Opinion
Nos. 28803-28805.
November 24, 1930.
1. TAXATION. Interest-bearing securities and solvent credits acquired by domestic insurance corporation in making loans held exempt from ad valorem taxes ( Laws 1922, chapter 184; Laws 1926, chapter 261; Code 1930, section 5152).
Laws 1922, chapter 184, granted exemption to domestic insurance corporations from all taxes of whatsoever kind or nature except ad valorem taxes on realty and privilege taxes for a period of five years. Laws 1926, chapter 261, removed five-year limitation in exemption previously granted and enlarged exemption to include ad valorem taxes on realty.
2. STATUTES. Statute exempting domestic insurance corporations from ad valorem taxes held not unconstitutional as amending law by reference to title only ( Laws 1922, chapter 184; Laws 1926, chapter 261; Const. 1890, section 61.)
Constitution 1890, section 61, provides that no law shall be revived or amended by reference to its title only, but the section or sections as amended or revived shall be inserted at length.
3. STATUTES. Statutes exempting domestic insurance corporations from ad valorem taxes held not invalid as special law or suspension of general laws for benefit of corporations ( Laws 1922, chapter 184; Laws 1926, chapter 261; Const. 1890, section 87).
Constitution 1890, section 87, provides that no special or local laws shall be enacted for benefit of individuals or corporations in cases which are or can be provided for by general law, nor shall the operation of any general law be suspended for benefit of any individual or private corporation or association in all cases where general law can be made applicable and would be advantageous.
4. STATUTES. Statutes exempting domestic insurance corporations from ad valorem taxes held not invalid as special law exempting property from taxation ( Laws 1922, chapter 184; Laws 1926, chapter 261; Const. 1890, section 90(h)).
Constitution 1890, section 90(h), prohibits Legislature from passing any local, private, or special laws exempting property from taxation or from levy or sale, and requires such matters to be provided for only by general laws.
5. TAXATION.
Statutes exempting domestic insurance corporations from ad valorem taxes held not to violate constitutional provision requiring uniformity and equality in matters of taxation (Laws 1922, chapter 184; Laws 1926, c. 261; Const. 1890, section 112).
6. TAXATION. Statutes exempting domestic insurance corporations from ad valorem taxes held not violative of constitutional provision requiring property of private corporations to be taxed same as individuals' ( Laws 1922, chapter 184; Laws 1926, chapter 261; Const. 1890, section 181).
Constitution 1890, section 181, requires property of all private corporations for pecuniary gain to be taxed in same way and to same extent as property of individuals, with certain exceptions.
7. TAXATION. Statutes exempting domestic insurance corporations from ad valorem taxes held not invalid as surrender of power to tax corporations ( Laws 1922, chapter 184; Laws 1926, chapter 261; Const. 1890, section 182).
Constitution 1890, section 182, provides that the power to tax corporations and their property shall never be surrendered or abridged by any contract or grant to which the state or any political subdivision thereof may be a party, with certain exceptions.
8. STATUTES. Statutes exempting domestic insurance corporations from ad valorem taxes held not violative of Constitution authorizing general law whereby municipalities may exempt public utility enterprises from taxation ( Laws 1922, chapter 184; Laws 1926, chapter 261; Const. 1890, section 192).
Constitution 1890, section 192, requires provision to be made by general laws whereby cities and towns may be authorized to aid and encourage establishment of public utility enterprises within their limits by exempting all property used for such purposes from municipal taxation for a period not longer than ten years.
9. CONSTITUTIONAL LAW. Statutes exempting domestic insurance corporations from ad valorem taxes held not invalid as violation of privileges and immunities clause in Federal Constitution ( Laws 1922, chapter 184; Laws 1926, chapter 261; Const. U.S. article 4, section 2, clause 1).
Under statutes of Mississippi regulating insurance business, individuals cannot engage in such business, but it can only be carried on by corporations or associations that are for all practical purposes incorporate.
10. CONSTITUTIONAL LAW.
Generally, party not within class affected by enforcement of statute cannot question alleged discrimination and consequent invalidity.
11. CONSTITUTIONAL LAW.
Where there is no probability of validity of statute being challenged by one of class discriminated against or decision on validity would not be necessary, one not within class may question validity.
12. CONSTITUTIONAL LAW.
State tax collector held entitled to challenge validity of statutes exempting domestic insurance corporations from ad valorem taxes (Laws 1922, chapter 184; Laws 1926, chapter 261).
13. TAXATION.
Classification for purposes of taxation is within province of Legislature.
14. CONSTITUTIONAL LAW.
Classification for purposes of taxation, if not wholly unreasonable and arbitrary, and statute is uniform in operation, does not deny equal protection of laws guaranteed by Federal Constitution (Const. U.S. Amend. 14).
15. TAXATION.
Exemption of property from taxation must be based on some principle of public policy supporting presumption that public interest will thereby be subserved.
16. CONSTITUTIONAL LAW.
Classification of property for exemption from taxation must be based on some reasonable ground and real difference which bears just relation to object (Const. U.S. Amend. 14).
17. CONSTITUTIONAL LAW.
Legislature in first instance is judge of necessity for exemption from taxation and reasonableness of classification for that purpose (Const. U.S. Amend. 14).
18. CONSTITUTIONAL LAW.
Statutes exempting domestic insurance corporations from ad valorem taxes held not to deny equal protection of laws based on arbitrary and unreasonable classification (Laws 1922, chapter 184; Laws 1926, chapter 261; Const. U.S. Amend. 14).
APPEAL from circuit court of First district of Hinds county. HON.W.H. POTTER, Judge.
Franklin, Easterling Rosenthal, of Jackson, for appellant.
The tax levied by the Acts of 1922 and 1926 is clearly an excise tax.
26 R.C.L. 35; Equitable Life Assur. Society v. Pa., 238 U.S. 143, 35 Sup. Ct. 829, 59 L.Ed. 1239; Ins. Co. of N.A. v. Comm., 87 Pa. St. 173, 30 Am. St. Rep. 352; Mutual Reserve, etc., Ins. Co. v. Augustus, 109 Ga. 73, 35 S.E. 71; Mass. Bonding Ins. Co. v. Chorn (Mo.), ___ S.W. 1122; Iowa, etc., Ins. Ass'n v. Gilbertson, 106 N.W. 153, 127 Iowa 658; Scottish Union, etc., Ins. Co. v. Harriotte, 109 Iowa, 606, 77 A.S.R. 548.
The exemption granted by the Acts of 1922 and 1926 cannot be held to mean or include an exemption from the ad valorem tax on money loaned at a greater rate of interest than six per cent per annum.
State to the Use of the City of Memphis v. Home Ins. Co., 19 S.W. 1042; State to the Use of City of Memphis v. Phoenix Fire Marine Ins. Co., 19 S.W. 1044; State to the Use of the City of Memphis v. Memphis City Bank, 19 S.W. 1045; Insurance Co. v. The Board of Assessors of St. Louis County, 56 Mo. 503; America v. The Board of Assessors of St. Louis County, 49 Mo. 512; Associated Producers Co. v. Board of Supervisors of Estelle County, 260 S.W. 335.
The rule is universal that he who claims exemption must show affirmatively an exemption expressly declared, and that the claimant is clearly embraced within the terms of the exemption.
Morris Ice Company v. Adams, 75 Miss. 410, 22 So. 944; Gulfport Building Loan Association v. City of Gulfport, 124 So. 658; New Standard Club v. McRaven, 111 Miss. 92, 71 So. 289; Barnes v. Jones, 139 Miss. 635, 103 So. 773.
The Acts of 1922 and 1926 are violative of Sections 61, 87, 90, 112, 181, 182, 192, of the Constitution of 1890.
Millers Mutual Fire Ins. Co. v. City of Austin, 210 S.W. 285; Northwestern Mutual Life Ins. Co. v. Lewis and Clarke County, 28 Mont. 484, 72 P. 982, 98 Am. St. Rep. 572; Hawkeye Ins. Co. v. French (Iowa), 80 N.W. 660; State v. Fleming, Tax Com'r (Neb.), 97 N.W. 1063, 1069.
The exemption granted by the Act of 1926 and the Act of 1922 must necessarily be limited to exempt only that property which is essential to the insurance business and none other.
37 Cyc., 839, 887, 888; Flint v. Stone-Tracey Co., 55 L.Ed. (U.S.) 413.
Under the acts 1922 and 1926, domestic insurance companies claim to be exempt from ad valorem taxes on all personal property and under the Act of 1926, from all real property also. Foreign insurance companies are required to pay ad valorem taxes on all property in the state, real and personal. The law, therefore, violates the due process and equal protection clauses of the 14th Amendment and Article 4, Sec. 2, Clause 1, of the Federal Constitution. It grants an immunity to domestic corporations not granted to foreign corporations.
Chalker v. Birmingham R.R., 249 U.S. 522, 63 L.Ed. 748, 39 Sup. Ct. 366; Travis v. Yale Mfg. Co., 252 U.S. 60, 40 Sup. Ct. 228, 64 L.Ed. 460.
A court will not declare a statute void because of repugnance to a provision of a Constitution for the protection of persons, unless requested to do so by a person of the class for whose protection the provision of the Constitution was adopted. There is an exception to this rule. It does not apply where there is no probability of the validity of the statute being challenged by one of the class discriminated against, or, if so challenged, it will not be necessary for the court to decide that question.
Miller v. Columbus Greenville Ry. Co., 122 So. 366, 154 Miss. 314.
Classification must be based on some reasonable ground, and some real difference which bears a just and proper relation to the object sought to be accomplished. Mere arbitrary selection can never be justified by calling it classification, and discrimination against persons and classes of an unusual character are obnoxious to the Constitution.
Adams v. Standard Oil Co., 53 So. 692.
Equality in right, privilege, burdens and protection is the thought running through the Constitution and laws of the state; and an act intentionally and necessarily creating inequality therein, based on no reason suggested by necessity or difference in condition or circumstances, is opposed to the spirit of free government, and expressly prohibited by the Fourteenth Amendment to the U.S. Constitution.
Southern Railway Company v. Greens, 216 U.S. 400, 54 L.Ed. 536; Hanover Fire Insurance Co. v. Carr, 272 U.S. 494, 71 L.Ed. 372; Campbell Packing Co. v. City of Harrisville, 19 Fed. (2 Ed.) 159; Union Sulphus Co. v. Reed, 252 U.S. 62, 64 L.Ed. 460.
Foreign insurance companies were doing business in the State of Mississippi and these companies, therefore, had certain vested rights, one of which was that the state would not thereto impose any greater liability on them than on the domestic companies.
Annotation, 49 L.Ed. 750; Leecraft v. Texas Co., 281 Fed. 918.
Wells, Jones, Wells Lipscomb, and J.M. Stevens, of Jackson, for appellees.
Unless a life insurance company invested its reserves in some form of investment bringing a substantial return on the money so invested, the company would be speedily rendered insolvent. Not only must the premiums be invested, but they must be promptly invested so as to begin the earning of interest thereon at the earliest possible moment in order that the companies may fulfill their obligations assumed in their contracts of insurance.
Every contention made by counsel for appellant, especially with reference to Chapter 184 of Laws of 1922, has been settled by this court adversely to counsel for appellant in case of City of Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415, 95 So. 845.
There is no material difference in the principles involved in Chapter 261 of the Laws of 1926 from Chapter 184 of the Laws of 1922.
The decision of this court in the above styled cause, to-wit, City of Jackson v. Mississippi Fire Ins. Co., became a rule of property which, in good faith and good conscience should not be disturbed by this court. This court has heretofore uniformly held that a rule of property will not be departed from, whether correct or not.
Edward Hines Yellow Pine Trustees v. State, 98 So. 158; Becker v. Columbia Bank, 73 So. 798, 112 Miss. 819.
Section 112 of the Constitution does not require all property to be taxed. It commits to the legislature the duty of designating and classifying property for taxation and all property not within the classes selected will be exempt from taxation. It does not deprive the legislature of the power which it has been accustomed to exercise from the inception of the state government to exempt from taxation property of a particular class embraced within a general class that is subject to taxation.
City of Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415; Miss. Mills v. Cook, 56 Miss. 40; Murray v. Lehman, 61 Miss. 283; Vicksburg Bank v. Worrell, 67 Miss. 48; Brennan v. The Miss. Home Ins. Co., 70 Miss. 531; Y. M.V.R.R. Co. v. Adams, 77 Miss. 194; Adams v. Tombigbee Mills, 78 Miss. 676; Harrison County v. Gulf Coast Military Academy, 126 Miss. 729.
That the exemption does not embrace the property of individuals engaged in the insurance business works no discrimination against them, for the reason that an examination of the state statute regulating the insurance business will disclose that only corporations and associations that are for all practical purposes corporations can engage in the insurance business in this state. Section 181 of the present state constitution does not prohibit the exempting of the property of corporations from taxation provided the exemption extends also to the property of individuals similarly situated. The requirement is simply that the property of corporations shall be taxed in the same way and to the same extent as the property of individuals.
City of Jackson v. Miss. Fire Ins. Co., 132 Miss. 415; Adams v. Railroad, 77 Miss. 194, 24 So. 200; Harrison County v. Gulf Coast Military Academy, 126 Miss. 729, 89 So. 617; Adams v. Railroad Co., 77 Miss. 194; City of Jackson v. Preston, 93 Miss. 366.
The requirement of Section 182 of the Constitution is that no grant shall be made to or any contract entered into with a corporation by the state which will prevent it from thereafter taxing the corporation or its property, except for a period of five years for the encouragement of manufacturers and other new enterprises of public utility. The power to tax is neither surrendered nor abridged by a failure to exercise it, and the grant of an exemption from taxation which can be repealed at any time is in effect nothing more than a failure for the time being to tax, the power to do which continues in existence and can be exercised at the will of the legislature.
City of Jackson v. Fire Insurance Co., 132 Miss. 423; Harrison County v. Gulf Coast Military Academy, 126 Miss. 729.
The equal protection clause of the Fourteenth Amendment does not take from the state the power to classify in the adoption of police laws, but admits of the exercise of a wide scope of discretion in that regard, and avoid what is done only when it is without any reasonable basis and therefore is purely arbitrary. 2. A classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequality. 3. When the classification in such law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such a law must carry the burden of showing that it does not rest upon any reasonable basis but is essentially arbitrary.
Price v. Illinois, 238 U.S. 446; Central Lbr. Co. v. South Dakota, 226 U.S. 157; Mutual Loan Co. v. Martell, 222 U.S. 225; German Alliance Ins. Co. v. Kansas, 233 U.S. 389; Carroll v. Greenwich Ins. Co., 199 U.S. 401; Heath Milligan Co. v. Worst, 207 U.S. 338; Rast v. Van Deman Le Wis, 240 U.S. 342; Quong Wing v. Kirkendall, 223 U.S. 59; Griffith v. Conn., 218 U.S. 563; Barrett v. Ind., 229 U.S. 26; Keokee Coke Co. v. Taylor, 234 U.S. 224; American Sugar Refining Co. v. La., 179 U.S. 89; St. John v. New York, 201 U.S. 633; Keeney Comptroller, 222 U.S. 525, 56 L.Ed. 299, 38 L.R.A. (N.S.) 1139; Huggins v. The Home Mutual Fire Ins. Co., 107 Miss. 650, 65 So. 646.
The state may distinguish, select and classify objects of legislation and necessarily the power must have a wide range of discretion.
Huggins v. The Home Mutual Fire Ins. Co., 107 Miss. 650, 65 So. 646.
The state has the unquestioned right and power to foster domestic institutions and discriminate against and forbid the entry into this state of foreign corporations.
Paul v. Va., 8 Wallace 168, 19 L.Ed. 357; Ducat v. Chicago, 10 Wallace 410; Liverpool Ins. Co. v. Mass., 10 Wallace 566, 19 L.Ed. 1029; Scottish Union N. Ins. Co. v. Herriott, 109 Iowa, 606; Doyle v. U.S., 94 U.S. 535; Bank of Augusta v. Earle, 13 Peters 519, 10 L.Ed. 274; New York L.E. W.R. Co. v. Conn., 128 Pa. 463, 18 A. 312, 15 Am. St. Rep. 724; Phoenix Ins. Co. v. Burdett, 13 N.E. 705; Goldsmith v. Inc. Co., 62 Ga. 379; People v. Fire Ass'n of Philadelphia, 92 N.Y. 331, 41 Am. St. Rep. 380; Phoenix Fire Ins. Co., 92 Tenn. 420, 21 S.W. 893; Hartford Fire Ins. Co. v. Raymond, 70 Mich. 485, 38 N.W. 474; Hooper v. Calif., 155 U.S. 648, 39 L.Ed. 657; Woodson v. State, 69 Ark. 521, 65 S.W. 465; Commonwealth v. Read Phosphate Co., 113 Ky. 32, 67 S.W. 45; Atty. Gen. v. Electric R.B. Co., 188 Mass. 239, 74 N.E. 467; State v. Va. Carolina C. Co., 71 S.C. 544, 51 S.E. 455; State v. Ins. Co., 106 Tenn. 285; Railroad Co. v. State, 107 Miss. 597; State v. Cotton Oil Co., 116 Miss. 398; Railroad Co. v. State, 107 Miss. 598; State v. Cotton Oil Company, 116 Miss. 398.
It is unnecessary to say that the equal protection of the laws required by the Fourteenth Amendment does not prevent the states from resorting to classification for the purposes of legislation. But the classification must be reasonable, not arbitrary, and must rest upon some ground of difference, having a fair and substantial relation to the object of the legislation so that all persons similarly circumstanced shall be treated alike. The latitude of discretion is notably wide in the classification of property for purposes of taxation and the granting of partial or total exemptions upon grounds of policy.
Royster Guano Co. v. Virginia, 64 L.Ed. 989; Bell's Gap R. Co. v. Pa., 134 U.S. 323, 327, 33 L.Ed. 892, 895, 10 Sup. Ct. Rep. 533; Magoun v. Illinois Trust and Savings Banks, 42 L.Ed. 1042; Davidson v. New Orleans, 96 U.S. 97, 24 L.Ed. 616.
The Federal Constitution imposes no restraints on the state in regard to unequal taxation.
J. Morgan Stevens, of Jackson, for appellee.
Chapter 184, Laws of 1922, under which the assessment for 1926 is attempted, has been expressly upheld by this court in the City of Jackson v. Mississippi Fire Insurance Co., 132 Miss. 415, 95 So. 845. Said opinion and the authorities there relied upon, put at rest every question raised by learned counsel as to the constitutionality of Chapter 261, Laws of 1926.
The law requires the capital of an insurance company to be intact. It requires the maintenance of adequate reserves and surplus. This capital, surplus and reserves must be invested and the law expressly declares how it shall be invested.
Section 5841, Hemingway's Code of 1927.
Section 112 of the Constitution does not prohibit exemptions.
City of Jackson v. Miss. Fire Insurance Co., 132 Miss., 415, 95 So. 845; Miss. Mills v. Cook, 56 Miss. 40; Murray v. Lehman, 61 Miss. 283; Vicksburg Bank v. Worrell, 67 Miss. 48; Brennan v. The Miss. Home Ins. Co., 70 Miss. 531; Y. M.V.R.R. Co. v. Adams, 77 Miss. 194; Adams v. Tombigbee Mills, 78 Miss. 676; Harrison County v. Gulf Coast Military Academy, 126 Miss. 729.
That the statute exempts the property of corporations and associations only from taxation does not render it repugnant to Section 181. No individual can engage in the insurance business in this state, as hereinbefore pointed out; consequently the statute does not exempt the property of corporations from taxation, and leave that of individuals similarly situated subject thereto.
City of Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415, 95 So. 845; Adams v. Railroad Co., 77 Miss. 194; City of Jackson v. Preston, 93 Miss. 366; Harrison County v. Military Academy, 126 Miss. 729.
Section 182 of the Constitution is not violated by either of the statutes involved in this litigation.
City of Jackson v. Miss. Fire Ins. Co., 132 Miss. 415, 95 So. 845; Harrison County v. Gulf Coast Military Academy, 126 Miss. 729.
Argued orally by Simon Rosenthal, for appellant and by J.M. Stevens, for appellee.
The appellant, W.J. Miller, state tax collector, filed three separate suits in the circuit court of Hinds county, one against the Lamar Life Insurance Company, one against the Mississippi Fire Insurance Company and one against the Bankers' Merchants' Fire Insurance Company, seeking to have assessed against these defendants an ad valorem tax on all of the real estate loans made by them out of their reserves at a greater rate of interest than 6 per cent per annum, and existing as of February 1, 1926, 1927, and 1928. Each of these suits involve identically the same legal propositions, and they have been considered together and will be disposed of in this opinion.
The board of supervisors of Hinds county declined to make the assessment against these companies on the ground that such property was exempt from taxation under the provisions of chapter 184, Laws of 1922, and chapter 261, Laws of 1926. From this decision of the board of supervisors the state tax collector appealed to the circuit court, where, on the hearing of the cause, the circuit judge likewise held that such property was exempt from ad valorem taxes under the above-mentioned statutes, and from the judgment entered the state tax collector appealed to this court.
Chapter 184, Laws of 1922, which was in effect on February 1, 1926, when the taxes attempted to be assessed for the year 1926 accrued, is as follows:
"An act to aid and encourage insurance companies incorporated or organized under the laws of the state of Mississippi and to exempt such companies from taxation except on real estate for a period of five years.
"Exempting domestic insurance companies from certain taxes.
"Section 1. Be it enacted by the Legislature of the State of Mississippi, That in addition to the property already exempt from taxation, all insurance companies or associations organized or incorporated under the laws of the state of Mississippi and maintaining its domicile therein, shall be exempt for a period of five years from all taxes of whatsoever kind or character except ad valorem taxes on real estate, and privilege taxes."
By chapter 261, Laws of 1926, which was approved and became effective on March 12, 1926, the five-year limitation in the exemption granted to domestic insurance companies was removed, and the exemption was enlarged to include ad valorem taxes on their real estate, the title and first section of the said act reading as follows:
"An act to aid and encourage insurance companies incorporated under the laws of the state of Mississippi and to provide the kind and method of taxation of such companies.
"Method of taxation of domestic insurance companies.
"Section 1. Be it enacted by the Legislature of the State of Mississippi, That in addition to the property already exempted from taxation, all domestic insurance companies shall be exempt from all taxes of every kind or character, state, county, municipal and other taxing districts; provided, however, that such domestic insurance companies shall not be exempt by this act from payment of the privilege tax imposed by section 2 and allowed by section 3 of this act, and from payment of the state income tax provided by the state income tax law."
Section 2 of the said act of 1926 imposes upon all domestic insurance companies the payment of an annual premium tax to the state, and also the payment of the full amount of the fire marshal's tax required by law, while section 3 of the act authorizes and empowers the county and the municipality in which any domestic insurance company has its legal domicile or principal place of business to each levy and collect annually the privilege tax on such domestic insurance companies "not to exceed forty per centum (40%) for said county and sixty per centum (60%) for said municipality of the said privilege tax imposed by this act upon the same company," the aggregate amount of the premium tax thus authorized to be levied and collected by the state, county, and municipality being the same as the premium tax imposed on foreign insurance companies.
The contentions of the appellant are: (1) That, if said acts are valid, they do not in any way apply to solvent credits and money loaned at a greater rate of interest than six per centum, the same not constituting an insurance business; and (2) that chapter 184, Laws of 1922, and section 1, chapter 261, Laws of 1926, are unconstitutional, null, and void.
The first contention of the appellant, as stated above, that is, that the above-quoted statutes do not exempt a domestic insurance company from taxes on solvent credits, or money loaned at a greater rate of interest than six per cent per annum, for the reason that such solvent credits do not primarily constitute an insurance business, or any part thereof, is, in our opinion, not maintainable. The said act of 1922 exempts domestic insurance companies from all taxes of whatsoever kind or character except ad valorem taxes on real estate and privilege taxes, while the act of 1926 exempts said insurance companies from all taxes of every kind and character except privilege and income taxes. The effect of these statutes is to exempt said insurance companies from all ad valorem taxes on their real and personal property of every kind and character. In order for an insurance company to carry out its contracts of insurance, pay the benefits contracted for, and maintain its solvency, it is important, and, in fact, necessary, that its reserves, if not a part of its capital stock and surplus, be invested in interest-bearing securities, or some form of property returning a percentage of increase by way of interest, or otherwise. In recognition of the importance and necessity of so investing the funds of the insurance companies, the Legislature enacted section 5152, Code 1930, authorizing and requiring said companies to invest their capital, surplus, and other funds in bonds, or notes secured by mortgages or deeds of trust on unencumbered real estate, various classes of municipal bonds, and other named securities, including corporate stocks and bonds and other evidences of indebtedness. So by virtue of the provisions of this statute, as well as by the necessities of the situation and the demands of good business policy, domestic insurance companies are required to make loans out of its capital stock, surplus, and reserves, and to otherwise so invest its surplus and reserves as to receive a substantial return on the money invested; and the interest-bearing securities, or solvent credits taken and acquired in making such investments, are so intimately connected with the insurance business as to become an essential element or part thereof. Such securities being the personal property of the companies owning them, and being a necessary and integral part of the insurance business, are clearly exempt from taxation by the express provisions of the above-quoted statutes.
The appellant next contends that the said chapter 184. Laws of 1922, and section 1 of chapter 261, Laws of 1926, are unconstitutional, and therefore null and void, the contention being that these statutes are violative of sections 61, 87, 90 (h), 112, 181, 182, and 192 of the state Constitution of 1890, and article 4, section 2, clause 1, and the Fourteenth Amendment to the Constitution of the United States.
The appellant offers no discussion or argument to sustain his contention that these statutes violate sections 61, 87, 90 (h), and 192 of the state Constitution, but confines his arguments to alleged violations of the provisions of sections 112, 181, and 182 of said Constitution. In determining the constitutionality of these two statutes, there is no material difference whatever in the legal principles applicable to each of them. The effect of chapter 184, Laws of 1922, was to exempt from taxation all the personal property of domestic insurance companies, while chapter 261, Laws of 1926, merely extends the exemption so as to remove the five-year limitation thereon and to embrace therein the real property of said insurance companies, as well as their personal property.
In the case of City of Jackson v. Mississippi Fire Insurance Co., 132 Miss. 415, 95 So. 845, 847, the constitutionality of chapter 184, Laws of 1922, was challenged, and elaborate and exhaustive arguments were made to establish the contention that it violated each of the above-stated sections of the state Constitution. In the opinion rendered in that case, the pertinent parts of the Constitution of 1890 were set forth, and the court declared that the contention that the statute was repugnant to sections 61, 87, 90 (h), or 192 was so obviously without merit as to require no discussion. In response to the contention and argument that the act of 1922 violated sections 112, 181, and 182 of the Constitution of 1890, the court there discussed fully the meaning and effect of these constitutional provisions, and, in holding that it violated none of these sections, the authorities bearing upon the question were cited and analyzed, and the reasons of the court for so holding were fully stated. Every contention made in the case at bar was made in this former case. The legal principles involved and the questions presented for consideration and decisions in determining the constitutionality of chapter 261, Laws of 1926, are identical with those presented in the consideration of the constitutionality of chapter 184, Laws of 1922, and, consequently, the case of City of Jackson v. Mississippi Fire Insurance Co., supra, is controlling upon all questions presented in the case at bar involving any asserted invalidity of the two statutes on account of being in conflict with any of the provisions of the state Constitution, and requires a holding that none of its provisions are violated by either of these statutes.
The appellant next makes the point that the two statutes of 1922 and 1926 violate article 4, section 2, clause 1, of the Constitution of the United States, which provides that "the Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States." Counsel for the appellant do not press this point in the argument, but, if it is the contention of counsel that these acts violate this provision on account of discrimination against individuals who are citizens of foreign states, there can be no merit in the contention, for it was expressly held in the case of City of Jackson v. Mississippi Fire Insurance Co., supra, that, under the statutes of this state regulating the insurance business, an individual cannot engage in such business, but it can only be carried on in this state by corporations or associations that are for all practical purposes corporations. If the contention is that these statutes violate this provision of the Constitution because they discriminate against foreign insurance corporations, there can be no merit therein, as it has been frequently held by the Supreme Court of the United States that a corporation is not a citizen within the meaning of this section. In the case of Blake v. McClung, 172 U.S. 239, 19 S.Ct. 165, 173, 43 L.Ed. 432, the court said:
"But it is equally well settled, and we now hold, that a corporation is not a citizen within the meaning of the constitutional provision that 'the citizens of each state shall be entitled to all privileges and immunities of citizens in the several states' (Paul v. Virginia, 8 Wall. 168, 178, 179 [19 L.Ed. 357, 359, 360]; Ducat v. Chicago, 10 Wall. 410, 415 [19 L.Ed. 972, 973]; Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566, 573 [19 L.Ed. 1029, 1031]). The Virginia corporation, therefore, cannot invoke that provision for protection against the decree of the state court denying its right to participate upon terms of equality with Tennessee creditors in the distribution of the assets of the British corporation in the hands of the Tennessee court."
The final contention of the appellant is that these statutes are repugnant to the equal protection of the laws clause of the Fourteenth Amendment to the Federal Constitution in that it discriminates against foreign insurance corporations doing business, or that may be admitted to do business, in this state. In reply to this contention, the appellees contend that the appellant, the state tax collector, cannot raise any questions of discrimination because he is not within the class that is in any wise affected or prejudiced by the enforcement of the statute. This contention of the appellees was upheld in the case of City of Jackson v. Mississippi Fire Insurance Co., supra; and this is the general rule. However, in the later case of Miller, State Tax Collector, v. C. G. Railway Co., 154 Miss. 317, 122 So. 366, this rule was modified to the extent of recognizing, as an exception thereto, cases where there is no probability of the validity of the statute being challenged by one of the class discriminated against, or, if so challenged, it will be unnecessary for the court to decide that question. In event a foreign insurance corporation discriminated against by these statutes challenged the validity thereof on the ground that it is an arbitrary discrimination against it, it would not be necessary for the court to decide the question, for, if these statutes should be held void, it would not in any way benefit such complaining insurance company or affect the amount of taxes to be paid by it. It thus appears that this case comes within the stated exception, and the state, through its duly constituted tax collector, can challenge the validity of these statutes affecting its revenues.
In the case of Davidson v. City of New Orleans, 96 U.S. 97, 105, 24 L.Ed. 616, the court said that "the Federal Constitution imposes no restraints on the States" in regard to unequal taxation, while in Magoun v. Illinois Trust Co. Sav. Bank, 170 U.S. 283, 18 S.Ct. 594, 599, 42 L.Ed. 1037, the court said: "Of taxation (and the case at bar is of taxation) Mr. Justice BRADLEY said, in Bell's Gap R. Co. v. Pennsylvania, supra [ 134 U.S. 232, 10 S.Ct. 533, 33 L.Ed. 892], and Mr. Chief Justice FULLER in Giozza v. Tiernan, 148 U.S. 657, 13 S.Ct. 721 [37 L.Ed. 599], that the fourteenth amendment was not intended to compel the state to adopt an iron rule of equal taxation." Again in the case of Royster Guano Co. v. Virginia, 253 U.S. 412, 40 S.Ct. 560, 561, 64 L.Ed. 989, Mr. Justice PITNEY, speaking for the court, said:
"It is unnecessary to say that the 'equal protection of the laws' required by the Fourteenth Amendment does not prevent the states from resorting to classifications for the purposes of legislation. Numerous and familiar decisions of this court establish that they have a wide range of discretion in that regard. But the classification must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike. The latitude of discretion is notably wide in the classification of property for purposes of taxation and the granting of partial or total exemptions upon grounds of policy."
In 12 R.C.L. p. 52, it is said that a state "may discriminate between its own corporation and those of other states, or it may discriminate between kinds of foreign corporations, as for instance, by imposing greater burdens on foreign railroads, banking or insurance companies and building and loan associations than it does on general manufacturing, mercantile or business corporations," and this text is supported by many authorities there cited in the footnotes. It is the province and duty of the Legislature to classify for purposes of taxation, and, if the classification is not wholly unreasonable and arbitrary, and the statute is uniform in its operation on all the members of the class to which it is made applicable, no one is denied the equal protection of the laws guaranteed by the Federal Constitution; and, as said in the case of Rast v. Van Deman Lewis, 240 U.S. 342, 36 S.Ct. 370, 374, 60 L.Ed. 679, L.R.A. 1917A, 421, Ann. Cas. 1917B, 455: "a distinction in legislation is not arbitrary, if any state of facts reasonably can be conceived that would sustain it, and the existence of that state of facts at the time the law was enacted must be assumed. . . . It is the duty and function of the legislature to discern and correct evils, and by evils we do not mean some definite injury, but obstacles to a greater public welfare. . . . And, we repeat, 'it may make discriminations if founded on distinctions that we cannot pronounce unreasonable and purely arbitrary.'"
The discrimination created by these statutes, if any, arises out of the grant of an exemption to domestic insurance companies from certain taxes, and the only limitation upon the legislative power to exempt property from taxation is that "there must underlie the exercise of the power 'some principle of public policy that can support a presumption that the public interest will be subserved by the exemption granted' . . . and the classification of the property exempted 'must be based on some reasonable ground, and some real difference which bears a just and proper relation to the object sought to be accomplished.'" City of Jackson v. Mississippi Fire Insurance Co., supra, and authorities there cited.
The Legislature must necessarily be the judge in the first instance of the advantages to the public welfare to be secured by an exemption of property from taxation, and of the necessity of such exemption, as well as the reasonableness of any classification made for that purpose. The statutes here under attack had their inception at a time when the old line or foreign fire insurance companies had withdrawn from the state, and there was practically an insurance famine which threatened disaster. Domestic insurance companies had not theretofore been fostered and developed, and there were few such companies in the state. It may have appeared, and probably did appear, to the Legislature that the needs of the people of the state required the establishment and development of domestic insurance companies to guarantee to the people insurance on their lives and property. It may have appeared to it that the classification was reasonable and justified on the ground that, by the fostering care and encouragement and aid thus granted, the establishment and success of domestic companies would be assured, thereby reducing the cost of insurance to the people of the state and causing vast sums of money which had theretofore been sent out of the state in payment of premiums for insurance to be retained therein for investment, and for utilization in the development of the resources of the state. Other reasons for the exemption might be imagined and assigned, and we are unable to say that the classification is wholly unreasonable and arbitrary, and therefore repugnant to the Fourteenth Amendment to the Federal Constitution.
The judgment of the court below will therefore be affirmed.
Affirmed.