Falcone v. Palmer Ford, Inc.

Decision Date24 May 1966
Docket NumberNo. 355,355
Citation219 A.2d 808,242 Md. 487
PartiesMichael A. FALCONE v. PALMER FORD, INC.
CourtMaryland Court of Appeals

Joseph A. Mattingly, Bethesda, for appellant.

William M. Canby, Rockville (Miller, Miller & Canby, Rockville, on the brief), for appellee.

Amicus curiae brief filed by Automobile Trade Assn. of Maryland, Inc. (Buckmaster, White, Mindel & Clarke and Everett L. Buckmaster, Baltimore, on the brief), by The Maryland Bankers Assn, (Venable, Baetjer & Howard, Norwood B. Orrick and Luke Marbury, Baltimore, on the brief), and by The Maryland Council of Retail Merchants, Inc. (Frank, Bernstein, Conaway, Gump & Kaufman, Lawrence F. Rodowsky and Frank A. Kaufman, Baltimore, on the brief).



The appellant, Falcone, bought a used tractor truck from the appellee, Palmer Ford, Inc., in August 1960. Falcone was either unable or unwilling to pay cash so the sale was on time with deferred monthly payments over a period of three years which were secured by a conditional sales contract which fully met the requirements and specifications of the Retail Installment Sales Law, codified both in Code (1957) and Code (1965 Replacement Vol.), as Art. 83, §§ 128 to 153. The final cash price of the vehicle, after deduction of the cash down payment and the trade-in allowance for an old truck, was $6,742.31. To this was added insurance premiums paid by the seller (as permitted by §§ 129(a)(6), 131 and 132 of Art. 83) in the amount of $248.75, making 'the principal amount financed' $6,991.06. Sec. 132(a) provides that 'the time balance' in an installment sale of a motor vehicle 'may include a finance charge and charges for insurance premiums, subject to the provisions of this section.' Sec. 132(b) specifies that:

'The finance charge imposed on the sale of a motor vehicle shall not exceed the following rates:

Class 1. Any new motor vehicle-$9 per $100 per year on the principal balance.

Class 2. Any used motor vehicle designated by the manufacturer by a year model not more than two years prior to the year in which the sale is made-$12 per $100 per year on the principal balance.

Class 3. Any used motor vehicle designated by the manufacturer by a year model more than two years prior to the year in which the sale is made-$15 per $100 per year on the principal balance.'

The tractor truck which Falcone bought was in Class 2, which would have permitted a finance charge of '$12 per $100 per year on the principal balance'; however, Palmer Ford charged $7 per $100 per year-21% of the principal balance of $6,991.06, stated to be a finance charge of $1,468.22-because this was the then current rate set by the various financial institutions which bought its conditional sales contracts for large used trucks. The principal balance and the finance charge together amounted to a total 'time balance' of $8,459.28, which was stated in the conditional sales contract executed by seller and buyer to be payable in 'consecutive monthly installments * * * as follows: 36 ; $234.98' (which would total $8,459.28). The conditional sales contract was assigned by Palmer Ford to The Commerce Investment Company and Falcone duly and punctually made to it thirty-six monthly payments of $234.98, and then sued Palmer Ford for refund of the finance charges of $1,468.22, claiming that it had charged, and Commerce Investment had collected, 'more of a finance charge than is allowed by law' and that he had 'a right under the remedy provided in Article 83, Section 132, to a forfeit of all finance charges paid of $1,468.22.' (Sec. 132(d) provides that:

'If any seller or holder of the installment sales agreement for a motor vehicle shall collect a finance charge on a motor vehicle greater in amount than the maximum specified in this section, or a service charge, the seller shall forfeit to the buyer all finance charges paid or payable under said agreement unless the overcharge results from a bona fide error in computation which is corrected within sixty days from the date of the installment agreement.')

The basis of Falcone's claim of an overcharge is that § 132(b) of Art. 83, correctly read, means that the maximum finance charge-which he considers and refers to as 'interest,' although the statute does not-is to be figured on a declining principal balance so that as each monthly payment is made, interest then due is deducted and credited, and what remains of the monthly installment is applied to principal and a new principal balance thus arrived at.

Palmer Ford's theory is, first, that the statute contemplates and authorizes installment payments which will aggregate and fully pay the 'time balance owed by the buyer to the seller' (§ 129(10)) which is the sum of (a) the 'principal balance' (§ 129(8)), and (b) the finance charge within the limits set by 132(b) stated as a sum in dollars, (the principal balance, being in turn the sum of (a) the unpaid cash balance owed by the buyer to the seller, (b) the cost of insurance provided by the seller, and (c) official fees to be paid by the seller to public officials for recording the papers securing the buyer's obligation) and, second, complementarily, that the 'declining balance' technique has no place in installment sales regulated by the Retail Installment Sales Law.

Palmer Ford offered testimony which Judge Shure permitted the jury to receive, over Falcone's objection, that it was the custom in Maryland and nationally to treat the 'principal balance' as the sum of the unpaid balance of the cash price, the cost of insurance, and official fees, and the custom in Maryland to compute the finance charge by multiplying the number of years over which the repaying installments are to stretch by the agreed rate so that where, as here, the time was three years and the rate $7 per $100 per year the finance charge customarily would be 21% of the principal balance.

At the close of the testimony offered on behalf of Falcone, Palmer Ford moved for a directed verdict which was refused, and then renewed its motion after all the testimony was in. This motion too, was denied, as was Falcone's motion for a directed verdict in his favor made at the close of Palmer Ford's case.

Judge Shure submitted the interpretation of the retail installment sales statutes to the jury and furnished them which photostatic copies of §§ 129, 132 and 152 (the definition section) of Art. 83 for use in their deliberations. The jury returned a verdict for Palmer Ford and Judge Shure overruled Falcone's motion for judgment N.O.V. and entered a judgment for Palmer Ford.

The parties agree that Judge Shure erred in submitting the meaning of the statutes to the jury and Falcone contends that it was improper and erroneous to permit evidence of custom or practical construction. It is established beyond doubt that the construction and interpretation of statutes is for the court and not the jury to decide. Aravanis v. Eisenberg, 237 Md. 242, 259, 206 A.2d 148; Bethlehem Steel Co. v. Munday, 212 Md. 214, 220, 129 A.2d 162; Emery, to use of Calvert Ins. Co. v. F. P. Asher, Jr., & Sons, Inc., 196 Md. 1, 75 A.2d 333; Vogelsang v. Schlhorst, 194 Md. 413, 71 A.2d 295; Belt v. Marriott, 9 Gill 331. It is similarly established that it is necessary and proper to construe a statute only when and where the statute is ambiguous and or doubtful meaning, Height v. State, 225 Md. 251, 170 A.2d 212; Pressman v. Barnes, 209 Md. 544, 558, 121 A.2d 816, and that it is only when and where construction is necessary that resort should be had no evidence of contemporaneous or practical construction or custom or usage. Armco Steel v. State Tax Comm., 221 Md. 33, 155 A.2d 678; Bouse v. Hutzler, 180 Md. 682, 26 A.2d 767, 141 A.L.R. 843; Baltimore County v. White, 235 Md. 212, 201 A.2d 358; 82 C.J.S. Statutes § 357 (1953).

We find the provisions of the Retail Installment Sales Law here applicable and pertinent to be plain and unambiguous and their meaning clearly to be perceived from a reading of the words used by the Legislature. Therefore, although the court erred in not itself construing the statutes and in allowing evidence of practical construction and usage relative to them to be offered, the errors were not prejudicial because the court should have directed a verdict for Palmer Ford as a matter of law.

Falcone's basic argument falls into two parts. First, he contends that unless the court construes the rates specified in § 132 of Art. 83 to mean rates of interest which are subject to the declining balance technique-that is, unless the phrase '$12 per $100 per year on the principal balance' used in § 132 be read as meaning '$12 per $100 per year on the unpaid principal balance'-Ch. 80 of the Laws of 1954 which added then § 119A-now § 132-to Art. 83 of the Code under the sub-title 'Retail Installment Sales' to fix 'the maximum rates which may be charged in retail installment sales of motor vehicles, * * * and also providing penalties for overcharges' would be unconstitutional because there would be a variance between the title and the body of the Act. He reaches this conclusion on the premise that the word 'rates' in the title must have the meaning and only the meaning of 'rates of interest.' The word rate has numerous and varied meanings apart from that of a measure of interest, as for example, hotel rates, the rates of a publisher for stories, and as a measure of price as at the rate of so much a ton or a yard. More pertinently and conclusively, the word rates in the title of Ch. 80 of the Laws of 1954 would seem obviously to refer to the schedule of Class 1, Class 2 and Class 3 motor vehicles set forth in § 132(b). Preceding the specifications of classes, subsection b commences with these words: 'The finance charge imposed on the sale of a motor vehicle shall not exceed the following rates.' (Emphasis supplied.) There is no substance to Falcone's contention as to the invalidity of the...

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