The Maryland Deposit Insurance Fund, the state agency created last month to help shore up the state's shaky savings and loan industry, agreed today to allow Fairfax Savings & Loan Association of Baltimore to recover $20 million it had invested in Old Court Savings and Loan in an unsuccessful effort to help stabilize the latter thrift.

At the same time, the Maryland Court of Appeals refused to hear an appeal by the owner of the Baltimore Blast soccer team, who sought an exemption from a $1,000-a-month limit on withdrawals imposed on Old Court's 72,000 accounts by a state-appointed conservator.

Fairfax Savings & Loan needed the $20 million to help qualify for federal deposit insurance, according to its attorney, Stanford D. Hess. He said Fairfax had been "lured" into purchasing $20 million in certificates of deposit at Old Court by the Maryland Savings-Share Insurance Corp. (MSSIC) before Old Court was placed under a conservator and MSSIC was made defunct by the Maryland General Assembly.

Fairfax sued MSSIC the day before it was dissolved, charging that the private insurance fund, which was supported by 102 state-chartered savings associations, knew Old Court was facing more than "a short-term liquidity problem" when it sought Fairfax's help in March.

Hess said MSSIC assured Fairfax its $20 million investment was safe in Old Court, the state's second biggest thrift, even after MSSIC had written a letter to state officials warning of evidence of millions of dollars in unsecured insider loans and overdrawn accounts at Old Court.

Today's agreement was worked out between Fairfax and the Maryland Deposit Insurance Fund and was approved by Baltimore Circuit Court Judge Joseph H.H. Kaplan.

Reports of the problems at Old Court, and subsequent ones at a second Baltimore savings association, Merritt Commercial, produced runs on many of the 102 members of MSSIC, and prompted Gov. Harry Hughes to convene a special session of the legislature.

A key component of a package of bills designed to restore public confidence in the savings and loan industry was a requirement that former MSSIC members obtain federal insurance as soon as possible.

A stumbling block to membership in the Federal Savings and Loan Insurance Corp. (FSLIC) has been a requirement that thrifts show a 5 percent net worth, meaning that they have assets that amount to at least 105 percent of their deposits.

Hess said today's agreement, which Francis X. Pugh, the assistant attorney general representing the Maryland Deposit Insurance Fund, said was "amicable," will be a major step toward Fairfax winning FSLIC approval.

So far, only three former MSSIC members, including Chevy Chase Savings and Loan, the state's largest thrift, have won FSLIC membership, although 24 others have been granted conditional approval.

Today's agreement calls for the state to pay Fairfax all principal and interest on the $20 million within one year. Fairfax will not be able to withdraw the money for one year, but the state has agreed to hold an equivalent amount of U.S. Treasury bills as collateral.

Hess said he did not know whether today's action alone would clear the way for Fairfax to get FSLIC coverage, but "it fills one big hole -- the biggest," he said.

In today's other action involving Old Court Savings and Loan, the Court of Appeals, in a brief order, refused to review a decision by the Court of Special Appeals that denied an exemption to the $1,000 monthly limit on withdrawals sought by Baltimore Blast owner Nathan Scherr.

Judge Kaplan initially had approved a waiver for Scherr, who said that he had $542,784 in 12 accounts at Old Court.

The Court of Special Appeals, in a written opinion released yesterday that supported its overturning of the Kaplan ruling, said it found that Scherr was "a person of substantial means" and had not proved that he had no other money available to meet the obligations of the professional soccer team.