Product Sales Co. v. Guaranty Co. of Maryland

• Decision Date: 14 January 1925
• Docket Number: 33.
• Citation: 127 A. 409,146 Md. 678
• Parties: PRODUCT SALES CO. v. GUARANTY CO. OF MARYLAND.
• Court: Maryland Court of Appeals

127 A. 409

146 Md. 678

PRODUCT SALES CO. v. GUARANTY CO. OF MARYLAND.

No. 33.

Court of Appeals of Maryland

January 14, 1925

Appeal from Baltimore City Court; Chas. W. Heuisler, Judge.

"To be officially reported."

Action by the Guaranty Company of Maryland against the Product Sales Company. Judgment for plaintiff, and defendant appeals. Reversed, and new trial awarded.

Argued before URNER, ADKINS, OFFUTT, DIGGES, BOND, and PARKE, JJ.

Richard S. Culbreth and Jacob Voloshen, both of Baltimore (Voloshen & Voloshen, of Baltimore, on the brief), for appellant.

Lee I Hecht and Webster C. Tall, both of Baltimore, for appellee.

URNER J.

The decision in this case depends upon the construction of an agreement between the Product Sales Company, designated as party of the first part, and the Guaranty Company of Maryland, as party of the second part, which includes the following provision:

"Second party will from time to time, during the continuance of this agreement, and within the limits agreed upon, buy such accounts belonging to first party, as may be acceptable to second party, and will pay therefor.

One hundred per cent. (100%) of the net face value thereof less a charge equal to the legal rate of interest on the money outstanding thereon, on which 77 per cent. of the net face value thereof shall be paid in cash upon acceptance thereof by second party, and the remaining 23 per cent. less any deductions and plus any overpayments by the debtors and less total charges, as shown in lines 51 to 61 hereof, to be paid to the first party immediately upon payment of any such accounts to second party. * * *"

The provision as to the total charges is as follows:

"The total compensation to be paid by first party for all services and other considerations specified in lines 13 to 17 hereof, added to the charge as mentioned in lines 13 and 14 hereof, it is hereby agreed shall be one-thirtieth of 1 per cent. per day (1 per cent. per month), making total charge for all services one-thirtieth of 1 per cent. plus the legal rate of interest."

Lines 13 to 17 of the agreement are embraced in the second of the three paragraphs we have quoted.

The service for which the contract provided, in addition to the advance of money to the defendant, consisted chiefly of extending the privilege of utilizing the plaintiff's collection and credit departments, and the advice of its officers as to bookkeeping and business efficiency. The record does not show whether the defendant availed itself of those privileges.

No question of usury is raised, and such a defense would not be maintainable under the laws of this state, since the defendant is a corporation. 4 Code, art. 23, § 100a; Kinsey v. Drury, 146 Md. 227, 126 A. 125.

The question is whether the monthly charge of one per cent., plus the legal rate of interest, making a total charge of 18 per cent., should be computed on the full amount of the "net face value" of the accounts transferred, or only upon the 77 per cent. of such value actually advanced. In this suit to recover from the Product Sales Company a balance of $1,623, claimed on the first of the alternative theories just stated, the Guaranty Company requested and obtained instructions that "the defendant agreed to pay to the plaintiff interest and charges based upon 100 per cent. of the face value of accounts receivable assigned by the defendant to the plaintiff, as collateral security, for loans advanced by the plaintiff to the defendant," and that "under the terms of the written contract entered into between the plaintiff and defendant, and in evidence in this case, the plaintiff is entitled to receive from the defendant total compensation of 18 per cent. on the face value of accounts assigned by the defendant to the plaintiff as collateral security for loans."

Prayers offered by the defendant limiting the computation of the interest charged to the amounts actually advanced on the accounts were refused by the lower court.

The trial resulted in a verdict in favor of the plaintiff for $1,828.30, being the full amount of its claim and interest from the date of the suit. From the judgment entered on the jury's verdict the defendant has appealed....