Court Opinion

ID: 4489274
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:01:45.664298+00
Date Added: 2024-06-11T15:03:54.792270
License: Public Domain

Smith,
dissenting: Granted that the petitioner is not an association exempt from income and profits tax under the provisions of section 231 of the Revenue Acts of 1918 and 1921,1 can not believe that a benefit association of the character of the petitioner is a mutual life insurance company within the contemplation of the taxing act.
In the construction of a taxing statute it is of the utmost importance to interpret it according to the intent of the legislative body enacting it. Under the decision of the Board in this case the petitioner is subject to a large income and profits tax for the fiscal years ended February 29, 1920, and February 28, 1921, upon the contributions of members. For the latter year the petitioner is subject to the provisions of the Revenue Act of 1921. Section 242 of that Act defines a life insurance company as—
* * * engaged in the business of issuing life insurance and annuity contracts (including contracts of combined life, health, and accident insurance), the reserve funds of which held for fhe fulfillment of such contracts comprise more than 50 per centum of its total reserve funds.
Although there appears to be no provision of the Michigan statutes which requires any part of the amounts of money on hand at the close of the taxable year to be reserved for the fulfillment of its contracts, nevertheless, it is apparent that the entire amounts on hand are reserved for the fulfillment of such contracts and for the payment of its operating expenses.
The term “ life insurance company,” as used in all of the income-taxing /statutes, appears to apply to the ordinary life insurance company which writes insurance and annuity contracts. The petitioner is, as stated in the majority opinion, a “ local mutual benefit association.” It undertakes to pay benefits to its members in case of sickness, accident, or death. If it were not for the provision that a benefit was to be paid in case of death, there would apparently be no ground for contending that the company wap a life insurance company. But it is to be noted that the benefit paid in case of death in no case exceeded $175, which is presumably little more than enough to pay funeral expenses. It does not seem to me that the petitioner loses the benefits of section 234 (a) (13) of the taxing statutes merely by reason of the fact that it pays such death benefits. A *82member ⅛ entitled to the death benefit only upon the condition that he is in good standing with the company at the date of death. If for any reason he should leave the employ of manufacturers in the City of Pontiac prior to the date of death his estate receives no benefits and he loses all right to contributions made to the association. It seems to me that a contract between the member and association is not a life insurance contract but merely a contract for limited benefits. For the foregoing reasons I am of the opinion that the petitioner was a mutual insurance company, not a mutual life insurance company, within the contemplation of section 234 (a) (13) of the Revenue Acts of 1918 and 1921.