''Paul v. Virginia'', 75 U.S. (8 Wall.) 168 (1869), is a U.S. corporate law decision by the

United States Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

. It held that a corporation is not a citizen within the meaning of the

Privileges and Immunities Clause The Privileges and Immunities Clause ( U.S. Constitution, Article IV, Section 2, Clause 1, also known as the Comity Clause) prevents a state from treating citizens of other states in a discriminatory manner. Additionally, a right of interstate ...

. 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 The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...

's legislative reach (until partially overturned in '' United States v. South-Eastern Underwriters Association'').

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 Virginia, officially the Commonwealth of Virginia, is a state in the Mid-Atlantic and Southeastern regions of the United States, between the Atlantic Coast and the Appalachian Mountains. The geography and climate of the Commonwealth ar ...

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 Virginia, officially the Commonwealth of Virginia, is a state in the Mid-Atlantic and Southeastern regions of the United States, between the Atlantic Coast and the Appalachian Mountains. The geography and climate of the Commonwealth are ...

, was appointed the agent of the New York insurance companies, to carry on the general business of insurance against

fire Fire is the rapid oxidation of a material (the fuel) in the exothermic chemical process of combustion, releasing heat, light, and various reaction products. At a certain point in the combustion reaction, called the ignition point, flames a ...

. 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

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

, 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

The US Supreme Court held that a corporation is not a citizen within the meaning of the

. 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

's legislative reach.

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..

Notes

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

* * {{USArticleI 1869 in United States case law 1869 in Virginia Legal history of Virginia United States Constitution Article One case law United States Constitution Article Four case law Privileges and Immunities case law United States Commerce Clause case law United States Supreme Court cases United States Supreme Court cases of the Chase Court Corporate personhood Insurance in the United States