Cole v. Randall Park Holding Co.

Hammond, J., delivered the opinion of the Court. Was a foreign corporation, made a garnishee in an attachment filed by a Maryland resident, against nonresident defendants, subjected to the jurisdiction of the Maryland Courts as a matter of right, and if not, did its filing a plea of nulla bona and answering interrogatories amount to a binding consent to jurisdiction? These are the questions which must be answered in this appeal. Colonel C. Cole, plaintiff below and the appellant here, filed a non-resident attachment in the Superior Court of Baltimore City against a number of individual defendants, residents of Ohio, and caused the attachment to be laid in the hands of the Randall Park Holding Company, an Ohio corporation.

The proceeding was filed on September 26, 1951, service was made on October ⁶¹⁹ 17 next, and the garnishee, on November 2, 1951, filed a plea of nulla bona to which a replication was filed. Colonel Cole filed interrogatories in January, 1952 and, several weeks later, the garnishee filed answers to the interrogatories. Additional interrogatories were similarly answered in February, 1952. The individual defendants, appearing especially for the sole purpose of presenting the motion, moved the Court to quash the attachment “Because Randall Park Holding Company is an Ohio corporation which is not qualified to do intrastate, interstate or foreign business in the State of Maryland and is under no duty to so qualify, . . . and there has never been any obligation owing to these defendants by Randall Park Holding Company arising out of business done in the State of Maryland by Randall Park Holding Company,”.

It was further set forth in the motion that “even if it be assumed for the purpose of this motion that the aforesaid obligations are obligations now owing to these defendants, they are not obligations which these defendants could sue on or enforce against Randall Park Holding Company in the State of Maryland, and since the plaintiff can enforce against the garnishee in this proceeding only such rights as might be prosecuted by the defendants against the garnishee, this Court is without jurisdiction over the garnishee and the attachment should be quashed.” On July 1, 1952 the garnishee filed its motion to quash in which it joined in and adopted the motion to quash by the individual defendants for the reasons set out in their motion. Thereafter, the facts were stipulated for the purpose of determining the motion to quash, as if proven by undisputed testimony in open court. It was stipulated that the garnishee is an Ohio corporation which is not now and never has been qualified to do business of any kind in the State of Maryland, and that it has neither resident agent nor office here. The garnishee has never been indebted to the defendants in any way except under certain mortgages and notes dated May 10, 1950, which were executed by it in connection with ⁶²⁰ the purchase by the defendants of real estate and appurtenant personal property, all located in the State of Ohio.

The notes and mortgages were executed in Ohio. Two of the officers and principal stockholders of the garnishee are residents of Maryland and process was served upon one of them, the president. The garnishee maintains a bank account in Baltimore, opened in 1951 with a deposit of $80,000.00. A substantial portion of this was promptly checked out to a Maryland corporation, two of whose officers are the same persons who are the officers and principal stockholders of the garnishee, residing in Maryland.

Only seven checks have been drawn on the Maryland bank account, four of them to the Maryland corporation, one to the Maryland officers, and two to the Cleveland Trust Company. Except for the maintenance of the bank account and the drawing of the checks, the Randall Park Holding Company has at no time conducted any activity of any sort in, or with any residents or corporations of, the State of Maryland. The garnishee owns only the real estate and personal property in Ohio and such cash in bank as it has on hand from time to time. It owns no other property of any kind.

The defendants are all non-residents of Maryland and the mortgages and notes executed by the garnishee were assigned by the defendants to the Cleveland Trust Company of Cleveland, Ohio, in July, 1950. It is further revealed by the stipulation that all of the stockholders, officers and directors of the garnishee are Maryland residents, that it has both Baltimore and Cleveland attorneys, and it was agreed at the argument that it also maintained Ohio bank accounts. One of the principal stockholders of the garnishee before its incorporation, conducted in Baltimore the initial negotiations which led up to the attachment. The negotiations resulted in an agreement in principle as to a contract which was executed in Ohio, and contained the right of the stockholder-promoter to assign the contract to an Ohio corporation to be formed.

The corporation so formed was the garnishee. The property transferred by the- con ⁶²¹ tract and now owned by the garnishee is a race track in Cleveland, Ohio. The race track is operated by another corporation to whom it is leased by the garnishee. The secretary of the garnishee is a Maryland resident who performs services in both Maryland and Ohio, limited to signing checks, preparation of minutes and other corporate work of a secretarial nature.

On the case thus presented by the pleadings and the facts we find: 1. The garnishee was not doing business in Maryland nor had it incurred any liability nor done any act in the State and, therefore, it was not subject to suit in Maryland. 2. Since the real defendants in the attachment proceedings, the Ohio residents, even if creditors of the appellee, could not sue it in Maryland, the appellant could not cause it to be made a garnishee here. 3. The appellee by filing a plea of nulla, bona and answering interrogatories did not confer jurisdiction on the Court below.

Art. 23, Sec. 88 of the Code (1951 Ed.) provides in sub-paragraph (a) : “every foreign corporation doing intrastate or interstate or foreign business in this State shall be subject to suit in this State by a resident of this State or a person who has a usual place of business in this State, (1) on any cause of action arising out of such business, and (2) on any cause of action arising outside of this State.” Sub-paragraph (d) provides: “Every foreign corporation shall be subject to suit in this State by a resident of this State or by a person having a usual place of business in this State on any cause of action arising out of a contract made within this State or liability incurred for acts done within this State, whether or not such foreign corporation is doing or has done business in this State.” It is clear, under the test of the cases, that the garnishee is not doing and has not done business in Maryland. The fact that its officers, directors and stockholders are Maryland citizens, does not control. Riverside & Dan ⁶²² River Cotton Mills v. Menefee, 237 U. S. 189 , 35 S. Ct. 579 , 95 L. Ed. 910 ; Restatement, Conflict of Laws, Sec. 89; Crook v. Girard Iron & Metal Co., 87 Md. 138 , 39 A. 94 ; State to Use of Bickel v. Pennsylvania Steel Co., 123 Md. 212 , 91 A. 136 . Sec. 84 of Art. 23 of the Code (1951 Ed.) states that a foreign corporation shall not be considered to be doing-intrastate business in this State so as to subject it to suit, merely by reason of maintaining a bank account in Maryland or holding meetings of its directors or stockholders, or carrying on other activities concerning its internal affairs.

If the bank account and the activities of the secretary are excluded, the only business or activity of the garnishee is the owning and leasing of real estate and personal property in Ohio, and the collection of rent in that State. It does absolutely nothing else of any kind anywhere. This does not give jurisdiction to Maryland. Restatement, Conflict of Laws, Sec. 167; Stewart Fruit Co. v. Chicago M. & St. P. R. R. Co., 143 Md. 56 , 121 A. 837 ; Carter v. Reardon-Smith Line, Ltd., 148 Md. 545 , 129 A. 839 ; Hieston v. National City Bank of Chicago, 132 Md. 389 , 104 A. 281 ; Baden v. Washington Loan & Trust Co., 133 Md. 602 , 105 A. 860 ; Lime Co. v. Wolfenden, 171 Md. 299 , 188 A. 794 ; Bank v. Meyers & Co., 182 Md. 556 -564, 35 A. 2d 110 ; Johns v. Bay State Abrasive Products Co., 89 Fed. Sup. 654 (opinion of Judge Chesnut in the United States District Court for the District of Maryland); 60 A. L. R. 1031; 101 A. L. R. 133; 146 A. L. R. 948.

It is equally plain that sub-paragraph (d) of Sec. 88 of Article 23 of. the 1951 Code does not apply to the garnishee. The appellant contends that the defendant, Lombardo, authorized him to find a purchaser for the race track in Ohio and that one DeChario, a Maryland resident, became interested through the appellant’s efort’s in purchasing the track. Mr. DeChario was instrumental in incorporating the garnishee and is one of its officers and directors. The appellant says that DeChario and Lombardo reached a verbal agreement on ⁶²³ substantial points in Maryland, and, at this time, the defendants incurred a liability to the appellant for commission.

However, the stipulation says that DeChario “conducted the initial negotiations” and further says that “agreement in principle but not in detail was reached between the representative of defendants and Mr. De-Chario in Baltimore, although the contract was executed in Cleveland(Emphasis supplied) It is apparent from this that neither the garnishee nor its promoters entered into a contract within the State or did any acts in this State resulting in liability under the provisions of sub-paragraph (d) of Sec. 88. Park Beverage Co. v. Goebel Brewing Co., 197 Md. 369, 373 , 79 A. 2d 157, 159 . Here Judge Marbury said for the Court: “It is quite clear that no final arrangement was made at the time of the meeting in Havre de Grace ... so there was no contract between the parties at that time. . . Under these circumstances there was no contract whatever made by the appellee within the State of Maryland, and, therefore, the Circuit Court for Harford County had no jurisdiction to entertain a suit against it under the provisions of Sec. 119 (d)”.

(Now Sec. 88 (d)). See also opinion of Judge Chesnut in the United States District Court for the District of Maryland, handed down on Feb. 12, 1953 in Harrison v. Robb Manufacturing Co., 110 Fed. Supp. 848. (Daily Record Feb. 21, 1953). The reason a plaintiff may not have garnishment where the defendant can not itself sue the garnishee in that forum undoubtedly is the nature of the remedy.

Attachment and garnishment is the exercise of a special and limited statutory power, the requisites of which are jurisdictional. Even when this power is conferred on courts of general jurisdiction, its exercise is special and statutory. U. S.. Express Co. v. Hurlock, 120 Md. 107 , 87 A. 834 , and Coward v. Dillinger, 56 Md. 59 .

In essence, attachment and garnishment is an action by the defendant against the garnishee for the use of the plaintiff. For this reason, the rights of the plaintiff can never rise above those of the defendant. If the de ⁶²⁴ fendant could not sue the garnishee in the courts of the State in which the attachment is filed, the plaintiff cannot do so. 2 Shinn on Attachment and Garnishment, Sec. 516, p. 893; Hodge & McLane, Attachments, Sec. 148; Myer v. Liv., London & Globe Ins. Co., 40 Md. 595 .

In the Myer case, he, the appellant, sued out an attachment on warrant against residents of Chicago and caused the attachment to be laid in the hands of a corporation of Great Britain, as garnishee. Service was made upon the agent of the insurance company in Baltimore, in an effor to attach funds said to be due from the insurance company to the