*1 AINSWORTH, Before DYER and SIMPSON, Judges. Circuit SIMPSON, Judge: Circuit based, non-jury This a Louisiana brought against' Company (Aetna)1 Life Insurance appellee, Jr., Don E. the sole beneficiary of a life insurance Company doing 1. Aetna Life Insurance is a tion business and Lou Hartford, corpora Connecticut domiciled isiana. *2 Lester, father, By E. Don his Lester, Sr. issued to deceased proceeds operation the of invoked of the automatic Sr. to Sr. recover policy provisions of policy.8 timely presented claim loan of clause 8 the Lester’s by (infra) yearly premi- paid policy Aetna and his first denied under the was premiums non-payment $2,252.50. Yearly ground lapse um for of on of the year May Applying premium. that amount due 1 of each of were thereafter, subject day Statute,2 thirty-one held to the district a Notice grace period. appellee, explaining that under for the the of this the circumstances necessary quote It here to from or Supreme Court paraphrase pertinent provisions to of the of the law law Louisiana and not the of policy. provided: Clause 4 Judgment $34,897.484 for Wisconsin. premiums paid “All shall be and and costs was entered interest with of advance at Home Office the the cross-appealed Appellee appealed. Aetna agent, Company, or to its authorized attorneys’ seeking penalties fees. and by exchange receipt signed for a its judgment court’s affirm the district We Secretary Secretary or and Assistant deny ap- appeal on and relief direct agent. countersigned If the pellee cross-appeal. on his due, premium paid not confronting us principal issues The cease, subject policy shall (1) applicability of Louisi- here the are privileges de- values and hereinafter preference of to the law ana except ; thirty- grace scribed of sufficiency Wisconsin; (2) the of the during days, policy one which the shall given by lapse the Aetna to notice of force, remain full will allowed be insured; (3) was whether or not any premium payment for the after ” * ** estopped lapse policy; and to claim of the (Emphasis the first. add- (4) the trial the failure ed) attorneys’ impose penalties and award provided company Clause 6 the (raised cross-appeal). Discus- fee security would make loans (3) is sion decision of issue render- policy for amount in excess disposition unnecessary ed our policy. net loan value6 The (1) and issues specified rate of interest on such loans per year. was stipulated. controlling were facts 5% they will be taken For our examination an automatic loan Clause 8 contained opinion-order5 district court’s provision if due which is available with minor and modifications. additions operation request made written for its payment 1,1952, policy May while there is no default life On $50,000 Essentially clause was amount of due. the face Wisconsin, by ap- any premi- Milwaukee, provides the amount issued in agent E. end of pellant’s to Don um and not before the originally “net the state 6. “Loan value” and filed 6 defined 2. This suit was Clause timely Louisiana, respectively as follows: but was value” loan courts policy U.S.O., Section “The Title loan value moved under which, seq., below which amount to the court shall et time policy pursuant jurisdiction current end took premi- L.S.C., year the end of current Title Section 1332. equal earlier, period if shall um 22:177, note 3. Revised Statute e., val- [i. cash surrender value cash 14, infra. year policy of such end ue] policy period. less value of 4. face amount The net unpaid in- loan and of an amount the loan shall be terest, any unpaid premium un- the amount of the cur- less for the less paid premium. premium period”. rent Life Insurance Lester v. Aetna F.Supp. (W.D.La.1968) grace 31-day period $12,850.02, will automatical- loan indebtedness totaled charged ly company composed principal amount be loaned $12,398.84 policy. as an indebtedness secured interest due $451.18. if the loan should in- The cash value of the However, value surrender May 1, anniversary pre- premium to cover the on the whole *3 due, premium cisely deficiency pre- $12,850.00. no automatic loan would The 2‡ provisions policy provi- be made under the of Clause 8 vented the loan automatic provisions taking Also, but the of Clause 7 would sion from effect. there was apply. of course no se- cash value to available insurance, cure extended term because options Clause 7 contained three the excess of over cash indebtedness 2‡ to the available insured in the event the value. premium provision automatic loan should premium payment A premi- notice of due was be insufficient to cover the total Lester, indicating issued on options provided um that due. If none Sr. 1, premium May by insured, the policy due date of 1962 he the were selected the yearly premium policy stipulated $2,252.- would the the owe that insurance automatically 50 and would on the $451.18 be continued as Option loan. But the not indicate extended term notice did insurance under (C). any against policy provision In the automatic case of loan indebtedness Moreover, the the extended term the record insurance ineffective. certainty does not for the show with the sum insured less the by period appellant notice was indebtedness for issued such a received by Lester, cash value less the Sr. indebtedness would purchase. July 2, days On 1962, 31 additional Lester, expiration 31-day grace timely paid yearly after his Sr. period, informing premiums Aetna issued a from his residence Lester, provi- time, until the automatic loan 1957. At that the full Sr. knowledge inoperative, policy sion was of Aetna he because the moved remaining Parish, Louisiana, did not have Natchitoches he value pay premium loan, 2, February and, lived until his death on there- fore, policy paid premiums lapsed policy had Sr. without value Lester, on the right they apply other Louisiana as from for rein- became due through Aetna, by July statement. 1961. He a total of letter dated 1962, $22,525 through Lester, 3, from advised Sr. that he could completing reinstatement remitting a form premi- the overdue moving Louisiana, Lester, After Sr. $2,252.50. um immediately Sr. entered into several transactions with appellant completed ap- mailed to concerning life plication, $2,703.68 (yearly a check for question. 1958, changed he premium plus interest) July dated beneficiary 6, 1962, reading: “Sorry, and a note administrator of his estate. Then misplaced. notify Notice was Please me 27, again 1961, changed October he you good if reinstate”. This check was beneficiaries, naming ap- this time and would have been honored the bank pellee, Lester, Jr., beneficiary. On sole presented time it was between August 2, 1961, Lester, Sr. obtained July 6, January 1962 and 23, 1963. $12,398.84 appellant, loan August 8, On 1962 Aetna advised its secured the cash surrender value insured letter must he submit policy. physician’s statement, including details May 1, 1962, yearly premium On findings, cardiovascular before became due. At could con- time the receive further states, conflict in response it must resolve the Having received sideration.7 princi- statement, conflict of laws accord with the request physician’s for a by to its developed by 23, forum January ples the courts of appellant letter dated Electric state. Klaxon Co. v. Stentor Mfg. Co., check the decedent’s returned 61 S.Ct. February 313 U.S. later, days $2,703.68. Ten is that L.Ed. The rub insured died. entirely clear what sometimes we must consider At the threshold developed principles or. how have been court erred whether or not the district developed ap- principles should law lieu when it plied in a fact new situation. When The district law. the Wisconsin closely must scrutinize occurs, reasoning Louisi- since court’s was that law, facts, equities specific “signifi- place most ana was *4 involved and law the Su- divine what premium cant contacts” the preme forum state would Court of the governed. The effect notice statute apply. lapsing require was to Aetna before In court followed this case the district give the insured Klaxon and went mandate May premi- 1, 1962 that his both of law rule Louisiana conflicts embodied um that the automatic was and also in Article 10 of the Louisiana Civil Code covering provision late pertinent part provides in which inoperative. was following: Conversely, under the law of Wiscon- public and “The form and effect sin, duty to Aetna would have had no gov- private instruments written are give The law con- notice. Wisconsin usages by erned places the laws premium notice statute. tained they passed where or execut- are it, therefore, would Under ed. lapsed. legally have passed in argument But the effect of acts one application The country to have effect another
Wisconsin law is based on the traditional regulated country is the laws of doctrine, calling for “lex loci contractus” country where such acts are to contract law where the have made, performed, effect”. was or delivered. The involved here was course recognized district that from court “delivered” to Sr. Wisconsin fed- the first sentence of Article 10 the agent. appellant’s Hence eral have courts state appeal on this we must decide whether general rule that the evolved a conflicts correctly ap- district court “place the insurance plied “significant approach contacts” citing govern, is must delivered” “place in lieu of the lex loci contractus or Company of North Davis v. Insurance delivery” approach. (E.D.La., America, F.Supp. 496 268 1967) helpful It therein.8 How- here to state and then and cases cited ever, ap- principles. reason from well established court declined the district cases, rigid saying diversity ply the cir- In federal must rule courts required state. a more cumstances of this case substantive law sophisticated approach Tompkins, Erie 58 and modern 64, R. Co. 304 U.S. v. 817, (1938). of a 82 1188 as was recent decisions S.Ct. L.Ed. When Weight sitting appellate a federal in a court. was Louisiana given apparent an decisions faced with conflict be- below to three recent Judge tween relevant two or more Circuit of the laws of Tate of Third purchased Supreme originally 8. For Court re- When recent Louisiana Theye up adding doctrine, had rated affirmation of this see Lester years age computing pre- Ajuria Ins. five Y American Life v. Pan (1964). physician’s Co., 755, finding of a 245 La. So.2d 70 miums because 161 heart ailment. 888 Appeals.9 argued
Louisiana Court of
those
further
where,
Judge
authority
choice,
here,
parties
cases
has found
Tate
made no
they
likely
the second
Article
for the
sentence of
10
more
otherwise
gravity”
expected
“grouping
“center of
the law
with the
opinions
significant
apply.
contacts”
These
are in most
rule.
contacts to
developments
line with recent
arguments
persuasive
These
are
providing
escape
decided
cases
perhaps
convincing
written,
were
rigidity
loci
lex
contractus
speculation
as what the Louisiana
See,
example,
rule.
Baffin Land
Supreme Court
do with the choice
Inn,
Corporation
v. Monticello Motor
lawof
issue is at an
court has
end. That
Inc.,
893, 425
623
70 Wash.2d
P.2d
spoken,
speaking,
and in
has extin-
Fowler,
(Wash.1967); Bernkrant v.
55
guished
theorizing of the trial court.
588,
266,
Cal.Rptr.
Cal.2d
P.2d
In the ease of
v. St. Paul
Johnson
(1961);
v.
Boston Law Book Co.
289,
Mercury
Ins.
256 La.
So.2d
Hathorn,
416,
119 Vt.
127 A.2d
(decided
30,
rehearing
March
(1956);
Auten,
Auten v.
308 N.Y.
4,May
1970),
denied
the Louisiana Su
(1954);
124 N.E.2d
889 authority, own not Circuit to find what is it would opinion emphasized that called the jurisdictions. rule other approach favor “false conflicts” lex loci abandon above, As we have stated trends.13 modern conflict of laws cases federal lex Supreme used Court The Louisiana courts bound conflict are laws embracing generic sense loci in the broad Klaxon, supra. rule of the forum state. loci con- lex loci delicti and lex both We determine that here the Klaxon tractus. principle inapplicable, because the Furthermore, we are convinced parties and the court have created below Supreme Court Myers, a “false conflict”. v. Gaither delivery” “place rule deviate from U.S.App.D.C. 216, 131 404 F.2d in an to avoid harsh result individual 224; Rawlings Truck Williams v. Johnson, pas- case. an automobile Inc., 1965, U.S.App.D.C. Line Louisiana, injured resident senger, 581, 586; Denny Ameri- 357 F.2d Cf. accident, denied Arkansas Corp., F.Supp. 219, can Tobacco covery by application of the Arkansas (N.D.Cal.1970). generally Currie, See guest passenger The Court of statute. Objectives Notes on Methods Circuit, Appeals, Second was reversed Laws, Essays Conflict Selected applying Louisiana law on the basis (1963); on the Conflict of Laws most of the “contacts” were in Louisiana. Cavers, The Process 88-96 Choiee-of-Law persuaded We are that if the Louisiana (1965), passim; Traynor, cf. Is This Supreme Court were faced with the case Really Necessary?, Conflict Texas L. bar, they would likewise (1959). Comment, Rev. 657 also See Zea; notwithstanding loci contractus rule Conflicts, False 55 Calif.L.Rev. consequences appellee,14 the harsh Ehrenzweig, But see “False provided a conflict exists. Rule”: Conflicts” “Better and the Despite analysis, the above Threat and Law, in Multistate Tort Promise .affirm *6 (1967). the district court’s choice The real of law on Va.L.Rev. 847 grounds appellant different since in our no issue is or not view whether go present. conflict is bound the statute.15 We outside our Louisiana notice 13. (cid:127)fact 'lex' presented to individual case advanced to legislative do tions that solution of the case”. 236 lex judgment trine not travel and the need versed lex loci and objective Such takes at “We are not satisfied that “Plaintiff “Other than broad and lex reinstated justice weigh V [*] loci, loci. We take it Court”. situation a us loci is warranted. and the change away of the Court of clearly hereafter all thought changing advocates a course *1* [*] compelling compels acceptance the individual and made the support Ibid, relevant from the ‘clear-cut’ judgment and will involve this court proponents require defined devise a rule process at 224. [*] compelling to do times, a reasons interests a vague generaliza- of the trial court Accordingly, departure, in departure justice Appeal So.2d at in V [*] the case.” judgment any change here which the have each' cáse the- abolition speed in each rules for respect. (a in is re- prime [*] Ibid, from is to been in a doc 'the the of 14. 15. - ment, stallment, thereof due on such installment, to tice of feited ment when due of and payable, newed, and sured thereof after default notice a term of lapsing at ry Louisiana No life One is inclined to refer § (2) (1) be Golden’s monthly 177. Written mailed or the or paid, loan stating: required and not life point. shall person lapsed any policy insurer one amount place assignment policies Revised Statute title, loan or or unless in assignee have year interest, weekly payment issued to or “For Two Cents person shall the terms notice any premium, of such a written or interest, interest, been whom policy; upon has less, for it shall within whose or to required duly been any premium, premium, issued 22:177: the of the any author declare or and or life is addressed one non-pay- given payment same portion portion printed install- or Plain” or before policy if no- Har- year for- in- in- simple; apply the “when becomes A occurs decision “false conflict” only York, estoppel a has a rule of New case of two states related to one having jurisdiction legitimate application of with an interest in interest defining none, issue of and other has its law ownership law and its * * text, supra; Williams, conclude of the vehicle. We see in direct- Currie, District Court the Choice that the ing erred The Constitution and Goldberger”. and a verdict favor of Interests
of Law: Governmental Function, 26 U.Chi.L.Rev. Judicial bar, at the laws (1958). example, as the For notice and of Wisconsin as to Louisiana Gaither, supra: said only has differ but Louisiana materially, “Thus, concerned we are not having its even remotest interest any the interests real ‘conflict’between applied. Maryland in this and the District 22:17716 Revised Louisiana Statute have states case. The fact that two provides declare that no insurer shall factors different rules where all lapsed non-payment of are oriented to state does one premium, installment, loan or interest necessarily a mean that there is ‘con- stating written “the unless a flict’ which state one demands installment, premium, amount of such rejects the other of its interest, portion loan or thereof pertinent rule to a situation where the policy” insured is mailed to the factors arise in two or more states. days and not more least 15 Where there is no such conflict of prior payable. Louisi- to the date situation, interest multistate enacting ana’s this statute this court noted there and others have protect was to the Louisiana insured situation”, is a conflicts’ ‘false against “losing through mere Williams, supra: neglect pay premium, also to pay- give a fair chance him to meet the sum, presents “In this case a classic Boring ments when due”. Adoption ‘false conflicts’ situation. State Insurance 97 So. La. 549, estoppel New will York doctrine of The statute embodies York, further the interests of New against for- will not interfere with by its feiture citizens of policies articulated District of benefits without notice. hand, applica- Columbia. On the other allowing tion the District’s rule has no such notice statute proof impinge upon may of sale protect New and on face this its *7 interests, furthering promote York’s industry without insurance of that recognizable policies relieving of the of the state insurers of the burden case, mandatory Appellant District. As a false conflicts our notice. does insurer, post at the last known office mail thorized such notice that assignee, post- required address such insured or this been notice section has prepaid by age any person duly the insurer or and mailed the insurer addressed appointed by payment, policy, presump- issuing it to collect such such shall be forty- at least fifteen and not more that been tive evidence notice has days prior duly given. five to the date when the same No action shall be maintained payable. is to recover under a forfeited unless years No shall case be forfeited is instituted the same within two lapsed day upon or declared forfeited or until from the which default was expiration thirty days mailing installment, paying premium, after the made in Any payment portion of such notice. demanded interest thereof for which it by such notice and made within the is This time claimed forfeiture ensued. compliance apply group limit shall be taken to be full Section shall not insurance requirements policies. with the Amended and Acts reenacted spect payment. to the time of such No. any officer, The affidavit of clerk or agent anyone 15, supra. of the insurer or of au- 16. See footnote supports ana law which an award of and Wisconsin in Louisiana business being penalties attorneys’ fees in case. office its home all other states argument appellee’s (footnote We note it is Hartford, Connecticut attorney pay unfair for him to have interest supra)-: has represent non-domiciliary him in to recover his efforts relieving appellant, ¡to proceeds legally insurance which are company, burden insurance point out that are with- property, we Louisiana giving to a notice in power legislate remedy out premium to be that his citizen Legislature only has failed to con due. Wisconsin’s is (cid:127)Louisiana provide Under Eñe one. we and ended occurred with this case tact we find it. single, substantive law as event long ago fortuitous policy in that delivery appeal As to both the and the cross- . policy assuming 'appeal state.. judgment Wisconsin’s therefore affirm the — such-,a protecting own its has the district Costs shall be —of court. mandatory against domiciliary insurers against appellant, (cid:127)taxed Aetna. neither requirements would notice Affirmed. by applica upon impinged nor furthered in this case. of Louisiana law tion ON PETITION FOR REHEARING very purpose hand, the other On AND PETITION FOR REHEAR- notice enacted the which EN ING BANC applicable Both here. statute Sr., appellee- insured,.. PER CURIAM: Jr., beneficiary, Lester, were residents ' Rehearing The Petition for is denied also, the noted we have As Louisiana. panel Judge and no member of this nor beneficiaries, changed insured has twice regular active on service the Court loan from obtained a having requested polled that the Court be pro- interest Louisiana’s Louisiana. rehearing banc, (Rule en 35 Federal against tecting forfeiture its citizens Appellate Procedure; Local Fifth .Rules clearly very much without notice at-(cid:127) 12) Circuit Rule the Petition for Re- only appel- if stake. We conclude '' hearing En Banc is denied. domiciliary of Wisconsin lant had been a exist. conflict of a “true” Appellant no conflict of laws. We find bo,und by statute. Louisiana notice ' sufficiency next turn to We urged contention Aetna.-As America, UNITED STATES court, we conclude did the district Plaintiff-Appellee, give appellant, failed notice ' pursuant lapse 22:177.-' to La.R.S. MENDOZA, Defendant-Appellant. Joe M. reaching follow decision we district reached No. 29417 determination Summary Calendar.* unduly to extend tTiisv So as not court.17 *8 long already opinion, will not under we Appeals, United States Court of viev^s.., court’s take'"" to' restate Fifth Circuit. without; Nevertheless, adopt them Oct. 1970. reservation. Rehearing Denied Nov. '“ appellee.’s Lastly, we consider concerning cross-appeal contention on ', impose penal- district court’s failure to - attorneys’ Appellee coiir;
ties fees.
cedes
Louisi-
there
on-.brief
*
F.Supp. 1208,
See 295
Cir.;
1214-1216.
Rule
5th
See
Enter
Isbell
prises,
Casualty
Inc.
Citizens
Co.
al.,
New York et
5th Cir.