Court Opinion

ID: 8058678
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:35:38.190439+00
Date Added: 2024-06-11T16:37:57.999347
License: Public Domain

The Chancellor,
(dissenting.) I regret that I am unable to concur with my brethren in affirming this judgment. The whole question is upon the effect of the words “ accumulated surplus,” in the fifteenth section of the tax act of 1866. It is whether these words apply to the premiums received by an insurance company, and yet unearned, because the risks lor which they were received are still running against the company.
We have to do only with the meaning of these words as used in the act. We are not to review the wisdom of the legislature in taking the capital paid and the accumulated surplus, as the proper measure of the taxable property of a private corporation, in an act providing for equal taxation on all property. Nor have we to deal with the fact that, by this measure, some property may escape taxation, either from defect in the law or difficulty in reaching it. That portion of the bills discounted, held by banks, which represents the average deposits, in all banks a large proportion of their discounts may not be taxed, because some belong to non-residents, and those of residents may not be assessed, because not given up, as, in fact, most are not. Insurance policies have a value easily ascertained, to a dollar. That value is the proportion of the premiums paid which corresponds to the unexpired time. But this is not the question before us ; that is for the legislature alone.
The term “accumulated surplus” is elliptical, and if it had no settled meaning, might as well apply to the surplus shoes and hats on hand of a manufacturing corporation, or the surplus cars or engines of a railroad company, which had been allowed to accumulate. But it has a settled and well-known technical meaning; that meaning is the surplus profits above dividends which any company has allowed to accumu*582late, or has piled up. This is the meaning given to it by financiers, by courts, and in legislation. It is the meaning given to it by this court in The State v. Utter, 5 Vroom 489, which defines it to be the fund in excess of capital and liabilities. It is given to it by legislation, in this very section, iu making it the measure of assessment for companies having capital stock, in contra-distinction to others who are assessed for the full amount of their property and assets. Among financial men the meaning is settled by long and uniform use - none could or would mistake the meaning of the term, but would apply it to surplus profits reserved from division. A vendor of insurance stock who should represent the amount of the company’s surplus at the amount of its premium fund, would not escape on ’Change, in London or this country, the charge of swindling, by claiming that he did not understand the term. Nor would even the decision in this case protect from personal liability, directors who, in reliance on it, should divide a premium fund three times the capital, (a not unusual situation,) leaving the capital alone to pay losses certain to occur, or a demand for return of premium which a disclosure of the fraud would bring down, either more than double (he capital. Even although the statute declaring this liability, if dividends are made except from surplus profits by implication, would authorize a dividend of the whole surplus, and the decision in this case declares the premium fund surplus profits. And among merchants it would be as reasonable to call the amount received for one day’s sales, the profits for that day, as to call the premiums received by an insurance company its profits.
The liability of the company to the insured is fixed, not contingent. That liability is to indemnify against all loss that may occur by fire. By the doctrine of chances among a large number of insured, the call for indemnity is not only certain to occur, but the amount of it at any given time is susceptible of calculation, if the premiums charged are properly based upon the real risks and expenses. That the value of these risks in the aggregate would be difficult for an assessor to estimate, made it proper for the legislature to do as-*583they have done, and not make tlie assets of such companies the basis of taxation, deducting liabilities. That such was their intention I think is demonstrated by the act of 1864, (Nix. Dig. 950, § 82,*) by which life insurance companies are taxed for their property and valuable assets, deducting debts and liabilities, limiting the liability on a life policy to its present value, instead of the sum for which the life is insured. Assuming that outstanding policies are liabilities that must be deducted, it does not direct that they shall be deducted, but only limits the value. That act was not repealed by the act of 1866, but remains in lieu of the provisions for which it was substituted, in the section of the act of 1862, corresponding to section fifteen in the present act, which is the same in other respects with this change. It must therefore be construed as part of the present act. No part of the premium on a perpetual policy can ever bo surplus — the whole is at any time liable to be paid back on demand; it is always a debt taxable in the hands of the insured.
Courts must construe a statute according to the plain meaning of its words, when that meaning is plain, and not contradicted by any other provision in the act; these words are not. The words of a statute, when olear, are the best key to the intention of its makers. The object of using words is to express what is intended, and not to allow it to be inferred from circumstances, or supposed intentions or policy. And statutes are written and published, that by the words used, the intention of the law-giver may be known. In Rudderow v. The State, 2 Vroom 515, Justice Elmer, in delivering the opinion of this court, says “ that no construction shall be made in opposition to the express words;” and “the legislature shall be intended to mean what they have clearly expressed, and consequenlly no room is left for construction.” In that case, this court held that a company whose capital stock had been largely impaired, must be taxed on its original amount, and that the words of the statute could not he restrained to the supposed intention of the legislature to tax every person and corporation upon what he or it was worth, and on that only. The law *584should be the same in every case, without regard to who owns the gored ox. The same rules of construction should be applied for the citizen as for the government.
I think we all agree that accumulated surplus means the surplus of profits remaining after dividends accumulated for use as capital. If I could bring myself to think that the term “ accumulated surplus ” in this section includes all the assets of the company above its capital, not otherwise taxed, or that the unearned premiums received by an insurance company are surplus profits, or profits in any sense, I would concur in affirming the assessment made upon this company. I cannot, after great effort, bring myself to either conclusion, and therefore must dissent.
For affirmance — Bedle, Scudder, Woodhull, Clement, Kennedy, Ogden, Olden, Wales — 8
For reversal — The Chancellor — 1

 Rev., p. 1149, § 57.