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Collins & Aikman Corp. v. Hartford Accident & Indemnity Co.11/5/1993
WEBB, Justice.
The first issue raised by this appeal involves the choice of law to be applied. Hartford contends that California law should be used in interpreting the insurance policy and that punitive
damages are not covered by the policy under the law of California. We agree with the Court of Appeals that this case is governed by N.C.G.S. § 58-3-1 which provides:
All contracts of insurance on property, lives, or interests in this State shall be deemed to be made therein, and all contracts of insurance the applications for which are taken within the State shall be deemed to have been made within this State and are subject to the laws thereof.
The policy in this case protects the interest of plaintiff against having to pay damages for the wrongful acts of its agents. The insurance contract is deemed to have been made in North Carolina.
The appellant, relying on Land Co. v. Byrd, 299 N.C. 260, 261 S.E.2d 655 (1980), Fast v. Gulley, 271 N.C. 208, 155 S.E.2d 507 (1967) and Bundy v. Commercial Credit Co., 200 N.C. 511, 157 S.E. 860 (1931), contends that the law of the state in which the last act in the making of a contract governs and that would be California in this case. None of these cases involved insurance policies and the implication of N.C.G.S. § 58-3-1 was not considered.
The North Carolina cases involving insurance contracts, Connor v. Insurance Co., 265 N.C. 188, 143 S.E.2d 98 (1965), Roomy v. Insurance Co., 256 N.C. 318, 123 S.E.2d 817 (1962) and Keasler v. Insurance Co., 177 N.C. 394, 99 S.E. 97 (1919), upon which Hartford relies are distinguishable. Keesler involved a life insurance policy issued in Georgia to a resident of Georgia. No interest in North Carolina was involved. Connor and Roomy involved automobile liability policies on vehicles owned by residents of other states. The vehicle in each case was titled in another state and the insurance policy was purchased in another state. This Court held in each case, without any reference to N.C.G.S. § 58-3-1 or its predecessor, that the law of the states in which the policies were issued was the law that governed. It is the very few contacts with this state that distinguishes Connor and Roomy from this case.
Hartford also relies on Hartford A. and I. Co. v. Delta and Pine Land Co., 292 U.S. 143, 78 L. Ed. 1178, 54 S. Ct. 634 (1934), in which the Supreme Court of the United States held that a Mississippi statute similar to N.C.G.S. § 58-3-1 violated the due process clause as the statute was applied in that case. In that case, the plaintiff had purchased an indemnity bond from the defendant in Tennessee where both parties had offices. A defalcation occurred in Mississippi.
The United States Supreme Court reversed a decision by the Supreme Court of Mississippi which had held that Mississippi law governed. The Supreme Court said a state "may not, on grounds of policy, ignore a right which has lawfully vested elsewhere, if, as here, the interest of the forum has but slight connection with the substance of the contract obligations. Here performance at most involved only the casual payment of money in Mississippi." Id. at 150, 78 L. Ed. at 1181. We believe that is the distinction from this case. In this case, the State has much more than a casual connection with the substance of the insurance policy. Most of the vehicles insured were titled in this state and plaintiff's transportation division is located
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