South‐eastern Underwriters Association, United States v.

South‐eastern Underwriters Association, United States v., 322 U.S. 533 (1944), argued 11 Jan. 1944, decided 5 June 1944 by vote of 4 to 3; black for the Court, Stone and Frankfurter in dissent, Jackson dissenting in part, Roberts and Reed not participating. Ever since Paul v. Virginia (1869), the issuance of insurance policies had not been considered a transaction of commerce, and the Court had consistently ruled that, since insurance did not constitute interstate commerce, states could regulate even out‐of‐state insurance companies doing business within their borders.

Then the Justice Department filed a suit against the South‐Eastern Underwriters Association, charging it with collusive price‐fixing of premiums for fire insurance in violation of the Sherman Antitrust Act. Despite the long string of cases holding to the contrary, a plurality of the Court agreed that fire insurance companies that conducted substantial parts of their business across state lines were engaged in interstate commerce. Justice Hugo Black explained away previous court decisions on the grounds that all of them had involved state laws; this was the first instance in which a federal law had been applied to insurance, and “Congress wanted to go to the utmost extent of its Constitutional power in restraining trust and monopoly agreements” (p. 558).

Congress immediately responded by passing the McCarran Act of 1945, which explicitly declared that the continued regulation and taxation of insurance companies should remain under state jurisdiction and that no act of Congress, unless specifically addressed to the insurance business, should be interpreted as superseding the states' authority over insurance.

See also Antitrust; Commerce Power; Reversals of Court Decisions by Congress; State Regulation of Commerce.

Melvin I. Urofsky