Carpenter v. People Mutual Life Insurance

California Supreme Court Nov 27, 1937 No. L. A. 15362Published

Before: Langdon

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Holding. The California insurance gross premiums tax is an excise or privilege tax rather than a property tax, and therefore an insurance company is liable for taxes based on premiums received during a year it conducted business, even if it is in liquidation by the tax assessment date. Furthermore, property in the custody of the law is subject to penalties for tax delinquency.

Issues

Whether the state insurance company tax is a property tax or an excise/privilege tax.
Whether an insurance company in liquidation is liable for taxes on premiums received during the year it conducted business.
Whether penalties for tax delinquency may be imposed on property in the custody of the law.

Disposition. reversed in part and affirmed in part

Quotations verified verbatim against the opinion

“We therefore hold that the tax on insurance companies levied pursuant to section 14, subdivision (b), of article XIII of the Constitution is an excise or privilege tax and not, as contended by appellant Insurance Commissioner, a property tax.”

LANGDON, J.

A hearing was granted in this case upon petition of both appellant and respondent State Controller, after decision by the District Court of Appeal, Second District, Division One, mainly for the purpose of giving con

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sideration to a recent case from another jurisdiction just decided. Upon a study of this and other authorities, we are satisfied that the District Court of Appeal has correctly decided the main issue involved herein, and we accordingly adopt the following part of the opinion of Mr. Justice

pro tempore

White as part of the opinion of this court:

“Two appeals are before us from the same judgment rendered by the trial court. One appeal is by the Insurance Commissioner of the State of California from that part of the judgment wherein it was decreed that the Peoples Mutual Life Insurance Company, a California corporation, was liable for the state insurance company tax which was assessed by the state board of equalization between the first Monday in March, 1933, and the first Monday in July of that year, notwithstanding the fact that the company was not doing business in this state on the first Monday in March, 1933, and had been prohibited from doing business in this state by order of the superior court, dated November 10, 1932, decreeing its insolvency .and directing its liquidation. From that holding the insurance commissioner, as statutory liquidator of the company, takes this appeal.

“The second appeal is taken by the State Controller from that part of the judgment which decreed that the insurance company, which was ordered liquidated by the superior court of the county of Los Angeles on November 10, 1932, and which thereafter did no business in California, was liable for penalties for default in the payment of taxes accruing prior to November 10, 1932, the date of the order of liquidation, but was not liable for penalties accruing after the date of such liquidation order.

“The facts are undisputed, and epitomized, are that Peoples Mutual Life Insurance Company was an insurance company doing business as such in the state of California during that portion of the calendar year 1932 prior to November 10, 1932, on which day the court below, after full hearing upon the petition of the State Insurance Commissioner, adjudged the company insolvent, terminated its right to do business, and ordered it liquidated pursuant to the provisions of Act 3739 of Deering’s General Laws (Stats. 1919, p. 265, and amendments thereto). By said order the Insurance Commissioner was appointed liquidator. At no time after November 10, 1932, was the company engaged in the business

Carpenter v. People Mutual Life Insurance

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LANGDON, J.

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