In the 1935 case New York Life Insurance Co. v. Viglas, the U.S Supreme Court ruled in favor of New York Life Insurance Company (NYLIC). The dispute arose when NYLIC refused to pay a life insurance claim on grounds that the policyholder had misrepresented his health condition during application. The deceased's beneficiary, Mr. Viglas, argued that since NYLIC had accepted premium payments without contesting for two years after issuance of the policy, they were barred from denying liability under Maryland law which stipulates such a limitation period for insurers to challenge validity based on misrepresentation or fraud by insureds. However, upon reaching Supreme Court level it was determined that this state law conflicted with federal jurisdiction rules governing diversity cases (where parties are from different states), and thus could not be applied here where NYLIC is an out-of-state entity being sued in Maryland court by a local resident. The court held that while states can regulate insurance contracts within their borders as per McCarran-Ferguson Act allowing 'state regulation' over 'insurance', they cannot impose such laws onto foreign corporations involved in interstate commerce unless Congress specifically permits them - which wasn't done here; hence ruling against Mr.Viglas and upholding insurer's right to deny claims based on initial misrepresentations regardless of any time elapsed.

In the dissenting opinion for New York Life Insurance Co. v. Viglas, it was argued that the majority's decision to uphold a Maryland law requiring out-of-state insurance companies to pay taxes on premiums collected from policyholders residing in other states was unconstitutional. The dissenters contended that this law violated the Commerce Clause of the U.S Constitution by imposing an unfair burden on interstate commerce and discriminating against out-of-state businesses. They also disagreed with the majority's interpretation of "doing business" within a state, arguing that merely having policyholders in a state does not constitute doing business there if all transactions are conducted outside its borders. Furthermore, they believed that upholding such laws could lead to multiple taxation issues as other states might enact similar legislation.