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It is not the intention of Congress in the enactment of this legislation to clothe the States with any power to regulate or tax the business of insurance beyond that which they had been held to possess prior to the decision of the United States Supreme Court in the Southeastern Underwriters Association case. Briefly, your committee is of the opinion that we should provide for the continued regulation and taxation of insurance by the States, subject always, however, to the limitations set out in the controlling decisions of the United States Supreme Court, as, for instance, in Allgeyer v. Louisiana (165 U. S. 578), St. Louis Cotton Compress Co. v. Arkansas (260 U. S. 346), and Connecticut General Insurance Co. v. Johnson (303 U. S. 77), which hold, inter alia, that a State does not have power to tax contracts of insurance or reinsurance entered into outside its jurisdiction by individuals or corporations resident or domiciled therein covering risks within the State or to regulate such transactions in any way.

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PURPOSE OF THE BILL

The purpose of the bill is twofold: (1) To declare that the continued regulation and taxation by the several States of the business of insurance is in the public interest; and (2) to assure a more adequate regulation of this business in the States by suspending the application of the Sherman and Clayton Acts for approximately two sessions of the State legislatures, so that the States and the Congress may consider legislation during that period. It should be noted that this bill

, by the moratorium proposed therein, does not repeal the Sherman and Clayton Acts, but opportunity will have been granted for the States to permit agreements and contracts by insurance companies which otherwise might be in violation of the Sherman and Clayton Acts. It should be noted further that no moratorium is granted from the Sherman Act relative to agreements or acts of boycott, coercion, or intimidation.

ANALYSIS BY SECTION Section 1 declares that the continued regulation and taxation by the States of the business of insurance is in the public interest.

Section 2 provides that the insurance business, and all persons engaged in such business, shall be subject to State laws relating to the regulation and taxation of such business; and (b) that no act of Congress shall be construed to invalidate, impair, or supersede any State law which regulates or taxes the insurance business, unless such act specifically so provides.

Section 3 provides that the Federal Trade Commission Act and the Robinson-Patman Antidiscrimination Act shall not apply to the insurance business, or to acts in the conduct of such business.

Section 4 suspends the application of the Sherman Act and the Clayton Act to the business of insurance until January 1, 1948; and (b) provides that at no time are the prohibitions in the Sherman Act against any act of boycott, coercion, or intimidation suspended. These provisions of the Sherman Act remain in full force and effect.

Section 5 provides that the enactment of this act shall not affect, in any manner, the present application of the National Labor Relations Act, the Fair Labor Standards Act, or the Merchant Marine Act, to the business of insurance.

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Section 6 defines the term “State."
Section 7 provides for separability of provisions.

CONCLUSION

In the considered judgment of your committee, S. 340, as amended, represents a most commendable effort on the part of insurance companies and State insurance commissioners to effect the adjustments and reorganization in and among the financial operations of insurance companies and in State laws which have been made necessary by the decision in the Southeastern Underwriters case. It should be emphasized that the bill has received the overwhelming endorsement of the principal national organizations of State insurance commissioners, insurance executives, agents, brokers, and underwriters, including the National Association of Insurance Commissioners, the American Life Convention, the American Mutual Alliance, the Association of Casualty and Surety Executives, the Inland Marine Underwriters Association, the National Association of Insurance Agents, the National Association of Mutual Insurance Agents, the National Board of Fire Underwriters, Insurance Executives Association, National Association of Insurance Brokers, Inc., the National Association of Casualty and Surety Agents, the Surety Association of America, the National Fraternal Congress of America, and the Health and Accident Underwriters Conference. Opportunity is granted to the State legislatures during their present and forthcoming sessions for 1945, 1946, and 1947 to consider the welfare of policyholders.

Enactment of this bill will (1) remove existing doubts as to the right of the States to regulate and tax the business of insurance, and (2) secure more adequate regulation of such business.

EXEMPTING THE MEMBERS OF THE ADVISORY BOARD APPOINTED
UNDER THE WAR MOBILIZATION AND RECONVERSION ACT OF
1944 FROM CERTAIN PROVISIONS OF THE CRIMINAL CODE AND
REVISED STATUTES

FEBRUARY 13, 1945.- Referred to the House Calendar and ordered to be printed

Mr. CRAVENS, from the Committee on the Judiciary, submitted the

following

REPORT

[To accompany H. R. 1527]

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The Committee on the Judiciary, to whom was referred the bill (H. R. 1527) to exempt the members of the Advisory Board appointed under the War Mobilization and Reconversion Act of 1944 from certain provisions of the Criminal Code and Revised Statutes, having considered the same, report the bill favorably to the House, with the recommendation that it do pass.

The bill proposes to exempt the members of the Advisory Board, established by section 102 of the War Mobilization and Reconversion Act of 1944, from the operation

of sections 109 and 113 of the Criminal Code (U. S. C., title 18, secs. 198 and 203), section 19 (e) of the Contract Settlement Act of 1944 (Public Law 395, 78th Cong.), and section 27 of the Surplus Property Act of 1944 (Public Law 457, 78th Cong.).

Attention is directed to the fact that these members serve without compensation except for a per diem allowance for each day spent in actual meetings of the Board or at conferences held upon the call of the Director, plus necessary traveling and other expenses incurred while so engaged.

The Director of War Mobilization and Reconversion, in the following communication to the chairman of the Committee on the Judiciary, has urged enactment of this bill as promptly as possible. OFFICE OF WAR MOBILIZATION AND RECONVERSION,

OFFICE OF THE DIRECTOR,

Washington, D. C., January 19, 1948.
Hon. HATTON SUMNERS,
Chairman of the Judiciary Committee of the

House of Representatives, Washington, D. C.
MY DEAR MR. CHAIRMAN: I am writing to call your attention to a situation
which I believe merits prompt remedial legislation.

Members of the Advisory Board established by section 102 of the War Mobilization and Reconversion Act of 1944, are appointed by the President by and with the advice and consent of the Senate. The Department of Justice has indicated to

H. Repts., 79–1, vol. 1-53

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me its informal opinion that these members are officers of the United States. (See United States v. Germaine, 99 U. S. 508.) Under such an opinion the Board members would be subject to the provisions of sections 109 and 113 of the Criminal Code and possibly, also, subject to the provisions of section 19 (e) of the Contract Settlement Act of 1944 and section 27 of the Surplus Property Act of 1944. Briefly, sections 109 and 113 of the Criminal Code (U. S. C., title 18, secs. 198 and 203) subject to severe penalties any officer of the United States who acts as an agent or attorney for prosecuting any claim against the United States or who, directly or indirectly, receives any compensation for any services rendered to any person by himself or another in relation to any proceedings or matter in which the United States is directly or indirectly interested and is pending before any governmental agency. Section 19 (e) of the Contract Settlement Act of 1944 and section 27 of the Surplus Property Act of 1944, respectively, provide penalties for any officer of the United States who takes any part in or makes any recommendation concerning the settlement of any contract or the disposition of any surplus property,

The Advisory Board was established because the Congress felt that the problems facing the Director of War Mobilization and Reconversion required that he obtain the thought, assistance, and advice of the best-qualified men in the country. (See Congressional Record of August 30, 1944, p. 7499.) The services to be performed by members of the Board are highly patriotic and the small compensation provided for them is obviously intended to cover only their out-of-pocket expenses. They make no decisions and determine no policies. Their sole duties are to advise with and make recommendations to the Director and their official contacts are limited to contacts with the Director.

It is well known that at the present time most affairs of the country are subject to laws and regulations which necessitate repeated appearances before the various governmental agencies and commissions administering them. If members of the Board are to be able to give the Director the kind of advice they are expected to give him and of which he stands in need, they must be persons of broad affairs and connections. The Congress clearly intended that there should be members of the Board who are interested in and closely connected with agriculture, labor, and industry, and did not expect them to give up their business in order to serve. But unless they are exempted from the statutes mentioned they may serve in peril of criminal indictments. It is believed, therefore, that legislation should be enacted to exempt them.

As you are aware, there are abundant precedents for this suggested legislation. During the present emergency the Congress has, by legislation, exempted from the provisions of sections 109 and 113 of the Criminal Code and related statutes a number of persons rendering patriotic part-time service to the Government in the interest of the war effort. Among statutes making such exemptions are the following:

1. Act of May 5, 1941, as amended by act of December 26, 1941 (55 Stat. 861), exempting certain officers and employees of the Selective Service System and members of alien enemy hearing boards.

2. Public Law 287 (78th Cong., 2d sess.), approved April 4, 1944, exempting certain members of the war price and rationing boards serving without compensation.

3. Public Law 298 (78th Cong., 2d sess.), approved May 5, 1944, exempting counsel to a Senate special committee serving under Senate Resolution 253 (78th Cong.).

4. Public Law 456 (78th Cong., 2d sess.), approved October 2, 1944, exempting certain members and employees of the National War Labor Board.

If after considering the matter you conclude that legislation should be enacted to exempt members of the Advisory Board from the strict provisions of the statutes mentioned, I have prepared and enclosed herewith a draft of a joint resolution to accomplish that purpose.

I am writing a similar letter to the chairman of the Judiciary Committee of the Senate. Sincerely yours,

JAMES F. BYRNES. O

CONSIDERATION OF S. 375

FEBRUARY 14, 1945.- Referred to the House Calendar and ordered to be printed

Mr. Sabath, from the Committee on Rules, submitted the following

REPORT

(To accompany H. Res. 137)

The Committee on Rules, having had under consideration House Resolution 137, report the same to the House with the recommendation that the resolution do pass.

CIRCULATE

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