McGEE v. INTERNATIONAL LIFE INSURANCE CO.

Procedural Basis: Appeal from Texas courts refusal to enforce California judgment in action to recover proceeds of life insurance policy.

Facts: Franklin, a California resident, had a life insurance policy with the Empire Mutual Insurance Company of Arizona.  In 1948, International Life Insurance Company (D) of Texas took over Empire Mutual’s policies.  International Life (D) refused to pay the proceeds of his policy to his designated beneficiary, McGee (P), claiming that Franklin had committed suicide.  McGee (P) brought suit in California, then tried to enforce it in Texas. 

Procedural History: The Texas Courts refused to enforce the judgment claiming that California’s exercise of jurisdiction was improper.  McGee (P) appealed the Texas decision to the U.S. Supreme Court.

Issue: Can a state ever exercise jurisdiction over a D whose contacts with that state are limited to a single act or contract?

Rule: A state may exercise jurisdiction over a D whose contacts with that state consist of only a single act, provided that that act is what gave rise to the claim for which jurisdiction is being sought, and was deliberately directed toward the state.

Application: It is much more likely that small policy holders would be denied justice if forced to file suit in a foreign jurisdiction, than the life insurance companies would be more than slightly inconvenienced by having to defend a suit in California.  It should not come as a complete surprise to International Life (D) to be required to defend suit after refusing to pay that policy holders beneficiary.

Conclusion:  Judgment reversed.