Larkin v. Charlestown Sav. Bank

• Decision Date: 13 March 1979
• Parties: Joan B. LARKIN v. CHARLESTOWN SAVINGS BANK.
• Court: Appeals Court of Massachusetts

Page 790

386 N.E.2d 790

7 Mass.App.Ct. 178

Joan B. LARKIN v. CHARLESTOWN SAVINGS BANK.

Appeals Court of Massachusetts, Suffolk.

Argued Jan. 12, 1979.

Decided March 13, 1979.

Joseph M. Cohen, Boston, for plaintiff.

James E. McGuire, Boston, John J. McCarthy and Stanley V. Ragalevsky, Boston, with him, for defendant.

Before KEVILLE, BROWN and GREANEY, JJ.

GREANEY, Justice.

The plaintiff appeals from the allowance of the defendant's motion to dismiss, based on the ground that the complaint seeking to test the meaning and validity of G.L. c. 183, § 61, does not set out a matter appropriate for declaratory relief under G.L. c. 231A. ¹ We find the statute to be unambiguous and order the entry of a declaration as to its effect.

The case purports to be brought as a class action ² and is part of the continuing dispute between mortgagors and residential mortgage lenders concerning payment of interest by the lenders on tax escrow mortgage accounts. The assertions made by the complaint, and the pertinent procedural history, are these. The plaintiff is the co-owner of a one family house in Randolph which she occupies as her home. The defendant bank holds a mortgage on the house, and since July 1, 1975, the plaintiff has paid the bank advance monthly payments for the discharge of real estate taxes on the property in keeping with the terms of the tax escrow clause in her mortgage. It is alleged that the bank has mingled these advance payments with its own funds, has invested them, has realized profits, and has failed to account for the profits. In 1973 the Legislature enacted G.L. c. 183, § 61, to take effect on July 1, 1975. This statute, set out fully in the margin, ³ requires mortgagee banks, including the defendant, to pay interest at least once a year at "a rate and in a manner to be determined by the mortgagee," and to file annually with the Commissioner of Banks a statement showing the amount of net profit or loss from the investment of tax deposits. Mortgagees showing a net loss from the investments may seek from the Commissioner an exemption from the requirement of paying interest. The annual reports of interest rates paid under the statute are maintained by the Commissioner as public records. The complaint further alleges that the first set of reports filed under the statute by seventy-seven savings banks in the geographical area of Boston reveal interest payments within a range of 0% To 5%, with the defendant Charlestown Savings Bank paying 2%. ⁴

The complaint seeks a declaratory judgment construing the statute to require the bank to pay a "fair and reasonable return" in relation to the return "on other funds received and invested by (the bank)." In the absence of such a construction, the plaintiff asserts that there is doubt that the statute is sufficiently specific to be enforceable, and that if it should be found to be void or unenforceable because of vagueness, then the bank has been unjustly enriched by the investment of the advance tax payments. ⁵

The bank filed a motion to dismiss the complaint under Mass.R.Civ.P. 12(b)(6), 365 Mass. 755 (1974). After hearing, a Superior Court judge ruled that the complaint did not allege a justiciable controversy appropriate for c. 231A relief since, in substance, the complaint requested the court to rewrite rather than interpret the statute. He ruled that the statute was unambiguous and refused to add to it what he styled a "judicial amendment"; judgment was then entered dismissing the complaint.

We need not dwell on the question whether the judge should have entered a declaration rather than dismissing the complaint for failure to present a justiciable controversy. ⁶ The parties have fully argued the validity and effect of the statute and have provided us with a sufficient record to enable us to appraise their contentions. Since we find that the statute cannot in any event admit of the construction sought to be ascribed to it by the plaintiff, additional litigation will be avoided by our making a declaration now as to its validity and meaning. City Manager of Medford v. Retirement Bd. of Medford, 346 Mass. 638, 640, 195 N.E.2d 519 (1964). See also Gibbs Realty & Inv. Corp. v. Carvel Stores Realty Corp., 351 Mass. 684, 686, 223 N.E.2d 534 (1967).

The complaint seeks a judicial construction of the statute to the effect that "banks subject to its provisions (be required to) pay a fair and reasonable rate of return." Without such a construction, it perceives an ambiguity in the statute the lack of "a formula" by which the rate of interest to be paid on the escrow accounts is to be determined. ⁷

We find the statute to be clear, specific, unambiguous, and not in need of judicial construction as to how the interest rate is to be set. It expressly provides that "(i)nterest shall be paid at least once a year at a rate and in a manner to be determined by the mortgagee," and provides for a reporting system to the commissioner with reference to the amount of net profit or loss from the investment of the escrow deposits. The statute grants mortgagees the privilege of establishing their own rates, based on the condition of their respective escrow accounts and overall profits and losses with regard thereto. While this will lead to variations in interest rates among different banks, as demonstrated by one of the allegations in the complaint, ⁸ such variations are expressly contemplated by the statute, which leaves each bank to determine its own rate and to pay interest at least once a year unless exempted by the commissioner. Thus, this is not a case where the Legislature's efforts could be considered to be futile or frivolous. The statute as we read it, Requires each bank to pay interest at some rate and permits a bank to avoid paying interest Only when it can demonstrate a net loss from the investments of the tax deposits and then only after the commissioner has granted an exemption. In this way, each mortgagor will either receive interest on his account or know, if interest is not paid, that his bank is incurring a loss on the investment of the deposits and that there has been an administrative determination that the bank should be excused from paying interest. This is not a case where there is any contradiction in the statute which would require the court to "(i)nterpret . . . (it), if possible, so 'as to make it an effectual piece of legislation in harmony with common sense and sound reason.' " Atlas Distrib. Co. v. Alcoholic Beverages Control Commn., 354 Mass. 408, 414, 237 N.E.2d 669, 673 (1968), quoting from Morrison v. Selectmen of Weymouth, 279 Mass. 486, 492, 181 N.E. 786 (1932), nor is it a case where the statute "in certain aspects lacks precision and verbal consistency." LaPierre v. Massachusetts Commn. Against Discrimination, 354 Mass. 165, 174, 236 N.E.2d 192, 198 (1968).

We think it also important to note that the plaintiff does not point to any language in the statue which is claimed to be ambiguous and in need of judicial interpretation, but proceeds instead on a view that what the Legislature determined is unfair. ⁹ By this argument she seeks to involve the court in judicial legislation by adding a sentence to the statute requiring payment of "a fair and reasonable rate of return to mortgagors on escrow deposits in accordance with customary investment guidelines and reasonably related to the return paid by the bank on other funds received and invested by it." As we read the statute, ¹⁰ its terms leave no room for the addition of such language, and any desired change in the statutory language would be for the Legislature to make in the first instance, not a court. Ocean Spray Cranberries, Inc. v. State Tax Commn., 355 Mass. 592, 597, 246 N.E.2d 654 (1969). It is axiomatic that "statutes must be construed as written and cannot be rewritten judicially." Commonwealth v. Brooks, 366 Mass. 423, 427-428, 319 N.E.2d 901, 904 (1974). Accord, Milton v. Metropolitan Dist. Commn., 342 Mass. 222, 227, 172 N.E.2d 696 (1961); Boylston Water Dist. v. Tahanto Regional Sch. Dist., 353 Mass. 81, 84, 227 N.E.2d 921 (1967).

We note also that the statute now under attack as vague and ambiguous is the product of extensive legislative consideration. The Legislature had bills before it for some time ¹¹ with reference to payment of interest on escrow accounts and settled finally on the form of the statute in c. 183, § 61. It enacted this legislation with an effective date two years after enactment. The reporting requirements to the commissioner are obviously designed to build a record as to how the rates paid balance with the profits or losses on each bank's investment of the escrow funds. This leads to the conclusion that the Legislature thought that the setting of the rates would best be left to the banks, at first, at least until concrete profit and loss figures should become available for some statistically valid period, since the formulation of a rate might well depend on financial and economic variables that could differ widely between lending institutions in the same and different geographic areas. Because of this discernible legislative goal, it would be unwise to consider whether the contentions made by the mortgagor and the bank as to the appropriate handling of the payment of interest on these accounts are sound as a matter of economics or public policy. The Legislature has reserved that question to itself, Massachusetts Housing Fin. Agency v. New England Merchs. Bank, 356 Mass. 202, 212, 249 N.E.2d 599 (1969), on an issue which the Supreme Judicial Court has termed a "good illustration of the advantages of legislative law reform as compared with reform by judicial decision," Carpenter v. Suffolk Franklin Sav. Bank, 370 Mass. 314, 327, 346 N.E.2d 892, 900 (1976). So we find that any attempt to add to the statute the language sought by the plaintiff, in the absence of any obvious ambiguity or any discernible vagueness, would be disruptive of the...