Smith v. COMMERCIAL TRAVELERS MUT. ACC. ASS'N, 9003.

• Decision Date: 20 December 1946
• Docket Number: No. 9003.,9003.
• Citation: 158 F.2d 65
• Parties: SMITH v. COMMERCIAL TRAVELERS MUT. ACC. ASS'N OF AMERICA.
• Court: U.S. Court of Appeals — Seventh Circuit

158 F.2d 65 (1946)

SMITH v. COMMERCIAL TRAVELERS MUT. ACC. ASS'N OF AMERICA.

No. 9003.

Circuit Court of Appeals, Seventh Circuit.

November 19, 1946.

Rehearing Denied December 20, 1946.

Jay E. Darlington, of Hammond, Ind., for appellant.

L. L. Bomberger and Rae M. Royce, both of Hammond, Ind. (Moses G. Hubbard, Jr., of Utica, N. Y., of counsel), for appellee.

Before SPARKS and KERNER, Circuit Judges, and HOLLY, District Judge.

KERNER, Circuit Judge.

Upon the death of her husband, plaintiff as beneficiary of a certificate of membership constituting a contract of insurance sued defendant. Defendant filed a motion to dismiss plaintiff's complaint on the grounds (1) that defendant, a New York corporation, was never qualified to do business in Indiana and therefore was not subject to the jurisdiction of the District Court there, and (2) that a one-year limitation in the contract barred plaintiff's action. The trial court filed a memorandum opinion on defendant's motion in which the question of jurisdiction was resolved against defendant, but the motion to dismiss was sustained on the ground that plaintiff's action was barred by the contractual limitation of one year. Plaintiff thereafter petitioned for leave to file an amended complaint wherein it was alleged that the one-year limitation clause was not applicable to plaintiff's case. The District Court denied plaintiff's petition and judgment was entered dismissing the action. To reverse the judgment, plaintiff appeals.

In 1930 defendant issued to Harry E. Smith, a resident of Pennsylvania, a certificate which insured him upon enumerated conditions against loss by accidental means of life, limb, sight, and time. The insurance benefit against loss of life was $10,000. In 1932 a change of beneficiary was effected and Lillian Bleweiss, intended wife, who later married insured and is the plaintiff here, was made the beneficiary. August 30, 1933, in Atlanta, Georgia, insured was injured, and on October 11, 1933, he died from his injuries. Plaintiff notified defendant of insured's death by letter dated October 18, 1933. Then, or soon afterwards, plaintiff became a citizen of Gary, Indiana, as she established residence with relatives and mailed all her subsequent correspondence regarding the claim from there. She filed proof of loss, and agreed in writing with defendant to allow it to exhume and perform an autopsy upon the body of deceased. March 23, 1934, plaintiff's claim was considered and rejected by defendant and plaintiff was notified of defendant's decision by letter dated March 27, 1934. Thereafter, on September 19, 1935, plaintiff commenced this action.

Unless we hold for plaintiff the question to be decided is whether the cause of action is barred by the one-year limitation clause in the contract.

Defendant is a mutual association doing business on an assessment basis. The certificate or contract was signed and delivered by defendant at its office in Utica, New York, and thereby defendant insured plaintiff's husband, a resident of Greensburg, Pennsylvania. In the certificate there is a specific provision providing: "This contract is . . . to be construed in accordance only with the laws of the State of New York."

In conflict of laws the lex loci contractus may mean either the law of the place where the contract was made or the place of its performance. Here it means the place where the contract was made (New York) because place of performance is not specified, and the rights of membership in an incorporated beneficiary society are determined by the law of the State of incorporation. Modern Woodmen of America v. Mixer, 267 U.S. 544, 45 S.Ct. 389, 69 L.Ed. 783, 41 A.L.R. 1384; Supreme Council of Royal Arcanum v. Green, 237 U.S. 531, 35 S.Ct. 724, 59 L.Ed. 1089, L.R.A.1916A, 771. Thus, it is clear that we must look to New York law to determine the validity of the contract's limitation clause. The New York courts have held unequivocably that a one-year limitation in an insurance contract is valid. Hanna v. Commercial Travelers Mutual Accident Ass'n, 236 N.Y. 571, 142 N.E. 288; Savery v. Commercial Travelers' Mutual Accident Ass'n, 238 App.Div. 189, 263 N.Y.S. 118. Moreover, "parties to a contract of insurance may provide for a shorter limitation of actions than that provided in the general Statute of Limitations." Brandyce v. Globe & Rutgers Fire Ins. Co., 252 N.Y. 69, 168 N.E. 832, 833.

Plaintiff contends, however, that the remedial laws of Indiana apply to a contractual limitation in an insurance contract, Karvalsky v. Becker, 217 Ind. 524, 29 N.E.2d 560, 131 A.L.R. 1074, and that the applicable Indiana statute at the time the action was brought, § 39-1713, Burns' Indiana Stat.Ann.1933 (original vol. 8), provided that no foreign insurance company could insert a contractual limitation of less than three years. But as the court observed in its memorandum opinion, "The policy had matured before it was in any way affected by the laws of Indiana." As we have already noted, the contract had its origin in New York and was issued...