Western & Southern Life Ins. Co. v. State Bd. of Equalization of Cal.

PETITIONER: Western & Southern Life Ins. Co.
RESPONDENT: State Bd. of Equalization of Cal.
LOCATION: North Carolina Correctional Institution for Women

DOCKET NO.: 79-1423
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: State appellate court

CITATION: 451 US 648 (1981)
ARGUED: Jan 12, 1981
DECIDED: May 26, 1981

Alan R. Vogeler - on behalf of the Appellant
Timothy G. Laddish - on behalf of the Appellee

Facts of the case


Media for Western & Southern Life Ins. Co. v. State Bd. of Equalization of Cal.

Audio Transcription for Oral Argument - January 12, 1981 in Western & Southern Life Ins. Co. v. State Bd. of Equalization of Cal.

Warren E. Burger:

We will hear arguments in the case of Western and Southern Life Insurance Company v. California.

Mr. Vogeler, you may proceed whenever you are ready.

Alan R. Vogeler:

Thank you, Mr. Chief Justice.

May it please the Court:

The Western and Southern Life Insurance Company is one of 1,957 legal reserve life insurance companies that as of January 1, 1980, were licensed to do business in one of the states or the District of Columbia.

Western and Southern was incorporated as a stock company in 1888 and in 1948 became a mutual company.

At January 1 of 1981 it had assets in excess of $3 billion, and life insurance in force of over $14 billion and thus according to Best's Insurance Reports, it ranks 25th in size of companies and 45th of companies in size of life insurance in force.

It's licensed to do business in 41 states, including the State of California.

It obtained the certificate of authority to do business in California as of July 1, 1956, and has carried on its business under that certificate of authority granted in 1956 for the last 25 years.

The California constitutional provisions and the retaliatory tax laws of California, when Western and Southern became qualified to do business there, levied a tax upon out-of-state insurers which was called a retaliatory tax if the state from which the foreign insurer to California came levied a higher tax on California insurers doing business in those foreign states than it did upon its own insurers.

And when the State Legislature implemented that statute in 1959, Western and Southern went to court, and it was determined in the Los Angeles County Superior Court in 1962 that no retaliatory tax could be assessed against Western and Southern under the California constitutional provision and law then in effect because the State of Ohio did not levy higher taxes on foreign insurance companies doing business in Ohio than they did on foreign insurance companies coming into the State from outside.

However, in November, 1964, the California constitution was amended to authorize a retaliatory tax on out-of-state insurers in California merely when the state of origin of that insurance company levied a tax on foreign insurance companies that was higher than California levied.

Warren E. Burger:

Now, in using this term retaliatory throughout, how would you distinguish that from the traditional reciprocity statute?

Alan R. Vogeler:

Reciprocity, Your Honor, is a situation in which one state recognizes and defers to legislation or some comity in another state.

Warren E. Burger:

Well, as it's typically, we'll treat your corporations the same way you treat ours, isn't it?

Alan R. Vogeler:

That's correct, Your Honor.

That is not what our situation here is, because California does not lower its tax if a foreign state has a lower tax.

It merely raised their tax up to a foreign state's tax.

There is no reciprocity.

But this is what, of course, the Attorney General of California would like this Court to believe.

We will expand on the fact that this is not reciprocity, this is not comity.

California taxes, whether or not Ohio discriminates on California corporations, and levies a higher tax on the foreign insurance company doing business in California.

The California constitutional amendment in 1964 had the effect of levying this tax on out-of-state insurers when the out-of-state, the foreign state of origin of the company doing business in California had a higher tax rate than California did.

Now, California's tax rate, actually, is higher than 32 other states.

But Ohio's tax rate is higher than California's.

So the question of the validity of this California retaliatory tax is therefore at issue in this case.

We claim, and the Los Angeles County Superior Court found, that this kind of a tax, which he referred to as a comparative retaliatory tax where the tax burdens of different states were compared, is unconstitutional.

William H. Rehnquist:

Mr. Vogeler?

Alan R. Vogeler:

Yes, Mr. Justice Rehnquist?

William H. Rehnquist:

In the opinion of the California Court of Appeal, the taxes are variously referred to as discriminatory, comparative, and new you characterize it as retaliatory.