Confederation Life Ass'n v. Ugalde, 62-295

• Decision Date: 26 March 1963
• Docket Number: No. 62-295,62-295
• Citation: 151 So.2d 315
• Parties: CONFEDERATION LIFE ASSOCIATION, a Canadian corporation, also known as La Confederacion Del Canada, Appellant, v. Leandro Goiricelaya UGALDE, Appellee.
• Court: Florida District Court of Appeals

Page 315

151 So.2d 315

CONFEDERATION LIFE ASSOCIATION, a Canadian corporation, also known as La Confederacion Del Canada, Appellant, v. Leandro Goiricelaya UGALDE, Appellee.

No. 62-295.

District Court of Appeal of Florida, Third District.

March 26, 1963.

Rehearing Denied April 11, 1963.

Shutts, Bowen, Simmons, Prevatt & Boureau and Cotton Howell, Miami, John G. Laylin, Washington, D. C., for appellant.

Nestor Morales, Miami, for appellee.

Before PEARSON, TILLMAN, C. J., and CARROLL and HORTON, JJ.

CARROLL, Judge.

This is an appeal by the defendant below from an adverse summary judgment. Appellant, a Canadian corporation, had issued a $20,000 life insurance policy to a resident of Havana, Cuba, in 1948. Some thirteen years later, when requested to pay the cash surrender value, the company offered to pay in Cuban pesos in Havana, but refused to pay in United States dollars. The insured sued the company in Dade County, Florida. Both parties moved for summary judgment. Plaintiff's motion was not augmented by evidentiary matter. Defendant's motion was supported by an affidavit of an expert to the effect that under Cuban law the defendant was authorized and required to pay the obligation in Cuban currency legal tender. Summary judgment was entered against the defendant for $13,825.52, ¹ plus certain costs.

The determinative question in the trial court as on this appeal was whether the defendant's obligation under the insurance policy to pay the cash surrender value, at the time demanded, was to be measured in United States dollars, or, as the defendant contended, in Cuban pesos. ²

The material facts as disclosed by the pleadings were not in dispute. The application for the life insurance policy was made by the appellee in 1948 in Cuba. Both in the application and in the policy which was written in Spanish it was stated that the policy would become effective upon payment of the first premium. The insured received delivery and paid the first premium in Havana. The policy provided that all payments were to be made in United States dollars, and the place for making payments under the policy was specified to be Havana, Cuba.

Subsequent to the issuance of the insurance policy, the Cuban government made certain laws and decrees which removed United States dollars as legal tender and substituted the Cuban currency of legal tender, for discharge of obligations payable in Cuba. Cuban Law No. 13 of December 23, 1948, provided that beginning one year after the Banco Nacional de Cuba should commence operations the currency of the United States of America would cease to be legal tender and to have debt redeeming force in Cuba. The Bank began its operations on April 27, 1950. The one year grace period previously imposed, which would have ended April 26, 1951, was extended to June 30, 1951, by an executive order, Decree No. 1384 of April 19, 1951. That decree provided that after the end of such extended grace period obligations could be discharged in Cuban currency regardless of contract provisions for payment in United States dollars. The provisions of Decree No. 1384 pertinent to that feature were as follows:

'Second. Beginning on the date on which the United States currency shall cease to be legal tender and have debt redeeming force in the territory of the Nation, all obligations contracted or payable in the national territory shall be expressed and settled in national currency pursuant to the provisions of Law No. 13, of December 23, 1948, subject to no exception other than those specified in Articles 96, 98 and 113 thereof.

'The debtors of obligations not included in said exceptions and the payment whereof in United States currency has been stipulated or agreed upon prior to the cessation of such legal tender status and such debt redeeming force, may settle such obligations at par through the delivery of national currency in the same amounts as those previously expressed in United States dollars.'

Thereupon the company notified its policy holders in Cuba that under said Decree No. 1384 amounts theretofore provided to be payable in United States dollars would be paid 'in Cuban pesos one for one.' The plaintiff made subsequent premium payments in Cuban pesos, and the company accepted them at par with the dollar as it was required to do by the Cuban law.

On October 2, 1959, the government of Cuba, under the rule of the dictatorship of Fidel Castro, enacted Law No. 568, which forbade the export of currency or transfer of funds abroad except for cases authorized by the Currency Stabilization Fund of Cuba. Unauthorized transfers were made felonies and it was provided that companies which are 'presumed to have infringed the provisions of this law' may be 'intervened.' Thereafter, on February 23, 1961, the Cuban government enacted Law No. 930, which provided that the Banco Nacional de Cuba should regulate the issuance of currency, and such currency (Cuban pesos) was to be the only legal tender and was to be accepted in payment of any obligation payable in Cuba, and further provided that obligations which by agreement were made payable in another currency must be settled and paid in Cuban legal tender. The demand for payment of the cash surrender value was made October 11, 1961, after enactment of the laws referred to above. The complaint in this suit was filed November 3, 1961.

The appellant contends that the contract is controlled by Cuban law, and that payments thereunder may and in fact must be with Cuban pesos at par with the dollar.

Appellee argues that the contract is governed by the law of Florida, and that it would be against the public policy of the State of Florida to recognize and enforce in behalf of the defendant insurance company the right, as conferred by Cuban law, to discharge the obligation in pesos.

The policy did not specify the law of any particular jurisdiction to govern it. The contract was made in Cuba ³ and by its terms was to be performed there. ⁴ Neither Florida nor any jurisdiction other than Cuba had any significant contacts with regard to the obligations of the insurance policy so as to justify or require the contract to be governed by the law of Florida or such other jurisdiction. ⁵ Under the above conditions, it is held uniformly, and in Florida, that when the place of the making and the place of the performance are the same, the law of that jurisdiction determines and controls the validity, interpretation, and the rights and obligations under such a contract. Thomson v. Kyle, 39 Fla. 582, 23 So. 12, 16; Connor v. Elliott, 79 Fla. 513, 85 So. 164, cert. den. 254 U.S. 665, 41 S.Ct. 148, 65 L.Ed. 465 (1920); Brown v. Case, 80 Fla. 703, 86 So. 684; In the Matter of Magnus Harmonica Corporation, 3 Cir., 1959, 262 F.2d 515, 518, note 8; Annot., 50 A.L.R.2d 524, 257; 11 Am.Jur., Conflict of Laws, § 117, p. 401; Restatement, Conflict of Laws, § 346, 358.

When a suit is brought on a contract in a jurisdiction other than the one which governs the rights and obligations thereunder, a defense lawfully vested under the law of the latter jurisdiction may not be ignored by the forum if that state had no significant connection with the contract obligations. Rejection of such rights under the contract, asserted as a defense, is a deprivation of due process of law guaranteed by the Fourteenth Amendment to the Constitution of the United States and Section 12 of the Declaration of Rights of Florida, F.S.A. Home Ins. Co. v. Dick, 281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926, 74 A.L.R. 701 (1930); Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U.S. 143, 54 S.Ct. 634, 78 L.Ed. 1178, 92 A.L.R. 928 (1934); Holderness v. Hamilton Fire Ins. Co. of New York, S.D.Fla.1944, 54 F.Supp. 145. Compare Clay v. Sun Insurance Office Ltd., 363 U.S. 207, 80 S.Ct. 1222, 4 L.Ed.2d 1170, (1960), vacating and remanding, 5 Cir., 1959, 265 F.2d 522, on holding the constitutional issue to have been decided prematurely. In Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., supra, a suretyship contract, held to have been governed by the laws of Tennessee, was sued upon. The Mississippi court refused to give effect to a provision of the contract, valid under the law of Tennessee, which absolved the defendant insurance company from liability. In reversing a judgment for the plaintiff, the Supreme Court of the United States said:

'The contract being a Tennessee contract and lawful in that state, could Mississippi, without deprivation of due process, enlarge the appellant's obligations by reason of the state's alleged interest in the transaction? We think not. Conceding that ordinarily a state may prohibit performance within its borders even of a contract validly made elsewhere, if the performance would violate its laws (Home Insurance Company v. Dick, supra, page 408 of 281 U.S., 50 S.Ct. 338, 74 L.Ed. 926 , 74 A.L.R. 701), it 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. * * *'

In the instant case, the defendant asserted as a defense its right to pay in Cuban pesos at par and the obligation of the insured to accept payment in such form, as provided for in the insurance contract as modified by the laws and executive decrees of Cuba. The trial court rejected the defense. In so doing, the trial court erred and deprived appellant of due process of law.

As a sovereign nation, Cuba was entitled to establish a national currency and require its use in discharge of obligations governed by its law. Guaranty Trust Co. of New York v. Henwood, 307 U.S. 247, 59 S.ct. 847, 83 L.Ed. 1266 (1939). And Cuba had the power to declare that which was legal tender for the discharge of such obligations. Legal tender cases, Knox v. Lee and Parker v. Davis, 79 U.S. (12 Wall.) 457, 20 L.Ed. 287 (1870); Juilliard v. Greenman, 110 U.S. 421, 448, 4 S.Ct. 122, 130, 28 L.Ed. 204, 214 ...