*1 ASTRAL, DE v. S. A. BOSTON COMPANIA METALS COMPANY Term, October [No. 1953.] *6 July Decided 1954. rehearing August filed, 26, 1954,
Motion denied for October 1954. argued J.,
The before and Bruñe, cause C. Dela- and Collins, JJ. plaine, Hammond, Henderson Grimes, with whom William A. were Herbert F. Mur- ray Ober, brief, Grimes on and & Stinson the for the appellant. Eugene Feinblatt, and
David P. M. Gordon with whom brief, on appellee. Feinblatt for were Gordon & J., opinion delivered C. of the Court. Brune, Company (hereinafter “Boston”), Boston Metals called Maryland corporation, brought a suit in the Baltimore City against Compañía Astral, (herein- Court de A. S. “Astral”), corporation, called Panamanian after for a contract breach sale three vessels. Astral appeared specially quash and moved the summons by Judge and dismiss the suit. This motion was denied pleadings Warnken. After further went to case Judge jury, Moser, trial before without a and resulted judgment approximately for Boston $274,000.00. brings up appeal rulings Astral’s both on motion question breach contract. latter The question meaning contract, on the turns under approval States United Government flag transfer vessels to the of Panama was required agreed accept and Astral conditions such relating approval disposition” “future use the vessels. *7 questions (1) principal
The are Was at issue these: Mary- and Astral contract between Boston made land, so that Astral is amenable suit thereon in this (1951),-Article 88(d); 23,- under Code Section State (2) (3) so, constitutional; if were is that statute and imposed Maritime the conditions Administration scope within the of those transfer vessels terms to which Astral assented under the of the contract? any, dispute little, facts, if There about the are summarized below. Maryland corpora- plaintiff-appellee,
Boston, is a yard principal having Baltimore, officeand its tion its engaged buying, Maryland, in the of is there business and selling scrapping ships. Astral is a Panamanian and having principal place corporation City in the its business engaged Republic Panama, and is and exporting from to the bananas Ecuador business selling agent It has other countries. States and United Selling Orleans, Louisiana, the Estrella Fruit in New “Estrella”), (hereinafter Corporation called sometimes Prior to office States. it has no United but “doing it was not business’ this suit institution (1951), meaning Maryland Article of Code Maryland its ac- Its contacts with and 88. Section pertained to the in this State and transactions tivities vessels in this case and three involved contract principal subject-matter whose sale constituted thereof. bought frigates
In 1946 Boston three from the United Navy. They States during had been built in Canada II relatively long, World War narrow, were fast useful, they shallow draft. However have wartime, they been in adapted peace- were not well for time require commercial use and would considerable changes to convert them for such use. After Boston purchased thought they might them it be sold for use vessels, as commercial price doubtless at a better than by scrapping would have been realized them. In 1947 frigates Boston sale, advertised the up for but to Jan- uary, 1952, it received no firm offer for ships them. The remained in the harbor of Baltimore from 1946 until they finally scrapped were there in 1953. prior January 9,
At some time Astral became possibility interested in acquiring vessels of the frigate converting class and them for use as banana date, Anderson, boats. On that Mr. York, Folke of New “foreign who representative” is described as Astral, submitted an offer on behalf of $75,000 apiece Astral of frigates. Boston’s three though This offer was made brokerage ship firm, a New York Co., W. R. Blackburn & which had craft on these its list available vessels. Boston, This offer rejected was transmitted to but was *8 inadequate. negotiations as Further followed.
Early February, 1952, Petterson, Mr. Gustav E. Estrella, of President who representative also acted as a Astral, of preliminary came Baltimore and made a inspection of the February vessels 6, 1952, there. On Anderson, acting Messrs. Petterson and representa- as Astral, of tives conferred with officers of Boston and its counsel at Boston’s office A proposed Baltimore. contract was at drafted provided, conference which among things: (1) other for the sale of three vessels then in the harbor of Baltimore on an “as is where is” basis, price $400,000; (2) at the of purchaser for the approval transfer, obtain of the cooperation with the of vendor; (8) purchaser deposit for the in escrow Company $80,000; a Trust in Baltimore a fund of (4) inspection frigates by purchaser, for of the 'the right reject any with the of them whose condition might unsatisfactory, subject provision be to the further rejection that the of one operate of the three would rejection contract; as a of all and would terminate the (5) delivery sale, for the of the vessels and bills and of payment purchase price of the balance days signing fifteen upon of the contract or ob- taining approval transfer; (6) Government of the for returning moneys remaining in the fund if escrow approval obtainable; (7) such was not and if the purchaser payment purchase price, defaulted in the deposit remaining the amount of the in escrow should liquidated damages. paid be to the vendor as Other provisions payment towing, shifting dealt with the drydocking charges inspection purposes, for payment brokers, of a commission to the to which the use put, govern to be the law to inter- the vessels were contract, pretation construction which was for by Maryland, and the of title the/law retention right vendor and the of resale case of default by purchaser. provisions These latter were either materially dealing different from the same or those subjects which were embodied in the with the same executed, agreements later and for that reason are not point. commented at this further February Anderson, day, 7th, Mr. ac- the next On Blackburn, companied conferred with Mr. Ander- Mr. in New York latter’s and Astral’s counsel at the son’s changes proposed contract were office. Several further suggested, Boston was advised them and a February 11th, 1952, in New was held on conference Astral’s counsel. This conference York at the office of Blackburn, broker, by counsel was attended Mr. Boston, Astral, an officer of Boston and counsel Petterson, representatives Anderson Messrs. Astral.
At proposed this conference the contract drafted on February revised; and, 6th among changes, was other split parts, it was into two one of which was dated February 18th February 19th, and the other 1952. These agreements two (apart from notification later referred to) constituted parties. They the contract between the subsequently by were executed Astral in Panama and apparently date, on the same which is not shown but prior February 23, which was They 1952. were substantially simultaneously by executed Boston at its February 23, office in Baltimore on 1952. agreement (dated February 18)
The first provided for by purchase by the sale Boston and the Astral “one frigates or more” of three named then in the harbor of is, basis, Baltimore on an “as is” price where at the $400,000 purchased, if all $270,000 three were for two only purchased, if $137,500 two were only for one if purchased. Subsequent one provisions were called for inspect ships Astral twenty-one days after parties signed required both the contract and Astral notify Boston acceptance within a time limit of its or rejection one, two or three the vessels. Astral right inspect drydock had the the vessels afloat or on “reject frigates and to one or more these if the con- unsatisfactory dition of such is to the Purchaser.” There provisions regard by were further payment shifting Boston or of towing, Astral of the cost drydocking vessels, depending upon number might reject them which Astral accept. provisions agreement required
Other of the first Astral deposit $80,000 in escrow the sum of with a Trust Company deposit required in Baltimore. This was (and made) signing made on of the contract parties. paid Boston, both The fund was to be over to together with other funds to be furnished Astral necessary up purchase price to make of the vessel delivery purchased, proper or vessels bills of sale purchased for the vessel vessels “after Government permission for transfer has been obtained.” If *10 -thirty days permission
such was not obtained within signing parties, the of of the contract both the escrow Astral, any towing, paid fund was to be over to less costs, chargeable shifting drydocking or to not al- and ready paid by liquidated damages provision Astral. The February of the draft of 6th eliminated.
Paragraph agreement provided 2 of the that first change flag frigates of of “Permission these co- by the Vendor with the Panama shall be obtained reversing Purchaser,” corre- operation thus of the February . sponding provision 6th of the draft. comple- Paragraph 9 that on
Under Astral “warrants by it for purchase will be used tion of vessels foreign property transportation passengers or of commerce.”
By provisions title vessels was to remain other cash, price in purchase of full payment Boston until carry contract out the case of failure of Astral and in frigates might any or all of to others one sell Boston pay com- Boston was also for its own account. 5% for dis- “as brokers Blackburn & Co. mission to W. R. tribution.” “In enforce-
Paragraph case of reads as follows: contract, interpretation or dispute or toas ment of this contract, of laws the substantive of this construction America, Maryland, of shall United States State apply.” document, February 19th, pro- dated
The second as follows: vided hereby mutually agreed parties between the It is
“1. agreement heretofore executed between hereto February 18th, purchase for the dated them frigates, more shall remain in full force effect or one forty-five period for an additional parties between the days notwithstanding agreement clause said if providing approval it shall be void transfer shall Government obtained days signing thirty agreement. from the of the said If “2. either or both the Maritime Administraron Navy jurisdiction has United States over this transfer, subject approves said transfer to condi- prescribed by respect them or tions either them with disposition vessels, use and future all these approval approval such amount will the United provided for in States Government as the contract dated February, 18th 1952.”
Following February 11th, the conference of R.W. Co., license, exporter’s Blackburn which held filed & an *11 applications Department with the State for licenses for export arms, each of the three “to ammunition vessels implements applications and of war.” These were dated February 13, 1952. Mr. Blackburn testified that ob- he responses con- tained the information contained cerning inquired Astral from Anderson. Item 9 Mr. specific purpose required for which the material was and of the consumer the name and address ultimate refrigerated abroad. answer was “To converted to The banana carrier in the United States or Canada for the purchaser consignee.” who At is the ultimate a later (under point relating quantity Items 14 and 15 and commodity), stated, it was “Sold for conversion to refrigerated leaving banana carrier before the United depending price re- States Canada on lowest where ceived for conversion. All armament removed. Con- approximately version cost has been estimated at $300,000.” February 28, 1952,
On or about Mr. Petterson and Hurst, surveyor acting a Mr. who was a marine for Astral, inspected drydock the three vessels in in Balti- more, February applications and on 29th Mari- frigates time Administration for transfer were executed in Baltimore on behalf of Boston and were signed on behalf of Astral Mr. Petterson. On day meeting same Astral’s Board of held Directors purchase Panama and authorized the of three vessels Company for the registry and the transfer thereof to the flag of granting Panama and also authorized the attorney, power of a which was executed and recorded day, empowering (described on that Petterson Gustav Jersey”) as “of New purchase to effect the authorized and transfer of “under the terms and conditions vessels which he believes will serve the interest of” best Astral. 20, 1952, granted Department
On March the State export applied February license under date 13th. 21, 1952,
On March Mr. Petterson wrote a letter notifying Boston on the letterhead of Estrella Boston buy frigates would Astral all three mentioned in agreement February 18th, 1952. April 9, 1952, ap- On the Maritime Administration proved proposed sale the vessels to Astral and the flag registry frigates upon transfer of certain among following: conditions which were the (1) That the vessels be converted in a United States shipyard;
(2) Emergency That the duration of the National proclaimed President December there change ownership registry no should be nor should in- vessels “there be transfer stock * * * persons terest citizens of the [Astral] *12 prior approval of without the the Mari- United States Administration.” time
(3) in of the That the event default observance others, conditions certain Astral should of the above or $25,000, pay Administration the sum of to the Maritime damages penalty, for liquidated and not as a each as default; and vessel involved by surety company (4) Astral and licensed That Treasury should execute and deliver the United States amount Administration a bond the to Maritime performance $75,000 Astral’s and observance of to secure undertakings conditions, that prescribed and or of the All of the deposit bonds. cash Government Astral conditions, except prohibiting a that above mentioned registry without change ownership or of the vessels of now ob- Maritime Administration are consent of the jected by to Astral. The conversion and stock transfer objected were to once. conditions at Certain other requiring conditions to sell or charter Astral the vessels prohibiting pur- to the United States and their use poses flag forbidden to United States vessels under cer- Commerce, Department tain orders were also conceded to be in order under terms of contract between Boston and Astral. to induce to re-
Efforts the Maritime Administration objected cede from were the conditions tó which Astral discharged not successful. claimed that it was Astral any obligation from under the contract reason conditions, opposite position. these Boston took eventually sale, public Boston at a bid sold vessels question scrapped them in raised itself and them. No regard adequacy propriety the sale price any question Boston. Neither is there bid damages, if as the amount of Astral is liable to Boston under the contract. testimony by
There an was Administrative Assistant employed by Administration the Maritime and there was a letter from its General Counsel one of Boston’s at- torneys imposed the effect the conditions frigates the conversion of the and as transfers stock of Astral were usual. The Administrative Assistant also testified that all the conditions were usual 1,000 gross tons, case of naval vessels more than give Maritime did not consent Administration frigates to the transfer of the until it had here involved Department granted ascertained that the State had ex- port copies licenses these vessels and that of such licenses were in the Maritime files. Administration’s testimony sought
There was also to show that Astral bids on conversion from several American and Canadian shipyards yard (the and that an American Bethlehem Company’s Key Highway yard Baltimore) Steel the low bidder. It is not clear whether bids were *13 yards countries, obtained from in other but there was testimony by to Mr. Petterson indicate that Astral was
252
considering having in the conversions made a Scandi- yard, European or navian other where the cost would States, be much less than in the United and that Astral sought towing frigates had obtained bids across Atlantic. Bethlehem’s bid all three vessels $420,000 per vessel, $120,000 per was at rate of ship applica- in in excess cost stated estimated Department export tion for the State license. question The first law is whether the contract'was
[ Maryland. was not in no room for m made There is obligations imposed were doubt that some and became signed Mary effective as soon as Boston the contract Among obligation put up land. these was Astral’s Company $80,000 escrow fund with the Trust Union Maryland Baltimore, which at one of its offices in immediately complied Astral’s was with. Another was obligation notify inspect Boston the vessels and to twenty-one days acceptance or thereafter of its rejection one, latter two or three them. This by Mr. met within the time limit obligation^Astral 21, 1952, notifying Petterson’s letter of March Boston acceptance of notification of Astral’s all three. This Maryland. received Boston at its office Whether obligation (1) creating contract as an is construed defeasible, part purchase vessels, on. Astral’s all three they however, as to one or more of them if should upon inspection in unsatisfac be found Astral to be tory condition, (2) granting option an to Astral by notifying purchase one, Boston in two or all three buy writing prescribed election within the time of its one, three, made think that the contract was two we pr view, Maryland. event, final act In in our either is, necessary completion of the contract —that Maryland, binding obligation done make it a —was con Maryland consequently place where Mallick, Md. Insurance Co. v. tract was Sun made. Knabe, 122 35; Md. Trust v. 153 A. Union Co. (Rev. Ed.) Section 1106; Contracts 89 A. Williston 97.
253 suggested constructions Under the first of the two contrary appear there would to be no for a con- basis however, construction, tention. Under the Astral second original only contends that contract amounted by frigates offer an Boston to sell and that Astral accepted by mailing Louisiana, acceptance this offer in an consequently and that place Louisiana is of the mak- ing agree. of the contrat. We do not Even if the agreement February dated 18th be considered as not amounting vessels, to a contract for but the sale only grant them, option buy as the of an terms “option” required Astral, pur- of that if elected to it chase, notify writing acceptance in Boston of its one, This, think, two contemplated or three vessels. we merely mailing Panama, from New letter anywhere else, receipt Orleans but the actual such n by Maryland. notice place This took Boston. in \ ^ As (1950 is said in Ed.), 1 on Corbin Contracts Sec- tion 264: when, by already
“But the terms of an consumnated provided contract it is party that one shall have the legal by power produce giving notice, certain results usually it is held this in that means notice received fact * * merely and not *. The rule notice mailed that an acceptance post operative mailing is on was itself subjected though criticism; it severe even regarded settled, now be it not be extended to as should acceptance already option binding notice of contracts.” (Rev. Ed.), 1 See also Williston Contracts Section 87, note, page 248. agree- we hold
Since final act which made the binding Maryland, place ment a contract took Beverage Brewing cases of Co., Park Co. v. Goebel 197 369, 157, Md. A. Holding 79 2d and Cole v. Park Randall Co., 616, 201 A. appellant, Md. 2d cited involving negotiations preliminary in which situations place Maryland, arrangements took but final were states, effected in applicable. other are not question (1951), The second is whether or not Code (d) applied constitutional, Article Section 88 Beverage to the facts of In this case. the Park Co. case just unnecessary pass to, referred found it Court n validity contract this Section because the Maryland and the Sec- there involved was not made in inapplicable. case, was, therefore, tion however, Maryland brings thelquestion up In the instant holding was made the contract our *15 If
for consideration. judgment court invalid, of the lower is the the statute and, the dismissed; on reversed and the suit must be jurisdiction the to determine hand, if we have other jurisdiction founded merits, must be such case on the upon validity of the statute. the (d) follows: Section 88 is
The text of subject “Every foreign corporation to suit shall be person or a this State a resident of in this State any having place on in this State of business a usual arising contract made out of a of action cause liability done within for acts incurred this State doing foreign corporation State, is or not whether such ' j in this or has done business State.” by Chapter provision of the 504 was first enacted This unchanged since that 1937, remained it has Acts of changes in the laws Act made considerable time. That amenability foreign corporations relating to to of the changes Maryland, made some and also suit provisions process. In article entitled of an for service Corpora- Foreign Maryland over Courts “Jurisdiction of 1937”, L. R. Professor the 3 Md. tions Under Act of analysis pro- comprehensive presented of the a Reiblich dealing jurisdiction and of the constitutional visions thereby. suggested questions He several relative- raised ly to reduce minor to the new law order amendments danger or grounds, the of successful attacks on constitutional avoid in 1941 another and one amendment made Two in 1943 seem to have been directed this end. major of the Gen- others were included in the revision by Chapter Corporation of the 135 eral Laws effected
255 changes of of Acts 1951. these amended Section None (d) changes nor 88 did Mr. Reiblich recommend therein, though clearly recognized possibility of he attack it. constitutionality
The attack in on this case of (d) process 88 limited to of Section is considerations due Constitutions, under the Federal and State and on this jurisdiction question issue it is confined to the of the Astral, subject Maryland the facts the State Maryland objec- presented, here court. No to suit sufficiency provisions tion is made Maryland regard giving law with notice suit, and no is made under commerce clause attack Federal Constitution. subject (d) separability
Section clause Code reading (1951), (h) Article Section as follows: any provision “If application of this or the Article provision any person of such or circumstance shall validity invalid, held remainder of Article, applicability provision and the of such to other circumstances, persons thereby.” shall not affected *16 virtually (A identical clause was contained in Section By 1937.) Chapter of 504 of of the Acts reason of clause, any concerned with we are not factual situa- may agree presented. other tion than that here We appellant Maryland mailing that the mere of acceptance of not to an offer would be sufficient sustain brought against suit a here under the statute the chal- lenge process, of dispose due but that does not of this case.
Undoubtedly, comparatively we are novel field. (d) by jurisdiction Section 88 its terms extends over foreign corporations in suits or residents other persons having place Maryland a usual of business cover arising to causes of action from contracts made State, acts regardless or done in this of whether or not foreign corporation doing is or business has been doing discussing business in this State. In the due process aspect of says: this extension Professor Reiblich attempt corporations apparent
“This is an to extend to jurisdictional recently recognized power a basis of [citing persons Pawloski, natural Hess v. 274 U. S. referring Doherty Goodman, v. 294 U. S. comparison authorities] ; it in a to other but to extend yet recognized more extensive fashion than has as been any opinions courts. validity (d) there “As a bar to the of sub-division repeated effect statements of the courts stand ‘doing there in the absence ‘consent’ business’ that jurisdiction over the is no basis for the assertion foreign corporation. authority old do not as this new “The cases stand n They
development. not were decided under statutes attempted (and limit) to assert at same time arising jurisdiction of action out of the as causes They attempting particular were to assert act done. doing general jurisdiction personal on the based support a contact sufficient to it. corporations business as ** * question [the] extension to “The doing jurisdiction [of an acts on the act or based ‘doing (not amounting State, within but business’ arising, very act out of to causes of action limited by determining acts)] whether answered must be foreign subject corporation to it is unreasonable why apparent It such assertion is similar control. corporations any applied power reasonable as less applied to individuals.” than as juris- raising question or not whether such After kind of done within act diction extend concluding, Hess and on the basis of state and suggests personal Doherty cannot, it he cases that individual) (or foreign corporation jurisdiction over a arising out of an act done to causes of action *17 may properly “to the extent that be asserted the state regulatory con- exercise of the state’s it is a reasonable think, This, we involved.” all of the facts trol under closely approximates in International laid down the test
257 310, Washington, decided about Shoe Co. v. 326 U. S. years
seven later. fully
Pennoyer 714, longer Neff, states 95 no v. U. S. against non process applied of due rules as to suits Jersey, 242 resident Kane v .New U. S. individuals. firmly 160, 352, Pawloski, estab Hess 274 U. S. v. using
lished the rule that non-resident motorist highways of a other than own be sub state his jected suit of cause of that state on courts arising operation action of out his of a motor vehicle highways. (as case) Beginning on with its the Kane type required, of law which a condition as state, highways use of the appointment of the actual agent of a state official of a as non-resident motorist upon might served, process type whom the usual (as case) state law soon became in the Hess that under highways which the use of non-resident motorist’s equivalent the state was deemed the the actual appointment Doherty of such an official. v. & Co. Good man, 623, amenability 294 U. S. established the likewise carry suit within a state a non-resident individual ing through agent on state, process business an if agent there, on though is served his even the non-resident principal agent has not accept authorized the service process. Doherty In case, Farson, Co. Flexner & v. 289, explained 248 ground U. S. per that the upon son Whom service was made that case had ceased agent to be an of the non-resident individual defendant prior to the time when service was made him. Maryland validity
In making of our statute non- resident motorists amenable suits courts arising state on causes of action operation out their of motor in this upheld. vehicles Employ- state has been Liability Corp. Perkins, ers v. 169 181 Md. A. 436. Just Pennoyer dealing doctrine of v. Neff undergone limitation,
non-resident individuals has so has the doctrine of Ry. such cases Reading as Phila. & v.Co. McKibbin, Rosenberg S. Co., U. Bros. & Co., Inc. v. 516, relating Brown Curtis U. S.
258 jurisdiction
foreign corporations. no is The test necessarily solely longer the the or whether acts “doing foreign corporation state within the amount may the noted in this connection that It be business.” Maryland Corporation specificallyprovides Laws General doing constitute an isolated transaction shall not that clearly ). (Article (b) (6) This Section business. single foreign corporation engaging exempts in a a requirements qualify general from the transaction foreign corpora- agent, appoint a resident doing like- must meet. It an intrastate business tions foreign exempt “one-transaction” wise serves to Mary- amenability corporation to suit in from the broad “doing foreign corporations busi- which attaches land they duly qualify not. state, whether in this ness” points up field in which the narrowness It also foreign corporation is amenable “one-transaction” by Maryland a a resident is in suit suit —that Maryland having regular place person of business a a Mary- arising an done in contract made or act out a land. any motorist cases shattered
The non-resident have by single argument a transaction to the effect that amenability not be made the basis non-resident The occurred. where the transaction to suit state Doherty conten- has rendered untenable & Co. case cannot made a state serve tion that a contract within against that a non-resident for suit in state as the basis party to the contract. distinguishes ground appellant
The these cases they power, applications police its involve Doherty being upon & case exercise based Co. ap- concern with the of securities. The the state’s sale points pellant Supreme out no case decided single upheld Court has a suit such as based appellant contract, claims which the scope police power. From of such the absence authority, appellant argues power the' that the This, to entertain this suit state cannot sustained. think, necessary consequence. we is not a Supreme in Inter The rule announced Court n Washington, 310, is that ational Shoe Co. 326 U. S. v. *19 jurisdiction Maryland is which we believe the foreign corporation, to There be tested in case. the sought to local and amenabil which avoid both taxation ity suit, engaged systematic to in to local found be was state, and continued and hence that activities comparable not case. case is its facts to the instant hand, applied expressed was not On the other test foreign corporation in terms whether or not the “doing (See business” state. Thomas v. Hudson Co., 225.) contrary, 204 105 2d Md. A. On the Sales Supreme Court down a much laid broader test which we applicable believe to be here. The Court said: process only subject requires
“Due in that order to judgment personam, a in defendant a if he not be present territory forum, within the he have certain minimum it contacts with such the maintenance of play the suit not offend does ‘traditional notions fair * * justice’ and substantial *. “Finally, although single commission some corporate agent occasional acts a state sufficient impose obligation liability corporation an on the thought not been upon authority has confer the state it, Rosenberg Co., to enforce Bros. & v. Curtis Brown Co. 260 such U. S. other acts because of their nature quality and commission, and the circumstances their may deemed corporation sufficient to render the liable * * * to suit.
“It is evident that the criteria which we mark the boundary line between justify those activities which subjection corporation of a to suit and those which * * * do simply quantitative. not cannot be mechanical or process] That clause does contemplate [due that a may binding judgment state personam make against corporate an individual or defendant with which the contacts, state has no ties or Pennoyer relations. Cf. v. 260 * * * ; Asso S. Minnesota Commercial U. [95 714]
Neff Benn, 261 v. U. S. 140. ciation corporation exercises “But to' extent that a state, enjoys conducting it within a privilege of activities The of that state. protection of the laws and the benefits give obligations privilege rise exercise con- obligations or are arise out of so far as those procedure state, a within the nected with activities suit respond to a requires corporation which hardly instances, can, brought in most them to enforce to be undue.” be said actually turning upon only previously decided
The case Bay (d) is Johns v. State now Section what C., Md.), (D. Co., Supp. 89 Fed. Products Abrasive applied Judge upheld statute Chesnut Mary- liability incurred a tort claim based analyzed carefully Judge reviewed Chesnut land. *20 bearing that question. He concluded on the the cases motion, they facts, preliminary appeared on a the as doing corporations was of defendant one the non-resident Maryland engaging simply in one isolated more in than “doing though in transaction, it business” was Maryland. International particularly relied the He Scophony Corp., case. v. Co. United States Shoe by Judge Chesnut, is con- also referred to S.U. venue, jurisdiction, question of than with a rather cerned summary of the opinion contains this brief but the relating through amena- which theories transition bility foreign corporation particular a a to suit in of gone: jurisdiction rationaliza- have “The conventional ‘presence,’ equated sequence applied ‘found’ in tion ‘doing by agents there,’ to ‘of a character its business subjection juris- warranting of to the local inference ” diction.’ background against development It is this of validity (d), applied the of that Section 88 as law case, of must be determined. On the the facts this basis Maryland, with of contacts the State we find that of subject principal which were matter of the vessels the years), (and for here been here the contract were had representatives to in- of came here that one Astral’s them, by spect inspection a that this was followed visit by by Mary- representative him and of another Astral negotiations repre- land and between them and Boston’s sentatives, general agreement which reached as to a many price contract, of and as to terms of final the the including provision Maryland express an of the law that (changed law”) read final contract to “substantive controlling interpreta- should in the construction or contract, establishing provision tion of the and a for (though escrow fund here certain an material terms altered), provision of later the escrow were that being by after in contract executed Astral Panama Boston, by when in became effective executed this State physical embodying that the documents the contract were brought representative into this State Astral purpose executed, being for the their so that representative brought him also with and delivered to agent Maryland the escrow check cashier’s $80,000 to establish the escrow fund called for here, contract to be established a letter instruc- regard thereto, further, tion from with Astral that contract, inspected accordance Astral the ves- Baltimore, sels it sent to Boston at its office in Maryland vessels, acceptance a notification of of all three signed Maryland, prospective purchaser, that it as application Boston, seller, required make the Maritime Administration for transfer vessels, place performance is, place delivery contract —that *21 payment purchase vessels price and of the —was Maryland. (and things, All of negotiations these also some local regard between Astral and Boston with to the conditions imposed Administration, the Maritime the local char- acter of which unimpressive), seems us true, it is single related to transaction; what was but a but all told, they up add to considerable contact with this State
262 protection and the
and considerable reliance its laws question they in is afforded. The statute meaning police power, scope within the of a narrow of the regulating statutes, as the non-resident motorist statutes Pennsylvania (as in the sale of securities and statutes 93, Mining Co., Fire 243 Ins. Co. v. Gold Issue U. S. 643) Virginia, 339 Travelers Health Ins. Co. v. U. S. regulating clearly the insurance business are. it that
Within the fields these cases we take validity subjecting non-residents to local suits statutes Beyond limits, question under the is settled. those sufficiency rule of the International Co. case is the Shoe subjecting of the the non-resi local contacts to warrant may foreign dent suit. We note that in the case of may corporations rigorous a less standard suffice than individuals, in the case of for the reason that a state generally power without an individual non exclude doing making from business or contracts resident state, may generally completely foreign exclude but may only subject admit them to conditions. corporations.^or op. cit., at 3 Md. Law Review 71. See Reiblich, type pertinent The same of considerations under as are applicable the doctrine of non conveniens are forum balancing respective plaintiff interests of the local foreign corporation, determining and in whether with the state are sufficient to war- the latter’s contacts being These its held accountable a local suit. rant convenience, though lightly dismissed considerations statutory recogni- appellant, have been accorded U.S.C.A., 28, (a), enacted in tion in Title Section Maryland (b) and in Article Section Code, application con- enacted in 1951. The of such present from the case be seen siderations every one of the witnesses who testified was fact of them or resident the United States. Five citizen York, Baltimore, employed in one in New were lived or Washington and one in New All but Orleans. one less two hundred miles of the were within than the last Panama, no witness from place of There was trial.
263 only documentary joint in the contained the evidence appendix produced which from there was small in easily procurable volume It and transmissible. joint pages appendix covers two and a half in of a seventy-five pages. hundred and Reiblich, Review,
Professor in his article in 3 Md. Law present at concluded his discussion Section (d) 88 process by saying “represents and due it policy against a sound social and should be sustainable process objection.” due the support In of this view he upon by acceptance the of such a rule coun- relied other tries, upon affording in state’s interest to its citizens litigating disputes convenience of in own their state growing seeing out contracts made and in there regards the contract is controlled which it law as applicable, plaintiff the convenience of the as place being tip of trial sufficient to the scales of process favor, due in his view of the defendant’s having plaintiff’s jurisdiction come to make a contract All present with him. of these factors are (the instant case and of them applicability one Maryland law) specifically provided is for the con- ' n ' > - ' \ tract.
A note in 38 Law Columbia Review entitled Maryland Corporation “Revision Law: An Ad- vance,” dealing jurisdictional with the and service process provisions Chapter 504 the Acts of 1937 applicable foreign corporations, were among things, (d) other described subsection of what is now “unique” para- Section and concluded with this graph :
“As the ‘contracts made’ state, within it is equally an jurisdiction’, ‘act within the but no case point. jurisdiction has been decided on But as over may justified the act done the state because ought the state to have some measure of rule over activi precincts, jurisdiction ties within its so over contracts ground supportable that if the state make contract, may the law of properly lay prior it claim to protection administering As rights the law. *23 surely no distinction between residents, could there its The con harm.* causing or of contractual of tort the embryonic, is at best cept in the subsection embodied expression in cases.” find the soon but Co., Bay Products Abrasive v. State A note on Johns 500-502, the approves Law Review supra, in 64 Harvard “Although court care- the states: case and result that factual the fully approval of the statute limited its state, the within of continuous solicitation circumstance slight the solicitation without that even it would seem Maryland statutory has that present, declaration solitary arising out of jurisdiction actions to entertain process.” This note due satisfies state acts development interesting reference to the in its is also foreign amenability regard of a of the law signi- “doing as local for business” corporation to a suit manifesting “cor- fying implied consent to suit an to the somewhat presence” and in its reference porate being motorist non-resident character of the fictional agent appointed local official as his a deemed to have say: goes on to then process. The note for service in appears ended emphasis to have “But the fictional process in with the basic due more accord of a rule favor ** *,” citing case. International Shoe Co. concept in disappearance of fictional consent complete The opinion is shown motorist cases the non-resident by Mr. Frank- Supreme Justice delivered Court Co., Railroad 346 Olberding Illinois Central in v. furter pretense fictional consent no There is 338. U. S. law, culminating case, the course instant Olberding case and International Shoe Co. consent, fictional, clear that no actual it case makes (The Olberding jurisdiction. case to sustain needed showing that a of consent as the absence turned on motorist, though court amenable to suit in a non-resident gently injures bill with [*] “Suppose, a Maryland a pedestrian example, garage.” a driver Maryland for and at a foreign same trucking time runs corporation up a negli- large occurred, con- the state where the accident had court hence had sented to be sued a state and statute.) not waived the federal venue Corp., Smyth Improvement In v. Twin 116 Vt. State 569, Supreme upheld 664, 2d Court of Vermont A. (d) and statute somewhat similar Section 88 jurisdiction brought by resi- sustained in a tort case growing dent of an Vermont out of isolated transaction. finding, require, There was no nor did the statute giving inherently the act rise to such a suit be an dangerous contrary nature. The seems have been fact, negligently damaging since the action was plaintiff’s roof of the home. Kincannon,
See also Gillioz v. 213 Ark. 214 W. S. 2d also a tort case. nature of the The act does *24 appear important, not to have been considered and the police power was considered to warrant the statute. (As possible police power, Sligh breadth of the see Kirkwood, question v. 237 U. S. at 59. This raises necessary which do attempt we not think it for to us case.) answer in this We having are aware of the American Law Institute’s position question declined to present. take a on the here quarrel We have no with prudent the for Institute its required reluctance to rush in tread, where we feel but we do how its see refusal to do support so can either side. opinion
It is our on that the facts of case as we above, them have set forth the contacts of Astral with Maryland the State of were sufficient to sustain a suit against it in this State under the of process test due stated International Shoe Washington, Co. v.
U. S. 310. question
The final is whether the upon conditions the imposed by transfer of the vessels the Maritime Admin- * * * beyond went istration the “conditions respect with disposition any to the future use and of of all these which agreement vessels” to Astral assented under the February 19, dated 1952. The conditions in issue are frigates made requiring of to be
(1) conversion that any (2) prohibiting trans- shipyard, that in an American Astral, (3) providing that interest fer stock respect each damages $25,000 in liquidated for re- the related of conditions and vessel for breach security in the a'surety quirement or other for bond vessel) per ($25,000 aggregate $75,000 amount of guarantee conditions. to all adherence the transfer matter conditions
The might imposed by was not mentioned the United be States it draft draft contract. Under that in the first recognized approval States United was that required Astral was to obtain it would be provision was reversed cooperation of Boston. This agreement, that Boston had learned because the final Boston obtain consent. would such the seller have would, probability, all that conditions also learned 11th, February during the imposed; and conference brought up, counsel had the matter Astral’s after Boston Administration had if the Maritime ascertained transfer, authority would be over some conditions inviting seeming imposed. The to avoid wish imposition splitting reason invite their agreements, two and doubtless it was also into contract testimony effect) (though no there is the reason subject. making inquiry party direct neither agreement parties into Instead, wrote a state- which, imposed, would kinds of conditions if ment of the *25 contract. avoid statutory relating study pertinent provisions A Maritime approval to Administration —Sections 46, of Title U.S.C.A.—and of the 835 and 839 Presidential Emergency, of a National dated December Proclamation brought statutory provisions which these into light operation throws no kind of conditions expected. might required have which been Section 835 approval the Maritime Administration for the proposed body transfer and Section 839 authorized that grant “absolutely approval to its either such ** * prescribes.” as 13 of conditions Section [it] application approval for such which Boston executed signed give warning and Astral also did that conditions might only against imposed, spoke be but restrictions larger trading ports vessels with for United States some period foreign specified registry, after transfer to other conditions the benefit the American mer- surety might chant marine. It also that stated bond required performance be secure “such conditions”— meaning presumably those mentioned. might thus in the dark as what the conditions
While agreement parties turn made an out protection risk and some to each involved some side. respect risk of Astral took the whatever conditions with disposition to the future use and of the vessels the might impose, Administration but assumed Maritime it Boston, no risk as conditions not within that field. part, gained protection any
its toas conditions within agreed having field took the risk the contract avoided if the conditions went that outside field. proceeding analyze any
Before of the conditions actually may imposed, we contract, observe that terms, according its to be construed to the law of Maryland. Neither the impelled reasons which have adopt the Maritime Administration the conditions prescribed which it nor by any views entertained proper interpretation of its officials as to the of terms in the used contract between Astral and Boston can be considered as determinative of the law of this State regard meaning of the contract. Certain expressed views in 1952 in a letter from the then General Counsel of the have, effect, Maritime Administration argument adopted been of Boston. We deem it unnecessary to determine whether prop- letter erly evidence, admitted but do not wish to be under- by this regarding stood reference to it as it properly if admitted. Even the words construed in that letter acquired meaning had as a matter of usage by the Administration, hardly Maritime we see how usage *26 268 meaning of contract
(if existed) could the it affect nothing it, could be parties who knew of or between Rode, binding 137 upon them. Trust Co. v. Mercantile 362, 370, A. 574. also Restatement Md. See of (a) Contracts, (b) and Comment Law Section 235 of thereon. against regard transfer to restriction
With Astral, prior of the consent stock without Administration, during Emergen- National Maritime 16, 1950, cy by proclaimed the President December hearing argued, and the trial court after Boston held, respect a condition merits this was with on the disposition vessels, of the use and because ways— in two corporation dispose its assets by by a sale of the stock a sale the assets either reasoning adopting the trial corporation. In the fact that a sale court to have overlooked seems transferring corporate is made control of assets stock by very cases) or more stock- (except unusual one by stock, not made who own the is holders corporation. Maritime Administration of the
The General Counsel by different the same result a somewhat in 1952 reached presses. argument, also He stated: “This which Boston the holders of stock condition is attached because only directly corporation not affect the character of a directly buyer corporate position but also are in a disposition of the vessel future use and control foreign given. permission to Ob- for which transfer control, of a ma- viously, whether virtue the stock interest, minority jority ownership virtue directly affecting the future use and dis- factor is a position the vessels.” sufficient, view, arguments is in our of these
Neither simple fact that the contract Astral binds overcome respect to the future use conditions assent vessels, says nothing but all disposition of the at If intended stock. such transfers were about transfers of they easily could have been mentioned. covered *27 Astral, and corporation, contract a The between Boston, corporation, not and its stock- a between Astral holders, side, A Boston the other. on the one and on cannot, corporation of motion without au- its own and thority do, enter into a valid from its stockholders so restricting right contract to trans- of its stockholders least, it under law fer their stock. At cannot do so Maryland, and if the law of Panama is different point, proof no us. Astral there is thereof before dealings agreement made no such in its with Boston gave agreement no commitment and to obtain such an course, might from its stockholders. Of it have sub- jected liability others, itself acts but we do not find that it undertook to do so. ownership
The difference between of shares of stock corporation ownership in proportionate a and of a share corporation, requires elaboration; the assets of the no by nor corporation does the difference between the sale a by of assets which it owns and the sale one or more corporation they stockholders of shares in True, corporate own. either a sale of assets or the controlling sale a interest in corporation stock of the owning may accomplish assets the transfer of con- corporate assets, trol over but that still does not make a disposition transfer or of shares of corpora- stock in a owning tion disposition a vessel a or transfer of the connection, may vessel. In this passing it be in noted stating the Maritime Administration’s letter its consent and speaks the conditions single thereto in a * * * paragraph “change of a in ownership of said “any vessels” and also transfer of stock interest [Astral],” corporation said which indicates to us that they regarded things. were as two different argument any change
Boston’s in stock owner- may change ship policy lead to a change hence to a disposition by the use vessels owned Astral has apparent logical almost stopping point. no Anything may which affects Astral affect the use for which it employ think it desirable to ships, its and hence by any supported virtually could be the same condition change logic upon -\yhich contention as Boston’s money borrowing example, ownership For rests. stock insisting change upon might some lead to creditor’s relating to in Astral’s use its vessels. Conditions themselves, uses, not to actual uses influences but meaning not, judgment, within the are in our now us. New stockholder clause of the contract before control of Astral could authorize control creditor prescribed depart conditions Astral from agreed Astral Administration Maritime might employed vessel uses for which Astral’s *28 vessels. We regard or charter with to sale or use respect with to future phrase “conditions take the any to mean disposition of of these vessels” all by disposition regard to their use or with conditions acquiring by any owner or transferee Astral or other Astral, remotely mean- directly and not as from them might any possibly the use ing which affect conditions might or transferee which or a future owner to Astral them, regardless whether or not use put such wish to any by by imposed the Maritime prohibited condition Administration. already engaged business, in the ves- Astral was
Since assets, certainly its sole not have constituted would sels any against transfer of shares of restriction existing might deprive two stockholders its stock quite having a value assets to realize of freedom ownership of to its these attributable apart from vessels. objection (nor may Astral made no noted that
It be successfully) condi- have done so to could do we think it opera- prohibited the use the vessels tions which flag American vessels under certain prohibited to tions re- orders or conditions Department of Commerce or charter of the vessels the United sale quiring the American-owned terms as vessels. the same States directly pertained to the use and dis- conditions These by thereof, owner and were vessels position
271 type did assent of conditions to Astral within the its contract with Boston. under construction, guise not,
The court will under the parties have rewrite the contract which the made. Joffe 165, Niagara Company, Md. 81 v. Fire Insurance 116 Meyer, 286; A. Nor 125 Md. 18. Cowan v. A. proof reform will court the contract the absence precisely real mutual mistake and of what was the agreement. England Gardiner, 142 A. Md. v. authority on these 625. Further citation established only would rules cumulative. unnecessary prolong opinion
It is further discussing extensively or not other conditions whether objected respect Astral are conditions with disposition the future use and of the vessels. We observe, however, regard do not “use” that we term including “conversion,” of a since the conversion estimation, use, vessel, preparation our is a but is not a use itself. There is also at least a serious question place as to whether or not the of conversion bring bears such a relation to future use as to it within respect scope of to future use. conditions On hand, position on this does the other Astral’s matter entirely appear consistent in view of have been Department. There application filed with the State *29 questions liquidated to the are also serious whether damages to, provision within the conditions assented security provisions. and also the or other Insofar bond provide making a reasonable method of as these effective scope within of the conditions are the conditions they assented, would, think, to which Astral we fall agreed conditions; may the and it be noted that application 13 of Section the Maritime Adminis- surety gave guarantee tration that a notice bond might performance of at least some conditions re- be quired. Insofar, however, provisions pertain as these agreed field, they conditions outside the must also fall outside it. imposed primary conditions of the
Since at least one by appurtenant Administration and the the Maritime security damages regard liquidated provisions with and beyond assented, which Astral conditions to went any obligation discharged purchase from Astral judgment plaintiff vessels, for the must be and the ap- judgment for the must be entered reversed and pellant. Judgment reversed, trial, new without a
\ judgment appellant, with
costs. J., following Henderson, opinion, delivered the dis- Hammond, J., senting part, in which concurred. agree majority Judge I with the of the Hammond and jurisdiction of that the trial court obtained Court subject person defendant, matter and the of the objection to that is no valid constitutional there do not action a contract made this state. We agree, however, the defendant was relieved of its that obligation purchase complete because of con- imposed the Maritime that dition Administration' "regis- change ownership be no there should * * * try or “transfer of stock interest in the vessels persons States, [Astral], of the citizens United approval prior of the Adminis- Maritime without the tration”. original merely stipu- noted contract
It be paid fund was to on de- escrow over lated that the livery covering proper “after sale the vessels bills permission the transfer ob- has been Government agreement Paragraph supplemental 2 of the tained.” approval provided of the transfer the Maritime * * * “subject prescribed to conditions Administration disposition respect or all to future use and approval amount to would United vessels” these The Maritime Administration did Government. States. approve If assume that the clause de- transfer. we might general scribing of the conditions that nature *30 prescribed precedent, legal a condition in be was stipulation that condition of kind not effect a a clause, by quoted prescribed, if covered would avoid contract, we think it no involves distortion of lan- * * * guage respect dispo- to hold “with that future vessels, of” the would at sition include least a transfer controlling that, corporation interest to aliens a form, change in if not in would effect in substance ownership any event, In the vessels. we think unambiguous phrase is not so clear and as to forbid surrounding resort circumstances as an aid interpretation. parties knew,
It from the seems clear record that both known, or should have that such a condition cus was tomarily by imposed Administration, the Maritime in generally, connection with transfers of domestic vessels particular. Indeed, in and war vessels the case by corporations, domestic vessels owned the federal stat requires approval ute the Maritime Administration corporate of transfers of stock such owners to aliens. 46, 835, Title Section U.S.C.. See also Sections 802 and Corp. S., (2) construed Meacham v. U. 207 F. 543, (C.A. 4th) (Soper, J.). Moreover, ap plication Administration, form of the Maritime executed by Astral, upon referred to these sections and called give names, addresses, nationality Astral per centage light of stock owned its stockholders. In the circumstances, credulity of these it suppose strains phrase comprehend intended the that Astral a con might dition on use as banana carriers that frustrate sale, purpose comprehend whole of the but not to customary limitation future transfers of stock that properly scope regulatory powers within the of the connection, In Maritime Administration. it noted the real motive that led Astral to repudiation of the simple sale was the fact converting cost vessels into banana carriers was greatly This, of what it excess had estimated.
course, judgment was an error of business that would *31 legal ground escape no for relief. cannot
afford We objection that the to the restriction as future conclusion pretext, going transfers a mere stock bargain, condition was well essence parties use of contemplation * * * disposition”. think respect “with We words judgment of court should be affirmed. the trial
DEAN v. STATE Term, [No. October 1953.]