Phoenix Savings & Loan, Inc. v. Striner Enterprises, Inc.

McWilliams, J., delivered the opinion of the Court. Since the gaudy adolescence of the appellant (Phoenix) ²⁰⁶ has been fully exposed in Bris Realty Co. v. Phoenix Savings and Loan Assn., Inc., 238 Md. 84 (1965), Eastern Air Lines, Inc. v. Phoenix Savings and Loan Assn., Inc., 239 Md. 195 (1965), Republic Realty Co. v. Phoenix Savings and Loan Assn., Inc., 250 Md. 549 (1968), Republic Realty Co. v. Phoenix Savings and Loan Assn., Inc., 254 Md. 532 (1968), Phoenix Savings and Loan, Inc. v. Aetna Cas. & Sur. Co., 381 F.2d 245 (4th Cir. 1967), and Phoenix Savings and Loan, Inc. v. Aetna Cas. & Sur.. Co., 427 F. 2d 862 (4th Cir. 1970), we can devote our entire attention to one of its less spectacular problems.

In December 1960 the appellee (Striner) 1 leased a store, 20 feet by 100 feet, to Phoenix for a term of 15 years, at a monthly rental of $583.33. The lease provided, among many other things, that the premises were to be used for the purpose of a savings and loan association “and none other.” Phoenix agreed not to assign the lease, nor to sublet the premises, without the written consent of Striner, which agreed that its “consent * * * [would] not be unreasonably withheld.” Although Phoenix never occupied the premises it nevertheless paid the monthly rent until March 1966. On 4 April 1966 the director of the Department of Building, Savings and Loan Associations sent Phoenix the following order: 2 “FINAL ORDER NO. 64 Phoenix Savings and Loan, Inc. “It appearing that Phoenix is in violation of Article 23 of the Annotated Code of Maryland (1957 Edition, 1965 Cumulative Supplement) Sections 144-161KK and Regulations 100.1-110.14 promulgated by the Board of Building, Savings and Loan Association Commissioners, and, in particular, that ²⁰⁷ “1. Phoenix has, for a period of several years, paid rent on office space located at * * * 3750 W. Belvedere Avenue which said office, during the past three (3) years, has not been, nor is it now being, maintained as a branch office to serve the association’s customers and the general public in the respective area; * * * “3. that the rental of this office has caused, and continues to cause, the association to sustain high and unwarranted operating expenses. “It is, therefore, ordered that “Phoenix discontinue the practice heretofore referred to and to conform with all requirements of the aforesaid law and regulations and sound operating principles and practices by taking the necessary action to immediately divest itself of all interest in the office space located at the address set forth above.

Allan D. Housley, Director” On 18 May Phoenix sought declaratory relief in the Circuit Court of Baltimore City. In its bill it recited the fact of the lease, the restriction against any use except as a savings and loan office, and the order of 4 April; it alleged the impossibility of further compliance with the covenants of the lease. It prayed a declaration that the lease became null and void on 4 April 1966. Striner answered, challenging the power of the director to “impair the validity and obligation of a contract” and counterclaiming a sum of money stipulated to be $24,838.19.

Striner prevailed and Phoenix has appealed. In 1961 the Legislature, by the enactment of Chapter 205 of the Laws of Maryland of 1961, acted to bring the savings and loan business under state supervision. The relevant provisions of Chapter 205 are known now ²⁰⁸ as Code (1966 Repl. Vol. and 1971 Cum.