Paul v. Virginia
Encyclopedia
Paul v. Virginia, 75 U.S. (8 Wall) 168
(1869), was a historic case in corporate law in which the United States Supreme Court held that a corporation is not a citizen within the meaning of the Privileges and Immunities Clause
. Of greater consequence, the Court further held that "issuing a policy
of insurance is not a transaction of commerce," effectively removing the business of insurance beyond the United States Congress
's legislative reach.
had passed a statute provided that an insurance company not incorporated under the laws of the state should not carry on its business within the State without previously obtaining a license for that purpose and that it should not receive such license until it had deposited with the treasurer of the state bonds in an amount varying from thirty to fifty thousand dollars.
In May 1866, Samuel Paul, a resident of the Commonwealth of Virginia, was appointed the agent of the New York insurance companies, to carry on the general business of insurance against fire
. He then applied for a license to act as such agent within the state, offering at the time to comply with all the requirements of the statute with the exception of the provision requiring a deposit of bonds with the treasurer of the state. Based on his failure to comply with the requirements of the statute, the license was refused. Notwithstanding this refusal he undertook to act in the State as agent for the New York companies without any license.
, and was sentenced to pay a fine of $50.
On error (appeal) to the Supreme Court of Appeals of the State, the judgment was affirmed, and the case was then appealed to the Supreme Court. The grounds were that the writ of error on the judgment in the lower court violated Privileges and Immunities Clause
, which provides that "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States" and the Commerce Clause, which empowers Congress "to regulate commerce with foreign nations, and among the several States."
, finding that insurance transactions were subject to federal regulation under the Commerce Clause.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1869), was a historic case in corporate law in which the United States Supreme Court held that a corporation is not a citizen within the meaning of the Privileges and Immunities Clause
Privileges and Immunities Clause
The Privileges and Immunities Clause prevents a state from treating citizens of other states in a discriminatory manner...
. Of greater consequence, the Court further held that "issuing a policy
Policy
A policy is typically described as a principle or rule to guide decisions and achieve rational outcome. The term is not normally used to denote what is actually done, this is normally referred to as either procedure or protocol...
of insurance is not a transaction of commerce," effectively removing the business of insurance beyond the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
's legislative reach.
Facts
In the 19th century, the insurance business was exclusively regulated by the US state individually. As a result, a patchwork of separate regulations proliferated to the dismay of insurance companies which sought uniform regulation across states. In an effort to promote federal regulation of the insurance industry, a number of New York insurance companies orchestrated a test case to try to invalidate state regulation. On February 3, 1866, the legislature of VirginiaVirginia
The Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...
had passed a statute provided that an insurance company not incorporated under the laws of the state should not carry on its business within the State without previously obtaining a license for that purpose and that it should not receive such license until it had deposited with the treasurer of the state bonds in an amount varying from thirty to fifty thousand dollars.
In May 1866, Samuel Paul, a resident of the Commonwealth of Virginia, was appointed the agent of the New York insurance companies, to carry on the general business of insurance against fire
Fire
Fire is the rapid oxidation of a material in the chemical process of combustion, releasing heat, light, and various reaction products. Slower oxidative processes like rusting or digestion are not included by this definition....
. He then applied for a license to act as such agent within the state, offering at the time to comply with all the requirements of the statute with the exception of the provision requiring a deposit of bonds with the treasurer of the state. Based on his failure to comply with the requirements of the statute, the license was refused. Notwithstanding this refusal he undertook to act in the State as agent for the New York companies without any license.
Judgment
Subsequent to the issuance of a fire insurance policy to a citizen of Virginia, Paul was indicted and convicted in the Circuit Court of the city of PetersburgPetersburg, Virginia
Petersburg is an independent city in Virginia, United States located on the Appomattox River and south of the state capital city of Richmond. The city's population was 32,420 as of 2010, predominantly of African-American ethnicity...
, and was sentenced to pay a fine of $50.
On error (appeal) to the Supreme Court of Appeals of the State, the judgment was affirmed, and the case was then appealed to the Supreme Court. The grounds were that the writ of error on the judgment in the lower court violated Privileges and Immunities Clause
Privileges and Immunities Clause
The Privileges and Immunities Clause prevents a state from treating citizens of other states in a discriminatory manner...
, which provides that "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States" and the Commerce Clause, which empowers Congress "to regulate commerce with foreign nations, and among the several States."
Signficance
In 1944, the Supreme Court overturned the holding of Paul v. Virginia in United States v. South-Eastern Underwriters AssociationUnited States v. South-Eastern Underwriters Association
United States v. South-Eastern Underwriters Association, 322 U.S. 533 is a United States Supreme Court decision that held that the Sherman Act, the federal antitrust statute, applied to insurance. To reach this decision, the Court held that insurance could be regulated by the United States...
, finding that insurance transactions were subject to federal regulation under the Commerce Clause.
External links
- Paul v. Virginia, 75 U.S. 168 (1868) (opinion full text).