Paul v. Virginia
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| Paul v. Virginia | ||||||||||
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| Argued December Term, 1868 Decided November 1, 1869 |
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| Holding | ||||||||||
| A corporation is not a citizen within the meaning of the Privileges and Immunities Clause and issuing a policy of insurance is not a transaction of commerce. | ||||||||||
| Court membership | ||||||||||
| Chief Justice: Salmon P. Chase Associate Justices: Samuel Nelson, Robert Cooper Grier, Nathan Clifford, Noah Haynes Swayne, Samuel Freeman Miller, David Davis, Stephen Johnson Field |
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| Case opinions | ||||||||||
| Majority by: Field |
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| Laws applied | ||||||||||
| U.S. Const. Art. I, § 8. and U.S. Const. Art. IV, § 2 | ||||||||||
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 legislative reach of Congress.
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[edit] Case history
In the 19th century, the insurance business was exclusively regulated by the States individually. As a result, a patchwork of separate regulation 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 that they hoped would invalidate State regulation. On February 3, 1866, the legislature of Virginia had passed a statute provided that no insurance company, not incorporated under the laws of the State, should 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.
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 Petersburg, and was sentenced to pay a fine of $50. On error to the Supreme Court of Appeals of the State, this judgment was affirmed, and the case was appealed to the Supreme Court on the ground of the writ of error being that the judgment below violated Privileges and Immunities Clause, which provides that "the citizens of each State shall be entitled to all the of citizens in the several States;" and the Commerce Clause, which empowers Congress "to regulate commerce with foreign nations, and among the several States."
[edit] Consequences
[edit] Reversal
In 1944, the Supreme Court overturned the holding of Paul v. Virginia in United States v. South-Eastern Underwriters Association, finding that insurance transactions were subject to federal regulation under the Commerce Clause.[1]
[edit] See also
[edit] Notes
- ^ 322 U.S. 533, 64 S. Ct. 1162, 88 L. Ed. 1440, 1944 U.S. LEXIS 1199
