Planters' Fire Marine Insurance Company v. Tennessee/Opinion of the Court

The claim set up by plaintiffs in error is that the insurance company was duly incorporated as the Energetic Insurance Company of Nashville, under the act passed March 24, 1860; that it is the same company as therein incorporated, and entitled to all the benefits and immunities, among them that of exemption from taxation, granted by that charter.

The defendants in error deny that claim, and assert the right to tax by virtue of the general revenue laws of the state. They assert that, by reason of the failure to accept the charter, and organize thereunder, until after the lapse of 24 years, the corporation did not acquire the right of exemption provided for in the sixtieth section of the charter, because, at the time the company was organized, in 1884, the constitution of the state of Tennessee, adopted in 1870, was in full force, and by that constitution any exemption of the property of the corporation, its capital stock, or its shares of stock was prohibited.

The plaintiffs in error answer that they are either a corporation organized under that charter, or else there is no corporation, and the individuals assuming to act as such should be sued in their individual capacity, and, if liable at all for any taxes whatever, they must be liable as individuals only. They further say that the state, by its action herein, recognizes them as a corporation, and, if a corporation at all, they are such under the original charter above mentioned, and, if they be a corporation under such charter, they are entitled to all the rights and privileges and immunities granted by that charter as a whole, and that they cannot be prosecuted as a corporation under that charter for the purpose of compelling them to pay taxes, and, at the same time, be denied the right of exemption from such payment granted by that sixtieth section. They also allege that this action of the state is a collateral attack upon their charter by denying their immunity from taxation, given by its sixtieth section, and therefore calling in question its existence as a corporation, and an action of that kind can only be maintained by the state by means of a quo warranto, either against the corporation itself for the exercise of powers not granted it, or against the individuals for assuming to exercise the corporate powers.

For the purpose of effecting a dissolution of a corporation, grounded upon some alleged forfeiture of its rights and powers, the state must act through its attorney general, and by action in the nature of quo warranto. This is not such an action, and the dissolution of the corporation is not its object. The state, in effect, so far recognizes it as a corporation as to demand payment of taxes on its capital stock, or on its shares of stock, and when, as a defense to that action, the corporation plaintiff in error, or its stockholders, set up its alleged right of exemption under the sixtieth section of the charter, the answer of the state is, 'You are not entitled to that exemption, because, at the time your charter was accepted, 24 years after it was granted by the legislature, the constitution of the state prevented the grant of any exemption such as is claimed by you.' To which the plaintiffs in error rejoin that, 'In this action, you cannot look at the time when the charter was accepted, but, as the corporation is acting under the original charter, the sixtieth section remains in full force.'

We think that, even in this action, it is proper for the state to inquire as to the time of the acceptance of the charter, for the purpose of determining what powers were actually granted. If the charter had been accepted, and the individuals organized under it, prior to the adoption of the constitution of 1870, then the exemption might have gone with it; but we think it entirely possible to hold that, by the acceptance of the charter, assuming it to have been within a reasonable time, but after the constitution was adopted, such acceptance (while subsequently recognized by the legislature in permitting it to change its situs) must be taken in connection with the provisions of the constitution existing at the time, and that, while the incorporators might take all the other rights, powers, and privileges granted by the charter, so far as to give them the franchise to be a corporation, and exercise the powers therein granted, the immunity of exemption would not pass under the grant. It might possibly have been held, in a direct attack of the state upon the charter, that there had been an unreasonable delay in accepting it, and that, consequently, there was in law no corporation under the charter. That course was not taken, and the legislature, after the assumed organization under the charter in 1884, passed an act changing the name of the corporation, and permitting it to change its situs. It might, therefore, be claimed that it thereby recognized the existence of the corporation under the charter, but in subordination to the constitution and laws existing at the time when the charter was accepted.

We think, upon these facts, the exemption from taxation did not pass to the corporation, and the assessments were, in consequence, legal and valid.

The judgment is therefore affirmed.

PLANTERS' INS.C.O. v. TENNESSEE AND SHELBY COUNTY No. 679, by stipulation, is to abide the event of this cause.