Theye Y Ajuria v. Pan Am. Life Ins. Co.

• Citation: 154 So.2d 450
• Decision Date: 14 June 1963
• Docket Number: No. 771,771
• Parties: Carlos Manuel THEYE Y AJURIA, Plaintiff-Appellee, v. PAN AMERICAN LIFE INSURANCE CO., Defendant-Appellant.
• Court: Court of Appeal of Louisiana (US)

Page 450

154 So.2d 450

Carlos Manuel THEYE Y AJURIA, Plaintiff-Appellee, v. PAN AMERICAN LIFE INSURANCE CO., Defendant-Appellant.

No. 771.

Court of Appeal of Louisiana, Fourth Circuit.

June 14, 1963.

Rehearing Denied July 1, 1963.

G. Frank Purvis, Jr., Solomon S. Goldman, Matthew Sutherland, New Orleans, for defendant-appellant.

Chaffe, McCall, Phillips, Burke & Hopkins, James G. Burke, Jr., New Orleans, for plaintiff-appellee.

Before JOHNSON, EDWARDS and DALFERES, JJ.

A. WILMOT DALFERES, Judge ad hoc.

Plaintiff, a Cuban National born in Cuba, applied to Pan American Life Insurance Company for a policy of life insurance in Havana, Cuba, through the Havana representative of defendant insurance company in May of 1928. For several years prior to the issuing date of this policy, defendant was authorized to do business in the Republic of Cuba, after complying with Cuban statutory regulations pertaining to the insurance field.

Plaintiff's application was in due course referred to the Home Office of defendant in New Orleans, Louisiana. Upon approval of the application, the policy in regular form, written in the Spanish language, was forwarded to the Havana agent of defendant who, after having it countersigned by an agency of the Cuban government, delivered same to the plaintiff. The plaintiff paid to defendant fourteen annual installments on the policy and in the year 1942 selected, as one of the alternatives in the policy provisions, to have the policy converted to a paid-up policy.

A payment known as a 'persistency bonus' became due under the policy in 1948.

In 1948, the Cuban government adopted Law No. 13, which provided that after 1951 United States currency might no longer be used in Cuba, and the Cuban peso would become the sole form of legal tender there. By the Monetary Law of Cuba of 1951, all contracts payable to or by Cuban Nationals were required to be paid in Cuban pesos only.

In November of 1948, in May of 1950, and in February of 1952, the plaintiff made loans against the policy in varied amounts and in each instance the proceeds of such loan in pesos were paid to plaintiff by a check drawn on the Havana, Cuba, office of the National City Bank of New York. Each of such loans to defendant company was repaid by plaintiff, who likewise made the payment in Cuban pesos. All the payments were made in Cuba to defendant's Cuban agent and deposited in a Cuban bank.

In January of 1959, the Castro government came into power after a revolution. The government of the United States recognized and maintained diplomatic relations with the Cuban government until about October 26, 1960.

From 1928, the date of the issuance of the policy in controversy, until some date subsequent to the date of the nationalization of respondent insurance company, plaintiff continued to live in Cuba as a Cuban National.

Subsequent to the nationalization of respondent's business, plaintiff left Cuba and is now a refugee in the United States. Upon his arrival in the United States, he appeared at the office of defendant's company in New Orleans and demanded the cash surrender value of the policy. Upon the refusal of defendant to pay the same, this action followed.

This matter was submitted to the Court for summary judgment on admissions, interrogatories, and stipulation.

The trial Court rendered judgment in favor of plaintiff and against defendant in the amount of SEVEN THOUSAND NINETY AND NO/100 ($7090.00) DOLLARS. From this judgment defendant has appealed.

It is elementary law that a sovereign government, having a definite interest in insurance contracts, can enact legislation for the protection of its citizens, controlling the insurance business within its bounds. ¹ As the United States Supreme Court said in Osborn v. Ozlin, 310 U.S. 53, 60 S.Ct. 758, 84 L.Ed. 1074,

'The state may fix insurance rates, German Alliance Ins. Co. v. Lewis, 233 U.S. 389, 34 S.Ct. 612, 58 L.Ed. 1011, L.R.A.1915C, 1189; it may regulate the compensation of agents, O'Gorman & Young v. Hartford Ins. Co., 282 U.S. 251, 51 S.Ct. 130, 75 L.Ed. 324, 72 A.L.R. 1163; it may curtail drastically the area of free contract, National Union Fire Ins. Co. v. Wanberg, 260 U.S. 71, 43 S.Ct. 32, 67 L.Ed. 136. States have controlled the expenses of insurance cpmpanies, New York Insurance Law, Consolidated Laws of New York, c. 28, § 244, and Wisconsin Statutes, § 201.21; and see Report of Joint (Armstrong) Insurance Investigation Committee (N.Y.) pp. 403--418 (1906). They have also promoted insurance through savings banks; see Berman, the Massachusetts System of Savings Bank Life Insurance, Bulletin No. 615, U.S. Bureau of Labor Statistics, and New York Laws of 1938, c. 471. In the light of all these exertions of state power it does not seem possible to doubt that the state could, if it chose, go into the insurance business, just as it can operate warehouses, flour mills, and other business ventures, Green v. Frazier, 253 U.S. 233, 40 S.Ct. 499, 64 L.Ed. 878, or might take 'the whole business of banking under its control.''

Our learned brother, the trial Court, resolved the issues as follows:

'The Court is of the opinion that any laws or decrees of the Republic of Cuba passed subsequently to the date upon which the policy became a paid-up policy of insurance could have no effect upon the obligation which existed at that time. ² Said obligation continued from that date to now to be an obligation under the laws of the State of Louisiana and subject to and governed only by said law, if the beneficiary or the insured under said policy presented himself in the State of Louisiana to enforce the obligations contained therein.'

It must be remembered that plaintiff is a Cuban National. It is a well established principle of law, recognized by all appellate Court decisions, that a recognized Sovereign Nation can make laws binding upon its nationals within its bounds. Chief Justice Marshall, in The Antelope, 10 Wheat. 66, 6 L.Ed. 268, said:

'No principle of general law is more universally acknowledged than the perfect equality of Nations. Russia and Geneva have equal rights. It results from this equality that no one can rightfully impose a rule on another. Each legislates for itself, but its legislation can operate on itself alone * * *.'

When Castro rose to power, his government was recognized by the United States of America. Diplomatic relations were maintained between the United States and Cuba, until October 26, 1960. Plaintiff did not leave Cuba until November 4, 1960. On September 29, 1959, following Castro's rise to power, Law 568 was promulgated. That law prohibited Corporations doing business in Cuba, from making payments, or even making any entries in their books which would result in credit being made available to Cuban Nationals, except in Cuba, and without express authorization of the National Bank of Cuba. Violators of said law were subject to criminal penalties.

Further, on October 24, 1960, all of the affairs and assets of Pan American Life Insurance Company in Cuba were nationalized. The investments, properties and reserves of the said Company were taken over by the Cuban Government, which substituted itself as insurer and assumed all liabilities of the Company; in fact, the business of the Company was carried on through a government appointed administrator.

Certainly any Sovereign Nation can and has the power to change the situs of its National's contracts. Further, a nation can and does frequently impair the obligations of contract. Even our own country did this in the Gold Clause Cases, Norman v. Baltimore & O.R. Co., Nortz v. United States, Perry v. United States, 294 U.S. 240, 317, 330, 55 S.Ct. 407, 428, 432, 79 L.Ed. 885, 905, 912. We do have a provision in the United States Constitution preventing the States of the Union from enacting ex post facto law or laws impairing the obligation of contract. (See 10, U.S. Constitution). But it is within the Sovereign power of the United States Government to do these acts if in its National interests it sees fit to do so.

The Courts of this Country can take judicial notice of treaties made between the U.S. Government and foreign governments. United States v. Reynes, 9 Haw. 127, 50 U.S. 127, 13 L.Ed. 74; Lacroix Fils v. Sarrazin, 5 Cir., 15 F. 489. Further, our Courts...