Securities and Exchange Commission v. Variable Annuity Life Insurance Company of America

PETITIONER: Securities and Exchange Commission
RESPONDENT: Variable Annuity Life Insurance Company of America
LOCATION: Fargo, North Dakota

DOCKET NO.: 290
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 359 US 65 (1959)
ARGUED: Jan 15, 1959 / Jan 19, 1959
DECIDED: Mar 23, 1959

Facts of the case

Question

Media for Securities and Exchange Commission v. Variable Annuity Life Insurance Company of America

Audio Transcription for Oral Argument - January 15, 1959 in Securities and Exchange Commission v. Variable Annuity Life Insurance Company of America

Audio Transcription for Oral Argument - January 19, 1959 in Securities and Exchange Commission v. Variable Annuity Life Insurance Company of America

Earl Warren:

Number 237 and 290, National Association of Securities Dealers versus Variable Annuity Life Insurance Company, et al., and Securities and Exchange Commission versus Variable Annuity Life Insurance Company of America, et al.

Mr. Dorsey, you may continue.

John H. Dorsey:

Your Honor, I've exhausted my time.

Earl Warren:

Oh, you have, sir.

Very well.

All we know is the aggregate time you have on your side.

So who is next in --

Another Dorsey.

Earl Warren:

Oh, another Dorsey.

[Laughter] Very well.

Mr. Dorsey --

Benjamin H. Dorsey:

If Your Honor --

Earl Warren:

-- you may proceed.

Benjamin H. Dorsey:

If Your Honor please.

Despite similarity of the names, we are in quite the opposite side of the case.

Earl Warren:

Yes.

[Laughs]

Benjamin H. Dorsey:

Mr. Chief Justice, Associate Justices, may it please the Court.

A product of the life insurance industry is insurance because it assumes and distributes an insurable risk.

This is as true of the variable annuity as it is -- as it is true of any insurance policy issued by any company.

The insurable risk in the variable annuity is the risk of excessive longevity.

As the Court of Appeal's said, “If everyone were to die at the time predicted by a mortality table, there would be no use in paying an insurance company to dollar out one's funds.

However, no one knows when he will die and the insurance product which guarantees him an income for life, regardless of how long that life may be is the annuity.”

And investment risk on the other hand is not an insurable risk and whether annuity payments vary with investment experience has nothing to do with whether or not they are annuities.

A variable annuity is an annuity.

This fact has been determined by the Insurance Superintendent and legal authorities of the District of Columbia and several States.

This fact was agreed to by all expert insurance witnesses testifying at the trial.

This fact is agreed to by the three leading authors of life insurance textbooks.

This fact has been agreed too by the two courts below.

This fact has been accepted by the Internal Revenue Service which classifies a variable annuity as an annuity.