Court Opinion

ID: 4137972
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:31:03.9884+00
Date Added: 2024-06-11T14:36:28.627935
License: Public Domain

TEE       ATFORNEY             GENERAE.
                            CDPTEXAS

                              March 31. 1949

Honorable G. C. Morris, Chairman
Senate Insurance Committee
5 1st Legislature
Austin, Texas                    Opinion No. V- 800.

                                     Re:   The constitutionality of
                                           Senate Bill 376, by Bullock,
                                           reiative to retaliatory re-
                                           serve and tax requir.ements
                                           on foreign insurance com-
                                           panies, in view of the re-
                                           quirement that revenue bills
                                           originate in the House of
                                           Representatives.

Dear Senator Morris:

               You request an opinion as to whether or not Senate
Bill 376 violates that provision of the Constitution which requires
revenue-raising bills to originate in the House.

              The portion of Senate Bill 376 under inquiry follows:

              ‘Whenever. by any law or regulation in
      force without this State, any group of individuals,
      society, association or corporation of this State
      transacting the business of life insurance, per-
      sonal accident insurance, ‘life and accident in-
      surance. or health and accident insurance, or
      agent thereof. is required to make any deposit
      of securities thereunder for the protection of
      policy-holders or otherwise, or to make pay-
      ment of taxes. fines, penalties, certificates of
      authority. valuation of policies, license fees, or
      otherwise, or any special burden is imposed up-
      on any such insurance organization greater than
      is imposed by the laws or regulations of this
      State upon similar insurance organizations of
Hon. G. C. Morris,   Page 2 (V-800)

      any other state or country. or their agents, the
      said insur~ance organization of such states or
      countie~s shall be and they are hereby re,quired.
      as a condition precedent to their transacting
      business in this State, to make a like deposit
      for like purposes with the State Treasurer of
      this State and to pay to the officers or agency
      of this State designated by Texas law to receive
      such payment, and if there be no officer or
      agency so designated, then such payment shall
      be made to the said State Treasurer for taxes,
      fines, penalties, certificates of authority, val-
      uation of policies, license fees, and otherwise,
      a charge or payment at a rate or basis ‘equal to
      the rate or basis of such charges and payments
      imposed or required by the laws or regulations
      of such other state or country upon such insur-
      ance organization of this State and the agents
      thereof and to perform any such special burden
      so imposed. Any such insurance organization
      of any other state or country refusing for thirty
      (30) days to make any such deposit or to make
      payment of such fees or taxes, or to perform
      such special burdens, as above required, shall
      have its certificate of authority revoked by the
      Board of Insurance Commissioners,      provided
      that in the computation of any such deposit, pay-
      ment, tax or fee liability no credit, diminution
      or exemption shall be allowed any such insur-
      ance organization of any other state or country
      in excess of a similar credit, diminution or ex-
      emption allowed similar Texas insurance or-
      ganizations transacting the business of life in-
      surance, personal accident insurance, life and
      accident insurance, or health and accident in-
      surance.”

             Article III, Section 33, Constitution of Texas, provides:

             “All bills for raising revenue shall orig-
     inate in the House of Representatives,  but the
     Senate may amend or reject them as other bills.”
Hon. G. C. Morris,    Page 3 (V-800)

              It should be .noted that the above quoted constitutional
article is similar to Article I. Section 7, Clause 1, of the United
States Constitution, which reads:

                “All bills for raising Revenue shall orig-
        inate in the House of Representatives; but the Sen-
        ate may propose or concur with Amendments as
        on other Bills.”

              In connection with revenue bills, it is said in 59 C.J.
531. Section 24:

                “As a general rule the constitutions pro-
        vide that bills for raising revenue must originate
        in the house of representatives, or the lower
        house, as it is called. The precise meaning of
        the claulse ‘to raise revenue’ is to levy a tax as
        a means of collecting revenue, a provision for a
        direct tax against all the property in a state for
        governmental purposes, and should not be ex-
        tended to include bills the incidental result of
        which may be to create revenue. .”

               In United States v. Norton (1876). 91 U.S. 569, the Court
said:

                “The Constitution of the United States,
        article 1, sec. 7, provides that ‘All bills for
        raising revenue shall originate in the House of
        Representatives.’

                 “The construction of this limitation is
        practically well settled by the uniform action of
        Congress.    According to that construction. it
        ‘Has been confined to bills to levy taxes in the
        strict sense of the words, and has not been un-
        derstood to extend to bills for other purposes,
        which incidentally create revenue.’ Story, Const.
        Sec. 880.” (Emphasis is added throughout this
        opinion).

              In Twin City National Bank v. Nebeker (1897), 167 U.S.
196. it was held:
250
      Hon. G. C. Morris,   Page 4 (V-800)

                     “It is sufficient in the present case to say
            that an act of Congress providing a national cur-
            rency secured by a pledge of bonds of the United
            States. and which, in the furtherance of that object,
            and also to meet the expenses attending the, execu-
            tion of the act. imposed a tax on the notes in cir.-
            culation of the banking associations organized un-
            der the statute. is clearly not a revenue bill which
            the Constitution declares must originate in the
            House of Representatives.       Mr. Justice Story has
            well said that the practical construction of the Con-
            stitution and the history of the origin of the consti-
            tutional provision in question proves that revenue
            bills are those that levy taxes in the strict sense
            of the word, and are not bills for other purposes
            which may incidentally create revenue. 1 Story,
            Const. Sec. 880.”

                    The earliest decision in Texas concerning Article III,
      Section 33, Constitution of Texas, was in Day Land and Cattle Co.
      v. State, 68 Tex. 526, 4 S.W. 865. in which Justice Stayton wrote:

                     “It is further urged that the act of Febru-
            ary 25. 1879. is invalid, because it originated in
            a bill introduced in the senate, which, it is claimed,
            was a bill to raise revenue. The Constitution pro-
            vides that ‘all bills for raising revenue shall orig-
            inate in the house of representatives.*    (Constitu-
            tion, art. 3. sec. 33) . . . .

                     “To hold that such a bill was one for rais-
            ing revenue would require the placing on the lan-
            guage of the Constitution a construction which such
            language has never received; a strained construc-
            tion, which should never be placed on language con-
            tained in a Constitution or a statute. Similar lan-
            guage is found in the Constitution of the United States
            and, as said by Judge Story, ‘The history of the origin
            of the power already suggested abundantly proves
            that it has been confined to bills to levy taxes in the
            strict sense of the words, and has not been under-
            stood to extend to bills for other purposes which may
            incidentally create revenue:”
Hon. G. C. Morris,   Page 5 (V-800)

             The Court of Criminal Appeals in Gieb v. State (1893).
3 Tex. Grim. 514. 21 S.W. 190, said:

                ‘The act complained of is not a bill rais-
      ing revenue, within the meaning of article 3 Sec-
      tion 33, of the constitution, which provides that
      ‘all bills for raising revenue shall originate in the
      house of representatives.’    This provision of the
      constitution has reference to bills .raising revenue
      for such general purposes as the legislature is re-
      quired or authorized to raise, and to cover such
      appropriations as are made by that body, . . .I

              In James v. Gulf Insurance Co. (1944). 179 S.W.2d 397,
(Tex. Civ. App., reversed on other grounds, 143 Tex. 424, 185 S.W.
2d 966), the court had under consideration Senate Bill 144, Acts
1943, which provided for the transfer of portions of certain taxes,
license fees, or assessments already levied, collected and deposited
in certain special funds or accounts in the State Treasury under
other existing statutes, to the General Revenue Fund. The act did
not authorize the collection of any more revenue than the statutes
levied or assessed.   Justice Blair, citing Day Land & Cattle Co. v.
State and Gieb v. State, supra, as well as others. said:

               ‘But the primary purpose of Senate Bill
      144 was to provide for the disposition of sur-
      pluses in special funds and it is therefore not a
      bill ‘for raising revenue.’ To be such a bill un-
      der Sec. 33 of Art. 3, it must levy taxes, and
      does not include a bill for other purposes even
      though it may incidentally create revenue.”

              The Supreme Court of Colorado in Colorado National
Life Assurance Co. v. Clayton (1913). 54 Colo. 256. 130 P. 330,
had before it a case involving an act requiring all insurance com-
panies doing business in the state to pay to the Commissioner    of
Insurance two per cent of the amount of premiums received.      In
holding that the act, which originated in the Senate,. was not a
revenue measure within the constitutional provision requiring reve-
nue measures to originate in the House, the Court said:

              “A bill designed to accomplish some well-
      defined purpose other than raising revenue is not
252

      Hon. G. C. Morris,   Page 6 (V-800)

            a revenue measure.     Merely because, as an inci-
            dent to its main purpose, it may contain provi-
            sions, the enforcement of which produces a reve-
            nue, does not make it a revenue measure. Revenue
            bills are those which have for their object the levy-
            ing of taxes in the strict sense of the words.   If
            the principal object is another purpose, the inci-
            dental production of revenue growing out of the en-
            forcement of the act will not make it a bill for
            raising revenue. The primary object and purpose
            of this bill was to regulate insurance companies
            and the insurance business in the state.” (Empha-
            sis ours.)

                     Obviously, Senate Bill 376 on its face is a regulatory
      or retaliatory measure. and not one the main purpose of which is
      to levy a tax in the strict sense of the word. As we construe it, the
      bill has for its primary purpose the requirement of foreign insur-
      ance companies seeking to do business in Texas to conform with
      certain regulations and laws of this state, if like or similar regu-
      lations and laws of other states in which such foreign insurance
      companies are domiciled are imposed upon Texas insurance com-
      panies seeking to do business in such other states. Accordingly,
      it is our opinion that origination of the act in the Senate did not
      violate Article III, Section 33, Constitution of Texas.

                                   suh4M4RY

                    Senate Bill 376 is not a revenue raising bill
            within the meaning of Article III, Section 33. of the
            Texas Constitution.   It therefore may originate in
            the Senate of Texas. U.S. v. Norton, 91 U.S. 569;
            Twin City National Bank v. Nebeker. 167 U.S. 196;
            Day Land & Cattle Co. v. State, 68 Tex. 526. 4 S.W.
865; Gieb v. State, 31 Tex. Grim. 514. 21 S.W. 190;
            Colorado National Life Assurance Co. v. Clayton,
            54 Colo. 256, 130 P. 330.

                                                Yours very truly.

                                        ATTORNEYGENERALOFTEXAS

      FIRST ASSISTANT
      ATTORNEYGENERAL

      JAA:gw:erc                                   Assistant