Davis Advisory Services, Inc. v. Executive Staffing of Bethesda, Inc.

⁶⁴⁵ Digges, J., delivered the opinion of the Court. This suit, brought in the Circuit Court for Montgomery County, seeks to recover a $3,750.00 fee charged by an employment agency. Davis Advisory Services, Inc., appellant, paid that sum to the appellee, Executive Staffing of Bethesda, Inc., for locating E. John Wentland to serve as its accountant and treasurer. After Davis concluded the presentation of its case, Judge Pugh, sitting without a jury, granted appellee’s motion to dismiss pursuant to Maryland Rule 535.

In order for the trial judge to have correctly granted this motion it would have been necessary for him to consider appellant’s evidence, including all logical and reasonable inferences which can be drawn therefrom, in a light most favorable to Davis and then properly determine that a prima facie case had not been established. Hadjis v. Anderson, 260 Md. 30, 35 , 271 A. 2d 350 (1970) ; Isen v. Phoenix Assurance Co., 259 Md. 564, 571 , 270 A. 2d 476 (1970) ; Shoreham v. Randolph Hills, 248 Md. 267, 278 , 235 A. 2d 735 (1967) ; Price v. Levin, 248 Md. 158 , 235 A. 2d 547 (1967). We disagree with the dismissal at this stage of the proceedings because we think appellant made out a prima facie case. From our review of the record, keeping in mind the test just enunciated, the following fact pattern emerges.

Mortgage Investors of Washington was organized as a Maryland mutual fund for the purpose of investing in real estate. In order for it to qualify for an exemption, under §§ 856-58 of the Federal Internal Revenue Code ( 26 U.S.C.A. §§ 856-58 , 1954), from paying an income tax, it was necessary for the fund to remain entirely passive. Accordingly, Davis was incorporated to manage and advise the mutual fund in all of its activities. Appellant’s primary responsibility throughout the formalization period of Mortgage Investors was to assist it in qualifying for the Internal Revenue Code exemption and also aid in obtaining approval from the Securities and Exchange Commission for a public offering of its shares.

During this pre-offering period, Davis needed someone ⁶⁴⁶ with experience to serve as its internal accountant, prepare and sign registration statements for the S.E.C. and see that there was compliance with the requirements of the I.R.C. Utilizing the services of Executive Staffing, an employment agency, Davis found and subsequently hired E. John Wentland as its treasurer at a $25,000 yearly salary. Prior to being employed, Wentland was twice interviewed by appellant. He also furnished a resume containing in-part the following information about his professional background: he had worked for Ernst & Ernst and Arthur Anderson & Co., two nationally known accounting firms; had spent four years with the Internal Revenue Service; and had served as comptroller of Miami Window Corporation, “a multi-corporate set up” of “21 corporations” for which he prepared the reports it filed with S.E.C. Shortly after deciding to hire Wentland, Davis received a statement from Executive Staffing showing that a $3,750.00 fee was due on September 30, 1969. This bill was accompanied by a “Candidate Stability Guarantee” which in pertinent part provided: “The following CANDIDATE STABILITY GUARANTEE is offered to those employers whose policy it is to pay fees in the interest of recruiting qualified and reliable personnel. 1.

In the event a candidate voluntarily resigns or is discharged for dishonesty, excessive drinking, excessive tardiness, or excessive absence (for reasons other than illness or emergency), Executive Staffing guarantees: Refund of the fee pro-rated over 90 days, should such a resignation or discharge-for-cause occur within 9.0 days of the starting date of a candidate whose starting salary is $9,000 per year or more. 2. Executive Staffing also guarantees the employer a refund of the fee IN FULL ⁶⁴⁷ in the event a candidate resigns or is discharged for ANY reason within two weeks of the starting date.” After receiving this statement with the enclosed guarantee, the president of Davis, Charles D’Arco, wrote appellee asking that the payment date be extended. The letter stated that appellant was “in effect an empty shell with no responsibilities and no income until such time as another organization, Mortgage Investors of Washington, comes