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decided: November 23, 1926.



Taft, Holmes, Van Devanter, McReynolds, Brandeis, Sutherland, Butler, Sanford, Stone

Author: Taft

[ 272 U.S. Page 501]

 MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

This is a writ of error under § 237 of the Judicial Code to the judgment of the Supreme Court of Illinois, affirming a decree of the Superior Court of Cook County dismissing the bill of the Hanover Fire Insurance Company, a corporation of New York, against Patrick J. Carr, County Treasurer and ex-officio tax collector of Cook County, Illinois. The prayer was for an injunction to prevent the distraint of the property of the complainant under a warrant for the collection of $10,678.50, as taxes due under a law of Illinois, which law, the bill averred, denied to the complainant the equal protection of the laws under the Fourteenth Amendment of the Federal Constitution.

The defendant filed an answer denying the claims of the bill and, after a reply, the case was heard by the trial court, which made findings of fact in its decree based on a stipulation by the parties, and entered a decree as set forth below.

The law in question reads as follows:

"Foreign Companies. -- Tax on net receipts. Section 30. Every agent of any insurance company, incorporated by the authority of any other State or government, shall return to the proper officer of the county, town or municipality

[ 272 U.S. Page 502]

     in which the agency is established, in the month of May, annually, the amount of the net receipts of such agency for the preceding year, which shall be entered on the tax lists of the county, town and municipality, and subject to the same rate of taxation, for all purposes -- State, county, town and municipal -- that other personal property is subject to at the place where located; said tax to be in lieu of all town and municipal licenses; and all laws and parts of laws inconsistent herewith are hereby repealed: Provided, that the provisions of this section shall not be construed to prohibit cities having an organized fire department from levying a tax, or license fee, not exceeding two per cent. in accordance with the provisions of their respective charters, on the gross receipts of such agency, to be applied exclusively to the support of the fire department of such city." Cahill's Ill. Rev. Stat. 1925, c. 73, § 159, p. 1405.

This had been in force since 1869 and was part of the Act of March 11, of that year, entitled "An Act to incorporate and to govern fire, marine and inland navigation insurance companies doing business in the State of Illinois." The section was amended to the above form by an Act approved May 31, 1879.

By section 22 and other sections of the original Act of 1869 (Cahill's Ill. Rev. Stat. 1925, c. 73, § 150, p. 1402), it was made unlawful for a foreign insurance company to transact any insurance business in the State unless it had a prescribed amount of capital, appointed an attorney in the State on whom process of law could be served, filed a properly certified copy of the charter or deed of settlement of the insurance company, showing its name and the place where located, the amount of its capital and a detailed statement of its assets, together with its indebtedness, the losses adjusted and unpaid, the amount incurred and in process of adjustment, and a copy of its last annual report. It was required also to deposit with the Director

[ 272 U.S. Page 503]

     of Trade and Commerce of the State, for the benefit and security of the policy holders residing in the United States, a sum of not less than $200,000 in 6 per centum stock of the United States or the State of Illinois, or approved mortgage securities, with a provision that, so long as the company should continue solvent and comply with the laws of the State, it might collect the interest on these securities. The law provided that it should not be lawful for the agents of the company to transact business without procuring annually from the Director of Trade and Commerce the authority stating that such company had complied with all the requisitions of the act which applied to it; that any violation of the provisions of the act should subject the one violating it to a penalty not exceeding $500 for each violation; that such insurance companies should make annual statements of their condition and affairs to the Director of Trade and Commerce in the same manner and in the same form as similar insurance companies organized under the laws of the State, on or before the first day of March in each year for the year ending on the preceding 30th of September. The Insurance Superintendent was given authority by the same act to investigate affairs of the foreign companies, such investigation to be at the expense of the company, and, if he found the condition of any one unsound, to close up the business of the company by application to the circuit court of the county in which it had its principal office. By the same act, each foreign company was required to pay $30 for filing the charter, $10 for filing the annual statement required, and $2 for each certificate of authority for agents, and certain other fees of a similar character. Paragraphs 150, 152, 156, Cahill's Rev. Stat. Ill. 1925, c. 73.

By the Act of June 28, 1919 (Cahill's Ill. Rev. Stat. 1925, c. 73, § 79, p. 1390), it was provided that each non-resident corporation licensed and admitted to do an insurance

[ 272 U.S. Page 504]

     business in the State should pay an annual state tax for the privilege of so doing, equal to 2 per centum of the gross amount of premiums received during the preceding calendar year on contracts covering risks within the State after certain reductions; that the tax should be in lieu of all license fees or privilege or occupation taxes levied or assessed by any municipality in the State, and that no municipality should impose any license fee, privilege or occupation tax upon such corporation for the privilege of doing an insurance business therein, but this should not be construed to prohibit the levy and collection of any state, county or municipal taxes upon the real and personal property of such corporations, or the levying and collection of taxes authorized by § 30, above quoted.

By § 12 of the same act (Cahill's Ill. Rev. Stat., c. 73, § 90, p. 1391), it was provided that, if any corporation should fail or neglect to make any report, or refuse to pay any tax assessment within thirty days after the same became due, the Department of Trade and Commerce should have power to revoke its license to transact the business of insurance in the State, or to suspend it until the reports were filed or the taxes paid.

The complainant insurance company complied with the requirements of § 22 and other unrepealed sections of the Act of 1869, and paid the 2 per cent. tax on its premiums received, as provided by the Act of 1919.

By the General Revenue Act of Illinois, in force since February 25, 1898 (Cahill's Rev. Stat. 1925, c. 120, § 329, p. 2042), personal property is to be valued at its fair cash value, which value is to be set down in one column to be headed "Full Value," and one-half part thereof is to be ascertained and set down in another column headed "Assessed Value." The one-half value of all the property so ascertained and set down is to be the value for all purposes of taxation. It is further stipulated in this case and found by the trial court, that for the

[ 272 U.S. Page 505]

     year 1923, and for many years prior thereto, there has been what is called an equalization, which systematically and intentionally reduces the amount set down in the column headed "Full Value" to not more than 60 per cent. of the actual market value of the personal property returned, and, by further reducing this by 50 per cent. to make the ...

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