When appellant, an Indiana life insurance company, first
qualified to do business in Oklahoma in 1919, the Oklahoma
Constitution provided that no foreign insurance company should be
granted a license or be permitted to do business in the State
unless it "shall agree to pay all such taxes and fees as may at any
time be imposed" by the legislature. Foreign life insurance
companies were required to pay annually an "entrance fee" of $200,
a 2 percent tax on all premiums collected in the State, and a tax
of three dollars on each local agent. A renewal license was
obtainable by payment on or before the last day of February of the
gross premium tax on all premiums received during the preceding
calendar year. A statute of 1941 increased the 2 percent gross
premium tax to 4 percent.
1. Appellant was not denied equal protection of the laws in
violation of the Fourteenth Amendment, either by the 2 percent or
the 4 percent gross premium tax, even though the tax was
inapplicable to domestic corporations. Hanover Inc. Co. v.
Harding, 272 U. S. 494
distinguished. P. 325 U. S.
A State may impose on a foreign corporation for the privilege of
doing business within its borders more onerous conditions than it
imposes on domestic companies.
2. The equal protection clause does not require that the tax or
rate of tax exacted from a foreign corporation be the same as that
imposed on domestic corporations. P. 325 U. S.
3. The fact that the State collects the tax at the end of the
license year is immaterial; what is controlling is that the tax was
levied upon the privilege of entering the State and engaging in
business there. P. 325 U. S.
194 Okla. 542, 156 P.2d 368, affirmed.
Appeal from a judgment denying, in part, a recovery of allegedly
Page 325 U. S. 674
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
The sole question presented by this appeal is whether Oklahoma
has denied appellant the equal protection of the laws in violation
of the Fourteenth Amendment.
Appellant is an Indiana corporation. It qualified to do business
in Oklahoma in 1919, and has continued to do business there every
year since then. The Oklahoma Constitution then provided, as it
does now, in Article XIX, Sec. 1, that:
"No foreign insurance company shall be granted a license or
permitted to do business in this State until it shall have complied
with the laws of the State, including the deposit of such
collateral or indemnity for the protection of its patrons within
this State as may be prescribed by law, and shall agree to pay all
such taxes and fees as may at any time be imposed by law or act of
the Legislature on foreign insurance companies, and a refusal to
pay such taxes or fees shall work a forfeiture of such
Section 2, Article XIX of the Oklahoma Constitution also
required all foreign life insurance companies to pay per annum an
"entrance fee" of $200, and provided:
"Until otherwise provided by law, domestic companies excepted,
each insurance company, including surety and bond companies, doing
business in this State shall pay an annual tax of two percentum on
all premiums collected in the State, after all cancellations are
deducted, and a tax of three dollars on each local agent."
Appellant paid the "entrance fee." It made application for a
license. And it satisfied the other requirements prescribed by
Oklahoma for admission to do business in the State. [Footnote 1
] In each year subsequent to 1919,
it made application
Page 325 U. S. 675
for a renewal license and satisfied the various requirements of
When a foreign insurance company desires, for the first time, to
do business in Oklahoma, it must apply for a license to expire on
the last day of February next after the issue of the license and,
on or before such date, it must pay the gross premium tax on all
premiums, less proper deductions, received by it in Oklahoma from
the date of its license to and including December 31st of that
year. When a foreign insurance company which holds a license to do
business in Oklahoma for a particular year desires to do business
there during the ensuing year, it must make application for a
license on or before the last day of February of the current
license year, pay the gross premium tax on premiums received in
Oklahoma during the preceding calendar year, and, on or before the
last day of February of the ensuing license year, pay the gross
premium tax on premiums received by it in Oklahoma during the
preceding calendar year. That is to say, the licenses issued expire
on the last day of February next after their issuance, and, to
obtain a renewal, the company must pay on or before the last day of
February in each year the gross premium tax on all premiums
received during the preceding calendar year. We are told by the
Supreme Court of Oklahoma that that has been the uniform
administrative practice of the Insurance Commissioner since
In 1941, Oklahoma enacted a law, effective April 25, which
increased the 2 percent gross premium tax to 4 percent. [Footnote 2
] Okla.Stat. 1941, Tit. 36, §
104. Like the 2 percent tax, this new tax is applicable only to
Page 325 U. S. 676
companies, not to domestic insurance companies. Appellant
reported the gross premiums collected in Oklahoma during the
calendar year 1941, paid the 4 percent tax under protest, and
brought this suit to recover the amount so paid. Appellant
challenged the constitutionality of both the 2 percent and the 4
percent tax. The Supreme Court of Oklahoma allowed recovery of the
taxes paid at the increased rate on premiums collected prior to the
effective date of the act, April 25, 1941. But it disallowed
recovery for the balance against the claim that the exaction of the
tax from foreign insurance companies while domestic insurance
companies were exempt violated the equal protection clause of the
Fourteenth Amendment. Okl.Supp., 156 P.2d 368. The case is here by
appeal. § 237, Judicial Code, 28 U.S.C. § 344.
We can put to one side such cases as Hanover Fire Ins. Co.
v. Harding, 272 U. S. 494
where a foreign insurance company, having obtained an unequivocal
license to do business in Illinois and built up a business there,
was subsequently subjected to discriminatory taxation. In the
present case, each annual license pursuant to the provisions of the
Oklahoma Constitution was granted on condition (1) that appellant
agree to pay all such taxes and fees as the legislature might
impose on foreign insurance companies and (2) that a refusal to pay
such taxes or fees should work a forfeiture of the license. The
payment of the gross premium tax on or before the expiration of the
license year was always a condition precedent to the issuance of
the license for the following year. Accordingly, appellant, unlike
the foreign corporation in Hanover Fire Ins. Co. v. Harding,
never obtained from Oklahoma an unequivocal license to
do business there; it agreed to pay not only for the renewal, but
also for the retention of its annual license such taxes as Oklahoma
It has been held both before and after the Fourteenth Amendment
that a State may impose on a foreign corporation
Page 325 U. S. 677
for the privilege of doing business within its borders more
onerous conditions than it imposes on domestic companies.
8 Wall. 168; Ducat v.
10 Wall. 410; Philadelphia Fire Assn.
v. New York, 119 U. S. 110
it is said that a State may not impose an unconstitutional
condition -- that is, it may not exact as a condition an
infringement or sacrifice of the rights secured to the corporation
by the Constitution of the United States. [Footnote 3
] The argument apparently is that, since
appellant is entitled to the equal protection of the laws, a
condition cannot be imposed which results in its unequal and
But that argument proves too much. If it were adopted, then the
long established rule that a State may discriminate against foreign
corporations by admitting them under more onerous conditions than
it exacts from domestic companies would go into the discard.
Moreover, it has never been held that a State may not exact from a
foreign corporation as a condition to admission to do business the
payment of a tax measured by the business done within its borders.
See Continental Assurance Co. v. Tennessee, 311 U. S.
. That was the nature of the tax imposed in
Philadelphia Fire Assn. v. New York, supra.
was licensed to do business in New York under a law which required
it to pay such a tax as its home State might impose on New York
companies doing business there. After it had qualified to do
business in New York, its home state exacted from foreign
corporations a tax of 3 percent on premiums received in that State.
New York accordingly followed suit. The Court sustained the
increased tax, saying that, since the license of the foreign
company was subject to the conditions prescribed by the New York
statute, the amount of the tax
Page 325 U. S. 678
could at any time be increased for the future.
"The state, having the power to exclude entirely, has the power
to change the conditions of admission at any time for the future,
and to impose as a condition the payment of a new tax, or a further
tax, as a license fee. If it imposes such license fee as a
prerequisite for the future, the foreign corporation, until it pays
such license fee, is not admitted within the state, or within its
jurisdiction. It is outside at the threshold, seeking admission,
with consent not yet given."
119 U.S. at 119 U. S. 119
And the equal protection clause does not require the tax or rate of
tax exacted from a foreign corporation as a condition of entry to
be the same as that imposed on domestic corporations. Hanover
Fire Ins. Co. v Harding, supra,
pp. 272 U. S.
The fact that Oklahoma collects the tax at the end of the
license year is not material. That was done in Philadelphia
Fire Assn. v. New York, supra.
The controlling fact is that
the tax, though collected later, was levied upon the privilege of
entering the State and engaging in business there. [Footnote 4
] Continental Assurance Co. v.
MR. JUSTICE ROBERTS dissents.
Okla.Stat. 1941, Tit. 36, §§ 47, 101.
This tax, together with the entrance fee and the annual tax on
each agent, is "in lieu of all other taxes or fees, and the taxes
and fees of any subdivision or municipality of the state."
Okla.Stat. 1941, Tit. 36, § 104. On a failure to pay the tax, the
Insurance Commission "shall revoke the certificate of authority
granted to the agent or agents of that company to transact business
in this State." Id.
the cases reviewed in Hanover Fire Ins. Co. v.
Harding, 272 U. S. 494
272 U. S.
-508; Henderson, The Position of Foreign Corporations
in American Constitutional Law (1918), ch. VIII.
It is not contended that appellant is engaged in interstate
commerce. Hence, we do not have presented any question concerning
the effect of the United States v. South-Eastern Underwriters
Assn., 322 U. S. 533