Beaty v. MS STEEL COMPANY

• Decision Date: 05 December 1967
• Docket Number: Civ. No. 18001,18002.
• Citation: 276 F. Supp. 259
• Parties: Melvin F. BEATY, to his own use and to the use of United States Fidelity and Guaranty Company v. M. S. STEEL COMPANY, Inc. Raymond A. GRAINGER, to his own use and to the use of United States Fidelity and Guaranty Company v. M. S. STEEL COMPANY, Inc.
• Court: U.S. District Court — District of Maryland

276 F. Supp. 259

Melvin F. BEATY, to his own use and to the use of United States Fidelity and Guaranty Company

v.

M. S. STEEL COMPANY, Inc.

Raymond A. GRAINGER, to his own use and to the use of United States Fidelity and Guaranty Company

v.

M. S. STEEL COMPANY, Inc.

Civ. Nos. 18001, 18002.

United States District Court D. Maryland.

December 5, 1967.

Sidney Blum and William H. Hicks, Baltimore, Md., for plaintiffs.

Patrick A. O'Doherty, Baltimore, Md., for defendant.

HARVEY, District Judge:

In Hardy v. Rekab, Inc., D.C., 266 F. Supp. 508 (D.Md.1967), Judge Kaufman, pursuant to the provisions of Rule 4(e) of the Federal Rules of Civil Procedure and the Maryland "long arm" statute, § 96, Art. 75, Maryland Annotated Code (1965 Repl. Vol.),¹ upheld this Court's diversity jurisdiction over an Oregon manufacturer which sold an amusement ride within the state of Maryland. The pending two cases involve the applicability of the same Maryland statute to a foreign manufacturer of fabricated bar joists being installed at a construction site at Sparrows Point, Maryland.

The plaintiff in the Hardy case was a minor child who sought damages from both the owner of a Maryland amusement park and the Oregon manufacturer for personal injuries sustained as the result of a ride on an amusement concession known as a "Paratrooper." As to the Oregon manufacturer, the complaint charged in six separate counts various acts of negligence, breach of warranty and strict liability. Allegations in two of the counts that the foreign manufacturer assembled, repaired and serviced the ride were found by this Court sufficient to support jurisdiction under § 96(a) (3) of Article 75. Jurisdiction of the other four counts was upheld under § 96(a) (1), in view of affidavits filed in the case indicating that the foreign manufacturer during the period from 1957 to 1963 had sold five amusement devices for use in Maryland, that in at least two instances delivery was made in Maryland partially by such manufacturer, and that in at least one instance a representative or employee of such manufacturer supervised the installation in Maryland. This Court further held that jurisdiction over this foreign manufacturer existed with regard to three of these counts and perhaps also as to the fourth under § 96(a) (3) or § 96(a) (4) or both.

In the pending cases, both plaintiffs were employed as iron workers by Bernaby Steel Company. Both allege that while working on fabricated bar joists on the premises of the Bethlehem Steel Company at Sparrows Point, Maryland, the joists collapsed, and the plaintiffs fell to the ground suffering disabling injuries. It is further alleged in each case that the defendant, a manufacturer of steel located in Fort Payne, Alabama, negligently manufactured the bar joists and that such negligence caused the injuries sustained by the two plaintiffs, entitling them to substantial damages. In both cases, service of process was made upon the State Department of Assessments and Taxation.

Motions to dismiss have been filed on behalf of the defendant in both cases together with affidavits executed by its President. It is stated in the affidavits that the defendant is an Alabama corporation not licensed to do business in the state of Maryland, that the company did not prior to the date of the accident transact business within the state nor has such business been transacted since, and that the bar joists in question were contracted for by telephone by a jobber in Boston, Massachusetts, were consigned to Brown and Matthews Construction Company, Sparrows Point, Maryland, and were shipped prepaid from Fort Payne, Alabama. At the hearing on such motions, the plaintiffs requested and were granted permission to file in opposition to these affidavits of the defendant corporation counter-affidavits relating to contacts that such defendant had with the state of Maryland. No such affidavits were filed within the time allowed, but instead plaintiff submitted a memorandum urging that under Gray v. American Radiator and Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961), this Court on the record presently before it has jurisdiction in both cases.

In the Gray case, an Illinois resident, claiming negligent manufacture, sued an Ohio corporation to recover for injuries sustained as a result of the explosion in Illinois of a water heater. The defendant corporation had manufactured a safety valve in Ohio and had sold it to a firm in Pennsylvania where the heater itself had been assembled for eventual sale in Illinois. Finding that under the applicable jurisdictional statute the tort was committed in Illinois, the Supreme Court of Illinois upheld jurisdiction over the Ohio defendant.²

If the Maryland "long arm" statute were identical with that of Illinois and if the Gray decision were the law of Maryland, undoubtedly this Court would have jurisdiction ever the foreign manufacturer named as defendant in these two cases. However, § 96 of Article 75 differs in several important respects from the Illinois statute. Furthermore, the Maryland Court of Appeals has not had occasion to decide if it would follow the Gray case in construing the subsections of the Maryland enactment involved here.

Three recent Maryland cases have considered jurisdictional questions arising under § 96 of Article 75 or related statutes. In Gilliam v. Moog Industries, Inc., 239 Md. 107, 210 A.2d 390 (1965), the Court did not decide whether there was jurisdiction under the new Maryland "long arm" statute (effective June 1, 1964) because the question had not been properly presented to and decided by the trial court. However, the Court did quote § 96(a) in its entirety and made the following comment at page 111, 210 A.2d at page 392:

"It seems clear that the purpose of the Legislature in enacting these new provisions was to give the courts of the State personal jurisdiction over all out of state persons and corporations which constitutionally could be reached as having had sufficient Maryland contacts, under the jurisdictional yardstick established by the Supreme Court in cases such as International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95; McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; and Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283."

In Van Wagenberg v. Van Wagenberg, 241 Md. 154, 215 A.2d 812 (1966), the Court considered whether the term "transacts any business within the state" in the New York "long arm" statute applied to the doing by a husband in a marital dispute of certain acts in New York, including the execution of a separation agreement. In construing the New York statute, the Maryland Court of Appeals relied upon the decision of the New York Court of Appeals in Feathers v. McLucas, 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E. 2d 68 (1965). In that case, the plaintiffs had brought a tort action for injuries sustained as a result of an explosion in New York of a tank manufactured by a foreign corporation in Kansas. The Court held that the New York statute conferring personal jurisdiction over a non-domiciliary committing a tortious act within the state did not include the commission of a tortious act without the state which caused injury within it and expressly declined to follow the Gray case. In discussing the constitutionality of the New York statute, the Maryland Court discussed and applied the test of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) in finding that the husband's contacts with New York were sufficient.

Novack v. National Hot Rod Association, 247 Md. 350, 231 A.2d 22 (1967) upheld Maryland jurisdiction under § 96 of Article 75 over a California non-profit corporation which sponsored and operated automobile drag races within the state. The Court found that the foreign defendant transacted business in Maryland within the meaning of subsection (a) (1) when its regularly employed agent inspected the Maryland track and certified it as in accord with the national association's standards. It further found that the foreign defendant engaged in a persistent course of conduct in Maryland under subsection (a) (4) in sending its agent into the state on five occasions within the period of little more than a year to inspect and certify the track.

The particular portions of the statute relied upon by the plaintiffs in these two cases are subsections (a) (1), (a) (3), (a) (4) and (a) (5) of § 96, Article 75.³ Subsection (a) (1) relates to jurisdiction as to a cause of action arising from a foreign corporation's "transacting any business in this State".⁴ Clearly, the defendant in these cases was not transacting any business in the state of Maryland at the time of the injuries sustained by the plaintiffs. Unlike Hardy v. Rekab, Inc., supra, there are no allegations or affidavits indicating that the foreign manufacturer has over a period of years sold other products to purchasers in Maryland, or that any delivery of the building materials in question was made by the foreign manufacturer itself in Maryland, or that any of its employees supervised installation or delivery of such materials. The affidavits in the pending cases establish that the contract of purchase was arranged by a jobber in Massachusetts by means of a telephone call and that the products in question were shipped prepaid from Alabama to the construction company at the job site. Although the factual requirements for "transacting business" are undoubtedly less than those for "doing business", the mere shipment of a product into Maryland under the circumstances of these cases does not satisfy the test established by subsection (a) (1).

Subsection (a) (5) is similarly inapplicable. It confers jurisdiction as to a cause of action arising from a foreign corporation's "having an interest in, using, or possessing real property in this State". The sale by a foreign manufacturer of materials through a...