Evening star., 1944-06-10
Douglas insurance
Vote Is Questioned
Justices Position With SEC
Disqualified Him, Say Critics
By David Laurence

BY David Laurence
The New Deal has finally gotten It's
claws into the insurance business.
While the Supreme Court for rs years
has ruled that insurance contracts are
not subject to regulation by the Fed
eral Government but only by the
States, minority OF the present mem.
bership OF the court has reversed that
decision.
This Is not only the first time In the
history of the Supreme Court that a
minority Of the Justices has reversed
an important precedent but It is the
first time that minority Of the ius-
tices has actually ruled on . question
OF constitutionahty Although the su-
preme Court may, II 1t likes, allow four
out Of the nine Justices to decide q
case, all the justices in the history of
the United States have refrained from
exercising that privilege. They have
felt that 1t was not proper.
In the present instance, two OF the
justices-Reed and Roberts-felt them
selves disqualified to sit on the case.
This left seven justices who heard It,
Heretofore justices of the Supreme
Court would not have reversed prece-
dent or ruled on a question of consti-
tutionality by four-to o-three vote,
This Is because 1t has always been felt
that at least five justices should concur
in the majority opinion of the court
whenever anything as vital as consti-
tutionality is involved.
Target Of Criticism.
Apparently Chief Justice Stone was
unable TO persuade the other justices
as to the improperly. There Is some
criticism also that among the four JUS
tices who concurred in the opinion Of
Justice Black, there was the vote of
Justice Douglas who, as the head of the
Securities and Exchange Commission,
conducted quite crusade against the
insurance business.
The criticism which is being voiced Is
that any one who has had part In the
prosecuting of case before the Gov
ernment, especially In the Department
OF Justice, usually disqualifles himself,
and any one who has taken a part In
the work OF a governmental agency
which touched on the subject matter of
a decision might, therefore, also be con-
stdered to be disqualified. But the main
criticism is not in respect to Justice
Douglas, but of the fact that only four
1ustices-namely, Black, Murphy, Doug
las and Rutledge-undertook to reverse
precedent OF rs years ago. Three
Justices - Frankfurter. Jackson and
tone-dissented.
The unfortunate part of It Is that
lawyers throughout the country will not
know really what is the law. For IL Is
evident that the Supreme Court In the
future viii not consider itself bound by
an opinion rendered by four members.
This means that the whole question of
whether insurance is or Is not subject
to prosecution under the antitrust laws
Will come up again and again.
ac Sees Conflict.
Meanwhile, during the New Deals
| continuance in power, 1t Is apparent
that the insurance business, both with
respect to life and fire, will come into
the tentacles Of the bureaucrats. For
several years now 1t has been evident
that the New Dealers wanted to get
their hands on the insurance business
because of the vast control of funds
involved therein. If a bureaucracy is
created here to regulate the insurance
business 1t viii be one of the biggest
additions to governmental agencies In
recent years.
Also there are 48 States which have
insurance departments and the question
arises now as to the conflict between
the Federal Government and the States.
Attorney General Biddle has said that
there is no present intention to enter
into regulation of the insurance busi-
ness. But he cannot speak for the
bureaucrats who have been planning a
long while to set up Federal agency
to control insurance. When the full
import of the decision of the Supreme
Court this week reaches all the persons
involved In the insurance business
throughout the United States, from
company. executives to life insurance
and fire insurance agents, it is certain
that Congress will be importuned to
pass law specifically exempting the In.
surance business from being enmeshed in
the Sherman law and its ramifications.
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