281 U.S. 397 (1930), 232, Home Insurance Co. v. Dick

Docket Nº:No. 232
Citation:281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926
Party Name:Home Insurance Co. v. Dick
Case Date:May 05, 1930
Court:United States Supreme Court

Page 397

281 U.S. 397 (1930)

50 S.Ct. 338, 74 L.Ed. 926

Home Insurance Co.



No. 232

United States Supreme Court

May 5, 1930

Argued February 27, 1930



A contract of fire insurance issued by a Mexican company, made and to be performed in Mexico, and covered in part by reinsurance effected there or in New York with New York companies licensed to do business in Texas, was assigned by the insured to a citizen of Texas who was present in Mexico when the policy issued and continued to reside there until after a loss had occurred. He then returned to Texas and sued on the policy in a Texas Court naming the Mexican company, which was never present in Texas and did not appear, as principal defendant, and the two New York companies, because of their reinsurance liability, as garnishees. The policy stipulated that no suit should be brought under it unless within one year of the loss, but a defense based on this was overruled by the Texas Supreme Court, and recovery against the garnishees affirmed, by applying a Texas statute which forbade any agreement limiting the time for suit to a shorter period than two years

Page 398

and declared that no agreement for such shorter limitation should ever be valid in that state.


1. The objection that, as applied to contracts made and to be performed outside of Texas, the statute violates the federal Constitution, raises federal questions of substance, and the existence of the federal claim is not disproved by saying that the statute, or the one-year provision in the policy, relates to the remedy, and not to the substance. P. 405.

2. That the federal questions were not raised in the trial court is immaterial, since the Court of Civil Appeals and the supreme court of the state considered them as properly raised in the appellate proceedings and passed on them adversely to the federal claim. P. 407.

3. The case is properly here on appeal, and petition for certiorari is therefore denied. Id.

4. The statute as construed and applied deprives the garnishees of property without due process of law, since the state was without power, under the circumstances, to affect the terms of the insurance contract by imposing a greater obligation than that agreed upon and to seize property in payment of the imposed obligation. Id.

5. When the parties to a contract have expressly agreed upon a time limit on their obligation, a statute which invalidates the agreement and directs enforcement of the contract after that time has expired increases their obligation and imposes a burden not contracted for. P. 408.

6. The statute, as here involved, is not one dealing with remedies and procedure merely; it purports to create rights and obligations. P. 409.

7. Assuming that a state may properly refuse to recognize foreign rights that violate its declared policy, or restrict the conduct of persons within its limits, this does not mean that it may abrogate the rights of parties beyond its borders having no relation to anything done or to be done within them. P. 410.

15 S.W.2d 1028 reversed.

Appeal from a judgment of the Supreme Court of Texas affirming a judgment of the Court of Civil Appeals, 8 S.W.2d 354, which affirmed recoveries against the appellants in garnishment proceedings ancillary to an action on a fire insurance policy.

Page 402

BRANDEIS, J., lead opinion

MR. JUSTICE BRANDEIS delivered the opinion of the Court.

Dick, a citizen of Texas, brought this action in a court of that state against Compania General Anglo-Mexicana de Seguros S.A. a Mexican corporation, to recover on a policy of fire insurance for the total loss of a tug. Jurisdiction was asserted in rem through garnishment, by ancillary writs issued against the Home Insurance Company and Franklin Fire Insurance Company, which reinsured, by contracts with the Mexican corporation, parts of the risk which it had assumed. The garnishees are New York corporations. Upon them, service was effected by serving their local agents in Texas appointed pursuant to Texas statutes, which require the appointment of local agents by foreign corporations seeking permits to do business within the state.

The controversy here is wholly between Dick and the garnishees. The defendant has never been admitted to do business in Texas, has not done any business there, and has not authorized anyone to receive service of process or enter an appearance for it in this cause. It was cited by publication, in accordance with a Texas statute, attorneys were appointed for it by the trial court, and they filed on its behalf an answer which denied liability. But there is no contention that thereby jurisdiction in personam over it was acquired. Dick's claim is that, since the obligation of a reinsurer to pay the original insurer arises upon the happening of the loss, and is not conditional upon prior payment of the loss by the insurer, Allemannia Fire Insurance Co. v. Firemen's Insurance Co., 209 U.S. 326; Hicks v. Poe, 269 U.S. 118, the New York companies are indebted to the Mexican company, and these debts are subject to garnishment in a proceeding against the latter quasi in rem, even though it is not suable in personam. The garnishees concede that inability to sue the

Page 403

Mexican corporation in Texas in personam is not material if a cause of action against it existed at the time of garnishment and there was within the state a res belonging to it. But they deny the existence of the cause of action or of the res.

Their defense rests upon the following facts: this suit was not commenced till more than one year after the date of the loss. The policy provided:

It is understood and agreed that no judicial suit or demand shall be entered before any tribunal for the collection of any claim under this policy unless such suits or demands are filed within one year counted as from the date on which such damage occurs.

This provision was in accord with the Mexican law to which the policy [50 S.Ct. 340] was expressly made subject.1 It was issued by the Mexican company in Mexico to one Bonner, of Tampico, Mexico, and was there duly assigned to Dick prior to the loss. It covered the vessel only in certain Mexican waters. The premium was paid in Mexico, and the loss was "payable in the City of Mexico in current funds of...

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