• Last updated on November 11, 2022

The Supreme Court upheld a state law placing special burdens on out-of-state insurance companies, ruling that a corporation was not protected by the privileges and immunities clause and that insurance sales were not transactions in interstate commerce.

During the nineteenth century, many states encouraged the growth of in-state insurance companies by charging special taxes and license fees on companies located in other states. A combination of insurance companies organized a test case to challenge the constitutionality of these discriminatory practices. Speaking for a unanimous Supreme Court, Justice Stephen J. FieldField, Stephen J.;Paul v. Virginia[Paul v. Virginia] ruled that corporations were not citizens for the purposes of the privileges and immunities clause of Article IV of the U.S. Constitution. In addition, insurance was held to be local in nature, and therefore, states had the authority to regulate the industry under their police powers.Corporations;Paul v. Virginia[Paul v. Virginia]

Without directly reversing Paul, the Court ruled in 1886 that corporations were persons for purposes of the Fourteenth Amendment. The second portion of Paul was reversed in United States v. South-Eastern Underwriters Association[case]South-Eastern Underwriters Association, United States v.[South-Eastern Underwriters Association, United States v.] (1944).

Comity clause

Commerce, regulation of

Federalism

Privileges and immunities

South-Eastern Underwriters Association, United States v.

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