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Law School Case Brief

Prudential Ins. Co. v. Benjamin - 328 U.S. 408, 66 S. Ct. 1142 (1946)


Through the McCarran Act, 15 U.S.C.S. §§ 1011-1015, Congress gave support to the existing and future state systems for regulating and taxing the business of insurance. This was done in two ways. One was by removing obstructions which might be thought to flow from its own power, whether dormant or exercised, except as otherwise expressly provided in the Act itself or in future legislation. The other was by declaring expressly and affirmatively that continued state regulation and taxation of this business is in the public interest and that the business and all who engage in it "shall be subject to" the laws of the several states in these respects. Moreover, in taking this action Congress must have had full knowledge of the nation-wide existence of state systems of regulation and taxation; of the fact that they differ greatly in the scope and character of the regulations imposed and of the taxes exacted; and of the further fact that many, if not all, include features which, to some extent, have not been applied generally to other interstate business. Congress could not have been unacquainted with these facts and its purpose was evidently to throw the whole weight of its power behind the state systems, notwithstanding these variations.


Respondent Benjamin, the Insurance Commissioner of South Carolina, levied a tax on petitioner Prudential Insurance Company ("Prudential"), a foreign insurance company, as a condition of receiving a certificate of authority to carry on the business of insurance within South Carolina. By an original proceeding in the Supreme Court of South Carolina, Prudential challenged the validity of the tax under the Commerce Clause, U.S. Const. art. I, § 8, arguing that the tax was unconstitutional because it discriminated against interstate commerce. The court upheld the tax. Prudential appealed.


Did the tax violate the Commerce Clause?




The Supreme Court of the United States affirmed the state supreme court's judgment. The Court rejected Prudential's argument that the Commerce Clause of "its own force" and without any reference to any action by Congress forbade discriminatory state taxation of interstate commerce. Likewise, the argument that the McCarran Act, 15 U.S.C.S. §§ 1011-1015, could not validate such taxes was rejected. The court held that the Commerce Clause did not limit Congress' power over interstate commerce and that the enactment of the McCarran Act, which permitted state regulation of the insurance industry, was a valid exercise of Congress' power.

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