Home Insurance Co. v. Dick
Citation: 281 U.S. 397 (1930) Court: United States Supreme Court
Facts
Dick, a Texas citizen living in Mexico, purchased a Mexican marine insurance policy (issued by a Mexican company to a Mexican company, reinsured by Home Insurance) and later assigned it to himself. The policy contained a clause requiring suit to be brought within one year. Dick failed to sue within one year but relied on a Texas statute providing a two-year limitation period for insurance suits. The Texas courts applied Texas law and upheld his suit. Home Insurance appealed.
Issue
May Texas apply its own two-year limitations statute to an insurance contract that was made and performed in Mexico and had no substantial connection to Texas, overriding the one-year suit clause in the policy?
Holding
No. The Supreme Court reversed, holding that Texas’s application of its own law to the contract violated the Due Process Clause of the 14th Amendment.
Rule / Doctrine
Due Process imposes constitutional limits on choice of law: a state cannot apply its own law to a transaction with which it has no substantial connection. Where a contract is made, performed, and insures property all in another jurisdiction, the forum state lacks a sufficient interest to override contractual provisions validly established under foreign law. This is one of the foundational cases establishing constitutional constraints on state choice-of-law decisions.
Significance
Home Insurance Co. v. Dick, along with Allstate Insurance Co. v. Hague, defines the constitutional floor for choice-of-law decisions. Dick establishes that a state with no significant contact to a transaction may not impose its own law on that transaction — doing so violates Due Process (and potentially the Full Faith and Credit Clause). Dick represents the stricter end of the constitutional limits on choice of law; Hague relaxed the standard somewhat by permitting application of forum law where the forum has multiple contacts with the parties or transaction.