author: Davidson, J.,

text:
    BALTIMORE COUNTY, MARYLAND v. ARCHWAY MOTORS, INC.
    [No. 73,
    September Term, 1976.]

      Decided March 9, 1977.

      The cause was argued before Moylan, Davidson and Mason, JJ.

      Harry S. Shapiro and Philip V. Tamburello, Assistant County Solicitors for Baltimore County, with whom was J. Carroll Holzer, County Solicitor for Baltimore County, on the brief, for appellant.

      Christopher A. Hansen for appellee.
   Davidson, J.,

delivered the opinion of the Court.

On 12 May 1975, in the Circuit Court for Baltimore County, the appellant, Baltimore County, Maryland, sued the appellee, Archway Motors, Inc., for money allegedly due either “on accounts stated between them” (count one), or under a contract allegedly breached by Archway (count two). Judge John Grason Turnbull denied Baltimore County’s motion for summary judgment and granted Archway’s motion for summary judgment.

Viewed in the light most favorable to the appellant, the evidence shows that on 29 August 1972, the parties signed a Public Works Agreement in which Archway requested Baltimore County to construct a water main near its property. Section 25 of this agreement provided, in pertinent part:

“Financial Agreements: After bids for the utilities have been received and accepted as satisfactory by the County and the undersigned, the Developer [Archway] will deposit with the County, in cash or certified check, an amount equal to the aggregate cost of the proposed work plus overhead charges as established by the Office of Finance at the time of awarding of contract.” (Emphasis added.)

It also provided that the estimated cost of construction was $6,750.

In a letter dated 15 November 1973, Baltimore County notified Archway that bids had been received and asked Archway to contribute $17,044.72. The letter continued:

“Upon receipt of your certified check in the above amount, payable to Baltimore County, Maryland and receipt of the approved allotment, the subject contract will be awarded.
“You are reminded that contract proposals specify that the award of the contract will be within 60 days of the bid date and any delay in compliance with the requests of this letter could result in the refusal by the low bidding contractor to accept the award.” (Emphasis added.)

In a letter dated 21 December 1973, Archway refused to pay the requested amount and stated:

“I shall do nothing until I hear from you in regard to the extent of any discrepancy in the water deficit computation. ...”

In a letter also dated 21 December 1973, Baltimore County notified Archway that the amount of its contribution had been reduced to $11,547.94. This letter additionally stated:

“Upon receipt of your certified check in the above amount, payable to Baltimore County, Maryland and receipt of the approved allotment, the subject contract will be awarded.” (Emphasis added.)

Moreover, like its predecessor, it stated that the award of the contract would be within 60 days of the bid date and that any delay in compliance could result in the low bidding contractor refusing to accept the bid.

In letters dated 23 September 1974 and 31 October 1974, Baltimore County requested payment of $11,547.94. In a letter dated 18 December 1974, Archway offered to pay $6,750. Notwithstanding the fact that at some unidentified point in time the contract was awarded and the work completed, Archway never paid any amount to Baltimore County.

I

Breach of Contract

In granting Archway’s motion for summary judgment, the trial court determined that § 25 of the parties’ agreement contained a condition precedent which established that Archway would not become obligated to pay until it had accepted the bid. Baltimore County initially contends that § 25 did not create this condition precedent. It maintains that the language of § 25 is ambiguous. Pointing to § 4 of the agreement, in which the words “condition precedent” were expressly stated, it argues that had the parties intended to create a condition precedent in § 25, they would have done so expressly. It maintains that the absence of these words in § 25 indicates that here the parties did not intend to create a condition precedent.

The Court of Appeals has established the standard by which to determine whether a provision in a contract constitutes a condition precedent. In Chirichella v. Erwin, that Court said:

“A condition precedent has been defined as ‘a fact, other than mere lapse of time, which, unless excused, must exist or occur before a duty of immediate performance of a promise arises.’ . . . The question whether a stipulation in a contract constitutes a condition precedent is one of construction dependent on the intent of the parties to be gathered from the words they have employed and, in case of ambiguity, after resort to the other permissible aids to interpretation. . . . Although no particular form of words is necessary in order to create an express condition, such words and phrases as ‘if’ and ‘provided that,’ are commonly used to indicate that performance has expressly been made conditional, ... as have the words ‘when,’ ‘after, ’ ‘as soon as,’ or ‘subject to.’ ” (Citations omitted. Emphasis added.)

Here, § 25 expressly states that an amount equal to the construction cost would be deposited after bids were “accepted as satisfactory” by Archway. Notwithstanding the absence of the specific words “condition precedent” in § 25, there is no ambiguity here. The use of the word “after” creates an express condition. Archway was not obligated to pay until it had accepted the bid.

Baltimore County next contends that even assuming the existence of a condition precedent, the trial court erred in granting the motion for summary judgment. It maintains that, despite Archway’s failure to transmit a certified check, it nonetheless accepted the bid. It argues that language in Archway’s letters dated 21 December 1973 and 18 December 1974, including an offer to pay $6,750 as its “fair share,” indicates that Archway knew that a bid had been received by Baltimore County and was concerned, not with the total amount of that bid, but rather with the amount of its contribution. It asserts that it is this evidence which raises an inference that Archway did in fact accept the bid so that the condition precedent was fulfilled. It concludes that, consequently, this evidence creates a genuine dispute as to a material fact.

While the question of whether Archway accepted the bid does involve a material fact, we are not persuaded that the evidence here created a genuine dispute as to that fact. In our view, the evidence does not support an inference that Archway accepted the bid.

Under general principles of contract law, when a method of performance necessary to constitute acceptance of an offer has been prescribed, performance in some other manner does not constitute acceptance. Thus, in Eshelman Co. v. Friedberg, the Court of Appeals said:

‘A reply to an offer which alters in any manner the suggested method of performance is not a true acceptance of the offer, but in reality is a conditional or qualified acceptance, which amounts to a counter-offer.” (Citations omitted.)

Applying this principle to the question of whether Archway accepted the bid produces a clear result. Here, Baltimore County itself prescribed the method of performance by which Archway could accept the bid. In letters dated 15 November and 21 December 1973, Baltimore County notified Archway that the contract would not be awarded until, among other things, Archway’s certified check for the requested amount was received. The only possible inference arising from these letters is that Archway’s transmittal of a certified check in the requested amount was the prescribed method by which to accept the bid. Archway refused to pay and never did send a certified check. Because the evidence that Archway allegedly was concerned with the amount of its contribution and not with the amount of the bid fails to show compliance with the method of acceptance established by Baltimore County itself, it cannot support an inference that Archway accepted the bid. Consequently, there is no evidence to show that Archway accepted the bid. In the absence of such evidence, there can be no genuine dispute as to that material fact.

Baltimore County further contends that the same evidence shows that Archway waived the condition precedent created by § 25. We do not agree.

In BarGale Industries, Inc. v. Robert Realty Co., Inc., the Court of Appeals said:

“A waiver is the intentional relinquishment of a known right, or such conduct as warrants an inference of the relinquishment of such right, and may result from an express agreement or be inferred from circumstances. ‘[A]cts relied upon as constituting a waiver of the provisions’ of a contract must be inconsistent with an intention to insist upon enforcing such provisions.
‘A waiver may be either verbal or in writing; and it is not necessary that the waiver should be direct and positive. It may result from implication and usage, or from any understanding between the parties which is of a character to satisfy the mind that a waiver is intended. The assent must, however, be clearly established and will not be inferred from doubtful or equivocal acts or language.’ ” (Citations omitted. Emphasis in original.)

Here, as a condition precedent to liability, Archway had the right to approve the bid before the contract was awarded. Archway’s language in its letters of 21 December 1973 and 18 December 1974 was neither sufficiently certain nor sufficiently unequivocal to support an inference that it intended to relinquish that right. At best, Archway’s offer to pay $6,750 as its “fair share” indicates an intent to relinquish the right to approve a bid resulting in a maximum liability of $6,750. Under no circumstances can it be viewed as evidence of an intent to relinquish its right to refuse to accept a bid resulting in a liability of $11,547.94. Archway’s conduct was not inconsistent with an intention to insist upon enforcing its right to accept the bid. The condition precedent created by § 25 of the contract was not waived.

Additionally, Baltimore County contends that Archway is estopped from asserting the condition precedent as a defense. It maintains that Archway did not inform Baltimore County that it was rejecting the bid, and that, consequently, Baltimore County failed to protect itself against the resultant loss.

In support of its position, Baltimore County relies upon Laurel Race Course, Inc. v. Regal Construction Co., Inc., where the Court of Appeals said:

“As a general rule, mere silence will not raise an estoppel. . . . Where, however, the circumstances are such as to require a silent party to speak, so that an injured party may take steps to protect himself against a loss which might otherwise result, the silent party will be estopped from asserting the defense he would have had but for his silence.” (Citations omitted.)

This case is inapposite.

The evidence shows that Baltimore County itself established that a contract would not be awarded until, among other things, Archway’s certified check in the amount requested was received. Archway’s failure to send the certified check constituted notice to Baltimore County that the bid was not approved and that the contract should not be awarded. Baltimore County had all the information it needed in order to protect itself. Archway was not required to take any affirmative action. Under these circumstances, Archway was not estopped.

II

Account Stated

Finally, Baltimore County contends that Archway’s failure, for a period of a year, to object to the .request for a contribution of $11,547.94, constituted an admission of liability for an existing debt. It maintains that it is entitled to recover on an account stated. It concludes that the trial court erred in granting Archway’s motion for summary judgment.

We agree that in order to maintain a cause of action on an account stated, all that need be shown is an admission that the stated sum of money constitutes a present existing debt. Such admission need not be express, but may be inferred. Thus, under appropriate circumstances, a failure within a reasonable time to object to the correctness of a stated sum may be regarded as an admission of liability.

We do not agree that under the present circumstances-such an admission may be inferred. The nature of an account stated has been considered in Maryland. In Wathen v. Pearce, the Court of Appeals said:

“In law the term ‘account stated’ is an artificial phrase of precise and definite significance. In 1 C.J.S. Account Stated, sec. 1, page 693, it is thus defined: ‘An account stated is an agreement between parties who have had previous transactions of a monetary character that all the items of the account representing such transactions, and the balance struck, are correct, together with a promise, express or implied, for the payment of such balance.’ Bullen & Leake, Prec. & Pl. 52, n. (a); Alexander’s Brit. Stat. (Coe’s Ed.) 65. An indispensable ingredient of any definition of the term is a definite acknowledgment of a subsisting debt immediately payable to the plaintiff, 1 C.J.S. Account Stated, secs. 1, 14, pages 694, 698.” (Emphasis added.)

Similarly, 6 Poe, Pleading & Practice states:

“This action is founded upon the implied promise to pay a sum which the defendant has admitted to be due, and hence, it can only apply to past transactions between the parties, or to some recoverable debt or demand, with reference to which an account may properly be stated.” (Emphasis added.)

Thus, it has been recognized that there can be no liability on an account stated if liability did not previously exist.

Courts in other states have recognized that a failure to object within a reasonable time to the correctness of a stated sum does not raise an inference of an admission of liability where liability did not previously exist. Thus, the Appellate Court of Illinois, Fourth District, has stated:

“The rule that an account which has been rendered and to which no objection has been made within a reasonable time is to be regarded as admitted by the party charged as prima facie correct, assumes that there was some indebtedness between the parties, for there can be no liability on an account stated if no liability in fact exists, and the mere presentation of a claim, although not objected to cannot of itself create a liability.... An account stated cannot be made the instrument to create an original liability; it merely determines the amount of the debt where liability previously existed.”

We agree.

Applying this principle to the instant case produces a clear result. Here, because the condition precedent created by § 25 was not fulfilled, Archway never became liable under the agreement. Under these circumstances, an inference that Archway’s failure to object within a year constituted an admission of its liability cannot be employed. Baltimore County’s letter of 21 December 1973 cannot create liability where liability did not previously exist. Baltimore County was not entitled to recover on an account stated.

Judgment affirmed.

Costs to be paid by appellant.

      . Dietz v. Moore, 277 Md. 1, 4, 351 A. 2d 428, 431 (1976); Lawless Adm’rx v. Merrick, 227 Md. 65, 70, 175 A. 2d 27, 30 (1961); Sanitary Facilities II, Inc. v. Blum, 22 Md. App. 90, 100, 322 A. 2d 228, 233-34, cert. denied, 272 Md. 748 (1974).

      . Baltimore County further contends that § 25 cannot be construed as creating a condition precedent if Archway is to be prevented from receiving a benefit for which it did not pay. This contention was neither raised nor decided below and will not be considered here. Maryland Rule 1085.

      . 270 Md. 178, 182, 310 A. 2d 555, 557 (1973).

      . 214 Md. 123, 188, 133 A. 2d 68, 73 (1957). Accord, Post v. Gillespie, 219 Md. 378, 383-86, 149 A. 2d 391, 395-96 (1959); First National Bank v. Clark, 61 Md. 400, 408 (1884).

      . 275 Md. 638, 643-44, 343 A. 2d 529, 533 (1975).

      . 274 Md. 142, 156, 333 A. 2d 319, 328 (1975).

      . Lyell v. Walbach, 111 Md. 610, 614-15, 75 A. 339, 341(1909).

      . 175 Md. 651, 661, 3 A. 2d 486, 491 (1939).

      . § 128, p. 159 (6th ed. 1970).

      . Conley v. National House Furnishing Co., 292 Ill. App. 558, 11 N.E.2d 828, 830 (1937). Accord, In re Merz, 45 F. 2d 558, 561-62 (2d Cir. 1930); Pontin Lighterage Co. v. American Export Lines, Inc., 126 F. Supp. 824, 828 (E.D.N.Y. 1954); Reconstruction Finance Corp. v. Commercial Union of America Corp., 123 F. Supp. 748, 756 (S.D.N.Y. 1954); Trafton v. Youngblood, 69 Cal. Rptr. 568, 442 P. 2d 648, 654-55 (1968); Bucklin v. National Shawmut Bank of Boston, 355 Mass. 338, 244 N.E.2d 726, 728 (1969); National Ass’n of Creditors, Inc. v. Ultican, 190 Wash. 109, 66 P. 2d 824, 826 (1937).


source: Caselaw Access Project

author: Powers, J.,

license: Public Domain

text:
    INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 1805, AFL-CIO v. HENRY C. MAYO
    [No. 126,
    September Term, 1976.]

      Decided March 9, 1977.

      The cause was argued before Morton, Powers and Mason, JJ.

      Ann F. Hoffman, with whom were Bernard W. Rubenstein and Edelman, Levy & Rubenstein, P.A. on the brief, for appellant.

      John A. Blondell, for appellee.

       Note: Certiorari granted, Court of Appeals of Maryland, June 1,1977.

   Powers, J.,

delivered the opinion of the Court.

Changes made by Henry C. Mayo, an Inspection Supervisor at a plant of Westinghouse Electric Corporation in Anne Arundel County, on the weekly time card of an employee under his supervision, constituted the first of a series of events which resulted in this appeal.

It is something of an anomaly that the merits of the original dispute — whether the supervisor’s action was right or wrong — have no bearing on the issues in this case. It is necessary, however, that we set out the facts as they occurred, in order to understand, in their proper perspective, the issues which later developed.

On Saturday, 20 October 1973, W. A. Sparks, an Inspector employed at Westinghouse, turned in his weekly time card to Mayo, his supervisor. It was the supervisor’s duty to verify that hours worked and absent time were properly reported, sign his approval, and forward the time card to payroll. The card turned in by Sparks showed that he worked 8.0 hours on Monday, Tuesday, Friday and Saturday of that week. By using the Absence Symbol “C”, Sparks classified his absences on Wednesday and Thursday as vacation days. Mayo gave the card back to Sparks, telling him to correct it, because Wednesday and Thursday had not been authorized as vacation time, and must be classified as voluntary absences. Sparks returned the time card, unchanged. Mayo consulted his superior, John Brothers, Manager of Quality Control. Brothers instructed Mayo to change the Absence Symbol from “C” to “A”, indicating voluntary absence. Mayo made the changes, and then approved and forwarded the time card.

Sparks, a member of International Brotherhood of Electrical Workers, Local 1805, AFL-CIO, consulted Lenora Brach, his union steward. She presented two Grievances, signed by Sparks as the aggrieved employee and by her as steward. The descriptions of the grievances were as follows:

“Grievance Serial § 3680 I
Management did violate company rule number 11, altering or falsifying company documents. On October 24th 1973 Mr. H. Mayo foreman of Inspection on second shift under his Superior Mr. J. Brothers instructions did falsify employee W. Sparks IBM weekly time card by changing a C absence (vacation day) to an A absence for October 17th and 18th 1973, without employee W. Sparks permission.
The Union has had several cases where employees have falsified company documents and were suspended. The Union contends that Management has no right in violating company rule number 11 than does the employees, and that W. Sparks IBM weekly time card be changed back to a C absence instead of an A absence.”
“Grievance Serial § 36811
Management is in violation of Article Nine Section Four (e), in not paying W. Sparks time and one half for working Saturday October 20, 1973. Management changed his weekly IBM card from C (vacation day) to A (absent day).
This the Union will not tolerate. W. Sparks time card must be changed to show a C absence (vacation day) for October 17th and 18th instead of an A absence, so he will be qualified for overtime pay for eight hours on Saturday the 20th of October.”

After they were filed, the grievances received consideration at various steps or levels as prescribed in the established grievance procedure.

In the November 1973 issue of “Intercom”, a newspaper owned and published by Local 1805, the following were among a number of items published under the heading, “Grievance Report”:

“368II — L. Brach 2nd Shift
Supervisor H. Mayo falsified employee’s I.B.M. Weekly Time Card. Is a violation of Company plant rule # 11. Submitted to the second step on 10-31-73, awaiting meeting.”
“36801 — L. Brach 2nd Shift
Management violated Art. IX, Section 4 (e) in not paying aggrieved time and a half for ■ Saturday, 10-20-73. His weekly I.B.M. time card was changed from vacation (C) to absent (Ai days. Submitted to the second step 10-31-73, awaiting meeting.”

We set forth both grievances, and both news items, not only because of the significance as an issue in the case of the difference between the grievance as actually stated and the news report of the grievance, but because it is apparent that the news report erroneously switched the two grievance numbers. This transposition error is of no importance, but we take note of it to avoid possible confusion.

There was evidence that at a December 1973 meeting between management officials and union officials, for the so-called third step of the grievance procedure, the management officials explained that the information in the “Intercom” “had terribly upset Mr. Mayo”, and asked if it could in some way be retracted or changed. The request was made to Mr. Bailz Elza, vice-president of Local 1805, an assistant editor of “Intercom”. He was also asked to consider rewriting the grievance “so that we could settle the issue, the real issue”, and it would not be printed in such a manner in the “Intercom”. He did not agree. The next issue of “Intercom”, April 1974, printed the item:

“36811 — L. Brach 2nd Shift
Supervisor falsified employee’s I.B.M. Weekly Time Card. In violation of Company plant rule #11. Requested 4th step 3-14-74.”

In October 1974 Mayo filed a suit in the Circuit Court for Anne Arundel County against International Brotherhood of Electrical Workers, Local 1805, AFL-CIO and ten individuals, all associated with Local 1805 and some also associated with the newspaper Intercom. The declaration contained two counts. In the first Mayo alleged that all of the defendants published a defamatory statement about him as follows:

“Page Two — Intercom — November 1973
Grievance Report
36811 — L. Brach 2nd Shift
Supervisor H. Mayo falsified employee’s I.B.M. Weekly Time Card. Is a violation of Company plant rule #11. Submitted to the second step on 10-31-73, awaiting meeting.”

In the second count he incorporated the allegations of the first count, and alleged that the defendants acted jointly and in concert with one another.

All defendants joined in a single responsive pleading entitled “Answer To Declaration”, in which they pleaded “That they did not commit the wrongs alleged.”

The case was tried before a jury and Judge E. Mackall Childs on 25 and 26 September 1975. At the close of the plaintiff’s evidence the defendants moved for a directed verdict. The motion was granted as to the second, or conspiracy, count, and it was also granted as to all of the individual defendants, leaving only the claim against Local 1805, as set forth in the first count of the declaration.

Upon completion of the defendant’s evidence, the court instructed the jury, objections to the instructions were noted, and counsel made their arguments to the jury. A verdict was returned in favor of Mayo against Local 1805 for compensatory damages of $1.00 and punitive damages of $5,000.00. A motion for judgment n.o.v. was made and denied. Judgment was entered on the verdict. This appeal was taken.

Appellant presents these questions:

1. Did Appellant enjoy a qualified privilege as a matter of law to publish the alleged libel?

2. Was there competent evidence to support an award of compensatory damages?

3. Does an award of $1.00 in compensatory damage support an award of $5,000 punitive damages?

4. Did the Court commit reversible error in instructing the jury that it could infer that Appellant sought to have Appellee discharged?

Qualified Privilege

Appellant argues that the court erred in failing to instruct the jury that it had a qualified privilege as a matter of law to publish the alleged libel. The argument is one of semantics, not of substance.

It would be unnecessarily repetitive for us to undertake an extensive discussion of the qualified, or conditional privilege, as it is recognized in the law of defamation. That privilege was one of several aspects of libel and slander which were reexamined by the Court of Appeals, in the light of Gertz v. Robert Welch, Inc., 418 U. S. 323, 94 S. Ct. 2997, 41 L.Ed.2d 789 (1974), in its opinion in Jacron Sales Co. v. Sindorf, 276 Md. 580, 350 A. 2d 688 (1976). After having adopted negligence as the standard to be applied in Maryland in cases of purely private defamation, 276 Md. at 596, the Court said, at 598:

“It has been suggested that adoption of the negligence standard of fault in defamation cases would have the practical effect of rendering obsolete the common law defense of conditional privilege. See, e.g., Anderson, supra, 53 Texas L. Rev. at 443, n. 97; Frakt, supra, 6 Rutgers-Camden L. J. at 496-97. The reasoning which underlies this position is that many jurisdictions follow the rule that one of the means by which a conditional privilege may be defeated is by proving negligence on the part of the defendant. F. Harper & F. James, supra, § 5.27; W. Prosser, supra, § 115.”

The Court rejected that reasoning. It said, at 598-99:

“In Maryland, however, we have never held that negligence is among the grounds on which the conditional privilege may be forfeited.
“The Maryland cases on abuse of conditional privilege are couched in terms of ‘express malice’ or ‘actual malice.’ ”
“Express or actual malice represents something-more than conduct that is merely negligent.”

Referring to its definition of malice found in Stevenson v. Baltimore Club, 250 Md. 482, 243 A. 2d 533 (1968), and Orrison v. Vance, 262 Md. 285, 277 A. 2d 573 (1971), the Court said, in Jacron, at 600:

“* * * thus the reckless disregard standard now appears to be firmly established in Maryland as a test, albeit not the exclusive test, for abuse of a conditional privilege. This being a higher standard than negligence, we retain the common law conditional privilege in Maryland which, in a given case may suffice to avoid liability even though the Gertz standard regarding falsity and defamation is met by the plaintiff.”
“While the question of whether a defamatory communication enjoys a conditional privilege is one of law for the court, whether it has been forfeited by malice is usually a question for the jury.”

The net result of what the Court said in Jacron about the common law conditional privilege in Maryland was that the law remained the same. The respective functions of the court and jury could be paraphrased thus:

In a libel or slander trial, the judge decides whether a defendant has the privilege when he walks into the courtroom; the jury decides whether he still has it when he walks out.

The fallacy in appellant’s argument is that it contends that it “enjoyed a qualified privilege to print the item in question, even if it were libelous”, and that the judge should have told the jury that this was so as a matter of law. Of course, such an instruction would have amounted to directing a verdict for the defendant, something that the court was not asked, by appropriate motion at the close of all the evidence, Rule 552, to do. Also, it would have ignored the existence of several factual issues, which the court should have, and did, submit to the jury.

In another recent case, Hanrahan v. Kelly, 269 Md. 21, 305 A. 2d 151 (1973), the Court of Appeals considered the defense of conditional or qualified privilege. Copies of a letter which defamed the addressee had been sent to several other persons, who may have shared with the writer, a mutual interest in the subject matter. Also, the letter had been seen by the writer’s office personnel. The opinion cited several earlier cases which defined the privilege, and quoted several of the definitions. It said, at 29-30:

“The general rules governing all conditional privileges are, however, well-settled. A finding of conditional privilege conditionally negates the presumption of malice and shifts the burden to the plaintiff to show actual malice. Peurifoy v. Congressional Motors, Inc., 254 Md. 501, 255 A. 2d 332 (1969). Malice may be a jury question. As stated in Fresh v. Cutter, 73 Md. 87, 93-94, 20 A. 774, 775 (1890):
‘It is a question for the Court whether the statement if made in good faith and without malice is thus privileged. But the plaintiff has the right notwithstanding the privileged character of the communication to go to the jury, if there be evidence tending to show actual malice * * *.’ ”
“Absent a finding of express malice, a conditional privilege, if not abused, defeats the libel action. Wetherby v. Retail Credit Co., 235 Md. 237, 241, 201 A. 2d 344, 347 (1964).”

The Court’s conclusion on that issue was stated at 31-32. It said:

“* * * in light of all the evidence, we find that there was a factual question as to the existence of a qualified privilege for Blankstein, Adler, Solomon, McManus, and Antonelli sufficient to go to the jury, and that the jury was properly instructed.”

A careful reading of the instructions given by Judge Childs in the case before us shows that there was no departure from the principles of Jacron (which had not yet been decided), Hanrahan, and the earlier decisions of the Court of Appeals. He told the jury that the “law has found it proper to afford a Union or a group of people who have a common interest, what is known as the qualified privilege”, and later said, “you may find or you may not find that there was a qualified privilege for the Union to say what it did in the Intercom, or you may find it went too far.” The court also said, with respect to the extent to which some 2,000 copies of the paper were circulated, “it’s up to you to determine whether or not this privilege was exceeded, and it is up to you to determine whether or not the one original publication and the additional publication exceeded the qualified privilege which may have existed between the Union, itself, and the Union members.”

The instruction also submitted to the jury on the evidence, questions of actual malice, ill will, and publication with knowledge of falsity, or with reckless disregard of whether they were true or false, none of which was the subject of objection.

The evidence in this case was sufficient to permit the jury to find that the privilege was exceeded, by the extent to which the publication was disseminated, or that it was forfeited because it was abused.

It is entirely clear to us that when the trial judge in this case told the jury that it may find or may not find that there was a qualified privilege for the Union to say what it did, and when the Court of Appeals in Hanrahan said that there was a factual question as to the existence of a qualified privilege, the question was whether a privilege, conceded at the outset, still prevailed in the face of evidence that it was exceeded or abused.

There was no reversible error in the instructions relating to qualified privilege.

Compensatory Damages

The objection noted by the appellant to the instructions as they related to damages was as follows:

“The second objection is on the question of damages, as I understand the case, it was loss of reputation and consequent damages. We felt that there was no evidence of loss of reputation, therefore, there could be no consequent damages. The consequent damages, as I understand it, has to relate back to some other loss, such as loss of reputation, and not that he felt and believed by the publication, not his own personal objection to the publication, but the reaction of others to the publication, which led to mental suffering and so on. And, therefore, we don’t think that the jury has been properly instructed on that and we would urge that there have been proven, in fact, no damages that are compensable at all.”

In effect, appellant’s position, as preserved below and as argued here, is that the sine qua non in a defamation case is evidence of actual damage to reputation, and that no other element of damage may be considered unless it is shown to flow from the proven damage to reputation.

What the “Intercom” said about Mayo was a libel per se. It imputed to him misconduct related to his employment. Appellant does not contend otherwise. For obvious reasons, appellant could not, and did not, deny the publication. It relied solely upon the protection of qualified privilege.

In libel per se, damage to reputation is presumed, General Motors Corp. v. Piskor, 27 Md. App. 95, 117, 340 A. 2d 767 (1975). In awarding compensatory damages, however, a jury should look to evidence of actual injury.

The Supreme Court, in Gertz v. Robert Welch, Inc., supra, noted, at 349:

“The common law of defamation is an oddity of tort law, for it allows recovery of purportedly compensatory damages without evidence of actual loss. Under the traditional rules pertaining to actions for libel, the existence of injury is presumed from the fact of publication. Juries may award substantial sums as compensation for supposed damage to reputation without any proof that such harm actually occurred.”

To reconcile state law with the command of the First Amendment, the Court held, at 349-50:

“It is necessary to restrict defamation plaintiffs who do not prove knowledge of falsity or reckless disregard for the truth to compensation for actual injury. We need not define ‘actual injury,’ as trial courts have wide experience in framing appropriate jury instructions in tort actions. Suffice it to say that actual injury is not limited to out-of-pocket loss. Indeed, the more customary types of actual harm inflicted by defamatory falsehood include impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering.”

There was evidence at the trial below from which the jury could find that Mayo suffered actual injury, at least to the extent of personal humiliation, embarrassment, and mental anguish and suffering.

The trial judge did not err in refusing to instruct the jury that there was no evidence of compensable damage.

Punitive Damages

Appellant next argues that the jury’s award of damages of $1.00 was nominal, not compensatory, and precluded a verdict for punitive damages.

It is not clear how the point is preserved for appeal, unless it arises from the objection to the court’s failure to instruct that there was no evidence of any damage. In any event, the contention is not a valid one. In Shell Oil Co. v. Parker, 265 Md. 631, 291 A. 2d 64 (1972), the Court of Appeals said, at 644:

“To allow punitive damages where only a technical invasion of the plaintiff’s rights existed would permit recovery of damages when, in fact, no compensable injury was proved. We therefore hold that to support an award of punitive damages in Maryland there must first be an award of at least nominal compensatory damages.”

The necessity of a compensatory damage base for punitive damages, in a tort involving malice, is unrelated to the distinction between common law malice, for most intentional torts, and the constitutional malice required in defamation cases by New York Times Co. v. Sullivan, 376 U. S. 254, 84 S. Ct. 710, 11 L.Ed.2d 686 (1964), and Gertz, supra. For an illustration of the constitutional malice distinction, see General Motors Corp. v. Piskor, 277 Md. 165, 352 A. 2d 810 (1976), at 174-75.

Prejudicial Instruction

In his instructions to the jury the judge referred to a contention in the case. He said:

“I believe that if you look thru the exhibits which were entered into evidence, the first complaint or written complaint in the step it was the Union’s position that violation of Rule 11, and this is advisory only, you read it and see what it says, that violation of Rule 11 has been known to lead to firing of various employees and they felt that, so as to speak, of what was sauce for the goose, was sauce for the gander, and they felt that alteration or falsification of a record of this nature should also, I believe it was their theory, but you interpret it your own way, should lead to possible discharge of Mr. Mayo. And it’s all there and you’ll take these things back to the jury room for your deliberations and don’t rely on my recollection, you see what it actually says itself, * * *.”

An objection was made that the court’s “implication” went well beyond any of the testimony, and could be inflammatory or prejudicial.

In addition to the general statement early in the instructions that

“* * * matters of fact are for your determination and should I mention the facts in discussing the case with you, and you disagree with my recollection of the facts, then please, use your own recollection and not mine because you are the ultimate deciders of the facts in this case.”,

the court’s subsequent reference to specific evidence was accompanied by further cautioning of the jury not to rely on the court’s recollection.

There was no error.

Judgment affirmed.-

Appellant to pay costs.

      . It appears that if the absences were authorized vacation, the Saturday work was overtime, at a higher rate of pay. If the days off were voluntary absences, the Saturday work was at straight time. There was evidence that it was the company’s position that vacation time was required to be scheduled in advance, and not after the fact, but that the union contended that an employee was entitled, after the fact, to classify an absent day as vacation time. The issue was then under dispute between the company and the union.

      . Appellant does not contend that qualified privilege was not sufficiently defined.


text:
    MILTON FELGER v. ZANE GRAY NICHOLS
    [No. 195,
    September Term, 1976.]

      Decided March 9, 1977.

    The cause was argued before Gilbert, C. J., and Davidson and Moore, JJ.

      Alan Hilliard Legum for appellant.

      William A. Franck, with whom were Joseph P. Manck and Goldsborough & Franck on the brief, for appellee.
   Davidson, J.,

delivered the opinion of the Court.

On 21 June 1974, the appellee, Zane G. Nichols, filed suit against the appellant, Milton R. Felger, in the District Court of Maryland for Anne Arundel County for $345 in unpaid legal fees. On 12 November 1974, trial was held before Judge Raymond G. Thieme. The appellant defended on the ground that the legal services were inadequately performed and, therefore, the fee was unreasonable. The court entered judgment for the appellee in the amount of $345. On 10 December 1974, the appellant appealed to the Circuit Court.

On 19 February 1975, in the Circuit Court for Anne Arundel County, the appellant filed a legal malpractice suit against the appellee, alleging that he had given him “false and untrue” legal advice. On 19 March 1975, the appellant made a motion to consolidate the appeal from the District Court with the malpractice suit in the Circuit Court. The court denied the motion. Thereafter, the appellant dismissed his appeal from the District Court, and that Court’s judgment became final.

On 28 April 1975, the appellee moved for a summary judgment, arguing that the final judgment for the appellee in the legal fee suit made the issue in the legal malpractice suit res judicata. On 12 May 1975, the motion for summary judgment was heard and granted by Judge Karl F. Biener but no order was entered. On 5 June 1975, an appeal was filed, and was dismissed as premature. On 5 March 1976, an order was entered granting the motion for summary judgment. This appeal is from that order.

In Maryland, the doctrine of res judie ata, of estoppel by judgment, consists of two branches: direct estoppel by judgment, and collateral estoppel by judgment. The doctrine of direct estoppel by judgment establishes that in a subsequent action between the same parties upon the same cause of action, claim or demand, or subject matter, a judgment rendered on the merits constitutes an absolute bar, not only as to all matters which were actually raised, litigated and determined in the former proceeding, but also as to all matters which could have been raised and litigated. As stated by the Court of Appeals in Lebrun, supra, direct estoppel by judgment applies:

“ ‘not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.’ ” (Emphasis added.)

The doctrine of collateral estoppel by judgment establishes that where a second action between the same parties is upon a different, “cause of action,” the judgment in the previous action operates as a bar only as to those matters actually litigated and determined in the original action and is not conclusive as to matters which might have been but were not litigated and determined in the previous action. Under this doctrine, as under the doctrine of direct estoppel, the matters actually determined in the previous proceeding may have been raised directly or as a matter of defense.

Whether the doctrine of direct or collateral estoppel applies depends upon whether the cause of action in two successive suits between the same parties is the same. Here, we need not determine whether the legal fee suit and the malpractice suit involve the same or different causes of action. The facts here are such that the same result would be reached whether the doctrine of direct or collateral estoppel is applied.

In a suit for counsel fees, the court must consider, among other things, the skill requisite properly to conduct the case, and the fidelity and diligence of the attorney. A client, by way of defense, may produce evidence to show that he did not receive competent legal representation. In a legal malpractice suit, the court must consider, among other things, whether the attorney either lacked or failed to exercise the requisite professional diligence, knowledge and skill. In such a suit, the client must produce evidence to show that he did not receive competent legal representation. Thus, assuming that both actions involve the same legal service, the matter of the adequacy of the client’s legal representation would be raised in both, either directly or by way of defense, and would be litigated and determined in both. Accordingly, a court’s determination that a lawyer is entitled to a legal fee, made after a client has, as a matter of defense, produced evidence to show inadequate legal representation, would be a bar in a malpractice suit alleging inadequate legal representation, whether the doctrine of direct or collateral estoppel applies.

Here, the record shows that the appellant testified at the District Court trial that four other attorneys had advised him that, contrary to the appellee’s opinion, he had no legal grounds for a limited divorce. He testified that the appellee misrepresented to him that his wife was about to file a complaint for divorce against him, and prodded him to file for divorce first. The appellant also testified that thereafter the appellee gave him bad advice when he said he should dismiss his divorce complaint and cross-file on his wife’s complaint. The appellant testified that the appellee was unprepared for an alimony pendente lite hearing. Finally, at the close of the trial, the appellant moved to dismiss the suit “on the grounds that Mr. Nichols did not faithfully and fully discharge the business entrusted to him in the manner a client has the right to expect.. ..”

The record here shows that, as a matter of defense in the legal fee suit, the client did present evidence as to the inadequacy of his attorney’s performance. Under these circumstances, the appellant’s contention that he had no opportunity to “litigate the issue of professional malpractice in the District Court suit,” because he was precluded by Maryland District Rule 314 from filing a counter-claim in excess of that Court’s jurisdictional amount, is without merit. Similarly, his contention that the trial court prevented him from litigating that issue by sustaining an objection to a single question is also without merit.

The adequacy of the attorney’s performance in the client’s divorce proceedings having been litigated and determined, the District Court’s final judgment in the legal fee suit bars that matter from being litigated in the present legal malpractice suit between the same parties. The trial court correctly granted the appellee’s motion for summary judgment. We shall affirm.

Judgment affirmed.

Costs to be paid by appellant.

      . Felger v. Nichols, 30 Md. App. 278, 279, 352 A. 2d 330, 331 (1976).

      . MPC, Inc. v. Kenny, 279 Md. 29, 32, 367 A. 2d 486, 488 (1977); Sterling v. Local 438, 207 Md. 132, 140, 113 A. 2d 389, 393, cert. denied, 350 U. S. 875 (1955); Davis v. Frederick County Board of County Commissioners, 25 Md. App. 68, 74, 334 A. 2d 165, 168, cert. denied, 275 Md. 747 (1975).

      . Johnson v. State Roads Commission of Maryland, 229 Md. 151, 152, 182 A. 2d 346 (1962); Sterling, supra, 207 Md. at 140, 113 A. 2d at 393; Lebrun v. Marcey, 199 Md. 223, 226-27, 86 A. 2d 512, 514 (1952); Davis, supra, 25 Md. App. at 74-75, 334 A. 2d at 169.

      . 199 Md. at 227, 86 A.2d at 514, quoting Cromwell v. County of Sac, 94 U.S. 351, 352 (1876).

      . MPC, Inc., supra, 279 Md. 29, 32-33, 367 A. 2d 486, 489 (1977); Arundel Asphalt Products, Inc. v. Morrison-Johnson, Inc., 256 Md. 170, 173, 259 A. 2d 789, 790 (1969); Pat Perusse Realty Co. v. Lingo, 249 Md. 33, 35, 238 A. 2d 100, 102 (1968); Buford v. Bunn, 247 Md. 203, 207-08, 230 A. 2d 636, 637-38 (1967); Sterling, supra, 207 Md. at 140-41, 113 A. 2d at 393; Lebrun, supra, 199 Md. at 226-27; 86 A. 2d at 514; Davis, supra, 25 Md. App. at 76, 334 A. 2d at 170.

      . See Polansky v. Orlove, 252 Md. 619, 624, 251 A. 2d 201, 204 (1969); Lebrun, supra, 199 Md. at 227, 86 A. 2d at 514.

      .Lusby v. Nethken, 262 Md. 584, 586-87, 278 A. 2d 552, 554 (1971); In re Family Savings & Home Loan Ass’ns., Inc., 246 Md. 219, 221-22, 228 A. 2d 233, 234 (1967); American Jewish Joint Distribution Committee v. Eisenberg, 194 Md. 193, 200, 70 A. 2d 40, 42-43 (1949); Knapp v. Knapp, 151 Md. 126, 131-32, 134 A. 24, 26 (1926).

      . Kendall v. Rogers, 181 Md. 606, 610-12, 31 A. 2d 312, 314 (1943). See Reamer v. Kessler, 233 Md. 311, 317, 196 A. 2d 896, 900 (1964); Cochrane v. Little, 71 Md. 323, 332, 18 A. 698, 700-01 (1889).

      . Md. District Rule 314 h, which prevents the filing of counter claims or cross-claims exceeding the monetary jurisdiction of the District Court, further provides that a party having such a claim may file a motion for a stay of the action against him which the court, for good cause, may grant. Here, no motion for a stay was filed.

      . Any alleged error in the District Court’s rulings on the admissibility of evidence should have been determined on an appeal in the Circuit Court. Here, the appellant’s appeal to the Circuit Court was dismissed.


text:
    MOSES H. KARKENNY v. MICHAEL MONGELLI et ux.
    [No. 215,
    September Term, 1976.]

      Decided March 9, 1977.

    The cause was argued before Powers, Mason and Liss, JJ.
    Moses H. Karkenny in proper person.

      Leonard A. Orman for appellees.
   Powers, J.,

delivered the opinion of the Court.

This case involves the finality of a decree foreclosing the right of former owners to redeem land sold for failure to pay taxes. We shall first outline so much of the proceedings in the foreclosure case as bear on the issue in the case now before us.

On 28 October 1970, at a tax sale held by the Collector of Taxes for Howard County, Moses H. Karkenny purchased several parcels of land, among them a subdivision lot owned by Michael P. Mongelli and Annette J. Mongelli, his wife. The purchaser received an appropriate Certificate of Sale from the Collector.

On 1 November 1971 Mr. Karkenny filed in the Circuit Court for Howard County a “Bill of Complaint to Foreclose Equity of Redemption”, naming the Mongellis and others as defendants, describing the property of each, and praying for a decree foreclosing all rights of redemption. An Order of Publication was filed, and duly published. Summonses were issued. Those issued for service upon Mr. and Mrs. Mongelli were twice returned “non est”.

The court, on motion, on 28 December 1971, entered a Decree- Pro Confesso as to the owners of the six parcels of land still involved in the proceedings. Among them were the Mongellis. On 1 February 1972 Mr. Karkenny filed an “Affidavit of Search”, which related to title to the properties. The affidavit also recited a search of telephone books, and the making of other inquiries, but those searches and inquiries must be read as limited to only one of the defendants, a corporation. There was no statement of any attempts to notify the Mongellis of the proceedings by any means other than the summonses and the order of publication.

On 3 February 1972 the court, Macgill, J., signed, and the clerk filed, a Final Decree foreclosing as to the defendants all rights of redemption in the properties described. The decree named the Mongellis, and described their property. The decree also ordered the Collector of Taxes to execute and deliver a deed conveying the property in fee simple to Moses H. Karkenny, upon payment of any balance of the purchase price and of any taxes due. The deed was duly executed and recorded.

The present case was initiated by Mr. and Mrs. Mongelli, on 28 February 1973, when they filed a bill of complaint in the Circuit Court for Howard County against Moses H. Karkenny and the Collector of Taxes for Howard County, praying that the final decree entered in the earlier equity case which purported to foreclose their equity of redemption be cancelled and voided, and that they be given an opportunity to redeem the property.

After various proceedings, including an answer by Mr. Karkenny to an amended complaint, the case was tried before Judge Stuart F. Hamill, sitting in the Circuit Court for Howard County. Mr. Mongelli and Mr. Karkenny were the only witnesses. The entire record in the tax foreclosure case, Equity No. 8095, was offered and received in evidence.

At the conclusion of the evidence, and arguments of counsel, the Chancellor ruled. He said:

“All right, then, I’m of the opinion that the failure on the part of the respondent in this proceeding to supply a sufficient affidavit as is required by Rule 105 has not been complied with, that the affidavit that is in the file is insufficient, and therefore Rule 105 has not been complied with. And for that reason the prayers of the bill of complaint will be granted, and the Court will sign a decree setting aside and vacating the final decree in * * * number 8095 Equity, wherein the right of redemption was foreclosed.”

A written Order, signed by the judge on 10 February 1976, filed on 18 February 1976, cancelled, vacated and voided both the final decree foreclosing the Mongellis’ right to redeem the property, and the conveyance of the property to Moses H. Karkenny. The order further permitted the Mongellis to redeem the property, upon reimbursement of expenses as defined in the statute.

In this appeal by Mr. Karkenny from that order, the issue is a narrow one. The position of the Mongellis below, and their position as argued in this Court, is that the decree and deed in the foreclosure case resulted from constructive fraud for failure of Mr. Karkenny to comply with Maryland Rule 105, as required by Code, Art. 81, §§ 106 and 107. In addition to his contentions that the requirements of Rule 105 are not jurisdictional, and that he did in fact make reasonable efforts to locate and warn the defendants, the appellant argues that the decree of foreclosure was conclusive under Art. 81, § 113, and could not be reopened on the ground of constructive fraud, since the application to reopen was not made within one year from the date of the decree.

We are compelled to agree with the appellant, and we must reverse the order of the circuit court.

We fully agree with the Chancellor in his conclusion that Mr. Karkenny failed to file an affidavit sufficient to meet the requirements of Rule 105. That Rule is applicable, because of the provisions of Art. 81, §§ 106 and 107 relating to personal service and service by order of publication. Although Rule 105 is applicable, compliance with it is not jurisdictional. This precise question was the issue in Hauver v. Dorsey, 228 Md. 499, 180 A. 2d 475 (1962). Judge Henderson wrote, for the Court of Appeals, at 504-05:

“We may assume that the issuance of an order of publication under section 107, supra, is a jurisdictional requirement to bar the claim of a known or unknown party defendant, or one claiming under him. The question is whether Rule 105 adds an additional requirement of a jurisdictional character. We think not. The manner in which the order issues is governed by the rule. But while the rule states that a party shall file an affidavit of the mailing of a notice, where a person’s residence or whereabouts is known, or if unknown, an affidavit of reasonable efforts to locate and warn such person, it is not declared, in terms, that this would affect the jurisdiction of the court. The rule certainly does not require personal service, but, in effect, only a showing of good faith on the part of the plaintiff. While it is stated that no final judgment shall be given until proof is made by affidavit to the satisfaction of the court, it is further stated that the failure of the plaintiff to offer proof by affidavit of such reasonable effort in good faith shall be ground for the postponement or denial of the entry of a decree. We think the latter provision indicates the nonjurisdictional character of the affidavit.”
“We see no reason to hold that a procedural requirement, designed to prevent imposition upon the court and require a reasonable effort in good faith to locate and warn the owner, creates a jurisdictional defect in the fundamental sense of preventing the court from dealing with the subject matter and the parties before it.”

In Jannenga v. Johnson, 243 Md. 1, 220 A. 2d 89 (1966), upon which appellees principally rely, the pendulum swung in the other direction. In that case the former owner filed suit to vacate a decree foreclosing the right of redemption in certain real estate. The sale and foreclosure proceeding arose from a clerical error, because the taxes had in fact been paid. There was no personal service in the foreclosure case. An order of publication was published, but no copy was personally served upon or mailed to the owner, although her address clearly appeared in the tax records. No affidavit was filed showing compliance with Rule 105, but there was no claim of actual fraud by the purchaser in the conduct of the proceedings. The suit to vacate the decree was filed four or five months from the date of the decree.

The Court noted that Hauver v. Dorsey, supra, had held that failure to comply with the requirements of Rule 105 was not a jurisdictional defect, and recognized that Art. 81, § 113 provided

«* * * that a decree setting aside an owner’s equity of redemption in property conveyed at a tax sale shall be conclusive and may not be reopened ‘except on the ground of lack of jurisdiction or fraud in the conduct of the proceedings to foreclose.’ ” At 4.

The Court in Jannenga concluded, at 4-5:

“We hold, however, that before one may proceed by order of publication pursuant to section 107 of Article 81, he is required by that section to comply with the provisions of Maryland Rule 105 and to make a good faith effort to furnish the defendant with such personal notice as would reasonably inform him of the proceedings against his property. A failure to provide such notice or to make a good faith effort to do so may not amount to actual fraud in that one may not have been compelled by malicious motives to deceive the defendant, but it does, in any event, amount to constructive fraud since Jannenga, regardless of moral guilt or intent to deceive, failed to perform a legal duty. The Court in Hauver did not pass upon the issue of constructive fraud present in the case at bar.
“The law declares this failure to comply with the requirements of Maryland Rule 105 to be fraudulent because of its tendency to deceive those who might otherwise not be notified of proceedings to foreclose their property rights except by the essentially pro forma means of publication.” (Citations omitted.)

Under the law as we have discussed it, Mr. Karkenny’s failure to comply with the requirements of Rule 105 did indeed amount to a constructive fraud, sufficient to justify the voiding of his decree and deed as to the Mongellis, had they made their attack upon the decree within one year from its date. But the application of the Jannenga ruling was curtailed by the General Assembly two years later when it amended Art. 81, § 113 by enacting Chapter 729, Laws of 1968, effective 1 June 1968. The amendment added these words:

“provided, however, that no reopening of any final decree on the ground of constructive fraud in the conduct of the proceedings to foreclose shall be entertained unless the application therefor with regard to decrees heretofore rendered is made within one year following the effective date of this act and with regard to decrees hereafter rendered is made within one year from the date of the final decree.”

The final decree foreclosing the Mongellis’ right of redemption was dated and filed on 3 February 1972. The application to reopen that decree on the ground of constructive fraud was made on 28 February 1973, more than one year later.

Order reversed.

Amended bill of complaint dismissed with prejudice.

Appellees to pay costs.

      . Tax foreclosure decrees are often attacked by a motion or petition filed in the same case, but it is also proper to do so by filing an original bill to vacate an enrolled decree for fraud. Master v. Master, 223 Md. 618, 623, 166 A. 2d 251 (1960); Kaylor v. Wilson, 260 Md. 707, 273 A. 2d 185 (1971).


author: Mason, J.,

text:
    IRWIN BERMAN v. STATE OF MARYLAND
    [No. 217,
    September Term, 1976.]

      Decided March 10, 1977.

      The cause was argued before Morton, Menchine and Mason, JJ.

      Courtland K. Townsend, Jr., with whom was John Burgess Walsh, Jr., on the brief, for appellant.

      Stephen B. Caplis, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, Andrew L. Sonner, State’s Attorney for Montgomery County, and Louis S. Lear, Assistant State’s Attorney for Montgomery County, on the brief, for appellee.
   Mason, J.,

delivered the opinion of the Court.

The appellant, Irwin Berman, was convicted by a jury in the Circuit Court for Montgomery County of false pretenses (three counts). He was sentenced to three concurrent nine-month terms in the Montgomery County Detention Center with three months of each sentence suspended upon making restitution.

In seeking a reversal of the judgments below, the appellant’s principal assignment of error is that the evidence was insufficient to support his convictions.

On January 1, 1973, Berman formed a corporation known as the Greatway Travel Ltd. of which he was president. The purpose of the company was to sell travel consultant franchises to individuals for a fee and to supply the consultants with training, publications and other materials necessary for them to sell all types of travel on behalf of Greatway. The consultants were required to execute a contract which specified in detail the services, materials and benefits they would receive.

Initially Berman owned 90% of the stock of Greatway, but after transfers to other investors, his stock ownership diminished to 38%. As a result of mismanagement, credit problems and the failure of certain investors to honor their monetary commitments, the financial condition of the company deteriorated, and as of December 30, 1973, Greatway had a net worth of zero. Notwithstanding its financial problems, the company continued its operations until May of 1974.

In February and March of 1974, the complaining witnesses in this case, Charles Hull, Sylvia Weaver, and Koo Yuen, purchased travel consultant franchises from Greatway for a fee, but did not receive the services or benefits promised.

As to the sufficiency of the evidence, Charles Hull testified that on February 14, 1974, as a result of answering a Greatway advertisement in the Washington Post, he was visited by Orville Kenneth Wright, a Greatway salesman. Wright informed him he would make money as a consultant for Greatway and would receive, among other things, reduced airfares, a percentage of airfare commissions, lower hotel rates, and familiarization tours. He was further informed that he would receive materials, publications and training to aid him in becoming an effective travel consultant. As a result of these representations, he signed the travel consultant agreement and paid Wright $295.00 with the balance to be paid in four monthly payments of $100.00 each.

Sylvia Weaver also signed a travel consultant agreement in February of 1974 and paid Wright $695.00. Representations similar to those made to Hull were also made to Weaver before she signed the contract.

Another complaining witness, Koo Yuen, signed a travel consultant agreement in March of 1974 and paid $895.00. His testimony regarding the representations is as follows:

Everything they said is strictly in the contract. The contract, the, copy they have, they let me read over and the details. At the time I read it, it was very reasonable and sounding and the promises they make is strictly a business deal where I pay a sum and get the benefits from the contract.

The travel consultant agreement which the complaining witnesses admit was explained to them, item by item, before they signed provides in pertinent part:

1. GREATWAY agrees to provide for the CONSULTANT:
a. A complete travel agency service facility for booking all types of travel and related services.
b. A training program to consist of:
1. A comprehensive guide for travel consultants and other related miscellaneous sales aids, manuals and materials.
2. An initial two (2) day training program in CONSULTANT’S geographical area, which CONSULTANT agrees to attend.
3. A complete, continuous training program whereby GREATWAY TRAVEL will hold monthly seminars, and/or periodic meetings in CONSULTANT’S geographical area for a twelve month period.
4. Access to travel information during business hours, including toll free, or collect, telephone communications, and reasonable consultation services.
5. Subscription to Travel Weekly and other trade publications.
6. Up to 5,000 Direct Mail “Business Getters”.
7. Subscription to monthly O.A.G. (Official Airline Guide).
8. Subscription to Quarterly Master & Travel Index.
c. Leads and inquiries in the [a particular geographical area],
d. Commissions on all travel sold by CONSULTANT without restriction as to the area, equal to 50% of the standard travel agency commission, including commissions from IATA and ATC carriers. All commissions shall be payable during the calendar month following the month in which GREATWAY receives its commission on travel sold by CONSULTANT.
e. One trip to Majorca (per attached brochure) at GREATWAY’S expense, available ninety (90) days after initial training program is completed.

The elements of the crime of false pretenses were enumerated by this Court in Polisher v. State, 11 Md. App. 555, 560, 276 A. 2d 102, 104 (1971).

[T]he crime is committed when a person:

1) by making a false representation of a past or existing fact;
2) with intent to defraud; and
3) knowledge of its falsity;
4) obtains any chattel, money or valuable security from another;
5) who relies on the false representation;
6) to his detriment.

Of like import, see Smith v. State, 237 Md. 573, 207 A. 2d 493 (1965); Andresen v. State, 24 Md. App. 128, 331 A. 2d 78, cert. denied, 274 Md. 725, aff'd 427 U. S. 463, 49 L.Ed. 2d 627(1976).

The statute under which the appellant was convicted, Article 27, § 140 of the Annotated Code of Maryland, in part provides:

Any person who shall by any false pretense obtain from any other person any chattel, money or valuable security, with intent to defraud any person of the same, shall be guilty of a misdemeanor, . . . that a mere promise for future payment, though not intended to be performed, shall not be sufficient to authorize a coJiviction under this section. (Emphasis supplied).

Our review of the testimony of the complainants and the contents of the travel consultant agreement signed by them, clearly indicates that the representations of Greatway were not representations of a past or existing fact, but rather promises of future acts, w’hich, standing alone, do not violate the statute.

The State, in its attempt to bring Greatway within the ambit of the statute, argues that Greatway’s representations to the complainants and those incorporated in the travel agreement implied that Greatway was a viable and bona fide travel agency with the capacity and ability to perform .as promised. That inasmuch as these promises were false, Greatway implicitly misrepresented an existing fact, i.e., its institutional status as a travel agency capable of performing , the services its salesmen promised and contracted to provide.

As authority for its argument, the State relies solely on 2 Wharton’s Criminal Late ajid Procedure § 589 (Anderson ed. 1957) which states:

The false representation must be as to a material fact or event,, existing or past. A statement as to a future event or a promise to produce a future result is not a criminal representation unless there is implicit therein a statement of the defendant's ability or capacity to achieve that result,6.... (Emphasis supplied) (Footnotes omitted).

Footnote 6 of § 589 refers to id. § 593 which in relevant part reads:

Any false representation as to the skill or qualifications of the defendant is within the statute. Accordingly it is a false pretense to represent falsely that one is a practicing physician, or a clergyman.

Significantly this section cites as an example Jules v. State, 85 Md. 305, 36 A. 2d 1027 (1897), where the Court of Appeals held that the defendant’s representation that he was a physician, which he was not, and that he had extraordinary and supernatural powers to cure, which he had not, were misrepresentations of present facts and would support a conviction of false pretenses. Jules is representative of the cases cited in § 593, supra, in that they all involve false representations of present facts as to qualification, position or powers. Consonant with this view is Davis v. State, 229 Md. 139, 182 A. 2d 49 (1962) where the Court of Appeals held that it was false pretenses for a defendant to state that he was a minister and represented an organization which collected money and sold advertisements for a church directory, when in fact, he was not a minister and there was no such organization. Unlike the present case, it is obvious the misrepresentations in Jules and Davis, supra, were of existing facts as opposed to promises of future acts.

The State cites several cases which do nothing to buttress its theory of the case. Illustrative of these cases is State v. Handke, 340 P. 2d 877 (Kan. 1959), which involved a defendant who promised to construct a certain building. The defendant indicated that he had construction crews, other construction business, and was presently engaged on a particular construction job. The evidence showed that at the time of the promise the defendant did not have a construction business nor any employees. The Handke Court stated, among other things, “It is a false pretense where a man represents himself to be in a situation or business which he is not.” The State, in its brief, rhetorically asks, “What difference is there between Handke and the characterization of a business as a travel agency capable of doing certain business which it is not qualified to perform?”

The conclusive answer to the State’s query is that Greatway, unlike Handke, was a legitimate travel agency. It was incorporated in the State of Pennsylvania with its main office in New York City and franchise offices in other areas. The corporation had a board of directors and an experienced staff to manage the various departments which included training, sales, operations, and bookkeeping. It had a five year lease on 3,500 square feet of space in a modern office building, with nine private offices and a library containing all travel programs then in existence. Although Greatway was an unappointed travel agency, i.e., without authority to sell airline tickets, it had a contract with another agency from which airline tickets could be purchased. It is manifest that Greatway, for all intents and purposes, functioned as an authentic travel agency. The fact that mismanagement, credit problems and a weakened financial condition precluded it from delivering on some of its promises did not, ipso facto, make it a bogus travel agency. It is clear that Handke and the case sub judice are markedly different. Similarly the cases of People v. Kirkup, 149 N.E.2d 866 (1958); People v. Sloane, 4 N.Y. Supp. 2d 784 (1938) and Davis v. State, 18 Md. App. 378, 306 A. 2d 620 (1973), relied on by the State, are completely inapposite.

The narrow issue in this case is whether Greatway made false representations to the complainants as to past or existing facts. The statute provides “. . . that a mere promise for future payment though not intended to be performed shall not be sufficient to authorize a conviction. . . .” Article 27, § 140, supra.

The State urges us to authorize a lesser degree of culpability for the crime of false pretenses than that prescribed by the statute. For example, the State would have us hold that Greatway’s promises of future acts, irrespective of its intent to perform, or without any false statement of past or existing facts, would constitute false pretenses simply because the promises, in and of themselves, implied that Greatway had the capacity and ability to perform. If we accept the State’s argument, all promises of future acts, if not performed, would amount to false pretenses. This is so because promises of future acts necessarily imply an ability or capacity to perform. If this were not true, no potential victim would part with his money.

The Maryland law is clear that there must be a false representation of a past or existing fact to constitute false pretenses. Whether there is implied in the false representation an ability or capacity to perform vel non is not the test. It is evident the State’s interpretation of the law of false pretenses would not only extend the meaning of § 589, supra, upon which the State solely relies, but it would also improperly expand the perimeters of the statute.

The State further contends that Greatway made false representations as to its financial status. Our review of the evidence fails to find any support for this contention.

Charles Hull testified:

Mr. Wright stated Greatway Travel was an on-going concern. They had been successful in other areas of the country and they were just beginning to open up their office and expand their business into the Washington area. They hoped the Washington area would be as successful as the company had been in the rest of the country.

This statement, standing alone, is an insufficient basis to establish that Greatway misrepresented its past or existing financial condition. This is especially true when the record fails to disclose whether the statement was made prior or subsequent to the signing of the contract or the payment of money.

Sylvia Weaver also testified, “I was told there were 60 million dollars behind Greatway.” The record reveals that the person who made this statement was never identified and that it was apparently made during a two-day training seminar subsequent to the signing of the travel agreement. Under these circumstances, the statement was obviously not the inducing cause for Weaver to part with her money.

In view of our holding that the evidence was insufficient to establish that the appellant falsely represented a past or existing fact as contemplated by the statute, it is unnecessary to consider the other issues raised by the appellant.

Judgments reversed.

Costs to be paid by Montgomery County.

      . The issue of the appellant’s criminal responsibility for misrepresentations made by an agent of the corporation was not raised on appeal.


text:
    JOHNNY LEE FACYSON v. STATE OF MARYLAND
    [No. 270,
    September Term, 1976.]

      Decided March 10, 1977.

    The cause was argued before Powers, Davidson and Moore, JJ.

      Dominic Gioioso, Assigned Public Defender, for appellant.

      Leroy Handwerger, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, William, A. Swisher, State’s Attorney for Baltimore City, and David Katz, Assistant State’s Attorney for Baltimore City, on the brief, for appellee.
   Davidson, J.,

delivered the opinion of the Court.

In the Criminal Court of Baltimore, a jury, presided over by Judge Martin B. Greenfeld, found Johnny Lee Facyson, the appellant, guilty of rape. On appeal, he contends, among other things, that the trial court erred in permitting a character witness to testify as to his familiarity with charges that the appellant had previously committed criminal acts. Because we shall reverse on this ground, no other contentions need be considered.

Here, the record shows that the alleged victim, aged 33, testified that she, her 5-year old daughter, and the appellant, aged 16, with whom she had been previously acquainted, had all been at a party. Thereafter, they walked together for a few blocks. When the 5-year old became tired, they sat down on some steps to rest. The appellant told the alleged victim that he wanted to have sex with her. She told him to “stop playing around.” Assuming that he was “kidding,” she started to joke with him. When she indicated that she had to go home, he pulled out a string or a cord about two feet in length, and stated that if she did not have sexual relations with him, he would kill her daughter. Thereafter, fearing that he would harm her daughter, she submitted to his sexual advances and was raped in her daughter's presence. On the following morning, she reported the rape to the police. They found three pieces of string at the site of the alleged crime, one of which the alleged victim identified as being that held by the appellant immediately preceding the alleged rape.

The appellant testified that while sitting on the steps, he and the alleged victim discussed her reasons for not having kept a previous date they had made. He told her that he wanted to have an affair with her and jokingly stated that he was going to rape her. She laughed. Subsequently, she consented to have sexual relations with him. The appellant denied possession of any string or cord and denied threatening the alleged victim or her daughter in any way.

When arrested the next morning, the appellant voluntarily gave the police the following statement:

“we was at a get togher on homewood amoung was mary and me abot 10:30 pm she and her baby left I walked with them and on Broadway I told mary I was going to Rape her and she laugh I grab her and took her to the school lot and told her daghter to set on the [steps] we went around on the side of the portable and she pulled her pants down and I pulled her blouse and bra up I was on her for about 20 minutes.”

At the trial, Mr. Albert Ruffin, a character witness appearing on the appellant’s behalf, testified on direct examination that the appellant had been a student at a school he operated for “juvenile offenders.” He stated that within the school community the appellant’s general reputation for truth and veracity was good. On cross-examination, notwithstanding the appellant’s objection and motion for a mistrial, the witness was permitted to answer a question as to whether he had heard that about one year previously the appellant had been arrested and charged with rape and sodomy. He responded that he had been aware of the existence of these charges and the fact that they had been dismissed. He concluded that his judgment with regard to his testimony concerning the appellant’s general reputation for veracity in the school community was not affected.

In its charge to the jury, the trial court said, in pertinent part:

“Now, any testimony concerning a prior arrest or prior charges against the defendant, that is, prior to the charge before you, are admissible in this case solely for the purpose of attacking the weight of the testimony of the character witness for the defendant. In this case it was a man by the name of Albert Ruffin. And, the purpose is not to discredit the defendant himself, but, goes to the weight of the character testimony given by Albert Ruffin. Any prior arrests or prior charges against the defendant has [sic] no bearing on the guilt or innocence of the defendant in this particular case for this particular offense.”

The question of whether a character witness may be cross-examined with respect to previous criminal charges against a defendant has recently been considered in Taylor v. State. There, the question presented was whether character witnesses might be cross-examined about a defendant’s previous convictions which were constitutionally infirm because they had been obtained in proceedings in which he had not been represented by counsel. The Court of Appeals held that cross-examination of the character witnesses with respect to such convictions was “error as a matter of Maryland law,” but that under the facts there present it “was harmless error beyond a reasonable doubt.”

With respect to the analogous issue in this case, the Court of Appeals described as dictum language appearing in earlier cases to the effect that character witnesses could be cross-examined as to previous criminal charges against a defendant and that “no distinction is to be drawn between convictions and charges which result in acquittal.” The Court, recognizing that its view was contrary to that of the Supreme Court, then said with respect to the question here presented:

“It has long been the rule of our cases that an accusation of crime, as distinguished from a conviction, may not be proved as a means of impeaching the testimony of a defendant who takes the stand in his own behalf. ... The same rule has always been applied to the impeachment of any other witness, including one called as a character witness for a criminal defendant .... We think that the identical rule should be applied to the cross-examination of a character witness called by the defendant, for if it is impermissible to question the defendant about a prior accusation, it should be similarly impermissible to question the defendant’s character witness about that prior accusation of the accused, the potential for prejudice being the same and the relevance insignificant.”

We now hold that the trial court erred in permitting the appellant’s character witness to be questioned about a previous accusation against the appellant of sodomy and rape. Moreover, we hold that under the facts and circumstances of this case, the error cannot be deemed harmless.

The Court of Appeals and this Court have articulated the applicable standard by which to determine whether an error is “harmless.” Thus, in Dorsey, supra the Court of Appeals said:

“[W]hen an appellant, in a criminal case,' establishes error, unless a reviewing court, upon its own independent review of the record, is able to declare a belief, beyond a reasonable doubt, that the error in no way influenced the verdict, such error cannot be deemed “harmless” and a reversal is mandated. Such reviewing court must thus be satisfied that there is no reasonable possibility that the evidence complained of — whether erroneously admitted or excluded — may have contributed to the rendition of the guilty verdict.”

Here, the central issue is whether the alleged victim was raped or consented to sexual intercourse. Thus, credibility is the critical factor in determining guilt.

This is not a case in which the State had overwhelming evidence of guilt. The evidence to support the appellant’s conviction consisted of the alleged victim’s testimony concerning the commission of the alleged crime and her identification of a piece of string, found in the vicinity of the alleged crime, as being that used by the appellant to threaten her. The appellant’s statement, voluntarily given to the police, was ambiguous and is not necessarily a confession. The victim’s daughter, the only other person who might have witnessed the alleged crime, did not testify. Thus, the State’s case rested essentially upon the credibility of the alleged victim.

Similarly, the appellant’s case rested primarily upon his own testimony, so that his credibility was of the utmost importance. Indeed, the appellant was entitled to an acquittal if his testimony did no more than raise a reasonable doubt as to whether he had raped the alleged victim.

From the erroneously admitted evidence which showed that the appellant had previously been charged with rape, the jury could have inferred that he had a propensity to commit such a crime, and, consequently, to conclude that he had committed the rape with which he is here charged. Such an inference and conclusion would tend to make the appellant’s denial less believable.

Upon our independent review of the record, we are satisfied that the erroneously admitted evidence was so inherently prejudicial that, notwithstanding the trial court’s instructions, there is a reasonable possibility that it may have contributed to the rendition of the guilty verdict. Since we are not persuaded beyond a reasonable doubt that the error did not influence the verdict, we cannot deem it to be harmless. Accordingly, we shall reverse.

Judgment reversed.

Case remanded for a neto tnal.

Costs to be paid by the Mayor and City Council of Baltimore.

      . The daughter, who might have witnessed the alleged rape, did not qualify as a competent witness.

      . 278 Md. 150, 360 A. 2d 430 (1976). The trial court had relied upon Taylor v. State, 28 Md. App. 560, 569-70, 346 A. 2d 718, 723-24 (1975), which was then applicable.

      . Taylor, supra, 278 Md. at 152, 360 A. 2d at 432.

      . Comi v. State, 202 Md. 472, 478-79, 97 A. 2d 129, 131-32, cert. denied, 346 U. S. 898 (1953); Avery v. State, 15 Md. App. 520, 549, 292 A. 2d 728, 748, cert. denied, 266 Md. 733 (1972), appeal dismissed, 410 U. S. 977 (1973).

      . Comi, supra, 202 Md. at 479, 97 A. 2d at 132.

      . Michelson v. United States, 335 U. S. 469, 482-84, 69 S. Ct. 213, 221-23 (1948).

      . Taylor, supra, 278 Md. at 157, 360 A. 2d at 435.

      . von Lusch v. State, 279 Md. 255, 260-61, 368 A.2d 468, 471 (1977); Ross v. State, 276 Md. 664, 673-74, 350 A. 2d 680, 686-87 (1976); Dorsey v. State, 276 Md. 638, 659, 350 A. 2d 665, 678 (1976); Nishchuk v. State, 32 Md. App. 403, 409-10, 362 A. 2d 91, 95(1976).

      . 276 Md. at 659, 350 A. 2d at 678.

      . See 3 Wigmore on Evidence § 988 (3rd ed. 1940).

      . See Burgett v. Texas, 389 U. S. 109, 115, 88 S. Ct. 258, 262 (1967); Howard v. State, 19 Md. App. 673, 676-77, 313 A. 2d 567, 569 (1974).