McGee v. International Life Insurance Co. Case Brief Summary | Law Case Explained




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McGee v. International Life Insurance Co. | 355 U.S. 220 (1957)

Advances in technology in the 19th and 20th centuries, including the train, the automobile, the telegraph, and the telephone, gave rise to business transactions that traveled farther than ever before. Businesses could sell goods to customers in different states, hundreds, or even thousands, of miles away. But long-distance business came with long-distance business disputes. Courts struggled to create fair rules regarding when and how they could decide cases involving out-of-state businesses. The Supreme Court considered the issue a number of times, including in the 1957 case of McGee versus the International Life Insurance Company.

Lowell Franklin, a California resident, bought a life insurance policy from Empire Mutual Insurance Company of Arizona. Later, International Life Insurance Company, a Texas company that we’ll call International, bought Empire’s assets and assumed its insurance obligations. Except for Franklin’s policy, International didn’t solicit or do any other business in California.

Franklin paid his monthly premiums, first to Empire, then to International, until he died six years after buying his policy. His mother and beneficiary, Lulu McGee, filed a claim for the policy benefits. But International refused to honor the policy, claiming Franklin had committed suicide.

McGee sued International in California state court. Since International didn’t have a place of business in California, McGee served the complaint by registered mail to International’s principal place of business in Texas. Even though Franklin was International’s only California policyholder, the California court nevertheless exercised jurisdiction over International, and awarded McGee a judgment.

International had no assets in California, so McGee couldn’t collect her judgment through the California courts. She therefore filed suit in Harris County District Court in Texas to enforce her California judgment. Both the district court and the Texas Court of Civil Appeals refused to honor the judgment, ruling that California courts didn’t have jurisdiction over the out-of-state insurance company, and that the California judgment was therefore invalid. The United States Supreme Court then granted cert.

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