Varas v. Crown Life Ins. Co.

• Decision Date: 17 September 1964
• Citation: 204 Pa.Super. 176,203 A.2d 505
• Parties: Alicia VARAS v. The CROWN LIFE INSURANCE COMPANY, Appellant.
• Court: Pennsylvania Superior Court

203 A.2d 505

204 Pa.Super. 176

Alicia VARAS v. The CROWN LIFE INSURANCE COMPANY, Appellant.

Superior Court of Pennsylvania.

September 17, 1964.

Owen B. Rhoads, Arthur W. Leibold, Jr. Pjiladelphia, for Crown Life ins. co.

Lewis Weinstock, Roy L. Cameron, Jr., James M. Marsh Philadelphia, David S. Foulke, Ambler, for Alicia Varas.

Before RHODES, P. J., and ERVIN, WRIGHT, WOODSIDE, WATKINS, MONTGOMERY and FLOOD, JJ.

WATKINS Judge.

These appeals by the plaintiff, Alicia Varas, and the defendant, The Crown Life Insurance Company, are from the judgment of the Court of Common Pleas of Montgomery County, entered on a directed verdict in favor of the plaintiff and against the defendant in the amount of $3680 with interest, representing the amount of premiums paid on an insurance policy; and from the refusal of post trial motions for judgment n. o. v. or for a new trial.

The policy in suit was applied for by the mother of the plaintiff, as her guardian, in Havanna, Cuba, in April, 1944. The policy, written upon the life of the plaintiff, was delivered by the defendant company in Cuba on July 12, 1944 with a date of issue of May 23, 1944. The contract was a twenty-year endowment policy in the face amount of $5000. At the time of the delivery the plaintiff was a resident and citizen of Cuba; the defendant was a Canadian insurance company doing business and having a place of business in Cuba. Until 1951 premiums were paid in United States dollars which were legal tender at that time. From 1951 and through 1960 the premiums were paid in pesos.

The Canadian company defendant at the time of the suit was doing business and had an office both in Cuba and in Montgomery County, Pennsylvania, U. S. A. The trouble in Cuba caused the plaintiff to leave that country in August, 1960 and she has been a resident of the United States since that time in Florida and Georgia and expresses the intention of making and continuing her residence here. She is a political refugee without citizenship. She has been admitted as a permament resident of the United States and is a civil citizen. Blanco v. Pan-American Life Ins. Co., 221 F.Supp. 219 (D.C.1963); United States v. Wong Kim Ark, 169 U.S. 649, 655, 18 S.Ct. 456, 459, 42 L.Ed. 890 (1897).

The plaintiff demanded payment by the company of the guaranteed cash surrender value of the policy and the company refused payment on the ground that the contract is governed by the laws of Cuba. The plaintiff, by a suit in assumpsit, demanded the cash surrender of the contract of insurance as provided in the policy or in the alternative, the return of the premiums paid. The defendant's answer admitted the execution and delivery of the policy of insurance and that the premiums were paid but, as new matter, alleged that performance in the United States is prohibited by Cuban law and its effect upon the contract, Cuba being the place of the creation of the obligation; that the monetary provisions of the policy were waived and plaintiff estopped from raising them because of the payment of premiums in pesos; and because of the International Monetary Fund Agreement.

At the conclusion of the trial a verdict was directed against the plaintiff on the first cause of action, the cash surrender value, and in her favor on the alternative cause of action, the return of the premiums paid. The jury determined that she was entitled to interest. The plaintiff and defendant filed cross post trial motions and they were dismissed. Both parties appealed.

Since oral argument, we have been asked by the defendant company to disregard the question raised as to the impact of the International Monetary Fund Agreement as on April 2, 1964, effective on that date, the Republic of Cuba had withdrawn from membership.

Cuban Law No. 13 passed on December 23, 1948 provided that United States currency should cease being legal tender and cease having debt redeeming force but by Decree 1384 dated the 20th of April, 1951 extended the status of legal tender of currency of the United States until June 30, 1951 and provided that after that date it would cease to be legal tender or have debt redeeming force. It also provided that all contract obligations enforceable in Cuba should be settled only in the national currency.

In January of 1959 the Batista government was replaced by that of Fidel Castro. The Castro government was recognized and still continues to be recognized by the United States as the government of the Republic of Cuba

Law No. 568 effective October 2, 1959 made all transfers, payments or any dealings in foreign currency felonies and by a law dated February 23, 1961 provided that only coins minted and bills issued by the National Bank of Cuba should be legal tender.

The defendant contends that Decree 1384 modified its dollar obligation to the plaintiff while law 568 must be interpreted to prohibit payment of the policy in dollars. The defendant therefore refused payment on that theory. The defendant company contends that where the contract is silent as to performance the law of the place where it is made governs. The plaintiff claims that not only can the place of performance be inferred from the policy to be the United States as well as Cuba but that the place of performance is, to wit, the place where the attempt to exercise the option of the payment of the guaranteed value took place, which was Pennsylvania, so that the monetary laws of Cuba do not apply.

The court below agreed with the defendant company that the monetary laws of Cuba apply as it was the place of the making of the contract and 'since no place of performance was stated, the contract must be performed in Cuba. Therefore, no recovery can be based on a demand for performance in Pennsylvania.' However, the court below agreed with the plaintiff that it was excusably impossible to obtain performance in Cuba and said: '* * * the law implies a quasicontractual obligation on the party receiving such performance to pay its fair value: West v. Peoples First National Bank & Trust Company, 378 Pa. 275 (1954) * * * The same principle is applicable here. The plaintiff is obligated to go to Cuba in order to receive any benefits under the insurance contract. It is excusably impossible for her to do so. She had partly performed the contract before this impossibility arose. She is entitled to recover the value of that performance.' This is on the basis of unjust enrichment and the law governing the performance of an insurance contract is not applicable and so Cuban law that might bar a recovery is of no effect.

We believe that the plaintiff was entitled to enforce the terms of the contract in regard to the cash surrender option in Pennsylvania. We do not believe that the monetary laws of Cuba are applicable.

The contract, admittedly, made in Cuba with a foreign insurance company provided that the currency contemplated for use by the parties was 'dollars, lawful money of the United States of America * * * and every amount payable to or by the company under this policy shall be payable in such currency.' The entire contract was written in Spanish but it is noteworthy that it unequivocally called for all payments to be in United States dollars. This was not by happenstance but was done with the deliberate intention to make sure that the sound currency of the United States was the currency to be used rather than the uncertain, and even then fluctuating, value of Cuban pesos. We can take judicial notice of this factual consideration. Pan-American Life Ins. Co. v. Recio, 154 So.2d 197 (Fla.App.1963). Up until the advent of the Castro regime the monetary exchange in Cuba between dollars and pesos was one for one. Today the peso in the United States is valueless. In the application for the policy the following question was asked. 'State here any special provisions desired in the policy'; the answer was 'currency of the United States of America'. So both parties to this contract agreed to a 'special provision' for payment in dollars. The policy further provided that payment of premiums must be made to the home office of the company or elsewhere in exchange for the company's printed form of official receipt.

The Republic of Cuba had the right and the power to specify that would be legal tender within its territory and at the time of the contract American dollars were legal tender in the Rapublic. The currency selected by the plaintiff and the defendant in the contract was the national currency of the United States, and it was only incidentally a currency having debt redeeming force in Cuba in 1944. The national currency of Cuba was pesos but the parties chose to express their obligations in dollars. Only the Congress of the United States has the legislative jurisdiction to alter the characteristics of the dollar and so long as the contract is performable in the United States no act of the Republic of Cuba can alter the duty of performance here.

'Generally a contract is construed under the law of the place where it was made, but when the place of performance differs from the place of making, the law of the place of performance may prevail * * * Thus a contract normally is interpreted according to the lex loci contractus * * * Generally a contract is deemed to have been made when and where the last act necessary for its formation is done * * * regardless of the place of making or place of performance of a contract the lex fori governs the form of the remedy.' 8 P.L.E. Contracts § 122.

The court below entered judgment against the plaintiff in her claim for the guaranteed value of the...