My dissent follows a firm conviction that it was within the discretion of the District assessor, in determining the amount of said back-assessment, to consider unearned premium reserves as no part of defendant's property, for purpose of taxation; but instead, to recognize them as belonging to its policy holders for the protection, stability and satisfaction of their policies; 102 S.W.2d 193; that the trial court possessed no such discretion (State v. Richardson, 126 Tex. 11,84 S.W.2d 1076), hence the assessment was void to extent of the unearned premium reserves; a "court hearing" being an insufficient substitute as due process for the assessor hearing, of which appellee was deprived.
In this connection, the following general statements are pertinent: (1) The acts of the District assessor, in January, 1934 (to which the equalizing board's approval was a mere formality because of no issue on valuation), were judicial in nature, having the force and effect of a judgment followed by levy and sale. Arts. 7253 to 7273, inclusive (Art. 7328a, prohibiting summary sales for delinquent taxes, applying only to real estate); (2) the "hearing" referred to, which should have been given, contemplates an actual hearing on the real merits and not merely a formal one; Cooley on Taxation, 4th Ed., § 1116; and is not awarded as a matter of grace or favor; Central of Georgia R. Co. v. Wright,207 U.S. 127, 28 S. Ct. 47, 52 L. Ed. 134, 12 Ann.Cas. 463; Tumulty v. District of Columbia, 69 App.D.C. 390, 102 F.2d 254-262; (3) an assessor is a public officer, Cooley on Taxation, Sec. 1053, clothed with quasi judicial powers in regard to listings and assessment of kinds and classes of property, possessing a fair discretion in the discharge of assessing duties; City of El Paso v. Howze, Tex.Civ.App. 248 S.W. 99, writ refused. His honest judgment on listings and valuations, based upon proven facts and reasonable grounds, is not subject to review; Atlantic *Page 1065 Pipe Line Co. v. State Tax Board, D.C., 12 F. Supp. 265; Templeton v. Pierce County, 25 Wash. 377, 65 P. 553; Northern Pac. R. Co. v. Pierce County, 55 Wash. 108, 104 P. 178; the same being equally applicable to boards of equalization and matters within their province. It is only upon an abuse of discretion on the part of the assessor or board, such as adopting arbitrary methods, acting fraudulently, or, in some other respect, failing to follow the taxing statutes, that courts of equity obtain jurisdiction; State v. Houser, Tex.Sup., 156 S.W.2d 968; Board of Equalization v. McDonald, 133 Tex. 521, 129 S.W.2d 1135, Syl. 1; (4) in this state, the powers of courts are severely limited regarding correction of irregularities in assessment or valuation; and extend only to cases where errors in tax methods can be eliminated by some mathematical formula. If the corrective procedure involves discretionary acts on part of the assessing agency, the findings of a court or jury cannot be substituted therefor; State v. Richardson, supra.
It follows in the case at bar that, if the hearing to which appellee Company was entitled called for an exercise of the assessor's discretion, a hearing before a court or jury would not suffice; thus rendering appellant's assessment, to such extent, a denial of due process.
Turning again to the so-called omitted property covered by plaintiff's blanket assessment for the years 1923 to 1931, inclusive, defendant's annual rendition sheets show that the items comprising same were reported as reserves or liabilities (same being grouped as 1 to 4, inclusive in above opinion on rehearing).
It will be noted that these reserves were wholly unrelated, except as they were denominated "liabilities" by defendant. No money or actual property of the Company was allocated or set apart to the extent of said amounts, but same were book entries, indicating that total assets had been offset by the claimed liabilities; and represented largely by Company investments in first mortgage loans, stocks and bonds. Plaintiff's back-assessment included the reserve for unearned premiums above mentioned, for the years 1923 to 1927, inclusive; when Art. 5057a was enacted.
As already stated, defendant had listed all four reserves in its sworn rendition sheets for above years, and (except for 1926-27), the county tax assessor and the commissioners' court, as the equalization board, had duly approved the listings and accepted taxes produced thereby, followed by regular receipts. Even for the tax years 1926-27 (subject of litigation discussed in 57 S.W.2d 627), amounts based upon the Company renditions were accepted by the assessor, in whose own official listing for 1927 the reserve for unearned premiums had been omitted; and there is evidence in this record indicating that the county officials had canceled and relinquished all further tax claims for these two years. Also, as an exhibit to defendant's pleading in the first suit, just above mentioned, was a letter from the Attorney-General to the Civil District Attorney of Dallas County, dated January 25, 1927 (prior to enactment of Art. 5057a), advising that a fire insurance company's reserve for unearned premiums was deductible as a debt under Art. 7147.
With particular reference to this statutory reserve, let us now turn to the back-assessment of January, 1934, to determine briefly what defendant Company could fairly have contended with respect to the deductibility of unearned premiums; and what action the assessor could lawfully have taken thereon, based on his honest judgment, and in exercise of full discretionary powers. Though Judge German, in 1937, had held this reserve not deductible under the debt statute (Art. 7147), yet I think an assessment compiled three years before was controlled, so far as applicable, by the opinion of Judge Higgins in 1933, 57 S.W.2d 627.
Legislation concerning fire companies, requiring segregation of unearned premiums when estimating profits, had been enacted in 1875 (Art. 5036); and by general law in 1927, such reserve had been made a statutory indebtedness, to be subtracted from total assets for tax purposes. Even long prior to 1927, the taxability of these funds had been gravely questioned, the contention being that they were generally deductible, the same as were like reserves of life insurance companies. In view of these considerations and of above background, I believe that a district assessor, in his 1934 back-assessment, subjecting further personal property to taxation, could honestly have judged that unearned premium reserves were not to be *Page 1066 regarded as assets of a fire insurance company; and thereby, in his discretion, could have eliminated them in fixing the amount of the alleged omitted credits of defendant corporation. Certainly his action thus taken, after an assumed hearing in 1934, would not have been subject to judicial review, involving, if error, mere undervaluation of omitted assets; State v. Chicago, R. I. G. R. Co., Tex.Com.App., 263 S.W. 249. The assessor's method in this respect would have been final, the District Board having no authority to supplement the former's lists; Davis, Tax Collector, v. Burnett, 77 Tex. 3, 13 S.W. 613; Ft. Worth v. Southland Greyhound Lines, 123 Tex. 13, 67 S.W.2d 354, 361.
Appellee Company was entitled to a hearing that comprehended the full discretionary powers of appellant's assessor regarding the taxability of unearned premiums. As has already been seen, defendant Company cannot be afforded such a hearing on retrial of this cause; thereby voiding plaintiff's assessment, in my opinion, to the extent of the particular reserve.