331 U.S. 586, 67 S. Ct. 1355, 91 L. Ed. 1687 (1947)
The Order of United Commercial Travelers of America was incorporated in 1888 under the general corporation laws of Ohio with its principal office in Columbus, Ohio.1
The decedent, on July 31, 1920, applied for membership in the society through Rapid City Council No. 516, in Rapid City, South Dakota.2
On August 19, 1920, he was accepted by the Supreme Council as an insured member of the society under "Class A."3
The certificate, No. 169655, evidencing this acceptance was executed at Columbus, Ohio, by the Supreme Counselor and Supreme Secretary.4
After a brief suspension he was reinstated in December 1922 through Black Hills Council No. 516, again with the certificate executed in Ohio, and he named his mother Elizabeth Shane of Mt. Vernon, South Dakota, as beneficiary.5
The society's constitution, including Article IV, Section 11 limiting any suit for benefits to six months after disallowance by the Supreme Executive Committee, appeared in full on the back of the certificate and was on file with the South Dakota Commissioner of Insurance.6
On May 8, 1931, he visited a physician's office in Rapid City, South Dakota, to be examined for stricture.7
The local anesthetic was a drug known as "butyn."8
The record shows that butyn commonly was used by physicians for such a purpose; that it was properly administered in the usual and proper amount and was of the usual and proper strength; but that the decedent, unknown to anyone, was subject to a rare idiosyncrasy, as a result of the presence of which he suffered convulsions immediately following the administration of the anesthetic and died within two minutes.9
His beneficiary promptly mailed notice of death to the society.10
On June 8, 1931, the Supreme Executive Committee in Columbus disallowed the claim on the merits and mailed notice of that action.11
On June 16, 1931, Elizabeth Shane filed suit in South Dakota circuit court seeking $6,300 in death benefits; the case was removed to the United States District Court for South Dakota on diversity grounds.12
The district court tried the case without a jury in September 1931 and entered judgment for the beneficiary on December 15, 1931.13
The United States Circuit Court of Appeals for the Eighth Circuit reversed on the merits in February 1933.14
On remand the district court entered judgment for the society in April 1933.15
Pursuant to stipulation of the parties the district court dismissed the action without prejudice on January 18, 1934.16
On June 15, 1934, Elizabeth Shane assigned her claim to Edward C. Wolfe, an Ohio citizen, who filed the present action in South Dakota circuit court the same day.17
The case remained dormant until October 1940 when an amended answer first raised the six-month limitation defense.18
After hearings in 1942 and 1943 the circuit court entered judgment for Wolfe on April 4, 1944.19
The Supreme Court of South Dakota affirmed by a divided vote in 1945.20
The United States Supreme Court granted certiorari.21
Whether the full faith and credit clause of the United States Constitution requires the courts of South Dakota to give effect to a provision in the constitution of an Ohio fraternal benefit society limiting the time for bringing suit to six months after disallowance of a claim, when that provision is valid under Ohio law but South Dakota statutes prescribe a six-year period for contract actions and declare contractual time limitations on enforcement of rights to be void?22
The full faith and credit clause requires that the law of the state of incorporation govern the rights and obligations of members in a fraternal benefit society. This includes limitations on the time for bringing suit that are valid under that law.
Yes. The Order of United Commercial Travelers of America was incorporated in Ohio under public acts that authorize and regulate fraternal benefit societies and their membership terms.23
Ford Shane became a member through South Dakota councils, yet the certificate was executed in Ohio and the constitution containing the six-month limitation in Article IV Section 11 is valid and enforceable under Ohio decisions such as Appel v. Cooper Ins. Co.24
South Dakota's statute voiding contractual time limits on enforcement cannot displace the Ohio-authorized terms of this membership relation.25
The Supreme Executive Committee disallowed the claim on June 8, 1931, and the present action was not filed until June 15, 1934, well after the six-month period expired.26
The full faith and credit clause requires South Dakota courts to enforce the six-month limitation, and the judgment in favor of the claimant must be reversed.27
Related opinions on this issue
Justice Black dissented on the ground that the decision effectively overrules M'Elmoyle v. Cohen by compelling a forum state to surrender its own statute of limitations to the chartering state's law.28 He maintained that the full faith and credit clause does not require South Dakota to yield to a private Ohio corporation's constitutional limitation when the insurance contract was applied for, delivered, and performed in South Dakota and the beneficiary resided there.29 Black further argued that prior decisions such as Modern Woodmen v. Mixer did not address statutes of limitations.
South Dakota retains authority to protect its residents from overreaching contractual restrictions imposed by a foreign fraternal insurer licensed to do business in the state.