Mayor and Council of Federalsburg v. Allied Contractors, Inc.

• Decision Date: 03 June 1975
• Docket Number: No. 156,156
• Citation: 338 A.2d 275,275 Md. 151
• Parties: MAYOR AND COUNCIL OF FEDERALSBURG, Maryland. v. ALLIED CONTRACTORS, INC.
• Court: Maryland Court of Appeals

Page 151

275 Md. 151

338 A.2d 275

MAYOR AND COUNCIL OF FEDERALSBURG, Maryland. v. ALLIED CONTRACTORS, INC.

No. 156.

Court of Appeals of Maryland.

June 3, 1975.

Starke Mathew Evans, Federalsburg, for appellant.

J. Owen Wise, Denton, for appellee.

Argued before MURPHY, C. J., and SINGLEY, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.

DIGGES, Judge.

The appellee, Allied Contractors, Inc., initiated this suit in the Circuit Court for Caroline County against the appellant, the Mayor and Council of Federalsburg, Maryland, a municipal corporation, for moneys Allied claims it is owed by the town under a construction contract. The case was removed to the Circuit Court for Queen Anne's County where, in a jury trial, the contractor was awarded damages in the amount of $74,022.66. From the judgment which was entered on that verdict, Federalsburg appeals.

The wellspring of this conflict is the contract which was entered into by Federalsburg and Allied on 28 July 1967. Under this agreement, the appellee was to underpin and otherwise reinforce as well as lengthen the piers of a highway bridge and the nearby railroad trestle, both of which span the Marshyhope Creek within the town limits. In addition, as part of the construction project, this creek, which is frequently referred to as the northwest fork of the Nanticoke River, was to be deepened, its channel widened, and its slopes protected so as to prevent erosion in the vicinity of these two parallel bridges. This undertaking, the initial stage of an extensive flood control program being pursued in cooperation with other governmental agencies, ¹ began in September of 1967 and was completed to Federalsburg's satisfaction one year later, on 17 September 1968.

The project contractor in this suit asserts that it is due compensation over and above the base price established in the contract because, while carrying out its obligations to the appellant, Allied provided, at Federalsburg's request, additional labor and services for the town including more guniting (the pneumatic application of mortar) of the highway bridge's first pier than was originally contemplated by the agreement. Furthermore, Allied seeks to be reimbursed for its costs which it alleges resulted from the unjustifiable issuance of stop work orders by the town's contracting officer. In submitting this latter claim, Allied urges that it is entitled to remuneration for two second in 1968, which were directed by Federalsburg's contracting officer not for work stoppages, the first in 1967 and the Allied's benefit but to accommodate the town. Following receipt by that contracting officer of these additional compensation demands, considerable correspondence and verbal discussions ensued between the contracting parties but, throughout these communications, the appellant constantly denied having a financial obligation for any of them. ² Eventually, however, when it became painfully obvious to Allied that continued 'negotiations' would not bear fruit, the contractor instituted this suit on 2 March 1972.

Federalsburg responded to Allied's amended declaration by filing a special of limitations along with its pro forma general denial. After testimony was taken at a pre-trial hearing confined to the limitations issue, ³ Judge Turner ruled that the suit was not barred by the statute of limitations.

On appeal, in seeking a reversal of the judgment, the principal contention of Federalsburg, and the only one which we find to have any substance, is that the trial judge erred when he ruled that each of the unpaid claims for additional compensation was not barred by limitations. In addition, the appellant asserts that the trial judge committed prejudicial error when he: (i) made certain comments concerning the evidence in the presence of the jury; (ii) allowed 'the jury to speculate and consider all aspects of plaintiff's ((Allied's)) claim under count number one of said declaration after the evidence clearly established the existence of a written contract as alleged by plaintiff in counts two, three, and four'; and (iii) concluded that there was 'sufficient evidence to uphold a finding of a new benefit to the defendant ((Federalsburg)) in the amount of $74,022.66 as required to be found by the trial court's instructions to the jury.' We will consider and dispose of each of these arguments seriatim.

Three distinct questions comprise the limitations issue presented by this case. These are: whether the contract was under seal so as to create a specialty and thus make the applicable period of limitations twelve years, under § 5-102(a)(5) of the Courts and Judicial Proceedings Article of the Maryland Code (1974), rather than the three-year period for simple contracts, under § 5-101 of that Article; on what date did the statutory period, as it pertains to each claimed item of damage, begin to run; and whether, once the period commenced, there were subsequent occurrences which tolled its running?

The only evidence, Allied concedes, to support its assertion that the contract in this case is a specialty is that when the document was signed on behalf of Allied by its vice-president, he also impressed the corporate seal on the instrument. The law in Maryland, as has been recently and fully discussed by this Court in Levin v. Friedman, 271 Md. 438, 317 A.2d 831 (1974) and Gildenhorn v. Columbia R. E. Title, 271 Md. 387, 317 A.2d 836 (1974), requires more than the mere affixing of the corporate seal to transform a would-be simple contract into one under seal. Indeed, as it made clear by those two cases and General Petroleum Corp. v. Seaboard Terminals Corp., 23 F.Supp. 137 (D.Md.1938), if a corporate seal is impressed on an agreement it will remain a simple contract unless either the body of the contract itself indicates that the parties intended to establish an agreement under seal, or sufficient extrinsic evidence, in the nature of 'how and when and under what circumstances the corporate seal was affixed,' General Petroleum Corp. v. Seaboard Terminals Corp., supra at 139 establishes that the parties desired to create a specialty. In Seaboard Judge Chesnut in discussing the Maryland law applicable to seals stated:

'If the contract is signed by an individual opposite and in obvious relation to a legally sufficient seal, the instrument will be taken as a sealed document, where there is nothing on the face of the paper to indicate the contrary even though be no reference to the seal in the wording of the paper. 'A recital of the sealing or of the delivery of a written promise is not essential to its validity as a sealed contract.' . . . 'A promisor who delivers a written promise to which a seal has been previously affixed or impressed with apparent reference to his signature, thereby adopts the seal.' . . .

'But with respect to a contract executed by a corporation, the mere presence of its seal on the paper without any other reference therein to the seal, does not necessarily make the contract a specialty, because it is possible the corporate seal was impressed merely as prima facie evidence of corporate authority for the execution of the paper; and in that case extrinsic evidence is admissible to show whether the use of the seal was intended to make the paper a specialty or merely as evidence of its authorized execution, or that it was in fact used without authority.' (citations omitted). 23 F.Supp. at 140-41.

Moreover, even though a contract need not always have as many separate seals as there are signatories to it, since in some circumstances a rebuttable presumption of a party's adoption as his own of another party's seal can be established (e. g., such as when the instrument purports on its face to be sealed by all the parties signing it), Stabler v. Cowman, 7 Gill. & J. 284 (1835); Rockwell v. Capital Traction Co., 25 U.S.App. 98 (1905); McNulty v. Medical Service of D.C., Inc., 176 A.2d 783 (Mun.Ct.D.C.1962) ordinarily when a seal is attached to the signature of one of the parties but not to that of the other party, the contract as to the latter is a simple contract while as to the former it is a contract under seal. Pearl Hominy Co. v. Linthicum, 112 Md. 27, 75 A. 737 (1910); State Use of Gilkeson v. Humbird, 54 Md. 327 (1880). In this case it is undisputed that the only seal attached to this document is Allied's corporate seal; no reference to a seal is made in the body of the instrument; and no extrinsic evidence was presented to prove that the town, through adoption of the other party's seal or otherwise, intended the contract, at least as to itself, to operate as a specialty. Thus, as the contract in this case is a simple one, for this suit to have been timely against the appellant, if not the appellee, it had to have been filed within the three-year period of limitations mandated by § 5-101 of the Courts Article.

Having concluded that three years is the applicable limitations period in this instance, we now must determine when that statutory period commenced to run. In contract cases, the general rule is that the period of limitations begins to run from the date of the breach, for it is then that the cause of action accrues and becomes enforcible. Cotham and Maldonado v. Board, 260 Md. 556, 273 A.2d 115 (1971); Whitcomb v. Horman, 244 Md. 431, 224 A.2d 120 (1966); Fisher v. Medwedeff, 184 Md. 167, 40 A.2d 360 (1944); Vincent v. Palmer, 179 Md. 365, 19 A.2d 183 (1941). Normally, unless the contract provides otherwise, a cause of action for extra labor and services accrues when the work is done or services provided. Md. Cas. Co. v. West. Constr. Co., 139 Md. 171, 114 A. 890 (1921); Dempsey v. McNabb, 73 Md. 433, 21 A. 378 (1891). But it is also true that when the contract requires some action, such as an accounting, a billing or a hearing, by one or both of the parties before the obligation for payment fully blossoms, then the performance of that activity is 'a condition precedent to recovery of such payments,...