Confederation Life Insurance Co. v. De Lara Et Al.

Background

A Canadian insurance company issued a life policy in 1938 to a man who lived in Cuba until his death in 1962. The policy originally called for payments in U.S. dollars. In 1951 Cuba declared the dollar no longer legal tender and required previously contracted dollar obligations to be paid in Cuban pesos at par. The insurer told the insured it would treat obligations as payable in pesos; the insured kept the policy and paid premiums in pesos. Beneficiaries now living in Florida sued, and the Florida Supreme Court applied Florida law, ordering payment in Florida in U.S. dollars.

Reasoning

The central question is whether Florida could apply its law to change the contract obligations for a policy made and performed in Cuba. The dissenting Justice argued that precedent forbids a State from altering substantive obligations arising from a foreign transaction that has no significant relation to the State. The dissent emphasized that the insured lived and paid premiums in Cuba, the policy was negotiated, issued, drafted in Spanish, and notarized in Havana, and the insurer’s reserves were held in Cuba. Although the trial court had alternatively relied on Canadian law, the Florida Supreme Court rested its judgment solely on Florida law.

Real world impact

Because the high Court refused review, the Florida ruling stands for now and requires the Canadian insurer to pay in U.S. dollars in Florida despite Cuban currency restrictions and the insurer’s inability to transfer peso reserves out of Cuba. The Government of Canada told the Court the decision has international ramifications, so the issue concerns cross-border payment rules between countries.

Dissents or concurrances

A dissent by one Justice, joined by another, urged the Court to grant review on due-process and comity grounds and to consider whether Florida’s choice of law violated the Fourteenth Amendment.