Griffin v. McCoach

Texas citizen Robert Gordon persuaded seven persons, including John McCoach (defendant) (collectively, investors), to invest in Texas oil developments. The Prudential Insurance Company of America (Prudential) (defendant) issued an insurance policy on Gordon’s life. The investors, who provided a significant amount of money to Gordon both before and after the policy was issued, paid the policy’s premiums. Initially, the investors were the policy beneficiaries, but the policy subsequently was amended so that, among other things, Gordon’s wife was to receive one-eighth of the death benefit, with the remaining death proceeds due to the investors (and their successors). Gordon signed the initial application for the policy in New York, the application was forwarded to Prudential’s New Jersey headquarters, and Prudential delivered the approved policy in New York. The policy amendments were accomplished via forms that were sent from New York to Texas, signed in Texas, sent to Prudential in New Jersey, and finally returned to New York. Upon Gordon’s death, the personal representatives of Gordon’s estate, including Griffin (plaintiff), sued Prudential in federal court in Texas, seeking to prevent the investors from receiving any of the policy’s death benefit. Federal jurisdiction was based on diversity of citizenship. Prudential impleaded McCoach, who was the trustee for the investors (and their successors) and departed the case. Griffin argued, among other things, that (1) Texas law governed the amended policy, (2) Texas law required beneficiaries to have insurable interests in the decedent, and (3) the investors did not have insurable interests in Gordon when the amendments were made. Griffin further contended that a federal court sitting in Texas had to apply Texas’s public policy requiring policy beneficiaries to have insurable interests in the decedent. The investors countered that New York law, which may not have required beneficiaries to have insurable interests in the decedent, applied. The district court ruled that (1) New York law governed the dispute because the initial contract was made in New York and the amendments were delivered in New York and (2) the investors had insurable interests in Gordon’s life due to the parties’ debtor-creditor relationships. The court of appeals affirmed, concluding that New York law governed because the initial policy was a New York contract and the amendments were made pursuant to provisions in the initial policy and thus could not have changed the governing law. The court of appeals further ruled that applying Texas law and policy would improperly extend Texas law beyond Texas. Griffin appealed.