# Petition — State Farm Fire & Casualty Co. v. Hime

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1980
- **Citation:** 444 U.S. 1032

## Text

IN THE MICHABL RODAK, JR., CLERK

Supreme Court of the United States
October Term, 1979

— 9-767
No.

GEORGE D. HIME,

Respondent,
VS.

STATE FARM FIRE & CASUALTY COMPANY,
. Petitioner.

PETITION FOR WRIT OF CERTIORARI TO
THE SUPREME COURT OF MINNESOTA

0,C. ADAMSON II

J. RICHARD BLAND
2250 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Telephone: (612) 338-0661

Attorneys for Petitioner
OF COUNSEL:

Meagher, Geer, Markham, Anderson,
Adamson, Flaskamp & Brennan
2250 IDS Center
Minneapolis, Minnesota

1979-—Northwest Brief Printing Co,, 316 Chicago Avenue, Minneapolis 55415—338-5078

TABLE OF CONTENTS

Page
(a) Opinion Below ........... eee eee creer eens 1
I oo ion enc ce eee es eeeeescsees 2

(i) Original Judgment Sought to Be Reviewed. 2
(ii) Statutory Provision Conferring Jurisdic-

OSE 2
(iii) Cases Sustaining Jurisdiction ..........- 2

(iv) Constitutional Provision and Statute In-
re ee eras are re 2
(c) Question Presented ........-.eseeeeeereces 3
(d) Statement of the Case ...........-ee ee eeees 4
(e) Reasons for Granting the Writ ............--. 6
ica e raises ccnecescrcecees 14

APPENDIX INDEX
Appendix A—Opinion of the Minnesota Supreme

Court, rendered August 17, 1979 ..........+4+: A-1
Appendix B—Order and Memorandum of Minnesota
EE ee ee A-10
Appendix C—Judgment of Minnesota Supreme Court
ee Gay Ges dee sce deneseeees A-18
TABLE OF AUTHORITIES
Cases:
Clay v. Sun Ins. Office, Ltd., 377 U.S. 179 (1964) ...
ake k va sees ecescccss Zz, & ti
Confederation Life Ins. Co. v. deLara, 409 U.S. 953
EEL Nash sees snes ec ccdsceeses 12

Empire Mut. Ins. Co. v. Melburg, 67 N.J. 139, 336
see ee 13

Hartford Acc. & Indemn. Co. v. Delta & Pine Land

eee BPA OG) | re a 6, &, 12,
Home Ins. Co. v. Dick, 281 U.S. 297 (1930) .......
SP PT Pn ee 2 oe ee En ee & 3, 0, 32,

Knight v. Heritage Mut. Ins. Co., 71 Wis.2d 821, 239
te ee AON 2s bbe Wee oe bo hahaa) Sea as
Reid v. Allstate Ins. Co., 344 So.2d 877 (Fla. App.),
alfd 332 So.2d 1172 (Fina. 1977) ..........2.2--
Rush v. Savchuk, No. 78-952 (Argued October 3, 1979)
World-Wide Volkswagen Corp. v. Woodson, No. 78-
1078 (Argued October 3, 1979) ...............

Constitutional Provisions ard Statutes:

United States Constitution, Art. 4,§1 .............
United States Constitution, Fourteenth Amendment
ee era, eb acy oak Go Ev oo vo ok oe ;

28 ee MRR hk Ks ess dk nese ke twee
Minn. St. 65B.14 (since repealed) ............... a
Minn. St. 65B.23 (since repealed) ............. a

13
13
13

4
2

2

IN THE

Supreme Court of the Anited States
October Term, 1979

No.
GEORGE D. HIME,
Respondent,
VS.
STATE FARM FIRE & CASUALTY COMPANY,
Petitioner.

PETITION FOR WRIT OF CERTIORARI TO
THE SUPREME COURT OF MINNESOTA

To the Chief Justice and the Associate Justices of the
Supreme Court of the United States:

Your Petitioner, State Farm Fire & Casualty Company,
hereby petitions for a writ of certiorari to review the
opinion of the Minnesota Supreme Court issued on August
17, 1979.

(a) OPINION BELOW
The opinion of the Minnesota Supreme Court has not

yet been officially reported. It appears in full as Appendix
A hereto (pp. A-1-9, infra).

2
-_

(b) JURISDICTION
.(i) Original Judgment Sought to Be Reviewed.

The decision of the Minnesota Supreme Court was filed
on August 29, 1979 and the judgment sought to be re-
viewed was entered on August 29, 1979. A copy of this
judgment is annexed hereto as Appendix C.

(ii) Statutory Provision Conferring Jurisdiction.

The statutory provision which invokes jurisdiction in
this Court of the petition for writ of certiorari is 28 U.S.C.
§$1257(3).

(iii) Cases Sustaining Jurisdiction.

Cases believed to sustain jurisdiction include: Rush v.
Savchuk, No. 78-952 (Argued October 3, 1979); World-
Wide Volkswagen Corporation v. Woodson, No. 78-1078
(Argued October 3, 1979); Clay v. Sun Ins. Office, Ltd.,
377 U.S. 179 (1964); Hartford Acc. & Indemn. Co. v.
Delta & Pine Land Co., 292 U.S. 143 (1934); Home Ins.
Co. v. Dick, 281 U.S. 297 (1930).

(iv) Constitutional Provision and Statute Involved.

This case involves the due process clause of the Four-
teenth Amendment to the United States Constitution, the
Full Faith and Credit Clause of the United States Consti-
tution, and a Minnesota statute precluding certain provi-
sions in insurance policies issued in Minnesota, Minn.
St. 65B.23 (repealed in 1974).

Section 1 of the Fourteenth Amendment to the United
States Constitution, in pertinent part, provides:

3

“No State shall . . . deprive any person of life,
liberty or property, without due process of law. . . “ag

Article 4 §1 of the United States Constitution, in perti-
nent part, provides:

“Full faith and credit shall be given in each state
to the public acts, records, and judicia! proceedings
of every other state... .”

The Minnesota Statutes involved, in pertinent part, pro-
vide:

§65B.23—“No policy of automobile liability insur-
ance as defined in Section 65B.14 written or renewed
after 7-1-69 shall contain an exclusion for liability
for damages for bodily injury solely because the in-
jured person is a resident or member of an insured’s
household or related to the insured by blood or mar-
riage.”
$65B.14, Subd. 1—‘“ Policy of automobile liability
insurance’ means a policy delivered or issued for de-
livery in this state... .”

(c) QUESTION PRESENTED

Is the Minnesota Supreme Court constitutionally pre-
cluded by the Due Process and Full Faith and Credit
Clauses from applying its own law because it lacks suffi-
cient contact with the parties to this litigation? In other
words, may Minnesota exercise control over, and change,
the obligations of contracts elsewhere valid and validly
consummated where to do so would enlarge petitioner’s
obligations in violation of the rule enunciated in Home
Ins. Co. v. Dick, 281 U.S. 397 (1930).

4

(d) STATEMENT OF THE CASE

George D. Hime is the named insured in an automobile
liability policy issued by State Farm Fire & Casualty Com-
pany (State Farm). The policy was applied for, issued and
delivered in 1966 to Hime in Florida. The automobile
listed in the policy is licensed and garaged in Florida,
where Hime resides with his wife, Gladys Hime.

The insurance contract contained the following lan-

guage:

“[State Farm agrees] (1) To pay on behalf of the
insured all sums which the insured shall become le-
gally obligated to pay as damages because of (A)
bodily injury by other persons * * *,

“[Exclusions] (1) coverage A, to bodily injury to
the insured or to any member of the family of the

insured residing in the same household as the in-
sureg * * °.”

The Florida courts have approved the validity of the
above exclusion. See Reid v. Allstate Ins. Co., 344 So.2d
877 (Fla. App.), aff'd 352 So.2d 1172 (Fla. 1977). In
Minnesota, such an exclusion is prohibited in “a policy
delivered or issued for delivery in this state.” Minn. St.
65B.14, 65B.23.

While on vacation, the Himes were involved in an acci-
dent in Minnesota. Mrs. Hime brought suit against her
husband in Minnesota for injuries sustained in the acci-
dent. State Farm declined coverage based on the house-
hold exclusion clause. After a judgment was entered
against George Hime, he initiated the present action seek-
ing coverage under the terms of his policy.

5

Cross-motions for summary judgment were filed in the
District Court. Arguments were held on November 16,
1976, and the District Court granied Hime’s motion on
April 22, 1977 (A-10). The District Court Judgment was
appealed to the Minnesota Supreme Court. The matter was
initially argued before a panel of three justices on April
18, 1978. By Order of the Minnesota Supreme Court, ad-
ditional briefs were filed, and the matter was again ar-
gued before the full court on March 30, 1979.

On August 17, 1979, the Minnesota Supreme Court af-
firmed the lower court, concluding that sufficient con-
tacts existed with Minnesota to justify the application of
Minnesota law to the Florida insurance contract and
thereby extend petitioner’s obligation to respondent be-
yond that stated in the insurance policy. The court believed
that the “contacts with Minnesota [were] sufficient to en-
sure that application of Minnesota law in this case would
not offend due process.” The court, once having made this
conclusion, then held that Minnesota law, rather than
Florida law, should apply to determine coverage under
the terms of the Florida insurance policy.

6

(e) REASONS FOR GRANTING THE WRIT

The Decision Below Is In Direct Conflict with the Principles
Set Forth In Home Ins. Co. v. Dick, 281 U.S. 297 (1930),
Hartford Acc. & Indemn. Co. v. Delta & Pine Land Co.,
292 U.S. 143 (1934), and Clay v. Sun Ins. Office, Ltd.,
377 U.S. 179 (1964). The Application Of Minnesota Law
To Change the Provisions Of A Valid Florida Insurance
Contract, Based Solely On An Accident in Minnesota,
Violates The Due Process Clause of The Fourteenth
Amendment And The Full Faith And Credit Clause of
The United States Constitution.

Even though a siate has jurisdiction to hear a contro-
versy, a state with jurisdiction can be constitutionally pre-
cluded by the Due Process and Full Faith and Credit
Clauses from applying its own law if it lacks sufficient
contacts with the parties. A series of United States Su-
preme Court decisions have established the limitations on
a state to impose its law on controversies bearing little re-
lationship to the forum state. The forerunner of these
cases was Home Ins. Co. v. Dick, 281 U.S. 297 (1930).
In Dick, a policy of insurance was issued to one Bonner
in Tampico, Mexico by a Mexican company not author-
ized to do business in Texas. (Home Insurance Company
was involved as a reinsurer of the Mexican company).
The policy provided coverage for a vessel Only while in
specified Mexican waters. The policy premium was paid
in Mexico. Prior to the loss, Bonner assigned the policy
to Dick. Dick, a permanent resident of Texas, resided in
Mexico from the time of the assignment to the time of
the loss. The policy contained a provision which required
institution of suit on the policy within one year of a loss—

5

a provision valid in Mexico, but invalid by statute in
Texas.

A loss occurred, but no action was commenced until
more than one year after the date of the loss. As might be
expected, Dick then commenced the action in Texas, seek-
ing to apply the Texas statute which forbade the shorten-
ing of any suit limitation to less than two years. The tri-
al court ruled that the Texas statute was applicable
and that Dick’s claim was not barred by the contrary pol-
icy provision. The Texas Court of Civil Appeals and the
Texas Supreme Court affirmed. The United States Su-
preme Court reversed. The Supreme Court held, at 281
U.S. 407-09:

“The Texas statute as here construed and applied
deprives the garnishees of property without due proc-
ess of law. A State may, of course, prohibit and de-
clare invalid the making of certain contracts within
its borders. Ordinarily, it may prohibit performance
within its borders, even of contracts validly made
elsewhere, if they are required to be performed within
the State and their performance would violate its laws.
But, in the case at bar, nothing in any way relating
to the policy sued on, or to the contracts of reinsur-
ance, was ever done or required to be done in Texas.
All acts relating to the making of the policy were
done in Mexico. All in relation to the making of the
contracts of re-insurance were done there or in New
York. And, likewise, all things in regard to perfor-
mance were to be done ontside of Texas. Neither the
Texas laws nor the Texas courts were invoked for
any purpose, except by Dick in the bringing of this
suit. The fact that Dick’s permanent residence was
in Texas is without significance. At all times here
material, he was physically present and acting in Mex-

8

ico. Texas was, therefore, without power to affect
the terms of contracts so made. Its attempt to im-
pose a greater obligation than that agreed upon and
to seize property in payment of the imposed obliga-
tion violates the guaranty against deprivation of prop-
erty without due process of law... .

* * *

“When, however, the parties have expressly agreed
upon a time limit on their obligation, a statute which
invalidates the agreement and directs enforcement of
the contract after the time has expired increases
their obligation and imposes a burden not contracted
for.

“It is true also that a State is not bound to provide
remedies and procedure to suit the wishes of individ-
ual litigants. It may prescribe the kind of remedies to
be available in its courts and dictate the practice
and procedure to be followed in pursuing those rem-
edies. Contractual provisions relating to these mat-
ters, even if valid where made are often disregarded
by the court of the forum, pursuant to statute or
otherwise. But the Texas statute deals neither with
the kind of remedy available nor with the mode in
which it is to be pursued. It purports to create rights
and obligations. It may not validly affect contracts
which are neither made nor are to be performed in
Texas.”

Accordingly, the Texas court was without power to af-
fect the terms of the insurance contract by imposing any
greater obligation than that agreed upon by the insured
and the insurer.

The next time the Supreme Court dealt with this issue
was in Hartford Acc. & Indemn. Co. y. Delta & Pine
Land Co., 292 U.S. 143 (1934). Plaintiff Delta & Pine

9

Land Company obtained from defendant, a Connecticut
corporation, a fidelity bond. By the terms of the bond, de-
fendant agreed to pay for losses caused by any of plain-
tiffs’ employees “in any position, anywhere.” Losses were
caused by an employee in Bolivar County, Mississippi. At
the time the bond was obtained, plaintiff was doing busi-
ness in Tennessee, with its principal office in Memphis.
Defendant also did business in Tennessee and the contract
was obtained through defendant’s Memphis agency. The
bond required claims to be made within 15 months of the
termination of the Suretyship. There was no statute in
Tennessee prohibiting or invalidating the time limitation
on the contract—a statute in Mississippi prohibited pro-
visions which changed the statutory limitation periods.

By the time suit was brought, plaintiff had moved its
principal place of business to Mississippi. Suit was brought
in Mississippi. The courts in Mississippi held that the pol-
icy provision was contrary to the policy and law of the
state of Mississippi, and awarded judgment in favor of
plaintiff.

The United States Supreme Court reversed on the basis
that the application of Mississippi law violated due proc-
ess. The Court held, at 292 U.S. 149:

“The Mississippi statutes, so construed, deprive
the appellant of due process of law. A state may limit
or prohibit the making of certain contracts within its
own territory . . . but it cannot extend the effect of
its laws beyond its borders so as to destroy or impair
the right of citizens of other states to make a con-
tract not operative within its jurisdiction, and lawful
where made. . . . Nor may it in an action based upon
such a contract enlarge the obligations of the parties

10

to accord with every local statutory policy solely up-
on the ground that one of the parties is its own citi-
MR...

In the present case, neither of the parties is a citizen of
the State of Minnesota, and accordingly there is no justifica-
tion whatsoever for enforcing Minnesota statutory policies
on the parties in this action. The Court further stated, at
292 U.S. 149-50:

“It is urged, however, that in this case the interest
insured was in Mississippi when the obligation to in-
demnify the appellee matured, and it was appellant’s
duty to make payment there; and these facts justify
the state in enlarging the appellant’s obligation be-
yond that stipulated in the bond, to accord with local
public policy. The liability was for the payment of
money only, and was conditioned upon three events,
loss under the policy, notice to the appellant at its
home office, and presentation of claim within fifteen
months of the termination of the suretyship. All of
these conditions were of substantial importance, all
were lawful in Tennessee, and all go to the obligation
of the contract. It is true the bond contemplated that
the employee whose faithfulness was guaranteed
might be in any state. He was in fact in Mississippi at
the date of loss, as were both obligor and obligee.
The contract being a Tennessee contract and lawful
in that state, could Mississippi, without deprivation
of due process, enlarge the appellant’s obligations
by reason of the states alleged interest in the trans-
action? We think not. Conceding that ordinarily a
state may prohibit performance within its borders
even of a contract validly made elsewhere, if the per-
formance would violate its laws . . . it may not, on
grounds of policy, ignore a right which has lawfully

1]

vested elsewhere, if, as here, the interest of the forum
has but slight connection with the substance of the
contract obligations. Here performance involved at
most only the casual payment of money in Mississippi.
In such a case the question ought to be regarded as
a domestic one to be settled by the law of the state
where the contract was made. A legislative policy
which attempts to draw to the state of the forum
control over the obligations of contracts elsewhere
validly consummated and to convert them for all pur-
poses into contracts of the forum regardless of the
relative importance of the interests of the forum as
contrasted with those created at the place of the con-
tract, conflicts with the guarantees of the Fourteenth
Amendment... .”

The final case of the three cases most frequently cited
with respect to this issue is Clay v. Sun Ins. Office, Ltd.,
377 U.S. 179 (1964). Clay was a resident of Illinois when
he purchased a “Personal Property Floater Policy (World
Wide)” from defendant, a British company licensed to do
business in Illinois, Florida, and other states. Shortly there-
after, Clay moved his property to Florida and became a
citizen and resident of Florida. The defendant company
knew that Clay had moved to Florida. Two years later,
Clay sustained a loss when his ex-wife destroyed some of
his property in Florida. The policy contained a provision
requiring that any suit against the company be commenced
within 12 months of the date of loss. Clay commenced an
action in Florida later than one year from the date of the
loss. The issue was whether Florida, consistent with due
process requirements, could apply its five-year statute to
the policy to negate the 12 month policy provision. The
Court held that Florida had ample contacts with the trans-

12

action and the parties to satisfy any due process require-
ment.

The question, then, is whether the present case is con-
trolled by Dick and Delta & Pine Land Co. or by Clay.
See for a similar discussion the dissent of Justices Brennan
and Douglas (the author of the Clay decision) in Confeder-
ation Life Ins. Co. v. de Lara, 409 U.S. 953 (1972). Are
the contacts with Minnesota (1) wholly lacking (Dick), (2)
too slight and casual to permit application of local law
(Delta & Pine Land Co.) or (3) ample for application of
forum law (Clay)? Of course, if the contacts are either
slight or nonexistent, there is no need to even consider the
choice-of-laws question. However, it appears clear that
the issue of due process and the separate and distinct is-
sue of choice-of-laws involve some overlapping consider-
ations. What are the contacts with Minnesota?

(1) Plaintiff is a non-resident (plaintiff was a resident
of the forum state in each of the three cases);

(2) Defendant, whose home office is in Illinois, does
business in Florida, Minnesota, and other states
(as did defendant in Delta & Pine Land Co. and

Clay);

(3) The event giving rise to the litigation occurred in
the forum state (as in Delta & Pine Land Co. and
Clay);

(4) The forum state has a statute which is contrary to
a provision of the insurance contract (as in all
three cases).

(5) The policy in question provided coverage for
losses occurring outside the state in which the con-
tract was made (as in Delta & Pine Land Co. and
Clay).

13

In comparing the contacts in the instant case with the
contacts involved in the Supreme Court trilogy, this case

falls into place between the Dick case and the Delta & Pine
Land Co. case—the contacts are more than in Dick but
less than in the Delta & Pine Land Co. case. The con-
tacts fall far short of the “ample” contacts found in the
Clay case. As a result, the application of Minnesota law
to the instant controversy violates defendant’s right to due
process.

This precise issue has been decided in other states. The
highest courts of New Jersey and Wisconsin, on facts vir-
tually identical, have held that the policy must be en-
forced as written. See, Empire Mut. Ins. Co. v. Melburg, 67
N.J. 139, 336 A.2d 482 (1975); Knight v. Heritage Mut.
Ins. Co., 71 Wis.2d 821, 239 N.W.2d 348 (1976). It is
ironic that had the accident happened 50 miles east, in
Wisconsin, that the policy provision would have been en-
forced as the parties contracted and as it would have been
if at anytime Hime would have had an accident in Flor-
ida. Should coverage which was not contemplated, which
was not in the policy, and for which a premium was not
charged, be forced on State Farm because Hime made
it across the Minnesota border? It should not. Minnesota
has no more contacts in this case than Wisconsin had in
Knight, supra, or New Jersey had in Melburg, supra. Un-
der these circumstances, it was improper for Minnesota,
after erroneously concluding that sufficient contacts ex-
isted, to apply Minnesota law to expand the coverage of
the policy.

14
(f) CONCLUSION

Petitioner respectfully prays that, for all the reasons set
forth herein, this petition for writ of certiorari be granted.

Respectfully submitted,

O. C. Adamson, IT
J. Richard Bland
2250 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Telephone: (612) 338-0661
Of Counsel
Meagher, Geer, Markham, Anderson,
Adamson, Flaskamp & Brennan
2250 IDS Center
Minneapolis, MN 55402

A-1
APPENDIX A

George D. Hime,
Respondent,
VS.

State Farin Fire & Casualty Company,

Appellant.
Hennepin County
Wahl, J.
Concurring specially,
Otis, J.
Endorsed

Filed August 17, 1979
John McCarthy, Clerk
Minnesota Supreme Court

SYLLABUS

1. Sufficient contacts with the State of Minnesota ex-
ist in this case so that due process would not be violated
by the application of Minnesota law.

2. Application of Minnesota law to set aside the Flor-
ida automobile liability insurance contract clause, which
excluded coverage for intra-family claims, was proper un-
der the choice-influencing considerations set forth in Milk-
ovich v. Saari, 295 Minn. 155, 203 N.W. 2d 408 (1973).

Affirmed.

Heard, considered, and decided by the court en banc.

A-2

OPINION

WAHL, Justice.

Defendant State Farm Fire & Casualty Company ap-
peals from the order for summary judgment and judgment
of the Hennepin County District Court, which set aside the
family exclusion clause and ordered State Farm to indem-
nify its insured, George Hime, for a judgment against him
for damages suffered by his wife arising from an automo-
bile accident in Minnesota. We affirm.

On December 5, 1966, appellant issued an automobile
insurance policy to respondent, a Florida resident. The pol-
icy recognized that the insured automobile would be prin-
cipally garaged in Florida. It also contained the following
intra-family liability exclusion, the enforceability of which
is the subject of this litigation:

“[State Farm agrees] (1) To pay on behalf of the
insured all sums which the insured shall become le-
gally obligated to pay as damages because of (A) bod-
ily injury by other persons * * *,

“[Exclusions] (1) coverage A, to bodily injury to
the insured or to any member of the family of the
insured residing in the same household as the in-
sured * * *.”

The policy was renewed annually. Respondent and his
wife resided at all times in the same Florida household.

On August 3, 1972, automobiles driven by respondent
and a Minnesota resident were involved in a two-car acci-
dent in Minnesota. Respondent’s wife, a passenger in re-
spondent’s car, was seriously injured and commenced suit
against both drivers in Minnesota court, Gladys Hime

*

—

A-3

was awarded damages in the amount of $38,000, which
were apportioned according to negligence in the amount
of 60 percent or $22,800 against respondent, and 40 per-
cent against the Minnesota driver. Appellant refused to
defend or indemnify respondent because of the intra-fam-
ily liability exclusion but paid Gladys Hime $4,424.25 in
no-fault benefits pursuant to applicable Florida law.

Respondent commenced this indemnification action
against appellant on June 11, 1976, prevailing in cross-
motions for summary judgment before the trial court.

The issue on appeal is whether the trial court erred in
applying Minnesota law to render ineffective the Florida
insurance contract clause that excluded automobile liabil-
ity coverage for intra-family claims.

The jurisdiction of the Minnesota courts over this mat-
ter being conceded, we limit our review to the conflict of
laws question presented by this case.’ To resolve this con-
flict, we consider initially whether the contacts with Min-
nesota are sufficient to make application of Minnesota
law consistent with due process. Such contacts must not
be too slight and casual. See, Clay v. Sun Ins. Office, Ltd.,
377 U.S. 179, 182, 84 S. Ct. 1197, 12 L. ed. 2d 229
(1964).

1The choice between the Minncsota and Florida laws is determinative
of the outcome of this case. The Florida courts have recognized the
validity of provisions of automobile liability insurance policies that ex-
clude from coverage members of the insured’s family or household.
See, e.g., Reid v. Allstate Insurance Co., 344 So. 2d 877 (D.C.A. Fla.
1977), affirmed, Reid v. State Farm Fire & Casualty Co., 352 So. 2d
1172 (Fla. 1977). To the contrary, Minnesota law has prohibited
household or family exclusions in automobile liability insurance poli-
cles since 1969. See. Minn. St. 65B.23, repealed by Laws 1974, c. 408
§ 33. Under the current Minnesota no-fault automobile insurance act,
family and household members are included in the statutory definition
of “insureds.” See, Minn. St. 65B.43. subd. 5,

A-4

The contacts in this case arise both from the contract
of insurance and from the tort, which initiates the insur-
er’s performance of the contract. We do not restrict our
review to the contacts arising from the contract. To do so
would be to ignore the unique nature of automobile liabil-
ity insurance. As the Supreme Court has recognized:

“Insurance companies * * * do not confine their
contractual activities and obligations within state
boundaries. They sell to customers who are promised
protection in States far away from the place where
the contract is made.” Clay v. Sun Ins. Office, Ltd.
363 U.S. 207, 221, 80 S. Ct. 1222, 1230 (1960)
(Black, J., dissenting), quoted in Clay v. Sun Ins.
Office, Ltd., 377 U.S. 179, 182, 84 S. Ct. 1197,
199.’

Moreover, the automobile liability insurance contract con-
templates the occurrence of a tort. The transaction is a
hybrid, overlapping the laws of tort and contract. See,
Allstate Insurance Co. v. Sullam, 76 Misc. 2d 87, 349
N.Y.S. 2d 550, 558 (1973).

The contacts with the State of Florida arise from the
contract itself. The contract was issued in Florida to a

*We note also the Supreme Court’s decision in Watson v. Employers
Liability Assurance Corp., 348 U. S. 66, 75 S. Ct. 166, 99 L. ed. 74
(1954). Watson involved a suit on an insurance policy issued by a
Massachusetts insurance company and delivered in Massachusetts and
Illinois, which contained a clause prohibiting direct actions against the
Insurance company. The plaintiff was injured by the product of the

insured in Louisiana and sued the insurance company under Louisi-

ana’s direct action statute. The Supreme Court reversed the dismissal
of the suit on the ground that Louisiana had a “legitimate interest in

safeguarding the rights of persons injured there,” 348 U. S. 73, 75

. hoe vinge The opinion recognized the interstate aspects of the case

efore it:

A-5

Florida resident on a vehicle principally garaged in Flor-
ida. Presumably, the premiums were paid in Florida. The
contacts with the State of Minnesota, however, are signifi-
cant. The appellant is licensed to do business in Minne-
sota and is subject to suit in our courts. The accident oc-
curred here and involved a Minnesota resident in a Min-
nesota vehicle. The non-resident who was injured was hos-
pitalized and treated in this state. Suit against both drivers
was commenced here, and the case was tried in the courts
of this state. We find these contacts with Minnesota suf-
ficient to ensure that application of Minnesota law in this
case would not offend due process.

Having concluded that due process would not be vio-
lated by application of Minnesota law, we apply our
choice of law rules set forth in Milkovich v. Saari, 295
Minn. 155, 203 N.W. 2d 408 (1973) to determine which
law governs in this case.* See, Schwartz v. Consolidated
Freightways Corp. of Del., 300 Minn. 487, 221 N.W. 2d
665, 668 (1974). Under Milkovich, policy considerations

“Some contacts made locally, affecting nothing but local affairs,
may well justify a denial to other states of power to alter those con-
tracts. But, as this case illustrates, a vast part of the business affairs
of this Nation does not present such simple local situations. Although
this insurance contract wus issued in Massachusetts, it was to protect
* * * against damages on account of personal injuries that might be
suffered * * * anywhere in the United States * * *. As a consequence
of the modern practice of conducting widespread business activities
throughout the entire United States, this Court has in a series of cases
held that more states than one may seize hold of local activities which
are part of multistate transactions and may regulate to protect interests
of its own people * * *.”

Thus, despite the contract clause prohibiting direct actions, peti-
tioner’s direct action was permitted.

3The efforts of the amicus curiae do not go unnoticed. While the amicus
concisely and articulately sets forth an alternative approach to the
resolution of conflicts questions, we are not persuaded that the alterna-
tive is preferable to the Milkovich analysis.

A-6

as well as contacts must be analyzed. Schwartz, 295 Minn.
155 at 493, 221 N.W. 2d at 669. Five choice-influencing
considerations are involved: (1) predictability of result;
(2) maintenance of interstate and international order; (3)
simplification of the judicial task; (4) advancement of
the forum’s governmental interest; and (5) application of
the better rule of law.

Unlike the typical tort case, where only advancement
of the forum’s governmental interest and application of
the better rule of law are relevant (See, e.g., Schwartz),
this case, with traits of both torts and contract, requires
consideration of all five factors. See, Hague v. Allstate, In-
surance Co., — N.W. 2d — Minn. (1978), filed April
7, 1978.

(1) Predictability of Results.

As we observed in Hague, supra, the unplanned nature
of automobile accidents lessens the importance of pre-
dictability of results in automobile insurance cases. Nev-
ertheless, we note that the insured’s protection has no geo-
graphical boundaries, at least not under the policy before
us, and it is foreseeable that the insured may meet his mis-
fortune out of the state of issuance. It was neither unu-
sual nor unpredictable that the insured in this case, a
former Minnesota resident, returned to visit his former
home and that his vehicle was involved in an accident
there. As was the case in Clay v. Sun, Ins. Office, Ltd.,
supra, the contract here in issue did not provide that the
law of the issuing state would govern suits filed in other
states. The transaction was not planned to have predictable
results, and the insurer is not now justified in expecting

een

ee aE ee

A-7

Florida law to govern absolutely in light of the extra-terri-
torial effect and unique nature of the automobile insurance
contract. As we said in Myers v. Government Employees
Insurance Uo., 302 Minn. 359, 365, 225 N.W. 2d 238,
242 (1974), predictability of results applies primarily to
consensual transactions where the parties desire advance
notice of which state law will govern in future disputes.
This is not such a case.

(2) Maintenance of Interstate Order.

This concept involves consideration of the sufficiency
of contacts between the forum state and the transaction.
See, Hague, supra. The contacts that we have found suffi-
cient to satisfy the due process also support application of
Minnesota law under this choice-influencing consideration.
In light of these facts, respondent cannot be regarded as
simply forum-shopping with little genuine contact with the
state.

(3) Simplification of the Judicial Task.

Because the Minnesota and Florida laws on the enforce-
ability of the contract clause, which is central to this ap-
peal, are equally clear, though contrary to each other,
this consideration is not significant in this case. Either law
could be applied without practical difficulty.

(4) Advancement of the Forum’s Governmenta] In-
terest.

Our concern here, as in Milkovich v. Saari, supra, is
that Minnesota courts not be called upon to determine is-
sues under rules, which, however accepted they may be

A-8

in other states, are inconsistent with our own concept of
fairness and equity. To apply Florida law in this case
would be adverse to that interest, for the courts and legis-
lature of this state have condemned household immunity
clauses. See, Minn. St. 65B.23. repealed by Laws 1974, c.
408 §33. See, also, Beaudette v. Frana. 285 Minn. 367,
173 N.W. 2d 416 (1969), where we abrogated interspous-
al immunity in actions for tort. Providing recovery to those
injured and treated within our borders is a legitimate state
interest that was recognized by the Supreme Court in
Watson v. Employers Liability Assurance Corp., 348 U.S.
66, 75 S. Ct. 166, 99 L. ed. 74 (1954), By applying
Florida law to this controversy, respondent’s wife, while
holding a $22,000 judgment against her husband, would
in effect be denied recovery. This result offends our idea
of fairness and defies our concern for the welfare of visi-
tors to this state.

(5) Better Rule of Law.

Because the foregoing considerations weigh in favor of
applying Minnesota law, we need not dwell on this fifth
factor. We simply note our reasoning in Beaudette v.
Frana, supra. There we recognized that the social gain of
providing tangible financial protection for those whom an
insured wrongdoer ordinarily has the most natural motive
to protect transcends the more intangible social loss of im-
pairing the integrity of the family relationship. Similarly,
this same social gain transcends the arguable social loss of
impairing insurance contract provisions that provide for
familial exclusions. The sanctity of such a contractual re-
lationship is already diminished by the relative absence of

A-9

free negotiation, perhaps approaching the nature of a con-
tract of adhesion. See, Ehrenzweig, 53 Colum. L. Rev.
1072, 1082 (1953). Our application of the Milkovich con-
siderations leads us to conclude that Minnesota law should
govern resolution of this controversy.

Affirmed.

OTIS, Justice (concurring specially).

I have no difficulty in distinguishing this case from
Hague v. Allstate, —N.W. 2d—- (Minn. 1978), filed
April 7, 1978, where Minnesota as the forum state had
literally no contacts with any of the parties which were re-
lated to the accident when it occurred. For the reasons
set forth in the dissent, in my opinion that decision ap-
plied the better rule of law unconstitutionally.

Here, on the other hand, the contacts of the parties
with the State of Minnesota are substantial and there is
every reason to apply what we all agree is the better Min-
nesota rule. Not only did the insured have ties with this
State as a former resident visiting here, but the other driver
was a resident of Minnesota; the accident occurred in Min-
nesota; and the injured party was treated in Minnesota.
None of these contacts was present in the Hague case,
however.

A-10
APPENDIX B
ORDER
FILE NO. 726761

The above-captioned matter came on for hearing before
the undersigned, a Judge of this Court, sitting at Special
Term on the 16th day of November, 1976, upon cross-
motions for Summary Judgment.

F. Dean Lawson, Esgq., appeared for and on behalf of
plaintiff, J. Richard Bland, Esq., appeared for and on be-
half of defendant.

The Court, having heard the arguments of counsel, and
having read and considered the memorandas submitted at
the hearing, and upon all the files, records, and proceed-
ings herein, and the Court, being otherwise fully advised
in the premises,

IT IS HEREBY ORDERED:

1. That plaintiff's motion for Summary Judgment be,
and the same hereby is, granted.

Dated this 22 day of April, 1977.

/s/ PATRICK W. FITZGERALD
Judge of District Court

MEMORANDUM

This matter is before the Court upon cross-motions for
Summary Judgment arising out of an action seeking a de-
termination whether Minnesota or Florida law governs the
insurance contract in question.

A-11

The events giving rise to this suit are simple and un-
disputed. Plaintiff and his wife are, and have at all times
to the present, been residents of the State of Florida. On
August 3, 1972, plaintiff became involved in an auto-
mobile accident in Minnesota in which plaintiff's wife, a
passenger, was seriously injured.

On the basis of her injuries, plaintiff’s wife commenced
an action in Minnesota agianst her husband and the driver
of the other vehicle involved in the accident. This action
resulted in a judgment of $38,000 with plaintiff 60% at
fault and plaintiff's co-defendant 40% at fault.

At the time of the accident, plaintiff and his wife were
covered by an insurance policy which was applied for
and issued in their home state of Florida. The premiums
were also paid in Florida.

The instant plaintiff sought coverage under his Florida
insurance policy for damages in the suit brought against
him by his wife. Defendant State Farm, which had paid
plaintiffs wife $4,424.25 under Florida’s No Fault Act,
denied plaintiff coverage on the basis of a household ex-
clusion in his policy.

At the time of the accident, Florida still had inter-
spousal immunity; the household exclusion was permitted
in insurance policies. Minnesota had abolished inter-
spousal immunity in 1969, Beaudette v. Frana, 285 Minn.
366, 173 N.W. 2d 416, and household exclusions are
presently prohibited by statute in Minnesota. See, M.S.A.
65B.23.

The question is whether Minnesota or Florida law
governs this insurance contract which was written, issued

————————

A-12

and paid for in Florida under Florida law to residents of
Florida for an automobile principally garaged in Florida
but where the accident occurs in Minnesota and suit is
brought in Minnesota.

The seminal Minnesota case on “conflicts of law” prob-
lems is Milkovich v. Saari, 295 Minn. 555, 203 N.W. 2d
408 (1973). In Milkovich, our Supreme Court crystalized
a method of conflicts analysis earlier adopted by that Court
in Schneider v. Nichols, 280 Minn. 139, 158 N.W. 2d
254 (1968). This methodology was formulated by Prof.
Robert Leflar in his article, “Choice-Influencing Consid-
erations in Conflicts Law,” 41 N.Y.U.L. Rev. 267 (1966);
it involves five basic “choice-influencing considerations:”

(A) Predictability of results;

(B) Maintenance of interstate and international or-
der;

(C) Simplification of the judicial task;

(D) Advancement of the forums governmental in-
terest;

(E) Application of the better rule of law.
Milkovich v. Saari, supra at 203 N W2d 412.

As counsel for defendant has pointed out, the applica-
tion of these choice-influencing considerations in Min-
nesota have more commonly been associated with negli-
gence law conflicts problems rather than with issues aris-
ing out of contracts.

Professor Leflar however applied his analysis to con-
flicts problems arising out of contracts as well as torts. He

a ee ee verereens

A-13

noted, for example, that predictability of results is of pri-
mary importance in resolving “contracts” conflicts prob-
lems. See, Leflar, supra at 41 N.Y.U.L. Rev. 318 (case 8).
The Professor closed the above-cited article with twelve
case hypotheticals and illustrated analyses employing his
proposed methodology. The twelfth hypothctical example
represents the essential facts presently before this Court:

Case (12), H and W, husband and wife domiciled
in State X, were traveling together by auto, H driv-
ing a car owned by H, registered and insured in X,
when H by his negligent driving in State F injured
W. By the law of X a wife may not recover from
her husband in tort; by the law of F a wife may so
recover. W sues H in F.

Leflar, supra, at 41 N.Y.U.L. Rev. 323. Professor Lef-
lar applied his choice-influencing considerations to these
facts in the following manner:

There are many cases saying that husband-wife rights
in tort are governed by the law of the place of the in-
jury under a tort characterization, while others use a
family law characterization to say that the law of
the parties’ marital domicile should govern. But the
characterization technique does not get at the real
issues here any more than in other problems.

Predictability, (A), is practically unimportant here,
as in cases (1), (2), and (5). Negligent injuries are not
planned in reliance on one law or another. The in-
terstate order, (B), is not particularly affected by the
choice of law in husband-wife injury cases. Spouses

A-14

will travel together across state lines regardless of
choice-of-law rules. The forum court can apply the
other state’s law as easily as its own; both are sim-
ple. No problem of efficiency in judicial administra-
tion, (C), is presented. It might be said that F has no
governmental interest, (D), in applying its law to pro-
tect an X wife against her X husband (or, more real-
istically to protect an X hushand and wife against
the insurance company that issued a liability policy
to H in X), when the only F contact was the acci-
dental occurrence of negligent injury in F. The fact
is, however, that F as a typical American state is
about as much interested in the welfare of visitors
from sister states as in that of its own domiciliaries,
especially when the visitors seek aid from F’s courts
on an F set of facts. The conflicting interest in pre-
venting collusive raids on insurance companies, if F
attaches importance to this interest, has about the
same weight for extrastate insurance contracts in an
F court as for local ones. On this kind of case the
nonresidence of the parties would not make such dif-
ference to F. As to which state’s law is better, (E),
each court is entitled to its own opinion, and there
is a real difference of opinion among courts on this
kind of law. Probably F will believe that its own law
is preferable, though it might not. It would be quite
possible for a good court to go either way on the
balance of choice-influencing considerations on these
facts, though probably most courts in F’s situation
would apply their own law and permit W to main-
tain the action. (Emphasis supplied).

Sete SR eR 5 eae Safin eR a>.

en ee

A-15

With Professor Leflar’s suggestion that a good Court
could go either way on these facts, the undersigned has
concluded that the balance of considerations in this case
support the application of Minnesota’s better law repre-
sented by Beaudette v. Frana, supra, and M.S.A. 65B.23
which forbids household exclusions in Minnesota insur-
ance contracts, rather than the application of Florida’s
more archaic household exclusion.

While the general rule may be that an insurance con-
tract is governed by the law of the place in which it is
executed, the main governmental interest which this
Court has in applying Minnesota’s plainly better law:

. is that of any “justice-administering state” . . .
In that posture, we are concerned that our courts not
be called upon to determine issues under rules which,
however accepted they may be in other states, are
inconsistent with our own concept of fairness and

equity.
Milkovich, supra at 203 N.W.2d 417.

While Milkovich may have involved a torts conflicts prob-
lem, the governmental interest remains the same where
Minnesota courts are properly invoked to determine issues
arising out of foreign insurance contracts.

Our Supreme Court has of course recognized defen-
dant’s suggestion that the application of the Leflar test is
not unlimited:

Once jurisdiction attaches, the forum may subject to
the rather minimal due process standards, apply its

A-16

own choice-of-law rules to determine what law gov-
erns the case...
Schwartz v. Consolidated Freightways of Delaware,
— Minn. —, 221 N.W. 2d 665, 668 (1974). (Em-
phasis supplied).

These due process standards are clearly met where a
Florida automobile driven by a Florida resident collides
with a Minnesota resident in Minnesota which then cul-
minates in a lawsuit litigated in Minnesota;

The courts of this state are open to those residents
and non-residents alike who properly invoke, within
constitutional limitations, jurisdiction of these courts.
Schwartz, supra at 221 N.W.2d 669.

This Court recognizes that our sister state of Wisconsin
has arrived at a different result in similar cases. See e.g.,
Peterson v. Warren, 31 Wisc. 2d 547, 143 N.W. 2d 560
(1966); Urhammer v. Olson, 39 Wisc. 2d 447, 159 N.W.
2d 688 (1968); Knight v. Heritage Mutual Insurance Co.,
71 Wisc. 2d 821, 239 N.W. 2d 348 (1976).

Despite these Wisconsin cases, the undersigned is per-
suaded that Minnesota, as a justice administering state
called upon to provide a forum in which to litigate this
case, should not determine this issue under rules which,
however accepted they may be in Florida, are nevertheless
inconsistent with our own concepts of fairness and equity.

The State of Minnesota has an interest in the welfare
of visitors to this state who are properly in our courts as
well as to its domiciliaries. Our own Supreme Court has
condemned the plainly repugnant doctrine of inter-spous-

a6 Pe nae et BO

sas ts

. Seer ae

A-17

al immunity and our legislature has forbidden the atten-
dant household exclusion in insurance contracts. Given
these facts and since this matter is being litigated in our
Courts, Minnesota law must apply.

For all of the foregoing reasons, this Court must con-
clude that plaintiff's motion for Summary Judgment must
be granted.

LET THIS MEMORANDUM BE MADE PART OF
THE FOREGOING ORDER.
P.W.F.

A-18
APPENDIX C

STATE OF MINNESOTA
Ss.
SUPREME COURT

MANDATE

To the Honorable Judge and Officers of the District Court
within and for the County of Hennepin Greeting:

Whereas, Lately in your Court, in action therein pend-
ing, entitled George D. Hime, Plaintiff, vs. State Farm Fire
& Casualty Company, Defendant, a certain order and judg-
ment was entered therein April 22 and 28, 1977 from which
action of your Court an appeal thereafter was taken to this
Court;

And Whereas, The said cause came on to be heard be-
fore our Supreme Court, and was argued by counsel;

On Consideration Whereof, It is now here ordered and
adjudged by this Court that the order and judgment of the
Court below herein appealed from, be, and the same here-
by is, in all things affirmed and that judgment be entered
accordingly. A copy of the entry of judgment thereupon in
this Court is herewith transmitted and made part of this
remittitur.

Now Therefore, This MANDATE is to you directed and
certified, to inform you of these proceedings in our Su-
preme Court, in said hereinbefore mentioned cause, and
the same is hereby and herewith REMANDED to your

we

A-15

Court for such other or further record and proceedings
therein as my be by law necessary, just and proper, under
and by virtue of the said order herein made.

Witness, The Honorable ROBERT J. SHERAN, Chief
Justice of the Supreme Court aforesaid, and the seal of
said Court at St. Paul, this August 29, 1979.

JOHN McCARTHY
Clerk of the Supreme Court.
/s/ WAYNE TSCHIMPERLE, Deputy.

STATE OF MINNESOTA, SUPREME COURT

George D. Hime,
Respondent,
vs.

State Farm Fire & Casualty Company,
Appellant.

JUDGMENT

Pursuant to an order of Court heretofore duly made and
entered in this cause it is determined and adjudged that the
order and judgment of the Court below, herein appealed
from, to-wit, of the District Court within and for the Coun-
ty of Hennepin be and the same hereby is in all things af-
firmed.

A-20

And it is further determined and adjudged that respon-
dent herein, do have and recover of appellant herein the
sum and amount of Four Hundred Sixty-Nine and 30/100
DOLLARS, ($469.30) costs and disbursements in this
cause in this Court, and that execution may be issued for
the enforcement thereof.

Dated and signed August 29, 1979.

BY THE COURT
Attest:
JOHN McCARTHY, Clerk

STATEMENT FOR JUDGMENT

Statutory Costs $25.00 Printer $439.80 Postage and
Express $4.50

Total $469.30
- Satisfaction of Judgment filed

Therefore the above judgment is duly satisfied in full
and discharged of record

Attest: Clerk.
By Deputy.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1244%3A1. Public record. Not legal advice.