Source: https://www.legalcrystal.com/case/95924/concordia-fire-insurance-co-vs-illinois
Timestamp: 2018-05-22 16:10:40
Document Index: 320693183

Matched Legal Cases: ['in casu', '§ 30', '§ 30', '§ 30', '§ 30', '§ 30', '§ 30', '§ 30', '§ 30']

Concordia Fire Insurance Co Vs Illinois - Citation 95924 - Court Judgment | LegalCrystal
Concordia Fire Insurance Co. Vs. Illinois - Court Judgment
LegalCrystal Citation legalcrystal.com/95924
Case Number 292 U.S. 535
Appellant Concordia Fire Insurance Co.
concordia fire insurance co. v. illinois - 292 u.s. 535 (1934) u.s. supreme court concordia fire insurance co. v. illinois, 292 u.s. 535 (1934) concordia fire insurance co. v. illinois no. 12 argued october 11, 12, 1933 decided june 4, 1934 292 u.s. 535 appeal from the supreme court of illinois syllabus 1. a state statute may be valid when given a particular application and invalid when given another. p. 292 u. s. 545 . 2. under an illinois statute taxing net receipts of foreign fire, marine and inland navigation insurance companies at the same rate as all other personal property, the net receipts were assessed at full value, page 292 u. s. 536 whereas personal property in general was systematically.....
Concordia Fire Insurance Co. v. Illinois - 292 U.S. 535 (1934)
U.S. Supreme Court Concordia Fire Insurance Co. v. Illinois, 292 U.S. 535 (1934)
1. A state statute may be valid when given a particular application and invalid when given another. P. 292 U. S. 545 .
whereas personal property in general was systematically assessed at 60% of its value, with the result that the tax on the insurance companies was disproportionately high. Held that the discrimination was a denial of equal protection of the laws. P. 292 U. S. 545 .
3. Upon a review of a judgment recovered by a state in a suit to collect a tax on net receipts of a foreign fire insurance company, held that the company was in no position to attack the assessment upon the ground that failure to deduct insurance losses in making it resulted in unconstitutional discrimination, it appearing that it did not claim the right to such deduction in the proceeding before the assessors, and was precluded by the state law from claiming it for the first time in defense of the suit. P. 292 U. S. 546 .
4. Substantial equality and fair equivalence are important factors in determining the presence or absence of arbitrary discrimination in state taxation. Mathematical equivalence is neither required nor attainable; nor is identity in mere modes of taxation of importance where there is substantial equality in the resulting burdens. P. 292 U. S. 547 .
5. A foreign corporation complaining of a tax on its net receipts upon the ground that no such tax is imposed upon competing domestic corporations is under the burden of showing that the latter are not subjected to other forms of taxation, not applied to foreign corporations, and which are the substantial equivalent of the tax in question. P. 292 U. S. 546 .
6. Two classes of foreign corporations, those engaged in fire, marine, inland navigation, and casualty insurance and those engaged in casualty insurance alone, do business in Illinois by license of the state. The second class conduct the same character of casualty insurance business as the first class, and these businesses are competitive. Both classes are taxed on their local tangible property, but the former class are subjected in addition to a property tax on net receipts, including the receipts from their casualty business -- a tax which the latter class are not required to pay. Held that the discrimination is arbitrary and unconstitutional. P. 292 U. S. 548 .
The taxes in question were levied under § 30 of a statute of March 11, 1869, [ Footnote 1 ] entitled "An Act to incorporate and to govern fire, marine and inland navigation insurance companies doing business in the State of Illinois." Several sections of the Act relate to the creation and regulation of domestic corporations, and others relate to the licensing, taxing, etc., of foreign corporations. Section 30 provides in respect of foreign corporations doing business in the state that, in the month of May, annually, "the amount of the net receipts" of their local agencies shall be entered on the local tax lists and be
Throughout the years 1923-1927 and before, it was the uniform practice of officers and boards engaged in listing and assessing personal property for taxation to treat and list 60% of the fair cash value as the "full value;" and, in the years 1923-1926, these officers and boards, pursuant to the direction of a statute of 1919, [ Footnote 2 ] treated and listed one-half of such "full value" as the "assessed value." By these processes, 30% of the fair cash value uniformly was made the basis of personal property taxes in 1923-1926. [ Footnote 3 ] The same processes were applied in respect of real property. In 1927, before the
assessments of that year were completed, the statute directing that 50% of the listed "full value" be taken as the assessed value was repealed, [ Footnote 4 ] and therefore was not applied in making assessments in that year. But the practice of taking 60% of the fair cash value as the true value was continued, and applied in the assessments of that year as it had been in those of earlier years.
In 1927, the defendant made a return of its net receipts from fire, marine, and inland navigation insurance, the amount reported being $76,291. It arrived at this amount by deducting operating expenses from gross receipts, the former being treated in the computation as 54% of the latter. On this basis, its gross receipts were $165,850. [ Footnote 5 ] The amount returned as net receipts was accepted as correct by the board of assessors of the county, and 50% thereof was listed by that body as the assessed value. But that assessment, as will appear presently, was not approved by the next superior body, the board of review of the county.
In Hanover Fire Insurance Co. v. Harding, 327 Ill. 590, 158 N.E. 849, [ Footnote 6 ] which preceded the decision in the present case about five years, the supreme court of the state, in considering and applying § 30, now in question, ruled that the reductions, by scaling and debasement, applied in the assessment of other personal property should be applied to net receipts of foreign insurance corporations, and, on that ground, the court condemned a tax of $7,184.18 where such reductions were not made, and awarded a recovery of $2,155.24, which would have been the tax had the net receipts been reduced like the value of other personal property. In stating the reason for its ruling, the court said (pp. 601-602):
"Section 30 provides that: 'Net receipts . . . shall be . . . subject to the same rate of taxation . . . that other personal property is subject to at the place where located.' The use of the word 'other' indicates that the net receipts were to be considered as personal property and treated the same as other personal property. Clearly, this provision means that not only the percentage of the rate, but the basis of the valuation, shall be the same. Taxing by a uniform rule requires uniformity not only in the rate of taxation, but also uniformity in the mode of the assessment upon the taxable valuation. Uniformity in taxing implies equality in the burden of taxation, and this equality of burden cannot exist without uniformity in the mode of the assessment, as well as in the rate percent of taxation. ( Greene v. L. & I.R. Co., 244 U. S. 499 ; Boyer v. Boyer, 113 U. S. 689 ; Cummings v. National Bank, 101 U. S. 153 ; Exchange Bank v. Hines, 3 Ohio St. 1). Section 30 and the law of 1898 [ Footnote 7 ] should be construed together, and
1. It is said that the act as it was applied to the net receipts of 1927 subjects the personal property of a foreign fire insurance corporation to a tax based on its full actual value, whereas other personal property is taxed on a basis of 60% of its value. The complaint is not that the net receipts were valued excessively, but that the value, when determined, was not debased like that of other personal property. The tax, as extended on the full actual value fixed by the board of review, was $5,895.19. Had that value been debased to 60%, as was the value of other personal property, the tax would have been $3,537.11, making a difference of $2,358.08. The act deals specially and only with the taxation of net receipts of foreign fire, marine, and inland navigation insurance corporations. The assessing officers acted in virtue of it and the state court held their action was valid under it. Thus, both applied it, and they applied it as subjecting the net receipts of a foreign fire insurance company, by reason of being such, to a tax burden 66 2/3% greater than that laid on other personal property. No reasonable basis for such a discrimination is suggested, and none is perceived. It is essentially the same character of arbitrary and prejudicial discrimination that was condemned as a denial of the equal protection of the laws in Hanover Fire Insurance Co. v. Harding, 272 U. S. 494 .
For a long period, the supreme court of the state ruled that the tax imposed by § 30 was a property tax; later on it ruled that the tax was an occupation or privilege tax, and still later it returned to its first ruling. In Hanover Fire Insurance Co. v. Harding, 272 U. S. 494 , this Court in sustaining a claim that the section, when applied according to the second ruling, was in conflict with the equal protection clause of the Fourteenth Amendment, said (p. 272 U. S. 516 ):
4. It is said that § 30 requires foreign fire insurance corporations to pay the tax not alone on their net receipts from fire, marine, and inland navigation insurance, but also on their net receipts from casualty insurance, whereas foreign casualty insurance corporations severally conducting a casualty insurance business in direct competition with the foreign fire insurance corporations are not required to pay a tax on their net receipts or any equivalent tax. The factual premises of this claim are stipulated. The supreme court of the state has construed § 30 as taxing the foreign fire insurance companies on their net receipts from casualty insurance, [ Footnote 8 ] and has held that foreign casualty insurance companies conducting a casualty insurance business are not taxable on their net receipts under § 30 or any other statute. [ Footnote 9 ] The stipulation shows that all of these foreign corporations are lawfully entitled by reason of licenses, etc., to conduct their respective businesses within the state; that the casualty corporations are conducting the "same character" of casualty insurance business as the fire insurance corporations; that these businesses are competitive, and that the casualty corporations are taxed on such real and tangible personal property as they hold within the state,
This statement shows that § 30, as the state court construes and applies it, works a very real and prejudicial discrimination against the fire insurance companies and in favor of the casualty companies in respect of competitive casualty businesses of the same character, conducted in the same way and in the same territory. The companies are all foreign corporations, and all are, for present purposes, equally within the jurisdiction of the state and subject to her power to tax. There is no basis or reason for making a distinction between them that has any pertinence to the imposition of a property tax such as is in question. The net receipts which are taxes are not different from those which are not taxed, and both come from the same source. Such a discrimination in respect of the taxation of real or tangible personal property obviously would be essentially arbitrary. In principle, it is not different with the net receipts. They are property, and the tax which § 30 imposes is, as the state court holds, a property tax. It follows that the section, when construed and applied in the way just described, is in conflict with the equal protection clause of the Constitution. Full support for this conclusion is found in prior decisions. [ Footnote 10 ]
This was the second decision of that court in the case. An earlier decision, reported in 317 Ill. 366, 148 N.E. 23, had been reversed in 272 U. S. 494 , and the case had been remanded for further proceedings.
Quaker City Cab Co. v. Pennsylvania, 277 U. S. 389 ; Louisville Gas & Electric Co. v. Coleman, 277 U. S. 32 ; Cumberland Coal Co. v. Board of Revision, 284 U. S. 23 ; Iowa-Des Moines National Bank v. Bennett, 284 U. S. 23 9; Royster Guano Co. v. Virginia, 253 U. S. 412 ; Kentucky Finance Corp. v. Paramount Auto Exchange, 262 U. S. 544 ; Power Manufacturing Co. v. Saunders, 274 U. S. 490 .
The validity of a tax depends upon its nature, and not upon its name. St. Louis Compress Co. v. Arkansas, 260 U. S. 346 , 260 U. S. 348 ; Federal Land Bank of New Orleans v. Crosland, 261 U. S. 374 , 261 U. S. 378 ; Louisville Gas Co. v. Coleman, 277 U. S. 32 , 277 U. S. 38 ; Educational Films Corp. v. Ward, 282 U. S. 379 , 282 U. S. 387 .
of foreign fire and inland navigation companies was a tax upon property, or at least was to be assessed in the same way. Chicago v. Phoenix Insurance Co., 126 Ill. 276, 18 N.E. 668; National Fire Insurance Co. v. Hanberg, 215 Ill. 378, 380, 74 N.E. 377; People v. Cosmopolitan Fire Insurance Co., 246 Ill. 442, 448, 92 N.E. 922. This continued to be the practice till 1921. In that year and for a time afterwards, the Court determined that the tax did not come within the rule of debasement, but was a tax upon a privilege. People v. Kent, 300 Ill. 324, 133 N.E. 276; People v. Barrett, 309 Ill. 53, 139 N.E. 903; Hanover Fire Insurance Co. v. Carr, 317 Ill. 366, 148 N.E. 23. The companies affected by the new ruling attacked the discrimination as unconstitutional, and brought the controversy here. In 1926, this Court held that the denial of the 30% debasement to foreign corporations brought about an inequality so gross in comparison with the burdens of domestic corporations as to vitiate the tax and the statute that imposed it. Hanover Insurance Co. v. Harding, 272 U. S. 494 . Following that decision, the Supreme Court of Illinois receded from the position that it had taken in 1921 and held that there must be a debasement of value as in the case of taxes upon property. Hanover Fire Ins. Co. v. Harding, 327 Ill. 590, 601, 158 N.E. 849; People v. Franklin National Insurance Co., 343 Ill. 336, 175 N.E. 431.
subjected to this tax on net receipts had taken the gross receipts out of the state at once after collection, or had placed them in an insolvent bank with the result that nothing remained when the assessment day arrived, the tax would still have been due without the abatement of a dollar. Fidelity & Casualty Co. v. Board of Review, 264 Ill. 14, 105 N.E. 704. On the other hand, nothing would have been due if no premiums had been collected during the year, though the profits of earlier years were still within the county. The tax, whatever its label, is upon the operations of a business. Generally in the United States, though perhaps not abroad, a tax so imposed is spoken of as an excise. Flint v. Stone Tracy Co., 220 U. S. 107 , 220 U. S. 145 ; cf. Encyclopaedia of the Social Sciences, vol. V, article "Excise;" Seligman, Essays in Taxation (9th Ed.) pp. 161, 165, 169. It is what it is, no matter what one calls it. It is a tax on net receipts.
Supreme Court of Illinois, while debasing the assessment, had described the tax as an excise, it does not effect such a denial because the court, rightly or wrongly, has described it as something else. New York Central R. Co. v. Miller, 202 U. S. 584 , 202 U. S. 596 . The question still is what kind of classification is permissible when the yearly net receipts are the subject matter of the tax and the measure of the burden?
Now plainly, a tax on the net receipts of a business of a particular kind is not condemned as void for the reason that a like tax or an equal one is not laid on the net receipts of every other kind of business. Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 232 , 134 U. S. 237 ; Pacific Express Co. v. Seibert, 142 U. S. 339 , 142 U. S. 351 -353; Adams Express Co. v. Ohio, 165 U. S. 223 , 165 U. S. 228 ; Southwestern Oil Co. v. Texas, 217 U. S. 114 ; Oliver Iron Co. v. Lord, 262 U. S. 172 ; Stebbins v. Reilly, 268 U. S. 137 , 268 U. S. 142 ; Ohio Oil Co. v. Conway, 281 U. S. 146 , 281 U. S. 159 ; Union Bank v. Phelps, 288 U. S. 181 . Not even the appellant makes any contention to the contrary. If it did, it would be driven to maintain that the whole statute must fall, and not merely so much as affects the casualty premiums. To say that a tax on the net receipts of one kind of business is void because a like tax is not laid on different forms of business would mean that the net receipts of insurance companies may not be taxed without laying a like tax on manufacturers and merchants. The cases above cited make it clear to the point of demonstration that this is not the law. The state "may tax real estate and personal property in a different manner." Bell's Gap Railroad Co. v. Pennsylvania, supra; Ohio Oil Co. v. Conway, supra. "It may impose different specific taxes upon different trades and professions, and may vary the rates of excise upon various products." Id. Nowhere is it intimated that what was approved would have been condemned if there had been in the statute a glossary that gave the tax another name.
With the aid of this analysis, the path is cleared to a conclusion. A tax upon the receipts of a business is not invalid as of course because some forms of business are hit and others are exempt. To bring about that result, the assailant of the tax must be able to satisfy the court that the classification had its origin in nothing better than whim and fantasy, a tyrannical exercise of arbitrary power. Ohio Oil Co. v. Conway, supra, p. 281 U. S. 160 ; Stebbins v. Reilly, supra; Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61 , 220 U. S. 78 . This is the heavy burden that the appellant must sustain. Is it a whimsical and fantastic act to tax foreign fire insurance companies upon all their net receipts, including those derived from casualty premiums, when no such tax is imposed upon the receipts of insurance companies that do a casualty business only? If so, the arbitrary quality of the division must have its origin in the fact that the activities of the one class overlap to some extent the activities of the other. But plainly there is no rule that overlapping classes can never be established in the realm of taxation except at the price of an infringement of the Federal Constitution. The recognition of such a rule means that a department store may not be taxed on the net receipts of its business unless all the many activities thus brought under a single roof are taxed in the same way when separately conducted. Cf. State Board of Tax Commissioners v. Jackson, 283 U. S. 527 ; Liggett Co. v. Lee, 288 U. S. 517 , 288 U. S. 532 . There must be a tax on the business of the draper, the jeweler, the shoemaker, the hatter, the carpet dealer, and what not. For the same reason, the proprietor of a retail market dealing in meats and groceries and vegetables and fruits will then escape, at least proportionately, a tax upon receipts if the statute does not cover the business of the shopkeeper who derives a modest income from the sale of peanuts and bananas. There are few taxes upon earnings that would pass so fine a sieve. The rule, if
until now, been pressed to that extreme. Armour & Co. v. Virginia, 246 U. S. 1 , 246 U. S. 6 ; Armour Packing Co. v. Lacy, 200 U. S. 226 ; Quong Wing v. Kirkendall, 223 U. S. 59 ; American Sugar Refining Co. v. Louisiana, 179 U. S. 89 ; Pacific Express Co. v. Seibert, supra; State Board of Tax Commissioners v. Jackson, supra; New York ex rel. N.Y. & Albany Lighterage Co. v. Lynch, 288 U.S. 590; Puget Sound Power & Light Co. v. Seattle, 291 U. S. 619 ; A. Magnano Co. v. Hamilton, ante, p. 292 U. S. 40 .
By the very law of their being, companies whose principal business is to provide insurance against fire, but who provide casualty insurance in a very narrow field, are in a class of their own, with capacities and opportunities essentially diverse from those of companies who are incompetent to provide insurance against fire, but who do insure against almost every other imaginable risk. The state is not called upon to explain the reasons for taxing the members of the one class more heavily than it does the members of the other. The burden is on the appellant who would strike the statute down, and not on the state which invokes the presumption of validity. Weaver v. Palmer Bros. Co., 270 U. S. 402 , 270 U. S. 410 ; Detroit Bridge Co. v. Tax Board, 287 U. S. 295 , 287 U. S. 297 .
O'Gorman & Young, Inc. v. Hartford Fire Insurance Co., 282 U. S. 251 , 282 U. S. 257 ; Lawrence v. State Tax Commission, 286 U. S. 276 , 286 U. S. 283 ; Williams v. Mayor, 289 U. S. 36 , 289 U. S. 42 . Here, the foundation fails, and with it the assault.
Nothing that was determined in Quaker City Cab Co. v. Pennsylvania, 277 U. S. 389 , is at war with this conclusion. There, the business done by the taxpayer was the same as that done by others to whom an exemption was allowed. Here, they are not the same, though at places they overlap.