Petitioner's son, a resident of California, bought a life
insurance policy from an Arizona corporation, naming petitioner as
beneficiary. Later, respondent, a Texas corporation, agreed to
assume the insurance obligations of the Arizona corporation, and
mailed a reinsurance certificate to petitioner's son in California,
offering to insure him in accordance with his policy. He accepted
this offer, and paid premiums by mail from his California home to
respondent's office in Texas. Neither corporation has ever had any
office or agent in California or done any other business in that
State. Petitioner sent proofs of her son's death to respondent, but
it refused to pay the claim. Under a California statute subjecting
foreign corporations to suit in California on insurance contracts
with residents of California, even though such corporations cannot
be served with process within the State, petitioner sued respondent
and obtained judgment in a California court, process being served
only by registered mail to respondent's principal place of business
in Texas.
Held:
1. The Due Process Clause of the Fourteenth Amendment did not
preclude the California court from entering a judgment binding on
respondent, since the suit was based on a contract which had a
substantial connection with California. Pp.
355 U. S.
223-224.
2. Respondent's insurance contract was not unconstitutionally
impaired by the fact that the California statute here involved did
not become effective until after respondent had assumed the
obligation of the insurance policy. P.
355 U. S.
224.
288 S.W.2d 579, reversed and remanded.
Page 355 U. S. 221
Opinion of the Court by MR. JUSTICE BLACK, announced by MR.
JUSTICE DOUGLAS.
Petitioner, Lulu B. McGee, recovered a judgment in a California
state court against respondent, International Life Insurance
Company, on a contract of insurance. Respondent was not served with
process in California, but by registered mail at its principal
place of business in Texas. The California court based its
jurisdiction on a state statute which subjects foreign corporations
to suit in California on insurance contracts with residents of that
State even though such corporations cannot be served with process
within its borders. [
Footnote
1]
Unable to collect the judgment in California petitioner went to
Texas, where she filed suit on the judgment in a Texas court. But
the Texas courts refused to enforce her judgment, holding it was
void under the Fourteenth Amendment because service of process
outside California could not give the courts of that State
jurisdiction over respondent. 288 S.W.2d 579. Since the case raised
important questions not only to California, but to other States
which have similar laws, we granted certiorari. 352 U.S. 924. It is
not controverted that, if the California court properly exercised
jurisdiction over respondent, the Texas courts erred in refusing to
give its judgment full faith and credit. 28 U.S.C. § 1738.
The material facts are relatively simple. In 1944, Lowell
Franklin, a resident of California, purchased a life insurance
policy from the Empire Mutual Insurance Company, an Arizona
corporation. In 1948, the respondent agreed with Empire Mutual to
assume its insurance obligations. Respondent then mailed a
reinsurance certificate to Franklin in California offering to
insure him in accordance with the terms of the policy he held with
Empire Mutual. He accepted this offer, and, from that
Page 355 U. S. 222
time until his death in 1950, paid premiums by mail from his
California home to respondent's Texas office. Petitioner,
Franklin's mother, was the beneficiary under the policy. She sent
proofs of his death to the respondent, but it refused to pay,
claiming that he had committed suicide. It appears that neither
Empire Mutual nor respondent has ever had any office or agent in
California. And, so far as the record before us shows, respondent
has never solicited or done any insurance business in California
apart from the policy involved here.
Since
Pennoyer v. Neff, 95 U. S.
714, this Court has held that the Due Process Clause of
the Fourteenth Amendment places some limit on the power of state
courts to enter binding judgments against persons not served with
process within their boundaries. But just where this line of
limitation falls has been the subject of prolific controversy,
particularly with respect to foreign corporations. In a continuing
process of evolution, this Court accepted and then abandoned
"consent," "doing business," and "presence" as the standard for
measuring the extent of state judicial power over such
corporations.
See Henderson, The Position of Foreign
Corporations in American Constitutional Law, c. V. More recently,
in
International Shoe Co. v. Washington, 326 U.
S. 310, the Court decided that
"due process requires only that, in order to subject a defendant
to a judgment
in personam, if he be not present within the
territory of the forum, he have certain minimum contacts with it
such that the maintenance of the suit does not offend 'traditional
notions of fair play and substantial justice.'"
Id., at
326 U. S.
316.
Looking back over this long history of litigation, a trend is
clearly discernible toward expanding the permissible scope of state
jurisdiction over foreign corporations and other nonresidents. In
part, this is attributable to the fundamental transformation of our
national economy over the years. Today, many commercial
transactions
Page 355 U. S. 223
touch two or more States, and may involve parties separated by
the full continent. With this increasing nationalization of
commerce has come a great increase in the amount of business
conducted by mail across state lines. At the same time, modern
transportation and communication have made it much less burdensome
for a party sued to defend himself in a State where he engages in
economic activity.
Turning to this case, we think it apparent that the Due Process
Clause did not preclude the California court from entering a
judgment binding on respondent. It is sufficient for purposes of
due process that the suit was based on a contract which had
substantial connection with that State.
Cf. Hess v.
Pawloski, 274 U. S. 352;
Henry L. Doherty & Co. v. Goodman, 294 U.
S. 623;
Pennoyer v. Neff, 95 U. S.
714. [
Footnote 2]
The contract was delivered in California, the premiums were mailed
from there, and the insured was a resident of that State when he
died. It cannot be denied that California has a manifest interest
in providing effective means of redress for its residents when
their insurers refuse to pay claims. These residents would be at a
severe disadvantage if they were forced to follow the insurance
company to a distant State in order to hold it legally accountable.
When claims were small or moderate, individual claimants frequently
could not afford the cost of bringing an action in a foreign forum
-- thus in effect making the company judgment-proof. Often the
crucial witnesses -- as here, on the company's defense of suicide
-- will be found in the insured's locality.
Page 355 U. S. 224
Of course, there may be inconvenience to the insurer if it is
held amenable to suit in California, where it had this contract,
but certainly nothing which amounts to a denial of due process.
Cf. Travelers Health Assn. v. Virginia ex rel. State
Corporation Comm'n. 339 U. S. 643.
There is no contention that respondent did not have adequate notice
of the suit, or sufficient time to prepare its defenses and
appear.
The California statute became law in 1949, after respondent had
entered into the agreement with Franklin to assume Empire Mutual's
obligation to him. Respondent contends that application of the
statute to this existing contract improperly impairs the obligation
of the contract. We believe that contention is devoid of merit. The
statute was remedial in the purest sense of that term, and neither
enlarged nor impaired respondent's substantive rights or
obligations under the contract. It did nothing more than to provide
petitioner with a California forum to enforce whatever substantive
rights she might have against respondent. At the same time,
respondent was given a reasonable time to appear and defend on the
merits after being notified of the suit. Under such circumstances,
it had no vested right not to be sued in California.
Cf.
Bernheimer v. Converse, 206 U. S. 516;
National Surety Co. v. Architectural Decorating Co.,
226 U. S. 276;
Funkhouser v. J. B. Preston Co., Inc., 290 U.
S. 163.
The judgment is reversed, and the cause is remanded to the Court
of Civil Appeals of the State of Texas, First Supreme Judicial
District, for further proceedings not inconsistent with this
opinion.
It is so ordered.
THE CHIEF JUSTICE took no part in the consideration or decision
of this case.
[
Footnote 1]
Cal.Insurance Code, West's Anno. §§ 1610-1620.
[
Footnote 2]
And see Ace Grain Co. v. American Eagle Fire Ins.
Co., 95 F. Supp.
784;
Storey v. United Ins. Co., 64 F. Supp.
896;
S. Howes Co., Inc. v. W.P. Milling
Co., 277 P.2d 655;
Compania de Astral, S.A. v. Boston Metals Co., 205 Md.
237, 107 A.2d 357, 108 A.2d 372, 49 A.L.R.2d 646,
certiorari
denied, 348 U.S. 943;
Zacharakis v. Bunker Hill Mut. Ins.
Co., 281 App.Div. 487, 120 N.Y.S.2d 418;
Smyth v. Twin
State Improvement Co., 116 Vt. 569,
80 A.2d
664.
