John Hancock Mutual Life Insurance v. Yates , 182 Ga. 213 ( 1936 )

Russell, Chief Justice.

The writ of certiorari was granted by this court to review the decision of the Court of Appeals in this case. 50 Ga. App. 713. The holding of the Court of Appeals, as stated in the single paragraph constituting the syllabus is: “The action was brought in this State on a life-insurance policy applied for and issued in the State of New York, in which State both the insured and the beneficiary lived when the policy was issued. The insurance company denied liability solely on the ground of false answers in the application for insurance, attached to and made a part of the policy, and contended that the law of New York rather than that of this State was applicable. The verdict in favor of the beneficiary was supported by competent evidence; and no error of law appears.” It is not considered necessary that the numerous .assignments of error contained in the petition for certiorari be here set out; for each and every one of them is based on the contention of the insurer that the statutes and decisions of the State of New York, rather than those of Georgia, should determine the effect of alleged false statements made in the application for insurance, .in the trial of the case in the courts of this State. One of the controlling questions in the adjudication now before us is whether the remedial processes applicable in a suit in Georgia shall give way to and be superseded by the laws of New York because the contract was executed in the State of New York and intended there to be performed. Suit was brought upon the contract in the courts of Georgia. The question is whether, as to the remedial features of the action, the lex loci contractus shall prevail over the law of the forum.

In Massachusetts Benefit Life Association v. Robinson, 104 Ga. 256 (8) (30 S. E. 918, 42 L. R. A. 261), it was held: “The materiality of representations made by the insured ip his application, under the laws of Georgia, is a question for the jury to decide. The manner in which this question shall be determined, being a matter affecting the remedy only, and not the ‘validity, form, or effect of the contract/ is to be controlled by the lex fori, and not by the lex loci contractus.” Mr. Justice Cobb, delivering the unanimous opinion of this court, said: “That the lex loci controls as to the validity, form, and effect of the contract, and the lex fori as to the remedies thereon, is simply a statement of elementary law. The courts of the State of Georgia will recognize this contract as a valid contract, because it appears to be such under the laws of Massachusetts and is clearly such under the laws of this State, but will give the plaintiff and the defendant respectively, for the purpose of enforcing it on the one hand or defeating it on the other, such remedies only as are given to other persons who sue or are sued in the courts of this State. It is immaterial, therefore, for us to consider what is the law of Massachusetts in reference to the tribunal, or what part of the tribunal, that determines the materiality of the misrepresentations relied upon to defeat a contract of insurance which is the subject of a suit in this State. These are questions which each State is entitled to decide for itself, and to that end erect tribunals'and lay down rules of procedure therein. The law of Georgia can declare what questions shall be passed upon by the court and what questions shall be passed upon by the jury. Persons seeking either to enforce or defeat contracts made in another State with citizens of this State, when’ they sue or are sued in the courts of this State, have no right to say that the tribunal fixed by its laws is not satisfactory to them and to demand a tribunal erected in accordance with the law of the State in which the contract is made. See Dicey on Conflict of Laws, 711; Story on Conflict of Laws (8th ed.), §§ 556, 557, 558. This doctrine is fully recognized in the case of Joice v. Scales, 18 Ga. 725, and Toomer v. Dickerson, 37 Ga. 428. In the latter case Judge Warner in the opinion lays down the principle clearly as follows: ‘It was further insisted in the argument, that although the bond was executed in Georgia, it was intended to be, and was in fact, a South Carolina contract, and as such should be governed by the laws of the latter State in its enforcement in the courts of this State. Conceding ex gratia that it is a South Carolina contract,'the plaintiff seeks to enforce it in the courts of this State. Neither the validity nor the construction of the contract is questioned. The only controversy between the parties is as to the remedy upon that contract in the courts of this State. The question here is, can the creditor enforce his reined}' against the security upon his South Carolina contract in the courts of this State, in accordance with our laws regulating that remedy? We give to him the same rights and remedies in our courts, for the enforcement of his contract, as we give to our own citizens; no more, no less. Mr. Justice Story states the rule correctly when he says: “Whenever a remedy is sought, it is to be administered according to- the lex fori, and such a judgment is to be given as the laws of the State, where suit is brought, authorize and allow, and not such a judgment as the laws of other States authorize or require.” Story’s Conflict of laws, 954, § 572; Dela Verga v. Vienna, 20 Eng. Com. Law Rep. 387; Whittemore v. Adams, 2 Cowen’s Rep. 626. When a party comes into the courts of this State to enforce his remedy upon his contract, that remedy will be enforced in accordance with the laws of this State regulating that remedy, and not according to the remedy provided for the enforcement of similar contracts in the State of South Carolina, although the contract may have been made in the latter State.’ See also South Carolina Railroad Co. v. Nix, 68 Ga. 572. As it has been held by this court in the case of Phenix Ins. Co. v. Fulton, 80 Ga. 224 [4 S. E. 866], that it was proper to submit to the jury the question as to whether or not a misstatement made in the application for a policy of fire-insurance was material and would have the effect of avoiding the policy, and this being, as long as that decision stands, the established procedure to be followed in such cases, there was no error in the present case in submitting to the jury the question of the materiality of the misrepresentation alleged to have been made by the insured in his application for reinstatement.”

In Johnson v. Ætna Insurance Co., 123 Ga. 404 (51 S. E. 339, 107 Am. St. R. 92), in which all the Justices concurred except Simmons, C. J., absent, this court ruled that “Limitations in an insurance policy upon the authority of the agent of the company to waive the conditions of the contract of insurance are to be treated as referring to waivers made subsequently to the issuance of the policy. Mechanics Ins. Co. v. Mutual Bldg. Ass’n, 98 Ga. [262] 266, approved and reaffirmed.” In the Ætna case attention was called to the conflict between the rulings in Mechanics Ins. Co. v. Mutual Bldg. Ass’n, 98 Ga. 262, and Thornton v. Travelers Ins. Co., 116 Ga. 121 (42 S. E. 287, 94 Am. St. R. 99). After thorough discussion of the subject the court held: “Our conclusion .is that the ruling in the case of Mechanics Ins. Co. v. Mutual Bldg. Ass’n, 98 Ga. 262, is sound; that it is controlling of the case at bar; and that anything to the contrary in the ease of Thornton v. Travelers Ins. Co., 116 Ga. 122, must yield as authority to the earlier case.” Chief Justice Simmons fully concurred in the rulings in the Robinson case and in the Mechanics Ins. case, supra; and therefore it must be presumed that had he been present in the Johnson case, supra, and not upon his death-bed, the Thornton case would have been overruled.

It is insisted in the present application for certiorari that the contract here involved is governed by the lex loci contractus, and that the insurance contract was avoided by reason of false representations of the insured in his application for insurance, and that under the law it was for the court and not the jury to determine whether the alleged misrepresentations are in fact material. In support of this proposition, counsel rely upon the ruling of the Court of Appeals of New York in Minsker v. John Hancock Mutual Life Insurance Co., 254 N. Y. 333 (173 N. E. 4), in which it was held that “False answers in written application attached to life policy, with respect to medical advice and hospital treatment, as matter of law defeated recovery, though insured gave truthful oral answers.” It must be borne in mind that until January 1, 1907, the courts of New York had decided that if the medical examiner of a life-insurance company was truthfully told by the applicant for a policy of facts which under the terms of a policy would make it void if not noted upon it, the company could not avail itself of the defense that such facts were not stated in the policy, the underlying principle being that it would be a fraud upon the insured to accept pay for a policy which the company through its agent knew was void when delivered. In 1906 the legislature of New York passed the New York statute upon which the decision in Minsker’s case, supra, was based (Laws of 1906, c. 326). This act was doubtless passed for some reason peculiar to the State of New York; for, as said by the Court of Appeals of New York in Minsker’s case, “the statute applies only to life-insurance corporations, and not to other insurance companies or associations.” And the reasons given for the passage of the New York statute are to be seen in Archer v. Equitable Life Assurance Society, 218 N. Y. 18. (112 N. E. 433). The explanation, of the headnote in Minsker’s case which we have quoted is as follows: “The answers to questions 14 and 15 as written and annexed to the policy establish as a matter of law that they are material to the risk. The plaintiff is bound by the answers as written, since the application was physically annexed to the policy of insurance, which she received from the insurer. Being a part of the policy, the statements in the application had at least the effect of erroneous and material representations under the rule at common law;” and several New York cases were cited in support of the opinion. The 14th and 15th questions in the Minsker case are similar to those asked the insured in the case how before us. “14. Have you had any medical advice during the past five years ? State . . the names and addresses of the physicians who treated you. 15. Have you ever received or applied for treatment at any hospital, . . cure, or other institution?” Georgia has no such law as the New York statute of 1906. By this last enactment and construction of the court of last resort of New York, the courts are to determine the materiality of all representations made by the applicant for life insurance. By the law of Georgia the jury are to determine the materiality of such statements as may be made by the applicant for life insurance. To our minds, therefore, the only question which arises is whether the laws of New York shall be given extraterritorial effect, so as to include the geographical limits of Georgia as well as of New York. If we now concede this as to life insurance, where will it end as to other matters upon which New York may hereafter see fit to pass laws? We are of the opinion, as re'marked by our predecessors, that we are not required to permit any foreign jurisdiction to overlap the domain which Georgia calls her own. To do this would destroy our right of independent existence.

The validity of a contract made in another State and sought to be enforced in this State is to be determined and controlled by the law of the State of the contract; but as to all remedies to be applied, either in the enforcement of such contract or in defeasance thereof, the law of the forum prevails. In Joice v. Scales, 18 Ga. 725, it was not only held that “As a general principle, the lex loci applies only to the interpretation of contracts, and the remedy on them must be prosecuted according to the laws of the country in which the action is brought,” but the court also held that “This rule is not in conflict with the clause of the Federal constitution which declares that ‘full faith and credit shall be given, in each State, to the public acts, records, and judicial proceedings in every other State;’ for that applied to such records, &c., as pleadings and evidence.” In Latine v. Clements, 3 Ga. 426, Judge Nisbet defined the requirements of the Federal constitution referred to above, and in delivering the opinion of this court said: “Congress has declared what the constitution means by full faith and credit; it has enacted that the judgments of State courts shall have the same faith and credit in other States as they have in the State where they are rendered. Act of Congress of 26 of May, 1790, ch. 11; 3 Story Com. on the Const., ch. 29, sec. 1297 to 1307. They are put upon the same footing with domestic judgments.” He further said that this was a case of an administration in Georgia, and that “The administration in Georgia is necessary, because the Virginia executor has no power to act in Georgia; the two States are sovereign, and, as to each other, foreign.” In Mitchell v. Cox, 28 Ga. 32, this court held: “If H. dies in Arkansas, and there is a creditor of the deceased in Georgia, and.assets belonging to the estate here, and the estate of H. be insolvent, the creditor in this State is entitled to receive his pro rata share of the entire fund in both States; and neither justice nor the courtesy of States requires that the surplus be transmitted by the ancillary administrator here to the principal administrator in Arkansas.” In delivering the opinion Judge Lumpkin said: “Whether Mitchell holds the note of Buffington, belonging to the estate of White E. Harden, or the proceeds which stand in the place of it, makes no difference. In the settlement of the note he was justifiable in allowing as a set-off, or part payment, the counter-claims held by Buffington against Harden. He could not have compelled payment of Buffington, except for the excess. But as to the surplus, if there be any, the courtesy between States does not, we apprehend, extend so far as to require this fund to be transmitted to the State of Arkansas, and force the creditor in this State to go there to collect his debt. . . All that justice demands is, that when an estimate is made of the whole estate of Harden — if the part coming to the claim of Cox would be less than the fund in Georgia — in that event, for the over-plus to be sent by the ancillary administrator here to the principal administrator in Arkansas. We are not prepared to say that even this is not going too far.”

Following this quotation the entire membership of this court, in Owsley v. Bowden, 161 Ga. 884, 891 (132 S. E. 70, 44 A. L. R. 795), spoke as follows: “But it is said that under the law of Alabama the claims of all the plaintiffs are barred, and for this reason, regardless of anything else, the petition is demurrable and should be dismissed. If it be conceded that the laws of Alabama governing the distribution of estates should govern in the distribution of the Georgia property owned by an Alabama testator, it does not, in our opinion, follow that statutes of limitations adopted in Alabama should prevail over Georgia statutes upon the same subject. They are purely remedial; and it has always been held that the law of the forum determines the remedy and determines when a claim may be enforced in the courts of that State.” Citing Thomas v. Clarkson, 125 Ga. 72 (54 S. E. 77, 6 L. R. A. (N. S.) 658), and Latine v. Clements, 3 Ga. 426; also quroting from Wilson v. Hartford Fire Insurance Co., 164 Fed. 817 (90 C. C. A. 593, 19 L. R. A. (N. S.) 553), in which the opinion was delivered by Judge Sanborn (with whom Judge Yan Devanter, later a Justice of the Supreme Court of the United States, presided) as follows: “The property of the estate which is situated in Kansas is not controlled nor is its administration or distribution governed by the laws of the domicile of the testator. The laws of Illinois have no extraterritorial force, and they are powerless in the State of Kansas. The property of the estate of the testator in that State is subject to and it must be administered and distributed in accordance with the laws of the State of its situs. Under the statutes of Kansas the property of deceased persons in that State, whether they were residents or non-residents, is subject to the payment of their debts due to citizens of other States to the same extent as it is to the payment of those owing to its own citizens. . . The effect of this legislation is that the application of the Kansas property of a deceased non-resident of that State, whether testate or intestate, to the payment of his debts, is governed exclusively by the laws of Kansas, and the laws of his domicile can have 'no effect upon any part of that property until those debts have been ascertained and paid.”

In the unanimous opinion of this court in Joice v. Scales, 18 Ga., heretofore quoted, it was said: “We may safely assume, as a general principle, that the lex loci applies only to the interpretation of contracts [and] to their construction, and that the remedy on them must be prosecuted according to the laws of the country in which the action is brought. This rule is approved by our reason; and it seems to be now regarded, generally, as the .correct rule in the courts of England and of the United States. It has the sanction of learned jurists in other countries, as is shown by Judge Story in his Conflict of Laws, §§ 573, 574. (See also 2 Kent’s Com. 462. Whittemore vs. Adams, 2 Cow. 620). . . The rule we lay down is founded upon plain principles of reason and propriety. A different principle would give to the laws of a State extraterritorial operation, causing those of one State to control in another, in the enforcement of remedies.” In response to the argument now made in this case, that "Full- faith and credit should be given in each State to the public acts, records, and judicial proceedings in every other State,” the court in the Joice case held that the rule just laid down was not in conflict with that constitutional provision, and that a construction which would give the same effect to a foreign judgment as our own "would, indeed, be to give the laws of one State complete operation in another — would be to make a judgment in one State bind property in another.” In support of the ruling of the Supreme Court in this case, Phelps v. Holker, 1 Dall. 261, James v. Allen, 1 Dall. 188, and Mills v. Duryee, 7 Cranch, 481, are cited. See also Obear v. First National Bank of Birmingham, 97 Ga. 587 (25 S. E. 335, 33 L. R. A. 384). The Court of Appeals did not err in affirming the judgment overruling the motion for new trial.

Judgment affirmed.

All the Justices concur, except Gilbert and Hutcheson, JJ., who dissent, and Beck, P. J., absent for providential cause.