                                Illinois Official Reports

                                         Appellate Court

                 United States Liability Insurance Co. v. Department of Insurance,
                                     2014 IL App (4th) 121125

Appellate Court            UNITED STATES LIABILITY INSURANCE COMPANY;
Caption                    NATIONAL INDEMNITY COMPANY; NATIONAL LIABILITY
                           & FIRE INSURANCE COMPANY; CENTRAL STATES
                           INDEMNITY COMPANY OF OMAHA; KANSAS BANKERS
                           SURETY COMPANY; GOVERNMENT EMPLOYEES INSUR-
                           ANCE COMPANY; GEICO GENERAL INSURANCE COMPANY;
                           GEICO INDEMNITY COMPANY; GEICO CASUALTY
                           COMPANY; GENERAL REINSURANCE CORPORATION;
                           GENERAL STAR NATIONAL INSURANCE COMPANY;
                           GENESIS INSURANCE COMPANY; FAIRFIELD INSURANCE
                           COMPANY; NATIONAL REINSURANCE CORPORATION; and
                           NORTH STAR REINSURANCE CORPORATION, Plaintiffs-
                           Appellees, v. THE DEPARTMENT OF INSURANCE; and
                           MICHAEL T. McRAITH, as Director of the Department of Insurance,
                           Defendants-Appellants.

District & No.             Fourth District
                           Docket No. 4-12-1125

Rule 23 Order filed        March 3, 2014
Rule 23 Order
withdrawn                  May 9, 2014
Opinion filed              May 9, 2014
Held                       In an action arising from a dispute over how insurance companies
(Note: This syllabus domiciled outside Illinois but conducting business in Illinois should
constitutes no part of the treat overpayments they made on their Illinois income taxes for
opinion of the court but purposes of the Illinois retaliatory tax, the appellate court found that
has been prepared by the the retaliatory tax statute unambiguously provides that the income-tax
Reporter of Decisions component of the retaliatory tax is the income tax that accrued
for the convenience of pursuant to sections 201(a) through (d) of the Income Tax Act, not the
the reader.)               income taxes paid, and since Title 50, section 2515.50(b), of the
                           Illinois Administrative Code, which provides that the Illinois basis
                           includes the income tax paid, conflicts with the statute’s mandate that
                           the retaliatory tax includes the corporate income tax imposed in a
                           particular year, Title 50, section 2515.50(b), of the Illinois
                           Administrative Code is invalid on the ground that it was inconsistent
                           with the retaliatory tax statute; therefore, the trial court’s reversal of
                           the Department of Insurance’s decision that the refund at issue had to
                           be accounted on a cash basis for the year in which the refund was
                           received was affirmed and plaintiffs were entitled to apply the refund
                           to the years in which plaintiffs overpaid their taxes.

Decision Under            Appeal from the Circuit Court of Sangamon County, No. 11-MR-228;
Review                    the Hon. John Schmidt, Judge, presiding.

Judgment                  Affirmed.

Counsel on                Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,
Appeal                    Solicitor General, and Richard S. Huszagh, Assistant Attorney
                          General, of counsel), for appellants.

                          James S. Dunn, of Springfield, and Tracy D. Williams, William M.
                          Sneed (argued), and Julie M. Weber, all of Sidley Austin LLP, of
                          Chicago, for appellees.

Panel                     JUSTICE HOLDER WHITE delivered the judgment of the court, with
                          opinion.
                          Presiding Justice Appleton and Justice Steigmann concurred in the
                          judgment and opinion.

                                                -2-
                                             OPINION

¶1       Defendants in this case are the Department of Insurance (Department) and Michael T.
     McRaith, as the Department’s Director. Plaintiffs, United States Liability Insurance Company
     (USLIC), National Indemnity Company, National Liability & Fire Insurance Company,
     Central States Indemnity Company of Omaha, Kansas Bankers Surety Company, Government
     Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity
     Company, GEICO Casualty Company, General Reinsurance Corporation, General Star
     National Insurance Company, Genesis Insurance Company, Fairfield Insurance Company,
     National Reinsurance Corporation, and North Star Reinsurance Corporation, are a group of
     insurance companies owned by National Indemnity Company that do business in Illinois.
¶2       The Illinois Insurance Code (Insurance Code) requires insurance companies domiciled
     outside Illinois that conduct business in Illinois to pay a retaliatory tax. 215 ILCS 5/444(1)
     (West 2010). The dispute in this case centers on how, for retaliatory tax purposes, plaintiffs
     should have treated an approximately $8.6 million refund that they received in 2004 for
     overpayments they made on their income taxes in 1999, 2000, and 2001. In reporting their
     2004 retaliatory tax, plaintiffs counted and applied the $8.6 million refund for the tax years in
     which they had overpaid their taxes–1999, 2000, and 2001–thus calculating that they owed
     $1.9 million in retaliatory taxes. The Department, however, contends the $8.6 million refund
     should have been counted against plaintiffs’ 2004 income, resulting in the payment of a higher
     retaliatory tax. The Department’s contention stems from the language in one of the
     Department’s regulations, which states, “[t]he amount of Illinois Corporate and Replacement
     income tax paid, decreased by the amount, if any, of any corporate and/or income replacement
     tax cash refund received in the same calendar year if that cash refund had been considered part
     of the amount of Illinois Corporate and Replacement income tax paid in the calculation of the
     annual retaliatory tax in a preceding year.” 50 Ill. Adm. Code 2515.50(b)(5) (2000).
¶3       In May 2011, the Department Director upheld the Department’s interpretation of its
     regulations as requiring the income tax refunds to be accounted on a cash basis. That month,
     plaintiffs filed a complaint for administrative review. Following a September 2012 hearing, the
     circuit court reversed the Department Director’s decision and entered judgment for plaintiffs,
     finding the Department’s regulation was invalid because it was “wholly and completely
     inconsistent” with the retaliatory tax statute.
¶4       Defendants appeal, arguing the circuit court erred by reversing the Department Director’s
     decision because section 2515.50(b) of Title 50 of the Illinois Administrative Code does not
     conflict with section 444(3) of the Insurance Code, as section 444(3) merely identifies the
     types of taxes, charges, and fees included in the scope of the retaliatory tax.
¶5       We disagree and affirm.

¶6                                    I. BACKGROUND
¶7                              A. Statutory Provisions at Issue
¶8       Section 444(1) of the Insurance Code, known as the retaliatory tax statute, requires
     insurance companies domiciled outside of Illinois to “pay penalties, fees, charges, and taxes, in
     amounts equal to” the aggregate amount of penalties, fees, charges, and taxes Illinois
     companies must pay when doing business in the foreign company’s state. 215 ILCS 5/444(1)

                                                 -3-
       (West 2010). The purpose of the retaliatory tax is to discourage other states from enacting
       discriminatory or excessive taxes on Illinois companies doing business there. Mutual Life
       Insurance Co. of New York v. Washburn, 137 Ill. 2d 312, 330, 561 N.E.2d 29, 37-38 (1990).
       The statute specifies that the terms “penalties,” “fees,” “charges,” and “taxes” shall include,
       among other things, the “taxes collected under State law” and “the Illinois corporate income
       taxes imposed under subsections (a) through (d) of Section 201 of the Illinois Income Tax Act
       after any tax offset allowed under Section 531.13 of this Code.” (Emphasis added.) 215 ILCS
       5/444(3) (West 2010).
¶9          Subsections (a) through (d) of section 201 of the Illinois Income Tax Act set forth two
       types of income taxes a corporation must pay. 35 ILCS 5/201(a) to (d) (West 2010). During the
       period of time of this dispute, a corporation was required to pay 4.8% of its net income in taxes.
       35 ILCS 5/201(b)(8) (West 2010). A corporation was also required to pay a personal property
       tax replacement income tax at a rate of 2.5% of a corporation’s net income. 35 ILCS 5/201(c),
       (d) (West 2010). These two taxes, collectively, will hereinafter be referred to as the “income
       tax.”
¶ 10        Under Illinois law, an insurance company is also required to pay a “premium” or
       “privilege” tax (hereinafter referred to as the “privilege tax”) at a rate of 0.5% of gross
       insurance premiums. 215 ILCS 5/409(1) (West 2010). If an insurance company has paid
       Illinois income tax in excess of 1.5% of premiums, it may receive a credit against the privilege
       tax liability. 215 ILCS 5/409(2) (West 2010). A privilege tax credit is based on the amount of
       income tax “paid by the company, on a cash basis.” 215 ILCS 5/409(2) (West 2010).
¶ 11        Section 401(a) of the Insurance Code authorizes the Director “to make reasonable rules and
       regulations as may be necessary” for effectuating the insurance laws of the State of Illinois.
       215 ILCS 5/401(a) (West 2010). The Department’s regulations governing the retaliatory tax
       are included in Title 50, section 2515, of the Illinois Administrative Code (50 Ill. Adm. Code
       2515 (2000)). In particular, section 2515.50 provides that to calculate the amount of retaliatory
       tax due, a corporation must compare the state of Illinois’s basis (Illinois Basis) to the state of
       incorporation’s basis (Foreign Basis). 50 Ill. Adm. Code 2515.50 (2000). The Illinois Basis is
       the sum of, among other things:
                “[t]he amount of Illinois Corporate and Replacement income tax paid, decreased by the
                amount, if any, of any corporate and/or income replacement tax cash refund received in
                the same calendar year if that cash refund had been considered part of the amount of
                Illinois Corporate and Replacement income tax paid in the calculation of the annual
                retaliatory tax in a preceding year.” 50 Ill. Adm. Code 2515.50(b)(5) (2000).
       Where the Illinois Basis is less than the Foreign Basis, the insurance company must pay a
       retaliatory tax. 50 Ill. Adm. Code 2515.50 (2000). A corporation pays the retaliatory tax in
       accordance with section 444 and is required to file “an annual return for the preceding calendar
       year on or before March 15.” 215 ILCS 5/444.1(1) to (2) (West 2010).

¶ 12                                B. The Administrative Proceedings
¶ 13       In 2004, after filing amended state income tax returns for tax years 1999 and 2000,
       plaintiffs collectively received a refund of approximately $8.6 million. On their 2004
       retaliatory tax return, plaintiffs included approximately $1.9 million of the $8.6 million refund
       based on plaintiffs’ belief that the refund should be counted for the years in which they made

                                                   -4-
       overpayments–1999, 2000, and 2001. In October 2005, the Department issued an invoice to
       one of the plaintiffs, USLIC, alleging USLIC owed additional privilege and retaliatory taxes
       for 2004. USLIC filed a protest challenging the Department’s proposed assessment and
       requesting a hearing on the matter. Specifically, USLIC argued it correctly reported the refund
       of Illinois income tax it received in 2004 because its share of the refund had to “be taken into
       account in 2004 only to the extent it was considered part of the ‘income tax paid’ that
       generated a privilege or retaliatory tax benefit for a year prior to 2004.” Alternatively, USLIC
       claimed that section 444(3) of the Insurance Code required “that the amount of Illinois Income
       Tax imposed be taken into account on an incurred basis rather than a cash basis, so that no
       amount of the 1999-2000 Income Tax refund received in 2004 should have been taken into
       account in 2004.” In December 2005, the Director assigned a Department employee to conduct
       a hearing on USLIC’s protest.
¶ 14       In April 2006, the Department advised a second group of the plaintiffs, General
       Reinsurance Corporation, General Star National Insurance Company, Genesis Insurance
       Company, Fairfield Insurance Company, National Reinsurance Corporation, and North Star
       Reinsurance Corporation, that it would not issue those plaintiffs’ requested refunds of
       approximately $98,000 of retaliatory taxes that those plaintiffs alleged they erroneously paid in
       1999. The second group of plaintiffs requested a hearing. Likewise, in June 2006, the
       remaining plaintiffs, National Indemnity Company, National Liability & Fire Insurance
       Company, Central States Indemnity Company of Omaha, Kansas Bankers Surety Company,
       Government Employees Insurance Company, GEICO General Insurance Company, GEICO
       Indemnity Company, and GEICO Casualty Company, filed a protest after the Department
       issued invoices alleging those plaintiffs owed additional privilege and retaliatory taxes for
       2004.
¶ 15       The three cases were consolidated before a single hearing officer. In 2005 and 2006, the
       parties filed cross-motions for summary judgment. In March 2011, the hearing officer issued
       proposed findings of fact and conclusions of law, recommending the Director grant the
       Department’s motion for summary judgment, deny plaintiffs’ protest, and order plaintiffs to
       pay the invoices issued by the Department. In April 2011, the Director adopted the hearing
       officer’s findings of fact, conclusions of law, and recommendations. The Director noted that
       although USLIC initially challenged the validity of the Department’s regulations, including
       sections 2525.60 and 2515.50, USLIC was no longer making such a challenge, “perhaps”
       because it understood the Department could not “challenge, let alone invalidate, one of its own
       regulations.” The Director then went on to find that the Department’s interpretation of its
       regulations was correct in that refunds of corporate income and replacement taxes are to be
       accounted on a cash basis. Thus, the Director granted the Department’s motion for summary
       judgment, denied plaintiffs’ protests, and ordered USLIC and the third group of plaintiffs to
       pay the Department invoices.

¶ 16                                  C. Circuit Court Proceedings
¶ 17       In May 2011, plaintiffs filed a complaint for administrative review in the Sangamon
       County circuit court. A hearing commenced in September 2012. In addition to challenging the
       Department’s interpretation of its regulation, plaintiffs asserted the regulation was inconsistent
       with the statute and therefore invalid. Specifically, plaintiffs pointed out that section 444(3) of
       the Insurance Code (215 ILCS 5/444(3) (West 2010)) specified the retaliatory tax included,

                                                    -5-
       among other things, a percentage of the Illinois corporate income taxes “imposed” under
       section 201 of the Income Tax Act. By contrast, the Department’s regulation specified that
       each party’s basis, used to calculate the retaliatory tax, included the income tax “paid.” 50 Ill.
       Adm. Code 2515.50(b)(5) (2000). According to plaintiffs, “paid” and “imposed” connoted two
       different meanings; thus, the regulation was inconsistent with section 444(3) of the Insurance
       Code. (Plaintiffs also argued the Department’s application of the retaliatory tax was
       unconstitutional; however, plaintiffs have not renewed that argument on appeal.) For their part,
       defendants argued the retaliatory tax statute was “broad” and “flexible,” and that the use of the
       word “imposed” in the statute encompassed when the tax was “paid,” not when the tax
       “accrued.”
¶ 18        In September 2012, the circuit court entered judgment for plaintiffs. Specifically, the court
       found that the Department’s regulation, contained in Title 50, section 2515.50(b)(5), of the
       Illinois Administrative Code, was invalid because it was “wholly and completely inconsistent”
       with the retaliatory tax statute. The court’s written order also included a finding that no just
       cause existed to delay enforcement of its order.
¶ 19        This appeal followed.

¶ 20                                          II. ANALYSIS
¶ 21       On appeal, defendants assert the circuit court erred by reversing the Director’s decision.
       Specifically, defendants posit the court erred by finding that Title 50, section 2515.50(b)(5), of
       the Illinois Administrative Code conflicts with section 444(3) of the Insurance Code because,
       contrary to the court’s finding, section 444(3) of the Insurance Code does not mandate the use
       of an accrual basis of accounting to report Illinois income tax payments and refunds when
       calculating the retaliatory tax, nor does it address the temporal accounting issue at all. Rather,
       according to defendants, section 444(3) is unambiguous and merely identifies the types of
       taxes, charges, and fees that are included in the scope of the retaliatory tax. Thus, defendants
       contend, no conflict exists between the statute and the regulation. In the alternative, defendants
       argue that if section 444(3) of the Insurance Code is ambiguous, this court should adopt the
       Department’s interpretation of the statute.

¶ 22                         A. Standards Governing Statutory Interpretation
¶ 23        “The interpretation of a statute is a question of law, which we review de novo.” People ex
       rel. Madigan v. Illinois Commerce Comm’n, 231 Ill. 2d 370, 380, 899 N.E.2d 227, 232 (2008).
       Our “primary objective in interpreting a statute is to ascertain and give effect to the intent of
       the legislature.” Solon v. Midwest Medical Records Ass’n, 236 Ill. 2d 433, 440, 925 N.E.2d
       1113, 1117 (2010). The “most reliable indicator of such intent is the language of the statute,
       which is to be given its plain and ordinary meaning.” Id. When ascertaining the plain meaning
       of the statute, we consider the statute as a whole, the subject it addresses, and the legislature’s
       apparent intent in enacting it. Id. “When the statutory language is clear and unambiguous, it
       must be applied as written, without resort to extrinsic aids of statutory construction.” Id. By
       contrast, where a statute is ambiguous–that is, where a statute is capable of being understood
       by reasonably well-informed persons in two or more different ways–we may consider extrinsic
       aids of construction. Id. In addition, where a statute is ambiguous and the agency has rendered
       an interpretation of the statute, “ ‘the court does not simply impose its own construction on the
       statute, as would be necessary in the absence of an administrative interpretation. Rather, ***

                                                    -6-
       the question for the court is whether the agency’s answer is based on a permissible construction
       of the statute.’ ” Illinois Bell Telephone Co. v. Illinois Commerce Comm’n, 362 Ill. App. 3d
       652, 657, 840 N.E.2d 704, 709 (2005) (quoting Chevron U.S.A. Inc. v. Natural Resources
       Defense Council, Inc., 467 U.S. 837, 843 (1984)).
¶ 24       Accordingly, we start our inquiry by looking to the language of section 444(3) of the
       Insurance Code.

¶ 25                              B. Section 444(3) of the Insurance Code
¶ 26       As previously detailed, a foreign corporation’s retaliatory tax is calculated by comparing
       the Illinois Basis to the Foreign Basis. Section 444(3) of the Insurance Code specifies that the
       income-tax component of the Illinois Basis consists of “the Illinois corporate income taxes
       imposed under subsections (a) through (d)” of the Income Tax Act. (Emphasis added.) 215
       ILCS 5/444(3) (West 2010).
¶ 27       Plaintiffs contend that the word “imposed” has an unambiguous, specific meaning within
       the field of tax law that is not the same as “paid.” In support of their argument, plaintiffs point
       out that the legislature, in enacting the retaliatory tax statute, used specific language when
       referring to the taxes making up the retaliatory tax calculation–“collected” when referring to
       the penalties, fees, charges, and taxes in article XXV of the Insurance Code, and “imposed”
       when referring to the corporate income tax under section 201, subsections (a) to (d), of the
       Income Tax Act. Thus, plaintiffs contend the legislature intended the word “imposed” to mean
       something different from “collected.”
¶ 28       Defendants, on the other hand, assert that the word “imposed” does not have the
       unambiguous meaning that plaintiffs attribute to it. Rather, defendants claim, “imposed” may
       be used to signify the “existence or application of an obligation generally” and thus can
       encompass the word “paid.” According to defendants, when reading section 444(3) as a whole
       and in conjunction with the rest of section 444 and the Insurance Code, the legislature clearly
       intended for section 444(3) to define the scope of the taxes, charges, and fees included in the
       retaliatory tax. With respect to why the legislature used the word “imposed” when referring to
       the corporate income tax and “collected” when referring to other taxes making up the
       retaliatory tax calculation, defendants assert the legislature likely adopted the word “imposed”
       because that term is used by section 201 of the Income Tax Act.
¶ 29       Defendants are correct that section 201 of the Income Tax Act uses the word “imposed” to
       refer to income taxes. This may explain why the legislature used the word “imposed” in the
       retaliatory tax statute when referring to income taxes and “collected” when referring to the
       other taxes comprising the retaliatory tax calculation. Defendants are also correct that in Lewyt
       Corp. v. Commissioner of Internal Revenue, 349 U.S. 237, 240 (1955), the Supreme Court, in
       interpreting a section of the Internal Revenue Code, stated that the word “ ‘imposed’ ” could be
       used “in one of two different senses–either to identify the tax or to define the amount of the tax
       that is to be levied and collected.”
¶ 30       Nonetheless, we conclude that, in this case, the legislature clearly did not intend the word
       “imposed” to merely identify the types of taxes included in the retaliatory tax. In particular, we
       find persuasive plaintiffs’ assertion that if the legislature had intended the amount of income
       tax included in the retaliatory tax calculation to be the amount of income tax paid, it could have
       made that clear by referencing section 601(a) and/or section 803 of the Income Tax Act, both
       of which govern the amount of Illinois income tax a corporation actually pays during a

                                                    -7-
       calendar year. See 35 ILCS 5/601(a), 803 (West 2010). Instead, the retaliatory tax statute
       references income taxes “imposed” under section 201 of the Income Tax Act. Section 201 of
       the Income Tax Act sets forth the rates at which an income tax is to be calculated but does not
       include a temporal component. However, section 444.1 of the Insurance Code requires a
       corporation to file an annual retaliatory tax return on or before March 15 “for the preceding
       calendar year.” 215 ILCS 5/444.1 (West 2010). Thus, in reading section 444.1 of the Insurance
       Code in conjunction with section 201 of the Income Tax Act, the legislature apparently
       intended the income-tax component of the Illinois Basis to be the income tax that accrued
       during the preceding calendar year.
¶ 31        Defendants point out that in another portion of the Insurance Code, section 409(2), the
       legislature specifically stated that for purposes of computing credits based on income taxes, the
       credit equals “the excess amount, if any, by which the aggregate income taxes paid by the
       company, on a cash basis, for the preceding calendar year” exceed a specific amount.
       (Emphases added.) 215 ILCS 5/409(2) (West 2010). Defendants contend this section of the
       Insurance Code shows that when the legislature intends to prescribe a specific accounting
       method, it does so; thus, because the legislature did not specify a type of accounting to be used
       to calculate the retaliatory tax, the Department could prescribe a cash-basis method in its
       regulation without conflicting with the statute.
¶ 32        Although the legislature did not specify that an accrual method should be used to calculate
       the income-tax component of the retaliatory tax, the legislature did use the word “imposed”
       instead of the word “paid.” The word “impose” is defined as “to establish or apply by authority
       [(a tax, new restrictions, penalties)].” Merriam-Webster’s Collegiate Dictionary 582 (10th ed.
       2000). In this instance, defendants’ reading of the word “imposed” to encompass the word
       “paid” is too broad, particularly in light of the Illinois Supreme Court’s directive that because
       the “ ‘retaliatory statute is penal,’ ” it is “ ‘subject to the rule of strict construction.’ ” Mutual
       Life Insurance Co., 137 Ill. 2d at 324, 561 N.E.2d at 35 (quoting Metropolitan Life Insurance
       Co. v. Boys, 296 Ill. 166, 172, 129 N.E. 724, 726 (1920)). If “imposed” signified when the
       income tax was “paid” rather than when it “accrued,” plaintiffs would have to pay an
       additional $2.7 million in retaliatory taxes that they would not have originally had to pay if
       they had not overpaid their income taxes in 1999, 2000, and 2001. The legislature could not
       have intended such a result given that such an interpretation effectively punishes plaintiffs for
       overpaying their taxes. See Coram v. State of Illinois, 2013 IL 113867, ¶ 57, 996 N.E.2d 1057
       (When construing statutes, the court “presumes that the legislature did not intend to create
       absurd, inconvenient, or unjust results.”).
¶ 33        Defendants also argue the language in section 444(3)–“[t]he terms ‘penalties’, ‘fees’,
       ‘charges’, and ‘taxes’ in subsection (1) of this Section shall include” (emphasis added) (215
       ILCS 5/444(3) (West 2010))–makes clear that the purpose of section 444(3) is merely to define
       the scope of the taxes, penalties, and charges included in the retaliatory tax and not to proscribe
       a specific accounting method. We disagree that this language in section 444(3) precludes a
       finding that “imposed” signifies “incurred” or “accrued” rather than “paid.” To the contrary,
       section 444(3) can be read as stating the “penalties,” “fees,” “charges,” and “taxes” include the
       Illinois corporate income taxes that “accrued” or “became due” under subsections (a) to (d) of
       section 201 of the Income Tax Act. We also reject defendants’ contention that because section
       444(1) of the Insurance Code specifies a foreign corporation owes a retaliatory tax if the
       foreign state requires “the payment of penalties, fees, charges, or taxes” (emphasis added) (215

                                                     -8-
       ILCS 5/444(1) (West 2010)) greater than those required under Illinois law, then the
       Department can use the time of payment, not the time of accrual, to calculate the Illinois
       income-tax component. Section 444(3) goes on to specify that the “ ‘penalties,’ ” “ ‘fees,’ ”
       “ ‘charges,’ ” and “ ‘taxes’ ” in section 443(1) include “income or personal property taxes
       imposed by other states or countries.” (Emphasis added.) 215 ILCS 5/444(3) (West 2010).
       Thus, the language used to specify the foreign income-tax component of the retaliatory tax
       mimics the language used to specify the Illinois income-tax component of the retaliatory tax.
       In other words, section 444(3) does not define the foreign states’ income-tax component as the
       “income tax paid” but rather as the “income or personal property taxes imposed.” (Emphasis
       added.) 215 ILCS 5/444(3) (West 2010). Again, to “impose” is “to establish or apply by
       authority.” Merriam-Webster’s Collegiate Dictionary 582 (10th ed. 2000).
¶ 34        In addition, defendants contend that because section 444(3) of the Income Tax Act uses the
       word “imposed” to refer to the hypothetical taxes that a foreign state would impose on an
       Illinois corporation doing business in that state, the word “imposed” when referring to Illinois
       income taxes likewise cannot refer to actual taxes. We find this argument unpersuasive
       because whether “imposed” signifies “paid” or “accrued,” any comparison of the Illinois taxes
       to the foreign state taxes would necessarily involve a consideration of the hypothetical taxes
       that an Illinois corporation would owe in the foreign state.
¶ 35        Finally, defendants assert that plaintiffs’ interpretation of section 444(3) will force
       corporations whose tax year is not the calendar year to create a second set of tax records in
       addition to the one they normally keep. Defendants also contend plaintiffs fail to take into
       account that although corporate income taxes are “generally due” on March 15 for the
       preceding calendar year, corporations are entitled to automatic seven-month extensions to file
       their returns. See 86 Ill. Adm. Code 100.5020(b) (2010). Thus, the only information a
       corporation taking such an extension would have to report on their retaliatory tax return by the
       March 15 deadline would be what it actually paid, typically in quarterly installments, which is
       exactly what the Department’s regulation requires. Plaintiffs respond that the Internal Revenue
       Code requires insurance companies to adopt a calendar year as their fiscal year, and the Income
       Tax Act requires taxpayers to use federal taxable income as the starting point in calculating
       Illinois taxable income. However, while section 843 of Title 26 of the Internal Revenue Code
       provides that, generally, “the annual accounting period for each insurance company subject to
       a tax imposed by this subchapter shall be the calendar year,” it also states that “an insurance
       company which joins in the filing of a consolidated return *** may adopt the taxable year of
       the common parent corporation even though such year is a not a calendar year.” 26 U.S.C.
       § 843 (2006). Thus, defendants are correct that an insurance company could have a different
       fiscal year than the calendar year and thus would be required to keep a second set of tax
       records.
¶ 36        Nonetheless, it is more plausible that the legislature would impose such a requirement than
       that it would require a corporation to owe more retaliatory taxes than it would have originally
       owed simply because the corporation initially overpaid its corporate income tax. Again, we
       note the supreme court has stressed the retaliatory tax statute is penal in nature and “ ‘must be
       confined to such cases as fall within its letter.’ ” Mutual Life Insurance Co., 137 Ill. 2d at 324,
       561 N.E.2d at 35 (quoting Metropolitan Life Insurance Co., 296 Ill. at 172, 129 N.E. at 726).
¶ 37        Based on the foregoing, we conclude the retaliatory tax statute unambiguously specifies
       that the income-tax component of the retaliatory tax is the income tax that accrued under

                                                    -9-
       section 201(a) through (d) of the Income Tax Act, not the income tax paid. We now turn to
       whether the Department’s regulation is consistent with the statute.

¶ 38                                 C. The Department’s Regulation
¶ 39       As previously detailed, Title 50, section 2515.50(b), of the Illinois Administrative Code
       specifies that the Illinois basis includes the amount of income tax paid. 50 Ill. Adm. Code
       2515.50(b)(5) (2000). Because this language conflicts with the statute’s mandate that the
       retaliatory tax includes the corporate income tax imposed in a particular year, we conclude
       Title 50, section 2515.50(b), of the Illinois Administrative Code is invalid. See Hartney Fuel
       Oil Co. v. Hamer, 2013 IL 115130, ¶ 38, 998 N.E.2d 1227 (“Regulations that are inconsistent
       with the statute under which they are adopted will be held invalid.”).

¶ 40                                      III. CONCLUSION
¶ 41      For the reasons stated, we affirm the circuit court’s judgment.

¶ 42      Affirmed.

                                                 - 10 -


652 N.W.2d 537 (2002)
In re the Marriage of Janet Marie ROBERT, Petitioner, Respondent,
v.
John Anthony ZYGMUNT, Appellant.
No. C7-02-67.
Court of Appeals of Minnesota.
October 8, 2002.
*539 James L. Berg, Chaska, MN, for respondent.
Alan C. Eidsness, Lisa T. Spencer, Henson & Efron, P.A., Minneapolis, MN, for appellant.
Considered and decided by HALBROOKS, Presiding Judge, KLAPHAKE, Judge, and SHUMAKER, Judge.

OPINION
HALBROOKS, Judge.
In this marital-dissolution dispute, appellant John Zygmunt challenges the trial court's award of summary judgment to respondent Janet Robert. Appellant argues that the trial court erred or abused its discretion by concluding that (1) stock purchased from an inheritance trust in exchange for a promissory note secured by the stock itself was nonmarital property, (2) respondent's interest in a Subchapter S corporation's retained-earnings account was nonmarital property, (3) appellant was not entitled to spousal maintenance, and (4) appellant had not shown undue hardship warranting an invasion of respondent's nonmarital property. We affirm.

FACTS
The 21-year marriage of appellant John Zygmunt and respondent Janet Robert was dissolved by judgment and decree on April 19, 2000. The parties have one child, now emancipated. Respondent's family owns Siegel-Robert, Inc. (Siegel-Robert), a closely held corporation. Respondent's parents gave respondent several individual gifts of Siegel-Robert stock both before and during the parties' marriage and gave appellant individual gifts of stock during the marriage. The parties agree that these separate gifts of stock are the nonmarital property of each party.
During their marriage, the parties lived a relatively modest lifestyle financed almost exclusively by respondent's distributions from her Siegel-Robert stock. By profession, appellant is a playwright and respondent an attorney, but during the marriage neither party worked full-time to support the family or established a career in any specific location. The parties typically held short-term jobs for little or no pay and relocated at will, living in various parts of the United States and Canada until settling near the Twin Cities in 1987.
Respondent's father died in 1996. His will directed that his entire estate, consisting primarily of Siegel-Robert stock, be held in a marital trust, with his wife (respondent's mother) acting as trustee. The will gave respondent's mother a life estate in the trust and divided the remainder interest equally among respondent and her siblings. The will authorized respondent's mother to enter into any transactions necessary to minimize the total tax liability of the estate and its beneficiaries.
Respondent's mother divided the marital trust into three separate trusts, including a qualified terminable interest property trust ("QTIP") that held a controlling interest of Siegel-Robert shares. The estate's tax planner determined that the estate's *540 tax liability would be substantially reduced if the QTIP held only a minority interest in Siegel-Robert by the time respondent's mother died. The tax planner accordingly arranged a stock-purchase transaction whereby respondent and each of her siblings purchased an equal number of shares from the QTIP. The children each signed a promissory note with a 15-year term, a pledge agreement, and a redemption agreement. The promissory notes were secured by the shares to be purchased, which were held by the QTIP trust. The pledge agreement and redemption agreement provided that the children could redeem the shares held by the trust in order to pay the annual installments on the note.
None of the children's spouses signed any of the documents related to the stock-purchase agreement. At the time of trial, respondent had not made any payment on the note using marital or nonmarital funds and had not commingled the QTIP stock with any marital asset. Instead, when the note's first and second annual installments came due, respondent redeemed shares held as security by the QTIP to meet her obligation on the note.
After respondent's father died, the Siegel-Robert board of directors further reduced the corporation's tax liability by voting to convert Siegel-Robert from a Subchapter C corporation to a Subchapter S corporation for tax purposes. See I.R.C. §§ 301-385, 1361-1379 (2000) (defining and explaining Subchapter S and Subchapter C corporations). As a Subchapter S corporation, Siegel-Robert does not pay corporate-level taxes on its income. See I.R.C.§ 1363. Instead, the corporation's income is taxed directly to its shareholders based on their ownership of corporate stock, whether or not the income is actually distributed to the shareholders. See I.R.C. §§ 1366-1368. A Subchapter S corporation monitors its retained corporate earnings using an accumulated adjustments account ("AAA"), which is used to determine each shareholder's basis for taxed but undistributed corporate income. See id. Siegel-Robert's AAA monitored the amount of income attributable to respondent's shares in the corporation. Although this undistributed income was taxed to respondent and appellant on the parties' joint income-tax returns, Siegel-Robert, and not the parties, always paid the tax; no marital assets were ever used for this purpose. Siegel-Robert never set aside an account for respondent with any funds in it, and no funds were ever distributed to either party from the AAA.
At the time of dissolution, respondent was working ten hours a month for nominal wages and receiving $360,000 net annual income from Siegel-Robert in stock distributions and director's fees; appellant was pursuing his playwriting career but earning no income.
Before trial, the court granted respondent summary judgment as to the QTIP stock, agreeing with respondent's argument that the stock was not marital property subject to division. The trial court reasoned that the stock-purchase agreement, as an estate-planning device, did not transform respondent's remainder in the family trust from nonmarital to marital property, but merely accelerated respondent's possession of the nonmarital bequest.
After a trial on the remaining issues, the trial court concluded that the AAA was also nonmarital property, reasoning that because Siegel-Robert always paid the tax burden created by the AAA and only nominally borne by the parties, the AAA had no effect on the parties' marital assets or income. The trial court also concluded that appellant was not entitled to spousal maintenance and that appellant had demonstrated *541 no special hardship entitling him to a portion of respondent's nonmarital property. This appeal follows.

ISSUES
1. Was the Siegel-Robert stock respondent purchased from the QTIP marital property?
2. Was respondent's basis in the Siegel-Robert retained-earnings account marital property?
3. Did the trial court properly deny appellant spousal maintenance?
4. Did the trial court properly decline to invade respondent's nonmarital property to alleviate appellant's financial hardship?

ANALYSIS

I.
Appellant challenges the trial court's conclusion that the QTIP stock respondent acquired pursuant to the stock-purchase transaction remained a nonmarital asset, arguing that the stock became divisible marital property when respondent purchased it from the trust. We disagree and hold that the trial court did not err by granting respondent summary judgment on this issue.
We review appeals from grants of summary judgment to determine "(1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990) (citation omitted); see also Minn. R. Civ. P. 56.03. We need not defer to the trial court's decision on a pure question of law. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn.1984). "Whether property is marital or nonmarital is a question of law, but a reviewing court must defer to the trial court's underlying findings of fact." Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn.1997) (citation omitted).
All property obtained by either spouse during the marriage is presumed to be marital property. Minn.Stat. § 518.54, subd. 5 (2000). "To overcome the presumption that property is marital, a party must demonstrate by a preponderance of the evidence that the property is nonmarital." Olsen, 562 N.W.2d at 800 (citation omitted); see also Minn.Stat. § 518.54, subd. 5. Nonmarital property includes property that is acquired as a bequest made to one spouse but not to the other, as well as a party's remainder interest inherited in property subject to a life estate. Minn.Stat. § 518.54, subd. 5(a), (c); Theroux v. Boehmler, 410 N.W.2d 354, 357 (Minn.App.1987). For property to retain its nonmarital character, it must be kept separate from marital property or be readily traceable to an identifiable nonmarital asset. Olsen, 562 N.W.2d at 800.
Appellant acknowledges that respondent's remainder interest in the QTIP is nonmarital, but argues that the stock purchased from the QTIP, as property obtained during the marriage in exchange for a marital debt, was presumptively marital. See Minn.Stat. § 518.54, subd. 5. He asserts that the stock-purchase transaction did not merely accelerate respondent's remainder interest while preserving its nonmarital character, but converted it from respondent's inheritance to divisible marital property.
Although there is some merit in appellant's arguments, the terms and circumstances of the stock-purchase transaction here lead us to conclude that the stock purchased by respondent from the QTIP remained nonmarital property. First, we do not agree that the promissory note exchanged for the stock represented a marital debt. It is undisputed that respondent *542 had a nonmarital remainder interest in the QTIP stock prior to the stock-purchase transaction and that the promissory note was secured by the QTIP stock itself, which remained in the trust's possession. By the terms of the stock-purchase agreement, respondent is entitled, and has consistently chosen, to surrender the shares held as security in order to meet her obligations under the note, effectively using the stock to pay for itself. We conclude that because the promissory note was secured wholly by respondent's nonmarital remainder interest in the QTIP and involved no personal or marital assets, it was not a marital debt.
Consequently, the QTIP stock acquired by respondent pursuant to the stock-purchase transaction was not marital property. We have previously held that an estate-planning device designed to minimize tax burdens does not alter the marital or nonmarital character of property. See Pfleiderer v. Pfleiderer, 591 N.W.2d 729, 732-33 (Minn.App.1999) (holding that "transferring joint property into one party's name for estate planning purposes does not convert marital property into nonmarital property"). Here, the stock-purchase transaction was developed by an estate planner in order to further the goal, as expressed by respondent's father in his will, of reducing the tax liability of the estate and its beneficiaries. The transaction was designed so that payment for the stock purchase could be generated from the stock itself, with no contribution of marital or personal assets. On these facts, we conclude that the stock purchased from the QTIP, which was respondent's nonmarital property before the transaction, did not become marital property by operation of the estate-planning device.
Appellant argues that respondent's remainder interest is strictly limited to the assets of the QTIP at the time of her mother's death and that when respondent placed a promissory note in the QTIP in exchange for the stock, she acquired a remainder interest in the promissory note and lost her nonmarital interest in the stock. He therefore contends that respondent's stock is marital property. But respondent indisputably had a nonmarital remainder interest in the stock held in the QTIP, subject to a life estate in her mother, prior to the stock-purchase transaction. Respondent purchased the stock from the trust in a transaction secured by the stock itself and involving no marital funds. While there are circumstances under which a party's purchase of nonmarital property could convert the property into marital property, no such circumstance is present here because the stock was not commingled with marital property and because the funds for its purchase were generated by, and were, therefore, directly traceable to the stock itself. See Olsen, 562 N.W.2d at 800. Here, respondent secured the purchase with nonmarital assets, made no initial down payment for the stock, signed the purchase agreement, and has only made payments on the note by authorizing the QTIP to redeem shares in its possession.
Under these circumstances, we conclude that the promissory note signed by respondent was not a marital debt of the parties. Consequently, the QTIP stock acquired by respondent pursuant to the stock-purchase transaction remained a nonmarital inheritance after the transaction. Because the evidence was sufficient to rebut the presumption that respondent's QTIP stock purchase was marital, the trial court did not err in granting respondent summary judgment on this issue.

II.
Appellant challenges the trial court's conclusion that the Siegel-Robert *543 AAA is respondent's nonmarital property, arguing that the AAA is marital property because it contains earned income taxed to the marital estate and because its value is attributable to respondent's efforts. Whether a Subchapter S corporation's retained earnings are marital property is an issue of first impression in Minnesota.
We note first that the Siegel-Robert AAA is not "income" under the plain meaning of Minn.Stat. § 518.54, subd. 6 (2000), which defines "income" as "any form of periodic payment to an individual." Although the Internal Revenue Code treats AAA earnings as income attributable to individual shareholders for federal tax purposes, there is no evidence in the record before us that an asset-bearing account was set aside by Siegel-Robert for respondent or that any amounts were, or will be, held in such an account or distributed to either party. Retained earnings and profits of a corporation are a corporate asset and remain the corporation's property until severed from other corporate assets and distributed as dividends. See Hoffmann v. Hoffmann, 676 S.W.2d 817, 827 (Mo.1984). Respondent agrees that Siegel-Robert dividends actually paid to the parties were marital property. But because Siegel-Robert never distributed the retained earnings to respondent, the earnings never became respondent's income under Minn.Stat. § 518.54.
Appellant argues that the AAA must be considered a marital asset because the income allocated to the AAA was taxed to the parties as income earned. But appellant does not contend, and there is no evidence, that any marital assets were used to pay the tax on the retained earnings associated with respondent's shares of Siegel-Robert stock.
There is no evidence that respondent has the right to distribute the AAA to herself or other Siegel-Robert shareholders. Appellant's reliance on Metz-Keener v. Keener, 215 Wis.2d 626, 573 N.W.2d 865, 866-68 (1997), for the proposition that a Subchapter S corporation's AAA is marital property is therefore misplaced because there, the party was the sole shareholder and manager of the corporation, had full access to the retained earnings, and could distribute the earnings at will. Appellant has not cited any authority and we are not aware of any that would require us to consider a party's interest in a corporation's retained earnings to be a marital asset where the party, like respondent here, is a minority shareholder, plays little to no role in the daily management of the corporation, and lacks control over the distribution of the corporation's income. Indeed, our research indicates that, consistent with Metz-Keener, courts in other jurisdictions will only consider a corporation's retained earnings to be a party's income if the party has substantial control over a corporation's earnings or is the sole stockholder. See, e.g., Bleth v. Bleth, 607 N.W.2d 577, 579 (N.D.2000); Mitts v. Mitts, 39 S.W.3d 142, 148 (Tenn.Ct.App.2000).
Here, the AAA was created when respondent and the other members of the Siegel-Robert board of directors voted to convert Siegel-Robert into a Subchapter S corporation. Appellant argues that the retained earnings are marital property because they are attributable to respondent's entrepreneurial efforts during the marriage. See Nardini v. Nardini, 414 N.W.2d 184, 192 (Minn.1987) (holding that an increase in the value of nonmarital property attributable to the efforts of one or both spouses during marriage is marital property); White v. White, 521 N.W.2d 874, 878 (Minn.App.1994) (stating that such efforts include a party's contribution of funds, labor, or entrepreneurial decision-making *544 to the nonmarital property). We disagree.
We have held that an individual who is a board member, officer, and employee of a corporation controlled by his family, but who is not involved in the key functions of the business and only minorly involved in the business, does not contribute an effort to the corporation's income. Duffey v. Duffey, 416 N.W.2d 830, 833 (Minn.App.1987), review denied (Minn. Feb. 24, 1988). Here, respondent plays no role in the management or day-to-day operation of the corporation, and she is not a corporate officer or employee. We do not agree with appellant that by attending quarterly board meetings, voting annually on distributions, and voting once to alter the corporate tax structure, respondent engaged in the kind of active effort contemplated by Nardini or entrepreneurial decision-making described in White.
The AAA is not a distributive, asset-bearing account attributable to either party's marital effort but rather is a notational device designed to measure the income attributable to respondent's Siegel-Robert shares for federal tax purposes. We, therefore, hold that the AAA was not a marital asset and affirm the trial court's determination that the account is respondent's nonmarital property.

III.
Appellant argues that the trial court abused its discretion by denying his request for spousal maintenance. A trial court has broad discretion in determining spousal maintenance, and we will not overturn the trial court's decision absent an abuse of discretion. Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn.1982). A trial court abuses its discretion by resolving the matter in a manner that is "against the logic and the facts on the record." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn.1984). That the record might support findings other than those made by the trial court does not render the findings clearly erroneous, and we view the "evidence in the light most favorable to the trial court's findings." Vangsness v. Vangsness, 607 N.W.2d 468, 474 (Minn.App.2000). When reviewing the evidence regarding spousal maintenance, we leave credibility determinations to the fact-finders because they are in the best position to make such assessments. Prahl v. Prahl, 627 N.W.2d 698, 702 (Minn.App.2001).
A spousal-maintenance award is appropriate when one spouse demonstrates that he or she lacks sufficient property to provide for his or her reasonable needs or is otherwise unable to reasonably provide adequate self-support. Minn.Stat. § 518.552, subd. 1 (2000). In determining the amount and duration of a maintenance award, a court should consider (1) the financial resources of the party seeking maintenance; (2) the likelihood of the party seeking maintenance becoming fully or partially self-supporting given the party's age and skills or ability to learn new skills; (3) the standard of living established during the marriage; (4) the duration of the marriage; (5) the loss of earnings, seniority, retirement benefits, and other employment opportunities forgone by the spouse seeking spousal maintenance; (6) the age and the physical and emotional condition of the party seeking maintenance; (7) the ability of the other spouse to meet his or her needs while also meeting those of the spouse seeking maintenance; and (8) the contribution of each party to the marital property and to the furtherance of the other's employment or business. Minn.Stat. § 518.552, subd. 2 (2000).
First, we observe that appellant has significant financial resources at his disposal. His final property award exceeded $670,000. The parties stipulated that *545 appellant can earn more than $32,000 annually in returns on his investments. A vocational expert testified at trial that appellant is capable of earning more than $30,000 annually as a copywriter. The record does not support appellant's contention that the trial court miscalculated his expenses by disregarding various taxes and expenses. Nor does the record support appellant's contention that the trial court's denial of spousal maintenance is an abuse of discretion because it deprives him of the opportunity to maintain the standard of living the parties enjoyed during their marriage. The record is clear that the parties' lifestyle for 18 of the marriage's 21 years was modest. The trial court properly refused to give greater weight to the parties' lifestyle in the final years of the marriage, when respondent's income increased due to her father's death. Appellant's contention that he is "entitled" to pursue his chosen nonremunerative vocation and be "amply supported" by respondent is without merit.
Appellant argues that the trial court improperly imputed income to him without finding that he is underemployed in bad faith; in support, he erroneously relies on Maurer v. Maurer, 607 N.W.2d 176 (Minn. App.2000), rev'd on other grounds, 623 N.W.2d 604 (Minn.2001), and Carrick v. Carrick, 560 N.W.2d 407 (Minn.App.1997). In each of those cases, we held that the district court had erred by imputing income to a longtime homemaker without a finding of bad-faith underemployment. Maurer, 607 N.W.2d at 181; Carrick, 560 N.W.2d at 410. We reasoned that when a spouse is the homemaker and primary caretaker of the children, imputing income to that spouse without finding bad faith would ignore the spouse's contributions as a homemaker in the marriage and punish her for maintaining the homemaker lifestyle. Carrick, 560 N.W.2d at 410; see also Maurer, 607 N.W.2d at 181. Here, respondent, not appellant, was the homemaker and primary caretaker of the parties' child. We also observe that appellant's financial and professional circumstances are far removed from those addressed in Maurer and Carrick, where we considered the diminished earning capacities of female homemakers in so-called traditional marriages. Although appellant's desire to seek remunerative employment may have diminished as a result of the financial support he received from respondent during the marriage, his earning capacity has not. The trial court appropriately imputed income to appellant.
The record does not support appellant's argument that the trial court impermissibly considered his marital misconduct in denying maintenance. The trial court found that the parties frequently failed to communicate, but made no specific finding of fault.
The record is clear that appellant's combined investment income and employment income will be sufficient to meet his monthly expenses. The trial court carefully considered and thoroughly analyzed all of the factors listed in Minn.Stat. § 518.552, subd. 2, and its determination that appellant is capable of self-support without any contribution from respondent has a reasonable and acceptable basis in fact. Pettit v. Pettit, 472 N.W.2d 668, 671 (Minn.App.1991) (citation omitted).

IV.
Appellant argues that the trial court abused its discretion by dividing the parties' marital property equally, concluding that appellant suffered no undue hardship warranting an invasion of respondent's nonmarital assets. We disagree, and affirm the trial court's conclusion that *546 appellant's awards of marital and nonmarital property, which together exceed $670,000, preclude his claim of hardship.
A trial court can apportion nonmarital property if it finds unfair hardship based on all relevant factors including the length of the marriage, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs, and opportunity for future acquisition of capital assets and income of each party. Minn.Stat. § 518.58, subd. 2 (2000). "A very severe disparity between the parties is required to sustain a finding of unfair hardship necessary to apportion nonmarital property." Ward v. Ward, 453 N.W.2d 729, 733 (Minn.App.1990),review denied (Minn. June 6, 1990).
Appellant is in good health and possesses marketable skills that, together with his investment income, will enable him to meet his reasonable expenses. Appellant cites no apposite authority to support his argument that he will suffer undue hardship because respondent's financial circumstances are, and will continue to be, significantly better than his own. Respondent's superior financial condition is due to her nonmarital holdings in Siegel-Robert. Appellant's reasonable needs will be met by the trial court's distribution of marital and nonmarital property. A disparity between the parties' post-dissolution assets does not support a claim of hardship. The trial court acted well within its discretion in dividing the marital and nonmarital property.

DECISION
The trial court did not err by concluding that (1) the QTIP stock remained respondent's nonmarital property following the stock-purchase transaction, (2) the Siegel-Robert AAA was respondent's nonmarital property, (3) appellant was not entitled to spousal maintenance, and (4) appellant suffered no unfair hardship warranting an invasion of respondent's nonmarital property.
Affirmed.


57 So.2d 23 (1952)
INDUSTRIAL INS. CO. OF NEW JERSEY
v.
FIRST NAT. BANK OF MIAMI et al.
Supreme Court of Florida, Division A.
February 22, 1952.
Blackwell, Walker & Gray, Miami, and Whitfield, Musgrave, Selvy, Fillmore & Kelly, Des Moines, Iowa, for appellant.
Loftin, Anderson, Scott, McCarthy & Preston, Miami, for appellee.
THOMAS, Justice.
Insurance policies indemnifying property owners for loss from fire are usually written for one year for a stated amount, but there is an appreciable reduction in the total premium if the policies are taken for three or five-year periods. For illustration, *24 the cost of a policy for a three-year period is five-sixths as much as one taken for three separate years; the cost of a policy for a five-year period is the same as the total of four yearly premiums for the same policy if taken for four separate years. Many owners cannot afford the larger outlay in cash, so to take advantage of the discount, they borrow against the policies, profiting by the difference between the saving in premiums and the interest on the loans made to them. From the financing of policy holders in this situation by the First National Bank of Miami, and another bank later merged with it, this suit arose.
Lotspeich-Bush, Inc., evidently personified by J.B. Bush, was the authorized and legalized local agent for the appellant, Industrial Insurance Company, successor of National Fire and Marine Insurance Company. Thrall General Agency, Inc. was the state agent for appellant with reference to business transacted by Lotspeich-Bush, Inc.
From here on, in an attempt to simplify the transactions, we shall refer to the principal transactors as "the bank," "Industrial," "Thrall," and "Bush."
Hundreds of policies were written by Bush as agent of Industrial, and finance notes to cover the premium purportedly signed by the policy holders, were delivered by Bush to the bank.
In a typical policy loan transaction, the assured would pay one-fourth the premium in cash and sign a "premium contract" reciting that in consideration of the bank's paying to Industrial the remaining three-fourths, the assured would pay the bank that amount in equal periodic installments. The assured assigned to the bank, as collateral, such part of any refunds, or proceeds in the event of loss, as would reimburse the bank. Also, in default of the payment of any installment, the bank was authorized to cancel the policy and apply the unearned premium to the debt.
Attached to the contract was the "Agent's Statement" certifying that the policy was genuine, that the down payment had been received, and that an endorsement had been placed on the policy showing the bank's financing and its right under relevant circumstances to cancel the insurance contract. This endorsement contained the statement that "Said agreement [of financing with the bank] assigns to the Bank all return premiums payable on this policy, and an amount out of the proceeds payable in the event of a loss, if the unearned premium be thereby reduced, as shall be required to pay all sums owing to the Bank under said agreement." Also, in the statement, executed by Bush in behalf of his corporation, was the promise immediately to notify the bank of any change in the policy that would affect the security of the bank.
Immediately after execution of the note with attached statement, the bank would address a communication to Thrall advising of the financing of the policy and expressing a purpose to pay to Bush, or to Thrall, the amount of the premium as Thrall might direct "on the enclosed duplicate" of the letter of notification. Then would appear the endorsement by Thrall, as agent for Industrial, directing the payment of the premiums "to our above-named agent (the undersigned)." Following this, the bank would address a letter to Bush enclosing a check for three-fourths of the premium. It will be noted that the words in parentheses are not stricken, but this is unimportant because Thrall did not receive the proceeds and apparently did not object to the manner of remitting direct to Bush. These checks of the bank issued to Bush's corporation for the amounts of the loans were deposited in the personal account of Bush, who remitted monthly to Thrall against accounts stated by Thrall.
Many policies, thus financed by the bank, were canceled without the bank's knowledge, and although the unearned premiums should have been returned to the bank, they were, instead, credited by Industrial to Thrall, and by Thrall to Bush. The bank was, therefore, circumvented to an extent not precisely known to it; so this suit was brought for an accounting, a discovery, and a decree for recovery of such sums as it had been deprived of by the triple play: *25 Industrial to Thrall to Bush. In few words, the premiums were not paid to the bank, but were credited to Bush's account.
The upshot of an inquiry, conducted by a master in chancery, which appears to have been quite thorough, was a decree in favor of the bank for about $50,000 against Industrial, Thrall and Bush, severally; and a denial of the bank's request for attorneys' fees.
Doubtless, Bush acted in a devious way to short-circuit the bank, but there is no need now to elaborate on the misconduct of his affairs or his breach of faith with the institution which must have contributed materially to the enhancement of his business and that of his employer. We are immediately concerned with the propriety of the chancellor's decree fixing the blame and disallowing the fee. One question is presented by the appellant, the other by appellee.
It is appellant's contention that because the premium contract bore the stipulation that the solicitor of the insurance, Bush, was not the agent of the bank, and because the "Agent's Statement" appended to the contract recited that the signatory, individually, and not as agent of the carrier, made certain representations, Bush was either the agent of the assured in each case or a principal. This view, if sustained, would, of course, be very comforting to Industrial and Thrall. But if this interpretation were accepted, it would immediately be wondered why Thrall, as general agent for Industrial, was exercising in each case the prerogative of instructing the bank about paying the money to its "agent" Bush or to Industrial and exercising the option by directing payment to the former, expressly describing Bush as "our above-named agent." If Bush was a principal, or a representative of the bank, such procedure would have been utterly useless, and the idea seems inconsistent with the dealings between Bush and Industrial. Bush remitted to Industrial the remainder of premiums after deducting his commissions. Upon one occasion the bank wrote Industrial for information about canceled policies and was advised that Thrall had the intelligence about them and was being directed to furnish it to the bank. So both Thrall and Bush were identified as agents of Industrial.
In its brief, the appellant has presented sixteen questions involving various phases of the series of transactions among Industrial, Thrall, Bush, and the bank. Some of them are based on isolated instances, the handling of individual policies. But we think it is unnecessary to discuss and decide seriatim the questions and the instances, because of our conviction from a study of the record that the general pattern of the transactions is so well established and the underlying principle so clearly developed as plainly to present for determination of the court the axial problem, namely, the resting place of responsibility for the misdoings of Bush that resulted in loss to the bank.
In making this observation, we do not overlook the probability that the policies involved fall in five categories: contracts canceled with refunds to Bush; policies never actually issued; policies claimed by Industrial to have been improperly canceled; policies validly canceled on which refunds are due; and duplication of contracts.
We think this responsibility may not be shunted from Industrial to the bank on the theories that Bush was the bank's agent, or that the bank was so negligent in determining Bush's authority to act for Industrial that it should not have prevailed in the suit. Thrall's recognition of the dealings and Bush's part in them and Industrial's recognition of Thrall really reduce the whole affair to simplicity itself, and in our opinion present a typical case for accounting and recovery of the amount due the bank.
We have not been convinced that any importance should be attached to the language following the "Agent's Statement" on some of the premium contracts, that "All installments under this Contract should be remitted to Lotspeich-Bush, Inc. * * *." Parenthetically, such was the phraseology on the premium contracts of American National Bank, with which First National *26 Bank was merged, while the contracts of the latter contained the identical stipulation except that the name of the bank appeared instead of "Lotspeich-Bush, Inc."
We agree with appellee that from the norm of the procedure and especially from the facts that there was no direction to the company to credit unearned premiums to Bush, and that notice was given to the assureds (after receipt of directions from Thrall) to make payments to the bank, this discrepancy is reduced to nothingness.
Our reaction to the facts and the presentations of counsel is that the stream moved quite smoothly while the bank's funds were flowing into the coffers of Industrial and, incidentally, profiting Thrall and Bush, but that things went awry whenever the course was reversed. Also, we are convinced that Industrial sponsored Bush for the purpose of augmenting its business through his efforts, but disowned him when his irregular practices were discovered and the time came to fix the responsibility for the losses from his delinquencies, which could have been prevented, or the evil effect of which could have been diminished had Industrial properly handled the refunds by sending them to the bank instead of giving its agent credit for them.
We decided long ago, in Aetna Ins. Co. v. Holmes, 59 Fla. 116, 52 So. 801, 802, that "`The acts of an agent, performed within the scope of his real or apparent authority, are binding upon his principal'" and further that "`The public have a right to rely upon an agent's apparent authority, and are not bound to inquire as to his special power, unless the circumstances are such as to put them upon inquiry.'" The court was quoting charges which it approved.
In the Restatement of the Law of Agency, we find, Sec. 261, that "A principal who puts an agent in a position that enables the agent, while apparently acting within his authority, to commit a fraud upon third persons is subject to liability to such third persons for the fraud." In the following section of the same work appears the statement that "A person who otherwise would be liable to another for the misrepresentations of one apparently acting for him, under the rule stated in Sec. 261, is not relieved from liability by the fact that the apparent agent acts entirely for his own purposes, unless the other has notice of this."
We think what we have quoted is peculiarly fitting in this case because Industrial held out Bush as its agent and there was nothing to convince master or chancellor that the bank had notice of Bush's acting "entirely for his own purposes," much less that he was committing fraud.
Concluding as we do that no error was shown by appellants to have been committed, we arrive now at the question submitted by the appellee. It is insisted by it that compensation should have been allowed its attorneys under Section 625.08, Florida Statutes 1949, and F.S.A., providing that a decree in favor of a beneficiary under a contract of insurance against an insurer shall include a fee for the beneficiary's attorney.
We do not consider that the bank was a beneficiary. It stood in the beneficiary's shoes only to the extent of being entitled to refunds and proceeds to secure the payment of the loans to beneficiaries. Actually, some amounts found to be due the bank on the accounting were for policies that never issued, duplicate policies and so forth. This controversy was one between the appellee in its own behalf and the appellants for monies that had miscarried. In numerous instances, the bank's claims were not based on outstanding policies for the reasons that policies had not been issued in the first place, or if issued, had been canceled.
We think the bank properly recovered, but that the statute cannot be so liberally construed as to require a revision of the decree to include attorneys' fees.
The final decree in all respects is
Affirmed.
SEBRING, C.J., and TERRELL and HOBSON, JJ., concur.


                                                                                ACCEPTED
                                                                                03-15-00644-CV
                                                                                7692155
                                                                     THIRD COURT OF APPEALS
                                                                                AUSTIN, TEXAS
                                                                           11/5/2015 8:44:27 AM
                                                                              JEFFREY D. KYLE
                                                                                CLERK
                         NO. 03-15-00644-CV
        ____________________________________________________
                                                          FILED IN
                                                   3rd COURT OF APPEALS
                 IN THE THIRD COURT OF APPEALS AUSTIN, TEXAS
                         AT AUSTIN, TEXAS          11/5/2015 8:44:27 AM
        ____________________________________________________
                                                     JEFFREY D. KYLE
                     KEYSTONE RV COMPANY,                  Clerk
                                   Plaintiff,
                                      v.

            TEXAS DEPARTMENT OF MOTOR VEHICLES,
                             Defendant.
        ____________________________________________________

     DEFENDANT TEXAS DEPARTMENT OF MOTOR VEHICLES’
                       ORIGINAL ANSWER
       ____________________________________________________

KEN PAXTON
Attorney General of Texas              DENNIS M. MCKINNEY
                                       Assistant Attorney General
CHARLES E. ROY                         State Bar No. 13719300
First Assistant Attorney General       OFFICE OF THE TEXAS ATTORNEY GENERAL
                                       ADMINISTRATIVE LAW DIVISION
JAMES E. DAVIS                         P.O. Box 12548
Deputy Attorney General for            Austin, Texas 78711-2548
Civil Litigation                       Telephone: (512) 475-4020
                                       Facsimile: (512) 320-0167
DAVID A. TALBOT, JR.                   dennis.mckinney@texasattorneygeneral.gov
Chief, Administrative Law Division     Attorneys for Defendant
TO THE HONORABLE JUSTICES OF THE COURT:

      Defendant, the Texas Department of Motor Vehicles Board (“Defendant”), by

and through the Office of the Attorney General of Texas and the undersigned

Assistant Attorney General, and file this Original Answer in response to Plaintiff’s

Petition for Judicial Review. In support thereof, Defendant would show the Court

as follows:

                                      I.
                                GENERAL DENIAL

      Defendant Texas Department of Motor Vehicles denies each and every

allegation contained in Plaintiff’s Petition for Judicial Review, and demands strict

proof thereof.

                                    II.
                            AFFIRMATIVE DEFENSE

      Defendant Texas Department of Motor Vehicles pleads the affirmative

defense of sovereign immunity to the extent that any portion of Plaintiff’s claim is

barred thereby.

                                        III.
                                      PRAYER

      Defendant Texas Department of Motor Vehicles prays that the Court, upon

final hearing, enter a final judgment that Plaintiff take nothing by way of this suit,

that all court costs be taxed against Plaintiff, and for such other and further relief to

which Defendant Texas Department of Motor Vehicles may be entitled.
                                           2
Respectfully submitted,

KEN PAXTON
Attorney General of Texas

CHARLES E. ROY
First Assistant Attorney General

JAMES E. DAVIS
Deputy Attorney General for Civil Litigation

DAVID A. TALBOT, JR.
Chief, Administrative Law Division

/s/Dennis M. McKinney
DENNIS M. MCKINNEY
Assistant Attorney General
State Bar No.13719300
Office of the Attorney General of Texas
Administrative Law Division
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Telephone: (512) 475-4020
Facsimile: (512) 320-0167
dennis.mckinney@texasattorneygeneral.gov
Attorneys for Defendant

  3
                        CERTIFICATE OF SERVICE

      I hereby certify that a true and correct copy of the foregoing document has
been served on this the 5th day of November, 2015 on the following:

Christopher J. Lowman           VIA Electronic Service
The Lowman Law Firm
One Allen Center
500 Dallas Street, Suite 3030
Houston, Texas 77002-4705
chris@lowmanlaw.com
Attorney for Plaintiff

                                     /s/ Dennis M. McKinney
                                     Dennis M. McKinney
                                     Assistant Attorney General

                                        4