Home Insurance Company v. Dick

281 U.S. 397 (1930)

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Nature of the Case

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Facts

Dick (P), a citizen of Texas, brought this action in a court of that State against Compania General Anglo-Mexicana de Seguros S. A., a Mexican corporation, to recover on a policy of fire insurance for the total loss of a tug. P asserted in rem jurisdiction through garnishment, by ancillary writs issued against Ds which reinsured, by contracts with the Mexican corporation, parts of the risk which it had assumed. Ds are New York corporations. P reasons that since the obligation of a reinsurer to pay the original insurer arises upon the happening of the loss and is not conditional upon prior payment of the loss by the insurer, Ds are indebted to the Mexican company and these debts are subject to garnishment in a proceeding against the latter quasi in rem, even though it is not suable in personam. Ds denied the existence of the cause of action or the res. P's suit was not commenced until more than one year after the date of the loss. The policy provided: 'It is understood and agreed that no judicial suit or demand shall be entered before any tribunal for the collection of any claim under this policy unless such suits or demands are filed within one year counted as from the date on which such damage occurs.' This clause was valid under Mexican law. The policy on the tug was issued by the Mexican company in Mexico to one Bonner, of Tampico, Mexico, and was assigned to P prior to the loss. It covered the vessel only in certain Mexican waters. The premium was paid in Mexico; and the loss was 'payable in the City of Mexico in current funds of the United States of Mexico, or their equivalent elsewhere.' P resided in Mexico, but his permanent residence was in Texas. The contracts of reinsurance were effected by correspondence between the Mexican company in Mexico and the New York companies in New York. Nothing was done in Texas. Ds claim that P's failure to sue within one year after accrual of the alleged cause of action was a complete defense to the suit on the policy; that this failure also relieved D of any obligation as reinsurers. P demurred, on the ground that Article 5545 of the Texas Revised Civil Statutes (1925) provides: 'No person, firm, corporation, association or combination of whatsoever kind shall enter into any stipulation, contract, or agreement, by reason whereof the time in which to sue thereon is limited to a shorter period than two years. And no stipulation, contract, or agreement for any such shorter limitation in which to sue shall ever be valid in this State.' The trial court agreed with P and entered judgment against Ds. Ds appealed claiming that the Texas statute violated the due process clause of the Fourteenth Amendment and the contract clause. The appeals courts affirmed the judgment of the trial court. Ds appealed on the ground that the statute, as construed and applied, violated their rights under the Federal Constitution.