Daniel G. Foster already had decided that he wanted to buy the home in Largo; all that remained was to agree on the final legal and financial details during the settement on the house.
But when it came time to get a lasyer for the settlement, Foster discovered that the Maryland Federal Saings and Loan Association of Hyattsville, which was giving him his mortgage, insisted that he pay the firm a $100 legal the even if he used a lawyer of his own. In addition. the law firm receiving these fees had close corporate ties to the sayings and loan.
Foster objected. When the financial institution persisted in its demand, Foster joined 1.130 other Maryland homeowners and sued Maryland Federal, charging violations of antitrust laws. After losing in the lower courts, the homeowners now have asked the U.S. Supreme Court to hear their claim.
The Maryland Federal practice "is nothing more than a device which assures Lancaster, Bland (the law firm for Maryland Federal) a steady supply of clients," charged William A. Dobrovir, an attorney for the homeowners.
Dobrovir added that the Maryland Federal practice of asking a $100 legal fee from the clients to whom it loans mortgage money is "a more sophisticated" version of a common banking practice. requiring borrowers to deal with certain lawyers or law firms as a condition of their mortgage.
However, Judge Malcolm R. Wilkey, who wrote the opinion for the U.S. Court of Appelas, said that a single lawyer "can effectively and fairly serve both the lender and the borrower on all questions in which the lender is interested...
"The only practical question is whether the borrower will pay for his own separate legal counsel as well as the lender's where the interests of the two parties are congruent," the appeals judge added.
Foster, contacted last week, said he felt he needed his own lawyer during settlement to make sure his interests were protected on matters other than those involving the title to property.
Foster added that he objected to paying the $100 extra towards Maryland Federal's legal bill because he was trying to keep his closing costs down.
One of the key objections that Foster and his fellow borrowers make in their antitrust suit involves his connections between the law firm receiving their $100 fees and Maryland Federal.
Lancaster, Bland, Eisele & Harring, the suit says, has offices in the same buildings as the savings and loan. From 1963 until 1971, T. Hammond Welsh -- the senior partner in the firm, which was then named Welsh & Lancaster -- also was the president and general counsel of Maryland Federal.
When Welsh resigned from the firm eight years ago, Richard D. Bland, a Maryland Federal director and member of the law firm, became general counsel of the lending insitution. Another firm member, Clifton Eisele, became the associate general counsel.
The requirement that Lancaster, Bland attorneys be paid a $100 fee to represent Maryland Federal borrowers was instituted in 1970. Before then, Dobrovir said, Maryland Federal allowed borrowers to pick their own laywers from a large list approved by the savings and loan.
Wilkey's opinion last June said ing its own lawyer "after an unsatisfactory period ofexperience" during which it found many of the lawyers were really picked by real estate developers or brokers who "tended to be less concerned about the quality of the title... than with facilitating a sale."
Moreoever, the appeals judge said the $100 fee was not excessive and did not create a profit for Maryland Federal," which passed on all the fees to the law firm.
Wilkey said the appeals court looked only at the propriety, under antitrust laws, of Maryland Federal hiring the law firm, several of whose partners hold "high corporate positions" in it.
While the suit originally was brought in U.S. District Court in Washington on antitrust grounds, the issue before the Supreme Court is a narrower one: was the appeals court right in upholding Judge William B. Bryant's dismissal of the complaint on behalf of Maryland Federal without letting the case go to the jury?
The homeowners said the appeals court was wrong because its ruling would mean they would not only have to prove that Maryland Federal's practice had the effect of unreasonably restraining trade, but that the lending institution had acted without unlawful intent.
Savings and loan attorney John P. Arness said the petition for Supreme Court review "deliberately misconstrued" the appeals court decision. He said the ruling said intent was just one of numerous factors considered in deciding restraint of trade questions.