The opinion of the court was delivered by: Will, District Judge.
This suit arises out of an automobile accident in the state of
Wisconsin between the plaintiff and Mrs. Penelope C. Pallin.
Plaintiff, a resident of Illinois, brings this direct action
against the Travelers Insurance Co., the insurer of Mrs. Pallin.
Mrs. Pallin is a resident of Michigan where the defendant
delivered an automobile insurance policy to her. The
defendant-insurer is a Connecticut corporation which also does
business in Illinois.
The contract of insurance contains a clause, known as a "no
action" clause, which prevents the insurer from being sued
directly. This clause, if given effect, would bar this suit. The
plaintiff, however, contends that a statute of Wisconsin,
Wisconsin Stat. § 260.11(1), as amended, L. 1959 ch. 380, allows
direct actions against automobile insurers despite any "no
action" clause in the contract where the accident takes place in
Wisconsin. The 1959 amendment provides, among other things, that
direct actions can be brought whether or not the contract of
insurance was delivered in Wisconsin. The amendment thus affords
the plaintiff a basis to bring this action, the policy having
been delivered in Michigan.
By permitting persons involved in automobile accidents in
Wisconsin to sue insurance companies directly, the Wisconsin
legislature created a new substantive right. But by inserting the
words "in this state" into the direct action statute, thus
restricting the place of suit to courts in Wisconsin, the
legislature has placed a venue restriction upon the substantive
right which it created. The question for the court is whether we,
sitting as a court of Illinois in this diversity action, can
allow suit to be brought here under this statute, the venue
In Atchison, Topeka & Santa Fe R.R. v. Sowers, 213 U.S. 55, 29
S.Ct. 397, 53 L.Ed. 695 (1909), the Supreme Court held that such
a restriction placed upon a common law cause of action could not
be given effect so as to bar suit in another state. The landmark
case of Tennessee Coal, Iron & R.R. Co. v. George, 233 U.S. 354,
34 S.Ct. 587, 58 L.Ed. 997 (1914) carried the Atchison principle
even further. In Tennessee Coal, suit was brought in a court of
Georgia under an Alabama statute which created a new right by
making a master liable to an employee for injuries resulting from
defective machinery. This statute also contained a provision
which stated that actions brought under it must be brought in a
court "within the state of Alabama, and not elsewhere."
The Supreme Court held that an employee could sue the master in
a court of Georgia despite the venue restriction. The Court
recognized that in some cases the right and the remedy are so
inextricably woven together that the right can only be enforced
in the prescribed manner. But the Court held that the Alabama
statute was not of that nature and that the venue restriction was
severable from the right which was created. At page 360, 34 S.Ct.
at page 589 the Court stated:
"But venue is no part of the right; and a state
cannot create a transitory cause of action and at the
same time destroy the right to sue on that transitory
cause of action in any court having jurisdiction."
"It is pointed out, however, that statutes of at
least one maritime country (Panama) allow suit under
its law by injured seamen only in its own courts. The
effect of such a provision is doubtful in view of our
holding that such venue restrictions by one of the
states of the Union will not preclude action in a
sister state, Tennessee Coal, Iron & R. Co. v.
George, 233 U.S. 354, 34 S.Ct. 587, 58 L.Ed. 997."
Illinois has also recognized the principle that state statutes
cannot prohibit or circumscribe the exporting of causes of
action. James v. Grand Trunk Western R.R. Co., 14 Ill.2d 356,
367, 152 N.E.2d 858, 864, 74 A.L.R.2d 814 (1958).
The Louisiana direct action statute, La.Rev.Stat. § 22:655,
which is quite similar to the Wisconsin statute, contains venue
restrictions which have been the subject of much litigation.
Federal courts in dealing with the venue restrictions in the
Louisiana statute (which say that the suit must be brought in the
parish where the accident occurred or in the parish where the
insured has his domicile) have held that the restrictions are not
binding in other forums. "The more reasonable view, however,
appears to be that these are but requirements of place of suit
which do not carry beyond the limits of a Louisiana forum."
Collins v. American Automobile Insurance Co., 2 Cir.,
230 F.2d 416, 423 (1956). See also 57 Col.L.Rev. 256, 259-262 (1957).
In Chambless v. National Industrial Laundries Corp.,
149 F. Supp. 504 (1957), a case not unlike the present case since
Louisiana's only contact with the suit was that it was the place
of the accident,*fn2 the court held that the direct action
statute created a transitory cause of action and thus Louisiana
could not limit the applicability of the statute to the courts of
Although the venue restrictions in the Louisiana statute are
slightly different from the restriction in the Wisconsin statute,
the reasoning of the Tennessee Coal case is applicable to both
the Louisiana and Wisconsin statutes. Even more important for our
purposes is the fact that Tennessee Coal dealt with a provision
which is the same as the one in question in the present case,
i.e., providing that suits brought under the statute be brought
within the state.
In all pertinent respects the Wisconsin statute is like that
which was involved in Tennessee Coal. A new substantive right was
created by the legislature; the right created is transitory in
that there is no reason why suits under it can be adjudicated
only in Wisconsin; and the legislature placed a venue restriction
upon the right. We conclude that the venue restriction in the