Clay v. Sun Insurance Office

Delivered the opinion of the Court.

In 1952, petitioner, while a citizen and resident of Illinois, purchased from respondent in Illinois the contract of insurance upon which this suit is based. The respondent is a British company licensed to do business in Illinois, Florida, and nine other States.

The policy, which petitioner bought for a lump sum, ran for three years. Designated a “Personal Property Floater Policy (World Wide),” it provides world-wide coverage against “all risks” of loss or damage to the property covered, property generally classified as personal property having no fixed situs. A provision of the policy, which has given rise to this controversy, required that suit on any claim for loss must be brought within twelve months of the discovery of the loss.

Some months after purchasing the policy the petitioner moved to Florida, where he brought this suit for losses sustained in Florida in the winter of 1954-1955. Petitioner reported the losses to the respondent on February 1, 1955, and on April 1, 1955, respondent denied liability.

The action, resting on diversity of citizenship, was instituted in the United States District Court for the Southern District of Florida on May 20, 1957, more than two years after discovery of the losses. The respondent defended on two grounds: (1) that under the time limitation for bringing suit, a restriction concededly valid under Illinois law, the suit was barred; and (2) that the “all risks” coverage of the policy does not include the losses resulting from willful injury to or appropriation of the insured property by the insured’s spouse. The jury was charged that if the losses were caused by the deliberate acts of petitioner’s wife, they were not therefore excluded from coverage. The jury found for petitioner, and judgment in the amount of $6,800 was entered. The District Court, without opinion, denied a motion for judgment non obstante veredicto, which was based, inter alia, upon the suit clause, apparently believing that Florida Statutes (1957) § 95.03, which is set out in the margin, rendered the clause ineffective.

On appeal the Court of Appeals for the Fifth Circuit reversed (one judge dissenting), sustaining the defense based upon the suit clause on the ground that Florida could not apply its statute to this Illinois-made contract consistently with .the requirements of due process. 265 F. 2d 522. The court considered the preliminary question of state law — whether the Florida statute, § 95.03, in fact applies to a contract made in these circumstances. Strangely enough, it did not decide this threshold question because it apparently found it easier to decide the constitutional question that would be presented only if the statute did apply. Such disposition of a serious constitutional issue justified bringing the case here. 361 U. S. 874.

By the settled canons of constitutional adjudication the constitutional issue should have been reached only if, after decision of two non-constitutional questions, decision was compelled. The lower court should have first considered: (1) whether, under the law of Florida, § 95.03 is applicable to this contract; and (2) whether the losses sued upon were within the “all risks” coverage of the policy if in fact caused by petitioner's wife.

It would be a temerarious man who described the constitutional question decided below as frivolous. The seriousness of the question becomes manifest from a recital of the decisions of this Court relevant to the determination of the issue on which the court below passed.

In Home Insurance Co. v. Dick, 281 U. S. 397, the Court held that Texas could not constitutionally apply its own law to invalidate a suit clause in a contract of fire insurance covering a tugboat. The plaintiff was at all pertinent times both a Texas domiciliary and a resident of Mexico. The contract, of which he was an assignee, was made in Mexico between a Mexican insurer which had no contact whatever with Texas, and a Mexican resident. The premium was paid in Mexico, and the policy covered the tug only while it was in Mexican waters. In Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U. S. 143, the Court held that Mississippi could not constitutionally apply its own law to invalidate a contract clause limiting the insurer’s liability on a surety bond against defalcations by the insured’s employees “in any position, anywhere,” to losses of which notice was given within fifteen months after the termination of coverage. The contract was made in Tennessee where the insured had offices and the insurer was licensed to do business. Mississippi’s action was struck down although the contract covered an ambulatory risk, the default giving rise to the claim actually occurred in Mississippi, the insurer was under license doing business there, and the insured was incorporated there.

The most recent case in the series is Watson v. Employers Liability Assurance Corp., Ltd., 348 U. S. 66. Without questioning either Dick, or Delta & Pine, the Court sustained Louisiana's application, in a suit by a Louisiana citizen, of its own “direct action” statute although thereby it invalidated an express provision against direct liability of the insurer in a contract negotiated and paid for within Illinois and Massachusetts, in both of which the clause was valid. The contract insured Toni, an Illinois corporation distributing its product nationally, against liabilities arising from the use of the product. The insurer was a British corporation licensed to do business in several States, including Massachusetts, Illinois and Louisiana. Toni had no contact with Louisiana and could not be served there. The Louisiana plaintiff had sustained her injury in Louisiana. The Court found Louisiana's contact with the subject justified its application of the statute to make an insurer doing business in Louisiana amenable to suit by a locally injured citizen.

The relevant factors of the present case are not identic either with Dick, or Delta & Pine, or Watson, and not one of them can fairly be deemed controlling here. The bearing of all three on the immediate situation would have to be considered and appropriately evaluated in adjudicating the precise constitutional issue presented by it, were that issue inescapably before us. The disposition of either of two unresolved state law questions may settle this litigation. The Court of Appeals was therefore not called upon initially to reach this constitutional question ; nor is this Court. The doctrine that the Court will not “anticipate a question of constitutional law in advance of the necessity of deciding it,” Liverpool, N. Y. & P. S. S. Co. v. Emigration Commissioners, 113 U. S. 33, 39, relied on by Mr. Justice Brandeis in his well-known concurring opinion in Ashwander v. T. V. A., 297 U. S. 288, 347-348, is a well-settled doctrine of this Court which, because it carries a special weight in maintaining proper harmony in federal-state relations, must not yield to the claim of the relatively minor inconvenience of postponement of decision. Of course we do not remotely hint at an answer to a question that is prematurely put.

While both questions not disposed of by the Court of Appeals are questions of local law, the question whether under Florida law § 95.03 is applicable to this contract is one on which the state court’s determination is controlling. But, as the Court of Appeals indicated, it could not, on the available materials, make a confident guess how the Florida Supreme Court would construe the statute. See, e. g., Hoagland v. Railway Express Agency, 75 So. 2d 822; Equitable Life Assurance Society v. McRee, 75 Fla. 257. The Florida Legislature, with rare foresight, has dealt with the problem of authoritatively determining unresolved state law involved in federal litigation by a statute which permits a federal court to certify such a doubtful question of state law to the Supreme Court of Florida for its decision. Fla. Stat. Ann., 1957, § 25.031. Even without such a facilitating statute we have frequently deemed it appropriate, where a federal constitutional question might be mooted thereby, to secure an authoritative state court’s determination of an unresolved question of its local law. See Allegheny County v. Mashuda Co., 360 U. S. 185, 189, and cases cited; see also Meredith v. Winter Haven, 320 U. S. 228, 236.

Vacated and remanded.

Certain property was taken from his home. Other property, clothing, was burned, and a painting was slashed.

“All provisions and stipulations contained in any contract whatever . . . fixing the period of time in which suits may be instituted under any such contract ... at a period of time less than that provided by the statute of limitations of this state, are hereby declared ... to be illegal and void. No court in this state shall give effect to any provision or stipulation of the character mentioned in this section.” Section 95.11 (3) provides a five-year limitation for actions on written contracts not under seal.

The statute provides that the Supreme Court of Florida may devise rules to govern such certifications; it appears that to date such rules have not been promulgated. See Kurland, Toward a Co-operative Judicial Federalism, 24 F. R. D. 481, 489. It is not to be assumed, however, that such rules are a jurisdictional requirement for the entertainment by the Florida Supreme Court of a certificate under § 25.031.