Harris v. Arlen Properties, Inc.

• Decision Date: 22 December 1969
• Docket Number: No. 65,65
• Citation: 260 A.2d 22,256 Md. 185
• Parties: Leon H. HARRIS v. ARLEN PROPERTIES, INC., et al.
• Court: Maryland Court of Appeals

Page 185

256 Md. 185

260 A.2d 22

Leon H. HARRIS v. ARLEN PROPERTIES, INC., et al.

No. 65.

Court of Appeals of Maryland.

Dec. 22, 1969.

Carleton U. Edwards, II, Bethesda (Stanley M. Karlin, Bethesda, on the brief), for appellant.

David Reich, Rockville, for appellees.

Before HAMMOND, C. J., and BARNES, FINAN, SINGLEY and SMITH, JJ.

FINAN, Judge.

This is an appeal in which the application of the Maryland 'Long Arm' Statute ¹ to nonresident individuals and foreign corporations is the pivotal question. We think that the principles of law laid down in Vitro Electronics v. Milgray Electronics, Inc., Md.App., 258 A.2d 749 (1969) (No. 34, September Term, 1969, decided November 10, 1969) and Novack v. Nat'l Hot Rod Ass'n, 247 Md. 350, 231 A.2d 22 (1967), are determinative of the question of jurisdiction.

Leon H. Harris, the appellant and plaintiff below, was a licensed real estate broker of the State of Maryland. He allegedly entered into a 'co-op' sales arrangement with another real estate broker Harry A. Boswell, who was one of the defendants below, regarding the 'Gudelsky Property,' located across the East-West Highway from the Prince George's Shopping Center in Hyattsville, Maryland.

Early in 1964, the plaintiff sent out letters to numerous mercantile establishments including Sears, J. C. Penny Co., Korvette, Marshall Field and the like, advising them of the availability of the 'Gudelsky Property.' Shortly thereafter the plaintiff was contacted by the defendant Jay Stempel (Stempel), who represented himself as an employee and site location scout of the defendant Arlen Properties, Inc. (Arlen). Arlen is a developer of shopping center sites which acquires the land, constructs the center and then leases the premises to department store tenants and others. Stempel told the plaintiff that Arlen had about eighty shopping centers throughout the nation and 'many, many corporations.' Arlen Properties, Inc. is a corporation organized under the laws of the State of New York, with its principal office at 60 E. 56th Street, New York, New York. Stempel and Arlen are among the appellees. Stempel is a resident of New York State.

The plaintiff exhibited to Stempel numerous potential shopping center sites in Prince George's County and Montgomery County, Maryland, and in nearby Virginia, viewing them by way of helicopter, airplane and automobile. In addition the plaintiff, at Stempel's request, forwarded to him aerial photographs of locations, the 'Declaration of Restrictions' on the 'Gudelsky Property,' and information on the 'Penn Center Property,' the sale of which latter property gave rise to this suit for brokerage commissions.

All of the plaintiff's contacts with Stempel and officers of Arlen were made either personally or by telephone; no letters passed between them. The plaintiff says he met with Stempel many times. The usual procedure was for Stempel to call the plaintiff and arrange to meet him the following day at an airport in the Washington area at about 9:00 A.M. and the plaintiff would take him on an inspection tour of the sites. When air transportation was used to inspect sites, Arlen paid the bill. The plaintiff also marked for Stempel an 'Esso' map of the Washington, D. C. metropolitan and suburban area, spotting desirable locations for shopping centers.

In the process of showing Stempel potential sites, the plaintiff, in the early spring of 1966, showed him the 'Penn Center Property,' comprising approximately 37 acres. He visited the property with Stempel on 'possibly five or six occasions.' 'Penn Center Property' was owned by James C. Dulin and wife, Samuel W. Barrow and wife, Harry A. Boswell and wife, and Henry J. Robb and wife, and the Pennsylvania Avenue Shopping Center, Inc., all party defendants. An employee of Boswell's, one Kloetzli, supplied most of the information concerning the property to the plaintiff who in turn either gave or forwarded it to Stempel. Kloetzli also advised the plaintiff, that in the event he proved successful in selling the property, the commission would be 7%. The plaintiff on one occasion met the defendant-appellee Joseph Comras (Comras), vice president of Arlen and a nonresident of Maryland, and transported him from the airport to a prearranged meeting at Boswell's Hyattsville office, at which time purchase of the 'Gudelsky Property' was discussed. The plaintiff also discussed with Comras the purchase of the 'Penn Center Property.' Still later the plaintiff, at Comras' request, arranged a meeting for him with Boswell in Baltimore to discuss the 'Gudelsky Property.' The plaintiff contends that sometime later he learned from Kloetzli, Boswell's assistant, that Comras asserted that he had driven by the 'Penn Center Property,' saw a sign on it and went to Boswell's office to confer with him about it.

It is the plaintiff's contention that after he was instrumental in bringing Boswell and his associates together with Arlen and its representatives, that at Arlen's suggestion it was agreed that the sellers would deal directly with Arlen and by-pass the plaintiff. The plaintiff states that on September 1, 1965, an agreement was reached for the sale of the 'Penn Center Property' to Arlen, the general terms of which were worked out in the defendant Robb's office in the District of Columbia. Among those in attendance were Comras, Arlen's attorney Barry Traub, Esq., and Kloetzli. At this meeting Arlen supposedly assumed the responsibility for paying any brokerage commissions in the event a claim for commissions was made. Meanwhile the plaintiff continued his efforts to sell the 'Gudelsky Property.' He states, however, that about this time Boswell stopped returning his telephone calls and he began 'to feel that there was something wrong * * * that everything going on wasn't above the table.'

On November 5, 1965, unbeknownst to the plaintiff, Arlen executed a contract to purchase the 'Penn Center Property.' The plaintiff learned of the sale in February of 1966.

Shortly after the November 5, 1965 contract, Arlen, through its engineering consultants, sought and obtained information from Boswell's office pertinent to topography and drainage of the property. Contacts were also made by Arlen's engineers with the Washington Suburban Sanitary Commission regarding drainage and with the telephone company regarding burying cable. In January, 1966, Arlen's representatives filed site plans with the Prince George's County Building Inspector's Office, and on January 3, 1966, an application for a building permit was filed. Under the date of September 7, 1966, Arlen assigned all of its interest in the subject property to the defendant Delton Realty Corporation.

On March 10, 1966, deeds of conveyance of the 'Penn Center Property' had been executed by the sellers to the defendant Delton Realty Corporation (Delton), a Delaware corporation, which instruments were recorded on September 15, 1966.

According to Arlen's attorney, 'The principals of both corporations are identical * * *,' i. e. Arlen and Delton. Delton's principal business address is c/o A. Levien, 45-10 Court Square, Long Island City, New York, the same as that of Arthur N. Levien, one of the two partners of Arlen Operating Co., a partnership consisting of Arthur N. Levien and defendant-appellee Arthur G. Cohen. This partnership is engaged in owning and developing real estate, and Arlen Properties, Inc., as the affidavit of plaintiff's counsel states, is wholly owned by the partnership. Delton's annual report to the State of Delaware for the year 1966 stated in part 'no business transactions, no bank accounts opened, no assets or liabilities.'

In May of 1968, the plaintiff filed his declaration against fourteen defendants comprising the sellers and purchasers of the 'Penn Center Property' for $112,000 in commissions. ²

All nonresident defendants were served under the provisions of Maryland's 'Long Arm' Statute, Code (1969 Supp. Vol. 7) Art. 75, § 96, except Delton, which having qualified to do business in Maryland was served through its resident agent. Service was obtained on the nonresidents either by registered mail or by having the suit papers served on them by an out of state sheriff.

The Dulins and the four appellees, Arlen, Stempel, Comras and Cohen, raised preliminary objections to the service upon them on the ground that they were nonresidents of Maryland and that they were not engaged in such business in this State as would subject them to the jurisdiction of the courts of Maryland.

In September, 1968, the plaintiff filed an amended declaration extending his causes of action to include counts in express contract, implied contract, and quantum meruit against the owner-defendants; for relief against the appellees on the theory that he is a third party beneficiary to the contract between them and the owner-defendants; for recovery on the basis of a conspiracy between all of the defendants, including the appellees, to deprive him of his brokerage commission; and for damages against the appellees for wrongfully inducing the owner-defendants to breach their brokerage contract with plaintiff.

Evidentiary hearings were held on October 30, 1968, and December 23, 1968, before Judge Powers. The matter was fully argued by counsel. On January 6, 1969, the Court entered an order denying the motion of the Dulins who were among the owner-defendants and granting the motion of the appellees who were among the buyer-defendants. This ruling had the effect of dismissing the declaration against the appellees. It is from the judgment of the circuit court dismissing the declaration against the appellees that the plaintiff has filed this appeal. The other defendants named in the declaration are not involved in this appeal, the only appellees being Arlen Properties, Inc., Stempel, Comras and Cohen.

The question before this Court is whether the four appellees were amenable to jurisdiction in this State by virtue of the provisions of ...