DocketNumber: No. 4-4413
Citation Numbers: 103 S.W.2d 38, 193 Ark. 458
Judges: McHANEY, J.
Filed Date: 1/18/1937
Status: Precedential
Modified Date: 1/12/2023
The effect of the majority opinion of the court in this case and in the cases of the Maccabees and Modern Woodmen of America and like insurance corporations is to permit them to do practically all kinds of life, disability, and accident insurance in this state without paying 2 1/2 per cent. to the state on the gross premiums collected on the policies.
The statutes of this state exempt fraternal beneficiary societies or orders from the payment of the 2 1/2 per cent. on gross premiums collected by those who write insurance without profit or gain, and who do their business under the lodge system, with ritualistic form of work and representative form of government. Act No. 186, p. 328 of 1899; Act No. 462, March 28, 1917, p. 2087; Act No. 237 of 1927, p. 800.
Fraternal beneficiary societies of non-profit benefit associations, as sometimes called, are exempted from the payment of the tax on the theory that their purposes are charitable and helpful to their members, not only in a social way, but that they might obtain insurance on a non-profit basis as an incident to their ritualistic fraternal work. I think this the paramount intention of the legislature running through all these statutes and that the various legislatures, in passing the acts, did not intend to exempt any kind of an organization issuing profit bearing insurance policies or certificates from paying a tax on the premiums collected to the state for the privilege doing business in the state.
The question for determination on appeal in this case and the two companion cases (Maccabees v. State, 103 S.W.2d 46; Woman's Benefit Asso. v. State, 103 S.W.2d 461) now before us is whether appellants are engaged in a general life insurance business in this state for profit to the respective corporations or the members thereof. If so, they are not exempt from the tax imposed on the premiums collected by them. If, however, *Page 470
they are not engaged in the general insurance business for profit, they are exempt from the tax. The test necessarily lies in the character and kind of business they are and have been doing in this state. This court said so in the case of Locomotive Engineers Mutual Life Accident Insurance Association v. Vandergriff,
"It is finally insisted that the court erred in assessing a penalty against the appellant and in allowing an attorney's fee to be charged against it. This contention is based upon 6068, 6069 and 6071, Crawford Moses' Digest, as construed by this court in United Order of Good Samaritans v. Meekins,
"Couch Encyc. of Insurance Law, vol. 1, 253, p. 602, lays down the following as a text: `But, as a matter of fact, the question of the nature of the society, with respect to whether or not its contracts shall be regarded as those of an assessment or of an old line company, is generally regarded as largely controlled by determining whether or not it operates on the assessment or cooperative plan, or on a fixed benefit and premium basis.' See, also, Marcus v. Heralds of Liberty,
The test announced in this case, in my humble judgment, is sound and ought to rule the three instant cases, because the facts reflected by the record in the instant cases bring them within the rule. All the policies or certificates introduced in the record are, in form and substance, the same kind of profit bearing policies written by old line mutual insurance companies. Great reserves and great surpluses, running into millions of dollars, have been built up out of the insurance business conducted by each. They solicit insurance through paid agents just as old line companies do. They write all kinds of insurance policies, barring none. They solicit *Page 472 insurance from all insurable persons, be they members of the associations or not. The policies they write are not canceled for failure to attend lodge meetings or to participate in the rituals. The failure to pay fixed or flat premiums is the only thing that works a forfeiture of their policies. Their insurance business has grown to great proportions. As I read the record, the lodge and ritualistic work is a mere incident to the insurance business they do; whereas, in their early beginnings, when they were fraternals in fact, instead of in name only, it was otherwise.
Under my interpretation of the insurance statutes, this appellant and the appellants in the two companion cases, owe the state $239,895.33, which amounts have gone directly or indirectly to build up enormous reserves and surpluses far beyond the amounts necessary to meet all their obligations existing or contingent and which amounts have been accumulated out of profits for the benefit of the societies or their numbers.
If the majority are correct in their interpretation of the statutes, the statutes, as written, discriminate between foreign insurers doing exactly the same kind and character of business in this state. This fortifies me in the correctness of my view, because my interpretation leaves no room for complaint against the statutes on account of arbitrary discriminations in them.
It is as clear as the noonday sun to me, gleaned from the records of the facts in these three cases, that appellant and the appellants in the two companion cases are doing a general mutual insurance business, covering life, disability, and accident insurance, in this state for profit in open violation of the statutes authorizing them to do only a non-profit life, disability, and accident insurance business incident to their ritualistic lodge work. For the reasons assigned, I am impelled to dissent from the construction placed upon our insurance statutes, so far as they relate to the issues involved, by my associates, and to say to them that I think they have and are departing from the test we announced in the Vandergriff case, supra, by which to distinguish fraternal beneficiary *Page 473 societies from old line mutual insurance companies.
In effect, we said, in that case, "Ye shall know them by their fruits." Matthew VII:16.
Locomotive Eng. Mut. Life Acc. v. Vandergriff , 192 Ark. 244 ( 1936 )
Gallegly v. American Ins. Union , 180 Ark. 4 ( 1929 )
Modern Order of Praetorians v. Bloom , 69 Okla. 219 ( 1918 )
Ragsdale v. Brotherhood of R.R. Trainmen , 229 Mo. App. 545 ( 1934 )