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(148 N.E.) agency is located something in lieu of the panies, when admitted to this state, should taxes that would otherwise be realized from not be required to pay any tax which domessuch net receipts as are taken away.

tic insurance companies do not pay, by the [5] The power to tax insurance interests same token domestic insurance companies, or business is expressly conferred by the sec- who pay on all of their property, could justond clause of section 1 of article 9 of the ly complain that the Revenue Law as applied Constitution. That section also requires that to them is invalid, for the reason that it, in the act of the General Assembly creating effect, does not apply to foreign insurance such tax shall operate uniformly as to the companies doing a like business in the state, class to which it applies, and appellant ar- because such companies, by reason of the gues that, since domestic fire insurance com- withdrawal of their net receipts, are able panies make the same sort of contract, trans- to escape all, or practically all, property taxact the same sort of business, and are like- ation. wise doing business within the state, they be The contention of appellant that this tax long to the same class as foreign fire insur- is void for want of uniformity cannot be susance companies which have been permitted to tained. come into the state, and that therefore a tax [6,7] Nor is section 30 open to the objeclevied against the latter which the domestic lition that it violates the equal protection fire insurance companies do not have to pay clause of the Fourteenth Amendment to the is not uniform, as required by the section of Constitution of the United States. The porthe Constitution referred to. Counsel are in tion of the Fourteenth Amendment referred error in supposing that for purposes of tax- to provides: ation under this section of the Constitution

“No state shall make or enforce any law foreign and domestic insurance companies be- which shall abridge the privileges or immunities long to the same class, because they are do- of the citizens of the United States, nor shall ing the same kind of business within this any state deprive any person of life, liberty or state. There is no reason why insurance property, without due process of law, nor deny companies may not be divided into classes, to any person within its jurisdiction, the equal the very point of distinction in which shall protection of the laws." be the domicile of such companies; i. e.,

While a foreign insurance company may whether foreign or domestic. The levying of taxes upon foreign fire insurance companies entitled to the equal protection of the laws

be a citizen, it is not a citizen of the state and not upon domestic companies of the same character, as compensation for the right to of that state, as contemplated by the Fourdo business, is not, therefore, an infraction United States, until it has complied with the

teenth Amendment to the Constitution of the of this provision of the Constitution. Hughes v. City of Cairo, 92 Ill. 339; Ducat v. City main within the state. The only limitation

conditions which entitle it to come and reof Chicago, supra; Walker v. City of Springfield, supra; People v. Thurber, supra; Insur- upon the power of the state to prevent a ance Co. v. Bradley, 83 S. C. 418, 65 S. E. within its limits, or to exact condition for

foreign corporation from doing business 433. In Home Ins. Co. v. Swigert, 104 III, 653, allowing a corporation to do business in the

state, arises where the corporation is an init was held that not only can the Legislature classify insurance companies into do- strumentality of the federal government or mestic and foreign, but may likewise divide where its business is strictly commerce, in

terstate or foreign. Pembina Mining Co. foreign insurance companies into classes for

v. Pennsylvania, 125 U. S. 181, 8 S. Ct. 737, purposes of taxation; that such companies cannot complain of a classification which is 31 L. Ed. 650; Paul v. Virginia, supra; Pen

sacola Telegraph Co. v. Western Union Telemade the basis for admitting them into this state, even though such insurance companies

graph Co., 96 U. S. 1, 24 L.. Ed. 708; Missouri

v. Lewis, 101 U. S. 22, 25 L. Ed. 989; Horn are put in different classes, for the reason

Silver Mining Co. v. New York, 143 U. S. that the state may exclude them entirely, and therefore, in permitting them to enter, Co. v. New York, 134 U. S. 594, 10 S. Ct.

305, 12 S. Ct. 403, 36 L. Ed. 164; Home Ins. may impose whatever conditions it chooses.

593, 33 L. Ed. 1025. Nor is there in this any injustice. Foreign

We are of the opinion that there is no eqinsurance companies have or may have in uity in this portion of the bill of appellant, this state on April 1, when assessments on

and the superior court did not err in dismisspersonal property are made, practically noth- ing the same. The decree of that court will ing of value, while domestic fire insurance therefore be affirmed. companies are assessed for all of their hold

Decree affirmed. ings, both real and personal, including their choses in action, little, if any, of which tax THOMPSON and DUNN, JJ. (dissenting). is paid by foreign insurance companies. If The constitutional objections to section 30 it were to be said that section 30 violates the of the act to incorporate and govern fire, uniformity clause of the Constitution, for marine, and inland navigation insurance the reason that foreign fire insurance com- companies doing business in this state, pre

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sented for decision in this case, have not involved in the proceeding, manifestly no been presented or decided in any of the cases ruling was made with respect to it. No case involving the construction of said section is cited in support of the opinion filed where heretofore considered by us. People v. Bar- the objection here presented for decision rett, supra, was a mandamus proceeding was considered or decided, and we are of the brought by the city of Chicago, an agency of opinion none can be found. It will appear the state which spends public funds raised by from the discussion which follows that we taxation, against the board of review of do not agree with the construction given to Cook county, a tax-assessing agency of the section 30 of the act of 1869, nor with the state. No insurance company or other tax- construction given to other acts relating to paying person was a party to that litigation, the business of insurance which bear indiand therefore the question here presented rectly on the question before the court. could not have been presented in the pro Our Constitution recognizes a distinction ceeding. The validity of an act can only be between a tax on the insurance business, questioned by a party to a suit whose in which is an occupation tax, and a tax on the terests will be adversely affected by a judg- corporation using the privilege of doing an ment or decree. Nowhere in the opinion is insurance business, generally called a franthe question of uniformity discussed, and it chise tax. In 1919 the Legislature passed an is clear from reading the opinion that the act in relation to the taxation of nonresiquestion was not there considered by the dent insurance companies. This act pro court. In People v. Kent, supra, the action vides: was a mandamus proceeding brought by the “That each nonresident corporation, compacity of Chicago against the agent of nine- ny and association licensed and admitted to teen foreign insurance companies, which do an insurance business in this state shall, exwere named. The constitutional questions cept as herein otherwise provided, pay an an. presented in this case could have been pre nual state tax for the privilege of doing an insented in that case, but it is clear that the surance business in this state, equal to two only questions presented by the parties and per centum on the gross amount of premiums decided by the court were whether the tax

received during the preceding calendar year on

contracts covering risks within this state. involved was a property tax or excise tax

* The tax herein provided for shall be and whether the agent could be compelled in lieu of all license fees or privilege or occupaby mandamus to make the return required tion taxes levied or assessed by any municipalby section 30, The court held specifically ity in this state, and no municipality shall imthat the tax involved was a tax on the busi- pose any license fee or privilege or occupation ness of insurance, which is authorized by tax upon any such corporation, company or asthe second division of section 1 of article 9 sociation, or any of its agents, for the privi

lege of doing an insurance business therein; of our state Constitution. It was said in

but this act shall not be construed * the discussion of the question that this sec

to prevent the levy and collection of the tax tion of the Constitution requires such tax to authorized by section 30 of an act entitled, 'An be fixed by general law uniform as to the act to incorporate and to govern fire, marine class on which it operates, but whether the and inland navigation insurance companies dotax authorized by section 30 !3 a uniform ing business in the state of Illinois.'' Smith's tas was not considered, discussed, or de Stat. 1923, p. 1157. cided,

Other sections of the act provide the methIn Walker v. City of Springfield, supra, od of computing the amount of the annual the sole question before the court was the tax and of collecting it, and section 12 makes validity of a city ordinance imposing a tax the penalty for failing to comply with the based on premiums received by foreign in provisions of the act a revocation of the lisurance companies. The court expressly

cense to do an insurance business in this held that the tax was one referred to in the state. The title and the body of the act inproviso to section 30, and that the tax men-dicate clearly that this is a franchise tax coltioned in the first part of the section, which lected from foreign insurance companies as is the tax involved in the case at bar, was a

compensation to the state for the privilege different tax authorized for a dissimilar pur- granted by it to the company to do an in. pose. The only constitutional questions rais

surance business in this state. The provi. ed by the parties and considered by the court sions of section 1 of the act clearly indicate in the Walker Case were that the tax im- that it is to be the only franchise tax col. posed by the ordinance was double taxation, lected by the state or any of its agencies; and that it was not uniform. The court but the right of local taxing authorities, held that the tax there under consideration granted by other statutes, to collect from was a privilege tax or license fee, and that it such companies an occupation tax and a tax was not double taxation, and that it was on the real and personal property located uniform on the class on which it operated. within the several taxing districts is specifNo reference was made to the business tax ically preserved. mentioned in the part of section 30 here un No reference is made in the title of the der consideration, and, such a tax not being act of 1869, of which section 30 is a part,

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(148 N.E.)
to taxation, nor is there any provision in the particular insurance business shall be sub-
act levying a tax or providing a penalty for jected in the particular taxing district. The
the nonpayment of a tax. The act is one “to method of collecting the tax is not fixed by
incorporate and govern fire, marine and in- section 30 or any other section of the act of
land navigation insurance companies doing 1869.
business in the state of Illinois.” The first That the tax on net receipts, to which the
21 sections of the act relate to the incorpora- provisions of section 30 relate, is not a tax
tion and government of domestic companies. levied as compensation for the privilege of do-
Section 22 relates to the method by which ing an insurance business in this state is no
foreign companies may be admitted to do longer on open question. In City of Chicago
business in the state and to the government v. James, 114 Ill. 479, 2 N. E. 475, and in
of companies so admitted. Before there is Walker v. City of Springfield, supra, it was
granted to a foreign insurance company the held that the portion of section 30 preceding
right to do business in this state, section 22 the proviso relates to a tax on the business
requires (1) proof that a certain specified of insurance as distinguished from a fee for
capital has been subscribed and paid; (2) the a license to exercise the privilege of con-
appointment of a resident attorney in fact ducting an insurance business. In People v.
and the filing of a certificate of such ap- Kent, supra, it was held that this tax is a
pointment; (3) the filing of a certified copy charge made upon the business of insurance
of its charter and a verified statement show for the purpose of compelling that business
ing details of its organization, assets and to bear its just proportion of the burdens of
liabilities; (4) the deposit with the insurance government. The amount of the net receipts
department of securities; and (5) the secur- of the business is used as a measure for de-
ing of a certificate of authority for its termining the amount of the annual tax, and
agents; and its right to continue to do busi- the tax is levied without regard to the value
ness here depends upon the filing of an an- of the assets or physical property of the in-
nual statement of its financial condition. surance company within the state and with-
Compliance with the provisions of section 30 out regard to the number of policies issued
is not made a prerequisite for admission to or the value of the property insured. In Peo-
do an insurance business in this state nor ple v. Cosmopolitan Fire Ins. Co., 246 Ill.
to continue such a business. The action 442, 92 N. E. 922, we held that the tax on
does not require any act on the part of the net receipts collectible under section 30 is
company at any time. It requires the agent not a fee for a license to do an insurance
of a foreign insurance company to return business in this state. Section 30 does not
to the proper taxing authorities the amount assume to exact a fee as a prerequisite to the
of the net receipts of his agency.

granting of authority to do an insurance
In order to prevent a circumventon of the business in this state, but it assumes that
legislative intent there was passed in 1893 the authority to do such a business exists in-
an act providing a penalty for violation of dependently of its provisions.
section 30. This act makes it unlawful for There is a clear distinction between the
any insurance company to do an insurance privilege to transact a business within the.
business in this state, except through legally limits of a state and the actual operation of
authorized resident agents and penalizes any the business itself. The one looks to prepa-
company writing insurance otherwise than ration for engaging in the business, and the
through resident agents possessing proper other is the actual engagement in it. Greene
certificates of authority by revoking its li v. Kentenia Corp., 175 Ky. 661, 194 S. W.
cense to do business in this state. Smith's 820. It is just as clear that there is a dis-
Stat. 1923, p. 1157. This statute acts di- tinction between a tax on a particular busi-
rectly upon the foreign insurance companies, ness and a tax on the person exercising the
and a compliance with the act of 1893 is an privilege of engaging in that business. The
additional prerequisite to the right of such payment of the latter is a condition prece-
companies to do an insurance business in dent to the right to engage in the business,
this state. Section 30 acts directly upon the while the former is merely a charge on the
agent of foreign insurance companies, and business for the purpose of raising revenue
if such agent fails or refuses to make the for the maintenance of government. The
return required by the section he may be right of a foreign corporation to do business
compelled by mandamus to make the return. in this state is a privilege, and the tax levied
People v. Kent, supra. Section 30 does not against the corporation as compensation for
levy a tax on net receipts or on any other the right to enter or remain in the state is
property of foreign insurance companies. It what is commonly called a privilege or fran-
simply requires the agent to return to the chise tax. It may be imposed for the grant
proper taxing authorities the amount of the of a privilege which is never exercised by the
net receipts of his agency for the preceding licensee. On the other hand, a tax on the
Fear, so that the taxing authorities may enter business of the corporation is a charge upon
this amount on the tax list for the purpose of the result of exercising the privilege when
determining the amount of tax to which the exercised. This distinction between a busi-

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ness tax and a privilege tax was recognized , dependent government. Therefore the Leg. and applied in Nebraska Telephone Co. v. islature, subject to constitutional restrictions, City of Lincoln, 82 Neb. 59, 117 N. W. 284, may tax all property or only certain kinds 28 L. R. A. (N. S.) 221.

of property, all occupations or only certain A state has the right to prohibit a foreign occupations, and all privileges or only certain insurance company from exercising any part privileges. Constitutional provisions relator all of its charter powers within its bord- | ing to the power of taxation do not operate ers, to impose such terms and conditions up as grants of the power of taxation to the on its right to do business in the state as it government, but instead merely constitute may see fit, or to entirely exclude it from the limitations upon a power which would otherstate. Alpena Portland Cement Co. v. Jen- wise be practically without limit. The limkins & Reynolds Co., 244 Ill. 351, 91 N. E. itations fixed by our state Constitution are 480; Hartford Fire Ins. Co. v. City of Peor- (1) that all taxes levied on property shall be ia, 156 11). 420, 40 N. E. 967. The privilege by valuation; and (2) that all excise taxes of doing an insurance business in this state levied (a) on business, or (b) on persons usaccorded to a foreign corporation being disc ing a privilege, shall be by general law, unitinct and different from the privilege ac- form as to the class upon which it operates. corded to a domestic corporation, the Legis- The Legislature may classify businesses for lature, in fixing the tax on the privilege of the purpose of taxation, but, when the clasdoing business, bas the power to place for- sification is made, all, which by the existeign corporations in one class and domestic ence of the facts on which the classification corporations in another (Hughes v. City of is made fall within it, must be subjected to Cairo, 92 Ill. 339), and also to subdivide for- the tax imposed. Pullman Palace Car Co. eign corporations into different classes. v. State, 64 Tex. 274, 53 Am. Rep. 758; (Home Ins. Co. v. Swigert, 104 Ill. 653). On | Auditor v. Walker, 128 Ky. 1, 107 S. W. 254; the other hand, in exercising its power to Mutual Reserve Fund Life Ass'n v. Augusta, tax a business, the Legislature is specifically | 109 Ga. 73, 35 S. E. 71. required by section 1 of article 9 of our state The Hanover Fire Insurance Company deConstitution to tax "by general law, uniform rives its receipts from premiums paid on as to the class upon which it operates," and policies issued on the following among other under the Fourteenth Amendment to the classes of insurance: (1) Fire; (2) lightning; federal Constitution the state cannot "deny (3) tornado; (4) navigation and transportato any person within its jurisdiction the tion; (5) fire apparatus and damage by same; equal protection of the laws." These provi- (6) crop and live stock; (7) explosion; and sions apply, to a foreign corporation which | (8) automobile. Domestic insurance compahas complied with all the conditions of ad- nies derive their receipts from identically the mission prescribed by the state and which same classes of insurance business. Casualhas been granted the privilege of engaging ty companies, both domestic and foreign, in business within the state. The law is write insurance covering four of the same settled that after a foreign corporation gets classe namely, fire apparatus, crop and into the state its burden shall be no more live stock, explosion, and automobile. Uninonerous than those of domestic corporations corporated entities permitted by the laws for exercising the same character of priv- of this state to do an insurance business ileges. 8 Fletcher's Cyc, of Corporations, & under regulations prescribed by law are en5755; Southern Railway Co. v. Greene, 216 gaged in the same insurance business as the U. S. 400, 30 S. Ct. 287, 54 L. Ed. 536, 17 incorporated companies mentioned in section Ann. Cas. 1247; Security Savings & Loan 30. In transacting the business of insurAss'n v. Elbert, 153 Ind. 198, 54 N. E. 753. ance, these four groups of persons or corpo

The question of making classifications for rations are in direct competition with each the purpose of enacting laws concerning mat- other in this state, and under the authorters within its jurisdiction is primarily for ities cited all of them are entitled to the the legislative department, and it can be equal protection of the laws of this state. come a judicial question only when the ac- Every tax levied on the business of insurtion of the law-making body is clearly un ance, under the limitation fixed by the secreasonable, arbitrary, and discriminatory. ond division of section 1 of article 9 of our But such classifications must rest upon some Constitution, must be "by general law, uniground of difference having a fair and sub- form as to the class upon which it operates." stantial relation to the object of the legis- An occupation tax on the business of insurlation, so that all persons similarly circum- ance, to be valid, must operate alike upon all stanced shall be treated alike. McGrath v. persons or corporations engaged in the same City of Chicago, 309 Ill. 515, 141 N. E. 299; class of insurance business. Section 30, oper: Royster Guano Co. v. Commonwealth of ating upon insurance companies incorporated Virginia, 253 U. S. 412, 40 S. Ct. 560, 61 L. by the authority of other states or governEd. 989. The power of taxation is an essen ments and licensed to do business in this tial and inherent attribute of sovereignty, state, and not upon insurance companies inbelonging, as a matter of right, to every in- corporated under the laws of this state and

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(148 N.E.) other companies, and persons doing identical- , of held and owned on the 1st day of April ly the same class of insurance business, con or 1st day of May of each year. Their cash, travenes the federal and state Constitutions or practically all of it, was sent out of the and is void.

state before the day named in the statute

for listing and valuing the same arrived, and DUNCAN, C. J. (dissenting). Section 30, the result was such corporations were evadaforesaid, is a valid enactment, as I view | ing and escaping practically all taxation on it, and does not contravene any provision | the net profits or net gains they had accuof our state or federal Constitution, when mulated from the business they transacted in properly construed with subsequent acts of the state, which the Legislature deemed unthe Illinois Legislature. At the time this fair and unjust to the local insurance comstatute was passed personal property was panies of the same class, as well as to the required by law to be listed and taxed at people of the state. Hence section 30 was its cash value. Such property is now re- passed, and every provision of it shows clearquired by law to be listed at its cash value, I ly that it was the intention of the Legislaand is taxed at one-half its cash value. In ture to tax both local and foreign insurance my judgment the court has erred in its pres- companies therein mentioned, upon substanent and in some of its previous decisions in tially the same character of property, equally holding, in effect, that subsequent acts of the and uniformly, and without discrimination. Legislature requiring personal and other This tax as to the local insurance company property to be listed at cash value and tax was a personal property or other property ed at one-third or one-half the cash value tax, because such net annual gains or profthereof had no application to the taxing of its had their situs here in the shape of monnet receipts of foreign insurance companies ey, or other property, if the money had been under section 30.

invested. As to the foreign insurance comIt will not aid us in the least in undertak- pany of that class, it was a tax on net reing to define and classify the taxes that are ceipts or net profits or net gains, that might collected under section 30. We know such or might not have a situs here, because most taxes are not poll taxes, and it does not of such had been sent out of the state in the aid us if it is positively demonstrated that form of cash or money. Nevertheless, both such taxes are excise taxes. What we really companies were taxed, and are taxed, equalneed to understand, it seems to me, is the ly and uniformly, and without discriminaobject and purpose of the act and the neces- tion, or as nearly so as is possible to be done, sity therefor, in order to tax such foreign on the same property or its representative insurance companies in substantially the the net annual gains or net accumulations same manner as our local and resident in- or profits realized from the business annualsurance companies of the same class are ly transacted in the state. taxed. Our resident insurance companies of The statute shows clearly and unequivothe class mentioned in said section had to cally that the objects and purposes and repay an annual tax, not only on all the per- sults of taxation of insurance companies, losonal and real property actually possessed cal and foreign, have been and will continue and owned by them in this state, but they to be as above stated, if the statute itself also had to pay the same character of tax is followed, and the subsequent acts of the on their net annual gains or accumulations Legislature aforesaid applied, and which by from the business transacted by them every necessary implication should be applied by year. We may very properly call it a tax the taxing authorities. The act itself specifon their net annual gains or net profits. ically provides that the amount of the net Such net gains or profits were taxed as mon- receipts of such agency for the preceding ey or other property, depending upon wheth-year shall be entered on the tax lists of the er or not the local insurance companies had county, town and municipality, and subject invested their net receipts in other personal to the same rate of taxation, for all puror real property or were held as cash or poses-state, county, town, and municipalmoney. If they complied with the law, it that other personal property is subject to at was not possible for resident insurance com the place where located. It cannot be subpanies to escape such taxes, unless they in- ject to the same rate of taxation, if such net vested the net cash so received in property receipts bear twice the amount of taxes as in some other state. The tax as to resident the local insurance companies' net gains insurance companies was a tax on money or bear. The very language of the act forbids property here in the state. The foreign in- that such net receipts be assessed at full surance companies of the same class accu- value, while property now is taken at only mulated their net profits or net gains as cash, half value for taxation. The statute was and they were avoiding practically all tax valid, and violated no provision of the Conthereon in this state, because of the provi-stitution, state or federal, when enacted, and sions of our taxing laws that cash as well is still the same valid act, intending to deal as other personal property was to be listed with equal and exact justice with both forand taxed on the amount and value there- eign and domestic insurance companies of

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