Malinow v. Eberly, Civ. A. No. 70-757.

• Decision Date: 28 January 1971
• Docket Number: Civ. A. No. 70-757.
• Citation: 322 F. Supp. 594
• Parties: Charles L. MALINOW v. James R. EBERLY, Trading as James R. Eberly Company.
• Court: U.S. District Court — District of Maryland

322 F. Supp. 594

Charles L. MALINOW v. James R. EBERLY, Trading as James R. Eberly Company.

Civ. A. No. 70-757.

United States District Court, D. Maryland.

January 28, 1971.

COPYRIGHT MATERIAL OMITTED

Robert E. Cahill, Isaac M. Neuberger and Melnicove, Asch, Greenberg & Kaufman, Baltimore, Md., for plaintiff.

Richard L. Walsh, Washington, D.C., and Leon H. A. Pierson, Baltimore, Md., for defendant.

JAMES R. MILLER, JR., District Judge.

This is an action in which the plaintiff seeks, together with related relief, an accounting of profits and assets of an alleged partnership between him and the defendant. Plaintiff is a citizen and resident of the State of Maryland and the defendant is a citizen and resident of the Commonwealth of Virginia. The matter in controversy is alleged to exceed Ten Thousand Dollars ($10,000), exclusive of costs and interest.

The defendant has filed a motion to dismiss the action and to quash service, arguing that the service upon him in Virginia under the purported authority of the Maryland "Long Arm" statute¹ does not confer in personam jurisdiction upon this Court under the circumstances in this case.

The plaintiff's complaint maintains that "beginning on or about October, 1961, the Plaintiff and Defendant formed a partnership trading under the firm name and style of James R. Eberly and Company the plaintiff's complaint refers to `James R. Eberly and Company' and `James R. Eberly Company' interchangeably and apparently treats them as one and the same, which was organized for and was engaged in the business of acting as a manufacturer's representative in the field of electronic parts, devices, and related items, in and around the Greater Baltimore-Washington Metropolitan areas." The complaint further alleges that the alleged partnership maintained offices in Baltimore, Maryland, as well as in the District of Columbia, and that the "* * * defendant personally transacted the business of the partnership * * * in the State and District of Maryland and some of the agreements between the parties were discussed, negotiated, and resolved within said State and District." The complaint further alleges that the partnership was terminated by the plaintiff, said termination becoming effective on June 1, 1968, and that the defendant, despite repeated demands therefor by the plaintiff, has failed and refused to account to the plaintiff for the profits and assets of the alleged partnership. It is also alleged by the plaintiff that the partnership, which is not evidenced by a formal written agreement, provided for the equal division of the profits and losses thereof between the plaintiff and the defendant. In addition, the plaintiff alleges that the defendant has had, and still has, sole and exclusive control and custody of the books and records of the alleged partnership.

Defendant has filed his affidavit in conjunction with his motion to dismiss and to quash service. His affidavit recites, in pertinent part, that his business consists of the representation of manufacturers of electronic and mechanical equipment for whom he solicits orders from prospective customers; that since 1959 the business has been conducted in the name of James R. Eberly Company; that the manufacturers represented by him in the aforesaid business are located in Maryland as well as elsewhere and that the prospective customers which he has visited in the business are similarly located in Maryland as well as elsewhere; that during the conduct of his said business the defendant has visited in person in Maryland at least four (4) private business organizations in addition to installations of the United States government located in Maryland; and that some of the businesses and government installations in Maryland, as a result of the visits of the defendant in person, ordered materials or products which, in turn, resulted in the payment of commissions to the defendant.

Since jurisdiction is based upon diversity of citizenship, the Maryland "Long Arm" statute is the statute involved in the determination of the question presented by the defendant's motion. Haynes v. James H. Carr, Inc., 427 F.2d 700 (4th Cir. 1970), cert. denied, 400 U.S. 942, 91 S.Ct. 238, 27 L. Ed.2d 245 (December 7, 1970); Rule 4(e) F.R.Civ.P. Authoritative interpretation of the statute by the Court of Appeals of Maryland is binding upon this Court. Shealy v. Challenger Mfg. Co., 304 F.2d 102, 104 (4th Cir. 1962). As to any federal constitutional question raised by the motion of defendant, this Court must follow decisions of the Supreme Court and where the Supreme Court has not spoken, the Fourth Circuit.

Section 96(a) (1), Article 75 of the Annotated Code of Maryland (1969 Replacement Volume) provides:

"(a) A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's

"(1) Transacting any business in this State."

That section is limited by § 96(b) which provides:

"(b) When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him."

The burden of the defendant's argument, as the Court understands it, is that the cause of action of the plaintiff, which seeks relief against the defendant individually, is not based upon business transacted by the plaintiff in his individual capacity in the State of Maryland. The defendant argues that, on the contrary, the plaintiff's cause of action is solely based upon the refusal of the defendant to give an accounting of the partnership affairs, which refusal occurred outside of Maryland's boundaries although the complaint itself and the defendant's affidavit do not clearly establish that the failure or refusal to account occurred outside of the State of Maryland, this fact is inferred by the circumstance of the non-residence of the defendant and from the various letters between the parties which were attached as exhibits to the plaintiff's complaint. The defendant further argues, in effect, that the allegations of the plaintiff show that whatever business the defendant transacted in Maryland was partnership business, but that the obligation sought to be established by the plaintiff is one allegedly owed by the defendant as an individual and is not a partnership obligation.

In determining whether personal jurisdiction can be conferred by the application of a "Long Arm" statute in a particular case, it is necessary to determine whether (1) service under the statute violates the due process clause of the federal constitution and (2) whether the statute by its terms permits service of process on the non-resident defendant. Haynes v. James H. Carr, Inc., supra.

If the Maryland "Long Arm" statute permits personal jurisdiction of the defendant to be conferred on this Court in the instant proceeding, the application of the statute to the defendant under the facts in this case does not violate the due process clause of the federal constitution. In 1945, the Supreme Court of the United States, in International Shoe Company v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), said:

"* * * due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."

and:

"Whether due process is satisfied must depend * * * upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure."

Expanding upon the doctrine of International Shoe, the Court declared in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), at 253, 78 S.Ct. at 1240, that "* * * it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws."

In 1964, the Maryland General Assembly enacted Chapter 95 of the Laws of 1964, which is now contained in §§ 94-100, Article 75, Maryland Annotated Code (1969 Replacement Volume), the so-called "Long Arm" statute of Maryland, dealing with in personam jurisdiction of persons who reside outside of Maryland. The purpose of the Maryland "Long Arm" statute, at least as to § 96(a) (1) thereof,² is to give the courts of the State personal jurisdiction over all out of State persons, partnerships,³ and corporations which, under the jurisdictional standards established by the Supreme Court, could constitutionally be reached as having sufficient Maryland contacts. Novack v. Nat'l Hot Rod Ass'n, 247 Md. 350, 231 A.2d 22 (1967); Gilliam v. Moog Industries, Inc., 239 Md. 107, 210 A.2d 390 (1965).

Section 96(a) (1) of the Maryland "Long Arm" statute is identical to § 1.03(a) (1) of the Uniform Interstate and International Procedure Act. Hardy v. Rekab, Inc., 266 F.Supp. 508, 514 (D. Md.1967). The Maryland Court of Appeals has held that the term "transacting any business," as used in the "Long Arm" statutes of Maryland and other states, is not limited to acts of commerce or transactions for profit, but includes acts which constitute a purposeful activity within the state. Novack v. Nat'l Hot Rod Ass'n, supra; Van Wagenberg v. Van Wagenberg, 241 Md. 154, 215 A. 2d 812 (1966).

The apparently undisputed facts in this case make it abundantly clear that the jurisdictional requirements of due process have been met. Although a resident of Virginia, the defendant has personally entered Maryland on many occasions in order to solicit business orders from companies or government installations located therein. He admits that he has received compensation as a result of his personal efforts in Maryland. His contacts have been more than "minimal" in Maryland. By...