Zinz v. Evans and Mitchell Industries

• Decision Date: 17 July 1974
• Docket Number: No. 821,821
• Parties: Herbert S. ZINZ v. EVANS AND MITCHELL INDUSTRIES et al.
• Court: Court of Special Appeals of Maryland

Page 126

22 Md.App. 126

324 A.2d 140

Herbert S. ZINZ v. EVANS AND MITCHELL INDUSTRIES et al.

No. 821.

Court of Special Appeals of Maryland.

July 17, 1974.

Certiorari Denied Oct. 7, 1974.

Charles E. Brooks, Towson, with whom were William N. White, Brooks & Turnbull, Towson, on the brief, for appellant.

A. Gwynn Bowie, Jr., Baltimore, with whom were William C. Stifler, III, Niles, Barton & Wilmer, Baltimore, on the brief, for appellees.

Argued before THOMPSON, MOYLAN and DAVIDSON, JJ.

MOYLAN, Judge.

At fundamental issue is the application of the so-called 'Long Arm' Statute. The appellant, Herbert S. Zinz, filed a two-count declaration alleging libel against the non-resident appellees, Evans and Mitchell Industries and Ernie W. Mitchell. The appellees, a Georgia corporation and its vice-president, were served by registered mail in Georgia. The appellees, by Maryland counsel, timely filed a Motion Raising Preliminary Objections on the ground that the court lacked personal jurisdiction over them because they were residents of the State of Georgia, were not subject to suit in Maryland under Article 75, Section 96, and on the ground that the service of process on them violated the due process clause of the Fourteenth Amendment. Following a full hearing, Judge Joseph C. Howard, in the Superior Court of Baltimore City, granted the appellees' motion and entered a judgment in their favor for costs. The appellant here appeals the granting of that motion.

The facts are essentially undisputed. The appellant is a citizen of the State of Maryland. The appellee Evans and Mitchell Industries is a Georgia corporation, having its primary place of business in the State of Georgia. The appellee Ernie W. Mitchell is an individual residing in the State of Georgia. There is no allegation that either of the appellees ever physically entered the State of Maryland or ever had any connection with the State of Maryland on other than the single occasion now in issue. The appellees were considering the purchase of land in the State of Maryland for development as a business venture. In exploring this possibility, they dealt with the appellant.

Early in the negotiating stage, the effort aborted over an apparent disagreement between the appellant, on the one hand, and the Union Trust Company of Maryland, on the other hand. The appellees agreed with the position taken by the Union Trust Company and withdrew from the Maryland venture. The subject of the libel action is a letter, dated August 16, 1972, which was sent by Ernie W. Mitchell, vice-president of Evans and Mitchell Industries, to Mr. Armand H. Levin, the vice-president of the Union Trust Company of Maryland. The letter read:

'Dear Mr. Levin:

At the present our proposed partner in Baltimore is emphatic about receiving an agreement which is enclosed and which is unacceptable to us. Should this not be a part of our purchase his attorney will proceed with a suit against your institution of which we could be made a part; or regardless, would be involved in should it reach the courtroom. Needless to say, law suits do not impress stockholders.

It is our regret to inform Union Trust that after weighing all circumstances we must withdraw from this acquisition. Many times it is better to find the rotten apple before you buy the bushel. Luckily for all concerned the apple was discovered before more time and dollars were spent. I am very sorry that your attorneys went to the effort of drafting the sale agreements; which, by the way, were excellent. I would like to assure you, however, that we were as shocked as you were concerning the last minute fees.

A letter from you acknowledging this matter would be appreciated.'

The letter was written in Georgia and mailed from Georgia. It was received in Maryland. Copies of the letter were sent to four individuals, two of whom were residents of Baltimore County, Maryland.

By the Acts of 1964, ch. 95, Maryland became one of the first states to adopt a comprehensive and expansive 'Long Arm' Statute. The Maryland act was essentially based upon the provisions of the Uniform Interstate and International Procedure Act, 9B Uniform Laws Ann. 307-310 (1966). The Uniform Act was based in turn upon prior enactments of many states, codifying in some instances the Supreme Court decisions regarding the constitutional basis for acquiring in personam jurisdiction over non-resident defendants. See International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). See generally Auerbach, The 'Long Arm' Comes to Maryland, 26 Md.L.Rev. 13 (1966).

The Maryland 'Long Arm' Statute is now codified as Courts Article § 6-103. The heart of the statute, and the provision which concerns us here, is Section 6-103 which reads as follows:

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

(b) In general.-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. (Ann.Code 1957, art. 75, § 96; 1973, 1st Sp.Sess., ch. 2, § 1.)

If personal jurisdiction exists in the case at bar, it must be pursuant to either subsection (a)(1), (a)(3) or (a)(4). The appellant does not seriously push a theory based upon (a)(4). That subsection provides for personal jurisdiction in those cases where there has occurred 'tortious injury in this State or outside of this State by an act or omission outside the State' if the person over whom jurisdiction is sought 'regularly does or solicits business, engages in any other persistent course of conduct in this State or derives substantial revenue from goods, food, services or manufactured products used or consumed in this State.' It was clear from the pleadings and supporting affidavits that the appellees did not regularly do business in Maryland, did not engage in any persistent course of conduct in Maryland and did not derive substantial income from products used or consumed in Maryland.

Nor do we think that personal jurisdiction over the appellees can be maintained on the basis of subsection (a)(1). That subsection provides for personal jurisdiction 'as to a cause of action arising from the person's . . . transacting any business in this State.' We think initially that the appellant, in his declaration, failed to allege a single jurisdictional fact which would show that the appellees were 'transacting any business in this State.' We feel, moreover, that since subsections (a)(3) and (a)(4) provide specifically for the acquisition of personal jurisdiction in tort cases, that subsection (a)(1) is limited to actions in contract. See Auerbach, supra, at 34, n. 124:

'Jurisdiction based on 'transaction of business' is technically broad enough to cover tort as well as contract cases. See Commissioners' Note to § 1.03 of Uniform Act. However, in view of the subsequent categories specifically dealing with tort actions, the typical case under this category is a contract action.'

The appellant relies primarily on subsection (a)(3). That subsection consists of two distinct elements. There must be 1) 'a tortious injury in this State' which is caused by 2) 'an act or omission in this State.' The appellees concede that the 'tortious injury,' if any, took place in Maryland. They strenuously assert, however, that the 'act or omission,' causing the tortious injury did not occur...