Texaco, Inc. v. Vanden Bosche

• Decision Date: 27 April 1966
• Docket Number: No. 261,261
• Citation: 242 Md. 334,219 A.2d 80
• Parties: TEXACO, INC. v. Richard P. VANDEN BOSCHE et al.
• Court: Maryland Court of Appeals

Page 334

242 Md. 334

219 A.2d 80

TEXACO, INC. v. Richard P. VANDEN BOSCHE et al.

No. 261.

Court of Appeals of Maryland.

April 27, 1966.

James J. Cromwell, Silver Springs (William G. Clark and Clark & Cromwell, Silver Spring, on the brief), for appellant.

Robert A. Gingell, Lawrence E. Speelman and Ritterpusch & Gingell, Silver Springs, on brief for Albert B. Seitz, III, appellee.

J. Grahame Walker, Bethesda, on brief for Richard P. Vanden Bosche, appellee and other appellees.

Leo Stepper, pro se.

Before PRESCOTT, C. J., and HAMMOND, MARBURY, BARNES, McWILLIAMS and J. DeWEESE CARTER (specially assigned), JJ.

HAMMOND, Judge.

Virginia has a statute which imposes personal liability on the directors, officers and agents of a foreign corporation that has not obtained a certificate of authority to transact business in Virginia 'for any contracts made or to be performed in this State and any torts committed in this State between the time when it began to transact business in this State and the date when it obtains a certificate of authority.' 3 Code of Virginia (1964 Replacement Vol.), § 13.1-119. Texaco, Inc., brought an action in the Circuit Court for Montgomery County, Maryland, under the Virginia statute against various officers and directors of Neal Construction Company, Inc., a Maryland corporation, seeking damages from them personally for failure of Neal fully to perform and for defective part performance of a contract between Texaco and Neal to erect a filling station in Fairfax County, Virginia. The defendants variously demurred to the declaration for that the suit was to enforce a penalty under a law which had no extraterritorial effect, there was no allegation the defendants or Neal transacted any business in Virginia and no allegation that any acts or omissions relied on as having damaged Texaco occurred in Virginia at a time when Neal was without a certificate of authority.

Judge Shure sustained the demurrers, holding that the statute was intended to have and did have force and effect only in Virginia, saying:

'(S)ince the statute derives its force from the legislature (of Virginia), its effect must be limited to (its) * * * boundaries * * *. The legislature has no power to make officers or agents, other than those within its jurisdiction, liable; and such an attempt to impose liability upon the citizens and residents of other states * * * cannot succeed in the State of Maryland * * *.'

Judge Shure also found support for his position in language of the Virginia statute that 'suits, actions and proceedings may be begun against it (the corporation transacting business without a crtificate) by serving process on any such director, officer or agent of the corporation, or, if none can be found, on the clerk of the Commission.' (The statute further provides that the transaction of business without a certificate constitutes the clerk of the Corporation Commission the attorney of the corporation to receive service of process). He found this language to indicate that suit must be filed in virginia.

We agree that the demurrers to the declaration rightly were sustained, although though not for the reasons assigned by Judge Shure. The declaration alleges that on May 8, 1964, Neal entered into a contract with Texaco to construct a filling station in Virginia and 'that said Neal * * * breached the said contract' (in ways specified), that Neal applied for a certificate of authority on July 20, 1964, and was granted one on July 30, 1964, 'being subsequent to May 8, 1964,' that Neal, a foreign corporation, did not secure a certificate 'until after the date of the contract to be performed in the State of Virginia,' and that all the officers and directors of Neal are personally liable to Texaco for the damages flowing from Neal's defaults. There is no allegation that the contract was made in Virginia and no allegation that Neal transacted business in Cirginia or breached its contract which it was to perform in Virginia before it was issued a certificate of authority on July 30, 1964. There allegations do not state a case within the provisions of the statute which assigns personal liability to directors, officers and agents of a delinquent foreign corporation only for 'contracts made or to be performed * * * between the time when it began to transact business * * * and the date when it obtains a certificate of authority.' If it be assumed that the Virginia statute should be given effect in Maryland and any liability it imposes enforced in the courts of Maryland, the declaration fails to state a cause of action in that there is no allegation that Neal did anything it should not have or failed to do anything it should have in Virginia before it obtained the required certificate of authority.

Our holding on this point makes it unnecessary to decide, and we do not, whether our assumption that the Virginia statute should be given force and effect in Maryland is valid and sound, although there are persuasive indications to which we shall refer that it is.

Earlier Maryland cases are not among these indications. When they were decided, as is true now, a transitory cause of action could, and generally would, be decided outside the jurisdiction of its origin by any court in any other forum which had jurisdiction of the subject matter and the parties. Then, as now, the host forum did not have to open its courts (a) to enforce criminal or penal laws of another state, (b) if it had a strong public policy against the provisions or requirements of, or the rights created by, the foreign law, (c) where the foreign law utilized a special or unusual form of proceedings or remedy which the host state cannot provide, or (d) where, under the doctrine of forum non conveniens, there is no substantial or legitimate basis for the plaintiff's choice of forum and an appropriate forum is otherwise available.

In First Nat. Bank v. Price, 33 Md. 487, the plaintiff sued in Maryland to recover from officers and directors of a Pennsylvania corporation personally a debt of the company. This Court held that the case stated was within the statute and the plaintiff could have prevailed in Pennsylvania, but that the personal liability imposed by the statute was in the nature of a penalty and not enforceable in Maryland. There was a similar holding in Attrill v. Huntington, 70 Md. 191, 16 A. 651, 2 L.R.A. 779, a suit in Maryland on a New York judgment rendered on a New York statute which imposed personal...