Evening star., 1944-06-12
Grave Danger Is Seen
In Insurance Decision
Strong Words Of Justice Stone
Cited in High Court Reversal
By David laurence


By David laurence
When the boys coms marching home
FROM the war some day they viii find
a Government different from the one
they left behind. They viii find parts OF
the Constitution have been emasculated.
They win find the system OF dual SOW
ereignty sabotaged. They win fnd that
there Is hardly any single thing which
the 48 States have hitherto legislated
upon that cannot by the ingenious
vocabularies of few Supreme Court
justices now be twisted into interstate
commerce" and hence subject to regu-
lation by Government bureau in
washington.
For rs years the Supreme Court has
held that the writing of insurance con-
tracts is not interstate commerce. Again
and again Congress and the court have
been impcrtuned to change that view,
but every proposal has been rejected as
unconstitutional.
Now four Justices have ruled that the
business Of insurance Is interstate com.
merce and hence that criminal indict-
ments should be upheld against those
insurance company executives now be-
ing prosecuted and who have relied on
the Supreme Courts consistent opinions
throughout rs years. Hitherto the Gus
tom and tradition has been that five
justices out of the nine must concur
on the question of constitutionality, but,
in this case, precedent Of $50 years
was broken.
Cites Stones Opinion.
The gravity Of the situation, In fact
the chaos that may result from what
Justices Black, Murphy, Douglas and
Rutledge have done to the stability of
court decisions and constitutional law
in America Is best described in the
words Of Chief Justice Stone, liberal,
who dissented from the insurance de-
cision. He said:
Its (the Supreme Courts action In
now overturning the precedents Of rs
years governing business of such vol
ume and such wide ramifcations, can
not fail to be the occasion for loosing
flood Of litigation and of legislation,
State and national, in order to establish
new boundary between State and ma
tional power, raising questions that cam
not be answered for years to come,
during which great business and the
regulatory officers of every State must
be harassed by all the doubts and DIM
culties inseparable from realignment
OF the distribution Of power in our Fed
eral system. These considerations might
well stay reversal of established doc
trine which promises so little advantage
and so much Of harm. For me these
considerations are controlling"
Even more severe q condemnation
comes from another dissenting opinion
In the same case written by Justice
Jackson, another liberal and the man
who recently occupied the portfolio Of
Attorney General in the New Deal cab
met. He said:
The States began nearly century
ago to regulate insurance, and State
regulation, while no doubt OF uneven
quality, today is a successful going con-
Germ. Several of the States where the
greatest volume of business is trans
acted, have rigorous and enlightened
legislation with enforcement and super
vision in the hands Of experienced and
competent officials.
"The courts decision at least will re-
quire an extensive overhauling of State
legislation relating to taxation and su-
pervision. The whole legal basis will
have to be reconsidered. What win be
irretrievably lost and what may be
salvaged no one now can say and 1t will
take generation of litigation to deter
mine. Certainly the States lose very
important controls and very consider
able revenues.
"The recklessness of such course is
emphasized when we consider that Con-
gress has not one line of legislation
deliberately designed to take over Fed
eral responsibility for this important
and complicated enterprise. A poorer
time to thrust upon Congress the neces-
sity for framing plan for nationaliza-
ton Of insurance control would be hard
to find.
Should Legislate.
"The orderly way to nationalize IN
surance supervision, II 1t be desirable,
is not by court decision but through
legislation. Judicial decision operates
on the States and the industry retro
actively. We cannot anticipate, and
more than likely we could not agree,
what consequences upon tax liabilities,
refunds, liabilities under State law to
States or to individuals, and even GRIM
inal liabilities, will follow this deci-
sion.
Congress, If it thinks the time has
come to take insurance regulation into
the Federal system, may formulate and
announce the whole scope of its action
in advance, Ak future effective date,
and avoid all the confusion, surprise
and injustice which will be caused by
the action Of the court.
Moreover this is the method OF re-
sponsible democratic government. To
force the hand of Congress is no more
the function of the judiciary than to
tie the hands of Congress. To use my
office at time like this, and with so
little Justification In necessity, to dis
locate the functions and revenues OF
the States and catapult Congress into
immediate and undivided responsibility
for supervision of the Nations insurance
businesses is more than I can reconcile
with my view OF the function Of this
court in our society,""
These are strong words hi,t tbev orc