Court Opinion

ID: 6655722
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:57:36.793104+00
Date Added: 2024-06-11T15:59:54.461247
License: Public Domain

Holcomb, C. J.
In 1873 the legislature passed a law relating to the business of insurance .entitled “An act regulating insurance companies.” Compiled Statutes, 1901, ch. 43. The law took effect and was in force from and after June first of that year. By section 32 of tin act it was provided that certain fees therein enumerated should be paid by every company doing business in this state to which the act applied. These fees were for services by the state auditor for filing, and making an examination of the first application; issuing certificates of license; filing annual statements; issuing certificates of authority; for copying papers and certifying to the same;, etc. Section 33 of the act is set forth in full in the following language:
“Whenever the existing or future laws of any other state of the United States shall require of insurance companies incorporated by or organized under the laws of this state, having agencies in such other state, or of the agents thereof, any deposit of securities in such state, for the protection of policy-holders, or otherwise, or any payment for taxes, fines, penalties, certificates of authority, *323license fees, or otherwise, greater tlian the amount required for such purposes, from similar companies of other states, by the then existing laws of this state, then, and in every such case, all companies of such states establishing, or having theretofore established an agency or agencies in this state, shall be and are hereby required to make the same deposit, for a like purpose, with the auditor of this state, and to pay said auditor for taxes, fines, penalties, certificates of authority, license fees, or otherwise, an amount equal to the amount of such charges and payments imposed upon or required by the laws of such state, of the companies of this state, or the agents thereof.”
In the case at bar, the state prosecutes an action to recover of the defendant insurance company, under the provisions of the section quoted, two per cent, of the amount of the gross premiums received by the defendant company in this state during the year 1902. The petition alleged, in substance, that while domestic insurance companies are by the laws of Pennsylvania, the domicile of the defendant, required to pay but eight mills on the dollar upon the amount of the gross premiums received, insurance companies of other states and countries are required to pay into the treasury of said state two per cent, on the amount of the gross premiums received by them respectively, and prays a recovery of a like percentage of the gross premiums collected in this state by virtue of the provisions of said section 33. By the answer filed, the validity of the section quoted and the legality of the demand made by the state are challenged on three different grounds. It is alleged that the attempted imposition of the amount sought to be collected is contrary to section 1, article IX of the constitution, providing for the levying of a tax by valuation and uniformity of taxation, and which section reads as follows:
“The legislature shall provide such revenue as may be needful, by levying a tax by valuation, so that every person and corporation shall pay a tax in proportion to the value of his, her or its property and franchise's, the value *324to be ascertained in such manner as the legislature shall direct, and it shall have power to tax peddlers, auctioneers, brokers, hawkers, commission merchants, showmen, jugglers, inn-lceepers, liquor dealers, toll bridges, ferries, insurance, telegraph and express interests or business, venders of patents, in such manner as it shall direct by general law, uniform as to the class upon which it operates.”. It is also alleged that the section quoted is repealed by implication by the revenue law of 1879 (section 38, chapter 77, Compiled Statutes), and the amendatory section as enacted by the legislature in 1887. It is further alleged that the imposition of the tax sought to be collected is unauthorized, because no insurande company organized under the laws of Nebraska has ever had any agent or agency in the state of Pennsylvania, and has never been admitted to do business therein, and that companies created under the laws of Nebraska have never been able to comply with the laws of Pennsylvania with respect to the admission of insurance companies to transact business in said state. It is regarded as neither advisable nor proper to attempt a discussion or consideration of that part of the answer of the defendant last above referred to,’ and the same will not be further noticed in the further consideration of the case. The state has filed a demurrer to the answer of the defendant, raising thereby issues of law only in respect of the defenses interposed of which we have just made mention.
Section 33 of the act of 1873 may be euphemistically called by some a reciprocal provision in the insurance law; while counsel for defendant insists on its being more properly denominated by the more harsh appellation of a retaliatory measure. Whatever may be the proper designation of the act as to its nature and characteristics, such legislation seems to be generally regarded as eminently just and fair, and based upon acknowledged sound, legal principles. Such an act asserts only the self-respect and dignity of a sovereign state, justly maintained in its business relations and dealings with other commonwealths.
*325While extending comity and inviting friendly commercial intercourse, it demands reciprocal equality and fairness as a basis for such transactions. The state, while ready to acknowledge the courtesy due to sister states and the corporations created under their laws, insists that our own corporations, formed and fostered under the laws of this state, shall receive the same consideration and protection which this state accords to the corporations coming here from other states to engage in business within the limits of our own state. The principle justifying legislation of the character under consideration seems to be so firmly established, and with such unanimity of sentiment, as evidenced by the opinions of the courts of last resort in the many adjudicated cases elsewhere, that it seems unnecessary to engage in any extended discussion in its support. It is said by the supreme court of Indiana in State v. Insurance Co. of North America (the company here litigating), 115 Ind. 257, 265:
“The principle that a state may impose on a foreign cor•poration, as a condition of coming into or doing business within its territory, any terms,, conditions and restrictions it may think proper, that are not repugnant to the constitution or laws of the United States, is firmly established by the decisions of the supreme court of the United States. Bank of Augusta v. Earle, 13 Pet. (U. S.) *519; Lafayette Ins. Co. v. French, 18 How. (U. S.) 404; Paul v. Virginia, 8 Wall. (U. S.) 168; Ducat v. Chicago, 10 Wall. (U. S.) 410; Doyle v. Continental Ins. Co., 94 U. S. 535.”
The authority and power of a state, by proper legislation, to impose additional burdens and conditions upon an insurance company of another state, where the laws of the state of its creation discriminate in favor of such company and against those of other states and countries, such as is sought to be done by the provisions of section 33, heretofore quoted, are recognized, approved and upheld by the supreme court of the United States and the supreme courts of several of the different states of the Union. With but one exception, in so far as our investigation of the matter *326has extended, all the courts which have been called upon to express themselves on the subject are of one mind in maintaining the validity of such legislation. Philadelphia Fire Ass’n v. New York, 119 U. S. 110; People v. Fire Ass’n of Philadelphia, 92 N. Y. 311; Phœnix Ins. Co. v. Welch, 29 Kan. 672; State v. Fidelity & Casualty Co., 77 Ia. 648; Germania Ins. Co. v. Swigert, 128 Ill. 237, and State v. Insurance Co. of North America, supra. The exception mentioned is from the supreme court of Alabama, which holds such legislation to be a delegation of legislative power, and therefore invalid. Upon legal principles of general application and under the authorities cited, it can hardly be doubted that the enactment of the provisions of section 33, heretofore quoted, is clearly a constitutional exercise of legislative power in no way inhibited by the fundamental law of the state or the nation. Were it solely a question of the power of the legislature to provide for the reciprocal features found in the above mentioned section, we should not hesitate to declare there is no legal obstacle in the way of the state’s recovery in the present action.
It is contended, however, by counsel for defendant that, while the legislature may have the power to levy a tax on foreign insurance companies by way of a license or privilege tax, such power has not been exercised by the provisions of section 33, and that the exaction therein provided for is purely a tax for revenue purposes, and the test of its validity is to be determined by the application of the same principles as those governing the levying and collection of a property tax. It is argued that the license* fees, authorizing the defendant to do business in this state, are* provided by section 32, of which mention has been made, and that the company having once entered the state 1o engage in business must then be placed upon the same plane as all other companies engaged in a like business, and that the enforcement of the tax sought to be recovered violates the rule of uniformity required by section 1, article IX of the constitution. We find ourselves unable to *327accept this argument as convincing. It is, we think, the manifest intention of the legislature to provide for the exaction which is sought to he imposed herein as a privilege or license tax as one of the conditions on which the company is admitted into the state to engage in business' herein. That is, the legislature has declared, that the company’s right and authority to enter and engage in business in this state is dependent on its comjdiance with the provisions of section'32 as to the fees therein required to be paid as a condition precedent, and also compliance with the provisions of section 33, whenever those provisions become applicable. The provisions of the latter section are an additional burden and exaction to those contained in section 32 on those companies, only, upon which the section is intended to operate. It says to the corporation doing business in this state having its domicile in another state, the laws of which discriminate against those companies engaged in a like business therein from other states or countries, that, in addition to the general requirements as to fees and licenses under section 32, you must also meet the same extra burdens and exactions required by the laws of your home state of outside companies doing business therein. The principle justifying the provision is in no wise changed or qualified, by reason of the fact that the exaction may not be demanded in advance and as a condition precedent to entrance into the state. It is sufficient if it is one of the conditions imposed, not only as a right to enter the state, but to continue to do business herein. It is an obligation assumed and is a part of the conditions to be complied with for the privilege of engaging in business in the state, and may be enforced in any proper manner when the exaction becomes due. What is said by the supreme court of Indiana in State v. Insurance Co. of North America, supra, is here quite apropos. Say the court:
“Moneys which have or may become due to the state from any foreign insurance company, under the provisions of the retaliatory section of our statutes regulating foreign *328insurance companies doing business in this state,are or will be due and payable as a part of the terms or conditions of its entering this state and transacting business within its limits. Such retaliatory section of our foreign insurance company statutes, therefore, is not within our constitutional restrictions in relation to taxation.”
In relation to a tax upon the gross earnings of insurance companies doing business in this state which, on principle, is of the same nature as the imposition sought to be enforced in the case at bar, in the very recent case of State v. Fleming, 70 Neb. 523, it is said:
“Relating to the provisions of sections 59 and 60, it is plain that the tax of 2 per cent, upon the gross earnings of the companies mentioned in these sections is a tax imposed, not upon their property, but upon their privilege of doing business in this state.”
Such a tax, say this court, is not in any sense a tax upon the property of these corporations, but a privilege tax and, as such, is Avholly unobjectionable.
There remains to be considered another feature of the provisions of section 33 in this same connection. It is urged that the selection, for the purposes of the exactions of the nature sought to be imposed in the present case, of those companies only having their domicile in another state, the laws of which discriminate against outside companies, is an arbitrary and unreasonable classification, not at all warranted under the second clause of section 1, article IX of the constitution, and that, because of such attempt at arbitrary classification, the act can not stand. As it occurs to us, a sufficient answer to this contention is that, when the principle underlying the right to levy a tax or exaction such as'we are discussing is admitted or is established, there is included in the proposition the idea of reasonableness, and an acknowledgment of the propriety of the classification. In order to make the operation of an act of this nature effective, there must be a classification both as to states and the character of the burden. The principle would be of no utility, and there *329could be no practica] application, unless the companies against which the act should operate might, by the legislature, be restricted to those states, only, and to the kinds of burdens and (exactions imposed by the laws of each individual state whose laws, in respect to the same matter, render tlie reciprocal legislation proper and necessary to effectuate', the desired purpose. The classification is not only wholly devoid of arbitrary features, but is founded upon considerations of the most reasonable kind and altogether appropriate to the object sought to be attained. Hay the supreme court of Kansas, in Phœnix Ins. Co. v. Welch, supra:
“It matters not whether this charge upon the plaintiff is to be regarded in the nature of taxation, or a license. In neither case is it justly obnoxious to the charge of inequality in the sense that would make it unconstitutional. The legislature may classify for the purposes of taxation or license, and when the classification is in its nature not arbitrary, but just and fair, there can be no constitutional objection to it. * * * Here foreign insurance corporations are classified by the state from which they come, and when Ave consider the purposes of such classification it can not be held that there is anything arbitrary or unjust therein.”
The rule announced in Rosenbloom v. State, 64 Neb. 342, on the subject of classification under the second clause of section 1, article IX, obviously gives warrant for the vieAvs expressed herein regarding the same matter.
The more serious problem to consider and determine in disposing of the present case, as we view the subject, is regarding the contention that section 33, chapter 43, or at least that portion thereof referring to the imposition and enforcement of a reciprocal tax, such as is herein sought to be recovered, is repealed by the enactment of the general revenue law of 1879 known as chapter 77, article I, of the Compiled Statutes, 1901, and especially section 38 thereof. The act is entitled “An act to provide a system of revenue.” It, in express terms, repeals “all acts and parts' *330of acts inconsistent witli the provisions of tills act.” Section 38, as originally enacted, provided for a tax upon the gross amount of premiums received by insurance companies within the state, during the previous year, and declared that “Insurance companies shall be subject to no other taxation under the laws of this state, except taxes on real estate, and the fees imposed by the chapter on insurance.” Relative to the contention that this section, as originally enacted, repeals by implication that part of section 33, chapter 43, now under consideration, we are prone to the-belief that the word fees should not be given a narrow and technical meaning, as argued by counsel for defendant, but rather be accepted in its broad and most comprehensive meaning, which, in view of the rule that repeals by implication are not favored, would probably justify the construction that all license fees or taxes in the nature of a privilege to do business in this state, as contemplated by both sections 32 and 33, would be included within the exception mentioned, and come fairly within the meaning of the words except “fees imposed by the chapter on insurance.” It is profitless, however, to discuss this phase of the subject, as nothing could be gained thereby save, possibly, the ascertainment of rights and obligations of a moral rather than of a legal character. In 1887, section 38, chapter 77, as originally enacted, was amended by the legislature, the amending act being entitled “An act to amend section thirty-eight of an act entitled ‘An act to provide a system of revenue.’ ” The section as amended provided for the levying of a tax on the net amount of premiums received instead of the gross amount, as before provided for. The section as amended also declared that “Insurance companies shall be subject to no other tax, fees, or licenses under the laws of this state, except taxes on real estate and the fees imposed by section 32 of an act regulating insurance companies, passed February 25, 1873.” It will be observed that, not only was the basis for levying a tax changed from the gross amount to the net amount of the premiums received, *331but that also, in specific terms, it was declared that no other tax, fees, or licenses under the laAVs of the state should be exacted from such companies, except taxes on real estate and the fees imposed by section 32, only, of the act of 1873 regulating insurance companies. It is difficult to conceive of the use of more specific language which might be employed, with a view of prohibiting all other forms of taxation than the general tax provided by the amended section 38, chapter 77, and the fees imposed by section 32, chapter 13, being the act regulating insurance companies and passed in 1873. Judging from the language found in the amended section, it is difficult to escape the conclusion that the amendment was intended to, and necessarily did, have the effect of repealing by implication the provisions of section 33 of the act of 1873 under consideration. The two sections are so repugnant to each other that both can not stand. If the reciprocal tax sought to be collected in this action is now enforced, then, obviously, the company is subject to other taxes and fees, under the laws of this state, than a tax on premiums received, and taxes on real estate, and the fees imposed by section 32 of the act regnlating insurance companies. It is manifest that, in the enactment of the revenue law of 1879 and especially the provisions found in section 38, the legislature had in mind the-prior legislation affecting insurance companies, for the act of 1873 is specifically mentioned in the exception of the fees therein provided for, as not coming within the general exception of the laying of other taxes and impositions than those contemplated by section 38. As has been suggested, the exception in general terms of the fees provided for by the prior chapter on insurance, is probably susceptible of the construction that the reciprocal tax feature of section 33 of that chapter, as one of the conditions of an insurance company entering and engaging in business in this state, would come within the terms of the exception and would not be construed as being repealed by implication by the later act.
But, by the amendment of 1887 of section 38 of the *332revenue act, the legislature has not only again referred to the prior chapter on insurance, but has gone to the extreme limit in the expression as to what fees provided for by that act shall come within the exception clause, and has said in words that need no explanation or construction that the fees provided for by section 32, only, of that chapter shall be exacted from the insurance companies doing business in this state, in addition to the taxes on premiums as provided by section 38 of the revenue act, and taxes on real estate. The maxim, expressio unius est exclusio alterius, would seem applicable, resulting in the warrant-able inference that the legislature intended to exclude the reciprocal tax feature contained in section 33. Had there not been in section 38, as originally enacted or as amended, special reference to the prior chapter on insurance, but only an exception clause general in its • character, we Avould, in construing such a statute, be warranted, perhaps, in saying that the exception referred only to taxes and impositions laid primarily for revenue purposes, and had no bearing on the chapter on insurance, because the chief object of the latter is regulation of the insurance business, rather than the raising of revenues. It may possibly be that the legislature did not fully appreciate the legal effect of the enactment of the amendment to section 38, but the thought suggests itself to one’s mind that those especially interested in legislation favorable to insurance companies, who are usually in convenient calling distance with suggestions and advice during legislative sessions, by their shrewdness and -finesse, have brought about a declaration by the legislature, in unmistakable terms, in the passage of the law which operates as a repeal by implication of the provisions of section 33 authorizing a reciprocal tax, as effectually as though the repeal was in express terms. The words in section 38 as amended are so plain, so specific, so unambiguous, that they admit of no other construction. The meaning which the words import must, Ave think, be held conclusively presumed to be the meaning which the legislature intended to convey; in other words, *333the statute must be interpreted literally. “Even though the court should be convinced that some other meaning was really intended by the lawmaking power, and even though the literal interpretation should defeat the very purposes of the enactment, still the explicit declaration of the legislature is the law, and the courts must not depart from it.” Black, Interpretation of Laws, ch. 3, sec. 26. Stoppert v. Nierle, 45 Neb. 105; State v. Moore, 45 Neb. 12; Woodbury & Co. v. Berry, 18 Ohio St. 456; McCluskey v. Cromwell, 11 N. Y. 593; Doe v. Considine, 6 Wall. (U. S.) 458. In an early case in this court, People v. Weston, 3 Neb. 312, in speaking of the repeal of statutes by implication, it is observed by Mr. Justice Gantt who wrote the, opinion (p. 323) :
“In the case of the Town of Ottawa v. La Salle, 12 Ill. 339, it is said that It is a maxim in the construction of statutes that the Jaw does not favor a repeal by implication. The earliest statute continues in force unless the two are clearly inconsistent with, and repugnant to each other, or unless in the latest statute some express notice is taken of the former, plainly indicating an intention to repeal it. And Avhen two acts are simply repugnant, they should, if possible, be so construed that the later may not operate as a re])eal of the former by implication.” Citing Ewarris, Statutes, 674; Bacon’s Abridgment, title Stat. D; Bowen v. Lease, 5 Hill (N. Y.), 221; Planters Bank v. State of Mississippi, 6 Smed. & M. (Miss.) 628; Hirn v. State of Ohio, 1 Ohio St. 15.
In State v. McCaig, 8 Neb. 215, it is held that, where statutes or parts of the same statute are so repugnant to each other that both can not be executed, the latter is always deemed a repeal of the earlier. It is said in the opinion, quoting approvingly from Brown v. County Commissioners, 21 Pa. St. 37:
“Where two statutes are so flatly repugnant that both can not be executed, ánd we arc; obliged to choose between them, the later is always deemed, a repeal of the earlier. This rule applies with equal force to a case of absolute *334and irreconcilable conflict between different sections or parts of the same statute. The last words stand, and the others which can not stand with them go to the ground.” See also White v. City of Lincoln, 5 Neb. 505, 514; Lawson v. Gibson, 18 Neb. 137; State v. Bemis, 45 Neb. 724; State v. Moore, 48 Neb. 870; State v. Magney, 52 Neb. 508.
The attorney general, as we understand his presentation of the case, concedes that section 38, chapter 77, as amended does repeal by implication that part of section 33 under which a recovery is sought, if the amended section be held valid. But it is argued by him that such section is unconstitutional and, for that reason, can not have the effect of repealing section 33 of chapter 43 or any part thereof. It is urged in support of the contention, that the attempted legislation found in the original section and the amendment thereto is in direct violation of section 1, article IX of the constitution, providing for the raising of needful revenue by levying a tax by valuation, so that every person and corporation shall pay a tax in proportion to his, her or its property and franchises, and that, because personal property of insurance companies is attempted by this section to be exempted from taxation, the fundamental law is violated. We are quiff; well satisfied that the attempted exemption from taxation of personal property is in direct contravention of the fundamental law. But, if such be the case, does it necessarily or legally follow that the entire section must be held invalid? We think not. The rule ordinarily is that a statute repugnant to some constitutional provision will yield to the extent of the repugnancy and no further. Scott v. Flowers, 61 Neb. 620; State v. Karr, 64 Neb. 514; State v. Fleming, 70 Neb. 523. The principle deducible from these several cases is of peculiar force and special application to section 38. The act is complete in all respects and is capable of enforcement. The unconstitutional feature is of a negative rather than of a positive character. The exemption from other taxes can not (extend to personal property without conflicting with con*335stitutional provisions. As a question of practical application and results the matter is of but little importance, because companies from other states maintaining agencies in this state usually have hut little, if any, personal property subject to taxation. But the provision attempting to exempt personal property, as to such exemption, must yield to the superior law, and the personal property of the insurance company held to be assessable, wherever found, as is all other personal property. In so far as the section permits personal property to escape taxation, it must he held without legal force and effect, hut otherwise it stands as a valid legislative enactment. The legal result would he that insurance companies must pay taxes on their personal property, on their real estate, on the net amount of premiums received, and must also pay the fees provided by section 32 of chapter 43, and that no other tax, fees or licenses under the laws of this state can be lawfully levied on such companies. The law being valid in all other respects and capable of enforcement, and, by its express terms, being utterly repugnant and inconsistent with the reciprocal tax feature of, section 33, so that one or the other must fall, we are driven to the conclusion that section 38, as amended in 1887, repeals by implication that part of section 33 of the act of 1873 providing for the exaction which is sought to be enforced in the case at bar. The answer in respect of this phase of the case states a good defense and, for the reasons given, the demurrer thereto should be overruled and judgment entered dismissing the action, which is accordingly done.
1. Statute: Validity. Where a part of an act is unconstitutional, because contravening some provision of the fundamental law, the language found in the invalid portion of the act can have no legal force or efficacy for any purpose whatever. 2.-: Repeal by Implication. That part of the revenue act (Compiled Statutes 1901, ch. 77, art. I, sec. 38), providing “Insurance companies shall he subject to no other tax, fees, or licenses under the laws of this state, except taxes on real estate and the fees: imposed by section 32 of an act regulating insurance companies, passed February 25, 1873,” being unconstitutional because attempting to exempt insurance companies from the payment of taxes on personal property, is void and of no effect for any purpose, and can not, therefore, operate as a repeal by implication of the provisions of section 33, chapter 43, Compiled Statutes, or any portion thereof.
*335Dismissed.