Novack v. National Hot Rod Ass'n

• Decision Date: 03 July 1967
• Docket Number: No. 476,476
• Citation: 231 A.2d 22,247 Md. 350
• Parties: John NOVACK and Carol Ann Randall v. The NATIONAL HOT ROD ASSOCIATION.
• Court: Maryland Court of Appeals

Page 350

247 Md. 350

231 A.2d 22

John NOVACK and Carol Ann Randall v. The NATIONAL HOT ROD ASSOCIATION.

No. 476.

Court of Appeals of Maryland.

July 3, 1967.

Paul H. Mannes, Washington, D. C. (Peter A. Greenburg and Bernstein, Kleinfeld & Alper, Washington, D. C., on the brief), for appellants.

Thomas A. Farrington, Upper Marlboro (Hal C. B. Clagett and Sasscer, Clagett, Powers & Channing, Upper Marlboro, on the brief), for appellee.

Before HAMMOND, C. J., and HORNEY, MARBURY, OPPENHEIMER, BARNES, McWILLIAMS and FINAN, JJ.

HAMMOND, Chief Judge.

The issue before us is whether The National Hot Rod Association (Hot Rod), a non-profit California corporation which sponsors and regulates automobile drag races, had sufficient contacts with Maryland to make it legally and constitutionally amenable to suit in Maryland on a cause of action related to its corporate activities in the State (a suit by an automobile drag race driver who had been injured on a track sanctioned as safe by Hot Rod and a similar suit by the widow of a deceased driver).

Hot Rod is 'a drag racing organization,' which organizes and sponsors four automobile speed race meetings a year, at which it hires its own personnel, buys its own insurance and is fully responsible for running the racing meetings. ¹ It has never sponsored such a meet in Maryland. In addition to this activity, Hot Rod sells individual memberships of $8.00 a head and, for a fee of $25.00 for each event sanctioned by it, gives its official blessing to those automobile race tracks throughout the country which meet its standards, specifications and regulations as to the construction, operation and maintenance of such tracks. It authorizes and permits the fact that it has sanctioned an automobile racing event to be publicized in various ways and in various media to contestants, spectators and the public. Darwin Doll testified that he was the director of the Northeast Division of Hot Rod with headquarters in York, Pennsylvania, and that Maryland is in the Northeast Division. He described Hot Rod's methods of operation in terms of the Aquasco Track, the only track in Maryland sanctioned by Hot Rod: Aquasco applied to his predecessor Hot Rod area representative and he assumed the track was inspected by that representative before it was first sanctioned because 'they all are.' He testified that the act of sanctioning takes place in California. He said: 'I send a letter of recommendation after my inspection of the track to the Los Angeles office, who thereby initiates the sanction.' The track has been inspected by Doll on four occasions-October 1964, March 1965, July 1965 and October 1965. He made these periodic visits 'to see that they (the Aquasco Track) are running according to our rules * * *. That is the purpose of the N. H. R. A. sanction.' He added that if the track did not meet Hot Rod standards, they would not have its signs in large letters bearing the legend 'N. H. R. A. Sanctioned' on their door or on their tower. Each track sanctioned must maintain 'minimum acceptable insurance standards' and buy specified kinds and amounts of insurance covering the track and Hot Rod ('For the protection of the Association. They are using our name.'). At least five days before a racing meet the track sends an application for sanction and the fee of $25.00. Hot Rod's division area representative then, it would appear from Doll's testimony, inspects the track and sends his report to California and, on the basis of this report, Hot Rod sanctions or refuses to sanction the proposed meet.

Hot Rod publishes 'The National Dragster Newspaper' to promote the activities of the Association for its members. In the paper there is listed the membership of the National Hot Rod Association. They sometimes sell the papers to sanctioned tracks which resell them.

It is alleged in the declarations in the suits against the owners and operators of the Aquasco Track and Hot Rod that both the injured driver and the deceased driver relied on the representations made by Hot Rod's sanction that the Aquasco Track was safe and fit for 'drag racing' at whatever speed might be obtained, that in fact it was not, but was dangerous and unsafe and that, as a result, one driver was killed and one badly hurt.

Service of process was made on Hot Rod in Los Angeles by the sheriff of Los Angeles County. Hot Rod moved to quash service and testimony was taken. Hot Rod argued that it has no office, sells no product, makes no contract, employs no person, conducts no races, solicits no business, conducts no negotiations, conducts no advertising and has neither a mailing address nor a corporate agent in Maryland and therefore was not amenable to suit in Maryland. Judge Parker, seemingly considering essentially whether Hot Rod was 'doing business' in Maryland, decided that it was not and quashed service.

In 1964 the Legislature enacted Ch. 95 of the Laws of that year, now codified as §§ 94 to 100 of Art. 75 of the Code under the subtitle 'Bases of Personal Jurisdiction over Persons Outside This State.' We pointed out in Gilliam v. Moog Industries, Inc., 239 Md. 107, 111, 210 A.2d 390, 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 yardsticks 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, 161 A.L.R. 1057; 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, 164-165, 215 A.2d 812, in dealing with New York's similar statutory provision for jurisdiction where the defendant 'transacts any business within the State,' Judge Oppenheimer, for the Court, quoted approvingly the language of Judge Fuld for the Court of Appeals of new York in Longines-Wittnauer Watch Co. v. Barnes & Reinecke, 15 N.Y.2d 443, 261 N.Y.S.2d 8, 18, 209 N.E.2d 68, 75:

"In enacting * * * (the long-arm statute), the Legislature chose not to fix precise guidelines, * * * and decided, instead, to follow the broad, inclusive language of the Illinois provision, adopting as the criterion the 'transact(ion of) any business within the state.' The design of the legislation, as expressed by the committee, was to take advantage of the 'new (jurisdictional) enclave' (Bomze v. Nardis Sportswear, 2 Cir., 165 F.2d 33, 36, per L. HAND, J.) opened up by International Shoe where the nonresident defendant has engaged in some purposeful activity in this State in connection with the matter in suit."

The recent decisions of the Supreme Court which have held that one outside the State need not have...