McGee v. International Life Ins. Co. (1957) (insurance company won’t pay)

a.       Facts- P is a California resident, while D is a Texas Corp. P sued D for refusal of payment on life insurance policy. P filed suit in CA Ct under State jurisdiction Statute stating that “foreign corps are subject to suit in CA on insurance contracts w/ residents of CA…even though such Corp cannot be served within CA borders”. P won this, but failed to collect on said judgment. P then filed suit to enforce judgment in TX Ct. TX Ct refused to enforce her judgment, holding that CA Ct never had jurisdiction over D. P appealed

b.      Procedural History- P sued D in CA for insurance policy, and won. P then sued to enforce judgment in TX, TX Ct refused, P appealed

c.       Issues-

                                                  i.      Whether a foreign Corp (D) has satisfied the “minimum contacts” by entering into a contract with a resident of the State

                                                ii.      Does a foreign Corp, in entering into a contract with a resident of the State, have “minimum contacts” as required by International Shoe (jurisdiction)?

d.      Holding- Yes, by entering into a contract with a resident of the State, a foreign Corp has established the “minimum contacts” required to be subject to suits, arising from said contract

e.       Rule- A foreign Corp may be subject to jurisdiction, in accordance with Due Process, if it enters into a contract with substantial connection with that State

f.       Rationale- California residents would be at a “severe” disadvantage if they had to go to another State to collect their payment from an insurer

                                                  i.      When claims were small, people would forego the payment in consideration of the financial burden associated with filing suit in a foreign State…effectively making insurance agencies “judgment proof” when concerned with small claims

g.      Notes-

                                                  i.      Even if a foreign Corp has NO other business in that State except the contract it entered with a resident of said State, the Corp may still be subject to suit in that State…so long as the action arose from the contract

                                                ii.      KEY point is that the D CREATED a “minimum contact” by sending the insured a NEW policy…thus creating the contact

                                              iii.      The fact that there was ONLY ONE insurance policy in CA doesn’t matter because the D “actively sought out” the insured and solicited to them

                                              iv.      What about strictly Online?

1.      It will be subject to every State’s jurisdiction in which it solicits business

                                                v.      There is still territorial limits that must be adhered to…convenience is NOT EVERYTHING