Chesapeake Supply & Equipment Co. v. Manitowoc Engineering Corp.

• Decision Date: 06 November 1963
• Docket Number: No. 7,7
• Citation: 232 Md. 555,194 A.2d 624
• Parties: CHESAPEAKE SUPPLY & EQUIPMENT CO. and R. E. Linder Steel Erection Co., Inc., etc. v. MANITOWOC ENGINEERING CORPORATION.
• Court: Maryland Court of Appeals

Page 555

232 Md. 555

194 A.2d 624

CHESAPEAKE SUPPLY & EQUIPMENT CO. and R. E. Linder Steel

Erection Co., Inc., etc. v. MANITOWOC ENGINEERING CORPORATION.

No. 7.

Court of Appeals of Maryland.

Nov. 6, 1963.

Mitchell Stevan, Baltimore (Sagner, Stevan & Harris, Baltimore, on the brief), for Chesapeake Supply & Equipment Co.

J. Royall Tippett, Jr., Baltimore (Hinkley & Singley, Baltimore, on the brief), for R. E. Linder Steel Erection Co., Inc.

William O. Doub, Niles, Barton, Gans & Markell, Baltimore, on the brief, for Royal Insurance Co., Ltd.

Norman E. Burke and Benjamin C. Howard, Baltimore (Miles & Stockbridge, Baltimore, on the brief), for appellee.

Before BRUNE, C. J., and HENDERSON, HAMMOND, PRESCOTT, HORNEY, MARBURY and SYBERT, JJ.

HORNEY, Judge.

The question presented on these appeals is whether a Wisconsin corporation that manufactured and sold mobile truck cranes through a Maryland distributor to purchasers in this State is amenable to the suits of the distributor and a purchaser, either because the foreign corporation was doing business in Maryland or because the contract between the parties was made here.

The original action was instituted by R. E. Linder Steel Erection Company, Inc. (Linder or purchaser), a Maryland corporation, to the use and benefit of itself and its insurer against the Chesapeake Supply and Equipment Company (Chesapeake or distributor), another Maryland corporation, for damages resulting from the collapse of a Manitowoc crane purchased by Linder through the distributor. Chesapeake impleaded the Manitowoc Engineering Corporation (Manitowoc or manufacturer) as a third party, and Linder amended the action to join Manitowoc as a defendant. Manitowoc appeared and moved to quash the writs of summons for lack of jurisdiction. The appeal is from the judgments of non pros entered by the lower court upon its granting of the motions to quash.

Manitowoc is a manufacturer of heavy equipment with its principal office and manufacturing facilities in Manitowoc, Wisconsin, and sells is products through distributorship agreements with local retail dealers. During the period between October of 1956 and July of 1961, Manitowoc entered into three such agreements (all of which were similar though not identical) with Chesapeake, which had its principal place of business in Baltimore City. Besides being a local distributor for Manitowoc, Chesapeake sold heavy equipment for some twenty other manufacturers.

The distributorship agreements provided in pertinent part that Chesapeake was not the agent of Manitowoc; that all orders taken by Chesapeake were to be submitted, together with a report on the financial condition of the purchaser, to Manitowoc for final acceptance or rejection; that Manitowoc had the right to fix the price and terms on which all sales were to be made by Chesapeake and no sales were to be made on any other terms and conditions; and that Chesapeake was to stock an adequate supply of replacement parts for servicing the territory allotted to it by Manitowoc, which included all of Maryland except Alleghany and Garrett counties, eight counties (reduced to four in 1960) in Virginia, three counties in West Virginia and the District of Columbia.

In January of 1957, Chesapeake entered into negotiations with Linder for the sale of a crane. As a result of a proposal made by Chesapeake and accepted by Linder on January 21, 1957, Chesapeake sent Manitowoc on January 28, 1957, a written purchase order for a crane, in which neither the price nor the terms of sale were mentioned. Manitowoc, acting in accordance with the distributorship agreement then in force, declined to 'bill' or accept the order until it had been paid a deposit of 10% and had been assured that payment of the balance of the purchase price would be made on presentation of sight draft with bill of lading attached. Thereafter, the negotiations between Chesapeake and Linder having been resumed, certain changes were made in some of the specifications relating to the crane which entailed an increase in the original purchase price quoted by the distributor to the purchaser in the first proposal. While the further preliminary negotiations were in progress between the distributor and the purchaser, the distributor communicated frequently with the manufacturer by mail, telephone and telegraph concerning the purchase price and terms of sale and with respect to expediting the order for the crane to meet the shipping date promised by the distributor. Finally, the revised specifications and purchase price were restated in a second proposal made by Chesapeake and accepted by Linder on February 25, 1957. On the same day, the distributor, in a letter to the manufacturer, confirmed the telecommunication revisions of the original purchase order, enclosed a check for the required 10% deposit, advised the manufacturer that the purchaser had agreed to pay the balance upon presentation of sight draft at its bank, ¹ and instructed shipment of the crane by fast freight direct to the purchaser instead of to the distributor as previously directed.

Linder's revised offer to purchase the crane was not accepted by Manitowoc in writing and the record is silent as to when the construction or assembling ² of it was commenced. However, work thereon was in progress, and was nearing completion, when the president of Linder and a representative of Chesapeake visited the Manitowoc plant on March 5, 1957, to inspect the crane before it was shipped. The crane, having been shipped f. o. b. Manitowoc on March 7, 1957, arrived in Baltimore on March 25th, and Linder paid the sight draft and the freight due.

When the crane was delivered in Baltimore, an employee of Manitowoc was present and helped unload and reassemble it and instructed Linder's operator how to use it. Having done so, the employee immediately left the state. In May of 1957, after the crane had collapsed, another Manitowocemployee helped repair the damaged crane. The repairman came to Baltimore at the request of Chesapeake and was paid by it.

In February of 1959, Chesapeake sold another Manitowoc crane to the Arundel Corporation. During the preliminary negotiations for the sale, a district manager for Manitowoc residing in Pennsylvania (who often visited Chesapeake 'just to make Chesapeake conscious of Manitowoc') came into Maryland and assisted in negotiating the sale. Other than not requiring a deposit and payment of balance on sight draft and shipment to Chesapeake, the sale to Arundel was accomplished in substantially the same manner as the sale to Linder. Upon delivery of the Arundel crane, an employee of Manitowoc was again present to supervise unloading and assembly, and to instruct Arundel's operator, after which the employee left the state.

The underlying controversy concerning the jurisdiction of the lower court over the foreign corporation arose when the original parties to this action attempted to bring Manitowoc into the action under the rule relating to third-party practice. This presents the questions on appeal (i) as to whether the foreign corporation was 'doing business' in Maryland and (ii) as to whether the contract was 'made' in this State.

(i)

We think that Manitowoc was not 'doing business' in this State within the meaning of Code (1957), Art. 23, § 92(a).

The general rule is that a foreign corporation is doing business within a state when it transacts some substantial part of its ordinary business therein. Cases (other than those hereinafter cited) which have arisen under what is now § 92(a), supra, include, among others, Crook v. Girard Iron & Metal Co., 87 Md. 138, 39 A. 94 (1898); Central of Georgia R. Co. v. Eichberg, 107 Md. 363, 68 A. 690, 14 L.R.A.,N.S., 389 (1908); Stewart Fruit Co. v. Chicago, M. & St. P. R. Co., 143 Md. 56, 121 A. 837 (1923); Carter v. Reardon-Smith Line, 148 Md. 545, 129 A. 839 (1925); Kahn v. Maico Co., 216 F.2d 233 (C.A.4th 1954); and Johns v. Bay State Abrasive Products Co., 89 F.Supp. 654 (D.C.Md.1950). In State to use of Bickel v. Pennsylvania Steel Co., 123 Md. 212, 218, 91 A. 136 (1914), it was said that the question whether or not a foreign corporation is doing business within a state 'must be largely determined upon the facts of each individual case.' Necessarily, this requires careful consideration of the nature and extent of the business activities conducted by or on behalf of the foreign corporation in the forum state. Blount v. Peerless Chemicals (P.R.), 316 F.2d 695 (C.A.2nd 1963).

When this is done in the instant case, it is at once apparent that the holding in the case of Feldman v. Thew Shovel Co., 214 Md. 387, 135 A.2d 428 (1957), must control the decision in this case on the point of law presently being considered. As we see it, the factual situation in Thew was so similar to the factual situation here that it is almost impossible to rationally distinguish the cases on the facts. Indeed, a comparative analysis of the methods of operation employed by both corporations in making sales of their products in Maryland were, for the most part, strikingly identical. There are, of course, some variations between the factual situations in the two cases, but in some instances it appears that Manitowoc had even less contacts with this jurisdiction than did Thew, particularly with respect to the number of sales made within specified yearly periods. On the whole the facts in Thew and in this case are so analogous that it would be tautological to repeat them. Nor would it serve any useful purpose to compare the facts in this case with similar facts in the Thew case.

With respect to the claims of the appellants that certain activities on the part of the appellee constituted doing business in this State, we deem it sufficient to say that we find nothing in the record to show that Manitowoc exercised such domination and control over Chesapeake as would bring the activities of Manitowoc within the doctrine of Thomas v. Hudson...