281 U.S. 397, 407, 408
In 1930, Dick, a citizen of Texas who had resided in Mexico at the time the insurance policy was issued and assigned to him, brought an action in a Texas state court against Compania General Anglo-Mexicana de Seguros S.A., a Mexican corporation, seeking recovery on a fire insurance policy for the total loss of a tug.1 Jurisdiction over the Mexican corporation was asserted through garnishment by ancillary writs issued against The Home Insurance Company and Franklin Fire Insurance Company, New York corporations that had reinsured portions of the risk.2 Service on the garnishees was effected by serving their local agents in Texas, who had been appointed pursuant to Texas statutes requiring foreign corporations to appoint such agents to do business in the state.3 The Mexican corporation had never been admitted to do business in Texas, had not done business there, and had not authorized anyone to receive service of process in the state.4
The policy had been issued by the Mexican company in Mexico to Bonner of Tampico, Mexico, and was there assigned to Dick prior to the loss.5 It covered the vessel only in certain Mexican waters, with the premium paid in Mexico, and the loss payable in Mexico City in Mexican funds or their equivalent elsewhere.6 The policy contained a provision requiring that any judicial suit for a claim under the policy be filed within one year from the date of the damage, a term consistent with Mexican law to which the policy was expressly subject.7 At all relevant times prior to the loss, Dick actually resided in Mexico, although his permanent residence was in Texas.8 The contracts of reinsurance were effected by correspondence between the Mexican company in Mexico and the New York companies in New York, with nothing under those contracts done in Texas.9
This suit was not commenced until more than one year after the date of the loss.10 In the trial court, the garnishees raised a defense based on the one-year limitation in the policy.11 Dick demurred, relying on Article 5545 of the Texas Revised Civil Statutes, which prohibited stipulations limiting the time to sue to less than two years.12 The trial court sustained the demurrer and entered judgment against the garnishees.13 On appeal, the Court of Civil Appeals and the Supreme Court of Texas affirmed the judgment, treating the policy provision as equivalent to a foreign statute of limitation and holding the Texas statute applicable to the remedy in Texas courts.14
The garnishees appealed to the United States Supreme Court, asserting that the Texas statute as construed and applied violated the due process clause of the Fourteenth Amendment and the contract clause.15 Dick moved to dismiss the appeal for want of jurisdiction.16 The garnishees also filed a petition for a writ of certiorari.17 The Supreme Court postponed consideration of its jurisdiction and the certiorari petition to the hearing on the merits.18
Whether the Supreme Court has jurisdiction over the appeal where the errors assigned involve only questions of local law and conflict of laws?19
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.20 The statute is not simply one of limitation. It deals with the powers and capacities of persons and corporations.
Yes. The contention that the errors assigned involve only questions of local law and conflict of laws is unsound.2122 The Texas statute is not simply one of limitation but deals with the powers and capacities of persons and corporations.23 It expressly prohibits the making of certain contracts and as construed directs the disregard in Texas of contractual rights and obligations wherever created.24
In the established facts the policy was issued in Mexico to Bonner of Tampico and assigned there to Dick prior to the loss.25 It covered the vessel only in certain Mexican waters, with the premium paid in Mexico and the loss payable in Mexico City.26 The reinsurance contracts were effected by correspondence between the Mexican company in Mexico and the New York companies in New York, with nothing done in Texas. The one-year provision defines the right of the insured and the correlative obligation of the insurer.27
Applying Article 5545 would abrogate that contractual right and impose liability although the parties agreed there should be none.28 Therefore the federal claim is one of substance.29
The Supreme Court has jurisdiction over the appeal.30
Whether the Texas statute as construed and applied deprives the garnishees of property without due process of law?31
A State may not impose a greater obligation than that agreed upon and seize property in payment of the imposed obligation when nothing relating to the policy or the contracts of reinsurance was ever done or required to be done in the State.32 Texas was without power to affect the terms of contracts so made.33
Yes. Texas was without power to affect the terms of contracts so made. All acts relating to the making of the policy were done in Mexico.34 All acts in relation to the making of the contracts of reinsurance were done in Mexico or in New York.35
All things in regard to performance were to be done outside of Texas.36 Neither the Texas laws nor the Texas courts were invoked for any purpose except by Dick in bringing this suit.37 Dick's permanent residence was in Texas but at all times material he was physically present and acting in Mexico.38 The attempt to impose a greater obligation than that agreed upon and to seize property in payment of the imposed obligation violates the guaranty against deprivation of property without due process of law.39
The Texas statute as construed and applied deprives the garnishees of property without due process of law.40
Whether a State may properly refuse to recognize foreign rights which violate its declared public policy in this context?41
A State may prohibit the enjoyment by persons within its borders of rights acquired elsewhere which violate its laws or public policy but it may not abrogate the rights of parties beyond its borders having no relation to anything done or to be done within them.42 The statute may not validly affect contracts which are neither made nor to be performed in Texas.43
No. A State may prohibit the enjoyment by persons within its borders of rights acquired elsewhere which violate its laws or public policy, and under some circumstances it may refuse to aid in the enforcement of such rights. But the Mexican corporation never was in Texas.44 Neither it nor the garnishees invoked the aid of the Texas courts or the Texas laws.45 The garnishees were brought in by compulsory process.46
They ask only to be let alone.47 The statute may not validly affect contracts which are neither made nor to be performed in Texas.
A State may not properly refuse to recognize such foreign rights in this context.48
Whether the Federal Constitution requires the States to recognize and protect rights derived from the laws of foreign countries under the full faith and credit clause?49
No. The claims here asserted are not based upon the full faith and credit clause.52 The defense asserted is based on the provision of the policy and on the contracts of reinsurance.53 The courts of the State confused this defense with that based on the Mexican Code.54 Whether or not the State courts' treatment of the foreign statute is a sufficient answer we may not consider for no issue under the full faith and credit clause was raised.55
In Texas as elsewhere the contract was subject to its own limitations.56
The Federal Constitution does not require the States to recognize and protect such rights under the full faith and credit clause in this case.57
Whether the guaranty of the contract clause relates to the date of a statute's enactment or the date of its effect on contracts?58
No. The Court does not reach the issue.62 The garnishees contend that the guaranty of the contract clause relates not to the date of enactment of a statute but to the date of its effect on contracts.63 When issued, the policy of the Mexican corporation was concededly not subject to Texas law.64 Although the statute was passed prior to the making of the contract, it did not operate upon the contract until this suit was brought in the Texas court.65
Because the due process holding disposes of the case, there is no occasion to consider this contention.66
There is no occasion to consider the contract clause contention.