Home Insurance v. Dick

Rule of Law:

The Due Process Clause of the Fourteenth Amendment prohibits a state from applying its own substantive law to a contract that was made and is to be performed entirely outside of its borders, as the state lacks the power to alter the rights and obligations of parties to such a contract.

Facts:

• Compañia General Anglo-Mexicana de Seguros S.A., a Mexican corporation, issued a fire insurance policy in Mexico covering a tugboat.
• The policy was issued to one Bonner in Mexico and assigned to Dick, a Texas citizen who was residing in Mexico at the time of the policy's issuance and loss.
• The policy explicitly stated that it covered the vessel only in specific Mexican waters and that any lawsuit for a claim must be filed within one year of the date of damage.
• The policy premium was paid in Mexico, and any loss was payable in Mexico City.
• The tugboat was a total loss.
• The Home Insurance Company and Franklin Fire Insurance Company, both New York corporations, reinsured the risk for the Mexican company via contracts made in Mexico and New York, with no performance required in Texas.
• Dick filed a suit to collect on the policy in a Texas court more than one year after the loss occurred.

Procedural Posture:

• Dick sued Compañia General Anglo-Mexicana de Seguros S.A. in a Texas state trial court.
• To establish jurisdiction, Dick initiated garnishment proceedings against The Home Insurance Company and Franklin Fire Insurance Company, the reinsurers, in Texas.
• The trial court entered judgment for Dick, holding that a Texas statute voided the contract's one-year time limit to sue.
• The garnishees appealed to the Texas Court of Civil Appeals, which affirmed the trial court's judgment.
• The garnishees then appealed to the Supreme Court of Texas, which also affirmed the lower courts' rulings.
• The garnishees, as appellants, sought review from the U.S. Supreme Court.