Pan-American Life Insurance Company v. Blanco

• Decision Date: 03 August 1966
• Docket Number: 20944,No. 20942,20943.,20955,20942
• Citation: 362 F.2d 167
• Parties: PAN-AMERICAN LIFE INSURANCE COMPANY, Appellant, v. Inocencio BLANCO et al., Appellees. PAN-AMERICAN LIFE INSURANCE COMPANY, Appellant, v. Guido CONILL, Appellee. AMERICAN NATIONAL INSURANCE COMPANY, Appellant, v. Jose Antonio LORIDO y DIEGO, Appellee. PAN-AMERICAN LIFE INSURANCE COMPANY, Appellant, v. Maria Teresa Paula Aguirregaviria ZABALETA, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

362 F.2d 167 (1966)

PAN-AMERICAN LIFE INSURANCE COMPANY, Appellant, v. Inocencio BLANCO et al., Appellees.

PAN-AMERICAN LIFE INSURANCE COMPANY, Appellant, v. Guido CONILL, Appellee.

AMERICAN NATIONAL INSURANCE COMPANY, Appellant, v. Jose Antonio LORIDO y DIEGO, Appellee.

PAN-AMERICAN LIFE INSURANCE COMPANY, Appellant, v. Maria Teresa Paula Aguirregaviria ZABALETA, Appellee.

Nos. 20942, 20944, 20955, 20943.

United States Court of Appeals Fifth Circuit.

June 13, 1966.

Rehearing Denied August 3, 1966.

James A. Dixon, Sam Daniels, Miami, Fla., for Pan-American Life Ins. Co. Stanley Arthur Beiley, Joseph A. McGowan, Wesley Carey, John Robert Terry, George H. Salley, Miami, Fla., for appellee Zabaleta.

Herbert A. Kuvin, Joseph A. McGowan, Wesley Carey, John Robert Terry, Miami, Fla., Carey, Terry, Dwyer, Austin, Cole & Stephens, Miami, Fla., for appellees Blanco, Conill, and Lorido y Diego.

Before TUTTLE, Chief Judge, JONES, Circuit Judge, and GROOMS, District Judge.

Rehearing Denied in No. 20943, August 3, 1966.

JONES, Circuit Judge:

These four appeals, each somewhat different from the others, involve the effect of expropriation laws and resolutions of the Castro government of Cuba. Consideration is required of the Sabbatino case¹ and of the so called Sabbatino Amendment.² Pan-American Life Insurance Company is a Louisiana corporation with its principal place of business at New Orleans in that State. American National Insurance Company is a Texas corporation with its principal place of business in Galveston, Texas. Pan-American conducted a life insurance business in Cuba from 1913 until October 26, 1960, maintaining a branch office in Havana. American National was in the insurance business in Cuba from 1949 to October 24, 1960, with a general agent in Havana.

On May 18, 1945, Inocencio Blanco, who was then both a citizen and resident of Cuba, purchased from Pan-American three single premium annuity contracts, for the benefit of his three daughters, Gloria, Ana and Maria. Each contract provided for the payment by Pan-American to the designated daughter of Blanco the sum of $100 per month commencing on a specified date in the future. Blanco, the father, retained control of the contracts and the right of exercising the privileges and benefits.

In 1941, Pan-American issued to Guido Conill, who was then a citizen and resident of Cuba, a policy of insurance on his life payable to a named beneficiary and requiring the payment of annual premiums.

The appellee, Maria Teresa Paula Aguirregaviria Zabaleta, in 1938, while a Cuban citizen and resident, procured a thirty-five year endowment policy on her life. Originally the Zabaleta policy, like the Blanco contracts, called for payment by Pan-American in New Orleans in dollars. By an amendment made in 1952 it was provided that "all premiums, all benefits and all claims payable under its terms be demanded and payable in the national currency of Cuba, in Havana, Cuba, on the basis of one peso for each dollar, required by the contract."

Applications for all of the Pan-American policies³ were made in Cuba in the Spanish language. The policies were prepared in New Orleans where they were signed and then sent to Cuba, and there they were authenticated and delivered. All of these policies were, at the outset, payable in New Orleans in dollars and all of them remained so payable except the Zabaleta policy which, as has been noted, was amended by endorsement.

American National issued a twenty-year endowment policy to the appellee, Jose Antonio Lorido y Diego, in 1950 and another in 1951. The applications for these policies, as in the case of the Pan-American policies, were made in the Spanish language in Cuba, and the policies were written up in the United States and sent to Cuba for delivery. Unlike the Pan-American policies which were in Spanish, the American National policies were in English.

Prior to June 30, 1951, the United States dollar was legal tender in Cuba. On that day, pursuant to legislation and a Presidential decree, the dollar ceased to be legal tender. After the Castro regime took over Cuba in 1959, a currency control law was enacted making it illegal to transfer currency or other funds to points outside of Cuba except when authorized by a permit. In retaliation against the United States for its action in reducing the Cuban sugar quota, the Cuban government enacted Law 851 of July 6, 1960, which authorized the nationalization through expropriation of properties or concerns belonging to natural or juridical persons, nationals of the United States. Under Law 851, Resolutions were adopted nationalizing and expropriating the Cuban properties and assets of many business entities of the United States. Resolution No. 3, dated October 24, 1960, declared the expropriation and nationalization of specified properties and concerns, including Pan-American Insurance Company and American National Insurance Company. The Resolution incorporates the following:

"Therefore, the Cuban state is declared subrogated in place and grade of the natural and juridical persons referred to in the preceding section with respect to the properties, rights and rights of action mentioned, as well as the assets and liabilities constituting the capital of the concerns referred to."

Blanco, his daughter, Conill, Zabaleta and Diego became exiled residents of Florida. Pan-American advised Blanco that it would make no payments under the annuity contracts purchased by him. Conill and Zabaleta made demand upon Pan-American, and Diego made demand upon American National, for the cash surrender values of their respective policies. Payment was refused. Actions were brought against the insurance companies for declaratory judgments to determine that the annuity contracts of the Blancos and the insurance policies of the others are valid and binding upon the insurers and are payable in the United States and in United States dollars. Pan-American, in the actions brought against it by Blanco, counterclaimed for a declaratory judgment that it was not liable on the annuity contracts.

The Blanco case was before this Court on an interlocutory appeal and the cause was remanded for a determination by the district court of substantially the same questions as are presented by the present appeal of that case. Pan-American Life Insurance Co. v. Blanco, 5th Cir. 1962, 311 F.2d 424. The factual situations, stated in some more detail than here, and the principles which the district court regarded as controlling are set forth in its opinion. Blanco v. Pan-American Life Insurance Co., 221 F.Supp. 219. Subsequent to the decision of the district court, the Supreme Court handed down its opinion in the Sabbatino case, note 1 supra, holding that the courts will not examine the validity of a taking of property by a foreign government within its own territory, where such government is recognized by the United States, in the absence of a treaty or other agreement, even if it is asserted that the taking was in violation of international law. The dissatisfaction of the Congress with the effect of the decision led to the enactment of the so-called Sabbatino Amendment⁴ to the 1964 Foreign Assistance Act. There may be a question as to the validity of the Sabbatino Amendment in view of some of the comments in the Sabbatino opinion. Cf. Banco Nacional de Cuba v. Farr, D.C.S.D.N.Y.1965, 243 F.Supp. 957. However, we think it is unnecessary, in disposing of these appeals, to consider whether the Sabbatino Amendment is valid.

In each of these cases there was a pretrial stipulation that Federal jurisdiction was invoked on the ground of diversity of citizenship and amount in controversy. In diversity cases, a Federal court must follow and apply the conflict of laws rules of the state in which it sits. Klaxon Company v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477; Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481, 134 A.L.R. 1462; Sperry Rand Corporation v. Industrial Supply Co., 5th Cir. 1964, 337 F.2d 363. Although the determination of these cases may require consideration of the act of state doctrine and the Bretton Woods International Monetary Fund Agreement, it is our view that the conflicts of laws rules are to be those of the forum. In cases scarcely distinguishable on their facts from the Blanco and Conill situations, a District Court of Appeal of Florida held that matters connected with the performance of a contract are regulated by the law prevailing at the place of performance, and decided that policies of insurance of Pan-American payable in the United States in United States dollars are not to be governed by the laws of Cuba as to the method of performance. Pan-American Life Insurance Co. v. Recio, Fla., 154 So.2d 197, cert. den. 377 U.S. 990, 84 S.Ct. 1908, 12 L.Ed.2d 1044, reh. den. 379 U.S. 871, 85 S.Ct. 17, 13 L. Ed.2d 78; Pan-American Life Insurance Co. v. Lorido, Fla., 154 So.2d 200, cert. den. 377 U.S. 990, 84 S.Ct. 1905, 12 L.Ed. 2d 1043, reh. den. 379 U.S. 871, 85 S.Ct. 15, 13 L.Ed.2d 77. See Confederation Life Association v. Ugalde, Fla., 164 So. 2d 1. Therefore, for the law governing performance, we look to state rules for our guides. The Zabaleta policy, originally payable in New Orleans and by endorsement made payable in Cuba, falls into a separate category.

The Supreme Court of Louisiana has held that the laws and decrees of Cuba passed subsequent to the date of the policy could have no effect upon the obligation existing at the time of the expropriation. Theye y Ajuria v. Pan-American Life Insurance Co., 245 La. 755, 161 So.2d 70, cert. den. 377 U.S. 997, 84 S.Ct. 1922, 12 L.Ed.2d 1046, reh. den. 379 U.S. 872, 85 S.Ct. 20, 13 L.Ed.2d 79. Whether or not it was intended by the Cuban government to relieve the appellant insurers of their...