Court Opinion

ID: 3985826
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:42:01.657753+00
Date Added: 2024-06-11T13:51:51.556903
License: Public Domain

I concur in the holding that Chap. 55, Laws of Utah 1939, amending Sec. 43-3-7, R.S.U. 1933, as amended by Chap. 40, Laws of Utah 1935, does not offend against Sec. 23 of Article VI of the state constitution which provides that *Page 228 
"no bill shall be passed containing more than one subject, which shall be clearly expressed in its title."
I dissent from that part of the opinion which holds that Chap. 40, Laws of Utah 1939, which is Sec. 43-3-7, U.C.A. 1943, imposes a tax of two and one-fourth percentum on the full amount paid to the plaintiff by its patrons who purchase title insurance. I think that the wording of the section plainly and unambiguously requires the very opposite conclusion from that reached in the prevailing opinion. Let us note the wording of the section prior to the amendment, and also the section as amended. Sec. 43-3-7 as amended by Chap. 40, Laws of Utah 1935, reads:
"All insurance companies engaged in the transaction ofbusiness in this state shall annually, on or before the thirty-first day of March of each year, pay to the state tax commission two and one-fourth per centum of the gross amount of premiums received on business in this state, * * * less the amount of all premiums returned to policy-holders * * *." (Italics added.)
As amended in 1939, now Sec. 43-3-7 U.C.A. 1943, it reads:
"All insurance companies engaged in the transaction ofbusiness in this state shall annually, on or before the thirty-first day of March of each year, pay to the state tax commission two and one fourth per centum of the total premiums received from insurance covering property or risks located in this state * * * less the amount of all premiums returned to policyholders on direct business in this state and premiums received for reinsurance of such property or risks * * *." (Italics added.)
It is interesting to note that the 1935 act based the tax ongross premiums received on business done in the state, while the 1939 act bases the tax on total premiums received forinsurance covering property risks. We must assume that the change in language was made intentionally and for a purpose. From the very nature of the language changes it seems indisputable that the purpose was to make clear that the tax was to be based upon receipts from insurance risks, and not upon receipts ofall business done, which was *Page 229 
the language of the prior act. This position is reinforced by the fact that there is to be deducted from the insurance risks
receipts before tax computation "premiums returned to policyholders on direct business" [that must mean direct property risk insurance] and also "premiums received for reinsurance of such property or risks," which can only mean premiums received from other insurance companies, which reinsure their risks with the company whose tax is being computed. In other words premiums received where the company acts merely as a reinsurer for the benefit and protection of the original insurer are not to be counted as receipts from property risks for figuring the tax. Such receipts are not considered receipts from business done in Utah by virtue of its Utah franchise. A company need not have a Utah franchise in order to reinsure for the benefit and protection of another insurer franchised to do business in Utah. Such insurance is not "direct business" in this state; it is not written for the benefit of the insured, but for the protection of the insurer. It is written not to protect against property risks, but against a business risk resulting from an act of possible overinsurance. Certainly the language "insurance of property risks" in the last section quoted above providing for deductions of premiums for "reinsurance of property risks" has the same meaning as "insurance covering property risks," where it speaks of total premiums.
The prevailing opinion overlooks this language and the significant difference in this regard between the 1935 and 1939 act, and bases its conclusions upon the use of the word "gross" premiums in the one act and the word "total" premiums in the other act. I think that the two words, "gross" and "total" are interchangeable and have the same meaning. Such too is the holding of the cases. Let us note a few. The California constitution imposed a franchise tax upon insurance companies based upon "the gross premiums received upon its businessdone in this state * * *." Art. XIII, Sec. 14(b) Cal. Const. (Italics added.) In Equitable Life v. Johnson, 53 Cal. App. 2d 49,127 P.2d 95, *Page 230 
99, the court said: "But it seems equally clear that it was the intent of the constitutional provision to tax all receipts that could reasonably be classified as `premiums.'" Again it says, "it imposes a tax on every insurance company doing business in this state, and the tax is imposed upon the `gross premiums received upon its business done in this state * * *' — not upon gross premiums on its life insurance business done in this state." (Italics added.) Let us digress to note that our 1935 act imposed the tax upon gross premiums received from business in thisstate, substantially the language of the California constitution. And in Western Travelers Acc. Ass'n v. Johnson,14 Cal. App. 2d 306, 58 P.2d 206, it was held that "gross premiums" meant total premiums. The South Carolina statute levied the tax upon the "total premium receipts from the State * * *." (Italics added.) In Jefferson Standard Life v. King,165 S.C. 219, 163 S.E. 653, 654, the court calls this the "gross annual premiums" and quotes from other cases all of which use the two terms interchangeably. In State v. Hibernia Ins. Co., 38 La. Ann. 465, the court says that in using the term "gross amount of premiums" the law refers to premiums received and earned. InConnecticut Mutual Life Ins. v. Commonwealth Mut. Life Ins.Co., 128 Ky. 174, 107 S.W. 802, 803, the court had under consideration the Kentucky statute fixing the tax on "all premiums receipted for on the face of the policy * * * and all renewal * * * on business done in this state," and held that the company was liable only on the amount actually collected for the risks assumed and not on overcharges. And in State v. Wilson,102 Kan. 752, 172 P. 41, it was held that a tax upon all premiums received on business done in the state for insurance of life, etc. does not include that portion of the charges over and above the actual cost of the insurance. It also points out that "gross," "all," "entire" and "total" mean the same things, and distinctions cannot be based thereon.
In 26 R.C.L. 187, we read that where a statute authorizes an assessment or tax on the gross annual premiums collected by the insurance company it is generally construed to refer *Page 231 
to money actually collected and used for insurance purposes and not to include fixed premiums, but the difference between the fixed premium and the actual cost of insurance. In New York LifeIns. v. Burbank, 209 Iowa 199, 216 N.W. 742, 744, it was held that the term "gross amount of premiums received" by a corporation for business done in the state in a statutory provision for a tax on such gross amount, meant the total
amount of premiums. In New York Life v. Wright,31 Ga. App. 713, 122 S.E. 706, it was held that "all premiums" and "gross receipts" of insurance companies were the same. It was further held that the word "premiums" was to be given the construction placed upon it by ordinary usage, and payment of which the company could exact as a condition precedent to keeping the policy alive, the maximum table rate premium stipulated in the policy. In Massachusetts Bonding  Ins. Co. v. Chorn,247 Mo. 15, 201 S.W. 1122, 1124, the court was called upon to consider a Missouri statute levying upon insurance companies a percentage franchise tax based upon premiums received in the state or business done in the state. The court said:
"The thing taxed in this case is the right to transact thebusiness of various kinds of so-called insurance. * * * The payment of the tax entitled it * * * to transact this business
in its capacity as a corporation."
It proceeds to say this is a tax upon the insurance business done in the state. It points out that the Missouri tax is a tax upon the "business done" and not upon the "insurancefurnished." Such seems to have been the provision of our 1935 act, which in 1939 was changed to tax premiums received from "insurance covering property or risks." which is equivalent to "insurance furnished."
In the case of Fire Ass'n of Philadelphia v. Love, 101 Tex. 376,108 S.W. 158, 159, the statute fixed the tax upon the "gross amount of premiums received in this state, upon property located in this state." The court says: *Page 232 
"When the premium is received by the insurance company, it has transacted the business for which it is licenced * * *. The whole purpose and object of ascertaining the amount of premiums received is to fix the value of the privilege granted."
Of course this privilege is that of writing insurance. The case also holds there is no difference in the use of the words "gross" and "total." They mean the same thing.
It seems therefore that the position now taken by the tax commission might have been sustained under the 1935 Act (which is doubtful and not decided) because that tax was on businessdone, while the 1939 act is expressly based on "insurance received covering property risks."
The prevailing opinion also refers to the fact that the statute says:
"The taxes and fees as provided herein shall be in lieu of all other state, county and municipal licenses and fees of every kind and character."
Clearly and palpably that refers to licenses and fees governing the matter and field licensed by the state for such tax and fee, to wit: the right to transact the business of insurance in the state. It does not cover the right to do an abstract business, a real estate business, a growers' market, nor a clothing store. It is a license to do an insurance business.
I see no escape from the conclusion that the tax should be levied only on the premiums charged for the insurance risks. I therefore dissent. *Page 233