Arundel Crane Service, Inc. v. Thew Shovel Co.

• Decision Date: 23 October 1957
• Docket Number: No. 12,12
• Citation: 214 Md. 387,135 A.2d 428
• Parties: ARUNDEL CRANE SERVICE, Inc., Sebastian Perrera and David Feldman v. THEW SHOVEL COMPANY.
• Court: Maryland Court of Appeals

Page 387

214 Md. 387

135 A.2d 428

ARUNDEL CRANE SERVICE, Inc., Sebastian Perrera and David Feldman v. THEW SHOVEL COMPANY.

No. 12.

Court of Appeals of Maryland.

Oct. 23, 1957.

Robert D. Bartlett, Baltimore (A. Adgate Duer, Baltimore, on the brief), for Arundel Crane Service, Inc., by Robert E. Coughlan, Jr., Baltimore (Joel J. Hochman and J. Marshall Neel, Baltimore, on the brief), for Sebastian Perrera et al.; (Franklin Goldstein and Burke, Gerber & Wilen, Baltimore, on the brief), for David Feldman.

Herbert F. Murray, Baltimore (Clater W. Smith and Clark, Smith & Prendergast, Baltimore, on the brief), for Thew Shovel Co., appellee.

Before BRUNE, C. J., and COLLINS, HENDERSON, HAMMOND and PRESCOTT, JJ.

COLLINS, Judge.

This case involves the question of whether a foreign corporation was 'doing business' in Maryland, within the meaning of Code 1951, Article 23, Section 88(a).

On August 17, 1953, Sebastian Perrera was injured by the fall of a boom of a Lorain Mobile Crane owned and operated by Arundel Crane Service, Inc., (Arundel). Perrera originally instituted suit against Arundel in the Circuit Court for Anne Arundel County. There, Arundel endeavored to make the Thew Shovel Company, a body corporate (Thew), a third party defendant on the alleged ground that the Lorain Crane had been purchased from Thew and had a latent defect not known to Arundel.

Service in the third party action in Anne Arundel County was made upon Freeland Equipment Company, Inc. (Freeland), a Maryland corporation of Baltimore, under the claim that Thew was doing business in Maryland through Freeland as its corporate agent. Thew then filed a motion to quash the summons and to dismiss the case against it for lack of jurisdiction. After hearing, the Circuit Court for Anne Arundel County granted Thew's motion and entered judgment of Non Pros. in favor of Thew on the ground that it was a non-resident corporation not doing business in Maryland. An appeal from that judgment by Arundel was afterwards withdrawn.

Perrera then filed the present action in the Superior Court of Baltimore City against Arundel, Lorain Shovel and Crane, a body corporate, and Thew. David Feldman also filed in the same court a suit against Arundel, Lorain, and Thew for property damage arising out of the same accident. These suits were consolidated. Thew filed a motion to quash service and to dismiss the cases for lack of jurisdiction. By stipulation between the parties the proceedings in the former action in Anne Arundel County and the depositions of Thurl S. Freeland, President of Freeland, and Fred J. Broad, District Sales Manager for Thew in its Philadelphia territory, were admitted in evidence in the case. In the Perrera action Thew also urged that the judgment of Non Pros. in the original suit filed by Perrera in Anne Arundel County was res judicata of the present action. The Superior Court, after hearings in both cases, held that the attempted service was invalid because Thew was not doing business in Maryland. The present appeals by Feldman and Perrera, plaintiffs, and Arundel, defendant, the three appellants, against Lorain and Thew, defendants, appellees, are from the judgments of Non Pros. entered on that ruling.

Thew, in its motion to quash, alleged that there was no such corporation as Lorain Shovel and Crane. No evidence was offered by the plaintiffs that such a corporation existed. The Non Pros. judgments entered below were in favor of Thew alone. It therefore appears that Lorain is not a party to these appeals.

The facts, for the purposes of this case, follow. Thew is an Ohio corporation with its principal office in Lorain, Ohio. It manufactures heavy machinery such as cranes, power shovels, road machinery and sells under the trade name of 'Lorain'. For at least twenty-five years it has had a distributor's agreement with Freeland, whose office and store are at 1600 South Caton Avenue, Baltimore. The present contract, dated April 16, 1951, provides, among other things, that Freeland shall not be construed as the agent of Thew. None of the officers or employees of Freeland are compensated by Thew. Freeland's territory includes Maryland with the exception of Allegany and Garrett Counties, three counties in West Virginia, the two counties on the eastern shore of Virginia, and the District of Columbia. A Pittsburgh company is distributor for Thew in Allegany and Garrett Counties. Freeland is a contractor and dealer in industrial equipment and buys and sells contractors' and industrial equipment including power shovels, cranes and other equipment of that nature. It obtains such equipment from the manufacturers. Freeland takes orders for the equipment through its three salesmen and then buys this equipment and various parts at a standard discount from Thew. No employee of Thew sells equipment in Freeland's territory. Freeland makes out regular purchase orders on its own purchase forms, mails them to Thew in Ohio, either directly or through Mr. Broad, District Manager of Thew, at his home or office in Wayne, Pennsylvania. The orders are made in the name of Freeland and accepted at Lorain, Ohio. Thew acknowledges receipt of the orders to Freeland from Ohio. Freeland sells each year from fifteen to twenty units of Thew equipment. The equipment is shipped by Thew directly to Freeland's customers. These customers take the equipment off flat cars, under the supervision of Freeland, and truck it to its destination. Freeland sends its servicemen to instruct the customers in the assembly of the equipment, how to operate it, and also services it with its own servicemen. Freeland is billed by Thew and Freeland bills the customer. Freeland takes the credit risk on the purchasers. Freeland acts as distributor for many companies other than Thew.

No office is maintained by Thew in Maryland and it has no personnel here. None of its officers or directors resides in Maryland. Thew is listed in the regular and classified advertising sections of the Baltimore telephone directory under the same telephone number as Freeland. This listing was started by Freeland about twenty-six years ago as a medium of advertising and Freeland has paid for this. Thew's District Manager did not know of this telephone listing. In Freeland's show window are signs 'Lorain' on four plates which Freeland took out of its parts department. Freeland purchases parts from Thew which include these plates. Freeland orders circulars advertising Thew equipment from Thew and sends them out to prospective customers. Freeland is not supervised in any manner by Thew nor does Thew make any inspection of Freeland's books or business records. Thew's District Sales Manager comes to Maryland about twice a month to talk to the President of Freeland and give 'pep talks' to its salesmen. Thew does no newspaper advertising in Maryland.

Mr. Broad's territory includes eastern Pennsylvania, southern New Jersey, Delaware, Maryland, District of Columbia, Virginia, and twelve counties in West Virginia. His duties are to act as liaison man between the distributors in his territory and Thew. He passes information to Freeland regarding change and design of equipment. Occasionally some of Freeland's purchase orders pass through Mr. Broad in Wayne Pennsylvania, where he edits them for errors in item numbers and price and sends them to Thew. He also sees prospective customers of Freeland with members of Freeland. If Thew receives an inquiry from Freeland's territory it is referred to Freeland.

Thew reserves the right to sell directly to the military departments of the Government. Sales to the Government are handled by Thew from an office which it maintains in Washington. If Government equipment breaks down in the vicinity of Washington, Freeland could be called to repair it. The Washington office maintains no personnel to service and take care of equipment.

The sales price of the motor crane involved in this case sold by Freeland to Arundel was $44,334 and $2,000 for extra equipment. Before purchasing, representatives of Arundel flew to Lorain, Ohio, in company with a representative of Freeland in the morning, viewed the equipment, and flew back that night. After the hoisting drum of the crane broke and the accident happened to Perrera, Freeland was notified. Freeland took the two broken parts of the drum and shipped them to Thew at Lorain. Later representatives of Arundel and Freeland went to Ohio to talk to personnel of Thew about the break in the drum. At that time the broken pieces of equipment had disappeared. This...