In Wishnev v. Northwestern Mutual Life Insurance Company, the Supreme Court today holds that an insurer can charge compound interest on a life insurance policy loan even if the insurer-lender doesn’t get the insured-borrower’s written agreement, which is generally required by usury law. Answering a question posed by the Ninth Circuit, the Supreme Court’s unanimous opinion by Justice Carol Corrigan notes “California’s usury laws . . . are far from a model of clarity,” but concludes 1934 and 1979 constitutional amendments plus a 1981 statute exempted insurers like the defendant from a written-agreement/compound-interest rule that was established by a 1918 initiative constitutional amendment containing no exemptions.
For you statutory construction buffs, the opinion has a lot to savor, including a nice example of the ejusdem generis interpretation principle. The court says, “in the phrase ‘sun, moon, planets, and other large bodies,’ the general term ‘other large bodies’ would be interpreted to mean other large heavenly bodies to be consistent with the more specific terms that precede it. The general term would not be given the much broader connotation it might otherwise have: a meaning that might embrace bodies of water or certain professional athletes.”
The court’s decision is contrary to the ruling of the federal district court in this case. However, the high court says its opinion is consistent with district court opinions in three other matters.