The Ninth Circuit today asks the Supreme Court to answer questions regarding California usury law and insurance companies. In Wishnev v. Northwestern Mutual Life Insurance Company, the federal appeals court wants help with these state law issues: 1. Are the lenders identified in Article XV of the California Constitution, see Cal. Const. art. XV, § 1, as being exempt from the restrictions otherwise imposed by that article, nevertheless subject to the requirement in section 1916-2 of the California Civil Code that a lender may not compound interest “unless an agreement to that effect is clearly expressed in writing and signed by the party to be charged therewith”?, and 2. Does an agreement meet the requirement of section 1916-2 if it is comprised of: (1) an application for insurance signed by the borrower, and (2) a policy of insurance containing an agreement for compound interest that is subsequently attached to the application, thus constituting the entire contract between the parties pursuant to section 10113 of the California Insurance Code?
The Supreme Court should let the Ninth Circuit know by the end of March — give or take — whether it will answer the questions, but it probably will.