Williams v. Standard Federal Sav. and Loan Ass'n, 1654

• Decision Date: 01 September 1987
• Docket Number: No. 1654,1654
• Citation: 545 A.2d 708,76 Md.App. 452
• Parties: Geraldine WILLIAMS, et vir. v. STANDARD FEDERAL SAVINGS AND LOAN ASSOCIATION, et al. ,
• Court: Court of Special Appeals of Maryland

Page 452

76 Md.App. 452

545 A.2d 708

Geraldine WILLIAMS, et vir. v. STANDARD FEDERAL SAVINGS AND LOAN ASSOCIATION, et al.

No. 1654, Sept. Term, 1987.

Court of Special Appeals of Maryland.

Aug. 8, 1988.

Certiorari Denied Oct. 11, 1988.

Daniel Blum (Louis Fireison and Louis Fireison & Associates, P.A., on the brief), Bethesda, for appellants.

James J. Gorney (Richard A. Kramer and Richard A. Kramer & Associates, Chtd., on the brief), Oxon Hill, for appellees.

Argued before WILNER, KARWACKI and WENNER, JJ.

KARWACKI, Judge.

On October 31, 1986, Geraldine Williams and Woodrow Williams, the appellants, filed suit in the Circuit Court for Montgomery County against Standard Federal Savings and Loan Association and its subsidiary, Century Mortgage Company, Inc., the appellees, alleging their violation of the Secondary Mortgage Loan Law--Credit Provisions, Md.Code (1973 Repl.Vol.), § 12-401 et seq. of the Commercial Law Article (hereafter SMLL) in connection with loans made to appellants on October 31, 1983. Appellants sought recovery of all interest, costs and other charges collected by appellees in connection with the loans pursuant to Md.Code, supra, the Commercial Law Article which provides:

§ 12-413 Civil penalties.

Except for a bona fide error of computation, if a lender violates any provision of this subtitle he may collect only the principal amount of the loan and may not collect any interest, costs, or other charges with respect to the loan. In addition, a lender who knowingly violates any provision of this subtitle also shall forfeit to the borrower three times the amount of interest and charges collected in excess of that authorized by law.

In addition to denying liability generally, appellees' answer to appellants' complaint asserted that their claim was time barred by Md.Code (1984 Repl.Vol.) § 5-107 of the Courts & Judicial Proceedings Article which states:

A prosecution or suit for a fine, penalty, or forfeiture shall be instituted within one year after the offense was committed.

Appellees' motion for summary judgment on the ground of that statute of limitations was granted and this appeal ensued.

At the hearing on appellees' motion for summary judgment the facts material to the limitation issue were not disputed. Appellee Century Mortgage Co., Inc. made two loans to appellants on October 31, 1983, in the aggregate principal amount of $200,000. Each loan was secured by a deed of trust executed by appellants creating liens against their residence, which property was already subject to an existing deed of trust securing a loan in the amount of $25,000 made to them by Ralph D. Kaiser Co., Inc. At the closing on the loans made to appellants on October 31, 1983, they were charged points in excess of those permitted by §§ 12-404.1, 12-405 and 12-411 of the Commercial Law Article. Appellants conceded that this violation of the SMLL by Century Mortgage Co., Inc., was not done "knowingly." Consequently, appellants did not seek to recover "three times the amount of interest and charges collected in excess of that authorized by law" as provided by Md. Code supra, § 12-413 of the Commercial Law Article. Rather, their claim was limited to recovery of all amounts they paid in excess of their repayment of the principal amount of the loan.

In Schmidt v. Beneficial Fin. Co., 285 Md. 148, 155-59, 400 A.2d 1124 (1979), the Court of Appeals found no ambiguity or obscurity in the Secondary Mortgage Loan Law with regard to its prohibition of excessive interest and other charges on transactions covered thereby. And we observed in Duckworth v. Bernstein, 55 Md.App. 710, 724, 466 A.2d 517 (1983):

It is a law intended to guard the foolish or unsophisticated borrower, who may be under severe financial pressure, from his own improvidence. The law achieves this beneficent purpose by penalizing even the unwitting violator to the extent of limiting him to recovery of the principal amount of the loan. This is consistent with the strong Maryland policy against usury. See Plitt v. Kaufman, 188 Md. 606, 612, 53 A.2d 673 (1946 [1947]. It is also consistent with the legislative approach to consumer protection illustrated in Brown v. Doug Griffith Dodge City, 52 Md.App. 687, 452 A.2d 984 (1982).

The civil remedies available to a borrower whose rights under the SMLL have been violated by a lender are set forth in § 12-413 of the Commercial Law Article, supra. Even if the violation is unintentional, the lender is prevented from collecting any interest or other charges exacted by the borrower for the loan. Moreover, where the borrower can establish that the lender "knowingly" violated the SMLL provisions regulating the amount of interest and other charges imposed by the lender, the borrower may recover enhanced damages from the lender, i.e., "three times the amount of interest and charges collected in excess of that authorized by law."

Although § 12-413 of the Commercial Law Article is captioned "Civil penalties," this fact does not detract from the remedial nature of the rights therein conferred upon a victim of a violation of the SMLL. That caption did not appear in the enactment of that section by the General Assembly. Chapter 390, § 69 of the Acts of 1967. When originally codified as Md.Code (1957, 1967 Cum.Supp.), Article 66, § 69, it was captioned "Violation--Penalties--Only actual amount of loan to be repaid lender; borrower to receive triple the excess paid over lawful charges." That caption was continued in Md.Code (1972 Repl.Vol.) Article 66, § 69. As part of the on-going process of Code revision in this State, the Commercial Law Article was adopted in 1975 and this section of the SMLL was codified in its present form with its present caption. These captions are mere catchwords and cannot be read to inject a legislative intent not expressed in the body of the law by the General Assembly. Md.Code (1987 Repl.Vol.), Article 1, § 18; Montgomery County v. Eli, 20 Md.App. 269, 275, 315 A.2d 136; cert. denied, 271 Md. 735 (1974).

The remedy which appellants pursued under § 12-413 of the Commercial Law Article was for their private benefit as recompense for the wrong they had suffered as a result of appellees' failure to heed the restrictions of the SMLL. To determine whether appellants' suit was one "for a fine, penalty or forfeiture" within the meaning of § 5-107 of the Courts & Judicial Proceedings Article we look first to the language of the statute itself. Bledsoe v. Bledsoe, 294 Md. 183, 189, 448 A.2d 353 (1982). We discern from that language no clear expression of legislative intent to subject a suit by a wronged borrower seeking recovery under the SMLL of only the interest and other charges illegally exacted from him by a lender to a one year limitation rather than the three year limitation applicable to civil actions generally under § 5-101 of the Courts & Judicial Proceedings Article. Therefore we examine the history of § 5-107 as an aid to its construction. Bledsoe v. Bledsoe, supra; Crawley v. General Motors Corp., 70 Md.App. 100, 105-06, 519 A.2d 1348, cert. denied, 310 Md. 147, 528 A.2d 473 (1987).

The language of § 5-107 of the current Courts & Judicial Proceedings Article can be traced to an Act of the General Assembly passed on April 20, 1777:

An ACT to direct in what manner all fines, forfeitures and penalties, shall be recovered, and in what manner fines, forfeitures, penalties and amerciaments, shall be applied. Lib.GR.fol. 27. Be it enacted, by the General Assembly of Maryland, That all fines, penalties and forfeitures, which shall hereafter be inflicted and imposed by any of the laws now in force, and no mode of recovery or application shall be directed, shall and may be recovered in manner following, to wit: Where the sum doth not exceed five pounds current money, the same shall and may be recovered, with costs, in the name of this state and the informer, before any one justice of the peace of the county where the offence shall be committed; and where the sum exceeds five pounds current money, the same shall and may be recovered, with costs, in the county court of the county where the offence shall happen, by indictment, in the name of this state, or by action of debt in the name of this state and the informer, in which it shall be sufficient to allege that the defendant is indebted to this state and the informer in the fine, penalty or forfeiture, by this act directed and imposed, whereby action accrued, without setting forth the special matter, provided the cause of action be endorsed on the writ at the time of the issuing thereof; and where any fine, penalty or forfeiture, shall be recovered before a justice of the peace, such justice shall either commit the offender to the public goal till payment to the sheriff of the county, or by warrant to any constable, shall direct and order the same to be levied, with the costs of execution, on the offender's goods or chattels, and shall annually return to the treasurer of his shore a list of the fines, penalties or forfeitures, recovered before him; and the constable collecting the same shall, on the receipt thereof, pay one half to the informer, and the other half to the sheriff of his county, who shall pay the same to the treasurer of his shore for the use of this state; and if the fine, penalty or forfeiture, shall be recovered by indictment, the court before whom such recovery shall happen, shall either commit the offender to the public goal till payment to the sheriff, or may order execution to levy the same, with the costs of the execution, on the offender's lands, goods or chattels, and the sheriff receiving or collecting the same, shall pay the same to the treasurer of his shore where such recovery shall happen, for the use of this state; and if recovered by action of debt, the same shall be paid by the sheriff receiving or collecting the same, one half thereof, with the costs, to the informer, and the other half to the treasurer of the...