Scottish Union & National Insurance v. City of Winchester

Whittle, J., delivered the opinion of the court. This suit was brought to enjoin the city of Winchester from imposing a license tax on appellants for conducting the fire insurance business in that city, on the ground that the ordinance is repugnant to Art. XIII, sec. 170 of the State Constitution of 1902. This appeal was allowed from a decree dismissing the bill on demurrer. The tax bill, Appendix to Va. Code, 1904, sec. 23, p. 2201, provides: “That the specific license tax upon every such company for the privilege of doing business in the State shall be two hundred dollars a year, and in addition thereto a sum equal to one and one-quarter per centum upon the gross amount of all assessments, premiums, dues and fees collected or received, or obligations taken therefor, derived from its business in this State. . . .” It is conceded that the city may impose taxes upon all subjects taxed by the State, and consequently if the act of the legislature is constitutional, the ordinance in question which imposes upon such companies a license tax of fifty dollars and one and one-half per centum on gross receipts, is also valid. Appellants’ objection extends only to the specific feature of the tax which they denominate a “license tax,” and not to the graduated portion, which it is insisted constitutes an ad valorem tax, and affords conclusive proof that the business can be reached by that system; and, if capable of being so reached, a license tax may not be constitutionally imposed. If this question were res integra, we should have no difficulty in holding that the percentage clause is not a property tax, but a privilege tax. Such has been the uniform legislative [453] construction with respect to this species of taxation for moire than half a century. When the Constitution of 1869 was adopted the legislature was habitually imposing both a specific sum and a percentage tax upon receipts of insurance companies as a license tax for the privilege of doing business in the State. Originally that sort of taxation was confined to foreign insurance companies (Acts 1852-3, p. 21, sec. 5; Va. Code, 1860, p. 248, sec. 36), but afterwards it was extended to all insurance companies, foreign and domestic, and in that form has passed through various enactments down to the present time. Acts 1871-2, p. 484; Va. Code, 1873, p. 360, sec. 58; Acts 1874, p. 357. The present Constitution was ordained and established in the light of this legislative construction, and the General Assembly embodied a similar provision in the first tax bill enacted thereunder. Tax Bill, 1902, supra. In Barbour v. Grimsley, 107 Va. 814, 61 S. E. 1135, this court held that “If a statute . . is of doubtful validity, it will not be declared unconstitutional where it appears that, under the same or similar constitutional provisions, like powers have been conferred by similar statutes which have never been called in question by the courts, nor by two constitutional conventions which have since assembled, but have received the sanction of the Legislature, and the inferior courts of the State, and have been acquiesced in for over half a century by all the departments of the State government. The practical construction thus put upon such acts will be regarded as decisive of their validity.” Brown v. Epps, 91 Va. 726, 21 S. E. 119, 27 L. R. A. 676; Smith v. Bryan, 100 Va. 199, 40 S. E. 652; Henrico County v. City of Richmond, 106 Va. 282, 55 S. E. 683, 117 Am. St. Rep. 1001; Tiller v. Excelsior Coal & Lumber Corp., ante, p. 151, 65 S. E. 507. But in addition to this long continued legislative usage with respect to the imposition of a specific and graduated license tax on insurance companies, we have direct authority in support of [454] the constitutionality of acts imposing similar taxation in analogous cases. Newport News, &c., R. Co. v. Newport News, 100 Va. 157, 40 S. E. 645; Postal Tel. Cable Co. v. Norfolk, 101 Va. 125, 43 S. E. 207; City of Norfolk v. GriffithPowell Co., 102 Va. 115, 121, 45 S. E. 889; Gordon v. Newport News, 102 Va. 649, 47 S. E. 828; N. & W. Ry. Co. v. Suffolk, 103 Va. 498, 49 S. E. 658. The attempt is made, however, to escape the controlling influence of these decisions by the contention that the Convention of 1902, by not incorporating in Art. XIII, sec. 110, the precise language of Art. X, sec. 4, the corresponding provision of the Constitution of 1869 manifested a purpose to change the pre-existing policy of the State in relation to the imposition of tax on licenses. A comparison of the two provisions shows that the contention is wholly without merit. In substance and legal intendment there is no difference between the two clauses. Section 4, after empowering the General Assembly to levy a license tax on specified occupations, concludes, “and all other business which cannot be reached by the ad valorem system.” While section 110, without specifically mentioning any business, declares that the General Assembly “may levy a license tax upon any business which cannot be reached by the ad valorem system.” It is inconceivable that the shadowy distinction between these sections could have been intended to operate so drastic a change in the long established fiscal policy of the State. On the contrary, if such had been the purpose of the convention, it cannot be doubted that such intention would have been made known in unmistakable language. The decree of the circuit court is plainly right, and must be affirmed. Affirmed.