U.S. Supreme Court BOSEMAN v. CONNECTICUT GENERAL LIFE INS. CO., 301 U.S. 196 (1937)

[Page 301 U.S. 196, 202]

1. The oil corporation and respondent intended, and the policy definitely declares, that Pennsylvania law should govern. Undoubtedly, as between employer and insurer, Pennsylvania law controls. [Footnote 1] 'In every forum a contract is governed by the law with a view to which it was made.' [Footnote 2] But the precise issue for decision is whether, as between petitioner and insurer, the policy provision requiring notice of claim is governed by Pennsylvania law or Texas law. Petitioner and other insured employees were not parties to, nor did they have any voice in, the negotiation or consummation of the contract. The terms of the policy were settled by the oil corporation and respondent. Eligible employees were given opportunity upon specified conditions to have insurance by giving payroll deduction orders approved by their employer. The policy did not of itself insure petitioner or any other person. It merely made available specified insurance to certain employees. For the payment of premiums the insurer looked only to the corporation. The latter, for the benefit of its insured employees, assumed the burden of paying to the insurer premiums to which they by the deduction orders had contributed. [Footnote 3]

[Page 301 U.S. 196, 203]

By his application petitioner accepted the provisions of the policy including the agreement of the oil corporation and respondent that the policy is governed by Pennsylvania law.

2. Petitioner insists that the delivery of the certificate in Texas made the law of that state, article 5546, applicable. But the certificate is not a part of the contract of, or necessary to, the insurance. [Footnote 4] It is not included among the documents declared 'to constitute the entire contract of insurance.' Petitioner was insured on the taking effect of the policy long before the issue of the certificate. It did not affect any of the terms of the policy. It was issued to the end that the insured employee should have the insurer's statement of specified facts in respect of protection to which he had become entitled under the policy. It served merely as evidence of the insurance of the employee. Petitioner's rights and respondent's liability would have been the same if the policy had not provided for issue of the certificate. And, plainly, delivery of the certificate by the refining company to petitioner in Texas has no bearing upon the question whether Pennsylvania law or Texas law governs in respect of the notice of claim. We are unable to agree with decisions of the Court of Civil Appeals of Texas in cases similar to this that the certificate is a part of the contract of insurance or that its delivery

[Page 301 U.S. 196, 204]

is necessary to make the policy effective. [Footnote 5] Nor are we required to follow their construction. [Footnote 6]

3. In support of his contention that Texas law applies petitioner suggests that the insurer, acting through the employer as its agent in that state, solicited and procured him to take insurance under the policy. There is no evidence that the insurer expressly authorized the oil corporation or any of its subsidiaries to act for it in consummating insurance under the policy. Petitioner's election and the employer's application for the policy were made before the Texas Board authorized the insurer to do business in that state. By uncontradicted evidence it is shown that the insurer did not qualify to solicit or write insurance or accept any application originating there. Employers regard group insurance not only as protection at low cost for their employees but also as advantageous to themselves in that it makes for loyalty, lessens turn-over and the like. [Footnote 7] When procuring the policy, obtaining applications of employees, taking pay roll deduction orders, reporting changes in the insured group, paying premiums, and, generally, in doing whatever may serve to obtain and keep the insurance in force, employers act not as agents of the insurer, but

[Page 301 U.S. 196, 205]

for their employees or for themselves. [Footnote 8] And wholly in accord with that view are the acts done in Texas that are claimed by petitioner to be attributable to the refining company or its agents. They are: The termination of the earlier policies; acceptance of petitioner's release of claims under them and his application under the new policy by the giving of pay roll deduction orders; delivery of the certificate to petitioner; the forwarding to the oil corporation of the amounts deducted from his pay on account of premiums. None of these was done for or on behalf of the insurer. The undisputed circumstantial facts require the conclusion that the employer acted, not as agent of the insurer, but for and on behalf of petitioner and other insured employees and in its own interest. [Footnote 9]

4. Petitioner cites articles 5054 and 5056, Revised Civil Statutes, as opposed to the lower court's ruling: 'If employes in Texas desire to join in an insurance plan about to be set up or already in operation in Pennsylvania, and either in person or through their employer take steps in Pennsylvania to do so, the laws of Texas do not control it.' Article 5054 applies only to contracts of insurance made by an insurance company doing business in Texas. [Footnote 10] The respondent did no business in that state. [Footnote 11] Article 5056 merely declares that one who in Texas does specified things in respect of insurance shall be held to be the agent of the insurance company for which the act is done or the risk taken 'as far as relates

[Page 301 U.S. 196, 206]

to all the liabilities, duties, requirements and penalties set forth in this chapter.' Clearly there is nothing in that article as expounded by the Supreme Court of Texas (Hartford Fire Insurance Co. v. Walker, 94 Tex. 473, 61 S.W. 711) that has any bearing on the question under consideration. The challenged ruling is sound and well supported by our decisions. [Footnote 12]

5. The conclusion that Pennsylvania law governs the policy provision requiring notice of claim is supported not only by the making and delivery of the contract of insurance in that state, the declaration in the policy that Pennsylvania law shall govern and petitioner's acceptance of the insurance according to the terms of the policy, but also by the purpose of the parties to the contract that everywhere it shall have the same meaning and give the same protection, and that inequalities and confusion liable to result from applications of diverse state laws shall be avoided. [Footnote 13]

Affirmed. Footnotes

Footnote 1 Equitable Life Assurance Society v. Clements, 140 U.S. 226, 232, 11 S.Ct. 822; Mutual Life Ins. Co. of New York v. Cohen, 179 U.S. 262, 264, 265 S., 267, 21 S.Ct. 106; Northwestern Mut. Life Ins. Co. v. McCue, 223 U.S. 234, 246, 247 S., 32 S.Ct. 220, 38 L.R.A.(N.S.) 57; New York Life Ins. Co. v. Dodge, , 372 et seq ., 38 S.Ct. 337, Ann.Cas.1918E, 593; Mutual Life Ins. Co. v. Liebing, 259 U.S. 209, 214, 42 S.Ct. 467, 468; Hartford Acc . & Ind. Co. v. Delta & Pine Land Co., 292 U.S. 143, 150, 54 S.Ct. 634, 636, 92 A.L.R. 928. Cf. Seeman v. Philadelphia Warehouse Co ., 274 U.S. 403, 408, 409 S., 47 S.Ct. 626, 627, 628; Home Ins. Co. v. Dick, 281 U.S. 397, 408, 50 S.Ct. 338, 341, 74 A.L.R. 701; John Hancock Mutual Life Ins. Co. v. Yates, , 57 S.Ct. 129.

Footnote 2 Wayman v. Southard, 10 Wheat. 1, 48; Pritchard v. Norton, 106 U.S. 124, 136, 1 S.Ct. 102.

Footnote 3 See Meyerson v. New Idea Hosiery Co., 217 Ala. 153, 157, 115 So. 94, 55 A.L.R. 1231.

Footnote 4 All States Life Ins. Co. v. Tillman, 226 Ala. 245, 248, 146 So. 393; Equitable Life Assur. Soc. of U.S. v. Austin, 255 Ky. 23, 26, 72 S.W.(2d) 716; Seavers v. Metropolitan Life Ins. Co., 132 Misc. 719, 722, 230 N.Y.S. 366; Thull v. Equitable Life Assurance Society, 40 Ohio App. 486, 488, 178 N.E. 850; Metropolitan Life Ins. Co. v. Lewis (La.App.) 142 So. 721, 722; Hardie v. Metropolitan Life Ins. Co. (Mo.App.) 7 S.W.(2d) 746, 747; McBride v. Connecticut Gen. Life Ins. Co. (D.C.) 14 F.Supp. 240, 241.

Footnote 5 Connecticut General Life Ins. Co. v. Moore, 75 S.W.(2d) 329; Connecticut General Life Ins. Co. v. Dent, 84 S.W.(2d) 250; Connecticut General Life Ins. Co. v. Lockwood, 84 S.W.(2d) 245; Metropolitan Life Ins. Co. v. Worton, 70 S.W. (2d) 216; Metropolitan Life Ins. Co. v. Wann, 81 S. W.(2d) 298.

Footnote 6 Carpenter v. Providence Washington Insurance Company, 16 Pet. 495, 511, 512; Washburn & Moen Mfg. Co. v. Reliance Marine Ins. Co., 179 U.S. 1, 15, 21 S.Ct. 1; Aetna Life Ins. Co. v. Moore, 231 U.S. 543, 559, 34 S.Ct. 186. See Swift v. Tyson, 16 Pet. 1, 19; Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co., 276 U.S. 518, 530, 48 S.Ct. 404, 407, 57 A.L.R. 426, and cases cited.

Footnote 7 Nohl v. Board of Education, 27 N.M. 232, 234 et seq., 199 P. 373, 16 A.L.R. 1085; State ex rel. v. City of Memphis, 147 Tenn. 658, 663 et seq., 251 S.W. 46, 27 A.L.R. 1257; Aetna Life Ins. Co. v. Lembright, 32 Ohio App. 10, 14, 166 N.E. 586. Encyclopaedia of Social Sciences, vol. 7, Group Insurance, pp. 182, 185.

Footnote 8 Duval v. Metropolitan Life Insurance Company, 82 N.H. 543, 548, 136 A. 400, 50 A.L.R. 1276; People ex rel. Kirkman v. Van Amringe, 266 N.Y. 277, 282, 194 N.E. 754; Connecticut General Life Ins. Co. v. Speer, 185 Ark. 615, 617, 48 S.W.(2d) 553; Leach v. Metropolitan Life Ins. Co., 124 Kan. 584, 589, 261 P. 603; Equitable Life Assur. Soc. of U.S. v. Hall, 253 Ky. 450, 452, 453, 69 S.W.(2d) 977; Dewease v. Travelers' Insurance Co., 208 N.C. 732, 734, 182 S.E. 447.

Footnote 9 See note 8.

Footnote 10 Article 5054 (then article 4950, Rev.Civ.Stat.1911) is quoted in Aetna Life Ins. Co. v. Dunken, 266 U.S. 389, 390, 391 S., 45 S.Ct. 129.

Footnote 11 Cf. Minnesota Commercial Men's Ass'n v. Benn, 261 U.S. 140, 145, 43 S.Ct. 293, 295.

Footnote 12 Allgeyer v. State of Louisiana, 165 U.S. 578, 588, 17 S.Ct. 427; Minnesota Commercial Men's Ass'n v. Benn, 261 U.S. 140, 145, 43 S.Ct. 293, 295; Aetna Life Ins. Co. v. Dunken, 266 U.S. 389, 399, 45 S.Ct. 129, 132; Hartford Acc. & Ind. Co. v. Delta & Pine Land Co., 292 U.S. 143, 149, 54 S.Ct. 634, 636, 92 A.L.R. 928.

Footnote 13 See note 11. Cf. Supreme Council of Royal Arcanum v. Green, 237 U.S. 531, 542, 35 S.Ct. 724, L.R.A. 1916A, 771; Modern v. Woodmen v. Mixer, 267 U.S. 544, 551, 45 S.Ct. 389, 41 A.L.R. 1384.