Barrie-Peter Pan Schools, Inc. v. Cudmore

Smith, J., delivered the opinion of the Court. When the Sheriff of Montgomery County twice returned non est summons for appellant Barrie-Peter Pan Schools, Inc., which he had been directed to serve upon Frances Seldin, its resident agent, appellees requested the appointment pursuant to Maryland Rule 116 of a private person to serve process. The Montgomery County sheriff filed a third return of non est and the private person filed a return reflecting “[t]hat he made five separate attempts to effect service on said resident agent but was unable to contact her.” Appellees then directed ser ⁴¹⁰ vice pursuant to Code (1969 Repl. Vol.) Art. 75, § 75B and Rule 106 e upon the State Department of Assessments and Taxation (the Department).

The Department pursuant to the mandate of § 75B (b) forwarded a copy of the declaration and summons to the corporation at its correct address in care of “Mr. Francis Seldin” by certified mail on May 28, 1969, which was returned to the Department by the post office marked “unclaimed”, thus producing this litigation. Judgments by default totaling $23,400.00 were entered against appellant on May 11, 1970. Attachments were issued on June 18, 1970, one of which reached a bank account of appellant where there was on deposit more than the amount of the judgments. This brought motions on behalf of appellant to vacate and set aside the judgments, to arrest execution on the attachment, and to quash the attachment.

We shall affirm the denial of those motions. It is conceded that appellant is a Maryland corporation and Mrs. Seldin is in fact its resident agent. As a matter of fact, in its brief appellant says that she lives on the premises at the address designated as the principal office of the corporation. Appellant contends the judgment thus obtained is void because the corporation was “without actual notice of suit”, relying upon Harvey v. Slacum, 181 Md. 206 , 29 A. 2d 276 (1942), and Little v. Miller, 220 Md. 309 , 153 A. 2d 271 (1959).

The statute in question provides in pertinent part: “(a) Except to the extent otherwise specifically provided by a statute of this State — H» H» “(2) If any corporation of this State * * * (2) has one or more resident agents and an unsuccessful attempt has been made to serve process on such corporation in the manner provided by the Maryland Rules of Procedure, such corporation shall he conclusively presumed to have designated the Department as its true and lawful attorney authorized to accept on its behalf ⁴¹¹ service of process in the action in which such process issued, and in such case such process may be served upon the Department as the true and lawful attorney of such corporation. “(b) When service of process upon any corporation of this State * * * is lawfully made by leaving copies of the process in the office of the Department, it shall be the duty of the Department forthwith to record the day and hour of such service and to forward by registered or certified mail, return receipt requested, one copy of the process with a notice of such service, addressed to such corporation at its mailing address, if it has a mailing address on file with the Department * * (Emphasis added.) Rule 106 e 1 provides in pertinent part: “If a corporation required (by statute of this State) to have a resident agent * * * has one or more resident agents, and unsuccessful attempts have been made on different business days to serve process either twice upon one resident agent or once upon each of two resident agents, process inay be served upon the State Department of Assessments and Taxation as the attorney of such corporation.” Code (1966 Repl. Vol.) Art. 23, § 8 requires every corporation of this state to have “at least one resident agent who shall be either a citizen of this State, actually residing herein, or a corporation of this State.” Appellant cites the language in Harvey where it was said: “It is an elementary principle that no valid proceeding can be had against a person until he has been notified of the proceeding by proper summons, unless he voluntarily waives such constitutional right.” 181 Md. at 210 . ⁴¹² It takes comfort from the fact that this language was quoted by Chief Judge Bruñe for the Court in Little, 220 Md. at 315 . In Harvey a judgment was obtained in a personal injury action in the Baltimore City Court. Some months later the defendants moved that the judgment be stricken, claiming that they had never been summoned to appear in the case.

The deputy sheriff was not certain whether he had notified the defendant William J. Slacum or his son, Clyde Slacum, and could not “say positive” as to whether he had served a copy of the declaration upon Mrs. Slacum, finally admitting that he did not say anything at all to her about why he had come to the house. In Little a judgment was entered in the Superior Court of Baltimore City against Little, a resident of Anne Arundel County. He claimed he was not personally served with process in the case and that the sheriff’s return showing him to have been summoned was false. Little was the only witness who testified at the hearing on the motion.

The suit was filed on March 4, 1952, and he was returned summoned on March 8,1952. He produced a discharge certificate issued by the United States Coast Guard at Baltimore showing that he had been a member of the crew of a ship which had departed from Baltimore on March 6,. 1952, and returned to that port on March 17,1952. This Court held that the motion to vacate should have been granted. Both of those cases differ from the one at bar.

We have not been cited nor have we located a case precisely on the point here involved. Close to our case is Silva v. Crombie & Co., 39 N. M. 240, 44 P. 2d 719 (1935), which concerned suit against a foreign corporation doing business in New Mexico. The statutory agent left the state and no other person had been named to replace him. Process was served upon the Secretary of State of New Mexico.

The defendant failed to answer. Judgment by default was entered. Six months later the defendant filed a motion to set aside and vacate the judgment, contending that the court had obtained no jurisdiction over it because there had been no valid service of summons on ⁴¹³ it, that it did not voluntarily appear, that the rendering and entering of final judgment was without due process of law, and that the Secretary of State did not mail a copy of the complaint and summons to the defendant as required by the New Mexico statute. The New Mexico court said in part: “The decisive question in this case is whether the appellee corporation had such notice of the suit, and was so far subject to the jurisdiction and laws of New Mexico, that it was bound to appear, or take the consequences of nonappearance. “Comp.

St. 1929, § 32-150, provides for service upon the secretary of state, when the statutory agent of any foreign corporation, who has been designated as the agent upon whom process may be served, dies, resigns, or removes from the state, and cannot be found. This statute also provides that such service is effective to all intents and purposes as if made upon the president or head officers of the corporation. There is an additional proviso therein to the effect that the secretary of state shall within two days after such service notify such corporation by registered letter directed to such corporation at its registered office, in which letter there shall be inclosed the process or other paper served. “Appellant contends that when the secretary of state is properly served, such service is sufficient. “Appellee contends that such service was not completed, and not effective, unless the secretary of state notified appellee of such service as provided by section 32-150. “With this contention of appellee we do not agree. The particular terms of our statute we deem decisive of the question.

The service upon the secretary of state was effective to all intents ⁴¹⁴ and purposes as if made upon the president or head officers of the corporation. If the Legislature had desired to make the service effective only when the secretary of state had notified such corporation, it could have so stated in plain language. Such language is discernible in the case of insurance companies. Comp.

St. 1929, § 71-114. The neglect of the secretary of state is not chargeable to the appellant. The Legislature chose its terms with discrimination, and made it plain that the service of process on the secretary of state is the effective service, not the notice by the secretary of state to the foreign corporation that renders it effective.” Id. at 241-42. ❖ * sfi “The secretary of state acts for and on behalf of the corporation, as effectually as if he were designated in the charter as the officer on whom process was to be served; or, as if he had received from the president and directors a power of attorney to that effect. Notice to him was notice to the corporation, and for whom, by statute, he was empowered to take notice.” Id. at 243.

It then stated that the matter appeared to have been settled by the Supreme Court of the United States in Washington v. Superior Court, 289 U. S. 361 , 53 S. Ct. 624 , 77 L. Ed. 1256 , 89 A.L.R. 653 (1933), quoting from that opinion: “ ‘The state need not have admitted the corporation to do business within its borders. Bank of Augusta v. Earle, 13 Pet. 519 , 10 L. Ed. 274 ; Lafayette Ins. Co. v. French, 18 How. 404, 407 , 15 L. Ed. 451, 452 . Admission might be conditioned upon the requirement of substituted service upon a person to be designated either by the corporation, St. Clair v. Cox, 106 U. S. 350 , ⁴¹⁵ 356, 1 S. Ct. 354 , 27 L. Ed. 222 [225] or by the state itself, Mutual Reserve Fund Life Asso. v. Phelps, 190 U. S. 147, 158 , 23 S. Ct. 707 , 47 L. Ed. 987 [994], or might, as here, be upon the terms that if the corporation had failed to appoint or maintain an agent, service should be made upon a state officer.

American R. Exp. Co. v. F. S. Royster Guano Co., 273 U. S. 274, 280 , 47 S. Ct. 355 , 71 L. Ed. 642 [643], The provision that the liability thus to be served should continue after withdrawal from the state afforded a lawful and constitutional protection of persons who had there transacted business with the appellant. American R. Exp. Co. v. Kentucky, 273 U. S. 269, 274 , 47 S. Ct. 353 , 71 L. Ed. 639 [642]. “ Tt has repeatedly been said that qualification of a foreign corporation in accordance with the statutes permitting its entry into the state constitutes an assent on its part to all the reasonable conditions imposed.

Lafayette Ins. Co. v. French, supra, 18 How. [404] 408, 15 L. Ed. 451 [453] ; St. Clair v. Cox, supra, 106 U. S. [350] 356, 1 S. Ct. 354 [ 27 L. Ed. 225 ] ; Connecticut Mut. L. Ins. Co. v. Spratley, 172 U. S. 602, 614 , 19 S. Ct. 308 , 43 L. Ed. 569 [573] ; Old Wayne Mut.

Life Asso. v. McDonough, 204 U. S. 8, 22 , 27 S. Ct. 236 , 51 L. Ed. 345