Clay v. Sun Insurance Office, Ltd, 470

• Decision Date: 18 May 1964
• Docket Number: No. 470,470
• Citation: 84 S.Ct. 1197,12 L.Ed.2d 229,377 U.S. 179
• Parties: John CLAY, Petitioner, v. SUN INSURANCE OFFICE, LTD
• Court: U.S. Supreme Court

377 U.S. 179

84 S.Ct. 1197

12 L.Ed.2d 229

John CLAY, Petitioner,

v SUN INSURANCE OFFICE, LTD.

No. 470.

Argued April 28, 1964.

Decided May 18, 1964.

Paschal C. Reese, West Palm Beach, Fla., for petitioner.

James T. Carlisle, Tallahassee, for the State of Florida, as amicus curiae, pro hac vice, by special leave of Court.

Bert Cotton, New York City, for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

This case, which invoked the diversity jurisdiction of the Federal District Court in a suit to recover damages under an insurance policy, was here before. 363 U.S. 207, 80 S.Ct. 1222, 4 L.Ed.2d 1170. The initial question then as now is whether the 12-month-suit clause in the policy governs, in which event the claim i barred, or whether Florida's statutes¹ nullifying such clauses if they require suit to be filed in less than five years are applicable and valid, in which event the suit is timely. The policy was purchased by petitioner in Illinois while he was a citizen and resident of that State. Respondent, a British company, is licensed to do business in Illinois, Florida, and several other States.

A few months after purchasing the policy, petitioner moved to Florida and became a citizen and resident of that State; and it was in Florida that the loss occurred two years later. When the case reached here, the majority view was that the underlying constitutional question—whether consistently with due process, Florida could apply its five-year statute to this Illinois contract—should not be reached until the Florida Supreme Court, through its certificate procedure,² had construed that statute and resolved another local law question.³ On remand the Court of Appeals certified the two questions to the Florida Supreme Court, which answered both questions in petitioner's favor. 133 So.2d 735. Thereafter the Court of Appeals held that it was not compatible with due process for Florida to apply its five-year statute to this contract and that judgment should be entered for respondent. 5 Cir., 319 F.2d 505. We again granted certiorari. 375 U.S. 929, 84 S.Ct. 333, 11 L.Ed.2d 262.

While there are Illinois cases indicating that parties may contract—as here—for a shorter period of limitations than is provided by the Illinois statute, ⁴ we are referred to no Illinois decision extending that rule into other States whenever claims on Illinois contracts are sought to be enforced there. We see no difficulty whatever under either the Full Faith and Credit Clause or the Due Process Clause. We deal with an ambulatory contract on which suit might be brought in any one of several States. Normally, as the Court held in Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 U.S. 493, 502, 59 S.Ct. 629, 83 L.Ed. 940, a State having jurisdiction over a claim deriving from an out-of-state employment contract need not substitute the conflicting statute of the other State (workmen's compensation) for its own statute (workmen's compensation)—where the employee was injured in the course of his employment while temporarily in the latter State. We followed the same route in Watson v. Employers Liability Assurance Corp., 348 U.S. 66, 75 S.Ct. 166, 99 L.Ed. 74, where we upheld a state statute allowing direct actions against liability insurance companies in the State of the forum, even though a clause in the contract, binding in the State where it was made, prohibited direct action against the insurer until final determination of the obligation of the insured.

The Court of Appeals relied in the main on Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U.S. 143, 54 S.Ct. 634, 78 L.Ed. 1178, and Home Ins. Co. v. Dick, 281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926. Those were cases where the activities in the State of the forum were thought to be too slight and too casual, as in the Delta & Pine Land Co. case (292 U.S. at 150, 54 S.Ct. at 636), to make the application of local law consistent with due process, or wholly lacking, as in the Dick case.⁵ No deficiency of that order is present here.

As MR. JUSTICE BLACK, dissenting, said when this case was here before:

'Insurance companies, like other contractors, do not confine their contractual activities and obligations within state boundaries. They sell to customers who are promised protection in States far away from the place where the contract is made. In this very case the policy was sold to Clay with knowledge that he could take his property anywhere in the world he saw fit without losing the protection of his insurance. In fact, his contract was described on its face as a 'Personal Property Floater Policy (World Wide).' The contract did not even attempt to...