Bowers v. Lawyers Mortgage Co., 285 U.S. 182 (1932)

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Bowers v. Lawyers Mortgage Co.

No. 355

Argued January 18, 19, 1932
Decided March 14, 1932
285 U.S. 182

Syllabus

1. A corporation which paid the capital stock tax laid generally on domestic corporations by § 1000, Revenue Act of 1921, and which claims a refund upon the ground that it should have been taxed under the special provisions of § 246 relating to certain classes of insurance companies, must show clearly that it is an insurance company within the meaning of the Act. P. 186.

2. The question whether a corporation chartered under and subject to state insurance laws was taxable under § 246 of the Revenue Act of 1921 as an "insurance company " is determined by the character of the business actually done in the tax years. P. 188.

3. Guaranties of payment of interest and principal of mortgage loans held contracts of insurance. P. 189.

4. Of "premiums " and "investment income," the only classes of income covered by § 246, supra, the former is characteristic of the business of insurance and the latter is generally essential to it. P. 189.

5. The taxpayer, although organized under and subject to the New York insurance law, with power to insure titles and loans on mortgages, confined itself mainly to a business which could also be carried on under the banking laws, viz., the business of lending money on bonds and mortgages, selling the bonds and mortgages with its guaranty, and using the purchase money to make additional loans. Its "premiums " covered agency and other services not generally performed under contracts of insurance, in addition to the charges for guaranties; the income from guaranties was less than one-third of its entire income and no "investment income" was shown. Held: that, as the element of insurance was no more than an incident of the lending business, the taxpayer was not an "insurance company" in the common understanding of that term and within the meaning of the Revenue Act, supra. P. 190.

50 F.2d 104, reversed.

Certiorari, 284 U.S. 606, to review the affirmance of a recovery on a claim for a refund of money paid as taxes. The action was against the executor of a former collector of internal revenue. Dist. Ct., 34 F.2d 504.