University of Michigan Law School Scholarship Repository
Abstract
Plaintiff, a New York corporation doing business in Texas, purchased insurance covering risks located in Texas from insurers not licensed to do business in that state. The entire insurance transaction was consummated outside Texas, and any adjustment for losses was to be made outside the state. Pursuant to a Texas statute, plaintiff was taxed an amount equal to five percent of its gross premiums. Plaintiff instituted the present suit in a state court in Texas to recover the tax, which had been paid under protest. The trial court\u27s decision for plaintiff was affirmed by the court of civil appeals, and the Supreme Court of Texas denied an application for writ of error. On certiorari to the United States Supreme Court, held, affirmed, one Justice dissenting. Congress, in passing the McCarran Act, explicitly incorporated the limitations of prior Supreme Court decisions which had held that a state does not have the power to tax insurance contracts entered into outside its jurisdiction, even though such contracts covered risks located within the state, and thus a de novo consideration of such decisions is inappropriate. State Bd. of Ins. v. Todd Shipyards Corp., 370 U.S. 451 (1962)
