Kane v. Schulmeyer

WILNER, Judge. In February, 1993, petitioners invested $400,000 in a limited partnership formed by respondents. As an inducement to petitioners to make that investment, respondents executed a guaranty agreement, in which they covenanted to return the $400,000 investment, on demand, if (1) the limited partnership sustained a “Net Cash Flow Shortfall” in any three periods, or (2) the gross sales of an affiliated limited partnership did not equal at least $3 million at the end of that entity’s first fiscal year. On December 27, 1994, petitioners demanded the return of their investment, alleging the failure of both conditions.

When payment was not forthcoming, they filed suit against respondents in the Circuit Court for Montgomery County. ⁴²⁶ Although a number of defenses were raised to the action, the one at issue here is venue—whether the suit was properly-filed in Montgomery County. One of the respondents, Schulmeyer, lives in Baltimore County; another, Buchsbaum, lives in Howard County; the third, Garcia, lives in Anne Arundel County. None of them live or, so far as this record indicates, are employed, carry on any regular business, or engage in any habitual vocation in Montgomery County. Petitioners, however, live or have their businesses in Montgomery County.

In their complaint, petitioners alleged that the guaranty was executed in Montgomery County and, apparently on that basis, claimed venue in Montgomery. County under Maryland Code (1995 Repl.Vol.), § 6-201(b) of the Courts and Judicial Proceedings Article. In relevant part, that section provides that, if, in a multi-defendant case, there is no single venue applicable to all defendants, suit may be brought “in the county where the cause of action arose.” Asserting that the guaranty was signed in Howard County, where he lived, Buchsbaum moved to transfer the case to the circuit court for that county. The other respondents, making no factual allegations, moved to dismiss the complaint for a variety of reasons, including want of proper venue in Montgomery County.

The court denied the various motions, and the case was tried, non-jury, on the merits. Finding for petitioners, the court entered judgment in their favor in the amount of $400,-000. Respondents appealed, raising three issues, including venue. In an unreported opinion, the Court of Special Appeals reversed, holding that Montgomery County was not the proper venue.

Relying largely on Bakas v. Marjec, Inc., 275 Md. 356 , 339 A.2d 662 (1975), the appellate court concluded that the provision in § 6-201(b) allowing suit to be brought “in the county where the action arose” did not apply to a cause of action based on breach of contract unless the contract specified a particular place for payment. As no such place was specified in the guaranty agreement, the court held that suit could be brought only in a county where one of the defendants lived or worked, and not in Montgomery County. In light of that holding, the court did not address the other two issues ⁴²⁷ raised by respondents. We granted certiorari to consider the venue issue, and, as we disagree with the conclusion of the Court of Special Appeals, we shall vacate that court’s judgment and remand for it to consider the other issues raised by respondents.

DISCUSSION The current venue statutes in Maryland are found in §§ 6-201 through 6-203 of the Courts and Judicial Proceedings Article. The general venue provision is in § 6-201: “(a) Civil actions.—Subject to the provisions of §§ 6-202 and 6-203 and unless otherwise provided by law, a civil action shall be brought in a county where the defendant resides, carries on a regular business, is employed, or habitually engages in a vocation. In addition, a corporation also may be sued where it maintains its principal offices in the State. (b) Multiple defendants.—If there is more than one defendant, and there is no single venue applicable to all defendants, under subsection (a), all may be sued in a county in which any of them could be sued, or in the county where the cause of action arose.” Section 6-202 sets forth additional venue for 13 specific, enumerated kinds of actions, and § 6-203 limits venue in five other kinds of actions.

Neither of those sections applies here. The breach of contract action in this case is governed by § 6-201. The issue before us is one of statutory construction—does the provision in § 6—201(b) allowing an action to be brought in the county where the cause of action arose apply to an action for breach of contract when the contract does not specify a place for performance? As with any issue of statutory construction, our task is to search for, attempt to ascertain, and then implement the legislative intent.

In this instance, that requires some consideration of the developmental history of Maryland’s venue law, now codified in § 6-201. We shall ⁴²⁸ start, however, with Bakas v. Marjec, Inc., the case found dispositive by the Court of Special Appeals. The defendants in that case, Bakas and Psoras, signed a promissory note for $20,000 to the plaintiffs. The note, which was due on April 28,1978, was signed in Montgomery County.

It was made payable “at such place as the payee or holder hereof may designate in writing____” In February, 1974, without ever having designated a place for payment in writing, the plaintiffs sued the defendants on the note in the Circuit Court for Montgomery County. In their complaint, they asserted that Bakas resided in Baltimore City, that Psoras resided in Baltimore County, but that “the place of making and delivery of said note'was Montgomery County and that Defendants have otherwise transacted business in this County.” 1 The defendants, who were served in Baltimore County, filed motions raising preliminary objection, under former Maryland Rule 323 a., contending that they were not residents of Montgomery County, that they were not employed there, and that they did not carry on a regular business or vocation in that county. Accompanying each motion was an affidavit attesting that the defendant was a resident of Baltimore County and regularly conducted his business from that county. In response, the plaintiffs filed an unverified opposition, stating simply that venue was proper in Montgomery County, that the note was executed in that county, and that both defendants “are alleged in the Declaration to be transacting business in Montgomery County____” The court overruled the motions without comment and without making any findings of fact as to the defendants’ residences or places of employment.

Apparently, it concluded that venue was proper in Montgomery County because the note was executed there, which was ⁴²⁹ the point of the plaintiffs’ argument. From the judgment ultimately entered on the note, the defendants appealed, pressing, among other defenses, lack of venue. Noting the lack of any finding as to whether the defendants were residents of the same or different counties and the trial court’s apparent conclusion that venue existed in Montgomery County under § 6-201(b) because the cause of action arose there, we responded: “This is a concept peculiarly applicable to an action in tort. While we are not prepared to intimate that it may never be availed of in a contract action, it cannot be invoked here because the note contained no provision that it was payable in Montgomery County, and there is nothing in the record to indicate that Marjec ever exercised the right accorded it by the note to fix a place of payment.” Id. at 360, 339 A.2d 662 (emphasis added).

We remanded the case for the court to determine (1) whether, when the suit was filed, Bakas was a resident of Baltimore City and Psoras was a resident of Baltimore County, and (2) if so, whether either could otherwise be sued in Montgomery County because he was regularly engaged in business there. The holding in Bakas , under the facts presented in that case, was correct. If, as the defendants attested under oath, they both lived and worked in Baltimore County and neither one carried on business, employment, or vocation in Montgomery County, there would have been a single venue applicable to them and § 6-201(b) would have no application at all. Absent a proper finding by the trial court on that matter, the judgment could not be affirmed.

As we shall see from our survey of the history of § 6-201, however, the provision in § 6-201 (b) allowing an action to be filed where the cause of action arises is no longer peculiarly applicable to an action in tort; it applies to an action for breach of a promise to pay money as well, even if the agreement from which the promise arises does not specify a particular place of payment. Like many common law rules and doctrines, venue has an ancient lineage, one that originally was tied to the early, and ⁴³⁰ long-since discarded, role of jurors as knowledgeable witnesses rather than as impartial determiners of fact based on evidence heard in court. 2 In Crook v. Pitcher, 61 Md. 510, 513 (1884), we observed that, at early common law, the plaintiff was required to state with precision not just the county, but the .particular district or “hundred” within which the action arose, so that “the sheriff might summon as jurors, persons from the immediate neighborhood, who were presumed to be acquainted with the nature of the transaction, which they were called upon to try, and who were liable to be attainted, if they rendered a wrong verdict.” 3 That requirement, tying venue ⁴³¹ to the immediate neighborhood where the cause of action arose, continued to be the rule in England into the Seventeenth Century. Coke observed that “[t]he most general rule is that every trial shall be out of the town, parish, or hamlet ... within which the matter of fact assignable is alleged, which is most certain and nearest thereunto.” Edward Coke, The First Part of the Institutes of the Laws of England, 125 (14th ed. 1791). As we noted in Crook v. Pitcher, however, the required local nexus became inconvenient, “especially in mixed transactions which might happen partly in one place, and partly in another,” and, as a result, (1) venue became an action-based, rather than a juror-based concept, and (2) a distinction was recognized between actions that were “local”— those which could only have arisen in a particular place—and those which were “transitory,” founded on events or transactions that might have taken place anywhere.

Crook, supra, at 513 . Actions for damages to real property, for nuisance, or for the obstruction of one’s right of way were regarded as local and had to be brought where the cause of action arose; if brought elsewhere, they were subject to dismissal on demurrer. Id. at 513-14 ; see also Patterson v. Wilson, 6 G. & J. 499, 500 (1836). Actions for personal injury or injury to personal property and actions based on transactions, including for breach of contract, were regarded as transitory.

Under English law, if the action was a transitory one, it could be brought “wherever the defendant could be reached with process,” Ec k v. State Tax Comm, of Md., 204 Md. 245, 250 , 103 A.2d 850, 853 (1954), although the court could change the venue if the action was not brought where it arose. See 2 Julian J. Alexander, Alexander’s British Statutes at 659 (2d ⁴³² ed.1912). The practice in Blackstone’s time, it appears, was still to have civil cases tried “in the county where the cause of action arises, and the witnesses and jurors live,” a practice he characterized as “most excellently calculated for the saving of expense to the parties.” 3 Blackstone, supra, * 355. Until changed by statute in 1852, suits at law in Maryland were initiated by the issuance of a capias ad respondendum— a judicial writ under which the defendant was either taken into custody or required to give bail for his appearance.

See State v. Gittings, 35 Md. 169, 172 (1872); Swanson v. Wilde, 74 Md.App. 57 , 62 n. 3, 536 A.2d 694 , 696 n. 3, aff'd, 314 Md. 80 , 548 A.2d 837 (1988); 1852 Md. Laws, ch. 76. That, of course, made it particularly inconvenient for a defendant to be sued outside the county of his or her residence. Apparently as early as 1714, the Provincial Assembly attempted to remedy that problem by requiring transitory actions against a Maryland resident to be brought where the defendant resided. See The Laws of the Province of Maryland 78-79 (1714); see also Patterson v. Wilson, supra, 6 G. & J. 499, 500-503 . 4 That requirement, in modified form, was reenacted in 1796 and again in 1801.

The 1796 Act (1796 Md. Laws, ch. 43, § 14) declared that “it shall not be lawful for any person whatsoever to cause any inhabitant of this state to be arrested out of the county where he or she doth reside, by virtue of any capias ad respondendum, or capias ad satisfaciendum, for any debt, damage or cost, until the sheriff or coroner of the county where such defendant shall reside shall have returned a non est inventus ....” 5 Under the 1801 law (1801 Md. Laws, ch. ⁴³³ 74, § 11), as under the Provincial law of 1714, if a defendant was arrested upon a capias ad respondendum “contrary to the intent of this act,” the plaintiff not only suffered a nonsuit but was required to pay the defendant “his or her reasonable costs and charges.” The only caveat to the requirement of suing the defendant where he or she resided was that a defendant who absconded from justice in his or her county was subject to being arrested “in any county where they may be found.” Much of the subsequent history of the Maryland venue law was described by the Court of Special Appeals in Swanson v. Wilde. It became a bit of a hodgepodge. The general venue statutes applicable to actions at law became codified in Article 75 of the Code, dealing with Pleadings, Practice and Process At Law. As amended through 1966, § 75 of that article, dealing with actions against individuals, provided, in essence, that: (1) A defendant could not be sued at law out of the county in which he or she resided unless the sheriff returned a non est on a summons issued in that county or the defendant “abscond[ed] from justice in the county where he lives,” in which event, the defendant could be sued “in any county where he may be found.” (2) If the defendant resided in one county but carried on any regular business or habitually engaged in any vocation or employment in another county, the defendant could be sued in either county.

(3) In an action ex delicto, in which all of the defendants were not residents of or carrying on a regular business or habitually engaged in a vocation or employment in one county, the plaintiff could sue all of the defendants in the county where the cause of action arose or where any of them resided, carried on a regular business, or habitually engaged in a vocation or employment. ⁴³⁴ (4) In an action ex delicto based on negligence, the plaintiff could sue “the defendant or defendants” in the county where the cause of action arose. Section 75A, dealing with actions against corporations, provided, in general, that a corporation could be sued in the county where its principal office was located, where it regularly did business, or where “the subject matter of the action lies.” A corporation that had no principal office in the State and that did not regularly do business in any county could be sued in the county where the plaintiff resided or “where the subject matter of the action lies.” If the corporation was a surety on a bond required to be filed in a court or with other enumerated officials, the suit could be filed in the county where the bond was filed. Apart from those general venue statutes in Article 75, there grew up over the years a variety of special venue statutes placed in other Articles of the Code. Article 16, dealing with equity cases, had a number of such statutes.

Section 22 provided that an action for divorce or annulment could be filed in the county where either the plaintiff or the defendant resided, where the defendant was regularly employed or had a place of business, or, in an annulment case, where the marriage ceremony sought to be annulled was performed. Section 68 provided a number of alternative venues in adoption cases. Section 100 required actions for partition of land or to foreclose a mortgage or enforce any other lien on land to be filed in the county where the land, or some part of it, lay, even if some or all of the defendants lived elsewhere. Section 101 provided, with respect to other equity cases, that if the defendants resided in different counties, “the court where any one of the defendants resides shall have jurisdiction, and the bill or other proceeding may be filed or had in such court.” In Article 50, dealing with joint obligors and joint tenants, § 5 provided that “[i]n any action ex contractu