Commercial Building & Loan Ass'n v. Mackenzie

Bryan, J., delivered the opinion of the Court. William McCarty executed a mortgage on certain leasehold property in the city of Baltimore to the Commercial Building and Loan Association of Richmond, Virginia. The mortgagee is a body politic and corporate under the laws of Virginia. By due proceedings the mortgaged property was sold, and in regular course exceptions were filed to the ratification of the sale.

The second exception maintains that according to the Act of 1894, chapter 629, the mortgage is null and void. As this exception goes to the root of the whole matter, it is best to consider it before giving our attention to other subordinate questions which have been argued at the bar. The specific objection is urged against this mortgage that it exacts interest at a greater rate than six per cent, per annum; and it is said that it is embraced within the Act of 1894, chapter 629. If these objections are well founded they are fatal to the mortgagee’s case; because the Act in question makes the usurious contracts and securities therein mentioned absolutely null and void.

It cannot be denied that a verbal and literal interpretation of the language of the Act will sustain the objection which has been urged. The appellant, however, argues that the purpose and meaning of the Act, the object which it was intended to accomplish, the evils designed to be remedied, and the great mischiefs which would be caused by including within its provisions such mortgages as the one now in litigation; all show that the construction set forth in the objection must be erroneous. A diligent examination of the Act is required for the decision of this question, which is involved in considerable difficulty. When a written instrument of any character whatsoever is brought before a Court for adjudication, the first inquiry must be directed to its meaning.

Until this is ascertained every step in the proceeding must be futile and useless. A great number of rules have been evolved by the wisdom and experience of successive ages for ascertaining the mean ¹³⁷ ing of statutes, deeds, wills and contracts. No general rules have ever been devised which are adapted to all cases, and it is not possible in the nature of things that any can ever be devised. They are, however, helpful in legal studies.

But of some of them, it may perhaps be suggested that they are more useful in illustrating and explaining a result when it has been attained, than in helping forward the investigation by which it is to be established. Courts must ascertain the meaning of written instruments when it is possible for them to do so ; seeking the aid of all rational methods of interpretation. Words and phrases are often used carelessly and inaccurately, sometimes it is evident that they are intended to include objects which are not expressed, and sometimes to exclude others which are embraced within their usual and ordinary signification. Blackstone mentions some ancient instances where the literal meaning of the words used would have defeated the evident intention of the statute.

For instance, the law cited in Puffendorf, which made it punishable for a layman to lay hands on a priest, was held to extend to a man who had hurt a priest with a weapon. Here a penal statute clearly included a case which was not within its literal terms. Also, another law from Puffendorf which enacted that “ whoever drew blood in the streets ” should be severely punished. It was adjudged that it did not apply to a surgeon who opened a vein to relieve one suffering from a fit.

Also, a case from a treatise attributed to Cicero, where a law was cited which enacted that those who forsook a ship in a storm should forfeit all property on board, and that the ship and lading should belong exclusively to those who stayed in it. During a tempest every one forsook the ship except one sick passenger who, because of his infirmity, was unable to escape. By chance the vessel came safely to a port. The sick man being in possession, claimed the benefit of the law.

It was adjudged that the object of the law was to reward persons who should venture their lives, to save the vessel, and that the sick man was not within its meaning; inasmuch ¹³⁸ as he remained in the vessel because he had not the power to get away, and not with the intention of saving it; nor did he contribute in any way towards its preservation. In these two latter instances the construction of the statute excluded cases which were comprehended within its words. In Lydew. Barnard, i Meeson & Welsby ioi, the Judges of the Court of Exchequer were divided on the construction of an Act of Parliament.

One of them thought that certain words in the Act ought to be transposed; two of them thought it highly probable that this would meet the difficulty ; while Lord Abinger thought that a word ought to be rejected altogether. In many cases, both in England and this country, words have been altered and supplied when the intention required it. If we come down to a very recent date we find in our own Court cases illustrating the principles by which we must interpret and construe written instruments. In Byrne v. Gunning, 75 Md. 35 , phrases were transposed and words were inserted in order to express the meaning of a deed.

In Farrell v. Mayor, 75 Md. 493 , it was held»that the word “damages ” should be substituted for “ benefits ” and in this way the literal meaning of a paper was entirely reversed. A case was cited in the opinion of the Court where a written promise “not to pay” was held to mean a promise to pay. And other remarkable cases were mentioned. One of them required the Court to determine the meaning of the transcript of the record in a capital case; and it determined that “ Baltimore County” was to be read “Carroll County.” In Burnett v. Bealmear, 79 Md. 39 , a receipt for payment in distraint proceedings was disregarded altogether.

It was evidently a clerical misprision, and the Court said that it was “ bound to ascertain the true meaning of the paper even in direct opposition to the terms employed.” Other striking cases are Lewis v. Fisher, 80 Md. 142 ; and the American Casualty cases, 82 Md. 535. And we must not forget to mention Trinity Church case, 143 United States, 458. These authorities and many others which might be cited show how ¹³⁹ readily the Courts will brush aside the language of an instrument when it stands in the way of its meaning. We are fully aware that the cases cited are well known; and we have not quoted them from any impression that they declared a doctrine in any respect unfamiliar.

But we wished to have them impressed upon our minds as we considered the construction of the statute which is now before us. The title indicates that it is an additional section to the laws relating to “Building or Homestead Associations.” But there is no reference whatever to these associations except in the last two lines. Of this matter we shall speak hereafter. In the body of the Act it is stated: “ And that no corporation incorporated under the laws of this State, for any purpose whatsoever, nor any foreign corporation doing business in the State, shall offer to procure or act as agent for any person or persons in procuring or making any loan of money or other valuable thing on the security of any chattels, nor shall make any loan of money or of any other valuable thing on the security of any chattels or otherwise, except in its own proper corporate name and for its own behalf or benefitand that no such corporation shall charge more than six per cent, interest on any loan; and that every security taken by any such corporation for a loan shall express plainly the period of time for which it is made and the entire interest agreed to be paid for the term of its continuance, and that any contract or security made in violation of the statute shall be absolutely null and void; and that no person shall, under a specified penalty, assume to deal or act as a corporation, or in any corporate name, or in any other than their own proper names in any of the matters prohibited by the statute; and that every security taken by such persons in any other than their own proper names shall be absolutely null and void.

And finally, it is provided that the Act shall not apply to homestead and building and loan associations incorporated under the laws of this State. It is shown on the face of the Act that it is directed against certain conduct by corporations, and against persons who ¹⁴⁰ had assumed to deal and act in a corporate name. It prohibits a corporation from acting as agent in procuring or making loans of money or other thing of value on the security of chattels, and from making loans on the security of chattels or otherwise except in its corporate name and for its own benefit; and it provides punishment for any individual who shall use a corporate name for doing any of the things which a corporation is forbidden to do. And it makes contracts which are forbidden by the Act null and void; and it provides even in cases where contracts may be authorized by the Act, that they shall be void if usurious interest is exacted.

The Legislature was striking at an evil which had grown to be very oppressive to persons whose necessities put them in the power of usurers. The means by which the oppression was practiced are described in the Act. Certain corporations assuming to act as agents for others loaned money on chattel security at excessive rates of interest; and certain individuals did the same things in the name of corporate bodies which had merely a fictitious existence. There was naturally great complaint because of the extortions and impositions practiced on the helpless sufferers.

And there was a general belief that there was much fraud and imposition cloaked and concealed under the pretence of agency. The remedy adopted by the Legislature was to prohibit the disguises assumed by real corporations, and to punish as a crime the false assumption of a corporate name by individuals. And also to make their usurious