First Continental Sav. & Loan Ass'n v. Director, State Dept. of Assessments and Taxation

• Decision Date: 09 July 1962
• Docket Number: No. 344,344
• Citation: 229 Md. 293,183 A.2d 347
• Parties: FIRST CONTINENTAL SAVINGS & LOAN ASSOCIATION, INC. v. DIRECTOR, STATE DEPT. OF ASSESSMENTS AND TAXATION, and State of Maryland.
• Court: Maryland Court of Appeals

Page 293

229 Md. 293

183 A.2d 347

FIRST CONTINENTAL SAVINGS & LOAN ASSOCIATION, INC. v. DIRECTOR, STATE DEPT. OF ASSESSMENTS AND TAXATION, and State

of Maryland.

No. 344.

Court of Appeals of Maryland.

July 9, 1962.

M. William Adelson and Eugene P. Smith, Baltimore (Douglas N. Sharretts, Baltimore, on the brief), for appellant.

Richard W. Case, Joseph M. Roulhac and Smith, Somerville & Case, Baltimore, on the brief amicus curiae (for Nos. 344 and 355 combined) filed by Maryland Savings & Loan League, Inc., Maryland League of Building Savings & Loan Assns., Inc.

Joseph S. Kaufman, Deputy Atty. Gen., and James P. Garland, Asst. Atty. Gen. (Thomas B. Finan, Atty. Gen., and Thomas W. Jamison, III, Asst. Atty. Gen., Baltimore, on the brief), for appellee.

Before BRUNE, C. J., HENDERSON, HAMMOND, PRESCOTT, HORNEY and MARBURY, JJ., and EMORY H. NILES, Special Judge.

HAMMOND, Judge.

The attack in this appeal is on the validity of the ex parte appointment of a receiver for the First Continental Savings and Loan Association, Inc., which was granted on the application of Albert Ward, Director of the State Department of Assessments and Taxation, and of the State of Maryland, under the provisions of sec. 160L of Ch. 1 of the Laws of the Special Session of 1961. In addition to the contention that there was no justification for such drastic action, which has almost always been made in such cases, sometimes successfully ¹ and at other times unavailingly, ² the Association argues that Ch. 1 was invalid or ineffective under Art. XVI of the Maryland Constitution, and that it was denied due process of law because its motion to dismiss or stay the petition for a receiver and its demurrer challenging the legal sufficiency of the petition were not considered by the lower court before the appointment.

Consideration of the background of the passage of Ch. 1 is necessary for proper determination of the argument as to the validity of that law. A Commission appointed by the Governor to consider regulation of savings and loan associations embodied the recommendations of its report in a bill which was presented at the 1961 session of the General Assembly. After making amendments, the Legislature enacted the bill proposed by the Commission as Ch. 205 of the Laws of 1961. The Act established comprehensive regulation of savings and loan companies and delegated broad policy making powers to a Board of Building, Savings and Loan Association Commissioners. The administration of the Act was confided to a newly created Department of Building, Savings and Loan Associations, the head of which was designated as Director. The Act dealt with reserve qualifications, dividends, withdrawals, investments, reports and examinations of building and loan organizations, and imposed specific restrictions on the multistock form of doing business, the investing in second mortgages and land instalment contracts and promotion campaigns for deposits. Soon after the passage of the Act, petitions were circulated seeking its referral to the voters at the election in November 1962, under the provisions of Art. XVI of the Constitution of Maryland. Sufficient signatures were procured to effect suspension of the Act until that election.

The Governor, feeling that the suspension of Ch. 205 created an emergency, in light of the prevailing urgent need to regulate and correct existing evils and unsound practices in the field, called a special session of the Legislature. On June 9, 1961, the Senators and Delegates passed, and on June 12, 1961, the Governor approved, a bill identical in substance with Ch. 205 except that administration of the law was vested in the State Department of Assessments and Taxation and its Director; the law was passed by three-fifths of the members of each House and was declared to be an emergency law and to take effect from the date of its passage.

Chapter 1 of the Laws of the Special Session of 1961, the emergency act, further declared that it was the intention of the General Assembly to preserve the right of referendum provided by the Constitution 'both as to this Act and as to Chapter 205' ³ and its further intention 'to meet the emergency that has arisen as a result of the suspension of the effect of the said Chapter 205 pending referral thereof to the voters of Maryland'; that therefore Chapter 1 should not be construed as repealing, by implication or otherwise, Chapter 205; and that Chapter 1 'small terminate at such time as the said Chapter 205 shall become effective.' There was a further provision that 'such rules, regulations, orders and decisions as may be made, promulgated or otherwise handed down by the State Department of Assessments and Taxation or its Director pursuant to the authority of this Act' shall remain in full force and effect until changed or repealed 'pursuant to the authority of said Chapter 205.'

On June 20, 1961, the Attorney General of Maryland ruled that there had been an insufficient number of valid signatures seeking referral of Chapter 205 presented to the Secretary of State to meet the requirements of Art. XVI of the Maryland Constitution for submission of the law for the approval or rejection of the voters.

A number of reasons are advanced in support of the contention that Ch. 1 was ineffective. It is argued that because the Attorney General had formally advised the Secretary of State that Ch. 205 had not been validly referred, it was not suspended but was in effect and Ch. 1, by its own terms, was not. The conclusion urged does not follow. Section 2 of Art. XVI of the Constitution says in precise terms that if the requisite number of signatures seeking a referendum be duly filed with the Secretary of State the law or part of law involved 'shall be referred by the Secretary of State to such vote, and shall not become a law or take effect until thirty days after its approval by a majority of the electors voting thereon at the next ensuing election * * *.' Section 1(b) of Art. XVI states, 'The provisions of this Article shall be self-executing * * *.' The period of suspension, which begins at the time specified by Art. XVI (following the filing of the requisite number of sworn-to signatures), ends either when the voters approve the law or when a court holds that suspension has not been effected for want of proper compliance with Art. XVI. Hammond v. Lancaster, 194 Md. 462, 71 A.2d 474, 483; Sun Cab Co. v. Cloud, 162 Md. 419, 159 A. 922. The views of the Attorney General as to compliance with the requirements of Art. XVI are advisory only and cannot operate to terminate the suspension of a referred law any more than his opinion that a law is unconstitutional makes that law inoperative. Only a court has the power to declare a statute invalid because it does not comply with constitutional requirements, and only a court can effectively hold that an attempted referral is fatally faulty.

The legislative intent in Ch. 1 is clear. That Act was to remain in force until Ch. 205 came into effect either by reason of approval of the votors at the polls or because a court earlier held it to be in effect.

It is argued further that Ch. 1 is void as 'a mere subterfuge to nullify the people's power of referendum.' The premise is that since the people reserved the right in the Constitution to suspend a law, once they have exercised the right, the power of the Legislature to deal with the subject matter of the referred law is likewise suspended until the law is voted on. In some States it has been so held. ⁴ In other States it has been decided that a legislative body may deal with the subject of a law referred but not yet voted on, particularly if it does so by means of an emergency measure. ⁵

The powers of the Maryland Legislature are plenary except as restrained or confined by the Federal or State Constitutions. Maryland Committee for Fair Representation v. Tawes, 228 Md. 412, 180 A.2d 656. There is no provision in the Maryland Constitution forbidding the Legislature to act on the subject matter of a referred law either during the period between its referral and the vote thereon or after approval or rejection by the voters. Section 2 of Art. XVI expressly permits the passage of a law coming within its ambit to be passed, which takes effect upon its passage and is not suspendable by referendum proceedings, provided it be approved by three-fifths of all the members elected to each of the two Houses and be declared to be 'an emergency law, and necessary for the immediate preservation of the public health and safety.' Dinneen v. Rider, 152 Md. 343, 136 A. 754. If legislation comes within the purview of Art. XVI, it is for the Legislature and not for the courts to determine whether an emergency exists. Culp v. Com'rs of Chestertown, 154 Md. 620, 141 A. 410.

Section 2 of Art. XVI provides that no measure which creates or abolishes any office, or changes the salary, term or duty of any officer, or grants any franchise or special privilege or creates any vested right or interest, shall be enacted as an emergency law. The appellant contends that Albert Ward, the Director of the State Department of Assessments and Taxation, is an officer, and that in confiding the administration of the law to him, Ch. 1 changed the duties of an officer. For reasons discussed later we find this proposition unsound and conclude that unless the petitions of referral of Ch. 205 deprived the Legislature of the right to legislate on its subject matter, Ch. 1 properly was passed as an emergency law. Chapter 1 declared that it was 'the intention of the General Assembly of Maryland to meet the emergency that has arisen as a result of the suspension of the effect of * * * Chapter 205 pending referral thereof to the voters of Maryland,' and the finding of an emergency was a finding the Legislature had the power and the right to make. The Act contained the provision contemplated by Sec. 2 of Art. XVI that it was an emergency measure necessary...