion of the arguments In
the Hawkeye case last evening Judge
Prouty announced from the bench that
he would sustain the objection of the
defendants, representing the taxing
boards of the city and county, to the
law passed by the Twenty-eighth gen.
eral assembly, unless Mr. Johnson. coun-
sci for the Hawkeye Company. could
succeed in securing authorities that
would sustain him before the decision
x,,,y,
Mr.. Johnson further time, but plainly
intimated that he would follow the lines
of his decision two years ago in another
test insurance case, and hold that the
legislature can not do by indirection
what the constitution and supreme court
Ct the state say must not be done.
A little over two years ago suit was
begun in Judge Prouty's division OF
the district court to test the consti-
tutionality of the then existing law as
to the assessing and taxing Of insur-
ance companies and stock in the state.
The insurance companies claimed that
by paying their taxes direct to the
state treasury under the law, they
We're relieved from paying any mu-
nicipal or county taxes, but the as
SCISSORS persisted in assessing them To-
cally and as q result the companies
We're compelled to pay double taxes;
one to the state and the other to the
local authorities.
A test case was started in Judge
Prouty's court and he declared the
existing law unconstitutional, being
antagonistic to section s of article .
and section of article / of the state
rr,1,;
tons must be taxed the same as indi-
viduals and that there shall be no dis
tinction.
The insurance companies were thus
subject to double taxation under Judge
Prouty's construction of the law. The
supreme court upheld Judge Prouty
and the insurance companies were
thus in double trouble.
1t was to remedy this condition of
affairs that the last legislature passed
chapter 43, and in particular section
thereof, which provides for the assess
ing and taxing of insurance cor
porations. The plan of the legislat-
ure was to remove one of these taxa
tons and secure the taxation of in
surance corporations the same as in
dividuals. Therefore section 4 of
chapter 43 was adopted, and provides
as follows
In assessing an insurance CORPORA
ton the assessor shall ascertain the
debts and liabilities of the corporation
to it's shareholders and other persons
and such debts and liabilities shall be
deducted from the assessed valuation,
as provided In section 1911 of the Iowa
code. A debt shall be deemed to exist
on account of the corporations LA
bilities on the policies, certificates or
other contracts of insurance issued by
it, equal to the amount of the surplus
company or corporation for the pur-
pose of fulfilling its policies, certif-
Gates or other contracts of insurance,
and which funds can be used for no
other purpose.
The legislature believed that in this
means the insurance companies would
escape double taxation. by having de-
Quoted from their assessed valuation the
amount which they owed their share
holders for certificates and their policy
holders for insurance policies. Another
section of the same chapter provided
that on payment by the insurance COM
oanies to the state treasurer, prior to
May /. 1900. the amount of the tax for
mat year, the companies would be re-
.ieved from further liability and double
taxation, as heretofore, for that first
sear of the new law, which went into
fleet March 81, 1900.
at To-, 10