Busto v. Manufacturers Life Ins. Co.

• Decision Date: 18 November 1976
• Docket Number: No. 1,1
• Citation: 556 P.2d 96,276 Or. 707
• Parties: Jose BUSTO, Individually and as personal representative of Jose Maria Busto, also known as Jose Maria Busto Lema, and as personal representative of Carolina Busto, Appellant, v. The MANUFACTURERS LIFE INSURANCE COMPANY, a Canadian Corporation, Respondent. Department
• Court: Oregon Supreme Court

Page 96

556 P.2d 96

276 Or. 707

Jose BUSTO, Individually and as personal representative of Jose Maria Busto, also known as Jose Maria Busto Lema, and as personal representative of Carolina Busto, Appellant, v. The MANUFACTURERS LIFE INSURANCE COMPANY, a Canadian Corporation, Respondent.

Department No. 1.

Supreme Court of Oregon.

Argued and Submitted Sept. 2, 1976.

Decided Nov. 18, 1976.

Howard R. Lonergan, Portland, argued the cause and filed briefs for appellant.

Vawter Parker, Portland, argued the cause for respondent. With him on the brief were James C. Dezendorf, James H. Clarke, and Dezendorf, Spears, Lubersky & Campbell, Portland.

Before DENECKE, C.J., and McALLISTER, HOLMAN and HOWELL, JJ.

HOWELL, Justice.

This is a declaratory judgment proceeding to determine the respective rights of the parties under an endowment insurance contract. Plaintiff maintained this action both individually and as the personal representative of his parents' estates. Plaintiff's father, the insured and a Cuban refugee, died in 1967, and plaintiff's mother died in 1974. Plaintiff's complaint alleged that the defendant insurance company, a Canadian corporation, owed $2,000, plus interest, under the terms of the policy, but had offered to pay only $699.05. Defendant's answer alleged that the contract had been amended by a supplemental agreement between the parties and that, pursuant to this agreement, it owed plaintiff only 2,000 Cuban pesos, plus interest.

Plaintiff requested a jury trial, contending that the supplemental agreement was ambiguous, that he was therefore entitled to introduce extrinsic evidence relating to the parties' probable intent, and that he was entitled to have the jury decide whether defendant was obligated to pay $2,000 worth of Cuban pesos, or 2,000 Cuban pesos. The court held that the evidence did not create a question of fact and that the interpretation of the supplemental agreement was a question of law to be resolved by the court alone. ¹ Thereafter, the court made findings of fact and conclusions of law and entered judgment for defendant. On appeal, plaintiff contends that the court erred in refusing to grant him a jury trial on the issue of the proper interpretation of the supplemental agreement.

The record discloses that in 1945 plaintiff's father, while living in Cuba, purchased a 20-year endowment life insurance policy from the defendant insurance company with a face value of $2,000 and at an annual premium of $112. The policy also contained the following provision:

'4. CURRENCY. All amounts payable under the terms of this policy, either to or by the Company, are payable in Bankers demand drafts on New York, U.S.A., for United States Dollars.'

At the time of the agreement, both U.S. dollars and Cuban pesos were legal tender in Cuba and had an equivalent value both in Cuba and elsewhere.

In 1952 both the insured and the defendant entered into a supplemental agreement which amended the policy and provided that:

'It is understood and agreed between the parties to the insurance contract referred to above that all payments to be made by virtue of this contract either to or by the Company are to be made in Pesos, legal currency of the Republic of Cuba.'

Apparently, this was in response to a Cuban law which had become effective one year earlier and which required that thereafter all debts payable to or by Cuban nationals which were previously stated in dollars were to be discharged in Cuba in pesos. At this time, pesos and dollars still had an equivalent monetary value. However, after Castro gained control of Cuba, the value of the peso declined sharply against the dollar in world markets, although the official exchange rate in Cuba has apparently remained one for one.

In 1963, the insured and his family fled Cuba and came to the United States. The insurance policy had been paid up before they left Cuba, and, prior to its maturity date of May 4, 1965, the insured, plaintiff's father, wrote to the defendant to notify it of his election to leave the proceeds on deposit with defendant at 3 per cent interest in accordance with one of the policy's settlement options. Defendant then wrote to the insured and acknowledged his request, but stated that the policy would mature

'for a total sum of Cuban pesos 2053.48. This amount consists of the full sum insured in Cuban pesos, two thousand, and increased by the total accumulated dividends due at maturity of Cuban pesos 53.48. The currency of the policy is Cuban pesos and the records are maintained in our office in Cuba. As a result, our office there is compelled to comply with the Cuban laws and currency regulations, which prohibit us from exporting any Cuban currency from that country or making any payment outside of Cuba. * * * As a result, any payment under the policy or withdrawal from the proceeds on deposit must be made in Cuban pesos to you in Cuba. We can quite understand that this is an impractical situation from your point of view, but regret that for the time being there is no alternative. * * *'

Plaintiff's father apparently never responded to these statements. However, on May 12, 1965, the following endorsement was unilaterally placed on the policy by the defendant:

'This contract having matured the proceeds of Cuban Pesos 2053.48 (after making the necessary adjustment for dividends) are retained on deposit under the terms of Option IV and interest shall be allowed from May 4, 1965. Such proceeds are held for the credit of Jose Maria Busto Lema and any balance remaining unpaid at his death shall be paid to his executors or administrators.'

The insured died in 1967. In 1968, plaintiff's mother, the widow of the insured, wrote to defendant as follows:

'This is to inform you that I had a telephone call from the company's office in Miami, to the effect that they would pay me the policy at the rate of four pesos to one dollar. I agree with your procedure, but I want to ask you a favor. I do not want to cash that money for the moment, because I do not need it now, and I would appreciate it if I could leave it on deposit with the understanding that I will not lose the money if it is left on deposit for several years. Awaiting your reply.' ²

The...