State v. Southern Farm Bureau Life Insurance

Bussey, Justice

(dissenting) :

Not being in accord with all of the views expressed, or the result reached, in the opinion of Mr. Justice Littlejohn, I most respectfully dissent.

The liability, if any, of the two insurance companies for the sums demanded in these 30 causes of action arises solely out of our retaliatory statute, section 37-132, and the pertinent law of the State of Mississippi, where the two insurers are domiciled. The clear weight of well reasoned authority, throughout the United States, is to the effect that retaliatory statutes, such as the one here involved, are not revenue statutes, but are regulatory statutes, which are penal in nature and enacted under the police power of the state, and accordingly, are to be strictly construed, the application thereof being limited to the letter of the statute. See Annot. 91 A. L. R. 795 et seq.; 19 Appleman Insurance Law and Practice sec. 10-352; 73 Am. Jur. (2d) Statutes sec. 12 (1974) ; 43 Am. Jur. (2d) Insurance secs. 85, 86 (1969); 44 C. J. S. Insurance § 76 (1945); Dec. Dig. Insurance key nos. 19, 20. The effect of a retaliatory statute is to impose a penalty upon a foreign insurer, not for anything it has done, but for what the legislature of the state of its domicile has, or has not, done in the imposition of burdens upon foreign insurers.

Since there is a difference in the principles which are applicable to the cases involving investment credits and those based on the Mississippi income tax law, I proceed to discuss these type cases separately.

Investment Credit Cases

In view of the 3-2 decisions of this Court in Lindsay v. Southern Farm Bureau Cas. Ins. Co., 258 S. C. 272; 188 S. E. (2d) 374 (1972) ; and Lindsay v. National Old Line Ins. Co., 262 S. C. 621, 207 S. E. (2d) 75 (1974), which *414we are not asked to overrule, the principal issue which presently concerns me with respect to the investment credit cases is that of estoppel. Contrary to the opinion of Mr. Justice Littlejohn, I think the insurers in this case have proved all of the essential elements of estoppel as set forth in Frady v. Smith, 247 S. C. 353, 147 S. E. (2d) 412 (1966), with respect to all years prior to the year 1970. The- record, to my mind, leaves no doubt that through the year- 1969 the insurers acted to their detriment in reliance upon.the 1965 and 1966 opinions of the Attorney General, issued in his official capacity.

Despite the general rule of law, that the doctrine of estoppel is not applicable to the extent of impairing the sovereign powers of a state in the enforcement of police measures, the instant case presents an excellent example of manifest injustice which should at least call for this Court to seriously consider the application of the doctrine of estoppel under the existing circumstances. But, in any event I respectfully submit that the doctrine of estoppel should be applied with respect to some $23,000.00 in penalties, which the State seeks to recover for the years 1970 and 1971. Such penalties are predicated upon the contention that in view of the December, 1969 ruling of the Attorney General the insurers should not have claimed investment tax credits for those years, and upon a Mississippi statute which provides for a 20% penalty for failing to timely pay the annual license or privilege tax levied by Mississippi upon foreign insurance companies.

The 1969 opinion of the Attorney General was not published until long after it was issued and such came to the attention of these insurers, indirectly, more than one year after it was issued. In view of the prior rulings of the Attorney General upon which the insurers relied, the litigation, which intervened and the legislative action, the insurers could not, and did not, know with any degree of certainty whether or not they owed the State of South Carolina, by way of penalty, any additional license fees, until the decision *415of this Court in Lindsay v. National Old Line in 1974, long after this particular litigation was instituted. Certainly it would be manifestly unjust, under these circumstances, to require the insurers to pay the additional 20% penalty provided by the Mississippi statute. Estopping the state as to these penalties, for late payment, would not, I think, do violence to the proposition that the State may not be es-topped from the enforcement of police measures.

Income Tax Cases

The Mississippi income tax, relied upon by the State, is not, I submit, “any payment of penalties, certificate of authority, license fees or otherwise” required by the State of Mississippi of foreign insurance companies doing business in the State of Mississippi, and hence, such is not literally within the terms of our retaliatory statute. Only the most liberal construction of' our statute, as opposed to a strict construction of this penal statute, could bring the Mississippi income tax within the purview of our statute. The Mississippi income tax is imposed, not just upon insurers, but upon individuals, corporations, trustees, partnerships and estates alike. In addition to the rule that a penal statute should be strictly construed, the ejusdem generis rule of statutory construction should apply. The word “otherwise” in our statute obviously refers to fees similar to the ones enumerated.

Under the plain language of the statute, I think it clear that the legislature intended to retaliate only as to those obligations placed upon South Carolina insurers for the privilege of conducting the business of insurance in a given state.

It is true, as pointed out by the lower court, that there is authority for the proposition that retaliatory statutes are applied so as to consider the aggregate of all taxes of whatsoever kind imposed by the respective states upon insurers. There is quite as much, and I submit, better reasoned authority to the contrary, and indeed, the retaliatory statutes *416vary considerably in their language, which necessarily brings about divergent judicial decisions or results construing the same. For instance, a case cited by the lower court as authority for the aggregate approach is Occidental Life Insurance Company of California v. Commonwealth, 6 Pa. Cmwlth. 532, 295 A. (2d) 853. The Pennsylvania statute there involved was quite different from our statute, that statute containing, inter alia, the following language:

“such company shall not be required to pay any taxes and fees which are greater in aggregate amount than those which would be imposed by the laws of such other state * * (Emphasis added)

In my view the insurers were entitled to judgments in their respective favors upon all the causes of action predicated upon the Mississippi income tax law. But failing such, these causes should be remanded for further consideration for the reason that, as the insurers succinctly point out, there is allegation that South Carolina insurers, under the same circumstances, would have owed income taxes to the State of Mississippi, but such allegation was denied and there is a total absence of any proof that such allegation is indeed factually true.

With respect to the statutes of limitation, I agree that the trial court should not have applied sections 65-5.1 and/ or 65-322 for the reason that such were not pled, and hence, we need not consider the applicability, if any, of these code sections to the present cases. On this point, His Honor reached the correct result with respect to the income tax cases in holding that recovery was limited to causes arising within three years prior to suit and he should therefor be affirmed in result.

It is unnecessary for us to consider or decide any conflict of laws issue as to which statute of limitations should apply, where two or more states are concerned. We look here to the Mississippi statute of limitations, not as a limitation upon the institution of the causes of action in this State, but as a statute fixing the limit of liability of the insurers. *417Any liability to the State under section '37-132 -is entirely, dependent upon the law of Mississippi. Under the same identical facts and circumstances a South Carolina insurer-operating in Mississippi, if liable at all, would Hot be required by the State of Mississippi to pay such income tax for more than three years past, any further imposition upon South Carolina insurers, by Mississippi, being barred by the Mississippi statute if pled as here. Our retaliatory statute does not authorize the imposition of a' greater burden upon a Mississippi insurer than Mississippi would impose -upon a South Carolina insurer under the same facts and circumstances, and hence, the liability of the insurers here, in the income tax cases, is limited, as a matter of law, perforce the provisions of section 37-132, to such of these actions as accrued within three years prior to the commencement of these actions.

In summary,-it is my view that the judgment of'the lower court should be reversed as to the income tax cases and judgments entered for the defendants. Failing such, these cases should be remanded for proof and factual findings on the issue of whether South Carolina insurers, under the same facts, would have owed any income tax in Mississippi. In any event liability should be limited by Mississippi’s three year statute. As to the investment credit cases, the judgment should be modified at least to the extent of eliminating the 20% late payment penalty sought to be imposed for the years 1970 and 1971.