Opinion
No. 27796.
May 6, 1929.
1. CONSTITUTIONAL LAW. Guaranty of "equal protection" requires that all persons subject to legislation be treated alike under like circumstances and conditions.
Guaranty of equal protection of the laws does not prohibit legislation which is limited either in objects to which it is directed or by territory within which it is to operate, but it merely requires that all persons subject to such legislation shall be treated alike under like circumstances and conditions both in privileges conferred and liability imposed.
2. CONSTITUTIONAL LAW. Guaranty of equal protection is not infringed by legislation applying only to those persons falling within specified class, if it applies alike to all persons of class and reasonable grounds exist for classification.
Guaranty of equal protection of laws is not infringed by legislation which applies only to those persons falling within a specified class, if it applies alike to all persons within such class and reasonable grounds exist for making distinction between those who fall within such class and those who do not.
3. CONSTITUTIONAL LAW. Classification for taxation must be based on substantial distinction bearing reasonable relation to purposes sought to be accomplished.
Classification for purposes of taxation must be based upon some real and substantial distinction, which bears a reasonable, just, and proper relation to objects sought to be accomplished, and this within field of subject-matter concerning which classification is made.
4. TAXATION. No tax may be laid to raise funds for private purpose.
No tax may be laid to raise funds for a mere private or personal purpose.
5. CONSTITUTIONAL LAW. Taxation. Statute imposing tax on insurance premiums to create and maintain fireman's disability and pension fund held to violate equality provisions of Federal Constitution ( Laws of 1924, chapter 189, and section 7).
Laws of 1924, chapter 189, providing that fireman's disability and pension fund shall be created and maintained by tax on insurance premiums, held to violate equality provisions of Federal Constitution, especially in view of section 7 of the Act, providing for addition of such tax, with consent of rating bureau, to premiums fixed and collected in municipality establishing such fund.
APPEAL from circuit court of First district, Hinds county, HON.W.H. POTTER, Judge.
R.L. McLaurin, of Vicksburg, and Watkins, Watkins Eager, of Jackson, for appellants.
POINT I.
Pearl River County v. Lacey Lbr. Co., 86 So. 755, 124 Miss. 85; Norwood v. State, 126 Miss. 272; 6 R.C.L., page 92; Section 16 of the Act; Section 17 of the Act; Section 18 of the Act.
Act violates sec. 96 of the state Constitution objection to act, as to Fourteenth Section of Bill of Rights of Constitution of state of Mississippi, Fourteenth Amendment to Constitution of United States and sec. 112, Constitution of state of Mississippi.
(a) Tax arbitrary, unjust, unequal and discriminatory.
(1) Arbitrary fixation of amount contributed by fire insurance companies without reference to their obligation to contribute to fund, without relation to benefits to be received by taxpayer, with no provision for notice to insurance companies or judicial determination of assertion by taxpayer that amount required is excessive, discriminatory and out of proportion to benefits received.
(2) If true that fire insurance companies benefited by act, and tax imposed has any just and reasonable relation to proportionate benefits, the following additional persons would receive benefits, upon whom no tax is provided.
(a) Property in state of Mississippi in the corporate limits, subject to the same protection;
(b) Property of the county in which the municipality is situated in corporate limits subject to same protection;
(c) Property of municipality in municipality subject to same protection;
(d) Persons who carry no fire insurance owning property inside or just outside of the municipality, which would receive protection;
(e) Persons within the municipality, and on the outside who would receive protection, whose property is inadequately insured;
(f) Insurance companies doing overhead writing, receiving benefits of system, none of which required under the terms of the act to contribute anything thereto.Clark v. Miller, Rev. Agt., 105 So. 502, 142 Miss. 123; State of La. v. Mer. Ins. Co., 12 La. Ann. 802; Philadelphia Ass'n v. Wood, 39 Pa. St. 73; San Francisco v. L. L. G. Ins. Co. (Cal.), 5 A.S.R. 425; Henderson v. L. L. G. Ins. Co., 135 Ind. 23, 41 A.S.R. 410; State v. Zeigenheim (Mo.), 66 A.S.R. 420; State v. Wheeler, 50 N.W. 770; Meade v. Acton, 138 Mass. 341; Aetna Ins. Co. v. Jones (S.C.), 58 S.E. 148, 13 L.R.A. (N.S.) 1147.
Construction of meaning of sec. 96, state Constitution.
City of Vicksburg v. Sun Ins. Co., 72 Miss. 67; R.D. Moore v. Walley, ___ So. (Miss.) ___.
POINT II
La. v. Merchants Ins. Co., 12 La. Ann. 802.
Classes of persons equally benefited by the fund: (a) Uninsured property owner; (b) Property owner insured for less than value of property destroyed; (c) The city, county and state; (d) Property owners situated beyond limits of the municipality benefited by the fire department; (e) Unauthorized fire insurance companies.
Sick v. City of Bay St. Louis, 74 So. 272, 113 Miss. 175; Baker v. Bruesdown, 263 U.S. 137, 68 L.Ed. 212; Batters v. Oakland, 263 U.S. 162, 68 L.Ed. 228; Myers Salt Co. v. Bd. of Comm'rs, 239 U.S. 478, 60 L.Ed. 392; Saunders v. Shaw, 244 U.S. 317, 61 L.Ed. 1163; Gast R. I. Co. v. Granite Co., 240 U.S. 55, 60 L.Ed. 523.
Discrimination in that tax-benefited parties not taxed.
Southern Bell Tel. Co. v. Calhoun, 287 Fed. 381.
Sec. 112, state Constitution, as well as sec. 14, Bill of Rights, state of Mississippi and Fourteenth Amendment to the Constitution of United States, requires that all persons similarly situated shall receive same kind of treatment.
Wirt Adams, Rev. Agt., v. Standard Oil Co., 53 So. 692, 97 Miss. 879; Chicago, St. L. N.O.R. Co. v. Moss, 60 Miss. 614; G. S.I.R. Co. v. Adams, 90 Miss. 559; City of Vicksburg v. Mullens, 106 Miss. 217; Sorensen v. Webb, 71 So. 273, 111 Miss. 87; Wirt Adams, Rev. Agt., v. Miss. Lbr. Co., 84 Miss. 23; Hyland, Sheriff, v. Sharp, 41 So. 264, 88 Miss. 567.
POINT III.
Ohio Valley Water Co. v. Borough, 253 U.S. 287, 64 L.Ed., 908; Ex parte Young, 52 L.Ed. 714; Bluefield Waterworks v. Service Com., 262 U.S. 679, 64 L.Ed. 1176; Washington, State of, v. Roberge, Sup. Ct., U.S., 73 L.Ed. 39.
POINT IV.
Chap. 261, Miss. Laws, 1926; Royster Guano Co. v. Virginia, 253 U.S. 412, 64 L.Ed. 989; Hanover F. Ins. Co. v. Carr, 272 U.S. 494, 71 L.Ed. 372; Quaker City Cab Co. v. Pennsylvania, 607 Sup. Ct. Vol. 48, page 553; Yick Wo v. Hopkins, 118 U.S. 356, 30 L.Ed. 220.
POINT V.
Robinson v. Dunn (Cal.), 11 A.S.R. 297; Mahon v. Bd. of Education (N.Y.), 63 N.E. 1107, 89 A.S.R. 110; Dodge v. Mission Tp. (C.C.A. 8), 107 Fed. 827; Sutherland v. Evart (C.C.A.), 86 Fed. 597; McClelland, Trustee, v. State (Ind.), 37 N.E. 1089; St. Paul Trust Sav. Bd. v. American Clearing Co. (D.C., Fla.), 291 Fed. 212.
APPENDIX.Firemen's Pension Fund Act of 1926 held unconstitutional, opinion, RUSH H. KNOX, Attorney-General, State of Mississippi.
REPLY BRIEF.
12 Corpus Juris, page 786; Minneapolis Brewing Co. v. McGillivray, 104 Fed. 258; Grainger v. Douglas Park Jockey Club (C.C.A. 6), 148 Fed. 513, 8 A. E. Cases, 997; Larabee v. Dolley, 175 Fed. 365; Moore v. Otis (C.C.A. 8), 275 Fed. 747; Savage v. Jones, 225 U.S. 501, 56 L.Ed. 1182; Clark v. Poor, 274 U.S. 554, 71 L.Ed. 1199; State v. Newman Lumber Co., 102 Miss. 802, 59 So. 923; Section 92, Constitution of Mississippi; Section 93, Constitution of Mississippi; Section 96, Constitution of Mississippi; Thompson v. State, 44 So. 989, 91 Miss. 662; Section 272, Constitution of Mississippi; Aetna Fire Insurance Co. v. Jones, 13 L.R.A. (N.S.) 1147; Ethridge, Mississippi Constitution, page 466; Ethridge, Mississippi Constitution, page 52; State v. Henry, 87 Miss. 125, 40 So. 152; Daily v. Swope, 47 Miss. 367.
Benefits allowed. (a) Section 16 of the Act; (b) Section 17 of the Act; (c) Section 18 of the Act.
Moore v. Walley, State Treasurer, Brief, page 31.
The Act delegates legislative authority. (1) Petition required to be signed by two members of fire department and no one else. (2) Legislature cannot submit to qualified electors, right to vote a tax affecting fire insurance companies, as to which no notice given companies sought to be charged and no right of hearing provided.
State of Washington v. Roberge, 73 L.Ed. 39; Browning v. Hooper, 70 L.Ed. 330, 269 U.S. 396.
Question of unconstitutional discrimination.
Louisville Gas Elec. Co. v. Coleman, 227 U.S. 32, 72 L.Ed. 770; Liggett Co. v. Attorney-General of Pa., 73 L.Ed. 45; Royster Guano Co. v. Va., 253 U.S. 412, 64 L.Ed. 989; La. v. Merchants Ins. Co., 12 La. Ann. 802; Phila. Ass'n v. Wood, 39 Pa. St. 73.
A large number of fire insurance companies similar to Loyd's daily writing large hazards in Mississippi, escape all taxation therefor imposed by the state and avoid payment to local underwriting agencies commissions paid by regular companies. (a) Insurance commissioner has repeatedly submitted the question to the legislature and asked for legislation to prevent; (b) Legislature of Mississippi has passed numerous statutes to prevent or discourage overhead insurance writing; (c) Supreme court of the United States has recognized the right of foreign fire insurance companies to write policies covering property in the state without compliance with state statutes.
Allgeyer v. La., 165 U.S. 578, 41 L.Ed. 832; St. Louis Comp. Co. v. Ark., 260 U.S. 346, 67 L.Ed. 297.
(d) Court takes judicial notice of matters of general information.
Liggett v. Attorney-General of Pa., 73 L.Ed. 45.
Persons in addition to other class of insurance companies benefited by tax upon whom no burden is cast, which difference creates unconstitutional discrimination.
Discrimination arising out of chap. 261, Miss. Laws 1926, exempting domestic insurance companies from certain taxes. Jackson v. Miss. Fire Ins. Co., 95 So. 845, 132 Miss. 415. Writ of error dismissed, 263 U.S. 730, 68 L.Ed. 529.
(a) Municipalities and counties permitted to levy privilege tax.
(b) State income tax: Domestic insurance companies not liable for ad valorem tax on property. Foreign fire insurance companies continue liable for excise tax, Fire men's Pension Act, whereas, domestic companies not liable.
Hamner v. Lumber Co., 56 So. 466, 100 Miss. 349; R.R. Co. v. Metcalfe, 84 Miss. 251; Yerger v. State, 91 Miss. 821; Martin v. Dicks, 52 Miss. 53; Hazlehurst v. Mayes, 96 Miss. 565; Ex parte McInnis, 54 So. 260; Hart v. Backstrom, 113 So. 898; Stingily v. Jackson, 104 So. 466, 140 Miss. 19; Coker v. Wilkinson, 106 So. 887; Drewser v. Hathorn, 109 So. 23, 144 Miss. 24; Jackson v. Worth, 90 So. 583, 127 Miss. 813; Bd. of Supervisors, Lauderdale Co., v. Meridian, 114 So. 803; State v. Creswell, 117 Miss. 795, 78 So. 770; Bd. of Education v. State of Ill., 51 L.Ed. 314; Baltic Min. Co. v. Mass., 231 U.S. 68, 58 L.Ed. 127; Cheney Bros. v. Mass., 62 L.Ed. 632; Northwestern Mut. L. Ins. Co. v. Wis., 62 L.Ed. 1025; Maxwell v. Bugbee, 250 U.S. 523, 63 L.Ed. 1125; Power Mfg. Co. v. Saunders, 274 U.S. 490, 71 L.Ed. 1165; Quaker City Cab Co. v. Pa., 48 Sup. Ct. Rep. 553; Adams v. Standard Oil Co., 97 Miss. 879, 53 So. 692; Conerly v. Union Pipe Sewer Co., 184 U.S. 540, 46 L.Ed. 679; Johnson, State Rev. Agt., v. Long Fur Co., 74 So. 283, 113 Miss. 373; Truax v. Corrigan, 257 U.S. 312, 66 L.Ed. 254; Martin v. Dicks, 52 Miss. 53; Bobo v. Levee Comm'rs, 92 Miss. 792; State v. Newman Lbr. Co., 102 Miss. 802; Darnell v. Johnson, 109 Miss. 570; Miller v. Tucker, 142 Miss. 146; Lang v. Harrison County, 114 Miss. 341; City of Jackson v. Miss. F. Ins. Co., 95 So. 845; State v. Wheatley, 113 Miss. 555. F.J. Lotterhos, of Jackson, for appellees.
All legislative authority is vested in the legislature, as provided by section 33 of the Mississippi Constitution; and this Act, deemed by the legislature to be wise, necessary, and sufficient, must remain and be observed as the law of Mississippi unless it can be made to appear to this court that it as a whole violates some definite section of the Constitution.
State v. Newman Lbr. Co., 102 Miss. 802, 59 So. 923.
All questions of economics, propriety, necessity, wisdom, and practicability have been settled favorable to the system by the legislature, which is the sole judge of these considerations. Systems of disability benefits and pensions for disabled public servants, particularly for firemen, are nothing new in this country, nor have they been for many years.
726-7 of 19 Ruling Case Law; Phoenix Assur. Co. of London v. Fire Department (Ala.), 23 So. 843.
The Statute does not violate section 96 of the Constitution.
1 Dillon, Municipal Corporations (5 Ed.), sec. 430; Nebraska ex rel. Haberlan v. Love (Neb.), 131 N.W. 196, 34 L.R.A. (N.S.) 607, Ann. Cas. 1912C, 542.
The Statute does not violate section 16, article 3, of the Constitution which provides: "The legislature shall never grant any extra compensation to any public officer, agent, servant, or contractor after the services shall have been rendered or the contract entered into."
Mahon v. Board of Education, 171 N.Y. 263; Hammitt v. Gaynor, 144 N.Y.S. 123.
State v. Love, supra, is directly in point upon this subject, and a similar distinction between pensions granted to employees who have left the service and those who are in service until retired is drawn in Mahon v. Board of Education. Wright v. Craig, 195 N.Y.S. 391; Phoenix Assur. Co. of London v. Fire Department (Ala.), 23 So. 843; Cobbs v. Home Ins. Co. (Ala.), 91 So. 627; O'Dea v. Cook (Cal.), 169 P. 366; Douglas v. Pension Board (Cal.), 242 P. 756; People ex rel. Kroner v. Abbott (Ill.), 113 N.E. 696; Home v. Souden (Cal.), 250 P. 162; Hammond v. City of Fulton (N.Y.), 115 N.E. 998; State v. Knox County (Tenn.), 290 S.W. 405; Byrd v. City of Dallas (Tex.), 6 S.W.2d 738; State v. Minneapolis (Minn.), 219 N.W. 924; Middlesboro v. Gibson (Ky.), 7 S.W.2d 825.
The tax is levied for a public purpose.
Borgnis v. Falk Co. (Wis.), 133 N.W. 209; Bosworth v. Harp. (Ky.), 157 S.W. 1084; Re Application of Lewis and Clark County (Mont.), 155 P. 268; Commonwealth ex rel. Philadelphia Police Pension Fund Association v. Walton, 182 Pa. St. 373, 38 A. 790; State v. Memphis (Tenn.), 251 S.W. 46; People v. Commercial Union Fire Ins. Co. (Ill.), 153 N.E. 488; Bowler v. Nagel (Mich.), 200 N.W. 258.
The premium tax imposed on insurance company is not arbitrary or discriminatory.
Equitable L. Assur. Soc. v. Pennsylvania, 238 U.S. 143, 59 L.Ed. 1239; Henry v. Alexander, 131 Miss. 588, 94 So. 846; Clarksdale Insurance Agency v. Cole, 87 Miss. 637, 40 So. 228; Daily v. Swope, 47 Miss. 367; Edwards House Co. v. City of Jackson, 91 Miss. 429, 45 So. 14; State v. Lawrence, 108 Miss. 291, 66 So. 745; Postal Telegraph-Cable Co. v. Robertson, 116 Miss. 204, 76 So. 560; Locke v. L.N. Dantzler Lbr. Co., 119 Miss. 783, 81 So. 175.
We deny that the act violates the due process clauses of the above-named constitutional provisions and the equal protection clause of the latter, or that the tax on fire insurance companies is arbitrary, unjust, unequal and discriminatory.
Mountain Timber Co. v. Washington, 243 U.S. 219, 61 L.Ed. 685; Rinehart v. State (Tenn.), 117 S.W. 508.
That the legislature may make reasonable classifications for the purpose of taxation and that taxes resting on such basis are valid exercises of the legislative power, is so well settled both in Mississippi and elsewhere that we deem it unnecesary to do more than make reference to 37 Cyc. 746, and 26 R.C.L. 249.
There are numerous cases in the reports wherein various pension laws similar to that under consideration here have been upheld or merely applied without question. These additional cases are not directly on the points raised in this case, but a reference to them might be of some help to the court. Hence, reference to some of them is now made.
Trustees of Exempt Firemen's v. Roome, 93 N.Y. 313; Firemen's Benevolent Ass'n v. Lownsbury, 21 Ill. 511; Trumper v. School District (Mont.), 173 P. 946; Higgins v. Sweitzer (Ill.), 126 N.E. 207; State ex rel. Lynch v. Board of Trustees (La.), 42 So. 506; Hughes v. Traeger (Ill.), 106 N.E. 431; Fire Department v. Helfenstein (Wis.), 16 Wis. 142; Barnett v. Pension Commission (N.J.), 136 A. 317; Citizens Ins. Co. v. Herbert, 131 La. 708, 71 So. 955; Kunx v. National Fire Ins. Co. (Ill.), 48 N.E. 682; Fire Department v. Stanton (N.Y.), 54 N.E. 28.
In appellants' brief, pages 56-66, it is contended that chapter 261 of the Laws of 1926 repeals or amends chapter 189 of the Laws of 1924 so far as it imposes a tax upon domestic insurance companies and that, therefore, the Act of 1924 becomes discriminatory against foreign insurance companies and is in conflict with the Fourteenth Amendment. In answer to this contention the appellee says: That chapter 261 of the laws of 1926 does not repeal the tax imposed upon domestic companies by Chapter 189 of the Laws of 1924.
Greenville Ice Coal Co. v. City of Greenville, 69 Miss. 866, 10 So. 574; Curry-Finch Brick Lumber Co. v. Miller, 123 Miss. 850, 86 So. 579; Ashcher Baxter v. Edward Moyse Co., 101 Miss. 36, 57 So. 299; Darnell v. Johnston, 109 Miss. 570, 68 So. 780; Coker v. Wilkerson, 141 Miss. 1, 106 So. 886; Holly Springs v. Marshall County, 104 Miss. 752, 61 So. 703; Jackson County v. Worth, 127 Miss. 813, 90 So. 588; Dresser v. Hathorn, 144 Miss. 24, 109 So. 23, 29; Supervisors v. Meridian, 149 Miss. 139, 114 So. 803; Robertson v. Texas Oil Company, 141 Miss. 356, 106 So. 449; Canal Bank v. Brewer, 147 Miss. 885, 114 So. 127; State v. Cresswell, 117 Miss. 795. 78 So. 770; City of Jackson v. Miss. Fire Insurance Co., 132 Miss. 415, 95 So. 845; Cheney Bros. Company v. Massachusetts, 246 U.S. 147, 62 L.Ed. 632, 638; Northwestern Ins. Co. v. Wisconsin, 247 U.S. 132, 62 L.Ed. 1025; Baltic Mining Co. v. Massachusetts, 231 U.S. 67, 58 L.Ed. 127, 135; 12 C.J. 1153; Board of Education v. Illinois, 203 U.S. 552, 51 L.Ed. 314; Maxwell v. Bugbee, 250 U.S. 525, 63 L.Ed. 1125.
In the case of Adams v. Standard Oil Co., 97 Miss. 879, 53 So. 692, it was held that where an exemption from taxation is based upon a purely artificial distinction, and in violation of the equality clause of the Federal Constitution, the courts will not invalidate the entire privilege statute, from the effect of which such exemption is sought to be made, but the tax will be imposed upon the attempted exemption as well as upon the other taxpayer complaining that he has been denied equality of treatment. This case is a conclusive authority on the point that the exemption, which it is claimed exists by reason of the Act of 1926, will be stricken down and that the Act of 1924 will impose a tax on all of the class according to the fact of the statute.
Johnson v. Long Furniture Co., 113 Miss. 373, 74 So. 283; Truas v. Corrigan, 257 U.S. 312, 66 L.Ed. 254.
In the present case, if the statute of 1926 creates an invalid discrimination that statute will be ineffective insofar as it has that effect, and the original statute, which is not discriminatory as written, will remain the law.
This court has held that a municipality in maintaining and operating its fire department is exercising a governmental function and not a private function. Alexander v. Vicksburg, 68 Miss. 564, 10 So. 62; Hattiesburg v. Geigor, 118 Miss. 676, 79 So. 846. If a fire department is an exercise of the governmental function, moneys appropriated or used for its support are dedicated to a public purpose.
Argued orally by W.H. Watkins and J.M. Talbot, for appellant, and F.J. Lotterhos, for appellee.
Acting under chapter 189, Laws of 1924, the city of Clarksdale has established a fireman's disability and pension fund. Section 4 of that chapter provides: "That said fund shall be created and maintained by means of the tax on insurance premiums hereinafter mentioned, such gifts and donations as may be made to said fund by any person or corporation, the proceeds of such appropriation or tax levy, or both, as may be made by such city, all fines collected for violation of the fire ordinances of such city, and one per centum of the monthly salaries of each member of such fire department."
Sections 7, 8, and 21 of said chapter are as follows:
"Sec. 7. That the governing authorities of such city, as soon as it may appear that such city is within the terms of this act, shall notify the insurance commissioner of the state of Mississippi that such city and its fire department come within the terms of this act, and said insurance commissioner of the state of Mississippi shall promptly notify all insurance companies transacting the business of fire and lightning insurance in the state of Mississippi, which shall include mutual, inter-insurer, and reciprocal associations or companies, of the fact that such city and its fire department are within the purposes of this act, and thereafter, at the time foreign insurance companies are required to report to said insurance commissioner the premiums charged or received in Mississippi for purposes of taxation, each of said companies, both foreign and domestic, including mutual, inter-insurer and reciprocal associations or companies shall truly report to said insurance commissioner, sending a duplicate of such report to such city authorities, the amount of premiums charged by said company for fire and lightning insurance on property situated in such city within the period covered by the report made to the insurance commissioner of the state of Mississippi for purposes of taxation by said state, less premiums returned to policy holder and cancellations on account of policies not taken; it being intended that said report of premiums shall include and cover all premiums charged or received within said period, less returned premiums and cancellations as aforesaid in connection with the insurance of property situated in such city, which are reported for the purposes of taxation by said state; such reports for the purposes of this act shall not include premiums contracted for prior to such time, as the insurance commissioner shall have notified the company that such city is within the terms and purposes of this act; that said premiums so required to be reported for the purpose of this act shall be and they are hereby taxed to the extent of one-half of one per centum of said premiums, after deducting said returned premiums and cancellations, which tax shall be paid to said insurance commissioner by the insurance company at the same time that the other general tax on premiums is paid to the insurance commissioner, the insurance company paying the same to notify the insurance commissioner of the name of the city for whose fireman's disability and pension fund the same is paid, and, at the same time, give such city duplicate notice of the amount paid to the insurance commissioner, which taxes the insurance commissioner is hereby authorized and empowered to collect in the same manner and by the same means that he is required and empowered to collect other taxes imposed upon insurance premiums."
"Said tax on insurance premiums shall not be imposed or collected upon any premiums except upon those under insurance policies upon property situated in the municipality coming under the provisions of this act, and the tax paid hereunder for the relief of the firemen in any municipality coming under the provisions of this act, shall not be used as an element of any premium or be considered in the making of rates except in proper cases under the provisions of the rating bureau law in connection with property situated in the municipality to which said tax is paid."
"Sec. 8. That it shall be the duty of the insurance commissioner to collect and enforce the collection of said tax of one-half of one per cent, and upon collecting the same to promptly pay it into the treasury of such city for the purposes of said fund, and this act."
"Sec. 21. That any fire insurance company subject to the tax herein mentioned, who shall fail to make report or statement as required herein, shall forfeit to said fund the sum of one thousand dollars, to be recovered by the insurance commissioner of the state of Mississippi for the use of said fund."
The steps directed in said sections with respect to the collection of the tax from the insurance companies were duly taken, and the companies paid to the insurance commissioner the stipulated percentages of the premiums taxed or attempted to be taxed, but made the said payments under protest, denying the constitutional validity of the said tax, thereby putting the said commissioner in the position that he could not safely pay over the said sums until his duty so to do is declared by a court of competent jurisdiction. The commissioner has accordingly withheld said moneys, and the city to compel him to pay over the same has brought this suit by way of a petition for a writ of mandamus. Upon the trial in the circuit court the writ was awarded; hence this appeal.
Many interesting questions are raised, and have been ably argued at the bar. We shall consider only one of these, as it is decisive so far as concerns the funds held as aforesaid. That question is whether the tax here imposed on insurance premiums is in contravention of the equality requirements of the Federal Constitution.
"The guaranty of `equal protection of the laws' . . . does not prohibit legislation which is limited either in the objects to which it is directed or by the territory within which it is to operate. It merely requires that all persons subject to such legislation shall be treated alike, under like circumstances and conditions, both in privileges conferred and liability imposed. It is not infringed by legislation which applies ony to those persons falling within a specified class, if it applies alike to all persons within such class, and reasonable grounds exist for making a distinction between those who fall within such class and those who do not." Cooley's Constitutional Limitations, vol. 2 (8 Ed.), pp. 824, 825. "A classification for purposes of taxation must rest on some reasonable distinction," Schlesinger v. Wisconsin, 270 U.S. 230, 240, 46 S.Ct. 260, 261, 70 L.Ed. 557, 564, 43 A.L.R. 1224; and a tax statute is void which contains classifications that are not based on any substantial difference or reason, 12 C.J., p. 1152. While reasonable classification is permitted, such classification must be based upon some real and substantial distinction which bears a reasonable, just, and proper relation to the objects sought to be accomplished, and this within the field of the subject-matter concerning which the classification is made, or in other words, the classification and the object to be accomplished must be germane. 6 R.C.L., pp. 381, 382; Adams v. Standard Oil Co., 97 Miss. 879, 53 So. 692; Sorenson v. Webb, 111 Miss. 87, 71 So. 273; Adams v. Mississippi Lbr. Co., 84 Miss. 23, 36 So. 68; Hyland v. Sharp, 88 Miss. 567, 41 So. 264; Vicksburg v. Mullane, 106 Miss. 199, 63 So. 412, 50 L.R.A. (N.S.) 421; Gulf S.I.R. Co. v. Adams, 90 Miss. 559, 45 So. 91; Chicago, St. L. N.O.R. Co. v. Moss, 60 Miss. 641; Ballard v. Mississippi Cotton Oil Co., 81 Miss. 507, 34 So. 533, 62 L.R.A. 407, 95 Am. St. Rep. 476.
These in brief are the tests, and they are that, in actual substance, reasonable grounds must exist for making a distinction between those who fall within the burdened class and those who do not, and the classification made must be germane to the immediate object in view.
Thus there is at once presented the inquiry, What is the reason, the substantial reason, not one which is merely arbitrary or artificial, for the difference or distinction here made by which a certain class, from among all those directly and materially concerned in the subject-matter, is segregated, and upon that class the burden of a certain fixed tax is laid, while no such tax or the relative equivalent thereof is laid upon others likewise concerned? The principal answer that has been offered is that the establishment and adequate maintenance of a fund of this sort tends to attract to the fire-fighting service a better character of men and to make that service a more dependable and loyal branch of the municipal administration, with the result that there will be an improved efficiency in the prevention of fires and in the lessening of losses by fire, thereby saving more to insurance companies than the amount of the tax imposed.
We cheerfully concede the worthiness of the object and the soundness of the considerations mentioned touching the betterment of the service; and the answer made, we may also concede, would be good in point of law if all combustible property in the municipality were insured in admitted companies at or near its full insurable value. Unfortunately, however, in weighing the aforesaid answer, we are confronted, not with the situation last mentioned, but with what is true to the contrary as a matter of common knowledge: First, that a part of the valuable combustible property is not insured at all; second, that a yet larger part, if not most of it, is not fully insured; and third, that some part is insured in outside companies not formally admitted and which therefore are not subject to the tax in question. There can be no question that the duty of a municipal fire department is the same towards all combustible valuable property within the municipality. It owes no greater duty towards property insured for its full insurable value than it does in respect to property not insured; its duty to partly insured property is the same as that in regard to fully insured property or to property not insured at all, and still the same towards property insured in outside companies. Such is the legal duty, but we may as well be candid enough to admit at the same time that if the average fire department should find that it could save only one of two burning buildings one of them insured and the other not, the uninsured buiding would be the more likely to be saved. This would be but a natural human impulse and personal course of action.
If then the legal duty of the fire-fighting department is as much owed towards uninsured property as towards that which is insured, and if, as we know, the personal element in an extreme emergency would favor the uninsured, it must be obvious that the answer above adverted to becomes no answer at all in point of substantial reason for the attempted distinction or classification; and no other answer as good as that mentioned has been advanced. For instance, among these answers it is in effect argued that although the duty to all species of combustible property insured and uninsured is the same, yet there is in the status of owners as owners, as distinguished from insurers as such, a sufficiency of distinction that upon this difference in status the classification may be legally upheld. It is true that such a difference might serve for a classification for some purpose, but the argument and every similar argument overlooks the requirement that the reason upon which the classification is grounded must be a reason which has a just and substantial relation to the particular object to be accomplished — an object which is a public one, for it is fundamental that no tax may be laid to raise funds for a mere private or personal purpose. The contemplated public object to be accomplished here is the improvement of the service in the fire-fighting department, and since that improvement moves in its benefits and advantages as much and in exactly the same way towards the uninsured owner of property of a certain value as it does towards an insurance company carrying a policy in an equal amount in value on another piece of property, there is no actual difference between the two in relation to the object to be accomplished. And every argument advanced to sustain this tax runs likewise into a corner.
Under those arguments, if the tax here in question may be imposed upon fire insurance companies, then upon like principles it may be extended and these companies could be required to pay the entire expense of a city fire department, and by a parity of reasoning there could be added all the costs of construction, extension, and operation of the waterworks department, since a modern fire-fighting department is essentially dependent upon an adequate water supply. By like, or even by better, reasoning, the banks and jewelers of a city could be required to pay the entire costs of the police department on the ground that banks and jewelry stores are distinct beneficiaries of police protection against burglaries and robberies; and so on as to many other features of municipal administration.
The situation here in question is well put by the supreme court of Louisiana in State v. Merchants' Ins. Co., 12 La. Ann. 802, a case upon the exact subject we are here considering, in which the court said: "But in the case before us there is no property improved or assessed; . . . one class of corporations is taxed an invariable sum for the benefit of another class; there is no possibility of ascertaining whether the tax is a quid pro quo; the fire companies are not compelled by the law to do anything for the insurance companies; a bounty is secured to the fire department by confiscating the money of the defendants, without providing that any service shall be rendered to the defendants by the fire department; and even if this could, for a moment, be regarded as an assessment for benefits conferred, its inequality is glaring; every owner of buildings and other combustible property in New Orleans, who is either wholly or in part his own underwriter, is presumed to be benefited by the fire department in the same way as the insurance companies are. Why should the companies alone pay taxes for this common benefit? Again; large amounts of property in New Orleans are insured abroad in offices which have no public agencies here; those offices are likewise as much benefited by the fire department as the New Orleans offices are; and yet they can be made to pay no tax under this law which is personal to the companies domiciled or represented in New Orleans." See, also, Philadelphia Ass'n for Relief of Disabled Firemen v. Wood, 39 Pa. 73; San Francisco v. Liverpool L. G. Ins. Co., 74 Cal. 113, 15 P. 380, 5 Am. St. Rep. 425; Henderson v. London Lancashire Ins. Co., 135 Ind. 23, 34 N.E. 565, 20 L.R.A. 827, 41 Am. St. Rep. 410; State v. Wheeler, 33 Neb. 563, 50 N.W. 770; Hanover Fire Ins. Co. v. Carr, 272 U.S. 494, 47 S.Ct. 179, 71 L.Ed. 372, 49 A.L.R. 713; Ætna Fire Ins. Co. v. Jones, 78 S.C. 445, 59 S.E. 148, 13 L.R.A. (N.S.) 1147, 125 Am. St. Rep. 818. Compare Phoenix Assur. Co. v. Fire Dept. of Montgomery, 117 Ala. 631, 23 So. 843, 42 L.R.A. 468; Fire Dept. of Milwaukee v. Helfenstein, 16 Wis. 136; Firemen's Benev. Ass'n v. Lounsbury, 21 Ill. 511, 74 Am. Dec. 115; Exempt Firemen's Benev. Fund v. Roome, 93 N.Y. 313, 45 Am. Rep. 217; Rhinehart v. State, 121 Tenn. 420, 117 S.W. 508, 17 Ann. Cas. 254.
We have proceeded to this point upon the assumption that the tax laid is to be paid in no other way than by the insurance companies themselves, that it is to come solely out of their own funds, and that they alone would ever feel the burden of the exaction. Upon that definite assumption we have endeavored to show that the tax is in contravention of the equality provisions of the Federal Constitution and that we should so declare, as we do declare and hold for the reasons above set out. But we now go further and point to the concluding paragraph of section 7 of the act. It is there seen that there is an unmistakable provision for the addition of this tax, with the consent of the rating bureau, to the premiums fixed and collected in the said municipality. When this tax is added to the premiums collected in the municipality, then we would have in real substance nothing more nor less than a situation where those who insure are paying the tax, while those who do not insure pay nothing of it; and that this then would be a discriminatory and unequal tax is too plain to require a discussion. It would be more reasonable to require that those who do not insure at all shall pay the tax; for fire losses to them are total losses, whereas when property is insured there is an amelioration of the burden of the loss, because borne jointly by the insured and the insurer.
Reversed, and petition dismissed.