Court Opinion

ID: 9536524
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:01:18.123759+00
Date Added: 2024-06-11T14:54:38.389644
License: Public Domain

Mr. Justice Holland
dissenting.
In the last analysis, the only question presented here is: When a policyholder applies any dividend due him or received by him, by virtue of the policy, toward payment of additional insurance, is the premium for the additional insurance taxable? To me, the question provides the answer. The policyholder could have received the dividend in cash and purchased as much insurance *101as it would buy in another company and that company would have to report the transaction in its gross income revenue from premiums. The same would apply if he bought the additional insurance in the company from which he received the dividend. When he applied for additional insurance to the extent of his dividend, he released the company from the dividend, and if accepted, the company contracted for new or additional insurance for which it received a premium to the extent of the dividend. Any other reasoning would be to overrule the case of Cochrane v. National Life Ins. Co., 77 Colo. 243, 235 Pac. 569.
It is self-evident that when the dividend was applied toward additional insurance, the insurer became liable for this additional insurance, therefore the original policy, together with the increased insurance, could not have been bought in the first instance for the original premium. What was once a dividend, the property of the insured, finally became a premium or payment for a modified policy of insurance. When received by the company, this money did not go into a dividend or surplus fund, it went into the premium account. For the original premium, the company would not have issued the additional paid-up insurance.
To quote from Cochrane v. National Life Ins. Co., supra, “We are therefore of the opinion that the dividends should be considered as premiums collected or contracted for during the year and that the company is liable for the tax thereon.”
I am clearly of the opinion that the judgment should be affirmed.