Button v. Hikes ( 1943 )

In view of our decision in Com. v. Sutcliffe, 283 Ky. 274,140 S.W.2d 1028, I am unable to concur in the majority opinion. We held there that the right to receive income from securities held under a trust was property subject to ad valorem taxation, even though the securities from which the income arose might have been taxed in another state.

It seems to me that the right of Mrs. Hikes to receive monthly income from the proceeds of the insurance policies, at not less than 3% per annum, is more clearly property subject to ad valorem taxation than was the beneficiary's right in the Sutcliffe case. The status of Mrs. Hikes is similar to that of one holding promissory notes of the insurance companies calling for the payment of a minimum sum monthly during her life time and it is beyond question that notes of this character would be taxable.

The majority opinion impliedly, if not expressly, concedes that her right to receive this income is property under principles enunciated in the Sutcliffe case and that it would be taxable had it not had its inception in insurance policies. The opinion then holds this property right non-taxable upon the theory that it is sought to lay a tax upon insurance policies. This premise, upon which the opinion is founded, is, I think, a fundamental error since the insurance phase of the transaction giving rise to the property right ended with the death of Samuel L. Hikes, the policies maturing when he died. It can not be doubted that if the policies had been payable in a lump sum and the proceeds deposited in a bank such proceeds would be subject to taxation even though they had their origin in an insurance policy. No attempt is made to tax insurance policies. On the contrary, the attempt is to tax a property right similar to a promissory note, the consideration for which is the right of the insurance companies to retain the cash due the beneficiary of the policies.

But, even though the right sought to be taxed be considered to be one arising under an insurance policy, I am of the opinion that it is taxable under the principles enunciated in the Sutcliffe case. The majority see an intention upon the part of the makers of the constitution that property rights arising out of insurance policies should not be taxed. I find no source from which to gather such an intention. Certainly, the mere fact that rights similar to the one here involved had never been taxed at the time of the adoption of the constitution affords no reason for surmising such an intention. If such a surmise were justified, then the Sutcliffe case is unsound since a right such as the one there subjected to taxation had never been taxed when the constitution was adopted. Other instances might be mentioned in which new forms of property have been taxed although such property had not been conceived to be taxable when the constitution was adopted. New concepts of taxation and of what constitutes taxable property are constantly springing into being. This is as it should be, in view of the constant ingenuity exercised by taxpayers in devising methods to place property beyond the purview of taxing statutes, and the taxing authorities should not be discouraged in their efforts to tax every available species of property.

The intention of the makers of the constitution is to be gathered only from the constitution itself, with the aid of such light as is shed by what was said by the makers at the time of its adoption. Section 172 of the Constitution provides that "All property, not exempted from taxation by this Constitution, shall be assessed for taxation at its fair cash value * * *." There is no pretense that the property right in question was expressly exempted by the constitution. Prior to the adoption of the present constitution exemptions from taxation were left to the Legislature and it was one of the purposes of the makers of the constitution to divest the Legislature of this function. The Debates of the Constitutional Convention of 1890, Volume II, pages 2372 to 2844, disclose that one of the chief concerns of the constitution makers was that no form of property, except that exempted by them, should escape taxation and that they regarded the provisions of Section 172 as broad enough to cover "everything of value belonging to any person * * * every available species of property." Page 2437 of the Debates. The Debates are replete with similar expressions indicating an intention squarely opposed to that which the majority attribute to the makers of the constitution.

Any intention of the makers of the constitution to permit any conceivable form of property, except such as was exempted by them to escape taxation is so completely dispelled by what they said when the constitution was adopted as to render wholly illusory the intention, attributed to them by the majority opinion, to exempt property rights arising under insurance policies.

The wording of Section 172 could not be more all inclusive. Were there need to look beyond the constitution itself to ascertain the meaning of the words, "All property," then such legitimate light as is thrown thereon reveals a meaning contrary to that expressed in the majority opinion.

Judges Cammack and Thomas concur in the views herein expressed.