City of Jackson v. Mississippi Fire Ins.

95 So. 845, 132 Miss. 415

• Court: Mississippi Supreme Court
• Decided: March 15, 1923
• Docket: No. 23289
• Status: Published

Opinions

Smith, C. J.,

delivered the opinion of the court.

■The Mississippi Fire Insurance Company, a corporation chartered under the laws of this state, appealed to the court below from an assessment of its property for taxation by the city of Jackson, and from a judgment there rendered in its favor the city has brought the case to this court.

The sole question presented to us for decision is the validity vel non of chapter 184, Laws of 1922, entitled:

“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,” and which provides: “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.”

The appellant’s contention is that the statute is repugnant to the following sections of the Constitution of this state:

Section 14: “No person shall be deprived of life, liberty, or property except by due process of law.”

Section 61: “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.”

Section 87: “No special or local law shall be enacted for the benefit of individuals or corporations, in cases whic't are or can be provided for by general law or where the relief sought can be given by any court of this state; nor shall the operation of any general law be suspended by the legislature for the benefit of any individual or private corporation or association, and in all cases where a general law can be made applicable, and would be advantageous, no speciál law shall be enacted.”

Section 90: “The legislature shall not pass local, private, or special laws in any of the following enumerated cases, but such matters shall be provided for only by general laws, viz.: . . . (h) Exemption of property from taxation or from levy or sale.”

Section 112: “Taxation shall be uniform and equal throughout the state. Property, shall be taxed in proportion to its value. . . . Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value.”

Section 181: “The property of all private corporations for pecuniary gain shall be taxed in the same way and to the same extent as the property of individuals.”

Section 182: “The power to tax corporations and their property shall never be surrendered or abridged by any contract or grant tp which the state or any political subdivision thereof may be a party, except that the legislature may grant exemption from taxation in the encouragement of manufacturers and other new enterprises of public utility extending for a period not exceeding five years, the time of such exemptions to commence from date of charter, if to a corporation; and if to an individual enterprise, then from the commencement of work; but when the legislature grants such exemptions for a period of five years or less, it shall be done by general laws, which shall distinctly enumerate the classes of manufacturers and other new enterprises of public utility entitled to such exemptions, and shall prescribe the mode and manner in which the right to such exemptions shall be determined.”

Section 192: “Provision shall be made by general laws whereby cities and -towns may be authorized to aid and encourage the establishment of manufacturers, gasworks, waterworks, and other enterprises, of public utility other than railroads, within the limits of said cities or towns, by exempting all property used for such purposes from municipal taxation for a period not longer than ten years.”

And to the following provisions of the Federal Constitution :

Article 4, section 2, paragraph 1: “The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states.”

The equal protection of the laws clause of section 1 of the Fourteenth Amendment.

The contention that the statute is repugnant to sections 14, 61, 87, 90, and 192 of the state Constitution are so obviously without merit that we will so declare without any special discussion thereof.

Section 112 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 subjected to taxation. Miss. Mills v. Cook, 56 Miss. 63; Yazoo & Miss. Valley R. R. Co. v. Adams, 77 Miss. 194, 24 So. 200, 317, 28 So. 956, 60 L. R. A. 33; Harrison County v. Gulf Coast Military Academy, 126 Miss. 729, 89 So. 617. The Mississippi Mills case was overruled in Adams v. Bailroad, supra, “in so far as it held that the property of private corporations for pecuniary profit was not . . . expressly directed to be taxed just as the property of individuals,” but no further.

The limitation on the legislature’s power under the uniformity and equality clause of this section of the Constitution to exempt property from taxation and thereby discriminate against property taxed or the owners thereof is the same as the limitation on its power to discriminate between persons and property under any other constitutional guaranty, state or federal, of the equal protection of the laws. Gray, Limitation of Taxing Power, 656. This limitation 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” (1 Cooley on Taxation [3d Ed.] 343), 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.” Adams v. Standard Oil Co., 97 Miss. 879, 53 So. 692; Adams v. Kuykendall, 83 Miss. 586, 35 So. 830; Adams v. Miss. Lumber Co., 84 Miss. 23, 36 So. 68; Gulf, Col. & Santa Fe Ry. Co. v. Ellis, 165 U. S. 150, 17 Sup. Ct. 255, 41 L. Ed. 666; Bell’s Gap R. Co. v. Pennsylvania, 134 U. S. 232, 10 Sup. Ct. 533, 33 L. Ed. 892; Magoun v. Ill. Trust & Sav. Bank, 170 U. S. 283, 18 Sup. Ct. 594, 42 L. Ed. 1037; People ex rel. Hatch v. Reardon, 184 N. Y. 431, 77 N. E. 970, 8 L. R. A. (N. S.) 314, 112 Am. St. Rep. 628, 6 Ann. Cas. 515; People ex rel. Farrington v. Mensching, 187 N. Y. 8, 79 N. E. 884, 10 L. R. A. (N. S.) 625, 10 Ann. Cas. 101.

Constitutional limitations should be applied with caution. “Some play must be allowed for the joints of the machine.” Mo., Kan. & Texas Ry. Co. v. May, 194 U. S. 267, 24 Sup. Ct. 638, 48 L. Ed. 971. Consequently the classification need not be, and generally cannot be, scientifically accurate. “If the purpose is within the legal powers of the legislature, and the classification made has relation to that purpose (excludes no persons or objects that are affected by the purpose, includes all that are) logically speaking, it will be appropriate; legally speaking, a law based upon it will have equality of operation.” Billings v. Illinois, 188 U. S. 97, 23 Sup. Ct. 272, 47 L. Ed. 400.

The legislature must necessarily be the' judge in the first instance of the public necessity for exempting property from taxation and of the reasonableness of the classification thereof, and when it has declared- that the public good will be served by exempting the property of a class of persons from taxation “its action should not he disturbed by the courts . . . unless they can see clearly that there is no fair reason for the law that would not require with equal force its extension to others whom it leaves untouched” (Mo., Kan. & Texas Ry. Co. v. May, supra), or that the exemption could under no circumstances be for the public good.

Viewed in this light, it will be impossible for us to say that the exemption violates the equality and uniformity clause of section 112 of the state Constitution. It may have appeared to the legislature that there were not a sufficient number of insurance companies doing business in the state of Mississippi to meet the needs of its people for insurance on their lives and property, or there may have been no, or only a few, domestic insurance companies therein, for either or both of which reasons the encouragement of the formation of domestic insurance companies and associations by exempting their property. from taxation would be for the public good. It may have appeared that without the exemption the price charged for insurance would have to be increased to the public harm, in order for the domestic companies to continue in business, or that with the exemption the domestic companies could reduce the price of insurance to the public good. Other reasons for the exemption may • be imagined. We may doubt the wisdom of, and the necessity for, the grant of an exemption; but those questions are for the determination of the legislature, on which rests primarily the duty of guarding the public welfare. In its purposes and the execution of them the legislature “must be allowed a wide range of discretion, and . . . this court will not make itself 'a harbor in which can be found a refuge from ill-advised, unequal and oppressive legislation.’ ” County of Mobile v. Kimball, 102 U. S. 691, 26 L. Ed. 238; Billings v. Ill., 188 U. S. 97, 23 Sup. Ct. 272, 47 L. Ed. 400.

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 (Liverpool & London Life & Fire Ins. Co. v. Massachusetts, 10 Wall. 566, 19 L. Ed. 1029) 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.”

In Adams v. Railroad, 77 Miss. 194, 24 So. 200, 60 L. R. A. 33, in holding a special exemption from taxation granted to a corporation to be void under a provision of the Constitution of 1869 similar to the one here under consideration, the court among other things said:

“If property of a particular kind is subjected to taxation, and owned by a corporation, it must bear the rate of taxation imposed on individuals. While the Constitution inhibits the exemption or discrimination in favor of corporation^, it equally inhibits a discrimination against them. Equality in bearing a common burden, which is natural right and equity, is secured alike to the corporation and to the citizen.”

This holding was approved and followed in Harrison County v. Gulf Coast Military Academy, 126 Miss. 729, 89 So. 617. That the statute exempts the property of corporations and associations only from taxation does not render it repugnant to section 181. No individu'al 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.

In passing, it will not be amiss to point out that the legislature has not restricted the right to engage in insurance business to corporations, in order that an individious discrimination might be made in favor of corporations and against individuals in respect to either the right to engage in the insurance business or the exemption of property from taxation. The restriction of the right to engage in such business to corporations was enacted more than twenty years ago, pursuant to a policy in vogue in other states, and is a valid exercise of the state’s power to regulate the business of insurance. Ins. Co. v. Miazza, 93 Miss. 18, 46 So. 817, 136 Am. St. Rep. 534; State v. Alley, 96 Miss. 720, 51 So. 467; 22 Cyc. 1386; 1 Joyce on Insurance (2 Ed.), section 328a; 16 Am. & Eng. EnC. L. (2 Ed.), 878.

Section 182 of the state Constitution prohibits the surrender or abridgement of the power to tax corporations and their property, except for a period of five years, for which time an irrepealable exemption may be granted for “the encouragement of manufacturers and other new enterprises of public utility.” In determining the validity of an exemption from taxation claimed by a corporation, two questions can arise under this section: (1) Is the exemption within the provision thereof for “the encouragement of manufacturers and other new enterprises of public utility?” And (2) if it is not within that provision, does the statute granting the exemption surrender or abridge the power of the state to tax corporations and their property?

We will assume for the' sake of the argument, and as we do not understand counsel for the appellee to contend to the contrary, that the exemption here in question is not within the provision for “the encouragement of manufacturers and other new enterprises of public, utility,” and therefore can be repealed at the will of the legislature, and will proceed at once to the consideration of the second of these questions. Section 182, it will be observed, does not require the power of the state to tax corporations and their property to be always exercised, but simply that it “shall never be surrendered or abridged by any contract or grant to which the state . . . may be a party.” The requirement, to express it in different language, 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 manufactures and other new enterprises of public utility.”

It is hardly necessary to say that 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. It was expressly so held in Harrison County v. Gulf Coast Military Academy, supra. But it has been suggested that the corporations meant in this section of the Constitution are the same in character as those referred to in section 181 thereof, that is. private corporations for pecuniary gain; that the Gulf Coast Military Academy is not a corporation organized primarily for pecuniary gain, but “for the education of youth;” and that consequently, while that case was rightly decided, it should be restricted in its application to corporations not organized primarily for pecuniary gain.

Assuming for the sake of the argument that the corporations referred to in section 182 are those only that are organized primarily for pecuniary gain and that the Gulf Coast Military Academy is not such a. corporation, nevertheless what we have hereinbefore said relative to the surrender or abridgment of the power to tax remains true and is applicable to the grant of an exemption from taxation to a corporation of any character. The appellant’s contention that the statute is repugnant to article 4, section 2, par. 1, of the Federal Constitution is based on the theory that individuals can engage in the insurance business in this state and are discriminated against by the statute; but, as hereinbefore pointed out, an individual cannot engage in such a business in this state.

This brings us to the appellant’s contention that the statute is repugnant to the equal protection of the laws clause of the Fourteenth Amendment to the Federal Constitution, which may have been disposed of by what we have said relative to the statute’s repugnancy to section 112 of the state Constitution, but we are not called on to so decide, for the reason that that question cannot be raised by the appellant. The ground of the appellant’s complaint is that the statute discriminates, not against it, but against foreign corporations engaged in the insurance business in this state, and the rule is that a court will not declare a statute void because of repugnance to a provision of a Constitution for the protection of persons unless requested so to do by a person of the class for whose protection the provision of the Constitution was adopted. This rule is so well settled that it would be supererogatory to cite authorities in support of it.

Affirmed.