# Travelers Health Association v. Commonwealth of Virginia State Corporation Commission/Concurrence Douglas

* Court Documents
* Case Syllabus
* Opinion of the Court
* Concurring Opinion Douglas
* Dissenting Opinion Minton
United States Supreme Court
339 U.S. 643
Travelers Health Association v. Commonwealth of Virginia State Corporation Commission
Argued: April 17, 1950. --- Decided: June 5, 1950
Mr. Justice DOUGLAS, concurring.
Since the formula adopted by the Court is adequate to dispose of this case, I have joined in the opinion. But I feel that the type of problem presented requires a more selective treatment. Hence my separate opinion.
Virginia's Blue Sky Law is a comprehensive scheme for the protection of the state's investors. Securities can be offered for sale in the state only after the issuer obtains a permit. To get it, the applicant must supply detailed information about its solvency, its earning record, and the nature of the securities. Promoters may be required to supply a bond. Applicants must appoint an agent, the Secretary of the Commonwealth, to receive service of process. Only after proof of their good character and financial responsibility are security salesmen licensed. After issuance, the state Corporation Commission is authorized again to investigate the issuer with an eye to possible revocation of its permit. These are the high points of the comprehensive regulation which Virginia seeks to apply to appellants.
That the business of insurance is interstate commerce is established by United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440. Any doubts about the power of a state to exclude an interstate insurance company which refuses to comply with its regulatory laws were dispelled by the passage of the McCarran Act. 59 Stat. 33, 15 U.S.C. §§ 1011-1015, 15 U.S.C.A. §§ 1011-1015. See Robertson v. People of State of California, 328 U.S. 440, 461, 462, 66 S.Ct. 1160, 1171, 1172, 90 L.Ed. 1366.
The requirements of due process do not, in my opinion, preclude the extension of Virginia's regulatory scheme to appellant. I put to one side the case where a policyholder seeks to sue the out-of-state company in Virginia. His ability to sue is not necessarily the measure of Virginia's power to regulate, as the Court said in Old Wayne Mut. Life Ass'n of Indianapolis, Indiana v. McDonough, 204 U.S. 8, 21, 27 S.Ct. 236, 240, 51 L.Ed. 345. It is the nature of the state's action that determines the kind or degree of activity in the state necessary for satisfying the requirements of due process. What is necessary to sustain a tax or to maintain a suit by a creditor, see Old Wayne Life Ass'n v. McDonough, surpa; Provident Savings Life Ass'n Society v. Commonwealth of Kentucky, 239 U.S. 103, 114 116, 36 S.Ct. at 34, 37, 38, 60 L.Ed. 167; Issacs, An Analysis of Doing Business, 25 Col.L.Rev. 1018, 1024, is not in my view determinative when the state seeks to regulate solicitation within its borders.
Blue Sky Laws are a well-recognized exercise of the police power of the states. See Hall v. Geiger-Jones Co., 242 U.S. 539, 552, 37 S.Ct. 217, 221, 61 L.Ed. 480, L.R.A.1917F, 514, Ann.Cas.1917C, 643. The wiles of the salesman have been many; the devices to avoid state regulation have been clever and calculated. One of those who contested the constitutionality of the Michigan Blue Sky Law in Merrick v. N. W. Halsey & Co., 242 U.S. 568, 573, 37 S.Ct. 227, 229, 61 L.Ed. 498, had no place of business in the state and was not sending agents into it. The history of the various methods used to evade state regulation is too recent to require extended comment. Instrumentalities of interstate and foreign commerce were extensively employed by those beyond the reach of a state to sell securities to its citizens. See H.R.Rep.No.85, 73d Cong., 1st Sess. 10. The Securities Act of 1933, 48 Stat. 74, 15 U.S.C. § 77a et seq., 15 U.S.C.A. § 77a et seq., was passed to fill the gap.
A state is helpless when the out-of-state company operates beyond the borders, establishes no office in the state, and has no agents, salesmen, or solicitors to obtain business for it within the state. Then it is beyond the reach of process. In the present case, however, that is only the formal arrangement. The actual arrangement shows a method of soliciting business within Virginia as active, continuous, and methodical as it would be if regular agents or solicitors were employed. Cf. Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 63 S.Ct. 602, 87 L.Ed. 777, 145 A.L.R. 1113.
Practically all of appellants' business in Virginia originates with and is the result of the activities of its Virginia members. The recommendation of a member relieves an applicant of the duty of furnishing any reference. Though the old members are not designated as 'agents,' it 'clearly appears,' as stated by the Supreme Court of Appeals, 'that the association relies almost excusively on these activities of its Virginia members to bring about an expansion of its Virginia business.' Travelers Health Ass'n v. Commonwealth of Virginia, 188 Va. 877, 887, 51 S.E.2d 263, 267. This device for soliciting business in Virginia may be unconventional and unorthodox; but it operates functionally precisely as though appellants had formally designated the Virginia members as their agents. Through these people appellants have realistically entered the state, looking for and obtaining business. Whether such solicitation is isolated or continuous, it is activity which Virginia can regulate. See Hooper v. People of State of California, 155 U.S. 648, 658, 15 S.Ct. 207, 211, 39 L.Ed. 297. The requirements of due process may demand more or less minimal contacts than are present here, depending on what the pinch of the decision is or what it requires of the foreign corporation. See International Shoe Co. v. State of Washington, Office of Unemployment Compensation and Placement, 326 U.S. 310, 316-319, 66 S.Ct. 154, 158, 159, 90 L.Ed. 95, 161 A.L.R. 1057. Where the corporate project entails the use of one or more people in the state for the solicitation of business, in my view it does no violence to the traditional concept of due process to allow the state to provide protective measures governing that solicitation. That is all that is done here.
I cannot agree that this appeal is premature. Virginia has placed an injunction on appellants, an injunction which may have numerous consequences, e.g., contempt proceedings. There is an existing controversy-real and vital to appellants.
Mr. Justice MINTON, with whom Mr. Justice JACKSON joins, dissenting.

## Notes

* ↑ Acts of the General Assembly of Virginia, 1928, c. 529, p. 1373, as amended, Acts of 1932, c. 236, p. 434, Michie's Code of Virginia, § 3848(47) et seq.
* ↑ Michie § 3848(47).
* ↑ Michie § 3848(51).
* ↑ Michie § 3848(51)(r).
* ↑ Michie § 3848(55).
* ↑ Michie § 3848(50)(m).
* ↑ Michie § 3848(53).
* ↑ By § 3(a)(8) insurance policies issued by a corporation subject to the supervision of specified state agencies are exempt from this federal regulation. Section 18 provides that the Act does not affect the jurisdiction of any state agency over a security or a person.
* ↑ As Mr. Justice Rutledge said in Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516, 146 A.L.R. 926, '* * * some casual or even single acts done within the borders of the sovereignty may confer power to acquire jurisdiction of the person, provided there is also reasonable provision for giving notice of the suit in accordance with minimal due process requirements.'
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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