78 S.Ct.

199 FOR EDUCATIONAL USE ONLY Page 1

355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223
(Cite as: 355 U.S. 220, 78 S.Ct. 199)

Supreme Court of the United States

Lulu B. McGEE, Petitioner,
v.
INTERNATIONAL LIFE INSURANCE COMPANY.
No. 50.

Argued Nov. 20, 1957.

Decided Dec. 16, 1957.

Action by beneficiary on a life policy. The Texas District Court, Harris County, refused to enforce a judgment
recovered by beneficiary in California on ground that it was void under the Fourteenth Amendment because service
of process was made on insurer outside California. The Texas Court of Civil Appeals, 288 S.W.2d 579, affirmed and
the Supreme Court granted certiorari. The Supreme Court, Mr. Justice Black, held that where insurance contract was
delivered in California, premiums were mailed from there, and insured was resident of California at time of death,
due process did not preclude entry of judgment against Texas insurance company by California court, which based
its jurisdiction on statute subjecting foreign corporations to suit on insurance contracts with residents of that state,
even though such companies could not be served with process within its borders, although Texas company had no
offices or agents in California and had apparently never solicited or done any insurance business in California apart
from policy involved.

Judgment reversed and cause remanded with directions.

West Headnotes

[1] Federal Courts 170B 456

170B Federal Courts

170BVII Supreme Court
170BVII(B) Review of Decisions of Courts of Appeals
170Bk455 Decisions Reviewable and Grounds for Issuance
170Bk456 k. Important, Novel or Recurring Questions. Most Cited Cases
(Formerly 106k3971/2)
Refusal by Texas courts to enforce California judgment rendered against Texas insurance company, which was
served by registered mail at its principal place of business in Texas, under California statute subjecting foreign
corporations to suit in California on insurance contracts with residents even though corporation cannot be served
with process within its borders, raised important questions, not only to California but to other States, and justified
granting of certiorari. 28 U.S.C.A. § 1738; West's Ann.Ins.Code Cal. §§ 1610-1620.

[2] Constitutional Law 92 3965(6)

92 Constitutional Law
92XXVII Due Process
92XXVII(E) Civil Actions and Proceedings
92k3961 Jurisdiction and Venue
92k3965 Particular Parties or Circumstances
92k3965(6) k. Insurers and Insurance. Most Cited Cases
(Formerly 92k309(2))

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78 S.Ct. 199 FOR EDUCATIONAL USE ONLY Page 2
355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223
(Cite as: 355 U.S. 220, 78 S.Ct. 199)

Where insurance contract was delivered in California, premiums were mailed from there, and insured was resident
of California at time of death, due process did not preclude entry of judgment against Texas insurance company by
California court, which based its jurisdiction on statute subjecting foreign corporations to suit on insurance contracts
with residents of that state, even though such companies could not be served with process within its borders, and
Texas company had no offices or agents in California and had apparently never solicited or done any insurance
business in California apart from policy involved. U.S.C.A.Const. Amend. 14; 28 U.S.C.A. § 1738; West's
Ann.Cal.Ins.Code, §§ 1610-1620.

[3] Constitutional Law 92 3965(6)

92 Constitutional Law
92XXVII Due Process
92XXVII(E) Civil Actions and Proceedings
92k3961 Jurisdiction and Venue
92k3965 Particular Parties or Circumstances
92k3965(6) k. Insurers and Insurance. Most Cited Cases
(Formerly 92k309(2))
California suit based on insurance contract issued by foreign corporation to resident of California had substantial
connection with that state sufficient to meet requirements of due process. West's Ann.Cal.Ins. Code, §§ 1610-1620;
U.S.C.A.Const. Amend. 14.

[4] Constitutional Law 92 2758

92 Constitutional Law
92XXII Obligation of Contract
92XXII(C) Contracts with Non-Governmental Entities
92XXII(C)2 Particular Issues and Applications
92k2758 k. Insurance. Most Cited Cases
(Formerly 92k154(3))

Insurance 217 3558

217 Insurance
217XXXI Civil Practice and Procedure
217k3558 k. Jurisdiction. Most Cited Cases
(Formerly 217k4(1), 217k4)
California statute, subjecting foreign corporations to suits in California on insurance contracts with residents of that
state even though such corporations could not be served with process within its borders, was remedial and did not
enlarge or impair insurance company's substantive rights or obligations under insurance contract issued prior
thereto. West's Ann.Cal.Ins.Code §§ 1610-1620.

[5] Constitutional Law 92 2648

92 Constitutional Law
92XXI Vested Rights
92k2648 k. Rights of Action and Defenses. Most Cited Cases
(Formerly 92k105)
Texas insurance company, which assumed Arizona insurance company's obligation to a resident of California, had

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78 S.Ct. 199 FOR EDUCATIONAL USE ONLY Page 3
355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223
(Cite as: 355 U.S. 220, 78 S.Ct. 199)

no vested right not to be sued in California although it had no offices or agents in California and apparently never
solicited or did any insurance business in California apart from such policy, and it could not on that ground escape
application of subsequently adopted California statute which subjected foreign corporations to suit in California on
insurance contracts with residents of that state even though such corporations could not be served with process
within California's borders. U.S.C.A.Const. Amend. 14; 28 U.S.C.A. § 1738; West's Ann.Cal.Ins.Code, §§ 1610-
1620.
**200 *220 Mr. Arthur J. Mandell, Houston, Tex., for the petitioner.

Mr. Stanley Hornsby, Austin, for the respondent.

*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.FN1

FN1. Cal.Insurance Code, West's Anno. ss 1610-1620.

[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, 77 S.Ct. 239, 1 L.Ed.2d 160. 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. s 1738, 28 U.S.C.A. s 1738.

[2] 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 *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, 24 L.Ed. 565, 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 **201 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. State of Washington, 326 U.S. 310,
66 S.Ct. 154, 90 L.Ed. 95, 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

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it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice. “ Id.,
326 U.S. at page 316, 66 S.Ct. at page 158.

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 *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.

[3] 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, 47 S.Ct. 632, 71
L.Ed. 1091; Henry L. Doherty & Co. v. Goodman, 294 U.S. 623, 55 S.Ct. 553, 79 L.Ed. 1097; Pennoyer v. Neff, 95
U.S. 714, 735, 24 L.Ed. 565.FN2 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 freguently 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. *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 Ass'n v. Commonwealth of Virginia ex rel.
State Corporation Comm., 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154. There is no contention that respondent did not
have adequate notice of the suit or sufficient time to prepare its defenses and appear.

FN2. And see Ace Grain Co. v. American Eagle Fire Ins. Co., D.C., 95 F.Supp. 784; Storey v. United Ins.
Co., D.C., 64 F.Supp. 896; S. Howes Co., Inc. v. W.P. Milling Co., Okl., 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, 75 S.Ct. 365, 99 L.Ed. 738; 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, 25 A.L.R.2d
1193.

[4][5] 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**202 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, 27 S.Ct. 755, 51 L.Ed. 1163;
National Surety Co. v. Architectural Decorating Co., 226 U.S. 276, 33 S.Ct. 17, 57 L.Ed. 221; Funkhouser v. J. B.
Preston Co., Inc., 290 U.S. 163, 54 S.Ct. 134, 78 L.Ed. 243.

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.

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78 S.Ct. 199 FOR EDUCATIONAL USE ONLY Page 5
355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223
(Cite as: 355 U.S. 220, 78 S.Ct. 199)

It is so ordered.

Judgment reversed and cause remanded with directions.

The CHIEF JUSTICE took no part in the consideration or decision of this case.
U.S. 1957.
McGee v. International Life Ins. Co.
355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223

END OF DOCUMENT

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