Court Opinion

ID: 8888054
Source: CourtListenerOpinion
Date Created: 2022-11-26 22:26:58.014288+00
Date Added: 2024-06-11T17:07:02.363523
License: Public Domain

WILKEY, Circuit Judge.
American Security and Trust Company, as Trustee in Reorganization for Parkwood, Inc., and Adams Properties, Inc., appeals from a denial of its objections to and the allowance of the secured claims of the three appellees, first by the Referee in Bankruptcy and then by the United States District Court. For the reasons set forth herein we affirm the District Court’s rulings as to appellee Manufacturers, reverse as to appellee Hartford, and remand for further proceedings as to appellee Equitable.
I. Procedural and Common Factual Background
In May and July 1966 petitions were filed in the District Court under Chapter X of the Bankruptcy Act for reorganization of Parkwood, Inc., and Adams Properties, Inc. (wholly owned subsidiary of Parkwood). In October 1966 Equitable Life Insurance Company filed a proof of claim as a secured creditor of Parkwood in the principal amount of $226,654.10; Manufacturers Life Insurance Company did likewise in the principal amount of $562,963.62; and Hartford Life Insurance Company filed as a secured creditor of Adams Properties, Inc., in the principal amount of $78,803.31. All claims were evidenced by a note or notes and a deed of trust.
On 1 May 1968 the Trustee objected to all three claims. By order of 26 March 1969 the Referee in Bankruptcy denied the Trustee’s objections and allowed all three claims.
On petition for review of this order, after hearing argument the District Court, by order of 4 February 1970, denied the Trustee’s petition for review, ratified the order of the Referee, and confirmed and adopted the Referee’s memorandum and his findings of fact and conclusions of law.
While there are important differences, the facts common to the three assertedly secured creditors are these. In each instance the original borrower obtained a loan from a corporation allegedly engaged in the business of lending money in the District of Columbia, executing a note or notes therefor and securing the indebtedness by a deed of trust on property located in the State of Maryland. Each original note bore interest in excess of 6%, thus running afoul of the District of Columbia Loan Shark Law,1 if such law applies to the transaction. Thereafter, in the instance of Equitable, the original debtor sold the property to Park-wood, which took the property subject to *162the deed of trust but did not assume the note. In the instance of Manufacturers, the original loan was made by Manufacturers through a mortgage loan correspondent in the District of Columbia, and thereafter the original debtor sold the property to Parkwood, who took the property subject to the deeds of trust but did not assume the two notes. In the instance of Hartford, the original debtor sold the property to Adams, who likewise took the property subject to the deed of trust but did not assume the note.
The issues involve principally the standing of the Trustee to attack the validity of the deeds of trust held by the secured claimants; the applicability of § 601 of the District of Columbia Loan Shark Law to loans by insurance companies; whether the real estate broker-mortgage banker, the original maker of the loan held by Hartford, is exempt under § 610 of that law; and, even if the above issues be decided in favor of the Trustee, whether certain facts peculiar to each individual claim would enable the secured claimant to maintain its position.
II. Standing of the Trustee to Attack the Validity of the Deeds of Trust
Of all the complex legal issues we have to determine in this case, perhaps this is the simplest to resolve. It will aid in clarity of analysis to keep in mind these facts; that the Trustee here is not acting on behalf of Parkwood and Adams, the debtor corporations, but on behalf of all creditors, particularly the unsecured creditors; that none of the notes secured by the deeds of trust was assumed by either Parkwood or Adams, and therefore the claims against the bankrupt estate rest entirely and only on the deeds of trust covering the particular pieces of realty involved. Two of the principal grounds relied upon by the Referee, and approved by the District Court, were that the Trustee was “estopped” from attacking the validity of the deeds of trust and therefore could not set them aside by asserting rights under §§ 70(c) and (e) of the Bankruptcy Act, and that somehow it was inequitable or would be a windfall to Parkwood and Adams to have these deeds of trust set aside. We think these two bases of decision by the Referee and the District Court were unsound.
In the first instance, what is equitable in a bankruptcy proceeding — and bankruptcy is part of the equity jurisdiction of the District Court — has been rather specifically spelled out in the Bankruptcy Act itself. In the second place, those provisions equally specifically give the Trustee here a right to set aside invalid deeds of trust.
Under § 70(c) of the Bankruptcy Act2 the trustee possesses the rights of any hypothetical lien creditor of the debtor. The trustee’s rights do not depend on the existence of any such creditor, but it has the status of “the ideal creditor, irreproachable and without notice, armed cap-a-pie with every right and power which is conferred by the law of the state upon its most favorite creditor who has acquired a lien by legal or equitable proceedings.” 3
It follows that in the exercise of such rights the trustee cannot be affected by any so-called estoppel which may be attributable to the debtor. The whole purpose of § 70(c) was to give the trustee defenses which the trustee might other*163wise not have if he were confined to the position of the bankrupt, who may very frequently have engaged in various acts which would estop him to deny the validity of his security obligations. The bankrupt may have engaged in chicanery or favoritism of certain creditors or other acts that “are in derogation of the Bankruptcy Act’s paramount purpose: equality of distribution among all creditors. The trustee would be sorely handicapped if he were not accorded some superior status, attaching as of the date of bankruptcy, that would enable him to challenge the validity of such transactions. This, then, is the purpose of the second sentence of § 70(c). It has been justly and characteristically termed ‘the strong-arm clause.’ ” 4
As of the date the petition for reorganization was filed the Trustee here gained the rights and powers of a lien creditor who had perfected his lien on the property of the debtor, irrespective of whether such a creditor actually exists, so says § 70(c). Among other powers of a lien creditor is the right to set aside an invalid deed of trust on the property.5
In addition to the trustee’s rights under § 70(c), which apply versus all three mortgagees here, under § 70(e)6 of the Bankruptcy Act the trustee can assert the rights of any existing creditor who could move to set aside the deed of trust held by Equitable. In contrast to § 70 (c), § 70(e) requires the existence of a real creditor having that power. Potomac Cooperators, Inc., holds a second deed of trust on the same property on which Equitable holds a first deed of trust, and has filed proof of claim in the bankruptcy proceeding as a secured creditor. The Trustee himself, for the same reason that Potomac Cooperators could move to set aside the allegedly invalid deed of trust held by Equitable, moved to void the deed of trust under § 70(e). Furthermore, the directive in § 47(a) (8) of the Bankruptcy Act7 to “examine all proofs of claim and object to the allowance of such claims as may be improper” requires the trustee to object to all invalid security instruments. In so doing, the trustee is acting for the benefit of all creditors and not, as the Eeferee and the court seemed to think, to create a “windfall” for the reorganized corporations whose affairs are being administered.8
*164We conclude that the Trustee had standing to attack the validity of the deeds of trust held by the claimant insurance companies under §§ 70(c) and 70(e) of the Bankruptcy Act, and that the District Court erred in holding to the contrary.
III. The Applicability of the District of Columbia Loan Shark Act to Loans Made by Insurance Companies
Section 26-601 of the District of Columbia Code provides:
It shall be unlawful and illegal to engage in the District of Columbia in the business of loaning money upon which a rate of interest greater than six per-centum per annum is charged on any security of any kind . . . without procuring license. . . .
Section 26-610 of the Code exempts certain specified types of businesses from the operation of § 26-601. At the time the loans herein were made, life insurance companies were not among the businesses so exempted. In construing § 26-601 this court has held that
It applies to all who would engage, in the District of Columbia, in the business of lending money upon which a rate of interest greater than six per centum per annum is charged, except those exempted by section 26-610.9
Appellees Equitable and Manufacturers nevertheless argue that § 26-601 does not apply to insurance companies which “invest” their funds by making loans secured by real estate. This argument, which the District Court accepted, rests essentially upon three bases which we now examine.
First, it is maintained that life insurance companies are not engaged in the business of loaning money, but rather that the making of loans (the “investment of funds” in appellees’ terms) is an integral part of the insurance business. But there is nothing in the statute which suggests that it applies only to those whose sole business is that of loaning money. In fact, § 26-601 regulates the regular activity of loaning money regardless of whether those who are so engaged do so as part of another business.10 In*165deed, while not disputing that the lending of money is an integral part of the insurance business, appellant points out that if that were sufficient to remove a company from the coverage of § 26-601, then the exemption section (§ 26-610) would be largely unnecessary.
Section 26-610 provides that nothing in § 26-601 shall apply “to the legitimate business of national banks, licensed bankers, trust companies, savings banks, building and loan associations . or real estate brokers.”11 Each of these exempted businesses is obviously engaged in activity which integrally involves the loaning of money. Thus if insurance companies were to be held not to be in the business of loaning money simply because their loans are an integral part of another, i. e., the insurance, business, the same rationale would apply for example to banks, whose loans can be said to be an integral part of the banking business, and there would have been no need specifically to exempt banks from the operation of the statute. We thus cannot agree with the Referee in Bankruptcy and the District Court that life insurance companies which regularly loan money on security are not “engaged in the business of loaning money” simply because they do so as part of their insurance business.
The second ground advanced to sustain the District Court’s ruling is that since life insurance companies are comprehensively regulated under the provisions of Title 35 of the District of Columbia Code, they cannot be subject to licensing regulation of their lending activities under § 26-601.12 In the first place, we note that many of the other businesses exempted by § 26-610 are also extensively regulated under other provisions of the District of Columbia Code or otherwise, but that such regulation did not obviate the need specifically to exempt them in § 26-610. Furthermore, we find nothing in Title 35 which conflicts with the purpose of regulation of lenders under § 26-601. Title 35 is concerned with the regulation of insurance companies for the protection of their policyholders. The Loan Shark Law, on the other hand, regulates those in the business of loaning money, in order to protect borrowers. Such regulation of lending activities for the protection of borrowers is in no way inconsistent with the regulation of insurance activities for the protection of policyholders.
The Referee and the District Court cited D.C.Code § 35-535 which authorizes life insurance companies to lend money against the security of real estate. But § 35-535 is nothing more than a “legal list” of investments which life insurance companies are permitted to make and is clearly directed toward the protection of policyholders. It says nothing concerning the terms on which such loans may be made, and thus in no way precludes other regulation for the protection of borrowers where interest in excess of 6% is to *166be charged. To hold that regulation of the insurance business as such, under one part of the Code, automatically exempts insurance companies from other types of regulation would nullify the effect of many general regulatory statutes insofar as the operations of insurance companies are concerned. For example, the same reasoning would support the conclusion that insurance companies were not subject to the usury statute, D.C. Code § 28-3301. And the provision in § 35-535(14) (f) that life insurance companies may acquire real estate “for the production of income . . . [and] may improve or otherwise develop in any manner such real estate . . . ” might, under the reasoning of the District Court, lead to the conclusion that life insurance companies which own property need not comply with the building and zoning regulations of the District. We conclude, as we must, that nothing in Title 35’s regulation of insurance companies prevents or precludes the application of § 26-601 to loans such as those involved in the case at bar.
Finally, appellees urge that the legislative history of the Loan Shark Act indicates that it was not intended to apply to large loans made by “institutional lenders” and secured by real estate. In the first place, this view ignores the principle that where the meaning of a statute is plain on its face, interpretation thereof by resort to legislative history is improper.13 Here the Act plainly applies to all who are in the business of lending money on security at a rate of interest in excess of 6% except for those types of organizations specifically exempted from coverage by § 26-610. And this court has expressly held that § 26-601 applies to large loans secured by real estate.14
As illustrative of the general recognition that large loans secured by real estate do fall within § 26-601, one need only consider the position of real estate brokers. Acting as agents for others, real estate brokers customarily participate in transactions involving large real estate loans. If such transactions did not fall within § 26-601, it would never have been thought necessary to include real estate brokers in the list of those exempted under that section.
In contrast, prior to 1963 life insurance companies were not included in the list of organizations exempted by § 26-610. It therefore inexorably follows that life insurance companies which prior to 1963 made loans at interest rates in excess of 6% were required to be licensed under § 26-601. And if such loans were made without a license in violation of § 26-601, they are, under the prior holdings of this court, together with the promissory notes and deeds of trust given therefor, illegal and void. As we held in Hartman v. Lubar,15
if the disputed loan was made by one who was engaging in the business of lending money in violation of the law, and if the loan was made in the course of that business, then it constituted an illegal contract. The general rule is that an illegal contract, made in violation of a statutory prohibition designed for police or regulatory purposes, is void and confers no right upon the wrongdoer. * * * Every consideration of public policy suggests that a contract made in violation of the Loan Shark Law should be unenforceable.
If Congress, when it exempted life insurance companies from the coverage of the Loan Shark Act in 1963, had intended to validate previous transactions made by life insurance companies in violation *167of the Loan Shark Act, it could have done so by providing that the exemption granted in 1963 would have a retroactive effect. It did not do so.16
The history of other exemptions added to § 26-610 is illuminating. In 1960 Congress added small business investment companies to the list of those exempted. The House Committee on Banking and Currency stated the necessity for such exemption in terms unmistakably refuting the position of appellee insurance companies here:
Although it [§ 26-601 et seq.l was obviously not intended to apply to SBIC’s, it does apply to them literally and constitutes an obstacle to effective operation of SBIC’s in the District of Columbia. The bill grants the same exemption for SBIC’s that is now written into the law for commercial banks, savings banks, savings and loan associations, and real estate brokers.17
Again in 1962, in hearings on the bill predecessor to the 1963 amendment, which eventually exempted life insurance companies under § 26-610, Congress was well aware that § 26-601 applied to all entities not specifically exempted by § 601, including life insurance companies. Testimony of the Chairman of the Legislative Committee, Mortgage Bankers Association of Metropolitan Washington, asserted that a majority of life insurance companies making mortgage loans in the District of Columbia had decided on advice of counsel that, as a result of court decisions and the omission of insurance companies from the list of those lending institutions exempted from the so-called Loan Shark Law, such insurance companies should not lend money in the District of Columbia at rates in excess of 6%.18 The purpose of H.R. 9441 (the predecessor in the preceding Congress of H.R. 3191 enacted in the 88th Congress) was described as “to remove a barrier that now prevents the free flow of money into the District of Columbia for investment and mortgage loans on real estate.” 19
Under established principles of statutory construction it is significant that Congress acted to add small business investment companies and insurance companies to the list of exemptions under § 26-610, and has never sought to amend § 26-601 after this court’s repeated interpretation of § 26-601 as including “all who would engage, in the District of Columbia, in the business of lending money upon which a rate of interest greater than 6 per centum per annum is charged, except those exempted by § 26-610.” 20 If Congress had interpreted § 26-601 as the District Court did here, it would never have found it necessary in 1960 and 1963 to add exemptions. Nor would it have stated in 1963, adding the life insurance companies to § 610, “The purpose of this bill [H.R. 3191] is to exempt life insurance companies from the provision of an *168act regulating moneylending.”21 This same amendment also added a requirement that persons or legal entities exempted from § 601 by § 610(a) should maintain in the District of Columbia a resident agent, and provided a sanction that if the otherwise exempted entity did fail to appoint and maintain such resident agent, then it was not entitled to the exemption provided by § 26-610(a). If Congress considered that the entities could have recourse to any other exemption except that provided by § 26-610 (a), this sanction would have been obviously useless.
We conclude that life insurance companies which regularly make loans in the course of their insurance business are in the business of lending money within the meaning of § 26-601 and until 1963 were not exempt from the requirement of obtaining a license in order to make loans at a rate of interest in excess of 6%. It follows that unless considerations peculiar to the cases of Equitable and Manufacturers operate to remove the transactions here involved from the applicability of the Loan Shark Law, the deeds of trust securing the loans herein are invalid and thus subject to attack by the Trustee in reorganization. To such considerations we now turn.
IV. Claim of the Equitable Life Insurance Company
A. Pertinent facts.
On 22 December 1959 Potomac Cooperators, Inc., borrowed $375,000.00 from Acacia Mutual Life Insurance Co., executing a note at an interest rate of 6/4 % per year, the loan being secured by a deed of trust on real estate in Maryland. Acacia is a District of Columbia corporation with its sole office in the District. On 22 March 1961 Equitable purchased the promissory note from Acacia at full value. On 28 August 1961 the promissory note was renegotiated and amended to provide for payment of interest at the rate of 6% per year, with new release provisions, new monthly payments, and a new maturity date. Potomac as the maker of the original note and the amended note ratified, confirmed and fully assumed the amended note and deed of trust.
On 5 December 1963, § 26-610 of the D.C.Code, the so-called Loan Shark Act, was amended expressly to exclude life insurance companies from the coverage of § 26-601.
On 20 February 1964, Parkwood, Inc., purchased the property subject to the deed of trust securing the note held by Equitable, the interest thereon at this time being 6%. Parkwood did not assume the note.
At the time the loan was made (1959), Acacia was engaged in the insurance business in the District of Columbia and also engaged in the business of loaning money, the evidence showing that from its sole office in the District substantial loans (from $500,000.00 to several million dollars per year) were made. Acacia did not possess the license required by § 26-601. The amendment of § 26-610 on 5 December 1963 exempting loans made by life insurance companies from the coverage of § 26-601 was prospective only.
B. Effect of amending the note.
On this appeal Equitable represents that it purchased the note at Potomac’s request pursuant to a prior agreement to amend the note. The prior agreement is claimed to have been evidenced in a commitment letter whereby Equitable agreed to take over the loan at a new rate of 6% interest and thus to reform the note and amend the deed of trust. However, because the Referee, affirmed by the District Court, decided that the Trustee’s objection to Equitable’s claim was insufficient as a matter of law, and thus granted Equitable’s motion to dismiss the objection on the ground that the Loan Shark Act did not apply to the original loan transaction here, there is no evidence in the record before us which *169bears upon the claimed prior agreement between Potomac and Equitable to reform the note to provide for interest at the rate of 6%. We are therefore unable to determine whether the effect of the transaction between Equitable and Potomac was to bring about a novation or to otherwise cure the invalidity of the loan under the Loan Shark Act.
Since Equitable has not had an opportunity to introduce evidence to establish the facts relevant to the amendment of the note, we have determined that the case must be remanded for factual findings and, based on the facts as established on remand, a determination as to whether the effect of the transaction between Equitable and Potomac was to render the note valid and enforceable as a result of the amendment.
The Trustee argues that the amendment to provide for 6% interest could not in any event validate the loan, since prior to the purchase of the note interest was paid at 6%%, a rate higher than permitted to an unlicensed lender under the Loan Shark Act. Because the excess interest thus paid has never been restored, it is maintained that the total interest paid over the life of the loan must inevitably be greater than 6%, notwithstanding the amendment. In support of this position, the Trustee cites authorities indicating that prior payment of usury renders any subsequent renewal of the transaction usurious, even though the usurious rate of interest is eliminated by the renewal, unless the previously paid usurious interest is restored.22
The instant case, however, does not involve a violation of the usury law, which in the District of Columbia sets an absolute limitation of 8% on the amount of interest that may be collected by any lender, but rather concerns the loan shark statute which imposes a disability on certain lenders, i. e., non-exempt, unlicensed lenders, to charge interest in excess of 6%. Because Acacia was nonexempt and unlicensed, its loan at a rate of 6% % was illegal under the Loan Shark Act and as a consequence it could not recover on the note, which was void as to both principal and interest.
It does not follow, however, that Potomac, which actually received the money lent, could not, in fulfillment of its moral obligation,23 contract with a third party to assume the note at a legal rate of interest in consideration of the reformation of the note. Potomac could, after all, have made the same original loan contract with an exempt or licensed lender and have no basis for avoiding its obligation to repay the loan. This distinguishes the instant case from the usury situation where any loan made at a rate of interest in excess of 8% would be invalid regardless of who the lender might be.
We think that the defense of violation of the Loan Shark Act, thus avoiding the obligation to repay the loan, must be limited in effectiveness to use against those unlicensed, non-exempt lenders who actually contract for or receive interest in excess of 6%. If Equitable, at Potomac’s request and with Potomac’s express assent and agreement, had purchased the note without any reduction of interest amendment being contemplated or made, but at that time was licensed or exempt under the Loan Shark Law, we do not think Potomac could have avoided payment of the loan on the grounds that it was originally made by an unlicensed lender. Similarly here, where Equitable was unlicensed, if when it agreed to purchase the note it was contemplated and agreed by both it *170and Potomac that the note would be amended to provide for a legal rate of interest for unlicensed lenders (6%), we think that Potomac, by agreeing to such a transfer and ratifying it could no longer avoid its obligation of repayment on the ground of violation of the Loan Shark Act. If the note and deed of trust thus became valid as to Potomac, as a result of the amendment and ratification, the deed of trust would likewise be valid as to Parkwood, which purchased the property subject to the deed of trust from Potomac subsequent to the amendment of the note.
On remand Equitable should have an opportunity to establish that the intent of the parties at the time Equitable purchased the note was to reform the transaction, so as to eliminate any further payment of interest at a rate in excess of 6%, and that Potomac through its ratification intended to be bound on the note to repay the remainder of the loan to Equitable at a legal rate of interest.24
V. The Claim of Manufacturers Life Insurance Company
A. Pertinent facts.
On 30 August 1960 Pend-Maple, Inc., borrowed $545,000.00 from the Manufacturers Life Insurance Company. On 13 June 1961 Pend-Maple, Inc., borrowed another $75,000.00. Each loan was secured by a deed of trust on real estate in Maryland and each note carried 61/4% interest.
The Manufacturers Life Insurance Company is a Canadian corporation with its principal office in Toronto. On the relevant dates it maintained an office in the District of Columbia for selling insurance, but no office under its name for the purpose of making real estate loans. Pend-Maple, Inc., was a Maryland corporation, and executed the application for both loans in Maryland.
Pend-Maple, Inc., made the loan application to H. G. Smithy Company, a District of Columbia real estate broker and a mortgage broker. This loan was not solicited for Manufacturers, and at that time H. G. Smithy Company did not solicit loans on behalf of any one lender. It took loan applications and then decided where best to place them. Smithy charged Pend-Maple, Inc., a fee for placing the loan, but also paid Manufacturers a fee to accept the application. Smithy thus functioned as an independent broker making its own profit depending on its success in placing the application. The decision on accepting or rejecting the loan was made by Manufacturers at its home office in Toronto, Canada. The notes and deeds of trust were executed in Maryland and the deeds of trust recorded there. The funds were received by the borrower in Maryland.
However, during the time this loan, which was the first loan application Smithy had ever submitted to Manufacturers, was being negotiated, Smithy was also negotiating with Manufacturers to become its regular mortgage loan correspondent in the District of Columbia. This permanent relationship was established by an agreement dated 18 August 1960, just prior to the first loan and deed of trust of 30 August 1960.
On 5 March 1963 Parkwood purchased the property covered by the deeds of trust from Pend-Maple, Inc., taking the property subject to the deeds of trust but not assuming the notes.
*171The Referee and the District Court overruled the objection of the Trustee and allowed the secured claim on the same three grounds relied upon to support the claim of Equitable, and in addition held that Maryland rather than District of Columbia law was applicable to the transactions. We think that on the latter ground the District Court and the Referee were correct, and that Manufacturers’ claim should be allowed as a secured claim.
B. Applicability of Maryland law.
The Trustee argues strenuously that Manufacturers was in fact engaged in the lending business in the District of Columbia by virtue of its relationship with Smithy, formally established twelve days before this particular loan was actually executed. The Trustee points to the regulations which define engaging in the regulated business of lending money in the District of Columbia25 and asserts that what is regulated here is an activity in the District of Columbia, and that all the contacts with Maryland which we have listed above are immaterial when viewed in that light. We think the regulations prove that District of Columbia law could apply to the activities of Manufacturers in making loans, or indeed in making this loan, but the regulations and the statute ■(§ 26-601) under which they were made do not necessarily compel the conclusion that District of Columbia law does or should apply here.
The Trustee asserts that subsequent to the 18 August 1960 agreement, Manufacturers was held out by H. G. Smithy Company as making loans in the District, and the Trustee points to Smithy Company’s activities in servicing the loans made through Smithy, including this particular one. However, all of these activities of Smithy in servicing these two particular loans occurred after the loans were made, and could not affect the validity of the loans and the deed of trust at the time they were made. If there had been a course of conduct by Smithy in holding itself out as the representative of Manufacturers and in doing the job of servicing the loans for Manufacturers in the District of Columbia prior to the two loans in question, the question of validity might have to be treated differently, but subsequent activities could not invalidate a note and deed of trust which were valid under Maryland law when made.
We think there are several grounds on which it can be said that Maryland law applies to the Manufacturers’ loans. Generally, the validity of conveyances of real property, and of mortgages and deeds of trust, is determined by the law of the situs of the property. Usually the cases in which the question of the validity of conveyances of real property has arisen have not involved issues such as we have here of the effort of another jurisdiction to regulate a lending activity, but where real estate is concerned, as a general principle, we look to the jurisdiction in which the property is located for the law which governs the security in such transactions.
All of the documents involved were executed in Maryland. The loan application, the note and deed of trust were executed in Montgomery County, Maryland; the deed of trust was recorded in that County; and the funds were received by the borrower Maryland corporation in Maryland. The law of Maryland, the place where the contracts were made, should govern “matters bearing upon the execution, interpretation, and validity of the contract.”26
Here we have a real estate transaction, involving a note, a security instrument, and a sizable sum of money, challenged as to its validity because of a moneylending regulatory statute in the District of Columbia, where some of the activities in connection with the loan un*172questionably took place. At best, the Trustee can create a conflict between Maryland and District of Columbia law and a choice as to which might govern; where there is a choice of jurisdictions, the preferable course is to select the law of the jurisdiction which would sustain the transaction, and here this is Maryland. This rule contributes to the certainty of commercial transactions, one of the prime objects of all commercial law.27
We think, however, that no one point is conclusive on Maryland law applying, neither the situs of the property, the execution of all the documents in Maryland, nor the fact that Maryland law would sustain the transaction and District of Columbia law invalidate it; we must therefore apply the principles, and weigh and balance the two jurisdictions’ contacts with the transaction in the manner set forth in the Restatement of the Law (Second), “Conflict of Laws,” Sections 6 and 188.28 In accordance with these principles, weighing the factors that point respectively to Maryland or to the District of Columbia as the source of law governing the transaction, we think that, on balance, the most weighty factors favor Maryland law.
We do not think the Trustee’s reliance on Indian Lake Estates, Inc. v. Ten Individual Defendants, 121 U.S.App.D.C. 305, 350 F.2d 435 (1965), and Horning v. District of Columbia, 254 U.S. 135, 41 S.Ct. 53, 65 L.Ed. 185 (1920), is well placed.
In Indian Lake Estates, while the property was in Florida, this court did not reach or discuss the applicability of § 26-601 to such loans made outside the District and secured on real property elsewhere. The case arose on the pleadings, and the holding of the court simply was that the complaint, reciting a loan contract entered into in the District of Columbia under such circumstances as to bring into play the D.C. Loan Shark Law, stated a cause of action.
Horning was a classic example of a transparent sham to circumvent the law. Horning was a pawnbroker who took his District of Columbia clients across a bridge into Virginia to execute the relevant documents, and then returned to his business of lending money on security in the District. The purpose of the Loan *173Shark Act has been said to be the protection of the residents of Washington from excessive interest, and Horning clearly was attempting to evade that purpose. In the case at bar we have no fraudulent or evasive purpose; everything done appears as a natural part of a business transaction without thought to evade the District of Columbia or any other law.
The Trustee makes no contention that the law of Maryland, if applied, would invalidate this transaction, and it is clear that Maryland law would not. While Article 58A of the Annotated Code of Maryland (1957 edition) is primarily a usury statute, the Maryland law is somewhat similar to D.C.Code 26-601 et seq., but it is clearly limited to loans of $300.-00 or less. This limitation has been recognized by the highest court in Maryland.29 This transaction, involving over one half million dollars, is therefore not invalidated by any Maryland law called to our attention by any party.
Accordingly, we sustain the District Court on this ground in its allowing the secured claim of Manufacturers Life Insurance Company.
VI. The Claim of the Hartford Life Insurance Company
A. Pertinent facts.
On 28 November 1960 Suburban Motors, Inc., borrowed $100,000.00 from Walker & Dunlop, Inc., a District of Columbia real estate broker-mortgage banker with its principal office in the District. A note at 6%'% and deed of trust on real estate in Maryland were executed. On 19 January 1961 Walker & Dunlop transferred the note and deed of trust to Hartford. On 2 March 1962 Suburban sold the real estate to Adams, which took the property subject to the deed of trust but did not assume the note.
The loan was made by Walker & Dun-lop from its principal office in the District for itself and on its own account. As of 28 November 1960 Walker & Dun-lop were not licensed to engage in the business of lending money under § 26-601. However, under § 26-610 real estate brokers are included in the category of businesses exempt from the requirement of a license under § 26-601. It is undenied that Walker & Dunlop was at all relevant times a real estate broker, and it also appears it was in the business of mortgage banking.
The Trustee contended that since it was unquestioned that Walker & Dunlop made the loan with its own money and for its own account, Walker & Dunlop was acting as a mortgage banker and therefore was not exempt from the licensing requirement of § 26-601. The Trustee argued that a real estate broker, as a matter of general law and understanding, is one who acts for another with respect to real estate in making or negotiating a loan or otherwise, and that the phraseology of the District of Columbia statute § 26-610 was intended only to exempt a person or company acting for another in making or negotiating a loan. The District Court found that under § 26-610 anyone who makes a loan for himself, secured by real estate, falls within the exemption of a real estate broker, which position Hartford argues here.
Hartford also argues that irrespective of whether the loan was originally exempt under § 26-610 as made in a real estate broker’s business, it took as a holder in due course and thus its security is valid and cannot be set aside. This the District Court did not find.
B. The exemption under § 26-610.
Hartford argues that an integral part of the real estate brokerage business includes not only negotiation of loans on behalf of other investors, but also the placing of loans on behalf of the brokers themselves. This may be true, but this part of the real estate brokerage business is more properly de*174scribed as the mortgage banking business.
Semantics aside, the District of Columbia statute involved does not say that making loans on real estate is exempt. When originally passed, the exemption section 26-610, listed the exempted organizations “as defined in the Act of Congress of July First, 1902, 32 Stat. 621.” Paragraph 15 of that Act defines real estate brokers as follows:
. That real estate brokers or agents shall pay a license tax of $50.00 per annum. Every person who sells, or offers for sale, as the agent for others, real estate, wherever located, including mining and quarry property, or who makes or negotiates loans thereon, or who rents houses, buildings, stores, or real estate, or who collects rent for others, shall be regarded as a real estate broker or agent.30
The key questions revolve around the italicized words.
First, if, as Hartford contends, the words “makes or negotiates loans thereon” mean that the making or negotiating of the loan may be for the broker’s own account, then anyone “who makes or negotiates loans thereon . . . shall be regarded as a real estate broker or agent.” This simply cannot have been the legislative intention, to define as a real estate broker or agent anyone who is in the business of making or negotiating loans on real estate for his own account.
Second, in the interpretation of this clause, the words “as the agent for others,” although dreadfully misplaced, must modify all of the activities described in this one sentence, i. e., “who sells or offers for sale,” “who rents houses, buildings, stores, or real estate, or who collects rent for others.” The concept of “agent for others” must apply to all of these activities, which, if done for others, do constitute proper functions of a real estate broker or agent.
Third, if “as the agent for others” does not refer also to “who makes or negotiates thereon,” then we have the peculiar situation that the person who is a real estate broker or agent is one who makes or negotiates loans for his own account, but there is no clause in this entire sentence referring to the broker or agent making or negotiating loans as the agent for others. The interpretation urged by Hartford, i. e., that “agent for others” only refers to the part preceding “who makes or negotiates,” would leave out completely the authority of the broker or agent to make or negotiate loans for others, which is the whole sense of the business.
So we conclude that the loan as originally made by Walker & Dunlop did not fall within the exemption of § 26-610, and therefore the loan was subject to the licensing requirement of § 26-601. In contrast to the position of the insurance companies, real estate brokerage firms have always been exempt from licensing under § 26-610. Mortgage banking, however, has never been exempt from § 26-601. Thus the loan in question, as it was a result of mortgage banking activity, was not exempt from § 26-601, and the security instrument executed in connection with the loan is void under § 26-601, unless the claim of Hartford as a holder in due course can prevail.
C. Hartford as a holder in due course.
There is much argument in the briefs as to whether the effect of § 26-601 is to make security instruments given in violation thereof truly “void” or merely “voidable,” allowing defenses to be asserted, and, even if the security instruments are truly void, whether a holder in due course can still prevail. We need decide none of these questions here, because we conclude that Hartford was not found to be a holder in due course and on the facts could not have been so found.
*175The question whether a holder is a holder in due course is a question of fact.31 The burden was on Hartford to prove to the fact-finder, the Referee, and the District Court, that it was a holder in due course.32 The District of Columbia Uniform Commercial Code provides :
After it is shown that a defense exists a person claiming the rights of a holder in due course has the burden of establishing that he * * * is in all respects a holder in due course.33
Hartford argued to the Referee that its rights under the deed of trust are not affected by any invalidity stemming from § 26-601 because Hartford is a holder in due course, but the Referee as the original finder of fact made no such finding, and the District Court made no fact-finding or conclusions of law of its own, merely adopting those of the Referee.
Nor do we see that the Referee or District Court could have made any such finding of fact. When Hartford purchased the note and deed of trust, it appeared on the face of the instrument that the loan was made at over six percent. On the face of the note the lender of the note was described as Walker & Dunlop, Inc., of Washington, D.C., and Hartford knew from its negotiations with Walker & Dunlop in making the loan that this company was engaged in making such loans in the District of Columbia. The loan is also shown on the face to be payable in Washington, D.C. Thus, from all of the uncontradicted facts, Hartford knew that it was purchasing a note and accompanying security covered at its inception by the laws of the District of Columbia, and Hartford should have been on notice that by virtue of § 26-601 a defense existed against the note. Since to have been a holder in due course Hartford would have had to have taken the note with “no notice of any infirmity in the instrument or defect in the title of the person negotiating it,”34 Hartford could not have qualified for holder in due course status.
Hartford asserts that it did not know that the loan was illegal under § 26-601 and that in the exercise of reasonable diligence it could not be expected to know. At the time of the note’s execution (1960) and at the time of its negotiation to Hartford (1961) the governing law for commercial paper in the District of Columbia was the Negotiable Instruments Law.35 Hartford claims that it became a holder in due course because at that time it met all the required conditions, including that “at the time when the note was negotiated to it, Hartford had no notice of any infirmity in the instrument or defect in the title of Walker & Dunlop.”
But the burden of establishing this was on Hartford; it could hardly plead ignorance of the law as an excuse, a holder cannot convert himself into a holder in due course by being ignorant of the law. While the question of whether Walker & Dunlop, Inc., as a real estate broker was entitled to an exemption under § 26-610 may not be perfectly plain on its face, it was perfectly plain that Walker & Dunlop had acted for itself in making the loan originally, and the whole tenor of the real estate broker’s exemption under § 26-610 is to take the real estate broker out from the licensing *176requirement of § 26-601 simply because the real estate broker is an agent and does not act for himself. Where persons are in the business of making loans on real estate themselves, § 26-601 requires them to be licensed, unless they are specifically exempt under § 26-610. We have held that transactions and obligations in violation of § 26-601 are “void,” 36 and therefore the maker of the note or the security instrument, or . his assignee, would have had a defense. This should have been apparent from the face of the note and the governing District of Columbia law, and Hartford should have been on notice of this defense, and on notice that it was not a holder in due course. It is possible to argue, as the Trustee strenuously has, that the obligations incurred in violation of § 26-601 are void and of no effect even in the hands of a holder in due course. We have not passed upon this question, as it is not necessary under the disposition we now make. But all of this was the law when Hartford purchased the note and accompanying deed of trust. Under these circumstances it is not surprising that, although Hartford sought it, neither the Referee nor the District Court made a finding of fact that it was a holder in due course. Nor do we so find here.
D. Applicability of District of Columbia Law
Unlike our conclusion in regard to the situation of Manufacturers, we find Hartford’s argument that the transaction was not subject to District of Columbia law to be unpersuasive, and we therefore decline to overrule the referee’s position that the Hartford transaction is governed by D.C. law.37
In the case of Manufacturers, it did not maintain a Washington office for the purpose of making real estate loans, and “the decision to make the loan was made by Manufacturers at its home office in Toronto, Canada. Manufacturers had no agent in the District of Columbia, at that time, authorized or empowered to make such loans.” 38 The referee also specifically found “The Manufacturers Life Insurance Company made no loans in the District of Columbia between January 1, 1959 and May 7, 1968 at a rate of interest in excess of 6% per annum.” 39
No such specific finding as the latter was made in the ease of Hartford. In further contrast, the referee referred to Walker & Dunlop, Inc., who unquestionably made the Hartford loan originally, as “a corporation with its principal office in the District of Columbia.”40 There is little doubt that D.C. law is designed to regulate this kind of lender, and the weight of whatever countervailing factors which may exist41 is not sufficient to upset the premise of the referee and District Court that District of Columbia law applied to the Hartford (Walker & Dunlop) loan.
We therefore conclude that Hartford not having established itself as a holder in due course, Walker & Dunlop’s actions not being exempt under § 26-610, and the applicable law being that of the District of Columbia, that the loan and accompanying deed of trust are therefore subject to § 26-601. We hold that the objection of the Trustee to the allowance *177of the claim of Hartford as a secured claim on the basis of the deed of trust was valid, the action of the District Court in denying the objection was erroneous, and we therefore remand to the District Court for the entry of the proper order.

. D.C.Code, Title 26, § 26-601 et seq. (1967).

. Section 70(c), 11 U.S.C. § 110(c) provides :
(c) The trustee may have the benefit of all defenses available to the bankrupt as against third persons, including statutes of limitation, statutes of frauds, usury, and other personal defenses; and a waiver of any such defense by the bankrupt after bankruptcy shall not bind the trustee. The trustee, as to all property, whether or not coming into possession or control of the court, upon which a creditor of the bankrupt could have obtained a lien by legal or equitable proceedings at the date of bankruptcy, shall be deemed vested as of such date with all the rights, remedies, and powers of a creditor then holding a lien thereon by such proceedings, whether or not such a creditor actually exists.

. In re Waynesboro Motor Co., 60 F.2d 668, 669 (S.D.Miss.1932).

. 4A Collier on Bankruptcy, 70.45, at 558-59.

. D.C.Code §§ 45-501, 45-601, 15-102; Hitz v. National Metropolitan Bank, 111 U.S. 722, 728, 4 S.Ct. 613, 28 L.Ed. 577 (1884); Admiral Co. v. Thomas, 106 U.S.App.D.C. 266, 271 F.2d 849 (1959); Osin v. Johnson, 100 U.S.App.D.C. 230, 243 F.2d 653 (1957); Munsey Trust Co. v. Alexander, Inc., 59 App.D.C. 369, 42 F.2d 604 (1930); Atlas Portland Cement Co. v. Fox, 49 App.D.C. 292, 265 F. 444 (1920); Ohio Nat’l Bank v. Berlin, 26 App.D.C. 218, 227 (1905).

. Section 70(e) (1), 11 U.S.C. § 110(e) (1) provides:
(e) (1) A transfer made or suffered or obligation incurred by a debtor adjudged a bankrupt under this title which, under any Federal or State law applicable thereto, is fraudulent as against or voidable for any other reason by any creditor of the debtor, having a claim provable under this title, shall be null and void as against the trustee of such debtor.

. 11 U.S.C. § 75(a) (8).

. See generally 4A Collier on Bankruptcy f 70.04 et seq., at 48ff. (14th ed. 1969). As was said in the case of Cartwright v. West, 173 Ala. 198, 55 So. 917, 918 (1911):
The trustee in bankruptcy in a sense is representative of both the bankrupt and the creditors. As such he succeeds in right and title to the bankrupt’s estate for the benefit of his creditors. He may, as a general rule, maintain all actions, both at law and in equity, for the recovery and preservation of the assets, both real and personal, of the bankrupt’s estate that the bankrupt himself, but for the bankruptcy, could have maintained. Even more, he may maintain an action the bankrupt could not, where, as in the present case, he seeks to avoid conveyances made by the bankrupt in fraud of his creditors. In this latter instance it cannot be said *164that the trustee is a representative of the bankrupt, for he [the bankrupt] could not maintain such a bill, nor in any legal or equitable proceeding become a beneficiary of his own fraudulent act. * * * The bill before us is in the nature of a creditor’s bill to set aside fraudulent conveyances made by the debtor, and the trustee in filing it in reality represents the interests of the creditors alone. The object of a recovery is for distribution among the creditors of the bankrupt. (Emphasis supplied.)
In tire case at bar, of course, we are not dealing with fraudulent conveyances, but in setting aside any voidable preferences or void security the role of the trustee is equally to act for the benefit of all creditors. We cannot, therefore, agree with our dissenting colleague, whose reluctance to apply the statute to the case of Hartford here stems in part from a belief — mistaken, we think — that somehow to do so would result “in a windfall to the Bankrupt.”

. Hartman v. Lubar, 77 U.S.App.D.C. 95, 97, 133 F.2d 44, 46 (1942), cert. denied, 319 U.S. 767, 63 S.Ct. 1329, 87 L.Ed. 1716 (1943).

. Appellees’ reliance on District of Columbia v. Brady, 109 U.S.App.D.C. 324, 288 F.2d 108 (1960), is misplaced. Brady held that a practicing physician who, through a real estate broker, regularly invested his earnings in first trusts on real estate was not in the business of loaning money for the purpose of payment of District of Columbia unincorporated business franchise taxes, D.C.Code § 47-1574 (1967), and did not refer to the entirely different question of whether Dr. Brady was subject to the provisions of the Loan Shark Act. The regulations pi-omulgated under authority of the' statute by the Commissioners of the District of Columbia define “engaged in the business of loaning money” as “the holding out in the District of Columbia, by the maintenance of a place of business in the District of Columbia, or in any other manner, that a loan or loans of money may be effected by or through the person so holding out, plus the performance in the District of Columbia by such person of one or more acts which result in the making or in the collection of a loan of money.”

. Small business investment companies and life insurance companies were added to the list of exempted businesses in 1960 and 1963, respectively. The language of the 1963 exemption for life insurance companies in no way indicates that it is intended to have retrospective application. It is thus of prospective operation only. See Restatement, Contracts, § 609. The original loans here in question were all made prior to 1963.

. Appellees argue that § 35-105 and § 47-1806 of the D.C.Code relieve life insurance companies from compliance with other licensing statutes. These sections, however, simply provide that insurance companies will be taxed on a certain basis in lieu of all other taxes. However, the fee required to be paid by non-exempt lenders who make loans at an interest rate in excess of six percent is clearly not a tax but rather a licensing fee, and this court has so held. Indian Lakes Estates, Inc. v. Ten Individual Defendants, 121 U.S.App.D.C. 305, 311, 350 F.2d 435, 441 (1965). Furthermore, it is obvious that if the provisions of §§ 35-105 and 47-1806 exempting life insurance companies from payment of “other taxes” were intended to exempt them from license fees such as that prescribed by § 26-601, there would have been no reason for Congress in 1963 to amend § 26-610 expressly to provide exemption of life insurance companies from the Loan Shark Act.

. United States v. Oregon, 366 U.S. 643, 648, 81 S.Ct. 1278, 6 L.Ed.2d 575 (1961); Cities of Statesville v. AEC, 142 U.S.App.D.C. 272, 284, 441 F.2d 962, 974 (1969).

. Indian Lakes Estates, Inc. v. Ten Individual Defendants, 121 U.S.App.D.C. 305, 350 F.2d 435 (1965); Royall v. Yudelevit, 106 U.S.App.D.C. 1, 268 F.2d 577 (1959).

. 77 U.S.App.D.C. 95, 96, 133 F.2d 44, 45 (1942).

. Section. 609 of the Restatement of the Law, Contracts, states the applicable general principle as follows:
A bargain that is illegal when formed does not become legal .
(b) by reason of a change of law, except where the legislature manifests an intention to validate the bargain.
The comment to § 609 provides the following pertinent example:
(2) A borrows money from B, promising to pay at a rate of interest forbidden by law. Later, but before the time for performing the bargain, a statute is passed allowing such interest. Unless a purpose is manifested in the statute to validate existing bargains, the bargain remains illegal. (Emphasis added.)

. H.R.Rep.No.1608, 86th Cong., 2d Sess. 8 (1960).

. Hearings on H.R. 9441 (87th Cong.) before Subcommittee No. 2 of the House District of Columbia Committee 1 May 1962 (unpublished transcript on file at U. S. Archives), page 3. H.R. 9441 was not enacted, but was reintroduced in the 88th Congress as H.R. 3191, and was enacted 5 December 1963 as P.L. 88-191, thus finally conferring on tire insurance companies an exemption from the licensing requirements of § 26-601 by adding insurance companies to the list of those exempted under § 26-610.

. im.

. Hartman v. Lubar, footnote 9, supra.

. S.Rep.No.650, 88th Cong., 1st Sess. 1, (1963).

. E. g., Bowen v. Mount Vernon Savings Bank, 70 U.S.App.D.C. 273, 105 F.2d 796 (1939); In re Feldman, 259 F.Supp. 218, 222 (D.Conn.1966).

. “ [I] f a lawful performance has been rendered beneficial to the receiver of it, and if the evil and illegal elements and purposes can be abandoned and rendered harmless to society, a promise by the benefited party to pay reasonable compensation for the beneficial performance will be enforceable. It is the executed performance and the moral obligation that will support it.” IA Corbin, Contracts, § 236, at 371 (1962).

. It would seem that it is the intent of the parties at the time of Equitable’s purchase of the note that is material. It appears that the note was not actually amended until 28 August 1961, some five months after the note was purchased by Equitable. If, during this period, Potomac continued to pay interest at a rate of it might indicate that at the time of purchase there was no intent that Equitable receive no more than 6% interest of the remainder of the loan. In that event, Equitable, having itself received illegal interest would then be in no position to escape the sanctions of the Loan Shark Law, unless the payment of excess interest during this period is found to have been inadvertent or de minimis, and not in accordance with the intent of the parties. Cf., Restatement, Contracts, §§ 537, 600.

. Commissioners of the District of Columbia, Regulations for the Conduct of the Business of Loaning Money, 6 Sept. 1949.

. Keco Industries, Inc. v. ACF Industries, Inc., 316 F.2d 513, 514 (4th Cir. 1963) (emphasis supplied).

. Kossick v. United Fruit Co., 365 U.S. 731, 741, 81 S.Ct. 886, 6 L.Ed.2d 56 (1961); Pritchard v. Norton, 106 U.S. 124, 1 S.Ct. 102, 27 L.Ed. 104 (1882); Teas v. Kimball, 257 F.2d 817 (5th Cir. 1958); Heede, Inc. v. West India Machinery & Supply Co., 272 F.Supp. 236 (S.D.N.Y.1967); Bernkrant v. Fowler, 55 Cal.2d 588, 12 Cal.Rptr. 266, 360 P.2d 906 (1961); Cochran v. Ellsworth, 126 Cal.App.2d 429, 272 P.2d 904, 909 (1954); Green v. Northwestern Trust Co., 128 Minn. 30, 150 N.W. 29 (1914). Compare, Restatement (second) Conflict of Laws, § 202 and § 203 (1971) and comments thereto.

. Section 188(2) of the Restatement provides :
(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) ' the domicil, residence, nationality, place of incorporation and place of business of the parties.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
Although payment of the loans here involved are evidently made in the District of Columbia, through the Smithy Co., we think that notwithstanding the rule set forth in § 195 of the Restatement that the law of the jurisdiction where repayment is to be made ordinarily controls the validity of contracts for the repayment of money, in the instant case the rationale of Comment c to § 195 should prevail. Comment c suggests that “when the contract would be invalid under the local law of the state where repayment is to be made but valid under the local law of another state with a close relation to the transaction and the parties,” the law of the latter state, Maryland in the instant case, should control.

. Brenner v. Plitt, 182 Md. 348, 34 A.2d 853, 858-859 (1943); Carozza v. Federal Finance & Credit Co., 149 Md. 223, 246-247, 131 A. 332, 341 (1925).

. With slight changes this has been carried in succeeding statutes and is found in the Real Estate Brokers Act of 1937, D. C.Code § 45-1401 et seq. (1967).

. Blow v. Ammerman, 121 U.S.App.D.C. 351, 350 F.2d 729 (1965); Northside Bank of Tampa v. Investors Acceptance Corp., 278 F.Supp. 191 (W.D.Pa.1968).

. This burden was placed on Hartford by both the Negotiable Instruments Law which was in effect at the time Hartford purchased the note, D.C.Code § 28-409 (1961 ed.) and the Uniform Commercial Code which was subsequently adopted. D.C.Code § 28:3-307(3) (1967).

. This section applies, even though Hartford’s purchase of the instruments involved occurred prior to the enactment of it. United Securities Corp. v. Bruton, 213 A.2d 892 (D.C.App.1965).

. D.C.Code § 28-402 (1961), superseded by D.C.Code § 28:3-302(1) (c) (1967).

. D.C.Code § 28-102 et seq. (1961 ed.).

. Royall v. Yudelevit, 106 U.S.App.D.C. 1, 3, 268 F.2d 577, 579 (1959).

. The referee’s allowance of the Hartford claim was predicated on the notion (which we find erroneous) that the Loan Shark Law was not applicable in this situation. The entire memorandum of the referee is written under the premise that District of Columbia law governs, however. See Appendix, pages 41-49.

. Referee’s Finding of Fact No. 2. (Manufacturers)

. Referee’s Finding of Fact No. 7. (Manufacturers)

. Referee’s Finding of Fact- No. 1. (Hartford)

. E. g., the referee stated in regard to Manufacturers, “the loan was finally consummated in the State of Maryland” (F.F. 3) and similarly re Hartford “the settlement of the loan took place in Montgomery County, Maryland” (F.F. 2).