Wolfe v. United Comm. Travelers

• Decision Date: 15 May 1945
• Docket Number: 8756
• Citation: 70 S.D. 452,18 N.W.2d 755
• Parties: EDWARD C. WOLFE, Respondent, v. THE ORDER OF UNITED COMMERCIAL TRAVELERS OF AMERICA, Appellant.
• Court: South Dakota Supreme Court

70 SD 452, 18 NW2d 755 (1945)

EDWARD C. WOLFE,

Respondent,

v. THE ORDER OF UNITED COMMERCIAL TRAVELERS OF AMERICA,

Appellant.

South Dakota Supreme Court

Appeal from Circuit Court, Pennington County, SD

Hon. Turner M. Rudesill, Judge

#8756—Affirmed

Byron S. Payne, Pierre, SD

E. W. Dillon, Columbus, OH

Attorneys for Appellant.

H. F. Fellows, Rapid City, SD

Attorney for Respondent.

Opinion Filed May 15, 1945; Rehearing Denied Jun 26, 1945

SICKEL, Judge.

The defendant is a fraternal benefit association, incorporated and having its domicile in the State of Ohio. On December 21, 1922, it issued an insurance certificate to Ford Shane naming Elizabeth Shane, his mother, as beneficiary. The certificate provided for indemnity against bodily injuries effected through external, violent and accidental means. The indemnity provided for death was $5,000 cash, and $1,300 in weekly installments of $25 each. On May 8, 1931, the insured visited a physician’s office to be examined for stricture. The doctors applied a local anesthetic, preliminary to introducing a sound for exploratory purposes. The insured went into convulsions as a result of the anesthetic and died within about two minutes. The beneficiary then brought an action on the certificate in Pennington county. The case was removed to the United States District Court where it was tried resulting in a judgment for the plaintiff. Defendant appealed to the Circuit Court of Appeals where the judgment was reversed. Order of United Commercial Travelers v. Shane, 8 Cir., 64 F2d 55. The case was then remanded to the United States District Court, and before any further proceedings were had the action was dismissed without prejudice, on stipulation of the parties. The beneficiary thereafter assigned her claim to Edward C. Wolfe who brought this action. Judgment was entered for plaintiff in the circuit court, and the defendant has appealed.

Appellant claims that this action was not commenced within six month from the time the claim on the certificate was disallowed, and that the claim is therefore barred. The constitution of the association was made a part of the certificate and provides: “No suit or proceeding, either at law or in equity, shall be brought to recover any benefits under this Article after six (6) months from the date the claim for said benefits is disallowed by the Supreme Executive Committee.”

This limitation is valid under the statutes and judicial decisions of the state of Ohio where the insurer has its domicile. Bartley v. National Business Men’s Ass’n, 109 Ohio St. 585, 143 NE 386.

Respondent admits that this action was not commenced within six months from the time that the claim was rejected, but claims that the limitation fixed by the contract is void in this state, under SDC 10.0705, which provides: “Every provision in a contract restricting a party from enforcing his rights under it by usual legal proceedings in ordinary tribunals or limiting his time to do so, is void.”

The above section of the Code is a statute of general application, and it is valid. Vesey v. Commercial Union Assur. Co., 18 SD 632, 101 NW 1074; Douville v. Pacific Coast Casualty Co., 25 Idaho 396, 138 P. 506, Ann.Cas. 1917A, 112; 37 C.J., Limitation of Actions, § 45, Note 4.

The question then is whether the limitation contained in the contract, valid under the laws of Ohio where the appellant has its domicile, or the laws of South Dakota where this action was brought, are applicable in this case. If our decision is to be ruled by the contract, the action is barred. If we are to be governed by the South Dakota statute, the action is not barred. Obviously, this court will follow its own decisions and the statutes of this state, unless it finds, as appellant claims, that the limitation contained in the contract must be upheld under the Federal Constitution, notwithstanding the laws of this state.

In Erie R. Co. v. Tompkins, 304 US 64, 58 SCt 817, 822, 82 LEd 1188, 114 ALR 1487, the following rule was stated:

“Except in matters governed by the Federal Constitution or ‘by acts of Congress, the law to be applied in any case is the law of the state. And whether the law of the state shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law.” This rule applies to the whole field of conflict of laws. Klaxon Co. v. Stentor Electric Mfg. Co., 313 US 487, 61 SCt 1020, 85 LEd 1477. It is not limited by the “full faith and credit” clause of the United States Constitution, Art. 4, § 1, in any case relating to “persons and events” within the state of the forum, Pacific Employers Ins. Co. v. Industrial Accident Comm., 306 US 493, 59 SCt 629, 83 LEd 940, if the case involves rights which are contrary to local public policy, Griffin v. McCoach, 313 US 498, 61 SCt 1023, 85 LEd 1481, 134 ALR 1462; Pink v. A. A. A. Highway Express, Inc., 314 US 201, 62 SCt 241, 86 LEd 152, 137 ALR 957; Order of United Commercial Travelers v. Meinsen, 8 Cir., 131 F2d 176; Anthony P. Miller, Inc. v. Needham, 3 Cir., 122 F2d 710; Boyle v. Ward, 3 Cir., 125 F2d 672; Kroger Grocery & Baking Co. v. Reddin, 8 Cir., 128 F2d 787; Transit Bus Sales v. Kalamazoo Coaches, 6 Cir., 145 F2d 804; Metropolitan Life Ins. Co. v. Haak, D. C., 50 FSupp 55.

The issue of law arising out of the limitation clause in this contract of insurance does not arise under the Federal Constitution nor under any act of Congress. The defendant was, at the time it issued its certificate of membership to the insured, and at all times since has been, authorized to do business in this state as a foreign insurance corporation. The insured was a citizen of this state when he was insured by defendant, and remained such a citizen until the time of his death. The beneficiary was a resident of this state when the certificate of insurance was issued, and she has been such resident ever since. The insured died within this state, and the cause of action arose here. The action therefore relates to persons and events within this state.

The right of defendant to claim that the action is barred in this state by the terms of the contract, conflicts with SDC 10.0705, quoted herein. That statute was considered in the case of Vesey v. Commercial Union Assur. Co., supra. It was held in that case that, under this statute, any stipulation in a contract which limits the time within which a party may enforce his rights thereunder, is absolutely void. That this statute is applicable to a contract made in another state and upon which an action is brought in this state was decided in the case of L. D. Powell Co. v. Larkin, 52 SD 245, 217 NW 200, 202. There the question presented was whether an action could be brought in this state on a Nebraska contract barred by the Nebraska statute of limitations before the debtor left that state. The court said:

“It is the general rule and the weight of authority that a statute which merely limits the time within which action may be brought upon a contract affects the remedy only, and not the right, and can have no extraterritorial effect, and will not prevent action upon the contract thereafter in the forum of some other state unless a statute of the forum so provides. ... Whether action on the contract is barred by lapse of time must therefore be determined for the purposes of this action by the laws of South Dakota, the state of the forum, without reference to the Nebraska statute or to the existence of a bar in Nebraska.”

See also Order of the United Commercial Travelers v. Meinsen, supra; Dinnie v. United Commercial Travelers, 41 ND 42, 169 NW 811; Avondale v. Sovereign Camp W. O. W., 134 Neb. 717, 279 NW 355; Erickson v. Order of United Commercial Travelers, 103 Kan. 831, 176 P. 989; Sternheimer v. Order of United Commercial Travelers, 107 SC 291, 93 SE 8; Hawkinson v. Order of United Commercial Travelers, Tex. Civ. App., 20 SW2d 101.

Therefore the defendant’s claim that this action is barred by the contract is contrary to the public policy of this state. So far as the Federal Constitution is concerned, the courts of this state are free to apply the statutes and decisions of this state in determining this issue.

Neither is this question ruled by the “due process” clause contained in the Fourteenth Amendment to the United States Constitution as that clause was interpreted and applied in Home Ins. Co. v. Dick, 281 US 397, 50 SCt 338, 74 LEd 926, 74 ALR 701, and in the case of Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 US 143, 54 SCt 634, 78 LEd 1178, 92 ALR 928. The Supreme Court held the “due process” clause applicable in those cases because under the facts, there was no occurrence in the state of the forum to which its laws could apply, and consequently there was no question of conflict of laws involved. This distinction is pointed out in John Hancock Mut. Life Ins. Co. v. Yates, 299 US 178, 57 SCt 129, 81 LEd 106.

Appellant also cites Supreme Council Royal Arcanum v. Green, 237 US 531, 35 SCt 724, 59 LEd 1089, LRA 1916A, 771; Modern Woodmen of America v. Mixer, 267 US 544, 45 SCt 389, 69 LEd 783, 41 ALR 1384; Sovereign Camp W.O.W. v. Bolin, 305 US 66, 59 SCt 35, 83 LEd 45, 119 ALR 478. In those cases the United States Supreme Court held that a certificate of membership in an incorporated beneficiary society establishes a complex and binding relationship, and that the rights and obligations of the members and of the society are governed by the laws of the state of incorporation, as those laws are defined and interpreted by its courts. That rule was established before the decisions in Pacific Employers Ins. Co. v. Industrial Accident Comm., supra, and in the Klaxon, Griffin and Pink cases. Apparently the rule is limited by these later decisions to cases which do not relate to persons and events within the state of the forum, and in which, therefore, no question of conflict of laws is...