Opinion ID: 1993394
Heading Depth: 1
Heading Rank: 3

Heading: Refinancing

Text: Section 568B of the Act (Article 43) contains the following sentences: The Maryland Hospital Commission shall not consider any application from any voluntary nonprofit hospital if the purpose of such application is to obtain funds for refinancing an existing loan. This shall not prohibit the submission of an application in those cases where the term of an existing loan has expired and there is a necessity for new financing for the balance. Following the passage of the Act and the appointment of the Commission in the summer of 1964, Greater Baltimore and St. Joseph's indicated their intentions to submit formal applications to the Commission for loans to cover portions of the cost of the proposed additional hospital facilities. Both hospitals wished to proceed promptly but needed temporary borrowing to meet construction costs. Before proceeding with the temporary financing, Greater Baltimore orally requested an opinion from the Attorney General as to whether the proposed temporary borrowing from private sources would make the hospital ineligible for a loan under the Act. The written opinion of the Attorney General on the matter, dated October 28, 1964, was addressed to the Chairman of the Commission. In that opinion, the Attorney General went into the history of the Act, and said: The quotation of these recommendations [from the report of the State Planning Commission's Committee on Medical Care] indicates that the loan program which the Act contemplates is intended rapidly and broadly to strengthen the voluntary non-profit hospital system in Maryland and to encourage its capital expansion on a sound basis pursuant to identifiable need. An interpretation of the statutory prohibition on `refinancing' which would exclude from participation in the program any hospital presently undertaking or about to undertake `construction, expansion, replacement, relocation or modernization of hospital buildings, facilities and equipment' simply because that hospital has moved ahead, in the manner indicated, during the time which the Commission needs to secure and evaluate the information pertinent to its recommendatory functions would defy the plain purpose of the program and might effect a discrimination against highly deserving institutions, for the sake, at most, of semantic propriety. Relying on this opinion, Greater Baltimore and St. Joseph's proceeded with the temporary borrowings. Greater Baltimore borrowed $6,000,000 on an unsecured demand basis in September 1964, which amount was subsequently increased to $7,500,000. St. Joseph's borrowed $6,500,000 in January 1965, on a note due March 31, 1966; the note was extended to December 31, 1966 and, since the hearing in the court below, was made payable on demand. Both hospitals used the monies obtained from their temporary financing to begin construction before their applications for loans under the Act had been approved. The appellants contend that when Greater Baltimore and St. Joseph's applied to the Commission for loans under the Act, each application was in fact to obtain funds for an existing loan which by its terms had not then expired, that each hospital is relying on the requested State loan to pay off or refinance or refund its existing loan, and that therefore the Commission's loans to the two hospitals are invalid because forbidden by the terms of the Act. We disagree. Refinancing, as used in the Act, is not a word of art. There are disagreements, even among financial experts, as to the meaning of the word. See Collector of Revenue v. Mossler Acceptance Co., 139 So.2d 263, 270-73 (La. App., 1962) and Du Quesnay v. Henderson, 24 Cal. App.2d 11, 14-15, 74 P.2d 294 (1937). The complexities of modern banking, like the usages of the law merchant which Lord Mansfield incorporated into the common law, require that the terms used be regarded in the context of the practices which they reflect. The language of the section of the Act here involved contrasts the prohibited purpose of refinancing an existing loan with the permitted new financing of the balance of an expired loan. A demand loan may, semantically, be regarded as existing and a construction loan agreement, which generally looks to long term financing on the completion of the construction, may be regarded as having a term, however short. However, the purpose of the Act, emphasized by its title [6] is to encourage the building of new hospital facilities. Both Greater Baltimore and St. Joseph's took the action they did in pursuance of that purpose. Had they waited to begin the construction contemplated until this case had been decided, the question raised by the appellants would not have existed, but the construction of the new facilities would have been delayed. To hold that, under the circumstances here present, the terms of the Act have been violated would be contrary to the purpose of the legislation. As Judge Barnes said for the Court, in Maryland Medical Service, Inc. v. Carver, 238 Md. 466, 478, 209 A.2d 582 (1965): In construing the words used in the statute, this Court will consider them in their natural and ordinary signification; if, however, the words used in the statute are of doubtful meaning, this Court in determining the legislative intent, will consider not only their usual and literal meaning, but their meaning and effect considered in the light of the objectives and purposes of the enactment and the consequences resulting from one meaning rather than another meaning, with the real legislative intent prevailing over the intent indicated by the literal meaning of the words used. Height v. State, 225 Md. 251, 170 A.2d 212 (1961). Here, in our opinion, the words of the statute of themselves contain ambiguities which make it necessary to look to the spirit and purpose of the enactment. See Amalgamated Cas. Ins. Co. v. Helms, 239 Md. 529, 535-36, 212 A.2d 311 (1965) and cases therein cited. The two hospitals as well as the Board acted in the light of the opinion of the Attorney General on the question involved. In State v. Cadwalader, 227 Md. 21, 24, 174 A.2d 786 (1961), Judge Marbury, for the Court, said: Opinions of the attorney general, though not binding on this Court, are, of course entitled to careful consideration, and they serve as important guides to those charged with the administration of the law. They frequently constitute valuable contemporaneous constructions of statutes recently enacted. As in Cadwalader, we find the opinion cited persuasive in support of the conclusion therein stated. We find the loans here involved did not violate the terms of the Act.