142
THE GREEN BAG
INSURANCE AS A COMMODITY BY EUGENE IN the way of those who would bring the business of insurance under Federal con trol there are several troublesome decisions of the Supreme Court of the United States. "Issuing a policy of insurance is not a transaction of commerce. . . . These con tracts are not articles of commerce in any proper meaning of that word. They are not subjects of trade and barter. . . . They are not commodities. . . . Such contracts are not interstate transactions. . . . They are local transactions, and are governed by the local law." [Paul v. Virginia, 8 Wall. 1 68 (1868)]. "The business of insurance is not commerce. The contract of insur ance is not an instrumentality of commerce. The making of such a contract is a mere incident of commercial intercourse, and in this respect there is no difference whatever between insurance against fire and insur ance against the 'perils of the sea." [Hooper v. California, 155 U. S. 648 (1894)],' "or against the uncertainty of man's life." [N. Y. Life Ins. Co. v. Cravens, 178 U.S. 389 (1899)]. As the authority of the Federal government to assume control of the business of insurance must be found in the Commerce Clause of the Constitution, great ingenuity has been shown by those advocating Federal supervision in finding a •way to avoid the effect of these decisions. It is contended that the remarks of the court in Paul v. Virginia to the effect that insurance is not commerce are dicta, for the reason that there is another good ground on which the decision might have been placed, viz: at the time of that case the Supreme Court had never squarely decided that the power of Congress over interstate commerce was exclusive as to subjects national in their character or requiring uniformity of regulation, and that the silence of Congress as to such matters was equivalent to a prohibition on State action. As Congress had not acted, the regulations of Virginia
A. GILMORE could be upheld. Further, that the courts had not then worked out to any extent the distinction between commerce and its instru mentalities, on the one hand, and the incidents and conveniences of commerce, on the other, and the regulations of Virginia, affecting only an incident, should be upheld until Congress acted. It is also said that until Congress has actually attempted to regulate insurance the question cannot be considered closed. The court will not determine indirectly the extent of the power of Congress over com merce by decisions upholding State legis lation affecting the same matter. While the court will not be bound by definitions of commerce as given by Congress in a statute, still what is commerce and what are its instrumentalities and facilities is primarily a legislative question, and the court will not disregard the legislative determination unless it is clearly unreason able. But even granting that the court meant to decide in Paul v. Virginia that the issuing a policy of insurance is not a transaction of commerce, it is said that the reasoning by which that result is reached would, if fol lowed to its logical limits, cut out from Federal control, practically, all commerce. The Court says: "These contracts are not articles of commerce. . . . They are not subjects of barter and sale as something offered in the market having an existence and value independent of the parties to them. . . . They are not commodities to be shipped or forwarded from one state to another and then put up for sale. " That is, because the contract of insurance is purely a personal matter between the parties, a local transaction, and is not a thing to be bartered and sold, there is no commerce. This reasoning would apply to all commerce arising out of contract. It is not the con tract that is sold. The contract is not
