Connecticut GEN. Life Ins. Co. v. Johnson, 303 U.S. 77 (1938)

Connecticut Gen. Life Insurance Co. v. Johnson

No. 316

Argued January 14, 1938
Decided January 31, 1938
303 U.S. 77

APPEAL FROM THE SUPREME COURT OF CALIFORNIA

Syllabus

1. A corporation which is allowed to come into a State and there carry on its business may claim, as an individual may claim, the protection of the Fourteenth Amendment against a subsequent application to it of state law. P. 79.

2. A Connecticut corporation conducted part of its life insurance business in California under license from that State and also entered into contracts with other insurance corporations likewise licensed to do business in California, reinsuring them against loss on policies of life insurance effected by them in California and issued to residents there. These reinsurance contracts were entered into in Connecticut, where the premiums were paid and where the losses, if any, were payable.

Held that, as applied to such reinsurance business, a California tax on the privilege of the corporation to do business within the State, measured by the gross premiums received, was void under the due process clause of the Fourteenth Amendment. Pp. 78, 82.

3. A State may not tax the property and activities of a foreign corporation which are not within its boundaries. P. 80.

The limits placed by the Fourteenth Amendment on the State’s jurisdiction to tax are to be ascertained by reference to the incidence of the tax upon its objects, rather than the ultimate thrust of the economic benefits and burdens of transactions within the State which it might, but does not, tax.

93 Cal.Dec. 4650; 67 P.2d 675, reversed.

Appeal from judgments affirming the dismissal on demurrer of two actions by the above named insurance company against Johnson, State Treasurer of California, to recover taxes paid under protest. The cases were heard together in the court below.