Chesapeake Supply & Equipment Co. v. Manitowoc Engineering Corp. , 232 Md. 555 ( 1963 )

Horney, J.,

delivered the opinion of the Court.

The question presented on these appeals is whether a Wisconsin corporation! that manufactured and sold mobile truck cranes through a Maryland distributor to purchasers in this State is amenable to the suits of the distributor and a purchaser, either because the foreign corporation was doing business in Maryland or because the contract between the parties was made here.

The original action was instituted by R. E. Linder Steel Erection Company, Inc. (Linder or purchaser), a Maryland corporation, to the use and benefit of itself and its insurer against the Chesapeake Supply and Equipment Company (Chespeake or distributor), another Maryland corporation, for damages resulting from the collapse of a Manitowoc crane purchased by Einder through the distributor. Chesapeake impleaded the Manitowoc Engineering Corporation (Manitowoc or manufacturer) as a third party, and Linder amended the action to join Manitowoc as a defendant. Manitowoc appeared and moved to quash the writs of summons for lack of jurisdiction. The appeal is from the judgments of non pros entered by the lower court upon its granting of the motions to quash.

Manitowoc is a manufacturer of heavy equipment with its principal office and manufacturing facilities in Manitowoc, Wisconsin, and sells its products through distributorship agreements with local retail dealers. During the period between October of 1956 and July of 1961, Manitowoc entered into three such agreements (all of which were similar though not identical) with Chesapeake, which had its principal place of business in Baltimore City. Besides being a local distributor for Manitowoc, Chesapeake sold heavy equipment for some twenty other manufacturers.

The distributorship agreements provided in pertinent part that Chesapeake was not the agent of Manitowoc; that all orders taken by Chesapeake were to be submitted, together with a report on the financial condition of the purchaser, to Manitowoc for final acceptance or rejection; that Manitowoc had the right to fix the price and terms on which all sales were to be made by Chesapeake and no sales were to be made on any other terms and conditions; and that Chesapeake was to stock an adequate supply of replacement parts for servicing the territory allotted to it by Manitowoc, which included all of Maryland except Alleghany and Garrett counties, eight counties (reduced to four in 1960) in Virginia, three counties in West Virginia and the District of Columbia.

In January of 1957, Chesapeake entered into negotiations with Linder for the sale of a crane. As a result of a proposal made by Chesapeake and accepted by Linder on January 21, 1957, Chesapeake sent Manitowoc on January 28, 1957, a written purchase order for a crane, in which neither the price nor the terms of sale were mentioned. Manitowoc, acting in accordance with the distributorship agreement then in force, declined to “bill” or accept the order until it had been paid a deposit of 10% and had been assured that payment of the balance of the purchase price would be made on presentation of sight draft with bill of lading attached. Thereafter, the negotiations between Chesapeake and Linder having been resumed, certain changes were made in some of the specifications relating to the crane which entailed an increase in the original purchase price quoted by the distributor to the purchaser in the first proposal. While the further preliminary negotiations were in progress between the distributor and the purchaser, the distributor communicated frequently with the manufacturer by mail, telephone and telegraph concerning the purchase price and terms of sale and with respect to expediting the order for the crane to meet the shipping date promised by the distributor. Finally, the revised specifications and purchase price were restated in a second proposal made by Chesapeake and accepted by Linder on February 25, 1957. On the same day, the distributor, in a letter to- the manufacturer, confirmed the telecommunication revisions of the original purchase order, enclosed a check for the required 10% deposit, advised the manufacturer that the purchaser had agreed to pay the balance upon presentation of sight draft at its bank,¹ and instructed shipment of the crane by fast freight direct to the purchaser instead of to the distributor as previously directed.

Linder’s revised offer to purchase the crane was not accepted by Manitowoc in writing and the record is silent as to when the construction or assembling² of it was commenced. However, work thereon was in progress, and was nearing completion, when the president of Hinder and a representative of Chesapeake visited the Manitowoc plant on March 5, 1957, to inspect the crane before it was shipped. The crane, having been shipped f.o.b. Manitowoc on March 7, 1957, arrived in Baltimore on March 25th, and Hinder paid the sight draft and the freight due.

When the crane was delivered in Baltimore, an employee of Manitowoc was present and helped unload and reassemble it and instructed Hinder’s operator how to use it. Having done so, the employee immediately left the state. In May of 1957, after the crane had collapsed, another Manitowoc employee helped repair the damaged crane. The repairman came to Baltimore at the request of Chesapeake and was paid by it.

In February of 1959, Chesapeake sold another Manitowoc crane to the Arundel Corporation. During the preliminary negotiations for the sale, a district manager for Manitowoc residing in Pennsylvania (who often visited Chesapeake “just to make Chesapeake conscious of Manitowoc”) came into Maryland and assisted in negotiating the sale. Other than not requiring a deposit and payment of balance on sight draft and shipment tO' Chesapeake, the sale to Arundel was accomplished in substantially the same manner as the sale to Hinder. Upon delivery of the Arundel crane, an employee of Manitowoc was again present to supervise unloading and assembly, and to instruct Arundel’s operator, after which the employee left the state.

The underlying controversy concerning the jurisdiction of the lower court over the foreign corporation arose when the original parties to this action attempted to bring Manitowoc into the action under the rule relating to third-party practice. This presents the questions on appeal (i) as to whether the foreign corporation was “doing business” in Maryland and (ii) as to whether the contract was “made” in this State.

(i)

We think that Manitowoc was not “doing business” in this State within the meaning of Code (1957), Art. 23, § 92(a).

The general rule is that a foreign corporation is doing business within a state when it transacts some substantial part of its ordinary business therein. Cases (other than those hereinafter cited) which have arisen under what is now § 92(a), supra, include, among others, Crook v. Girard Co., 87 Md. 138, 39 Atl. 94 (1898); Central of Georgia R. Co. v. Eichberg, 107 Md. 363, 68 Atl. 690 (1908) ; Stewart Fruit Co. v. C., M. & St. P. R. Co., 143 Md. 56, 121 Atl. 837 (1923); Carter v. Reardon-Smith Line, 148 Md. 545, 129 Atl. 839 (1925); Kahn v. Maico Co., 216 F. 2d 233 (C.A. 4th 1954); and Johns v. Bay State Abrasive Products Co., 89 F. Supp. 654 (D.C. Md. 1950). In State use of Bickel v. Penna. Steel Co., 123 Md. 212, 218, 91 Atl. 136 (1914), it was said that the question whether or not a foreign corporation is doing business within a state “must be largely determined upon the facts of each individual case.” Necessarily, this requires, careful consideration of the nature and extent of the business activities conducted by or on behalf of the foreign corporation in the forum state. Blount v. Peerless Chemicals (P.R.), 316 F. 2d 695 (C.A. 2nd 1963).

When this is done in the instant case, it is at once apparent that the holding in the case of Feldman v. Thew Shovel Co., 214 Md. 387, 135 A. 2d 428 (1957), must control the decision in this case on the point of law presently being considered. As we see it, the factual situation in Thew was so similar to the factual situation here that it is almost impossible to rationally distinguish the cases on the facts. Indeed, a comparative analysis of the methods of operation employed by both corporations in making sales of their products in Maryland were, for the most part, strikingly identical. There are, of course, some variations between the factual situations in the two cases, but in some instances it appears that Manitowoc had even less contact with this jurisdiction than did Thew, particularly with respect to the number of sales made within specified yearly periods. On the whole the facts in Thew and in this case are so analogous that it would be tautological to repeat them. Nor would it serve any useful purpose to compare the facts in this case with similar facts in the Thew case.

With respect to the claims of the appellants that certain activities on the part of the appellee constituted doing business in this State, we deem it sufficient to say that we find nothing in the record to show that Manitowoc exercised such domination and control over Chesapeake as would bring the activities of Manitowoc within the doctrine of Thomas v. Hudson Sales Corp., 204 Md. 450, 105 A. 2d 225 (1954). Furthermore, we think that the activities of the district sales manager, in regularly visiting Chesapeake to keep it “conscious of Manitowoc” and in assisting Chesapeake to negotiate the sale of the Arundel crane, were not such as would subject Manitowoc to suit in Maryland. Cf. G. E. M. Inc. v. Plough, Inc., 228 Md. 484, 180 A. 2d 478 (1962). We also think that the activities of Manitowoc employees, in unloading and assembling the Linder and Arundel cranes and in instructing the future operators thereof, were merely incidental to sales which had been made in interstate commerce and did not make Manitowoc amenable to suit in Maryland. See Vulcan Steam Shovel Co. v. Flanders, 205 Fed. 102 (D.C. Mich. 1913). See also 23 Am. Jur., Foreign Corporations, § 379; 17 Fletcher, Corporations (1960 Rev. Vol.), § 8412; and the book entitled What Constitutes Doing Business (1963), at p. 52, published by the Corporation Trust Company. Nor was Manitowoc amenable to suit because one of its employees came into Maryland and helped repair the Linder crane, for this activity was but an isolated act that did not constitute “doing business.”

We hold that under the facts in this case Manitowoc was not doing business in Maryland.

(ii)

Nor was the contract with Manitowoc for the sale of the crane “made” in Maryland within the purview of Art. 23, § 92(d).

When the original purchase order, containing the initial specifications for the crane without mentioning either the price or terms of sale, was received by Manitowoc, it notified Chesapeake that it would not accept the order until it had been paid the customary deposit and had been assured that the balance would be paid on delivery. As a consequence, Chesapeake renewed its negotiations with Kinder as to the purchase price and terms of sale. During these negotiations, Kinder made certain changes in the specifications relating to the crane which necessitated further communications between Chesapeake and Manitowoc concerning the specifications and purchase price as well as the terms of sale and shipping instructions. After Kinder had agreed to comply with Manitowoc’s requirements as to the terms of sale and after all details (including payment of the 10% deposit and assurances as to payment of balance on sight) had been “finally ironed out,” the specifications and purchase price were restated by Chesapeake in another “proposal” to Kinder on February 25, 1957. Therein reference was made to the “revised quotation” of price and shipment “f.o.b. factory.” The proposal was “accepted” by Kinder and returned to Chesapeake with its check for $4446.50 to complete the 10% deposit, of which $2000 had been previously paid. On the same day, Chesapeake, in a letter to Manitowoc, enclosed its check for $6446.50 “covering the down payment on [its] purchase order.” The letter concluded with the statement that the representatives of Kinder and Chesapeake would “arrive in Manitowoc on March 5th to discuss [Kinder’s] machine and if there are any questions, they can be straightened out at that time.”

In essence, it is contended that Manitowoc made Chesapeake its agent to receive the balance of the 10% deposit and to enter into a binding contract in Maryland with Kinder for the sale of the crane. We do not agree. The only legal relationship between Manitowoc and Chesapeake was established by the distributorship agreements, and there is no evidence that Manitowoc had allowed the distributor to act as its agent in this instance. Nor is this a case of an undisclosed principal. The president of Kinder knew that he was buying a Manitowoc crane and that Chesapeake was a distributor of Manitowoc equipment. There was no evidence that he thought, or was justified in thinking, that Chesapeake had authority to enter into a binding contract in Maryland on behalf of Manitowoc.

The general rule is well settled that persons dealing with an alleged agent are put on inquiry as to the extent of his authority. Metropolitan Club v. Hopper, McGaw & Co., 153 Md. 666, 139 Atl. 554 (1927) ; Brager v. Levy, 122 Md. 554, 90 Atl. 102 (1914); Lister v. Allen, 31 Md. 543 (1869). The corollary to this rule is that the scope of an agent’s apparent authority governs the rights of third persons against the principal. Apparent authority is that authority which the principal has held the agent out as possessing or which he is by his actions estopped to deny. Penowa Coal Sales Co. v. Gibbs & Co., 199 Md. 114, 85 A. 2d 464 (1952). See also Salvatorian Mission v. Horn, 210 Md. 475, 124 A. 2d 268 (1956). Chesapeake was the distributor for some twenty other manufacturers besides Manitowoc. The president of Linder testified that he had had dealings with Chesapeake for several years before “this crane sale.” When a salesman for Chesapeake heard that Linder was in the market for a new truck crane, he supplied the president of Linder with “Manitowoc literature,” told him that Chesapeake “represented” Manitowoc and “had a nice crane to offer.” The president of Linder further testified he had “always liked Manitowoc” and that he “was sold almost before they showed me the literature.” There is nothing in the record to even suggest that Chesapeake had apparent authority to contract.

Actually, Chesapeake had no authority at all to bind Manitowoc in Maryland. The current distributorship agreement expressly provided that Chesapeake had no authority to bind or obligate Manitowoc “in any manner whatsoever” and that all orders taken or received should be immediately forwarded “for acceptance or rejection, together with a report on the financial condition of the party who gave said order.” Furthermore, Manitowoc expressly reserved the right to “either accept or reject such order” and to so advise Chesapeake. The mere fact that Manitowoc gave a firm price to Chesapeake, and required a down payment of 10% and the balance in cash on delivery f.o.b. the factory in Wisconsin, did not amount to a modification or change in the basic agreement so as to enlarge the very limited authority of Chesapeake in this one particular instance. There is no real inconsistency between the act of quoting a price and the reservation of a right to reject the offer when made. Chesapeake was no more than a soliciting agent. A written agreement, of course, may be modified by a subsequent oral agreement, but the oral modification must be established by a preponderance of the evidence. See Cole v. Wilbanks, 226 Md. 34, 171 A. 2d 711 (1961); Freeman v. Stanbern Const. Co., 205 Md. 71, 106 A. 2d 50 (1954). This was not done.

It was also argued that the evidence implies a waiver of Manitowoc’s right to reject the purchase order. Waiver is a term susceptible of many different meanings. See 5 Williston on Contracts, § 679 (3d. ed.). There is here no element of promissory estoppel. Linder was not deceived as to the extent of Chesapeake’s authority. Insofar as the question of intention to waive is one of fact, the finding of the trial court would seem to be conclusive. In any event, we think the evidence was insufficient to show a modification of the basic agreement so as to convert the distributor into an unlimited agent to effect a single sale.

It was further contended that even if Chesapeake was not Manitowoc’s agent it must be found that the contract was made in Maryland because Manitowoc’s refusal to accept Linder’s offer of January 28, unless certain conditions were first complied with, was in effect a conditional acceptance constituting-a counter-offer which Linder accepted in Maryland on February 25. From the record, however, it is clear that the negotiations between the parties prior to the acceptance of the last “proposal” by Linder on February 25, were merely preliminary as to every term in the contract. Not only had no agreement-been reached as to a purchase price and as to the payment thereof, but the subsequent change in specifications relating to the crane necessitated further negotiations with respect to the purchase price. The sale of the crane was therefore contingent on Manitowoc and Linder arriving at an agreement as to the terms-of payment and as long as negotiations were pending as to this-material matter, no contract existed since there had been no meeting of the minds of the parties. Beck v. Bernstein, 198-Md. 244, 81 A. 2d 608 (1951). See also Peoples Drug Stores v. Fenton, 191 Md. 489, 62 A. 2d 273 (1948).

As we see it, the sending of the letter of February 25, from Chesapeake to Manitowoc, confirming the fact that the revised specifications and purchase price had been accepted by Linder,. and enclosing its (Chesapeake’s) check to cover the deposit or down payment, constituted the offer from Linder to Manitowoc for the purchase of the crane. See 1 Corbin, Contracts, § 82. This offer was accepted by Manitowoc in Wisconsin, and it is clear, we think, that the last act that made the transaction a binding contract was not the receipt in Maryland by the distributor of the purchaser’s check payable to Chesapeake for the balance of the down payment, but, instead, it was the receipt in Wisconsin by the manufacturer of the distributor’s check payable to Manitowoc for the full amount of the 10% deposit and the manufacturer’s beginning to assemble the crane, Duplex Envelope Co. v. Baltimore Post Co., 163 Md. 596, 163 Atl. 688 (1933), that finalized the contract of sale. Sun Insurance Office v. Mallick, 160 Md. 71, 153 Atl. 35 (1931). See also Compania De Astral v. Boston Metals Co., 205 Md. 237, 107 A. 2d 357 (1954), cert. den. 348 U. S. 943 (1955). Acceptance may be evidenced by acts as well as words, and notification of acceptance is not essential to the formation of a contract. See International Filter Co. v. Conroe Gin, Ice and Light Co., 277 S. W. 631 (Tex. 1925). Indeed, it may well be, in view of the details left open to be “straightened out” that the sale was not finally consummated until the representatives of Chesapeake and Linder arrived in Manitowoc (Wisconsin) on March 5.

That the contract was made and the sale consummated is not questioned. The only issue is as to where the contract was made. We think it was made in Wisconsin and so hold.

In view of our holding on this point, and the obvious absence of any contact that Manitowoc had with this state, it is unnecessary to consider, even if the contract had been made in Maryland, whether there were sufficient minimal contacts to meet constitutional requirements for liability in personam.

Judgments affirmed; the appellants to pay the costs.

1 . There is a conflict in the evidence as to when and where agreement was reached as to payment of the balance by sight draft. According to Linder, agreement was not finally reached until March 5, 1957, while the president of Linder was in Manitowoc. According to the documentary evidence (the letter from the distributor to the manufacturer dated February 35, 1957), Manitowoc was advised by Chesapeake that payment by sight draft at the National Central Bank in Baltimore was satisfactory to Linder. But when the president of Linder was confronted with the documentary evidence on cross examination at the hearing, he frankly admitted that the matter of a sight draft must have been discussed and agreed upon “as of at least February 35, 1957.”

2 . The automotive “carrier” on which the Manitowoc crane was mounted was constructed for Manitowoc by another manufacturer of heavy equipment.