State Board of Insurance v. Todd Shipyards Corporation

PETITIONER: State Board of Insurance
RESPONDENT: Todd Shipyards Corporation
LOCATION: U.S. District Court for the District of Utah

DECIDED BY: Warren Court (1962)
LOWER COURT: State appellate court

CITATION: 370 US 451 (1962)
ARGUED: Mar 21, 1962
DECIDED: Jun 25, 1962

Facts of the case


Media for State Board of Insurance v. Todd Shipyards Corporation

Audio Transcription for Oral Argument - March 21, 1962 (Part 1) in State Board of Insurance v. Todd Shipyards Corporation

Audio Transcription for Oral Argument - March 21, 1962 (Part 2) in State Board of Insurance v. Todd Shipyards Corporation

Earl Warren:

-- you may continue your argument.

Charles R. Vickery, Jr.:

May it please the Court.

I shall proceed, sir.

In connection, readdressing ourselves to the nature of the insurance policies, the tax is levied without regard to whether the policies are available in Texas or not, and the fact that the Tex -- the taxes rendered without regard to availability, renders absolutely sterile as state's arguments that it's for regulation.

To the extent that the insurance is unavailable in Texas, any discouragement of course is -- is without any force at all.

Certainly, the respondent is better off with insurance in an unadmitted insurer than none.

It is better off with insurance in a corporation unadmitted in Texas than it would be with no insurance.

They can't regulate what they don't offer.

If the insurance is not offered in Texas, Texas couldn't be regulating it or trying to force it into a regulated market.

The regulation argument is absolutely dependent upon Texas availability.

John M. Harlan II:

Is that -- is what you're arguing now, does that have a basis in the record?

I thought you said, it was --

Charles R. Vickery, Jr.:

As to the actual facts, there is no record as to availability in the market.

The statute makes it quite clear that they reach available and unavailable insurance.

There's one section in this same statute which says that before a licensed agent can obtain or purchase unadmitted insurance, he must make an affidavit that admitted insurance is not available.

So the statute clearly contemplates to tax it whether it's available or not.

It was not thought material in the trial court under St. Louis Compress, Tabacos, Connecticut General and Allgeyer to offer that proof and there was none offered.

Now, the -- the State in picturing the type of coverage here has not accurately presented the coverage picture.

This insurance coverage and all of the policies at least by types are printed in the record.

This coverage does cover comprehensive coverage on certain personal property, principally dry docks and certain perhaps real property, principally palings and wards.

But the State argues this case as though the only insurance in the case was a property insurance but that is not quite true.

The insurance also covers liability for negligence, collision liability and products liability risks which are not property in Texas but risks in connection with Texas work.

For example on the products liability coverage, if Todd repaired a tanker say for one of the major international oil companies and it had a liability under the products coverage, the liability could arise in Hong Kong, Shanghai or any port of call in the world.

And certainly on that insurance, the likelihood of loss in Texas does not even exist.

This -- this case does not involve only Texas property.

It involves products liability risk, it involves risk for negligence or willful damage by vessels that are on the dry docks, it also involves protection against a collision hazard from the dry dock.

The policies also cover insurance in five or six different states.

Now, the stipulation also includes this critical crucial fact and that is that the respondent has paid all taxes.

The respondent has paid all taxes for the privilege of doing business in Texas.

The State admits in the stipulation that this tax cannot be justified as the tax for the privilege of doing business in Texas.