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· 11/18/1869

Paul v. Virginia

Citations

  • 75 U.S. 168
  • 19 L. Ed. 357
  • 8 Wall. 168
  • 1868 U.S. LEXIS 1092

Syllabus

<p>1. A State statute which enacts that no insurance company not incorporated under the laws of the State passing the statute, shall carry on its business within the State without previously obtaining a license for that purpose; and that it shall not receive such license until it has deposited with the treasurer of the State bonds of a specified character to an amount varying from thirty to fifty thousand dollars, according to the extent of the capital employed, is not in conflict with that clause of the Constitution of the United States which declares that “the citizens of each State shall be entitled to all the privileges and immunities of citizens .in the several States,” nor with the clause which declares that Congress shall have power “ to regulate com'fnerce with foreign nations and among the several States.”</p> <p>2. Corporations are not citizens within the meaning of the first of these clauses. They are creatures of local law, and have not even an absolute right of recognition in other States, but depend for that and for the enforcement of their contracts upon the assent of those States, which may be given accordingly on such terms as they please.</p> <p>3. The privileges and immunities secured to citizens of each State in the several States, by this clause, are those privileges and immunities which are common to the citizens in the latter States under their constitution and laws by virtue of their being citizens. Special privileges enjoyed by citizens in their own States are not secured by it in other States.</p> <p>4. The issuing of a policy of insurance is not a transaction of commerce within the meaning of the latter of the two clauses, even though the parties be domiciled in different States, but is a simple contract of indemnity against loss.</p>

About this case

Paul v. Virginia

Not to be confused with Paul and Virginia .

Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1869), is a U.S. corporate law decision by the United States Supreme Court . It 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 (until partially overturned in _United States v. South-Eastern Underwriters Association _).

Contents

Facts

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=1 "Edit section: Facts")

In the 19th century, the insurance business was exclusively regulated by the states , 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 Virginia 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.

Paul sold a fire insurance policy to a citizen of Virginia. He was then indicted and convicted in the Circuit Court of the city of Petersburg , and was sentenced to pay a fine of $50. Paul claimed that the statute was invalid.

Judgment

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=2 "Edit section: Judgment")

Supreme Court of Virginia

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=3 "Edit section: Supreme Court of Virginia")

The Supreme Court of Appeals of the State, the judgment was affirmed, and the case was then appealed to the Supreme Court. Paul claimed 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."

Supreme Court of the United States

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=4 "Edit section: Supreme Court of the United States")

The Chase Court as of 1869.

The US Supreme Court held that a corporation is not a citizen within the meaning of the Privileges and Immunities Clause . A corporation has a right to operate in states where it is not incorporated where that state allows it to. It also 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.

The recognition of its existence even by other states, and the enforcement of its contracts made therein, depend purely upon the comity of those states; a comity which is never extended where the existence of the corporation or the exercise of its powers, are prejudicial to their interests, or repugnant to their policy. Having no absolute right of recognition in other states, but depending for such recognition and the enforcement of its contracts upon their consent, it follows as a matter of course that such consent may be granted upon such terms and conditions as those states may think proper to impose. They may exclude the foreign corporation entirely; they may restrict its business to particular localities; or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interests. The whole matter rests in their discretion.

Significance

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=5 "Edit section: Significance")

In 1944, the Supreme Court overturned the holding of Paul v. Virginia in _United States v. South-Eastern Underwriters Ass'n _, finding that insurance transactions were subject to federal regulation under the Commerce Clause.[1]

See also

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=6 "Edit section: See also")

Notes

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=7 "Edit section: Notes")

  1. ↑ _United States v. South-Eastern Underwriters Ass'n _, 322 U.S. 533 (1944).

References

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=8 "Edit section: References")

  • Henry N. Butler, Nineteenth century jurisdictional competition in the granting of corporate privileges (1985) 14(1) Journal of Legal Studies 129

  • F Tung, Before Competition: Origins of the Internal Affairs Doctrine (2006) 32 Iowa Journal of Corporate Law 33

External links

(https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&action=edit&section=9 "Edit section: External links")

Retrieved from "https://en.wikipedia.org/w/index.php?title=Paul_v._Virginia&oldid=1332990054 "

Editorial context from Wikipedia (CC-BY-SA 4.0).

How courts have described this case

Verbatim parenthetical descriptions written by other courts when citing this decision. Ranked by citation-network relevance.

  • Art. IV, § 2, “inhibits discriminating legislation against [citizens of other States and] gives them the right of free ingress into other States, and egress from them”

Source: CourtListener parenthetical corpus (CC0).

Judges: Field

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