Opinion
Rehearing Denied Jan. 4, 1972.
Page 1295
Gorsuch, Kirgis, Campbell, Walker & Grover, Leonard M. Campbell, C. E. Eckerman, Denver, for plaintiff-appellee.
Duke W. Dunbar, Atty. Gen., John P. Moore, Deputy Atty. Gen., Harold L. Neufeld, Asst. Atty. Gen., for defendants-appellants.
COYTE, Judge.
This is an appeal by defendants-appellants from a judgment entered against them in the District Court of the City and County of Denver. Defendants below are the appellants here and will be referred to herein as 'defendants,' and the plaintiff-appellee will be referred to as 'plaintiff.'
The case was submitted to the trial court upon an agreed statement of facts. The basic issue involved in this action is the construction of 1969 Perm.Supp., C.R.S.1963, 72--1--14(1)(a), providing for:
'* * * a tax on the gross amount of all premiums collected or contracted for on policies or contracts of insurance covering property or risks in this state during the year ending December 31 next preceding, after deducting from the gross amount of premiums subject to the tax the amount received as reinsurance premiums on business in the state, and in the case of companies other than life, the amounts paid to policyholders as return premiums, which shall include dividends on unabsorbed premiums or premium deposits returned or credited to policyholders.'
Plaintiff contends that the above quoted section does not include premiums paid on annuity contracts within the State of Colorado. Defendants contend that premiums on annuity contracts are included. Plaintiff filed an action seeking a declaratory judgment, a judgment for refund of taxes paid on annuity premiums for the year 1968 in the amount of $1,377.39, with interest thereon, and an injunction enjoining the defendants from further attempts to collect the tax on premiums collected on annuity policies or contracts. The trial court found for plaintiff, issued the requested injunction, and ordered a refund of the $1,377.39. We affirm.
The question before us is whether or not the premiums paid on annuity contracts are taxable under 1969 Perm.Supp., C.R.S.1963, 72--1--14(1)(a).
We note at the outset that the legislative definition of insurance has recently been changed to specifically include annuities (Colo.Sess.Laws, Ch. 174, p. 690 (1971)), but for the purposes of this action we refer to the statutory definition in effect during 1968, C.R.S.1963, 72--1--1(2):
'Insurance is a contract whereby one party called the 'insurer,' for a consideration, undertakes to pay money or its equivalent, or to do an act valuable to another party called the 'insured' or to his 'beneficiary,' upon the happening of the hazard or peril insured against, whereby the party insured or his beneficiary suffers loss or injury.'
In defining insurance in terms of a 'hazard or peril,' the legislature limited 'insurance' to coverage of indemnity for the occurrence of specific casualties. This definition of insurance is foreign to the purpose and operation of annuity contracts and therefore cannot include them.
The statute in question does not tax premiums on business done in the state, but rather, premiums on insurance contracts. In Corporation Commission v. Equitable Life Assurance Society, 73 Ariz. 171, 239 P.2d 360, the Arizona court considered the same question when it interpreted a similar statute. After a thorough discussion on the differences between insurance and annuities, the court stated:
'* * * Since annuities are not policies or contracts of insurance, the payments therefor are not generally regarded as 'premiums' even though so called. The nature of a thing must be determined by what it is and not by what it is called. The annuities are not indemnities for death but are investments for life. They are designed as safeguards against misfortune and want during the life of the annuitant and are essential provisions for life and not provisions for death.'
In reviewing the cases on the subject, the Arizona court determined that a tax on 'business done' in the state would cover consideration for annuities, and noted that the authorities were in conflict where the statutes refer to 'premium received.' In conclusion, the court stated:
'Our statute in Arizona in this respect is different. It does not refer to 'business done in this state' but simply imposes a tax on 'all premiums received on policies and contracts of insurance covering property or other risks within (Arizona).' We have reached the conclusion our legislature did not intend to include considerations for annuities in the term 'premiums' but limited same to policies and contracts of insurance. Inasmuch as a taxing statute must be strictly construed, we cannot extend its application to include something not specifically covered by the language thereof.'
This is an accurate appraisal of the law as it applies to this case. While there are a number of cases reaching the opposite conclusion, these are with reference to statutes which have different wording from the one before us. Cases cited in the defendants' brief are based upon what we construe to be more inclusive statutes.
Defendants further contend that it would be contrary to the legislative intent to exclude from the tax in question the considerations paid for annuity contracts. Defendants cite several instances in which annuities are specifically mentioned either in general or exclusionary sections of the Insurance Code. In analyzing these sections, however, we find no instances where the wording necessarily includes annuities in the term 'insurance,' and in several of these instances the opposite position could also be maintained. Any doubt concerning the meaning of a taxing statute must be resolved in favor of the taxpayer and against the taxing power. Bedford v. Johnson, 102 Colo. 203, 78 P.2d 373; City and County of Denver v. Sweet, 138 Colo. 41, 329 P.2d 441; Colorado v. Estate of Fisch, 153 Colo. 525, 387 P.2d 282. Furthermore, the legislature's own definition of insurance, where that definition is unambiguous, must prevail. Industrial Commission v. Northwestern Mutual Life Insurance Co., 103 Colo. 550, 88 P.2d 560.
The defendants also contend that, by long-standing administrative interpretation, the premium tax statute has been applied to annuity premiums, and this interpretation is entitled to great weight in the construction of this statute. However, the rule that administrative interpretation is entitled to weight is not applicable where the statute is clear and unambiguous. See Goldy v. Crane, 167 Colo. 44, 445 P.2d 212; McMillin v. State, 158 Colo. 183, 405 P.2d 672. The judgment of the trial court is affirmed.
SILVERSTEIN, C.J., and DUFFORD, J., concur.