Griffin v. Baltimore Federal Savings & Loan Ass'n

Henderson, J., delivered the opinion of the Court. This appeal is from a judgment of the Superior Court of Baltimore City that became final after the Court overruled a motion to strike. The case was docketed by consent on March 13, 1952, as authorized by a note dated November 27,1950, in the face amount of $1,166.03, and a judgment by confession was entered for the balance due of $668.37, with interest and attorneys’ fees. The note attached to the declaration showed that it had been endorsed to the appellee without recourse by the payee, National Heating and Plumbing Company.

The motion to strike was on the ground that the authority to confess judgment was void because in violation of the Retail Instalment Sales Act, Sections 116-140, Article 83 of the 1951 Code. After hearing and testimony taken, the trial court held that the appellee was a holder in due course and that the Act was inapplicable. The testimony showed that one Holt, trading as National Heating and Plumbing Company, entered into a written agreement with the appellants on November ¹⁵⁷ 20, 1950, whereby he agreed to supply and install in their home a forced air, oil burning heating unit, with necessary ducts and an oil tank, for a price of $1,151.58, on which $115.16 was specified as the down payment. No time for payment of the balance was specified in the agreement, but it was understood by the parties that a note would be given for the balance to be paid in monthly instalments.

One of the conditions of sale set forth in the agreement was that, until paid for in full, the seller should retain title to all the “equipment and materials entering into this installation whatever may be its mode of attachment to realty or otherwise, [which] shall be considered personalty * * *.” The seller, his successors and assigns, reserved the right to “remove the same” upon default; the agreement also contained the usual acceleration clause. The note was executed on November 27, 1950, and on the same date Griifin signed a “FHA title I completion certificate,” in which he certified that all articles and materials had been furnished and installed and the work satisfactorily completed, although it was testified that the unit had not been tested at that time. The note was signed by Griffin and his wife, payable to the National Heating and Plumbing Company “at the office of Baltimore Federal Savings and Loan Association.” The note, the certificate and the executed sales agreement were delivered by Holt to the appellee; the note was endorsed by him and discounted after the appellee had approved the credit standing of the makers. The agreement was not assigned.

Griffin paid a number of the monthly instalments called for in the note before default occurred. Section 118, Article 83 of the 1951 Code (as enacted by Chapter 851, Acts of 1941) provides that “no seller, sales finance company, or holder shall at any time take or receive any instrument from a buyer, or from- any surety or guarantor for the buyer, which contains * * * (b) any confession of judgment or any power or warrant of attorney to appear for the buyer or for any surety ¹⁵⁸ or guarantor for him to confess judgment * * If the note in the instant case can be deemed to fall within the scope of the Act, the provision for confession of judgment cannot be sustained, for Section 186(b) provides that “whenever any instrument contains any provision prohibited by Section 118, such provision shall be absolutely void * * *.” The appellee argues that the Act does not apply to this transaction because it involved a sale of articles affixed to the realty which became fixtures. We think the argument is unsound. It has been noted that the sales agreement provided that the subject matter of the sale should be considered personalty and removable on default.

See Dermer v. Faunce, 191 Md. 495, 499-500 . Section 139 (b) defines “instalment sale agreement” to mean “any contract for the retail sale of goods [defined by Section 139 (a) to include “all