Acts of 1916, ch. 374; ch. 596, sec. 100A; Bagby's Code, art. 23, sec. 131. The legislation applies to all corporations, and so is not within the rule enforced in the case of the Citizens' Security and Land Company v. Uhler, 49 Md. 45; and its constitutionality, while not discussed, was implicit in the decision of this Court in Penrose v. Canton National Bank, 147 Md. 200, 207, 209. In an able opinion by Chief Judge Bond, this Court held in that case that the effect of this legislation "is to leave lenders and corporate borrowers free to agree upon any rate of interest above the regular limit" of the statutory law.
Maryland decisional law also holds that an individual guarantor is bound by the corporation's inability to plead usury. Reamer v. Kessler, 233 Md. 311, 319, 196 A.2d 896, 901 (1964); Rabinowich v. Eliasberg, 159 Md. 655, 659-661, 152 A. 437, 439 (1930); Carozza v. Federal Finance Credit Co., 149 Md. 223, 243-244, 251, 131 A. 332, 340, 342 (1925); Penrose v. Canton Nat'l Bank, 147 Md. 200, 207, 127 A. 852, 856 (1925). Bogan here guaranteed the corporation's obligation; therefore his liability is for the full amount of the loan irrespective of the fact that the loan would be usurious if made to an individual.
It would seem to the court that the above statute has no real significance unless in effect it removes or repeals usury laws insofar as loans to corporations are concerned. A number of cases considering similar or identical situations from other jurisdictions have so held, Country Motors, Inc. v. Friendly Finance Corp., 13 Wis.2d 475, 109 N.W.2d 137 (1961); Curtis v. Leavitt, 15 N.Y. 9 (1857); Rosa v. Butterfield, 33 N.Y. 665 (1865); MacQuoid v. Queens Estates, 143 App. Div. 134, 127 N.Y.S. 867 (1911); Penrose v. Canton Nat. Bank, 147 Md. 208, 127 A. 852 (1925). The court concurs in those holdings.
Those decisions establish the principle that, when a corporation is barred from asserting the defense of usury by a statute similar to the one above, the individual endorsers, guarantors, or sureties of a corporate note or obligation may not raise the defense of usury. Winkle v. Scott, 99 F.2d 299 (8th Cir. 1938); Tennant v. Joerns, 329 Ill. 34, 160 N.E. 160 (Ill. 1928); Penrose v. Canton Nat'l Bank, 147 Md. 200, 127 A. 852 (Md.Ct. of Appeals 1925); Pardee v. Fetter, 345 Mich. 548, 77 N.W.2d 124 (Mich. 1956); Dahmes v. Industrial Credit Co., 261 Minn. 26, 110 N.W.2d 484 (Minn. 1961); Gelber v. Kugel's Tavern, 10 N.J. 191, 89 A.2d 654 (N.J. 1952); Ferdon v. Zarriello Bros. Inc., 87 N.J.Super. 124, 208 A.2d 186 (N.J.Super.Ct. 1965); Fine v. H. Klein, Inc., 10 N.J.Super. 295, 77 A.2d 295 (N.J.County Ct. 1950); General Phoenix Corp. v. Cabot, 300 N.Y. 87, 89 N.E.2d 238 (N.Y. 1949); Waterman v. Witteman, 25 A.D.2d 531, 267 N.Y.S.2d 660 (Supreme Court, App. Div., 2d Dept. 1966); Pink v. Kaplan, 252 App. Div. 490, 300 N.Y.S. 45 (Supreme Court, App. Div., 2d Dept., 1937); Rosen v. Columbia Sav. Loan Ass'n, 29 Misc.2d 329, 213 N.Y.S.2d 765 (Supreme Court, Nassau County, 1961), aff'd, 15 A.D.2d 810, 225 N.Y.S.2d 495 (1962); Metz v. Taglieri, 29 Misc.2d 841, 215 N.Y.S.2d 263 (Supreme Court, Suffolk County 1961); Margulis v. Messinger, 34 Misc.2d 699, 210 N.Y.S.2d 855 (Supreme Court, Kings County, 1960); Elias v. Schwartz, 22 Misc.2d 129,
177 U.S. at 555, 20 S.Ct. at 735, 44 L.Ed. at 884. In Penrose v. Canton National Bank, 147 Md. 200, 208, 127 A. 852, 856 (1925), we held that national banks in Maryland could avail themselves of the provisions of State law making the defense of usury unavailable to a corporate borrower; we there recognized that it was "the purpose of the federal law, declared in many decisions of the Supreme Court . . . [citing Tiffany] to put national banks in a position of equality with state institutions for dealing in loans." The Comptroller of the Currency, charged with the duty of supervising and regulating national banks, 12 U.S.C. § 1 et seq., rendered an opinion in 1936 that national banks in Iowa were entitled to charge the same rate of interest allowed to small loan companies under the Iowa Small Loan Act.
The argument of appellants if accepted would rule out liability on any note by an accommodation indorser. In Penrose v. Canton Nat. Bank, 147 Md. 200, 127 A. 852 (1925), our predecessors considered a requested prayer which "would have directed the jury to find for the defendant on each note if his indorsements were found without any consideration passing to him." Chief Judge Bond there said for the Court:
In Rabinowich v. Eliasberg, 159 Md. 655, 152 A. 437 (1930), our predecessors held where an applicant for a loan was told it would be made only if a corporation was formed to act as a borrower and mortgagor, which was done, that there could not be a later contention that the corporate form of the transaction was so unreal as to preclude the lender from asserting this statutory provision. The court quoted in that case from Penrose v. Canton Nat. Bank, 147 Md. 200, 208, 127 A. 852 (1925), where Chief Judge Bond said for the Court that the obvious purpose of the statute was "to leave lenders and corporate borrowers free to agree on any rate of interest above the regular limit". GI relies upon Silver v. Benson, 227 Md. 553, 177 A.2d 898 (1962).
He concedes that the loans were made to corporations and that corporations cannot plead usury. Code (1957), Art. 23, § 125. He also concedes that the denial of the right to plead usury extends to individuals who become accommodation endorsers, sureties or guarantors of a corporate borrower's loan contracts, citing Penrose v. Canton National Bank, 147 Md. 200, 127 A. 852; Carozza v. Federal Finance Co., 149 Md. 223, 131 A. 332. To these may be added Rabinowich v. Eliasberg, 159 Md. 655, 152 A. 437. The appellant contends that he is not sued as an endorser, surety or guarantor and that he is sued upon quite a different undertaking, his liability being "based upon a failure to use due care as an attorney, with resultant loss — not upon a guarantee, express or implied, of performance by a corporation of an usurious but enforceable contract."
"That the state statutes upon the subject of usury should be laid out of view and that where a statute created a new right or offense and provided a specific remedy or punishment, that remedy alone could apply; that the payment of usurious interest being distinctly averred, it could not be recovered by way of offset or payment of the bill in suit, and that the same rule applied to the payment of interest upon other bills of exchange which the defendant sought to recover back." Penrose v. Canton National Bank of Canton, 147 Md. 200;127 Atl. Rep. 852, is to the same effect; likewise the cases of Chipman v. Farmers' and Merchants' National Bank, 121 Md. 343;88 Atl. Rep. 151, 157 ( Maryland Court of Appeals); SchuylerNational Bank v. Gadsden, 191 U.S. 451, 461; 48 L.Ed. 258;Wysong Miles Co. v. Bank of North America, 262 Fed. Rep. 130 ( C.C.A. 4th). Since the defendants allege the payments were made between the period of October 29th, 1926, and January 26th, 1933, which is more than two years prior to the institution of this suit, within which time they have failed to follow the mandate expressed in section 5198 of the National Banking act, this court is without power to give them the relief they seek.
There is no rule more firmly established in American jurisprudence, nor one which has been more uniformly followed by the courts of this state, than that which denies the right of one party to a contract to vary or contradict its terms by proof of prior oral negotiations or agreements. As stated by Judge Parke in Crothers v. National Bank, 158 Md. 595, 149 A. 270, 274: "The sound doctrine is that parol testimony is not admissible to change the clear and precise terms of an executed, delivered, and operative written contract which was designed to be the repository and evidence of the final intention of the parties. Penrose v. Canton Nat. Bank, 147 Md. 200, 127 A. 852; Black v. First Nat. Bank, 96 Md. 399, 414-418, 54 A. 88; Southern etc. Advertising Co. v. Metropole Shoe Mfg. Co., 91 Md. 61, 67-69, 46 A. 513; McSherry v. Brooks, 46 Md. 103, 118; Neal v. Wilson, 213 Mass. 336, 100 N.E. 544; Davis v. Randall, 115 Mass. 547, 15 Am. Rep. 146; Wright v. Morse, 9 Gray (Mass.) 337; Gerli v. Nat. Mill Supply Co., 78 N.J. Law, 1, 73 A. 252; Grannis v. Stevens, 216 N.Y. 583, 111 N.E. 263; Id., 217 N.Y. 664, 112 N.E. 1060; Alexander v. Chevalier, 98 Vt. 230, 126 A. 498-500; First Nat. Bank of Greencastle v. Baer, 277 Pa. 184, 120 A. 815, 817; Abrey v. Crux, L.R. 5 C.P. 37; 2 Williston on Contracts, sec. 644, pp. 1247-1250. See collection of cases in annotation in 20 A.L.R. 490-498; Badart v. Foulon, 80 Md. 591, 31 A. 513; Cassard v. McGlannan, 88 Md. 173, 40 A. 711.