Mr. Harry L. Butler, of Madison, Wis., for plaintiff in error.
Mr. Walter Drew, of Milwaukee, Wis., for the State of Wisconsin. [247 U.S. 132, 133]
Mr. Justice DAY delivered the opinion of the Court.
This suit was brought to recover certain taxes or license fees paid by the Northwestern Mutual Life Insurance Company to the state of Wisconsin; the same were paid under protest, and this action was to recover $482,193.23 paid in 1912, and $505,643.22 in 1913. The case was decided in the Supreme Court of Wisconsin, upon demurrer to the original and amended complaints, and judgment was rendered in favor of the state. 163 Wis. 484, 155 N. W. 609, 158 N. W. 328.
The taxes in question were collected under the statutes of Wisconsin. Section 1220, Wis. Stats. of 1911, being section 51.32 of the later Stats.; section 1221, now section 51.33, being the so-called retaliatory law; section 1222, subsec. 5 of section 1947; and section 1948
The substance of the statute immediately involved is thus stated by the plaintiff in error:
[247 U.S. 132, 134] 'Every company ... transacting the business of life insurance within this state (excepting only such fraternal societies as have lodge organizations and insure only the lives of their own members) shall annually, on or before March 1, pay 'in lieu of all taxes for any purpose authorized by the laws of this state (except taxes on real estate), certain prescribed license fees for transacting such business."
It appears that fraternal societies with lodge organizations insuring only the lives of their own members are not subject to this tax, and foreign level premium companies, similar to the plaintiff in error, are subject to an annual tax of but $300.00 liable to increase under the so- called retaliatory law according as other states impose like taxes on similar companies of Wisconsin. Assessment and stipulated premium companies, domestic and foreign, are taxed $300.00, or as to foreign companies such larger amounts as may be proposed under the retaliatory law. The license when granted authorizes the company to transact business until the first of March of the ensuing year unless sooner revoked or forfeited.
The contentions of a federal nature, raised by the plaintiff in error, are that this license tax imposes an unlawful burden upon interstate commerce in contravention of section 8, article 1 of the federal Constitution; that it violates the Fourteenth Amendment in denying the equal protection of the laws to the Northwestern Company by arbitrarily discriminating against it and in favor of foreign insurance companies, and between it and fraternal associations, both domestic and foreign; that it violates the Fourteenth Amendment in imposing an arbitrary, discriminatory, and confiscatory burden upon the Northwestern Company.
As to the annual license fee, it is made up as follows:
The statute also provides that such license fee shall be in lieu of all taxes for any purpose authorized by the laws of the state except taxes on real estate. The Northwestern Company was thus obliged to pay 3 per cent. of its gross income less income from rents of real estate, and less premium receipts from outside of the state.
Before entering upon a consideration of the errors assigned the nature and effect of this system of taxation must be borne in mind. The Northwestern Mutual Life Insurance Company is a corporation of the state of Wisconsin, having large reserves in that state, having a taxable situs therein. Of this statute the Supreme Court of Wisconsin said:
And in the opinion on the filing of the amended complaint, added:
While these views of the nature and effect of the law are not conclusive upon us, they are accepted unless they appear to be illfounded, and we find no reason to reject them. The tax in question is, therefore, not only one for the privilege of doing life insurance business within the state, but is in effect a commutation tax, levied by the state in place of all other taxation upon the personal property of the company in the state of Wisconsin.
It is insisted that because of the foreign investment business of the company, large in amount, and involving shipments of securities, correspondence, etc., beyond the state, this law burdens interstate commerce. We need not reiterate the reasoning upon which this court has repeatedly held that a state may not by its system of taxation impose burdens upon interstate commerce, the cases have been recently reviewed and the doctrine reaffirmed. Looney v. Crane Co., 245 U.S. 178 , 38 Sup. Ct. 85, 62 L. Ed. --; International Paper Company v. Massachusetts, 246 U.S. 135 , 38 Sup. Ct. 292, 62 L. Ed. --; Cheney Bros. Co. v. Massachusetts, 246 U.S. 147 , 38 Sup. Ct. 295, 62 L. Ed. --. [247 U.S. 132, 138] The construction of the act by the state court brings the case within the decisions of this court in U. S. Express Co. v. Minnesota, 223 U.S. 335 , 32 Sup. Ct. 211; Cudahy Packing Co. v. Minnesota, 246 U.S. 450 , 38 Sup. Ct. 373, 62 L. Ed. --, decided April 15, 1918. In the former case a commutation tax upon gross receipts of the express company from state and interstate business was sustained as casting no burden upon interstate commerce. In the Cudahy Packing Company Case a tax of like character was held not a burden upon interstate commerce, although much of the gross receipts, which measured the property tax, was derived from such commerce. In both of these cases, following the previous decisions of this court, the tax was held to be within the authority of the state, and the inclusion in the measure of taxation of the receipts partly derived from interstate commerce was held not to invalidate the tax, its amount not being in excess of what would be legitimate as an ordinary tax on the property taken at its value.
We have said thus much as to the alleged invalidity of this license tax as a burden upon interstate commerce, without deciding, as we do not find it necessary to decide, whether the so-called foreign investment business of the company does or does not of itself amount to interstate commerce. If it amounts to commerce of that character no burden is cast upon it by such tax as is here involved, since the gross receipts coming from that character of business are used only as a measure of the value of the property and franchise lawfully taxable in the state.
That the tax upon the life insurance business, which is the subject- matter of the license tax here involved, is not a tax upon interstate commerce is established by a reference to the recent full consideration of the subject by this court. N. Y. Life Insurance Co. v. Deer Lodge Co., 231 U.S. 495 , 34 Sup. Ct. 167.
This brings us to the question whether the statute denies to the company the equal protection of the laws. That [247 U.S. 132, 139] the state is not because of the Forteenth Amendment required to tax all property alike, and may classify the subjects selected for taxation, is too well established to require citation of the many ases in this court which have so held. The classification may not be arbitrary and must rest upon real differences-subject to these qualifications the state has a wide discretion. In this connection the Northwestern Company contends that the tax upon it is so different from that imposed upon foreign level premium companies doing a like business within the state, that an arbitrary discrimination, amounting to a denial of equal protection, is exercised as against it and in favor of the foreign company. As we have already said, the foreign companies of like character pay a privilege or occupation tax in the sum of $300.00 per annum. The state court held, and we think properly so, that foreign insurance companies occupy a relation to the state which is different from that of a domestic company. The latter has within the borders and taxing jurisdiction of the state a large amount of personal property, receiving protection, and subject to taxation. The foreign company has its reserves in the state of its domicile, and there subject to local taxation, which is of itself a substantial difference. Moreover, we have held that it is no denial of equal protection for a state to impose a different rate upon one of its own corporations than that imposed upon a foreign corporation, for the privilege of doing business within its borders. Kansas City, Memphis & Birmingham R. R. Co. v. Stiles, 242 U.S. 111, 118 , 37 S. Sup. Ct. 58. In the case of Cheney Brothers Co. v. Massachusetts, supra, this court said:
But, it is said that these decisions are opposed to the decision of this court in Southern Railway Co. v. Greene, 216 U.S. 400 , 30 Sup. Ct. 287, 17 Ann. Cas. 1247. In that case the railway corporation of another state came into the state of Alabama in compliance with its laws, paid the license and property tax imposed upon other corporations doing business within the state, under sanction of the laws of the state acquired a large amount of railroad property therein, when it was attempted to subject it to a further tax for the privilege of doing business as a foreign corporation, which tax was not imposed upon domestic corporations doing the same kind of business in the same manner, and it was held that such classification was arbitrary and void under the Fourteenth Amendment. In that case we laid stress upon the fact that the tax related to railroad property not susceptible of other uses, which placed in the state had to remain there permanently, and could not be withdrawn at the pleasure of its owners. Under such circumstances, and dealing with that character of property, we held that the particular tax constituted such discrimination as to deny to the company the equal protection of the laws. That case was distinguished in the decision in Kansas City, Memphis & Birmingham R. R. Co. v. Stiles, supra, and also in disposing of the case of the White Company involved in Cheney Brothers Company et al. v. Massachusetts, supra. The difference between the Southern Railway Company Case and the one under consideration is quite obvious.
As to the alleged discrimination between old line level premium companies and beneficial associations, which are exempted from taxation under this statute, we think the differences are plain. The fraternal and beneficial- [247 U.S. 132, 141] features are wanting in organizations like that of the Northwestern Company. The ascertainment and collection of premiums and paym nts for insurance are upon wholly different plans. As to the alleged discrimination in favor of stipulated premium compaines and assessment companies, the plaintiff in error in its brief says that no domestic company of these classes and but one foreign company existed in Wisconsin in 1912, and that as to this its argument as to discrimination in favor of foreign level premium companies applies. What we have already said disposes of that contention. We find no reason to disagree with the Supreme Court of Wisconsin in the conclusion that differences upon which classification rests in this statute are not fanciful, but real and substantial, and that the dissimilarities in treatment fall short of that arbitrary classification which amounts to a denial of the equal protection of the laws.
We find no error in the judgment of the Supreme Court of Wisconsin.
Mr. Justice CLARKE took no part in the consideration or decision of this case.