P. Flanigan & Sons, Inc. v. Childs

Singley, J., delivered the opinion of the Court. P. Flanigan & Sons, Inc. (the Paving Contractor), the appellant here and plaintiff below, is engaged in the highway and road construction business. The appellees and defendants below are John C. Childs, Sr., Gerald H. Cooper and Thomas E. Kelly, Jr., who were sued in their individual capacities and as members of a partnership known as Underwood Associates (the Underwood Partnership). On 28 February 1963, the Underwood Partnership transferred to Underwood Development Corporation (the Underwood Corporation) a two-acre tract located at Underwood Road and Winston Avenue in Baltimore.

At the time of transfer, all of the stock of the Underwood Corporation was owned by Childs, Cooper, Kelly and their wives. After the transfer, an oral agreement was entered into between the Underwood Corporation and Giardina Construction Company (the Construction Company) for the construction of 32 apartment units on the tract. Construction commenced about 15 March 1963. It appears that the tract was the only asset of the Underwood Partnership and that once the conveyance had been made, the partnership was regarded by the partners as having been terminated, although there was no formal dissolution. ⁶⁴⁹ There was uncontroverted testimony below that the oral agreement contemplated that the Construction Company would build the project without profit, and that upon completion, Harry Giardina, president of the Construction Company, would receive a 25% interest in Underwood Corporation.

Sometime in June, 1963, Pierce J. Flanigan, president of the Paving Contractor, according to his testimony, received “* * * a telephone call from either Mr. John Kreiner or Mr. Harry Giardina asking me to come out and look at this Underwood Apartment project and submit a price for the asphalt paving of the parking areas and the roadways which led up to the apartment buildings.” Mr. Flanigan, who said that he knew, and had previously done work for Mr. Kreiner and Mr. Giardina, when they were employees of another contractor, went to the site; met Mr. Kreiner and perhaps Mr. Giardina; and was given a site plan prepared by the project’s architect on 3 July 1962 for “Underwood Associates, Owners,” which Flanigan used in the preparation of his company’s bid. Flanigan said that Kreiner told him that the thickness of the paving would have to be discussed with the owners, and this was done. On 19 June 1963, the Paving Contractor submitted a written proposal addressed to “Underwood Associates, 1404 Rome Road, Baltimore 27 Maryland, attention Mr. John Kreiner” to do the job for $3,613. The original proposal, according to Mr. Flanigan, was hand-delivered to the job site, but on the same day, at the request of a person on the site whose identity was unknown to Mr. Flanigan, a copy of the proposal was mailed by the Paving Contractor to 1404 Rome Road, where the office of the Construction Company was located.

Flanigan was instructed by Kreiner to proceed with the work, which was completed sometime in July. On 24 July 1963, the Paving Contractor billed Underwood Associates at 1404 Rome Road. The bill was not paid. In December of 1963, a trustee was appointed for the creditors of the Construction Company.

On 8 May 1964, the Paving Contractor filed its claim for $3,613 in the receivership, upon which there was ultimately a distribution of $59.09. In June of 1964, Flanigan learned for the first time that the owner of the project was the Underwood Corporation, and not the Underwood Partnership, as he had ⁶⁵⁰ assumed. By this time, however, Underwood Corporation’s mortgage on the project had been, or was about to be foreclosed, since the property was sold at public auction on 11 June 1964. : On that day, the Paving Contractor entered suit in the Court of Common Pleas of Baltimore City against the members of the Underwood Partnership as individuals and as members of the firm, and prayed a jury trial. When the case came on for trial, the jury returned a verdict for $3,613 against the defendants, who promptly moved for a judgment n.o.v. This motion was granted.

Judgment was then entered in favor of the Underwood Partnership for costs. The correctness of that action is the only question presented by this appeal. The thrust of the Paving Contractor’s argument is that the members of the Underwood Partnership either clothed Giardina with apparent authority to contract for the partnership’s account or alternatively are estopped from denying that he was their agent. In support of this contention, they say that when Kreiner gave to the Paving Contractor a site plan which identified the Underwood Partnership as owner and said that he needed to discuss the thickness of the paving with “the owners”, a factual situation had developed with the- knowledge or permission of the Underwood Partnership which led the Paving Contractor to assume that it could look to the partnership for payment. 1 The trial judge did not see it quite this way, and neither do we.

For the Paving Contractor to hold the Underwood Partnership, as principal, answerable for the obligation incurred by Giardina or by the Construction Company, as its agent, there must be proof of an agency relationship. The lower court found the record wanting in this respect, and we agree. Gerald H. Cooper, one of the defendants and a member of the Underwood Partnership, was called as an adverse witness by the Paving Contractor. He testified that the partnership was formed about 29 May 1962 and continued until 28 Feb ⁶⁵¹ ruary 1963; that there had been no formal agreement of partnership, and that there were no articles of dissolution; that the Construction Company had been employed by the Underwood Corporation as general contractor; and that Giardina had no authority to hire individual subcontractors on behalf of the Underwood Corporation.

Parts of Mr. Cooper’s testimony are of particular interest: “Q. Is it fair to say that Mr. Giardina had the authority to cause the parking lot area to be paved ? “A. Not on behalf of Underwood Development Corporation. Mr. Giardina was hired—His Corporation was hired to do the building and any acts that he performed were on behalf of the Harry B. Giardina Construction Company. “Q. I see. Well now, as far as Mr. Giardina, regardless of who he was working for, he had the authority to cause the job of paving this parking lot to be done, did he not ? “A. Yes, he had authority to do it in his capacity with the Plarry B. Giardina Construction Company. He dealt with all the subcontractors, some thirty-five or thirty-six.

We never had any dealings with any of them. “Q. Did you or either of your partners have knowledge of Mr. Flanigan working on the job at the time he was working on the job ? “A. I had no personal knowledge of Mr. Flanigan doing any work on the job as I had no knowledge of any of the other subs individually doing any work. I knew the job was being done.” Later in his testimony, Mr. Cooper, who is a lawyer, summed up: “The Underwood Associates never had any dealings with anyone concerning this project other than the architect. All the dealings with the subcontractors were by Harry B. Giardina [Construction Company]. Underwood Development Corporation dealt with ⁶⁵² Harry B. Giardina Construction Company.

We had no dealings with the subcontractors. Not one.* * *” * * * “* * * Underwood Associates had no dealings with Mr. Giardina. All the dealings Mr. Giardina had were with Underwood Development Corporation and the stockholders.” Maryland Code (1957, 1965 Repl. Vol.) Art. 35, § 9 permits the calling of an adverse party as a witness.

When an adverse party is called by an opposite party, the opposite party is bound by the testimony of the adverse party unless rebutted, contradicted or discredited. Giba v. Bastian, 246 Md. 508 , 229 A. 2d 93 (1967) ; Wood v. Johnson, 242 Md. 446 , 219 A. 2d 231 (1966) ; Plitt v. Greenberg, 242 Md. 359 , 219 A. 2d 237 (1966); Vokroy v. Johnson, 233 Md. 269 , 196 A. 2d 451 (1964); Lehmann v. Johnson, 218 Md. 343 , 146 A. 2d 886 (1958); Proctor Electric Co. v. Zink, 217 Md. 22 , 141 A. 2d 721 (1958) ; Maszczenski v. Myers, 212 Md. 346 , 129 A. 2d 109 (1957). This is not to be interpreted, however, as meaning that the jury must accept such statements blindly, particularly if the testimony contains improbabilities, or there are reasonable grounds for concluding that it is erroneous. Wood v. Johnson; Plitt v. Greenberg; Lehmann v. Johnson; Proctor Electric Co. v. Zink, all supra.

In the usual case, the existence of an agency relationship is a question of fact. Heslop v. Dieudonne, 209 Md. 201, 206, 120 A. 2d 669 (1956). We have also held in cases involving the presumption of agency from ownership that whether evidence offered in rebuttal of the presumption is so slight that it is insufficient for the consideration of the jury, or so