McGee v. International Life Insurance Co.

Facts

In 1944, Lowell Franklin, a California resident, bought a life insurance policy from Empire Mutual Insurance Company, an Arizona corporation. In 1948, International Life Insurance Company agreed with Empire Mutual to assume its insurance obligations. International Life then mailed a reinsurance certificate to Franklin in California, offering to insure him on the terms of his Empire Mutual policy. He accepted. From then until his death in 1950 he paid premiums by mail from his California home to International Life's Texas office. McGee, his mother, was the beneficiary. She sent proofs of his death, but International Life refused to pay, claiming he had committed suicide. It appeared that neither Empire Mutual nor International Life had ever had an office or agent in California. As far as the record showed, International Life never solicited or did any insurance business in California apart from this policy. A California statute, which became law in 1949, subjected foreign corporations to suit in California on insurance contracts with residents of that State, even though the corporations could not be served with process within its borders. McGee sued in California and served International Life by registered mail at its principal place of business in Texas.

Issues

1. Did the Due Process Clause of the Fourteenth Amendment bar a California court from entering a judgment against a Texas insurer that was served by registered mail in Texas and had no office or agent in California?
2. Did applying the 1949 California statute to an insurance contract made before it became law improperly impair the obligation of that contract?

Holding

The Due Process Clause did not stop the California court from entering a judgment binding on International Life. The suit rested on a contract with a substantial connection to California, and applying the statute to the existing contract did not impair its obligation.