Document: 348 U.S. 66 75 S.Ct. 166 99 L.Ed. 74 B. Clinton WATSON, et ux., Appellants,v.EMPLOYERS LIABILITY ASSURANCE CORPORATION, Ltd. No. 6. Argued Oct. 14, 1954. Decided Dec. 6, Rehearing Denied Jan. 10, 1955. See 921, 289. Messrs.Richard H. Surtzer, Cleve Burton, Shreveport, La., for appellants and petitioners. Mr.Benjamin C. King, appellee respondent. Mr. Justice BLACK delivered the opinion of Court. 1 Louisiana has an insurance code which comprehensively regulates business 2 3 in all its phases.1 This case brings to us challenges constitutionality certain provisions that allowing injured persons bring direct actions against liability companies have issued policies contracting pay liabilities imposed on who inflict injury. Cf. Lumbermen's Mutual Casualty Co. v. Elbert, 48, 151. is such a action brought by appellants, Mrs. Watson, state court claiming damages appellee, Employers Liability Assurance Corporation, Ltd., account alleged personal injuries suffered Watson. The complaint charged occurred when Watson bought used State 'Toni Home Permanent', hair-waving product contained highly dangerous latent ingredient put there manufacturer. manufacturer Toni Company Illinois, subsidiary Gillette Safety Razor headquarters Massachusetts. 4 particular problem presented with reference enforcing statute this arises because policy sued was negotiated Massachusetts Illinois.2 Massachusetts-negotiated contract contains clause, recognized as binding enforceable under Illinois law, prohibits company until after final determination Company's obligation injury either judgment or agreement.3 Contrary contractual 'no action' challenged statutory permit sue before determination. As occurring Louisiana, one provision State's makes it applicable, even though, here, made another clause forbidding actions.4 Another provision, long ago complied, compels foreign consent suits order get certificate do State.5 basic issue raised attack both these whether Federal Constitution forbids apply own law Illinois. 5 After removed United States District Court diversity moved dismiss, contending two contravened Equal Protection, Contract, Due Process Full Faith Credit Clauses Constitution. With emphasis due process contention, dismissed case, holding unconstitutional written outside Louisiana. 107 F.Supp. 494.6 Appeals agreed affirmed dismissal. 202 F.2d 407. Provisions Louisiana's statutes having been held invalid repugnant Constitution, properly here appeal.7 6 denial equal protection impairment contentions are wholly void merit. fall force upon companies, domestic. points no other facts any nature give slightest support charge discriminatory application statute. And since became effective made, similar lack substantiality suggestion violated Art. I, § states impair contracts. Munday Wisconsin Trust Co., 252 499, 503, 40 365, 366, 64 684. 7 Had would be arguable question. Merchants Auto. Ins. Smart, 267 126, 129—130, 45 320, 321, 69 538. But bought, invokes principle without power exercise 'extra territorial jurisdiction,' is, regulate control activites beyond boundaries. Such applied Dick, 281 397, 50 338, 926, strongly relied Employers. There Texas denied alter terms Mexico between then country, covering vessel only while Mexican waters, containing governed laws Mexico. Thus, subject matter related manner anything had done Texas. For reason, obligations contract. carefully pointed out decision might different activities relating taken place could lay hold basis regulation. supra, at page 408, note 5, 341. extra doctrine again Hartford Accident & Indemnity Delta Pine Land 292 143, 54 634, 78 1178. That Mississippi Tennessee. connection were found so 'slight' 'casual' not way enlarge Tennessee Again, however, noted future cases out-of-state contracts vital interests forum justify nonenforcement. 150, 636. also Griffin McCoach, 313 498, 61 1023, 85 1481, cited. 8 Some locally, affecting nothing but local affairs, may well those But, illustrates, vast part affairs Nation does present simple situations. Although Massachusetts, protect users Permanents anywhere States, territories, Canada. consequence modern practice conducting widespread throughout entire series more than seize multistate transactions people, though phases same regulatory legislation states. See, e.g., Osborn Ozlin, 310 53, 60 758, 84 1074; Hoopeston Canning Cullen, 318 313, 63 602, 87 777; Alaska Packers Ass'n Industrial Commission, 294 532, 55 518, 79 1044. 9 mere intermeddling her boundaries concern hers. Persons killed most likely residents, if not, care them. Serious require treatment homes hospitals doctors. destitute. They compelled call friends, relatives, public help. manifested natural interest providing remedies recovery damages. It designed assure ultimate payment Moreover, courts instances provide convenient trial cases. transportation methods difficult serve wrongdoers live In efforts answered motion dismiss ground agent whom served. If granted, tried going although she lives claim from there. What said enough show legitimate safeguarding rights view interest, violate process. 10 we above goes far toward answering Clause contention. automatically compel subordinate happens formally executed. Where, affects people several states, each leave free enforce policies. 544—550, 522—525, 506—507, 1027, 1481. We already covers State. Of course some case. executed office plainly cannot outweigh taking Since true, rules. Pacific 306 493, 59 629, 633, 83 940. cf. John Hancock Mut. Life yates, 299 178, 57 129, 81 106; Hughes Fetter, 341 609, 71 980, 95 1212. 11 disposes contention compelling unconstitutional. Fourteenth Amendment corporation surrender constitutional condition being permitted state. Terral Burke Construction 257 529, 42 188, 352. inapplicable because, just decided, right they not. 12 Reversed. 13 FRANKFURTER, concurring. 14 While I agree Court's result, find reasoning reached serious obstacles. difficulties involve issues, them should avoided less doubtful available. my readily invites today's decision. Whether rewrite contract, whose determined deleting substantial feature thereby enlarging company, surely raises question relationships another. Contrariwise, exclude coming into business, empowered company's entry undertaking observe strictly citizens, seems me easier solution. Accordingly rest ground. 15 controversy Employers' Corp., British corporation, Company, division Delaware principal offices Boston, provision: 16 'No shall lie unless, precedent thereto, insured fully complied policy, nor amount insured's finally actual agreement insured, claimant company.' 17 copy Toni. Happily, necessary determine flowing exclusively Concededly, recognize safeguard treasury making indirect third person contingent compromise settlement participated insurer. Howsoever fact phrased explained away, allow third-party directly prior undertaken indeed expressly refused assume. sanctioning funds afforded 'no-action' expressed authority asserted actions. deeply concerned fiscal well-being center State; considerable importance citizens. addition, share scope bind him. premiums payable varied losses paid insurer extent stake clause. To treat redundant insubstantial flout familiar experience readiness juries amerce companies.1 18 resolve conflicting solely assume involved principles relevance. heretofore disregarded position exclusive regard necessarily tangles sister States. sure, refuse affirmative help valid where incurred, policy. At least insofar barrier. deny judicial enforcement through sufficiently offends very thing rewriting contrary makers. 19 attempt change presents question, apart admit condition, emphatically shown fidelity bond insuring employee defalcations 'in position, anywhere.' executive temporarily Tennessee, main Mississippi, incorporation, suit treasurer's thieving Mississippi. must within months termination suretyship defaulting employee. period, Supreme reversed court, disregard limiting laid down based parties accord every citizen.' 149, Joining unanimous members, Chief Brandeis, probably specialized knowledge make aware 'Government always special relation insurance', 65, 763, 1074, Justices ever sit 20 covered transitory risks, defined situs, foreseeable assets jurisdiction time issued, listed 21 employees working Nevertheless, forum, allowed elsewhere validly consummated. Our recent inroad governing consideration fixes protected important seeks excise 777, merely validity nature. neither faced applying existing modifying Realization statute, context delicate balancing interests—that refractory aspect process—admonishes avoidance solution lies hand. 22 These, then, formidable hurdles cleared which, somehow other, duly served exercised privilege doing amenability statutes. doubt, can exact Employers, did, inflicted citizens policyholders. fair bargain gave hospitality 23 grain winnowed chaff hundred opinions dealing so-called 'unconstitutional conditions,' relate entry, residuum clear. early leading absolute terms: 24 'Having recognition depending their assent, follows, course, assent granted conditions think proper impose. entirely; restrict localities, security performance will best promote interest. whole rests discretion.' Paul Virginia, Wall. 168, 181, 357.2 25 while, obvious, qualifications made: 26 'The limitation limits * hire there, employ federal government, commerce, interstate foreign. commerce restricted authority.' Pembina Consolidated Silver Mining Milling Commonwealth Pennsylvania, 125 190, 737, 741, 31 650. 27 further experience, thus summarized our day Holmes: 28 '* favor defendants arbitrarily plaintiff reason will. great many times seeming qualified, circumstances become wrong. One frequently recurring socalled scheme accomplish forbidden result. Frick (Commonwealth of) 268 473, 603, 1058; American Bank Reserve Atlanta, 256 350, 358, 41 65 983; Badders 240 391, 394, 36 367, 706; Reading 226 324, 357, 33 90, 243. Thus prevent resorting Court, 352; tax property established tax, Western Union Telegraph (State Kansas, 216 1, 30 355, volume later followed it; interfere Sioux Remedy Cope, 235 197, 203, 35 57, 193; Looney Crane 245 38 85, 62 230; Foster, 247 105, 114, 438, 1006. A conduct railroad jurisdiction, tracks attempt. New York, Lake Erie R.R. 153 628, 646, 952, 846.' Fidelity Deposit Maryland Tafoya, 270 426, 434—435, 46 331, 332, 70 664. 29 particularization his earlier generalization Denver Water 246 278, 649: ordinance city mean accept city's rates stop—and stopped out, general unless price paid. true tended about things predominant prevent, see deduced 355; Pullman 56, 232, 378; Motion Picture Patents Universal Film Manufacturing 243 502, 37 416, 871.' Id., 285. upshot decisions recently Roberts Court: 32 'It repeatedly qualification accordance permitting constitutes reasonable imposed. Lafayette Insurance French, 408 How. (404), 451; St. Clair Cox, 356 106 (350), 354, 222; Connecticut Spratley, 172 614, 308, 43 569; Old Wayne McDonough, 204 8, 22, 236, 51 345; Commercial Davis, 213 245, 254, 445, 53 782. corporation's conditioned rights, attempted appellant relies. (of Maryland) 664; Frost Trucking Railroad 271 583, 605, 1101; Hanover Fire Harding, 272 494, 47 179, 372. arbitrary unreasonable respecting corporations admission, Power Mfg. Saunders, 274 490, 678, 1165. altogether consequent ability entrance state, distinguishes involving substituted service individuals *.' Washington ex rel. Bond Goodwin Tucker, Inc., Superior 289 361, 364—365, 624, 626, 77 1256. 34 standard reasonableness, conditions, embraces power. gives rational holdings burdensomely or, justification ample own, project powers domain falls specific guiding limitations what still remains practically desire privileged authority, bounds.3 Here interference operations Government. discrimination domestic companies. admission meets test diverse contexts light relevant factors, including corporation. reasonableness fairly appropriately surrendering obviously latter constitutionally yield former. Surely adopt method did meeting obtaining over tortfeasors, typified dispute efficacy Gillette, insured. Even present, justifiably felt delays satisfaction judgments sustaned inherent traditional system requires separate victim tortfeasor reach latter's he default extorting unfair advantage permission tap market.4 Nor protecting selfishly ruthlessly seeking inject itself matters sole States.5 Title LSA—Rev.Stat. 1950. Division *' Corporation Boston manufactures Chicago, '12. Action Against Company. No company. 'Any organization legal representative thereof secured thereafter entitled recover Nothing join co-defendant liability. 'Bankruptcy insolvency estate relieve hereunder.' heirs, option, parish accident domicile, alone insurer, jointly solido. exist action, provided intent Section hereunder lawful defenses urged violation state.' 1950, 22:655, amended Act 541 Legislature according courts, Rome London Lancashire America, La.App., 169 So. 132. alien heirs 655 Title, deliver Secretary issuance instrument evidencing consent.' LSA Rev.Stat. 22:983, 542 1650. Mayo Zurich General D.C., 579; Bayard Traders 343; Bish 102 343. U.S.C. 1254(2), U.S.C.A. 1254(2). addition noting probable cause, certiorari. 347 958, 708. appeal, certiorari dismissed. Additional protections swept aside outcome litigation decreases, concomitant reduction likelihood vigorous cooperation insurer's defense. burden becomes increasingly oppressive conscientious far-flung agents leads remote proceedings. An expressed, jumble loose generalizations, assumption restrictions deal corporations. 404, 407, 451. Phrases like 'natural justice' reason' 'the social compact' fashion stating intrinsic political More recently, strike acutely analyzed loosely expressed. Rhetorical generalizations deemed sufficient invalidating legislation. Whatever survival value 1101, Stephenson Binford, 287 251, 288, significant that, private carrier common carrier's trucking use highways violative process, advert Pierce Oil Corp. Phoenix Refining 259 125, 440, 855, imposition oil upheld may, compliance antitrust Waters-Pierce Texas, 177 28, 44 657, State, Hammond Packing Arkansas, 212 322, 370, 530. duties carrier, 855; impose individuals, Louis Cotton Compress 260 346, 67 297, 664, penalize acts pertinent. assert happenings so, likewise, taxing

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