Section 28 provides that: A life insurance company, association or partnership, incorporated or associated by authority of any other state of the United States, by the laws of which a tax is imposed upon the premium receipts of life insurance companies chartered by this commonwealth and doing business in such state, or upon their agents, shall annually, so long as such laws continue in force, pay a tax or excise upon all premiums charged or received upon contracts made in this commonwealth, at a rate equal to the highest rate so imposed during the year. Laws of New York, 1901, c. 118, § 1, provides that: An annual state tax for the privilege of exercising corporate franchises or for carrying on business in their corporate or organized capacity within this state, equal to one per centum of the gross amount of premiums received during the preceding calendar year, for business done in this state, whether such premiums were in the form of money, notes, credits or any other substitute for money, shall be paid annually into the treasury of the state, on or before the first day of June, by the following corporations; 2. Every insurance corporation incorporated, organized or formed under, by or pursuant to the laws of any other state of the United States and doing business in this state, except a corporation doing a fire insurance business or a marine insurance business. This act was amended by Laws of New York, 1905, c. 94, by providing that the tax should be on the gross amount of premiums received during the preceding calendar year for business done at any time in this state, which gross amount of premiums shall include all premiums received during such preceding calendar year on all policies, certificates, renewals, policies subsequently canceled, insurance and reinsurance during such preceding calendar year, and all premiums that are received during such preceding calendar year on all policies, certificates, renewals, policies subsequently canceled, insurance and reinsurance executed, issued or delivered in all years prior to such preceding calendar year, whether such premiums were in the form of money, notes, etc. In 1905 the Tax Commissioner of Massachusetts assessed the Metropolitan Life Insurance Company of New York a tax under section 24 upon the net value of its policies, amounting to $21,058.58; and also assessed a tax upon the same company, under the provisions of section 28, based upon the premiums received during the year ending Dec. 31, 1904, of $46,618.25. By an agreement made with the Commissioner of Insurance of the State of New York, the taxes assessed under sections 24 and 28 are not deemed to be cumulative; that is, a tax under each section is estimated and then only the larger one is collected. In the case of The People of the State of New York, ex rel. The Provident Savings Life Insurance Society v. Miller, decided by the New York Court of Appeals in 1904, it was held that under chapter 118 of the Laws of 1901 the premium receipts of a domestic insurance company could only be assessed upon receipts from insurance written subsequently to the passage of the act, and that receipts of premiums upon contracts entered into before the enactment of the statute could not be taxed. The Metropolitan Life Insurance Company has appealed from the tax assessed in Massachusetts under the provisions of section 28, upon the ground that under the New York decision. only such receipts as were taxable in New York during the year 1904 could be taxed in Massachusetts for that same year. You request the opinion of the Attorney-General as to whether you were right in assessing the tax as you did upon the Metropolitan Life Insurance Company for the year 1904. I am of opinion that the tax was properly assessed and no part of it should be repaid to the company. There are several grounds upon which the validity of the assessment can be maintained: 1. Section 28 provides that the tax or excise upon all premiums charged or received upon contracts made in this Commonwealth shall be paid annually, so long as the laws in the foreign State continue in force, and at a rate equal to the highest rate so imposed during the year. Under this section it is obvious that the exact form or quantity of premiums collected or taxed in the foreign State in a given year is immaterial, the only material question being, What was the highest rate imposed by the foreign law during the year? 2. The New York decision does not affect the imposition of the Massachusetts tax. That case held, first, that the New York tax with respect to domestic corporations was a tax upon the exercise of a franchise; and second, that the act of receiving premiums from pre-existing contracts of insurance did not necessitate an exercise of the franchise; and the case was expressly distinguished from one involving the taxation of a corporation foreign to New York. Upon this point the court said:— The statute designates the burden as one "for the privilege of exercising corporate franchises," and, consequently, it can be laid only upon such business as depended upon the exercises of such franchise. It could not have been lawfully i posed upon the receipts of business contracts that the company had the right to collect and enforce by virtue of the contract alone, and that did not depend upon the exercise of the franchise. The tax is purely a franchise tax and nothing else as to domestic corporations. The tax imposed "for carrying on business in their corporate or organized capacity" applies only to foreign corporations deriving their franchises from other sovereignties. Moreover, section 28 of chapter 14 makes no distinction between an excise upon the exercise of a franchise and an excise upon the doing of business in the State; either or both may properly be taxed. See Connecticut Ins. Co. v. Commonwealth, 133 Mass. 161, at p. 163: It has been uniformly held . . . that the Legislature has the power to impose an excise upon any business or calling exercised in the Commonwealth, and upon any franchise or privilege conferred by or exercised within the Commonwealth. Portland Bank v. Apthorp, 12 Mass. 252; Commonwealth v. People's Five Cents Savings Bank, 5 Allen, 428. The power to impose an excise upon corporations or associations engaged within this Commonwealth in the business of life insurance, whether incorporated here or incorporated elsewhere and allowed by comity to carry on business here, cannot now be doubted. Thus, the case of People v. Miller is irrelevant in this discussion; first, because its effect was expressly limited to domestic corporations, with an indication that all the premium receipts of a foreign corporation could be taxed; and second, because in Massachusetts there seems to be no objection to taxing "the right to do business" as distinguished from "the exercise of a franchise," even of a domestic company. 3. Under the act of New York, chapter 94 of the Acts of 1905, the tax assessed on all life insurance companies, whether domestic or foreign, was made expressly measurable by the amount of premiums collected during the year 1904, whether upon new contracts or renewals of old contracts. Under that statute there can be no question but that Massachusetts companies were assessed a tax in New York in 1905 based upon all their premium receipts collected in New York during 1904; consequently, there can be no injustice in assessing the Metropolitan Company in Massachusetts a tax based upon all of its premium receipts collected in Massachusetts in 1904. 4. It might be argued (by analogy with the second point decided in People v. Miller, which I have not quoted) that the tax as assessed here in 1905 is retroactive in its action, because it imposed a burden upon the receipts of 1904. But it must be remembered that section 28 has been in force since 1873. Since that time all foreign life insurance companies have been subject to being taxed under its provisions, upon a certain contingency, i.e., the passing of a certain form of taxation law in a foreign State. That contingency occurred in 1901, since which time effect has properly been given to section 28. 5. It has been argued for the Metropolitan Company that upon a broad view of the policy of the Commonwealth it would be unjust to tax a New York corporation here upon receipts which were not taxed to foreign corporations in New York, and that it is especially unjust in this instance, as the Metropolitan Company is the only foreign company whose tax under section 28 exceeds the tax under section 24. The answer to this argument is twofold: first, that the provisions of section 28 are plain, and contain no warrant for a reduction of the tax upon some vague principle of interstate justice; and second, that under the decision of People v. Miller it appears that Massachusetts corporations in New York would be and probably are assessed a tax based upon all their New York premium receipts, whether received under old or new contracts. That this company is the only one which has so far been taxed under the provisions of section 28 does not seem a sufficient reason for abating the tax, as it is confessedly a tax, not upon the value of the policies in force, as in section 24, but upon the privilege of doing business as measured by the amount of business done, and the Metro politan Company acknowledges that it has done by far the largest business in this Commonwealth, during the past few years, of any of the foreign companies. The question of the constitutionality of section 28, under the clause of the Constitution which provides that "full power and authority are hereby given and granted to the said general court to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise and commodities whatsoever, brought into, produced, manufactured or being within the Commonwealth," has not been raised by the Metropolitan Company. I do not, therefore, go into the problem of how far a reciprocal or retaliatory tax, as enforced by the Tax Commissioner and affecting only certain corporations of certain States, such as is provided by section 28, would be constitutional under the clause above set forth. To the Tax TAXATION CORPORATE BONDS MORTGAGE VALUE OF BONDS IN EXCESS OF VALUE OF MORTGAGED REAL ESTATE. The bonds of the New England Cotton Yarn Company, amounting to $5,206,000 par value, are taxable to the holders thereof upon the excess of the amount outstanding of the assessed value, to wit, $2,105,575, of the real estate mortgaged to secure such bonds. You request the opinion of the Attorney-General as to whether the bonds of the New England Cotton Yarn Company, secured by a mortgage of real and personal property to The New England Trust Company, trustee, are taxable to the individual owners thereof. It appears that there are $5,206,000 par value of its bonds outstanding, and that its real estate is assessed for $2,105,575. It is obvious that it has always been the policy of the Commonwealth to tax as personal estate "all money at interest and other debts due the person to be taxed more than he is indebted or pays interest for." Knight v. Boston, 159 Mass. 551, held that the bonds of a mercantile corporation, the Boston Water Power Company, secured by a mortgage to a trustee for bondholders, under which the trustee had entered and been assessed for more than the par value of the outstanding bonds, |