Eaton v. Connecticut General Life Ins.

PER CURIAM. The controversies arose under the Corporation Excise Tax Act of August 5, 1909, the action being brought to recover taxes that had been collected under section 38 (Comp. St. 1913, § 6301), which sets forth how the net income of insurance companies shall be ascertained for purposes of taxation. The precise question presented is whether certain sums of money are “dividends” within the meaning of such section. In companies, conducted on the mutual plan policies are issued providing for a definite yearly premium, which is usually fixed somewhat above the amount required to insure safety. When a certain time has passed, and it is found that a less sum may safely be taken for a specific year, the premium for that year is reduced to the lower sum, and the insured is allowed to invest the difference, if he care to do so, in additional paid-up insurance without further medical examination. In company bookkeeping the premiums are frequently entered, at their full amount and the amounts of rebate are entered as “dividends.” They are in no true sense dividends, however they may be called, but are in fact partial abatements of premium. It is unnecessary to discuss the points raised in argument. The precise question was decided by Judge Cross in Mutual Benefit L. I. Company v. Herold (D. C.) 198 Fed. 199, his decision was affirmed by the Court of Appeals of the Third Circuit, 201 Fed. 918, 120 C. C. A. 256, and a writ of certiorari to review the decision last cited was. denied by the Supreme Court. Comity calls for a like decision here, which, indeed, is fully in accord with our views of the merits of the controversy. The judgments are affirmed.