Hagerstown Brewing Co. v. Gates

Thomas, J., delivered the opinion of the Court. The appeal in this case is from a judgment recovered against the Hagerstown Brewing Company, a corporation (appellant), on two contracts executed in its name by its president and general manager, endorsed on and guaranteeing the payment of two single bills of one Kurtz in favor of the appellee, each for the sum of five hundred dollars, and both dated the 18th of November, 1907; one payable twenty-seven months after date and the other payable thirty months after date. The case was instituted in ¡the Circuit Court for Washington County, and the declaration contained five of the common counts and four special counts. The sixth count charges that the plaintiff was the owner of a stock of goods, fixtures, etc., and that Kurtz desired to purchase the same and to give in part payment therefor his promissory note under seal or single bill for five hundred dollars, dated November 18th, 1907, and payable twenty-seven months after date, and that the defendant, “by its servants and agents, while acting within the scope of their authority, promised and agreed with” the plaintiff that if the plaintiff would sell and deliver said stock of goods, fixtures, etc., to Kurtz it would pay said single bill “at its maturity;” that the plaintiff, in consideration of the defendant’s promise, sold and delivered said stock of gooRs, fixtures,' etc., to Kurtz, but Kurtz did not pay said single bill, and that the defendant had due notice of that fact but refused to pay the same when requested to do so.

The seventh count malees the same charge in reference to the single bill payable thirty months after date, and the eighth count alleges that the plaintiff was the owner of the stock of goods, etc., and that Kurtz desired to purchase the same and to give in paid payment therefor his single bill in the following words: ³⁵¹ “JohNstowh, Pa., November 18th, 1907. Twenty-seven months after date we promise to pay to the order of George E. Gates, five hundred dollars, without defalcation, value received with interest from maturity, at Dollar Deposit Bank of Johnstown. And further, we do hereby empower any attorney of any Court of record within the United States or elsewhere to appear for me and after one or more declarations filed, confess judgment against us as of any term for the above sum, with costs of suit and attorney’s commissions of six per cent., for collection, and release of all errors, and without stay of execution, and inquisition and extension upon any levy on real estate is hereby waived and condemnation agreed to and the exemption of personal property from levy and sale on any execution hereon is also expressly waived and no benefit of exemption is claimed under and by virtue of any exemption law now in force or which may hereafter be, passed. Witness our hands and seals, Steve Kuktz (Seal)” That the defendant, by its agents and servants, while acting within the scope of’ their authority, had “previously written on the back” of said single bill as follows: “For value received we hereby guarantee the payment of this note at maturity.

(Signed) HagebstowN Bbew’g Co., By Philip Heeaiann, Pres.” And the plaintiff accepted the single bill with said endorsement thereon in part payment for his stock of goods, etc., and delivered said goods to Kurtz, but Kurtz did not pay said single bill, and that the defendant, after due notice thereof, has also failed to pay the amount due thereon. The averments of the ninth count are the same in reference to the single bill payable thirty months after date. The defendant filed two pleas, first, that it never promised as alleged, and, second, that it never was indebted as alleged, and demurred to the sixth, seventh, eighth and ninth counts of the declaration. The plaintiff joined issue on ³⁵² tbe pleas, and on tbe 6tb of October, 1910, upon tbe suggestion and affidavit of tbe defendant, itbe case was removed to tbe Circuit Court for Allegany County.

That Court overruled tbe demurrers to tbe sixth, seventh, eighth and ninth counts of ¡the narr., and on tbe same day tbe defendant filed its third and fourth pleas to those counts and its fifth plea to tbe declaration. By tbe third plea tbe defendant says that “it was incorporated' in tbe year 1898 under tbe provisions of tbe general laws of ‘the State of Delaware for tbe purpose of brewing, manufacturing and making beer and other kinds of malt liquors and for tbe sale, transportation or other disposition of tbe products of said business, and these are tbe only powers given to it by its certificate of incorporation and that it has not tbe power to guarantee tbe obligations of other persons except for a valuable consideration moving to tbe said defendant, and .that tbe said alleged promise or guarantee of tbe said defendant on said promissory note was wholly without consideration and is ultra vires on tbe part of tbe defendant and void and unenforceable by a suit against tbe defendant.” Tbe fourth plea alleges that tbe endorsements were made without the authority of tbe defendant and have not been ratified by it, and tbe fifth plea, which on motion of tbe plaintiff was not received, says that tbe plaintiff “is and has been a resident of tbe State of Pennsylvania since before tbe execution of tbe alleged promissory notes sued on and endorsements thereon, and that tbe alleged cause of action arose in tbe State of Pennsylvania, and did not arise in tbe State of Maryland, and tbe subject of tbe action is not and has never been situated in this State, and that tbe defendánt is and has been a non-resident of tbe State of Maryland since before -the execution of tbe alleged promissory notes sued on and endorsements thereon, and that both plaintiff and defendant are non-residents of tbe State of Maryland, and that the plaintiff has no right of action in this Court.” Tbe plaintiff joined issue on tbe fourth plea, and filed six replications to tbe third plea. Tbe Court below sus<- ³⁵³ tained a demurrer to the first and fifth replications, and issue was joined on the second, third, fourth and sixth replications, which deny the averments of the plea that the promises of the defendant were made without consideration and were ultra vires, and allege that they were made for valuable considerations “moving to the defendant,” and that. the certificate of incorporation did give the defendant power to guarantee the obligation of others, etc. During the trial of the ease the defendant reserved seven exceptions, the first six of which relate to rulings on the evidence, and the seventh to the granting of the plaintiff’s first, third and fifth prayers, and the rejection of the defendant’s first, second, third, fifth, sixth, ninth, tenth and eleventh prayers and a modification of its eighth prayer. The defendant’s fifth prayer presents its contention that á non-resident of this State can not sue a foreign corporation in the Courts of this State on a contract made in some other State.

That was undoubtedly the law prior to the Act of 1908, Chapter 21-0, except where the subject of the action was situated in this State, but section 67 of that act declares that “Any person or corporation, whether a resident ór a non-resident of this State, may sue any foreign corporation regularly during business or regularly exercising any of its franchises therein for any cause of action.” This language is very broad and clear, and the right of a non-resident to sue a foreign corporation in the Courts of this State is nd longer confined to cases in which “the cause of action has arisen, or the subject of the action shall be situated in'this State,” as was the case under section 411 of Article 23 of the Code, which was expressly repealed by the Act of 1908. The appellant insists, however, that section 67 of Chapter 240 of the Acts of 1908 was repealed or modified by the later Act of 1908, Chapter 309, which provides that “Any corporation now chartered by the laws of this State, which shall transact business therein, shall be deemed to hold and exercise franchises within this State, and shall be liable to suit in any of the Courts of this State on any dealings or trains- ³⁵⁴ actions therein, and also shall be liable to suit in any of the Courts of this State, on any controversy which may arise between such corporation and any resident of this State.” This act is practically section 409 of Article 23 of the Code of 1904 with the additional provision for controversies between such corporations and residents of this State. It was never suggested that section 409 of the Code so modified the provisions of section 411 as to confine the jurisdiction of our Courts to suits against non-resident corporations on transactions in the State, on the contrary it was repeatedly held that, under section 411, they had jurisdiction also in cases where “the subject of the action” was situated in this State (Cromwell et al. v. Royal Canadian Ins. Co., 49 Md. 382 ; Universal Life Ins.

Co. v. Bachus, 51 Md. 31 ), and there is no more reason for holding that Chapter 309 of the Act of 1908 repeals or modifies section 67 of Chapter 240 than that section 411 of the Code was restricted or limited by section 409. Chapter 309 does not expressly repeal Chapter 240, and if allowed the effect contended for by the appellant it would take away the 'jurisdiction of our Courts in cases of suits by non-residents against foreign corporations where the subject of the action is situated in this State, which was expressly provided for in section 411 of the Code, and included in the terms of Chapter 240. The argument of counsel for the appellant that to allow corporations regularly doing business in this State to be sued by non-residents on any cause of action would impose great additional labor upon the Courts and extra burdens upon the taxpayers of -this State would be entitled to some weight if the terms or meaning of the act were obscure or uncertain,' but here the language is clear and does not admit of any doubt as to its meaning. It expressly provides that a foreign corporation regularly doing business or exercising any of its franchises in- this State may be sued by any person or corporation, resident or non-resident, on any cause of action, and the evidence in this case shows that the appellant was “regularly doing business” in this State: and had an office, if not its ³⁵⁵ main office and chief place of business, in Hagerstown.

Moreover, as the Act of 1908 has been in force for nearly four years, and as this is the first time the question has been raised in this Court, it would seem that the apprehension of the appellant are not well founded. Plaintiffs third prayer instructed the jury that there was “no legally sufficient evidence” in the case to show that the endorsement of the single bills sued on was beyond the corporate powers of the appellant. The certificate of incorporation was not offered in evidence, and the ground of the demurrer to the sixth, seventh, eighth and ninth counts of the declaration, and of the appellant’s objection to this prayer is that it was incumbent upon the plaintiff to allege and show that the contract sued on was within the corporate powers of the appellant. It is said in 5 Pncy. of P. & P. 95: “If the defendant wishes to interpose the defense of ultra vires in an action by a corporation against him, he should specially plead it.

And, in an action against a corporation, the plaintiff need not set out in his complaint or declaration the capacity of the corporation to make the contract sued on. Where the defense of ultra vires is allowable to a corporation, the corporation must specially plead it.” In 10 Oyc. 1155, Judgts SeymouR D. ThomtsoN says: “A general presumption of right-acting attends corporations, the effect of which is to place the burden of proving that a contract made or an act done by a corporation was ultra vires upon him who alleges that fact as the foundation of his action or defense.” He says further: “Aside from casting the burden of proof upon a party setting up the want of power this presumption operates in several ways. If the powers possessed by the particular corporation do not appear at all, and are not judicially noticed by the Court, then it operates within certain limits to carry with it the general presumption that the act or contract which is challenged is within its powers. If it has the power to do the given act, or to make a contract of a given nature under prescribed conditions, then the principle operates to create the ³⁵⁶ presumption that these conditions existed in the particular -instance. * * * If the corporation itself seeks to avoid its contract on the ground that it was ultra vires this presumption puts upon it the burden of showing that its articles of incorporation did not authorize the contract.” In the case of Railway Co. v. McCarthy, 96 U. S. 258 , it