Springle v. Cottrell Engineering Corp.

• Decision Date: 06 September 1978
• Docket Number: No. 1270,1270
• Citation: 391 A.2d 456,40 Md.App. 267
• Parties: Gene SPRINGLE v. COTTRELL ENGINEERING CORPORATION.
• Court: Court of Special Appeals of Maryland

Page 267

40 Md.App. 267

391 A.2d 456

Gene SPRINGLE v. COTTRELL ENGINEERING CORPORATION.

No. 1270.

Court of Special Appeals of Maryland.

Sept. 6, 1978.

Philip Abraham, Baltimore, with whom was Murray I. Resnick, Baltimore, on the brief, for appellant/cross-appellee.

Theodore B. Oshrine, Baltimore, with whom were Donald C. Allen and Allen, Thieblot & Alexander, Baltimore, on the brief, for appellee/cross-appellant.

Argued before MORTON, THOMPSON and WILNER, JJ.

WILNER, Judge.

We have before us cross-appeals from a judgment entered by the Circuit Court for Anne Arundel County on an action by Gene Springle. Mr. Springle was a seaman who claims to have been injured while serving aboard the dredge "Richmond", and he sued the owner of the dredge (Cottrell Engineering Corporation) because of its failure to provide him with maintenance and cure. ¹ The threshold question arises from appellee's cross-appeal; that is, whether the court had jurisdiction to entertain this action in the first place (or, more precisely, whether the court erred in denying its motion raising preliminary objection filed under Maryland Rule 323, alleging a want of jurisdiction over appellee).

After pointing out that appellant is a resident of North Carolina, that appellee is incorporated in Delaware and has its principal office in Virginia, and that the incident giving rise to the claim for maintenance and cure occurred in North Carolina, appellee asserts that "(i)n order for a Maryland Court to have jurisdiction over a foreign corporation, one of the requirements set forth in § 6-103 of the Courts and Judicial Proceedings Article (the Long Arm Statute) must be complied with." Building upon that foundation, appellee attempts to show how it does not meet any of the six requirements for In personam jurisdiction under that statute. More precisely, appellee's claim appears to be that This cause of action did not arise from any of the types of contacts with Maryland enumerated in § 6-103, and for That reason, jurisdiction does not exist in this case.

The question of jurisdiction may not be decided Solely on the basis of § 6-103, however. Drawn into play as well are Courts article § 6-102(a), Corporations and Associations article § 7-210, and the overlay of due process which, ultimately, circumscribes the reach of the In personam jurisdiction of a Maryland court over a foreign corporation.

To trace through the interplay of these statutes and concepts, we first must identify what they are.

The "bases of personal jurisdiction" of Maryland courts are set forth in Courts article, §§ 6-101 through 6-104. Section 6-101 consists of definitions. Section 6-102 provides:

"(a) A court may exercise personal jurisdiction As to any cause of action over a person domiciled in, Served with process in, organized under the laws of, or who maintains his place of business in the state.

(b) This section does not limit any other basis of personal jurisdiction of a court of the state." (Emphasis supplied.)

Section 6-103, which is generally referred to as the "long-arm" statute provides:

"(a) If jurisdiction over a person is based solely upon this section, he may sued only on a cause of action arising from any act enumerated in this section.

(b) A court may exercise personal jurisdiction over a person, who directly or by an agent:

(1) Transacts any business or performs any character of work or service in the state;

(2) Contracts to supply goods, food, services, or manufactured products in the state;

(3) Causes tortious injury in the state by an act or omission in the state;

(4) Causes tortious injury in the state or outside of the state by an act or omission outside the state if he regularly does or solicits business, engages in any other persistent course of conduct in the state or derives substantial revenue from goods, food services, or manufactured products used or consumed in the state;

(5) Has an interest in, uses, or possesses real property in the state; or

(6) Contracts to insure or act as surety for, or on, any person, property, risk, contract, obligation, or agreement located, executed, or to be performed within the state at the time the contract is made, unless the parties otherwise provide in writing."

Section 6-104 codifies the doctrine of Forum non conveniens. It provides:

"If a court finds that in the interest of substantial justice an action should be heard in another forum, the court may stay or dismiss the action in whole or in part on any conditions it considers just."

The record here shows that appellee qualified to do business in Maryland in 1964; that, pursuant to State law it appointed and has maintained a resident agent authorized to accept service of process on its behalf; and that service of process in this case was, in fact, duly made in Maryland upon that resident agent so appointed. In that circumstance, § 6-102(a) would appear to provide an independent basis for jurisdiction over appellee, a basis apart from those set forth in § 6-103 and founded solely upon appellee's being served with process in Maryland. Two questions arise, however, as to whether § 6-102(a) may be applied in quite so straightforward a manner. The first is whether, and to what extent, Corporations and Associations article, § 7-210, detracts from this basis of jurisdiction, and the second is whether, and to what extent, jurisdiction may constitutionally attach to a foreign corporation simply by virtue of its being served with process in Maryland. These two questions are very much interrelated.

Section 7-210, which is part of the subtitle dealing with the registration and qualification of foreign corporations, provides:

"With respect to any cause of action on which a foreign corporation would not otherwise be subject to suit in this State, compliance with this subtitle:

(1) Does not Of itself render a foreign corporation subject to suit in this State; and

(2) Is not considered as consent by it to be sued in this State." (Emphasis supplied.)

There is an historical relationship between these three statutes (§§ 6-102 and 6-103, Courts article, and § 7-210, Corporations article) which emanates from the due process requirements laid down, from time to time, by the Supreme Court.

In Pennoyer v. Neff, 5 Otto. 714, 95 U.S. 714, 24 L.Ed. 565 (1878), the Court held, in effect, that, in order for a State court to determine the personal liability of a defendant, and to render a valid In personam judgment against him, "he must be brought within its jurisdiction by service of process within the State, or his voluntary appearance." 95 U.S. at 733. The Court did permit somewhat of an end run around this principle when it stated, at page 735:

"Neither do we mean to assert that a State may not require a non-resident entering into a partnership or association within its limits, or making contracts enforceable there, to appoint an agent or representative in the State to receive service of process and notice in legal proceedings instituted with respect to such partnership, association, or contracts, or to designate a place where such service may be made and notice given, and provide, upon their failure, to make such appointment or to designate such place that service may be made upon a public officer designated for that purpose, or in some other prescribed way, and that judgments rendered upon such service may not be binding upon the non-residents both within and without the State."

This "exception" was not very helpful, however, with respect to foreign corporations, which continued to transact business of varying types and degrees within the borders of many States, without appointing "resident" agents to accept service of process.

In order to bring a foreign corporation within the range of personal jurisdiction permitted by Pennoyer v. Neff, and its predecessors, a number of theories and fictions were tried by the States. See Fletcher Cyclopedia Corporations (1977 Rev.), Vol. 18, § 8640; Jurisdiction of Maryland Courts over Foreign Corporations Under the Act of 1937, 3 Md.L.Rev. 35 (1938); The "Long Arm" Comes to Maryland, 26 Md.L.Rev. 13 (1966). Maryland's approach to the problem was found in Laws of Md., 1868, ch. 471, codified as Md.Code (1888), art. 23, §§ 288, 290. Section 288 provided that any corporation not chartered by the laws of Maryland "which shall transact business therein, shall be deemed to hold and exercise franchises within this State, and shall be liable to suit in any of the courts of this State, on any dealings or transactions therein." Section 290 provided that suits may be brought in Maryland "against any corporation not incorporated under its law, but deemed to hold and exercise franchises therein . . . by a resident of this State, for any cause of action; and by a plaintiff, not a resident of this State, when the cause of action has arisen, or the subject of the action shall be situated in this State. . . ." Process was permitted to be served upon "any agent of such corporation".

Maryland, in common with many States, thus adopted the premise that if a foreign corporation "transacted business" in the State, it was subject to the jurisdiction of the State's courts, at least to the extent that the statute permitted such jurisdiction to be exercised. If service of process could be obtained in accordance with § 290, the Maryland courts were open to any resident of the State upon any cause of action, and to non-residents if the cause of action arose or the subject matter of the action was situate in the State. Maryland courts had no jurisdiction, however, over a suit against a foreign corporation by a non-resident upon a cause of action arising (or a subject matter situate) elsewhere, unless the defendant corporation appeared voluntarily, in which event jurisdiction could be exercised. See Fairfax Forrest Co. v. Chambers, 75 Md. 604, 23 A. 1024 (1892).

The General Assembly rewrote the corporation law in 1908 (Laws of Md., 1908, ch. 240). In new ...