Home Insurance Company v. City Council of Augusta

ERROR to the Supreme Court of the State of Georgia.

A statute of the legislature of Georgia, to regulate insurance business and insurance agencies in the State of Georgia, passed March 19, 1869, enacts as follows:--'SECTION 1. That it shall not be lawful for any insurance company, or agent of the same, excepting masonic, odd fellows, and religious mutual aid societies, already chartered by this State, to transact any business of insurance, without first procuring a certificate of authority from the comptroller-general of this State; and, before obtaining such certificate, such company must furnish the comptroller-general with a statement, under oath, specifying,--

'First, The name and locality of the company.

'Second, The condition of such company on the thirty-first day of December then next preceding, exhibiting the following facts and items, in the following form: namely,-1st, capital stock; 2d, assets, detailed; 3d, liabilities, detailed; 4th, income preceding year, detailed; 5th, expenditures preceding year, detailed; 6th, greatest risk; 7th, certified copy of charter.

'SECT. 2. The said statement shall be filed in the office of the comptroller-general, and the company shall show possession of at least $100,000 cash capital.

'SECT. 3. Upon filing such statement as aforesaid, the comptroller-general, when satisfied that the statement is correct, and that the company has fully complied with the provisions of this act, shall issue a certificate of authority to transact business of insurance in this State to the company applying for the same, and to all agents such company may appoint and commission.

'SECT. 4. Said statement must be renewed annually on the first day of January in each year, or within sixty days thereafter; and if the comptroller-general is satisfied that the capital, securities, and investments remain secured as at first, he shall furnish a renewal of the certificates. Insurance companies shall not be required to furnish but the single statement annually. The comptroller-general shall be entitled to a fee, for examining and filing each statement of such companies, of seven and one-half dollars, and for certificates to agents, of two and one-half dollars,-which fee shall be paid by the company or agent filing said statements, and to whom certificates are to be issued.'

'SECT. 6. That all persons violating the provisions of this act shall be liable to indictment, and, on conviction, shall be fined not less than one hundred dollars, nor more than five hundred dollars, at the discretion of the jury and court trying the same.'

The plaintiff in error, a corporation organized under the laws of the State of New York, had an agency in the city of Augusta. On furnishing the required statement, it received the certificate of the comptroller-general authorizing it to conduct the business of insurance in that city for one year from Jan. 1, 1874. Under a general law, it paid a tax of one per cent upon the gross amount of premiums received, and, under a city ordinance, a tax of one and a quarter per cent thereon.

On the 5th of January, 1874, the city council passed an ordinance, the first section of which provides, that, from and after that date, 'the annual license tax on insurance companies shall be as follows: 1. On each and every life-insurance company located, having an office or doing business within the city of Augusta, $100. 2. On each and every fire, marine, or accidental insurance company located, having an office or doing business within the city of Augusta, $250.

The legislature, by an act passed Feb. 26, 1874, validated all existing ordinances of said city council imposing taxes for the support of its municipal government for 1874. Thereupon the plaintiff in error filed its bill in the Superior Court of Richmond County, to enjoin the council from collecting the license tax for that year imposed upon it, and claimed, as a ground of relief, that said ordinance impaired the obligation of the contract between the company and the State, whereby the former was authorized to transact the business of insurance therein, and thus violated that clause of the Constitution of the United States which declares that no State, and, a fortiori, no political subdivision of a State, 'shall pass any law impairing the obligation of contracts.'

The Superior Court refused the injunction prayed for, and dismissed the bill; and the decree having been affirmed by the Supreme Court of the State, the company brought the case here.

Mr. William M. Evarts, and Mr. Salem Dutcher, for the plaintiff in error.

An ordinance of a municipal corporation of a State is the exercise of an authority under that State. Weston v. City Council of Charleston, 2 Pet. 449.

A final judgment in any suit in the highest court of a State, in which a decision could be had affirming the validity of an ordinance of a municipal corporation of that State, which was drawn in question on the ground of its repugnance to the Constitution of the United States, is subject to review by this court. Weston v. City Council of Charleston, supra; Osborne v. Mobile, 16 Wall. 479; Cannon v. New Orleans, 20 id. 577. The ordinance was the point on which the controversy turned, and the decision of the Supreme Court of the State was in favor of its validity.

The compliance of the company with the terms of the act of 1869 and the action of the State thereunder, form a contract within the meaning of art. 1, sect. 10, clause 1, of the Constitution of the United States. It is identical in principle with, although differing in form from, that in Fletcher v. Peck, 6 Cranch, 87. The considerations are, to the former, authority to do business in the State for a specified period; to the latter, the public advantages arising from the operations in the State of a corporation coming up to the prescribed standard of usefulness, solvency, and reliability.

'The word 'license' means permission or authority; and a license to do any particular thing is a permission or authority to do that thing, and, if granted by a person having power to grant it, transfers to the grantee the right to do whatever it purposes to authorize. It certainly transfers to him all the right which the grantor can transfer to do what is within the terms of the license.' Gibbons v. Ogden, 9 Wheat. 563(580); State Tonnage Tax Cases, 12 Wall. 204(215). A license is a contract. 'It is a right given by some competent authority to do an act which, without such authority, would be illegal.' Bouvier, Law Dict.; ''Mayor, &c. of Rome v. Lumpkin, 5 Ga. 447; Chastain v. Town Council of Calhoun'', 29 id. 333; Adams v. Mayor of Albany, 29 id. 56; Wood v. City of Brooklyn, 14 Barb. 425; Martin v. O'Brien, 34 Miss. 21; Leonard v. City of Canton, 35 id. 189; Boyd and Jackson v. The State, 46 Ala. 329; Martin v. O'Brien, 34 Miss. 21; Philadelphia Association v. Wood, 39 Penn. St. 73.

It is submitted that the license tax imposed after the required authority had been conferred by the State, on a full compliance by the company with the stipulated conditions in question, cannot be sustained, and that the city could not, during the year 1874, limit, burden, or obstruct, in any way, the exercise by the company of its right to transact its legitimate business,-a right secured by the contract with the State. The amount of 'license tax' exacted is immaterial. Brown v. Maryland, 12 Wheat. 419; ''Mayor, &c. of Rome v. Lumpkin et al., 5 Ga. 447; Adams v. Mayor of Albany'', 29 id. 56; Chastain v. Town Council of Calhoun, 29 id. 333; Sanders v. Town Commissioners of Butler, 30 id. 679; ''Mayor, &c. of Savannah v. Charlton'', 36 id. 460; ''Mayor, &c. of New York v. Nichols, 4 Hill, 209; Wood v. City of Brooklyn'', 14 Barb. 425; Stein v. ''Mayor, &c. of Mobile'', 49 Ala. 362; ''Mayor, &c. of New York v. Second Avenue R. R. Co., 32 N. Y. 261; Leonard v. City of Canton'', 35 Miss. 189; Martin v. O'Brien, 34 id. 21; Boyd and Jackson v. The State, 46 Ala. 329; Philadelphia Association v. Wood, 39 Penn. St. 73; Prince v. City of St. Paul, 19 Minn. 267.

Mr. William Brown, contra.

MR. JUSTICE SWAYNE delivered the opinion of the court.