Court Opinion

ID: 6656963
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:58:33.464936+00
Date Added: 2024-06-11T15:59:59.321173
License: Public Domain

Letton, J.,
concurring specially.
I concur in the view expressed in the opinion of Mr. Justice Barnes as to fraternal beneficiary associations, such as the Royal Highlanders, not being charitable associations and entitled to exemption from taxation for that reason. I also agree that this court is not bound by any administrative construction of the former revenue law for the reasons set forth in his opinion. With the conclusion reached I also concur, but, since I do so mainly upon grounds not mentioned in his opinion, I deem it proper to briefly state my views. ■
The question whether or not the securities held in pledge by the Royal Highlanders, or other domestic fraternal beneficiary associations, or whether the reserve held by domestic old line life insurance companies, are taxable as the property of the respective associations or corporations, is purely one of statutory construction. The controlling question for the court to determine is, what was the intention of the legislature with respect to the subject matter? To ascertain this intention is the sole duty of the court in *29the premises, and, when this is determined, the construction must stand until such time as the legislature may determine that the court has incorrectly interpreted the meaning of its language, and enacts a new provision so clear and specific that all may understand. To ascertain the intention of the lawmaker, we must consider the whole statute, its purpose and object, and the means provided in the act for attaining the desired end. Uniformity in taxation is essential under our constitution, and it must be presumed that the legislature intended, as nearly as possible, taking into consideration the innumerable phases, conditions, and forms in which property appears, to secure uniformity. In accomplishing this result, it is proper to classify property, individuals or corporations, and by sections 58, 59, 60 and 61 of the law under consideration this classification has been made so far as concerns insurance companies. These sections have been the subject of consideration in State v. Fleming, 70 Neb. 523, and in Aachen & Munich Fire Ins. Co. v. City of Omaha, 72 Neb. 518, and they were upheld as a proper exercise of the taxing power in that behalf. By section 59 all foreign life and accident insurance companies, except fraternal beneficiary associations and mutual assessment companies, were placed in one class, and by section 61 all domestic life, fire, accident, or surety companies, except fraternal beneficiary associations and mutual assessment companies, were placed in another class. By the provisions of section 59 each foreign company is required to pay into the state treasury 2 per cent, of the gross amount of premiums received by it during the preceding calendar year for business done in this state. This is a business tax imposed under the second clause of .section 1, art. IX of the constitution, and such companies are also liable for taxation upon all their property within the state the same as other corporations or individuals, State v. Fleming, supra, and Aachen & Munich Fire Ins. Co. v. City of Omaha, supra. Section 61 provides that all domestic companies shall be taxed in each local political subdivision where the agent conducts the busi*30ness, upon their gross premium receipts for the preceding year, less premiums on canceled policies and reinsuran- .1, such gross receipts less reinsurance and cancelation to be taken as an item of property of tliat value, and be assessed and ta:.ed on the same percentage of such value as other property. This tax also is a business tax, and each of such domestic companies is liable also to be taxed upon its tangible property the same as any other individual or corporation within the state.
No specific provisions are made for taxation of fraternal beneficiary associations, or mutual assessment companies, having no capital stock, making no dividends, and whose scheme of insurance does not contemplate the return of any profits to policy-holders. The tangible property of such associations and mutual companies, whether domestic or foreign, is to be taxed, therefore, the same as the property of other persons and corporations. It is made compulsory upon domestic corporations carrying on the business of life insurance under the old line plan to accumulate and keep on hand a fund for the purpose of meeting their outstanding obligations to policy-holders, and, although not compulsory in the case of domestic fraternal beneficiary associations or mutual assessment companies, it is a matter of common knowledge that a number of such associations or companies, including the Royal Highlanders, voluntarily have accumulated a fund, variously designated as a mortuary, reserve, or emergency fund, for the purpose of meeting liabilities to their certificate-holders as they mature, in order to prevent such frequent assessments as experience has shown may be caused by epidemics of disease or widespread calamities. Whether held by old line companies or associations formed upon the assessment plan, these funds are set apart to meet obligations of a certain nature. They are not the property of the company or association for general purposes, but are devoted to a specific end. In the case of foreign life insurance companies, these accumulations are held, in other states or countries and are not within the reach of the taxing officers of this state. In this *31state such companies, therefore, merely pay 2 per cent, npon the gross amount of premiums received during the preceding year, into the state treasury as a business tax, and are otherwise assessed only upon their tangible property within this state, which may or may not exist, since its existence is not essential to carrying on business. They are relieved from all local taxation, except npon tangible property, unless taxed by local ordinances upon their business. Domestic companies, however, are taxable in each county, town, city, village, and school district, where an agent conducts their business, npon their gross receipts, less reinsurance and return premiums, on the same percentage of value as other property, and in addition thereto are taxed upon their tangible property..
It will be seen, from a comparison of these provisions with reference to the taxation of foreign and domestic life insurance companies, that if the law is construed so that the special reserve or mortuary funds of domestic companies and of domestic fraternal beneficiary associations, accumulated, reserved, and set apart to meet their liability to their policy and certificate-holders, are to be taxed as the property of such companies and associations, a heavy burden is placed upon domestic organizations from which foreign are exempt. The business tax which domestic companies are required to pay may be as great as, or greater than, that exacted from foreign companies, depending upon local conditions. It is not to be presumed that the legislature intended to impose a heavy burden upon domestic enterprises of this character from which those organized in other states are free. It would be doing violence to common sense to believe that its intention was to make a hostile discrimination against citizens of this state in favor of citizens of other states. It may be said that foreign companies are taxed in the states or countries of their domicile npon such funds, but, as is pointed out in the opinion of my brother Barnes, in several states where net credits are the subject of taxation the amount of liabilities to policy-holders has been held entitled to be properly *32offset against gross credits in the form of such securities. It may further be said that the methods of taxation of insurance corporations in other states are so various and diverse that it is almost impossible to say whether or not such accumulations are subject to any portion of the taxes paid by such companies. Many of the states provide for the taxing of insurance corporations, not by the value of their tangible property, but by franchise, business, or license taxes alone, and so far as I can determine from an examination of the statutes, in the main such funds, if taxed at all, are not taxed directly, as is sought to be done in this case. While, in the case of ordinary business, and if considered without relation to the sections of the revenue law relating to the subject of insurance taxation, it may be questioned whether contingent liabilities are such debts as would be entitled to be offset against credits, yet, considering the subject of insurance taxation as a whole, the conclusion reached by my brother Barnes seems to me to express the legislative intent.
With respect to the taxation of insurance companies and fraternal beneficiary associations, as well as in many other respects, the provisions of the revenue law of 1903 are far from clear and definite, and may be expected to give rise to many controversies. If the construction now placed upon the law fails to evidence the purpose of the lawmakers, the remedy lies with the legislature. The resources of the English language are vast and rich and flexible enough so that it may express its intention in phrase so clear and plain that an ordinary man may understand, and thus relieve the court from liability to a misconstruction of its meaning, and the taxpayers of the state from unnecessary litigation.