American Casualty Co. of Reading, Pennsylvania v. Department of Licensing & Regulation Insurance Division

Lowe, J., delivered the opinion of the Court. Appellants are seven insurance companies doing business in Maryland, all members of what is known as the CNA Group. They are subject to an annual tax imposed by Md. Ann. Code (1980 Repl. Vol.), Art. 81, § 136 (a) upon the percentage of gross direct premiums allocable to Maryland and written during the preceding year.

In 1977, § 139 of that article (Code, 1975 Repl. Vol. & 1976 Supp.) provided that insurance companies subject to such tax .. shall, on or before March 15th in each year, file with the Insurance Commissioner a report of the new and renewal gross direct premiums less return premiums written by it during the preceding calendar year ....”' Concomitantly, the tax owed under § 136 (a) was to be paid to the Insurance Commissioner "at the time fixed for filing the report.” § 140. If the taxes were not paid "when the report or declaration is filed,” the defaulting company "shall be subject to a penalty of five percent and interest at the rate of one percent per month from the date the report was due.” § 140. Appellants mailed their reports and payments from Chicago, Illinois on March 14, 1977, but they were not received by the Commission until March 16, 1977.

Had that scenario occurred prior to 1975, this case would ¹⁵⁹ not be before us because the practice of the Commissioner had been to accept, as timely filed, mailed reports and payments "as long as the postmark reflects a date of on or before March 15th.” In 1974, however, the Commissioner was advised by an Assistant Attorney General that the term "file” unambiguously required a physical delivery to the Commissioner and, therefore, that the prior administrative practice should end. On October 20,1975, the Commissioner sent a notice to all companies subject to the tax, including appellants, that thereafter such reports and taxes "must be received annually in the Commissioner’s office on or before March 15.” He added that "any administrative practice followed in the past with respect to filing premium tax reports ... shall be immediately discontinued by this Division.” In 1979, the new interpretation was invoked against an insurance company, but the penalty was abated by the Maryland Tax Court because that company was able to show that it had never received the aforementioned notice; however, the Tax Court held that the term "file” was unambiguous, and that it "clearly and explicitly means that there be a delivery to the Insurance Commissioner, not just a mailing.” It followed, therefore, that the imposition of the penalty, although "very harsh,” was not legally improper. Because of the penalty’s harshness, however, that case was remanded to the Insurance Division to reconsider its discretionary right to recommend a refund of the tax paid, pursuant to § 216. Apparently responding to the Attorney General’s interpretation of "file” adopted in that case, 1 the Legislature added to § 139 a subsection (b) which now reads: ¹⁶⁰ "Any report or declaration mailed and postmarked by the U.S. Postal Service on or before the filing date shall be deemed to be in compliance with the filing requirement.” Section 140 was made to conform by substituting, as the break off point for paying the taxes before subjecting the late-filing company to a penalty, "when the report or declaration [mandated by § 139] is due to be Giled”, for the more rigid prior time "when the report or declaration is filed.” 1979 Md. Laws, Ch. 243, (emphasis added).

The colloquialism, "a day late and a dollar short” took on a special significance to appellants when the Insurance Commissioner imposed a penalty of $25,736.44 on them for filing one day late. This time the Tax Court was either unimpressed or uninformed of mitigating circumstances recited here in the "Agreed Statement of Facts.” 2 In either case, it failed to remand for consideration under § 216 as it had before, and that issue, of course, is not for our consideration, even if it were a proper consideration for the Commissioner in this'case. Because no extrinsic interpretative aids are needed or appropriate for statutory language that is unambiguous, State v. Fabritz, 276 Md. 416, 421-422 (1975), appellants obviously contend that the Tax Court and the Circuit Court for Baltimore County were both wrong in holding that the verb "file” unambiguously meant to deliver, not merely to ¹⁶¹ place in transit for delivery. In interpreting that "ambiguous” term as used in the statutes, appellants would have us consider two extrinsic aids, i.e., the prior administrative practice and the subsequent legislative amendment.

Even if we had found the term to have been touched with ambiguity, appellants’ arguments were not so