Court Opinion

ID: 7994608
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:35:21.058631+00
Date Added: 2024-06-11T16:35:29.921018
License: Public Domain

Ethridge, J.
(dissenting).
I dissent from the conclusion of the majority with the greatest reluctance, and only because I find myself wholly unhble to reconcile chapter 184, Laws of 1922, with sections 181, 182, and 112 of the state Constitution. I appreciate fully the grave situation which confronted the legislature and the people of the state, making it desirable to encourage by every means possible the organization of domestic insurance companies, and the great difficulty there was as a practical proposition in organizing sufficient companies and getting the necessary capital to operate such business. For many years practically all of the fire insurance business and a large part of the life insurance business done in Mississippi was done through foreign insurance companies doing business in the state by permission of its statutes. The sudden withdrawal from the state of practically all of the fire insurance companies left the property and business of the state in a precarious, if not chaotic, condition. To obtain insurance it was necessary for citizens of the state to apply to agencies in foreign states, and made it both more difficult and expensive and less convenient to the people than it would be with domestic insurance companies having their property situated in the state. Under the conditions which existed it was both desirable and commendable for the legislature to offer whatever inducements it had the power to make to bring about the organization of such domestic insurance companies. There were a few foreign companies, however, who remained in the field and to the extent of their ability to do so took care of the business. f
Chapter 184, section 1, Laws of 1922 (the pertinent part of the act),- reads as follows:
“That in addition to the property already exempt from taxation, all insurance companies or associations organized or incorporated under the laws of the state of Mississippi and maintaining its domicile therein, shall be exempt for a period of. five years from all taxes of whatso*431ever kind or character except ad valorem taxes on real estate, and privilege taxes.” •
Section 181 of the Constitution of 1890 reads as follows: “The property of all private corporations for pecuniary gain shall be taxed in the saíne way and to the same extent as the property of individuals, but the legislature may provide for the taxation of banks and banking capital, by taxing the shares according to the value thereof (augmented by the accumulations, surplus, and unpaid dividends), exclusive of real estate, which shall be taxed as other real estate. Exemptions from taxation to which corporations are legally entitled at the adoption of this constitution, shall remain in full force and effect for the time of such exemption as expressed in their respective charters, or by general laws, unless sooner repealed by the legislature. And domestic insurance companies shall not be required to pay a greater tax in the aggregate than is required to be paid by foreign insurance companies doing business in this state, except to the extent of the excess of their ad valorem tax over the privilege tax imposed upon such foreign companies; and the legislature may impose privilege taxes on building and loan associations in lieu of all other taxes except' on their real estate.”
Section 182 of the Constitution reads as follows:
“The power to tax corporations and their property shall never be surrendered or abridged by any contract or grant to which the state or any political subdivision thereof may be a party, except that the legislature may grant, exemption from taxation in the encouragement of manufacturers and other new enterprises of public utility extending for a period not exceeding five years, the time of such exemptions to commence from date of charter, if to a corporation; and if to an individual enterprise, then from the commencement of work; but when the legislature grants such exemptions for a period of five years or less, it shall be done by general laws, which shall distinctly enumerate the classes of manufacturers and other new enterprises of public utility entitled to such exemptions, and shall prescribe *432the mode and manner in which the right to such exemptions shall he determined.”
Section 112 of the Constitution reads as follows:
“Taxation shall be uniform and equal throughout the state. Property shall be taxed in proportion to its value. The legislature may, however, impose a tax per capita upon such domestic animals as from their nature and habits are destructive of other property. Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value. But the legislature may provide for a special mode of valuation and assessment for railroads, and railroad and other corporate property, or for particular species of property belonging to persons, corporations, or associations not situated wholly in one county. But all such property shall be assessed at its true value, and no county shall be denied the right to levy county and special taxes upon such assessment as in .other cases of property situated and assessed in the county.”
I agree with the majority holding that individuals cannot under our statutes engage in the insurance business. It is true individuals are not expressly prohibited by statute from doing an insurance business, and neither has the insurance business been specifically declared by statute to be a business affected with the public use, which would authorize the legislature to exclude individuals engaging therein. But a careful consideration of the provisions of law contained in the insurance chapter of the Code and its amendments clearly shows that it excluded individuals and contemplates that the business can only be done by such organizations ás are classed as corporations by section 199 of the Constitution which defines:
“The term ‘corporation’ used in this article shall include all associations and all joint-stock companies for pecuniary gain having privileges not possessed by individuals or partnerships.”
I cannot see how under section 181 of the Constitution the legislature can exempt property from taxation when held by a corporation and the same property when held *433by an individual be taxed, and the fact that the individual does not do the business which is done by a corporation Avould be AAdiolly immaterial if the individual owns the same kind of property that a corporation owns. The act here under consideration, chapter 184, Laws of 1922, does not exempt property devoted exclusively to the use of conducting an insurance business, but exempts all property of every kind and description except ad valorem taxes on real estate and privilege taxes. Under the terms of the act the property owned by insurance companies or associations which are organized or incorporated under the laws of the state and which maintain their domicile in the state is exempt from all these taxes, and even if the legislature had undertaken to exempt property devoted to the use of insurance it would be unconstitutional, unless individuals and partnerships could also do the business and their property be also exempt. In other Avords, in my opinion, the legislature cannot evade the Constitution by the simple expedient of classifying a business as being affected Avith a public use and prohibiting individuals from engaging therein, and then, after so doing, exempting the property of such corporations from all sorts of taxes. That the poAver of the state to declare certain kinds of business to’be affected Avith a public use is very large, and the precise limits thereof cannot be clearly foreseen or foretold, but must be left to the legislative discretion and the circumstances existing at the time, is shown by a careful reading of the opinion in the case of Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77, wherein the United States supreme court elaborately considered the question and held that the state had very large powers in that respect, and was not limited to such corporations as Avere considered affected by a public use at the common law. Since rendering this decision the United States supreme court has decided that the insurance business may be declared by the legislature to be affected by a public use and that individuals may be prohibited from engaging in such business, and has also held the same about banks and other business not necessary to be set forth here.
*434Of course, the plain meaning of section 181 of the Constitution was to prevent discrimination in favor of corporations who were in business for pecuniary gain, and to place their property on the tax roll to be taxed at the same rate and in the same manner as that of an individual having the same kind of property, subject, of course, to the exceptions contained in sections 181 and 182 of the Constitution. Section 181, providing specifically that banking capital might be taxed as therein provided, and that building and loan associations might be taxed by a privilege tax only in lieu of all other taxes except on real estate, intended to include in the first part of the section all other property of every kind and nature, except that named on the Constitution.
I have had some doubts as to the provision of section 181 which provides:
“And dordestic insurance companies shall not be required to pay a greater tax in the aggregate than is required to be paid by foreign insurance companies doing business in this state, except to the extent 'of the excess of their ad valorem tax over the privilege tax imposed upon such foreign companies.”
This portion of the section is not entirely clear to my mind; that is to say, it is not entirely clear whether the legislature could provide a scheme for taxing such companies in a different way and at a different rate or to a different extent from that of an individual. It seems to be the purpose of this section to prevent the imposition of higher privilege or excise taxes upon domestic companies than were placed upon foreign companies and probably would exclude taxes- like franchise taxes and income taxes from being imposed on domestic companies, especially as to such business as they might do beyond the limits o-f the state. It seems to me, however, that the section does not contemplate that exemptions can be granted to domestic insurance companies on This court has elaborately considered section 181 of the such property as is taxable in the hands of individuals. *435Constitution in the case of Adams v. Railroad Co., 77 Miss. 194 et seq., 24 So. 200, 317, 28 So. 956, 60 L. R. A. 33. At page 276 of the Mississippi report of that opinion (24 So. 216, 60 L. R. A. 33) the court said:
“All exemptions from taxation necessarily increase the burdens imposed on the property not exempt, and are directly injurious to the taxpayer. The incidental benefits which it is supposed may result to him, in common with the community at large, are speculative, and not often a compensation for the immediate injury sustained. Invidious exemptions or discriminations, by which the property of an individual or of a corporation is relieved from bearing a just proportion of the common burden taxation is intended to discharge, are violative of the equality of right of the citizen, which is a fundamental principle of our institutions. To prevent any exemption or discrimination in favor of corporations, to subject their property to the same rate of taxation to which the property of individuals of the same kind is subject, is the purpose of the constitutional provision, clearly expressed: 'The property, of corporations now existing, or hereafter created, shall forever be subject to taxation the same as property of individuals,’ etc. The argument of appellee, that it was intended only to reserve to the legislature the power of subjecting corporate property to the taxation imposed on individuals, and to avoid the introduction into charters of irrepealable exemptions, or discriminations, cannot be supported. Eeading these constitutional provisions in the light of their history, and with a due regard to the words in which they are expressed, it is impossible for us to doubt that it was not competent for the general assembly, in the imposition of taxes, to distinguish or discriminate in favor of corporate property subject to taxation. If property of a particular kind is subjected to taxation, and owned by a corporation, it must bear the rate of taxation imposed on individuals. While the Constitution inhibits the exemption or discrimination in favor of corporations, it equally inhibits a discrimination against *436them. Equality in hearing a common burden, which is natural right and equity, is secured alike to the corporation and to the citizen.”
At page 273 of 77 Miss., at page 215 of 24 So. (60 L. R. A. 33), in discussing the decision in Mississippi Mills v. Cook, 56 Miss. 40, the court said:
“One of the vices of the decision in Mississippi Mills v. Cook is that it did not hold that all the property of private corporations for pecuniary profit was required to be taxed by the terms of the Constitution (sections 13 and 20, art. 12), just as, and when, the property of individuals was. Instead of doing this, the court decided that all such property was free from taxation unless the legislature expressly subjected it to taxation, even though the property of private individuals was taxed, inverting the rule of the Constitution. It was certainly an idle performance to declare, as the court did declare, that the whole effect of the constitutional provision Avás to render the property of private corporations for pecuniary profit liable to taxation; that everybody knew, and to so limit the constitutional declaration was to emasculate it.”
The learned justice then commented on the experiences which the state had had with corporations seeking tax exemptions between 1832 and 1869, and of the purpose of the convention of 1869 of leaving the power in the hands of the legislature to subject property of corporations for pecuniary profit at any time it saw proper and overruled the Mississippi Mills case, supra, in so far as it held that the legislature could exempt property from taxation when the same property in the hands of an individual would be taxable. Commenting on this decision, at page 285 of 77 Miss., at page 219 of 24 So. (60 L. R. A. 33), the court said:
“The opinion of the court declares as its gist that section 13 was not mandatory upon the legislature to tax the property of private corporations for pecuniary profit whenever the property of individuals was taxed. It distinctly put the property of such private corporations, as *437to the power to tax them or exempt them, in a class by themselves distinct from the class of individuals. In other words, it held that although the property of individuals might be taxed, yet the property of such corporations might be at the same time exempted by the legislature from taxation, provided such exemption extended to all corporations of the same class in the state. We think it is perfectly manifest that the language, ‘the same as the property of individuals,’ imperatively commanded the legislature, whenever they tax the property of private individuals, to tax also the property of such corporations, and under the same rules of equality and uniformity. It was well said-by Justice Campbell that this provision of section 13 ‘sprang from the experience that corporations were in the habit of asking and obtaining legislative exemption from liability to taxation.’ That experience the state had acquired in the thirty-seven years elapsing between the Constitution of 1832 and the Constitution of 1869, and that experience was wisely availed of to put an end to the grant o.f exclusive privileges to such corporations. It marked a new era in the history of corporate taxation in this state; it laid down a fundamental new line of great public policy, one that will be found essential to the preservation of the rights of the people, as is abundantly attested by the experience of older states dealing with such corporations. It is that feature of the decision thus holding that this section 13 merely permitted the taxation of such corporations, but did not require that taxation whenever the property of individuals was taxed, and in just the same manner in all respects as the property of private individuals was taxed, which Ave now condemn and overrule.”
It seems to me that'the decision noAV rendered re-establishes the very thing that was overruled and condemned by the court in the Adams case, supra, in overruling the Mississippi Mills case, 56 Miss. 40.
The latest pronouncement of this court upon this subject also announces the doctrine of equality between the citizen and the corporation in bearing the burdens of taxa.*438tion in the case of Harrison County v. Gulf Coast Military Academy, 126 Miss. 729, 89 So. 617, which case the majority opinion relies on in support of its present conclusion, but which is wholly different from the present case, because as to schools of all kinds (except public schools) an individual may own and operate them as well as corporations, whereas in the insurance business an individual is absolutely precluded from doing the business at all. It is a long step from that case to this one. This court has consistently, from the decision of the case of Adams v. Railroad, 77 Miss. 194, 24 So. 200, 317, 28 So. 956, 60 L. R. A. 33, down to this date, held to the theory that there must be absolute equality between the citizen and the corporation in bearing the burden of taxation. Panola County v. Carrier & Son, 89 Miss. 277, 42 So. 347; People’s Warehouse Co. v. Yazoo City, 97 Miss. 500, 52 So. 481; Robertson v. United States Nursery Co., 121 Miss. 14, 83 So. 307; Robertson v. Planters’ Oil Works, 127 Miss. 610, 90 So. 325; Adams v. Bullock, 94 Miss. 27, 47 So. 527, 19 Ann. Cas. 165; Robertson v. Mississippi Valley Co. (Miss.), 77 So. 253; Robertson v. K. C. Lumber Co. (Miss.), 77 So. 246; Robertson v. Mississippi Valley Co., 120 Miss. 159, 81 So. 799.
My own views upon this phase of túe case were elaborated.in the last cases cited above. My views were founded upon the decision in Adams v. Railroad, 77 Miss. 194, 24 So. 200, 317, 28 So. 956, 60 L. R. A. 33, and subsequent cases following it. It would seem from some of the language used in sections 181 and 182 of the Constitution that the constitutional convention intended to eliminate all exemptions to corporations for pecuniary gain, except as expressly authorized in said sections. In Section 181 it is said:
“Exemptions from taxation to which corporations are legally entitled at the adoption of this Constitution, shall remain in full force and effect for the time of such exemption as expressed in their respective charters, or by general laws, unless sooner repealed by the legislature.”
*439This expression, taken in connection with the whole section, seems to indicate that it was not the purpose of the Constitution makers to permit exemptions not already granted to such corporations at all] This is followed up in section 182 of the Constitution with the provision that:
“The power to tax corporations and their property shall never be surrendered or abridged by any contract or grant to which the state or any political subdivision thereof may be a party, except that the legislature may grant exemption from taxation in the encouragement of manufactures and other new enterprises of public utility extending for a period not exceeding five years,” the time of the exemption to commence at the date of the charter or beginning of the work, according as to whether it was an individual or corporate enterprise.
A careful consideration of the whole chapter on corporations in the Constitution demonstrates to my mind that it was the firm purpose of the constitutional convention of 1890 to prevent legislative favors to corporations which are not extended to individuals, and it was certainly their purpose to make the great railroad and other public service corporations contribute their due proportion to the expenses of the government. I think the construction placed upon section 181 in the case of Adams v. Railroad, supra, is a just one, that gives equal right to all persons engaged in the same pecuniary business and it was the purpose of the constitutional convention only to allow exemptions of property in favor of a use to which the property was to be devoted to extend only to non-profit making institutions, and that when the legislature undertakes to exempt property devoted to a use, and not exempt all property eo nomine, the use must not be to a business which seeks pecuniary gain as its sole object. Of course, a charitable institution may require some fee or reward for some service, but profit making must not be its object. Considering sections 181, 182, and 112 of the Constitution together, it is clear to my mind that the act under review cannot be upheld.
*440I do not think there is any merit in the federal questions assigned for error. The privileges and immunities clause of the federal Constitution does not arise here, because a person cannot engage in the business of insurance, and the citizens of the several states under our law can become incorporators equally with the citizens of this state. In so far as the question of the equal protection of the law is concerned, I think the state has authority to make the classification which it has as against foreign insurance companies under the authority of Cheney Bros. Co. et al. v. Massachusetts, 246 U. S. 147, 38 Sup. Ct. 295, 62 L. Ed. 632, 38 Sup. Ct. 295, and N. W. Mutual Life Ins. Co. v. Wisconsin, 247 U. S. 132, 38 Sup. Ct. 444, 62 L. Ed. 1025.
I cannot forbear, however, to register my dissent from the announcement in the majority opinion that the city cannot raise this question. The city is an agency of the state government and has been given the power to sue and be sued. Under our laws all property is taxable unless specifically exempt and a city has a right to levy and collect the tax here involved unless the exempting statute is valid. It is in no sense seeking to assert some other person’s right, but is seeking to assert its own right, and-is met by the statute as a defense to that right. If the statute is valid, the defense was complete and the city’s right annulled. If the statute is void and unconstitutional, it is no defense to recovery.
Section 4805, Code of 1906 (Hemingway’s Code, section 3169), gives the! state a right to bring all actions and to have all remedies to which individuals are entitled in a given case, and like provisions are given counties and cities by the state. In the case of State v. Nichols, 39 Miss. 318, 2 Morris’ State Cases, 1358, it is stated in the second syllabus : , .
“The state of Mississippi is as properly a plaintiff in a prosecution or suit instituted in her name as a private individual, and hence is entitled to all the remedies provided by law for plaintiffs against sheriffs or other of*441fleers for misconduct in the execution and return of process.”
In the case of Hines v. State, 10 Smedes & M. 529, it was held that the state of North Carolina was entitled to bring an action in the courts of this state. ¡ Mr. Justice Thacher in that case said: “The state of North Carolina is entitled, as a corporation, to institute actions in this state.”
And the doctrine is generally acknowledged that a state, by reason of its sovereignty, is entitled to maintain an action at law or suit in equity in its own courts, and, by comity, in the courts of any other sovereignty. 25 R. C. L., p. 408, section 44.
In the case of State of Missouri v. Holland, 252 U. S. 416, 40 Sup. Ct. 382, 64 L. Ed. 641, the United States supreme court held that the state of Missouri was a proper party complainant to bring an injunction suit against a federal officer seeking to enforce the provisions of the federal Migratory Bird Law. At page 431, of 252 U. S., at page 382 of 40 Sup. Ct., at page 647 of 64 L. Ed., the court said :
“The state also alleges a pecuniary interest, as owner of the Avild birds Avithin its borders and otherwise, admitted by the government to be sufficient, but it is enough that the bill is a reasonable and proper means to assert the alleged quasi-sovereign rights of a state” — citing Kansas v. Colorado, 185 U. S. 125, 142, 22 Sup. Ct. 552, 46 L. Ed. 838, 844; Georgia v. Tennessee Copper Co., 206 U. S. 230, 237, 27 Sup. Ct. 618, 51 L. Ed. 1038, 1044, 11 Ann. Cas. 488; Marshall Dental Mfg. Co. v. Iowa, 226 U. S. 460, 462, 33 Sup. Ct. 168, 57 L. Ed. 300, 302.
In each of these cases the right of the state to bring a suit for the protection of its interests is recognized by the Federal supreme court.