## Facts

- A Texas citizen residing and working in Mexico obtained a fire insurance policy in Mexico covering a tugboat operated in Mexican waters.
- The policy included a contractual limitations clause requiring any suit or demand to be filed within one year of the loss.
- The tugboat was destroyed by fire while the insured was still residing in Mexico.
- The Mexican insurer reinsured part of the risk through reinsurance contracts made in Mexico and New York with two New York insurers authorized to do business in Texas.
- A Texas statute declared void any insurance contract provision requiring suit in less than two years.
- More than one year after the fire, the insured returned to Texas and sued in Texas court; the Mexican insurer was not subject to personal jurisdiction in Texas.
- The insured proceeded by quasi in rem garnishment against the two New York reinsurers, asserting their debts to the Mexican insurer were garnishable in Texas.
- The reinsurers argued there was no enforceable claim because the policy’s one-year clause barred suit under the governing law.

## Issues

1. Whether Texas, consistent with the Fourteenth Amendment Due Process Clause, could apply its statute voiding short contractual suit-limitation clauses to an insurance contract made and performed wholly in Mexico with no relevant Texas performance.
2. Whether the Texas statute could be treated as merely procedural (regulating remedies) or instead as altering substantive contractual obligations.

## Decision

- The Supreme Court unanimously reversed the Texas judgment.
- Texas lacked constitutional power to apply its statute to invalidate the one-year limitation in this foreign insurance contract.
- Applying the Texas statute increased the obligors’ contractual burden and resulted in a deprivation of property without due process.
- The federal due process question was properly reviewable because the Texas appellate courts addressed it, even if not raised at trial.

## Legal Principles

- A state may not apply its law to enlarge or change substantive obligations of a contract made and to be performed entirely outside the state when the transaction has no substantial connection to the forum.
- A forum rule that nullifies an agreed contractual time limit and permits enforcement after expiration functions substantively by increasing the parties’ obligation, not merely procedurally by regulating remedies.
- The Due Process Clause limits state choice-of-law power; minimal contacts such as a plaintiff’s forum citizenship or the plaintiff’s later decision to sue in the forum do not justify rewriting out-of-state contractual terms.
- A state may not seize or apply property to satisfy an obligation created only by the forum’s constitutionally impermissible alteration of a foreign contract.

## Conclusion

Because the insurance contract was made and performed in Mexico and lacked a sufficient connection to Texas, Texas could not constitutionally apply its statute to void the policy’s one-year suit-limitation clause; doing so imposed a greater contractual obligation and deprived the reinsurers of property without due process.


Home Ins. Co. v. Dick, 281 U.S. 397 (1930)