author: Wilner, J.,

text:
    AMERICAN LAUNDRY MACHINERY INDUSTRIES v. TIMOTHY EDWARD HORAN et al.
    [No. 757,
    September Term, 1979.]

      Decided March 5, 1980.

      The cause was argued before Moylan, Moore and WlLNER, JJ.

      Donald C. Allen, with whom were Allen, Thieblot & Alexander on the brief, for appellant.

      Max R. Israelson, with whom were Samuel O. Jackson, Jr., and Israelson & Jackson, P.A. on the brief, for appellee Horan. George L. Russell, Jr., for appellee Jessop. Submitted on brief by Alva P. Weaver, III, for appellee Sinai Hospital of Baltimore, Inc., and by James M. Gabler for appellee Up-to-Date Laundry, Inc.
   Wilner, J.,

delivered the opinion of the Court.

This is a “products liability” case; it is a most unusual one, and also a most tragic one.

Timothy Horan was a balloonist — the “up, up, and away” kind. He owned a large hot air balloon that, for fun and profit, he used in various promotional events.

In October, 1976, Mr. Horan was engaged to fly his balloon in order to advertise or promote the Shrine Circus. The person representing the Circus in this was one William Stair, who also happened to own the Up-to-Date Laundry. As an inducement to Mr. Horan, Mr. Stair promised to clean the balloon if it got dirty, which, indeed, it did. Unfortunately, however, Mr. Stair’s laundry did not have a machine large enough to handle the balloon. It should be explained at this point that the actual balloon part (sans cable and gondola) was made of a urethane coated nylon fabric. Although, when inflated, it was about 55 feet in diameter, and enveloped 5,500 cubic feet of air, it could be folded neatly into a bundle approximately 3% feet wide by lVz feet high and, when so folded, fit into a canvas bag. It weighed about 128 pounds.

As in most professions, there is a certain camaraderie among laundrymen, and Stair, through his subordinates at Up-to-Date, learned that Sinai Hospital had a machine large enough to wash Horan’s balloon. In return for past favors done by Up-to-Date, Sinai agreed to handle this item; and so, on October 25,1976, Mr. Horan, accompanied by Fred Jessop, a vice-president and manager of Up-to-Date, took the balloon to the laundry room at Sinai Hospital.

A number of Sinai employees were, of course, at work there —- among them Edwin Zimmerman, the laundry manager, Steven Sebree, his assistant, and Ronald Scott, a “washman.” In its collapsed state, the balloon was washed without incident. It was then put in the dryer.

This dryer is known in the trade as a Notrux Extractor. It was manufactured and sold to Sinai in 1958 by appellant, the American Laundry Machinery Company, now a division of McGraw Edison. The design of this machine is a critical element in this case, and will be described in some detail shortly. Suffice it at this point to note that it contained three main elements. The first was the “basket.” This consisted of two semi-circular metal bins into which the wet laundry would be placed. The two bins, each a self-contained unit, would then be coupled together to form one circular receptacle divided along its diameter. The laundry in one part of the basket was thus kept separate from that in the other part, an important factor in this case. The exterior skin of this “basket” was perforated; through the holes water could (and was supposed to) escape. The basket fit into the second element — a round metal cylinder known as the “curb.” This unit, itself stationary, spun the basket around inside of it at great speed - — 750 RPM — which spinning action created an enormous centrifugal force that expelled the water from the laundry inside the basket. The “curb,” in turn, was suspended from the floor by suspension rods housed in three large pylons or pedestals located equidistant around the curb. These pedestals were bolted to a steel slab that was itself bolted to the floor. The machine itself was thus immobile.

Anyone who has taken a course in high school physics, or has ever seen the family washing machine begin to shake, rattle, and walk across the floor during the “spin” cycle, knows how powerful centrifugal force can be, and thus how important it is to balance the laundry load evenly. This is especially true with an 8,000-pound machine capable of spinning a 2,000-pound load (1,400 pounds of wet laundry and a 685-pound basket) at 750 revolutions per minute.

Thus, when the wet balloon (128 pounds dry weight) was put into one part of the basket, an equivalent amount of regular laundry was placed in the other part. The top was put on and the machine was started. It immediately “oscillated” — i.e., it vibrated — and it was immediately shut off. The Sinai washman — Mr. Scott — wet down the Sinai laundry to add some weight to it and even out the balance, and the machine was started again. The same thing happened, and it was again shut down right away. More laundry and water was added, but, when restarted, it again shook and made a racket. Finally, on the fourth try, the “oscillation” tapered off. The machine ran smoothly — for less than a minute — when, without warning, it suddenly, instantaneously, came wildly apart and disintegrated, strewing shrapnel throughout the room. The parties characterized what happened as an “explosion.” One piece of flying metal virtually amputated Fred Jessop’s left arm, wiping out his wrist completely. Timothy Horan had his abdomen sliced open.

The threshold question, of course, is what caused this to happen. In a combined action by Horan and Jessop in the Superior Court of Baltimore City, the court and jury, by their respective decisions, concluded that the accident was attributable to defects in the machine itself, and not to any act or omission of the persons operating it. This was made manifest when (1) a directed verdict was entered by the court in favor of Sinai and its employees, as defendants in the original actions by Horan and Jessop, and in favor of Horan, Jessop, and Up-to-Date Laundry, as defendants in a third-party action brought by appellant; (2) the jury returned a verdict in favor of Horan against appellant for $335,425 ($210,425 in compensatory damages and $125,000 in punitive damages); and (3) it also returned a verdict in favor of Jessop against appellant in the amount of $874,637 ($674,637 in compensatory damages and $200,000 in punitive damages). The case against appellant was submitted to the jury on issues; and, with respect to each plaintiff, it found liability on the basis of both negligence and strict liability.

Appellant is obviously displeased with this result, and so it has appealed. It claims:

“I. There Was Insufficient Evidence of Negligence To Allow The Jury To Consider That Issue.
II. The Doctrine of Strict Liability Is Unconstitutional Generally And, As Applied Here, Specifically.
III. Even Assuming That Strict Liability Is A Constitutionally Permissible Doctrine It Is Not Applicable In This Case.
IV. Directed Verdicts Should Not Have Been Entered In Favor Of Sinai Hospital, Frederick . Jessop and Up-To-Date Laundry.
V. Punitive Damages Could Not Be Properly Assessed In This Case.
VI. The Jury Was Allowed To Consider Financial Resources Not Relevant To The Case.
VII. The Court’s Rulings On The Admissibility Of Evidence Were Improper.”

We shall deal with these in the order presented, although, as will soon become apparent, it will not be necessary to decide the second, third, or sixth issues.

(1) Evidence of Negligence

In Moran v. Fabergé, 273 Md. 538 (1975), the Court of Appeals concluded (p. 543) that “a manufacturer’s duty to produce a safe product, with appropriate warnings and instructions when necessary, is no different from the responsibility each of us bears to exercise due care to avoid unreasonable risk of harm to others.” As a result, the Court noted that “consumer suits” have been permitted against manufacturers based “purely on negligence concepts” for “defective design, negligent production, and failure to warn (or adequately warn) of latent dangers.” Id., at 543.

The actions by Horan and Jessop against appellant were indeed based in part upon a negligence theory, the particular negligence alleged being that of defective design and failure to warn of latent danger. Appellant claims that the evidence adduced in support of that theory was insufficient to permit it to be considered by the jury — in other words, that the court erred in denying itis motion for directed verdict.

The standard to be applied in this regard is that stated in Fowler v. Smith, 240 Md. 240 (1965), as restated in Curley v. General Valet Service, 270 Md. 248 (1973), and confirmed in Beahm v. Shortall, 279 Md. 321 (1977); namely:

“... [Njegligence is a relative term, to be decided upon the facts of each particular case; that ordinarily it is a question of fact to be determined by the jury; that before it can be determined as a matter of law that one has not been guilty of negligence, the truth of all the credible evidence tending to sustain the claim of negligence must be assumed and all favorable inferences of fact fairly deducible therefrom tending to establish negligence drawn; that ‘Maryland has gone almost as far as any jurisdiction that we know of in holding that meager evidence of negligence is sufficient to carry the case to the jury;’ that the rule requires submission of the case to the jury if there be any evidence, however slight, legally sufficient as tending to prove negligence, the weight and value of such evidence being left to the jury---- The test of legal sufficiency, we have held, ‘is whether the evidence serves to prove a fact or permits an inference of fact that could enable an ordinarily intelligent mind to draw a rational conclusion therefrom in support of the right of the plaintiff to recover.’ [citation omitted].”

See also Impala Platinum v. Impala Sales, 283 Md. 296, 329 (1978); Summit Loans, Inc. v. Pecola, 265 Md. 43 (1972).

The evidence in support of appellees’ theories of negligence came primarily from their “expert” witness, Simon Tamny, whose testimony covered three principal elements: causation, foreseeability, and preventability of the accident.

(a) Causation

In a nutshell, Mr. Tamny described what amounts to a three-step process that caused the extractor to disintegrate. First, he pointed out that the balloon was made of an essentially waterproof, or nonabsorbent, material, which would make the extraction (through centrifugal force) of water retained in it considerably more difficult than the extraction of water from ordinary laundry. Thus, although the load may have been fairly well balanced, as to weight, when the balloon and the other laundry were initially put into the basket, it would quickly become out of balance once the spinning action commenced. The water would rapidly be expelled from the side of the basket containing the ordinary laundry, because it could be pushed through the fabric itself; but, as to the balloon, the water would escape more slowly because of the more impervious nature of the fabric. This differential in the rate of expulsion (and, conversely, in the amount of water retained) created an increasingly significant weight differential, or imbalance, in the basket and thus as well in the “curb.”

This developing imbalance, Mr. Tamny said, would, through the effect of centrifugal force, create a correspondingly increased amount of pressure within the machine, as it continued to pick up speed. This force, or pressure, may be considered the second step in the process; it manifested itself in the oscillation or vibration described by the various witnesses on the scene.

Tamny then described the machine itself, noting that there was only a one-inch tolerance between the closest projection of the “curb” and the pedestals housing the suspension rods. With the build-up of enormous centrifugal force caused by the increasing weight imbalance, the “curb” would tend to move toward the pedestals. What occurred, the expert said, was that when the pressure reached a certain point, “the whole thing just walked to the point where the suspension wouldn’t handle it any more, and the curb slammed into the pedestals and just proceeded to rip them apart, one, two, three.”

(b) Foreseeability Intended Use

In Moran, supra, 273 Md. at 545, the Court considered a manufacturer’s duty to warn of latent dangers as extending “to all [uses] which are reasonably foreseeable,” but presumably not to uses that are not reasonably foreseeable. The same principle would also apply to his duty to design and manufacture a safe product. See Phipps v. General Motors Corp., 278 Md. 337 (1976); Lahocki v. Contee Sand & Gravel Co., 41 Md. App. 579 (1979), rev’d on other grounds 286 Md. 714. The pertinent inquiry, in this instance, is not whether the harm that occurred — the actual use — was itself foreseeable, but rather whether it fell “within a general field of danger which should have been anticipated.” Segerman v. Jones, 256 Md. 109 (1969), quoting from McLeod v. Grant County School Dist. No. 128, 255 P.2d 360 (Wash. 1953); also Moran, supra, at 551.

This becomes particularly significant in light of appellant’s contention in this case. It complains that the machine in question was neither designed, nor expected to be used, to dry large balloons — that such a use was therefore an entirely unforeseeable one.

In this regard, there was evidence adduced from two Sinai employees that, although they had never had occasion to wash and dry a balloon before, items made of the same or similar types of waterproof, nonabsorbent materials were routinely put through the extractor as part of the hospital’s regular laundry. Items such as cubicle curtains, “rubber” sheets, laundry bags, and “slings” — some of which were quite large — were so processed without prior mishap. Mr. Tamny stated that, in terms of their potential effect on the extractor, these items were not substantially different than the balloon. Indeed, in discussing appellant’s theory of what caused the accident (the balloon clogged up all the holes in the basket preventing any water from escaping), Mr. Tamny said that “these items that have been commonly extracted in the machine are just as capable of plastering up all the holes in the side of the half container as the balloon. The balloon material is not really much different from some of those materials.” One curtain, he said, could have the same effect.

Appellant has not contended that the drying of these other items represented an impermissible or unforeseeable use of the machine.

Given the foreseeability of imbalances developing even from normal use, Tamny stated “obviously the design of this machine, it was capable of tearing itself apart.” Recalling that the unit was bolted to the floor, this colloquy with Mr. Tamny is significant:

“Q How about commercial equipment where it is bolted to the floor?
A In a large unit that is tied to the floor, the expectable thing is that the machine is going to tear itself apart. These are very large heavy parts that are vibrating.
Q So that to that extent, are you able to say whether such as happened here was foreseeable by the manufacturer?
A Yes, certainly. I mean, I did a basic calculation of the amount of engineering that’s tied up in this machine, just from the sizes of the parts and how fast they’re moving, and it’s immediately obvious that the machine has the capacity for self-destruction.” (Emphasis supplied.)

In this same vein, Tamny later said:

“Q You use the word capable of destroying itself. Based upon your investigation, is it reasonable to assume that what did happen, in fact, would happen in a hundred per cent of the cases if it were not capable of being shut off by a safety device?
A Well, with the amount of unbalance that occurred in this machine, any time you repeated those conditions of unbalance at that speed, the machine would do the same thing, tear itself apart.” (Emphasis supplied.)

(c) Preventability

As noted, the plaintiffs alleged both a defective design and an omission to warn of latent danger. These are quite different things, and will be considered separately.

With respect to defective design, it was shown that in 1926 — some 32 years before the manufacture and sale of the machine in question — appellant obtained a patent on an automatic cut-off device designed for use on an extractor of a type similar to the Notrux. The patent states, in part:

“This invention relates to improvements in centrifugal extractors.
“The objects of this invention are to provide means for limiting the oscillation of the rotating basket of the extractor; to provide automatic means for cutting out the motor should the amplitude of oscillation of the basket exceed a predetermined amount; and furthermore to provide dynamic braking means for slowing down and stopping the motor upon being automatically cut out by excessive oscillation of the basket.”

This device, Tamny said, is commonly used by other manufacturers, but has never been used by appellant. It would have cut off the power to the machine, and thus immediately commenced to slow it down, before the oscillation built up to the point of causing the machine to disintegrate. Tamny stated, in particular: “... [T]hese switches are typically set to kick out at about fifteen percent of the dry weight capacity in unbalance. As the cut out switch doesn’t wait until the machine is swung one inch off center before it kicks out, it will kick out at relatively smaller levels of vibration. What it does is it catches the problem early enough that you can shut the machine down, bring it to a stop without tearing it apart.” His ultimate conclusion was that, had this device, costing $50 or less, been placed on the Notrux, “it would have prevented what happened. That’s what it is designed to do and that’s what this type of device does millions of times a year on home washing machines when the loads go out of balance. It shuts the machine down.”

It was conceded that appellant gave no warnings with respect to nonabsorbent materials in any of the manuals it published relating to the machine. Customers were not told to refrain from putting such materials in the extractor; nor were they warned to balance such items with similar items, rather than with ordinary laundry. In no way were they alerted to the danger inherent in placing nonabsorbent items in one part of the basket and absorbent items in the other. Mr. Tamny’s comment:

“Well, you know, obviously the very least they could have done was to warn people about the inherent danger of the machine, the fact that under certain kinds of conditions it was capable of destroying itself and what to do about preventing those conditions from happening.”

Having summarized the evidence in support of appellees’ claim, we return once more to Moran, 273 Md. at 552:

“Based on this negligence law we think that in the products liability domain a duty to warn is imposed on a manufacturer if the item it produces has an inherent and hidden danger about which the producer knows, or should know, could be a substantial factor in bringing injury to an individual or his property when the manufacturer’s product comes near to or in contact with the elements which are present normally in the environment where the product can reasonably be expected to be brought or used.”

In the context of the rules laid down in Fowler v. Smith, supra, 240 Md. 240, and its “progeny,” there was surely sufficient evidence here to overcome appellant’s motion for directed verdict, and thus to require the issue of negligence to be resolved by the jury. The evidence recounted above, if believed, sufficed to establish that the accident (and thus the injuries) resulted from appellant’s negligence in designing and selling a machine that, absent an automatic cut-off switch, would, under foreseeable circumstances, become a dangerous instrument, as well as in failing to warn customers of that foreseeable potential danger.

(2) (3) Strict Liability

As its second and third issues, appellant contends that the doctrine of “strict liability” is unconstitutional, and that, even if it is constitutional, the evidence was insufficient to establish its liability under that theory.

Because the jury based its verdicts independently upon a finding of appellant’s negligence — a finding that we have concluded was entirely permissible — the questions raised as to strict liability are moot. Even if we concurred with appellant on these two issues, or either of them, the judgments appealed from would be unaffected. We therefore find no need to consider the second and third issues. See, however, Phipps v. General Motors Corp., supra, 278 Md. 337, in which the Court of Appeals, after an exhaustive analysis of the doctrine, stated flatly, at p. 353: “Therefore, we adopt the theory of strict liability as expressed in § 402A of the Restatement (Second) of Torts.” Also Lahocki v. Contee Sand & Gravel Co., supra, 41 Md. App. 579.

(4) Negligence of Sinai Hospital, Jessop, and Up-to-Date Laundry

We are told by appellant in its brief that it filed a third-party action against Jessop and Up-to-Date Laundry, although, as that pleading was not included in the record extract, it is not entirely clear upon what basis this was done — what acts or omissions on their part appellant asserted would render them liable to it. Appellant says nothing about a third-party action or cross-claim against Sinai or any of its employees, although they were initially sued by Horan and Jessop.

Notwithstanding these omissions, it now asserts that the court erred in directing verdicts in favor of these defendants, or third-party defendants. Its contention is that, by putting the balloon in the extractor without inquiring whether it was proper to do so, and by failing to remove it after the machine began vibrating on the first two or three attempts, these defendants also exhibited varying degrees of negligence contributing to the accident, and that the jury was entitled to consider the question of their relative culpability.

In the first place, there was no evidence that any of these individuals had any prior knowledge that the extractor was incapable of safely drying the balloon. As noted, there were no warnings to that effect given in any of appellant’s manuals. The machine had been routinely used in the past to dry similar types of material.

What is even more telling, however, is that appellant’s own expert witness, Ralph Barnett, absolved these people of any responsibility for the accident. On cross-examination, he said, in relevant part:

“Q Mr. Barnett, at the time of your deposition you stated that this accident occurred through no fault of anyone?
A That’s correct. I believe it’s an unforeseeable misuse of this machine, that nobody could have predicted anything like this, it’s so bizarre.
Q And you absolve everybody of any responsibility who had anything to do with this machine?
A Yes, I do. It’s the first time in 4900 cases that I have ever had a situation like this before.
Q That includes Mr. Scott, Mr. Zimmerman, Mr. Jessop, Mr. Sebree?
A That’s correct.
Q Mr. Horan?
A That’s correct. Everybody.
Q And that’s your expert opinion, that nobody did anything wrong?
A That’s correct. What they did wrong, there was no way in the world for them to know that beforehand." (Emphasis supplied.)

Appellant, it seems to us, is hard-pressed to complain that the court concurred in the opinion expressed by its own (and only) expert witness, particularly when there was no substantial evidence to contradict it. We find no error in the court’s direction of verdicts in favor of these other defendants and third-party defendants.

(5) Punitive Damages

As noted earlier, the case against appellant was submitted to the jury upon two distinct legal theories — negligence and strict liability; and it found appellant liable under both theories. In presenting the issue of punitive damages, the court, in its instructions, drew no distinction between these alternate theories of liability, and thus allowed the jury to consider and award such damages upon either basis of liability.

As the Maryland Court of Appeals has yet to consider the availability vel non of punitive damages in a product liability case, much less the conditions under which such damages may be awarded, we are in virgin territory as to this issue. We must be especially careful, therefore, not to range beyond that which must, of necessity, be decided in this case.

In that regard, we need not, and do not, consider in this case whether or under what circumstances punitive damages are allowable where the verdict as to liability necessarily rests upon a strict liability theory. Because the jury expressly found negligence in this case, we may and do confine our consideration of the issue to that circumstance. We shall restate the issue in these terms: (1) are punitive damages allowable in a product liability action based upon the manufacturer’s negligence; (2) if so, under what conditions — specifically, will anything less than a showing of “actual” malice suffice to permit such damages; and (3) whatever the test, did the evidence in this case suffice to satisfy it?

The Court of Appeals has considered the availability of punitive damages in many different contexts, and certain general guidelines may be distilled from these cases. They are essentially as follows:

(1) Punitive damages are not recoverable at all in actions for breach of contract. H & R Block, Inc. v. Testerman, 275 Md. 36, 44 (1975) — hereafter referred to as Testerman.

(2) Such damages are recoverable in tort actions if malice is shown. The type or degree of malice required depends upon the nature of the tort.

(3) Actual or express malice requires an intentional or wilful act (or omission). It “has been characterized as the performance of an act without legal justification or excuse, but with an evil or rancorous motive influenced by hate, the purpose being to deliberately and willfully injure the plaintiff.” Testerman, at p. 43; Drug Fair v. Smith, 263 Md. 341 (1971).

(4) Implied malice, on the other hand, involves something less than actual malice.

(5) To support an award of punitive damages in a tort action arising from the operation or entrustment of a motor vehicle, what must be shown is a “wanton or reckless disregard for human life ... with the known dangers and risks attendant to such conduct____” Smith v. Gray Concrete Pipe Co., 267 Md. 149 (1972); Testerman, 275 Md. at 47. This is a standard, the Court said, “which, although stopping just short of wilful or intentional injury, contemplates conduct which is of an extraordinary or outrageous character____” Smith at 168. Such a showing, in such an action, amounts to the “legal equivalent” of actual malice. Smith at 168.

(6) Where the tort arises from neither a contractual relationship nor the operation of a motor vehicle, the malice necessary to warrant punitive damages has been defined as “conduct of an extraordinary nature characterized by a wanton or reckless disregard for the rights of others.” Wedeman v. City Chevrolet Co., 278 Md. 524, 532 (1976); St. Paul at Chase v. Mfrs. Life Insur., 262 Md. 192, 239 (1971).

(7) Where the tort arises out of a contractual relationship, actual, rather than implied, malice is required. Testerman, supra, 275 Md. at 44. See also Aeropesca Limited v. Butler Aviation International Inc., 44 Md. App. 610 (1980).

(8) In the context of awarding punitive damages, a tort will be deemed to arise out of a contractual relationship only if “the tortious conduct and the contract were so intertwined that one could not be viewed in isolation from the other,” or, in other words, if, “[i]n one form or another, then, the tort arose directly from performance or breach of the contract.” General Motors Corp. v. Piskor, 281 Md. 627, 637 (1977). Restated again in Piskor at 640:

“In order, then, for an alleged wrong to constitute a ‘tort arising out of a contractual relationship,’ thereby necessitating proof of common law actual malice to permit recovery of punitive damages, we require that there be a direct nexus between the tortious act and performance or breach of the terms and conditions of the parties’ underlying contract.” (Emphasis supplied.)

This is the framework within which we address the three issues restated by us.

(a) Availability Per Se

We note, initially, that there is nothing in any of the Maryland cases to suggest that punitive damages, per se, would not be recoverable in a product liability action based on negligence — that there exists some policy reason not to treat such cases in the same manner as other tort actions in that regard. Nor have other courts around the country tended to draw such a distinction.

Despite an alarm sounded by Judge Friendly in Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832 (2nd Cir. 1967), most courts that have considered the matter have recognized the availability of punitive damages, under certain circumstances, in products liability cases based upon negligence in the design or manufacture of the item or in a failure to warn of latent danger. In most of these cases, the focus was on the circumstances under which such damages would be allowed rather than on the threshold question of whether they would be allowed at all. That was more or less assumed, especially in those cases affirming such awards. There was some discussion of the vel non issue in Rinker v. Ford Motor Co., 567 S.W.2d 655, at 668 (Mo. App. 1978), where the Missouri Court said:

“Appellant advances the argument that punitive damages are ‘inappropriate’ in a products liability case such as this. As appellant suggests, no case in this State relied upon by either party has approved of punitive datnages in a products liability case. However, given the purpose of punitive damages to punish a defendant for an aggravated act of misconduct and to deter similar conduct in the future by the defendant and others, there is no fundamental reason for excluding products liability cases from the cases in which punitive damages may be recovered.”

Discussing then Judge Friendly’s concerns expressed in Roginsky, supra, and the contrary views taken elsewhere, the Court concluded, at p. 669:

“Appellant’s authorities and the argument based thereon are not persuasive that this court should, as a matter of public policy, refuse to permit punitive damages in a case such as this. The problems suggested by appellant will be dealt with as they arise. Means are available to both trial and appellate courts of the state for the control of excessive award of punitive damages.”

Coupling this authority, and the rationale in support of it, with the current framework of the Maryland cases, we conclude that punitive damages are available in product liability actions based upon the manufacturer’s negligence.

(b) What Kind of Malice is Required?

We again advert to the Maryland rulings that to recover punitive damages in a “pure” tort action, “conduct of an extraordinary nature characterized by a wanton or reckless disregard for the rights of others” will suffice as the legal equivalent of “actual” malice, whereas with respect to a tort arising out of a contractual relationship, “an evil or rancorous motive influenced by hate, the purpose being to deliberately and willfully injure the plaintiff” — i.e., “actual” malice — must be shown. See, supra, pp. 111, 112.

Product liability actions may rest on a number of legal theories, some ex contractu in nature (such as breach of warranty), others ex delicto in character (negligence, fraud, and, more recently, “strict liability,” which, it has been suggested, is akin to a theory of negligence per sé). See 74 Mich. L. Rev. 1257, 1269. Whatever the theory pled and argued, the underlying contention in these cases is that a defective product capable (or likely) of producing injury was placed on the market; and that process of marketing normally involves a contract of some sort. In a very real sense, therefore, a product liability action is one that arises out of a contractual relationship. But it is not, in this case at least, a contractual relationship to which the plaintiff-appellees were parties. The tort here did not arise from any contract entered into by Horan and Jessop. The standard to be applied, therefore, is not that stated in Testerman, but rather the “legal equivalent” implied malice standard normally applicable in tort cases.

The courts in other jurisdictions are in substantial agreement that reckless or wanton conduct will suffice to support an award of punitive damages — that “actual” malice as defined in Testerman is not required. In some States by interpretation of statute, in others by court rule, in yet others by court decision, the standard applied in these cases is essentially that stated in Restatement of Torts (Second), § 908: “Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others." (Emphasis supplied). Compare Prosser, Torts, 4th Ed., § 2, pp. 9, 10.

The latter part of the Restatement criterion is quite similar to that expressed by our Court of Appeals in Wedeman, supra, 278 Md. at 532, for tort cases generally, and is essentially the test adopted by the trial court in its instructions to the jury in this case. Whether stated as “wanton or reckless disregard for the rights of others” or as “reckless indifference to the rights of others,” it is, we think, the correct standard to be applied in a product liability action.

(c) Evidence of Wanton or Reckless Disregard

The only evidence offered in support of appellees’ entitlement to punitive damages in this case was that which established appellant’s negligence: failure to use the patented cut-off device and failure to warn of the danger involved in misloading absorbent and nonabsorbent materials. From this, appellees seek to infer the requisite wanton and reckless disregard (there being no evidence whatever of “actual” malice as defined in Testerman). It will not suffice, however.

Wanton and reckless conduct requires far more than mere negligence, or what may be casually inferred from it. See Restatement, supra, § 908. It requires, in this context, direct evidence of substantial knowledge on the part of the manufacturer that the product is, or is likely to become, dangerous, and a gross indifference to the danger. Such evidence simply does not exist in this case.

The machine in question was not inherently dangerous under normal use. Indeed, for 18 years, Sinai dried all sorts of materials absorbent and nonabsorbent —- in it without mishap. There was no evidence that any of these, or similar, types of Notrux extractors had ever before disintegrated in this fashion, or had come close to it Nor was there evidence that appellant had received any prior complaints about the machine or that it had in any way been declared unsafe prior to the sale to Sinai or prior to the accident. This is in sharp contrast to the level of knowledge possessed by the manufacturers in those cases cited supra in footnote 7.

There is nothing in this record to show why the patented device was not used on this particular machine — whether appellant had some reason not to use it, or simply never considered its use. It was originally designed for use in an extractor containing a single “basket,” rather than the two-piece unit used in the Notrux. Neither is there anything to show that appellant ever really expected the machine to be used as it was in this case, even though, for purposes of establishing negligence, such a use was within a general class of use that was “foreseeable.”

In short, the conduct here, as documented in the record, may have been negligent, but not wanton or reckless. The evidence did not support an award of punitive damages, and the court therefore erred in submitting that issue to the jury.

(6) Consideration of Appellant’s Financial Resources

Our conclusion just stated makes it unnecessary to consider appellant’s sixth issue.

(7) Evidentiary Rulings

Finally, appellant raises four evidentiary issues, which we find to be without substantial merit.

Its first complaint is that the court permitted the jury to view two slide photographs of Mr. Jessop’s nearly amputated arm. This occurred during the course of Dr. Weiland’s testimony as to the nature of Jessop’s injuries and the procedures used to correct and heal them. The photographs are a bit gory, to be sure, but we find no abuse of discretion in allowing them. They were accurate depictions of Mr. Jessop’s condition and were relevant to Dr. Weiland’s explanation of what had happened to Mr. Jessop and the difficulties involved in repairing the damage. See Nolan v. Dillon, 261 Md. 516, 527-28 (1971).

The other three complaints concern the examination and cross-examination of the two expert witnesses — Mr. Tamny and Mr. Barnett. Many of the questions complained of here were asked and answered without objection from appellant. It can hardly complain about them now. The others were not patently offensive, and, at worst, involved judgment calls well within the discretion normally accorded to the trial judge.

Judgments for compensatory damages affirmed; judgments for punitive damages reversed; costs to be paid one-half by appellants, one-half by appellees.

      . The jury also returned a verdict of $50,000 in favor of Mr. and Mrs. Jessop for loss of consortium. The fate of that judgment is linked to that of the other compensatory damages awarded.

      . Phipps and Lahocki both involved the application of “strict liability” rather than pure negligence; but in this context that distinction has no meaning. Foreseeability of the harm sued upon (or harm of the general type sued upon) has always been a required element of actionable negligence; indeed, it would seem to be an even more critical element in an action based on negligence than one based upon “strict liability.” See Moran, 273 Md. at 550, et seq.

      . We would also observe that, based upon the record before us, it does not appear that appellant ever raised the Constitutional issue presented here in the trial court. We therefore would decline to review it as well under Maryland Rule 1085.

      . As will be seen, this is a more stringent definition than that adopted by the Restatement of Torts and by most courts that have considered the question; but it is the one that applies in Maryland.

      . To some extent, this definition, or test, is quite similar to that prescribed for motor vehicle torts. But there is at least one distinction that the Court emphasized in Testerman, 275 Md. at 47; i.e., in the motor vehicle tort, the wanton or reckless disregard must be “for human life,” rather than “for the rights of others.” Where personal injuries are in fact sustained, however, and are a foreseeable consequence of the alleged negligence, it is difficult to see that this distinction will have any practical significance.

      . Judge Friendly was dealing with the harmful side effects of a drug that had been marketed nationwide, and that had already produced some 1500 lawsuits around the country — 75 in the Southern District of New York alone. In all, or most, of these cases, punitive damages were sought. Three in California, New York and Washington, had proceeded to iudgment and resulted in substantial awards of punitive damages. Friendly’s principal concern was over the cumulative effect of such awards; “ft]he legal difficulties engendered by claims for punitive damages on the part of hundreds of plaintiffs are staggering,” he wrote. “We have the gravest difficulty in perceiving how claims for punitive damages in such a multiplicity of actions throughout the nation can be so administered as to avoid overkill. 378 F.2d at 839. He also observed that the burden of this expense would be placed either upon innocent shareholders of the corporate defendant, who were not involved in the wrongdoing, or, if the expense were an insurable one, upon the public generally in the form of higher prices reflecting the cost of the insurance. The expression of this caveat was in the nature of dicta, however. Punitive damages were denied in Roginsky because the evidence was held to be insufficient to show that the top level management of the corporate manufacturer authorized or participated in the alleged concealment (failure to warn), which was a requirement for punitive damages under New York law. It should be noted that the California court, in Toole v. Richardson-Merrell, Inc., 251 C.A.2d 689 (1967), a similar lawsuit involving the same product and the same defendant, disagreed with Judge Friendly’s analysis of the evidence, and concluded that management had participated in the wrongdoing. See also a critique of Roginsky in Punitive Damages in Products Liability Litigation, 74 Mich. L. Rev. 1257, 1299, et seq. (1976), an excellent and exhaustive article by Professor David G. Owen. Also Allowance of Punitive Damages in Product Liability Claims, a less exhaustive article appearing in 6 Ga. L.R. 613 (1973).

      . See, for example, Toole v. Richardson-Merrell, Inc., 251 C.A.2d 689 (Cal. App. 1967); Rinker v. Ford Motor Co., 567 S.W.2d 655 (Mo. App. 1978); Moore v. Jewel Tea Company, 253 N.E.2d 636 (Ill. App. 1969), aff'd 263 N.E.2d 103 (1970); Hoffman v. Sterling Drug, Inc., 485 F.2d 132 (3rd Cir. 1973), applying Pennsylvania law; Heil Co. v. Grant, 534 S.W.2d 916 (Tex. Civ. App. 1976); Drake v. Wham-O Manufacturing Company, 373 F. Supp. 608 (E.D. Wisc. 1974), applying Wisconsin law; [but compare Walbrun v. Berkel, Incorporated, 433 F. Supp. 384 (E.D. Wisc. 1976), reaching an exactly opposite conclusion]; Knippen v. Ford Motor Co., 546 F.2d 993 (D.C. Cir. 1976); Gillham v. Admiral Corporation, 523 F.2d 102 (6th Cir. 1975). Cf. Johnson v. Husky Industries, Inc., 536 F.2d 645 (6th Cir. 1976), applying Tennessee law; Drayton v. Jiffee Chemical Corp., 591 F.2d 352 (6th Cir. 1978), applying Ohio law; Auto Specialties Mfg. Company v. Boutwell, 335 So. 2d 291 (Fla. App. 1976), overruled on other grounds in Goodyear Tire & Rubber v. Hughes Supply, Inc., 358 So. 2d 1339, 1343 (Fla. 1978); Hafner v. Guerlain, Inc., 310 N.Y.S.2d 141 (1970); Pease v. Beech Aircraft Corporation, 38 C.A.3d 450 (Cal. App. 1974); G. D. Searle & Co. v. Superior Court, 49 C.A.3d 22 (Cal. App. 1975); Newding v. Kroger Co., 554 S.W.2d 15 (Tex. Civ. App. 1977). In a number of these cases, punitive damages were not, in fact, allowed. The courts rested their decision, however, on the insufficiency of the evidence to support such an award, and implied that had the evidence been sufficient to meet the applicable standard, punitive damages would have been available.

      8. Rinker involved an action by the driver of a Ford automobile involved in an accident that occurred when the accelerator pedal stuck. This, in turn, was caused by the failure of a nylon cam in the carburetor. The plaintiff sued both on strict liability and negligence theories, claiming that Ford knew or should have known that nylon was an inappropriate material for the cam — that other plastics were available. The jury returned a verdict on the negligence count and awarded substantial punitive damages, which was affirmed on appeal.

      . It is of interest to note that, in the Model Uniform Product Liability Act, drafted and proposed by the U.S. Department of Commerce, punitive damages are allowable, the Department’s comment being that such damages “serve an important function in deterring product sellers from reckless disregard for safety in the production, distribution, or sale of dangerous products.” See § 120 (and ensuing analysis), published in 44 FR 62713, 62748 (10/31/79).

      . E.g., California. See Calif. Civil Code, § 3294.

      . E.g., Missouri. See Missouri Approved jury Instructions (MAI), § 10.02.

      . E.g., Hoffman v. Sterling Drug, Inc., supra, 485 F.2d 132; Drake v. Wham-O Manufacturing Company, supra, 373 F. Supp. 608; Knippen v. Ford Motor Co., 546 F.2d 993 (D.C. Cir. 1976); Thomas v. American Cystoscope Makers, Inc., 414 F. Supp. 255, 264 (E.D. Pa. 1976).

      . The court defined “implied malice” as “a wanton disposition, grossly irresponsible to the rights of others, or extreme recklessness, or utter disregard for the rights of others, or in other words, conduct of an extraordinary and outrageous character.” Although appellant objected to the submission of the issue of punitive damages to the jury, it made no objection to the form of this instruction. Compare Maryland Pattern Jury Instruction, § 7:6.


source: Caselaw Access Project

author: Melvin, J.,

license: Public Domain

text:
    KELSO CORPORATION v. MAYOR AND CITY COUNCIL OF BALTIMORE
    [No. 403,
    September Term, 1979.]

      Decided March 6, 1980.

    -The cause was argued before Gilbert, C. J., and Moylan and Melvin, JJ.

      Richard D. Rosenthal for appellant.

      Richard K. Jacobsen, Chief Solicitor for Baltimore City, with whom were Benjamin L. Brown, City Solicitor, and William Hughes, Associate City Solicitor, on the brief, for appellee.
   Melvin, J.,

delivered the opinion of the Court.

On March 14, 1978, the Mayor and City Council of Baltimore (City) filed in the Court of Common Pleas a condemnation petition for property owned by Kelso Corporation (Kelso), the appellant. The property consisted of five unimproved lots known as 609, 611, 613, 615 and 617 W. Saratoga Street in Baltimore. The petition alleged, inter alia, that the property was “to be acquired for Urban Renewal Purposes, namely, CDBG-I, Orchard-Biddle Site” and cited Ordinance No. 32, approved April 10, 1972, as the City’s authority to acquire the property. The City also filed on March 14,1978, a second petition for immediate possession and title, purporting to act pursuant to the City’s “quick take” condemnation procedures provided by Section 12-16 of the Code of Public Laws of Baltimore City (1969 ed., 1977 cum. supp.).

On the same day the two petitions were filed, March 14, 1978, the court passed an order that

1. ) Ordered that the City be vested with possession of Kelso's property; and
2. ) Ordered that title to the property “shall vest” in the City “ten (10) days after personal service” upon Kelso of the quick take petition and “this Order.”

The order further provided that the “vesting of such possession or title and possession in the ... [City] shall in nowise act as a bar to trial of this matter to determine the fair value ... [of the property] in accordance with the applicable provisions of law applicable thereto.”

The record shows that copies of the two petitions and the March 14th order were served on Kelso on April 17,1978 and that on April 24,1978, Kelso filed an “Answer to Petition for Immediate Possession and Title and Motion to Vacate Order.” The answer alleged, for various reasons, that the City “lacks the power and/or right to condemn title to the properties in question.” The answer prayed that the quick take petition be dismissed and that the March 14th order be vacated. The answer also alleged that it was “not necessary for the ... [City] to acquire possession and/or title to the properties____” There is an indication in the record that a hearing on the petition and answer was scheduled for June 20,1978, but was postponed for reasons unrevealed by the record. The hearing was finally held on January 19, 1979, after which the court passed an order, filed February 2, 1979, denying the relief requested. In a shotgun like attack, the appellant contends here that the court below erred. As we point out, infra, we agree that the order of February 2,1979 needs to be modified, but as modified we shall affirm it; otherwise, the various reasons urged for reversal and our reasons for finding them to be without merit follow.

I

Appellant contends that various alleged procedural defects “renders the petition for immediate possession and title invalid.”

(1)

Appellant first contends that it was not given an opportunity to accompany the City’s appraisers during their inspection of the property. Real Property Article, Title 12, Eminent Domain, of the Md. Code, § 12-207, provides that “[i]f a public agency acquires land, it shall be guided to the greatest extent feasible by the policies set forth in this section.” Among the policies set forth are that the agency “shall make every reasonable effort to acquire expeditiously land by negotiation” (§ 12-207 (b)), and that “[l]and shall be appraised before the initiation of negotiations, and the owner ... shall be given an opportunity to accompany the appraiser during his inspection of the property.” (§ 12-207 (c)).

In the instant case, the two managing officers of the appellant both testified, without contradiction, that no one contacted them “for the purpose of appraising this property” and that neither of them “accompanped] any appraiser when he appraised the property.” Appellant argues that the City’s failure to give it “an opportunity to accompany the' appraiser” voids the entire proceedings. We disagree. The provisions of Real Property Article, § 12-207 (c), are not contained in Baltimore City’s quick take statute. Assuming without deciding that they are, nevertheless, applicable to the City’s quick take proceedings, we hold that § 12-207 (c) is directory only and that failure to comply with the particular “policy” set forth therein does not vitiate the entire proceedings — at least where, as in the instant case, no prejudice resulting from such failure has been shown.

(2)

Appellant next contends that the appraisals filed with the quick take petition supporting the amount of money deposited into court as the City’s estimate of the fair value of the property were “stale”. The quick take statute requires that the amount deposited in court as the City’s “estimate” of the fair value of the property to be acquired “be substantiated by the Affidavits of two qualified appraisers, attached to said Petition.” In this case, the affidavits of one appraiser, stating his opinion of value, were dated September 13,1977, as to all five lots. The affidavits of a second appraiser, stating his opinion, were dated August 26, 1977, as to four of the lots, and February 2,1978, as to one of the lots. As already noted, the quick take petition was filed March 14, 1978. Appellant argues that because the amount deposited did not represent the value of the property “at the time of the taking”, the court had no right to vest title in the City by its order of March 14,1978. The argument is without merit. In Dunne v. State, 162 Md. 274, 284, 159 A. 751, 755 (1932), the Court of Appeals said:

“... Neither the State nor any agency thereof can exercise the right of eminent domain except by condemnation proceedings wherein compensation is determined, and that compensation paid, tendered, or secured to the property owner; and title to such property sought to be taken does not pass from the owner until such payment be made or secured." (Emphasis added).

The City’s quick take statute does secure to the property owner just compensation. The payment into court of the City’s estimate of fair value is specifically provided by the statute to be “without prejudice to either party and shall not be construed to prevent either party from requiring a subsequent trial to determine the value of the property.” See subsection (g) of the quick take statute. As already noted, the March 14th order vesting title in the City specifically so provided. Moreover, although it would have been better to have more current appraisals, we think the appraisals used here, on their face, were not so old as to require a holding invalidating the March 14th order.

(3)

The appellant next contends that the City’s quick take petition was not filed “under oath” as required by the statute. Subsection (a) of the statute requires the petition to be “under oath stating that it is necessary for the City to have immediate possession of or immediate title to, and possession of said property, and the reasons therefore [sic].”

In this case, paragraph 2 of the quick take petition alleged that “it is necessary for Petitioner to acquire immediate possession of and title to said property ... as appears from the affidavit of Jerome M. Katz, Land Acquisition Officer, Department of Housing and Community Development, attached hereto and prayed to be taken as a part hereof.” (Emphasis added). Two forms of paper writing were attached to the petition, both of them signed by Mr. Katz and a Notary Public. The first paper was indeed in the form of an “affidavit” rather than an “oath”, for in it Mr. Katz “made oath that the matters and facts set forth in the ... [Petition] are true to the best of his information, knowledge and belief.” See Md. Rule 5 (c). In the second form attached to the petition, however, Mr. Katz “made oath in due form of law that it is necessary for the ... [City] to have immediate possession and title ... of the property ... to expedite the development of highway expansion under Urban Renewal in the Community Development Block Grant — CDBG-I Orchard-Biddle Site” and that “[i]n order to make the Urban Renewal Plan feasible, the within property must be in possession of the ... [City] at the earliest possible time to allow for the commencement of highway expansion.” The appellant does not attack this second attachment to the petition — indeed does not mention it in its brief in connection with his “no oath” argument. Under the circumstances, we reject the argument as devoid of merit. The fact that the first “affidavit” was not technically within the definition of an “oath” does not require a holding that the petition, together with the second attachment, does not comply with the statute. See Segall v. City of Baltimore, 273 Md. 647, 331 A.2d 298 (1975).

II

In addition to the alleged procedural defects in the proceedings already noted, the appellant argues that “the lower court lacked power to order that title and possession vest in the condemnor.”

(1)

Appellant contends that “where the condemnor files a timely answer to the petition for immediate possession and title, the lower court may not award title or possession to the condemnor prior to a judicial hearing.”

Subsections (c) and (d) of the quick take statute provide:

“(c) In cases where the City files a Petition for immediate taking of title and possession to the said property in fee simple absolute or such lesser estate or interest as is specified in the Petition, possession and title thereto shall irrevocably vest in the Mayor and City Council of Baltimore ten days after personal service of the petition upon each and every defendant unless the Defendants or any of them shall file an answer to the Petition within the said ten day period alleging that the City does not have the right or power to condemn title to the property. In the event the defendants or any of them should file an answer, the court shall schedule a hearing within fifteen days of the date of the filing of an answer, which hearing shall be only for the purpose of contesting the right or power of the City to condemn title to the property. The trial court shall render its decision within fifteen days from the final day of said hearing. The City or the defendants or any of them shall have an immediate right of appeal to the Court of Appeals of Maryland from the decision of the trial court.
(d) If it appears from a Petition for Immediate Possession, with or without supporting affidavits or sworn testimony, that the public interest requires the City to have immediate possession of said property, the court shall, within not more than seven days after the filing of said Petition, pass an order, either ex parte or after a hearing, directing that the City may take possession of said property after the expiration of thirty days from the filing of said petition or earlier, in the court’s discretion. Upon passing such an order, the court may direct the City to give such notice of said order to the defendants as the court may deem proper, but the court’s requirement of notice shall not extend the time within which the City may take possession of said property.” (Emphasis added).

In the present case, as already noted, the quick take order of March 14, 1978, in addition to vesting the City “with possession” of the property also provided that “title ... shall vest in the ... [City] ten (10) days after personal service____” This latter portion concerning vesting of title was technically erroneous, for the power to vest the City with title ten days after service would only exist if the defendant, “within the said ten day period,” failed to file an answer to the petition “alleging that the City does not have the right or power to condemn title to the property.” (Emphasis added). The order concerning title should have gone further and provided for this contingency. The fact that it did not so provide, however, resulted in no harm to the appellant. This is so because the effect of the appellant’s timely answer challenging the City’s “right or power to condemn title” was to suspend, by operation of law, the vesting of title until the issue was ultimately decided after a hearing.

The fact that appellant filed a timely answer to the quick take petition did not, however, affect the validity of that portion of the March 14th order vesting possession in the City. When subsections (c) and (d), quoted above, are read together, it is clear that the filing of a challenge to “the right or power to condemn title”does not stay the effect of a prior order for immediate possession.

Following the hearing on the appellant’s challenge to the March 14th quick take order, the court, on February 2,1979, filed its “Ruling by the Court”:

“Upon review of the Court file, consideration of testimony taken at the hearing of January 19,1979, and Memoranda of Law submitted by counsel, the Court has concluded that the Mayor and City Council of Baltimore complied with all the requirements of the applicable law pertaining to the City’s Petition for Condemnation and Petition for Immediate Possession and Title of the Defendant’s properties in question.
Furthermore, in the exercising of the condemning authority by the City, pursuant to the applicable law, the Court is of the view that there existed a necessity for the acquisition and immediate possession of the subject properties in their entirety, even although approximately sixty percent (60%) of the frontage of these properties was needed for the widening of Saratoga Street. The widening of Saratoga Street is of necessity and its use is consistent with industrial purposes. Also, under the law, the City has the authority to retain excess property in urban renewal areas and to use said property for purposes consistent with the overall Urban Renewal Plan and for future industrial expansion.
Consequently, the Defendant’s Motion to Vacate Order for Immediate Possession and Vesting of Title is hereby DENIED.”

While we find no error in the first two paragraphs of this order, we will modify the last paragraph and, as modified, affirm it. Without such modification, the effect of the February 2nd order is to leave standing that portion of the March 14th order that vested title in the City ten days after service upon the appellant of the quick take petition and the March 14th order. As we have seen, such an order was technically erroneous. As modified, the last paragraph of the February 2nd order will read as follows:

“Consequently, the Defendant’s Motion to Vacate that portion of the order, entered in these proceedings on March 14, 1978, vesting the Mayor and City Council of Baltimore with possession is DENIED. It is Further Ordered that the portion of the aforesaid order entered on March 14, 1978, vesting title in the Mayor and City Council of Baltimore ten (10) days after service of the Petition for Immediate Possession, is hereby VACATED; and it is Further Ordered that title to the Defendant’s property shall vest in the Mayor and City Council of Baltimore on this 2nd day of February 1979.”

(2)

The appellant further challenges the quick take order on the grounds that (a) there was no finding of “public interest” by the court; (b) that the Baltimore City Charter prohibits the City from acquiring property by eminent domain for an industrial use [not raised below]; (c) it was not necessary for the City to acquire all the property it sought; and (d) Baltimore City Ordinance No. 32 did not authorize the City to acquire the property for street widening purposes. We have carefully considered all of these contentions and on the record before us find them without merit.

We note that in City of Baltimore v. Kelso Corporation, et al., 281 Md. 514, 380 A.2d 216 (1977), the Court of Appeals stated in footnote 3 of its opinion at 281 Md. page 518, that

“To the extent that Free State Realty v. City of Balto., 279 Md. 550, 557-60, 369 A.2d 1030, 1034-35 (1977), may be read to suggest that use of quick-take procedures by Baltimore City can be challenged on grounds other than facial non-compliance with the statutorily mandated requirements or lack of power to condemn, such a suggestion was not intended and we reject it.”

In the case before us we find that on its face the quick take procedure employed by the City shows compliance with the statutorily mandated requirements and that the appellant has failed to show that the City lacked the power or right to condemn its property. See Master Royalties v. Baltimore City, 235 Md. 74, 200 A.2d 652 (1964). The order appealed from, as herein modified, will therefore be affirmed.

As modified by this opinion, the order of the Court of Common Pleas, entered on February 2, 1979, is affirmed; costs to be paid one-half by appellant and one-half by appellee.

      . Although § 12-101 of Title 12, Eminent Domain, of the Real Property Article provides that, “All proceedings for the acquisition of private property for public use by condemnation are governed by the provisions of this title and Subtitle U of the Maryland Rules,” § 12-101 also provides that, “... [T]his title does not prevent... Baltimore City from using the procedure set forth in §§ 674 through 685, inclusive [now § 21-16] of the Charter and Public Local Laws of Baltimore City.” It is at least arguable, therefore, that the particular “policy” involved here (§ 12-207 (c)) does not apply at all when the City elects to invoke its quick take powers.

      . We note that the appellant does not argue that the staleness of the appraisals invalidates the City’s right to immediate possession.


author: Gilbert, C. J.,

text:
    STANLEY K. SHELTON v. MARYLAND AUTOMOBILE INSURANCE FUND
    [No. 732,
    September Term, 1979.]

      Decided March 6, 1980.

    The cause was argued before Gilbert, C. J., and Moylan and MacDaniel, JJ.

      Thomas E. Grzech, with whom were John T. Brooks and Fine & Klauber, P.A. on the brief, for appellant.

      Thomas M. Baumann, with whom were E. B. Harris, Jr. and Hardwick, Trípoda & Harris on the brief, for appellee.
   Gilbert, C. J.,

delivered the opinion of the Court.

“For purposes of judicial enforcement, the ‘policy’ of a statute should be drawn out of its terms, as nourished by their proper environment, and not, like nitrogen, out of the air.” Mr. Justice Frankfurter in Schulte Co. v. Gangi, 328 U.S. 108, 121-22, 66 S. Ct. 925, 931-32, 90 L. Ed. 1114, 1122 (1946).

With Mr. Justice Frankfurter’s erudite expression of “judicial enforcement” as our polar star, we set out, in this appeal, to decide whether the General Assembly of Maryland, in 1957, meant then Md. Ann. Code art. 66%, § 145S (the Unsatisfied Claim and Judgment Fund) to be mandatory or directory. That section of the code as originally enacted provided:

“Other ‘hit-and-run’ cases.
(a) When in an action for a sum in excess of one hundred dollars ($100.00) in respect to the death of, or personal injury to, any person, arising out of the ownership, maintenance or use of a motor vehicle in this State on or after June 1, 1959, judgment is rendered for the defendant on the sole ground that such death or personal injury was occasioned by a motor vehicle —
(b) The identity of which, and of the owner and operator of which, has not been established, or
(c) Which was in the possession of some person other than the owner or his agent without the consent of the owner, and the identity of the operator has not been established, — such cause shall be stated in the judgment and the plaintiff in such actions may, within three months from the date of the entry of such judgment, make application for authority to bring an action upon said cause of action against the commissioner in the manner provided in section 145R {i.e. apply to a court of competent jurisdiction for an order permitting a suit against the commissioner].”

Although there have been a number of changes to the “Unsatisfied Claim and Judgment Fund” (UCJF), the provisions of the 1957 Act concerned with the UCJF have remained substantially intact. When the Legislature created MAIF, it empowered the executive director to “promulgate rules setting forth procedural requirements with respect to claims against the Fund____” The act further provided that “[p]rior to the effective date of such rules ... [compliance with] §§ 7-606 through 7-635 of Article 66% ” shall be a condition precedent to liability on the part of the Fund. The executive director was also empowered to stipulate, on behalf of the Fund, “that the procedural requirements [of sections 7-620, 7-621, 7-622, and 7-623] for bringing an action against the Fund have been met and consent to an order permitting the claimant to bring an action against the Fund. No stipulation or consent shall be deemed a waiver of any defense which the Fund may have with respect to the case.” Apparently the executive director has not as yet exercised the authority to promulgate rules that would effectively repeal or modify sections 7-606 through 7-635 of Article 66%. Patently, those sections of the generally repealed Article 66% live solely by virtue of the executive director’s disinclination to announce rules that would supplant them and thus sound their demise. Consequently, section 7-622, the sibling of section 145S of the 1957 Act, remains the law today.

We turn now to the matter sub jadice. On February 28, 1977, in Baltimore City, the appellant, Stanley K. Shelton, was walking across Monroe Street at one of the alley intersections between Wilkens Avenue and Eagle Street, when he was struck by a motor vehicle which failed to stop. Shelton believed the errant driver to be Willie B. Witherspoon. He sued Witherspoon for the personal injuries allegedly sustained as a result of the hit-and-run accident. A jury returned a verdict favorable to Witherspoon.

Shelton’s attorney, on April 4, 1978, four days after the jury’s verdict against his client, wrote to MAIF and advised it of his intention to make a claim. Not until January 3,1979, nine months later, was that intent changed into reality when Shelton, in the Superior Court of Baltimore City, filed a “Petition for Leave to Sue the Maryland Automobile Insurance Fund UCJ Division.” Md. Ann. Code art. 48A, § 243H (b) (1); Md. Ann. Code (1970 Rep. Vol.) art. 66%, § 7-620. Shelton requested MAIF to “stipulate” its consent to the suit, Md. Ann. Code art. 48A, § 243H (b) (l), but the agency refused. Instead, it opposed the petition on the ground that the appellant had not complied with Md. Ann. Code art. 66%, § 7-622 as left intact by Md. Ann. Code art. 48A, § 243H (b) (1). Counsel for MAIF told the hearing judge that since “the petition to sue was filed nine months later [than the verdict in the Shelton v. Witherspoon trial] ... it cannot be granted.”

Shelton’s lawyer informed the judge of the various steps in the case, commencing with the injury and ending with the jury’s response to issue “Number 2, [which] said that someone other than ... [Witherspoon], an unknown driver caused the accident.”

The issue before the hearing judge became less than clear at that point. The record shows the following:

“THE COURT: Do you agree with him that the issue before me is whether a letter in and of itself is sufficient, or there must be a petition to sue filed within the applicable time period?
MR. HARTZ: Your Honor, I would agree that is the issue involved, There’s no question about notice. I don’t think that’s denied, and Mr. Harris agrees with that. The question of interpretation of the statute, of course, our contention would be somewhat analogous to the original intention to make claim within 180 days. Of course, the statute indicates that notice or suit must be filed within ninety days of the jury verdict. So that would be the issue, your Honor, and I would submit the file.” (Emphasis supplied.)

The court, in a “Memorandum Opinion and Order,” concluded that the appellant had not furnished notice of intention to make a claim to MAIF “within 180 days of the accident [of February 28, 1977]” citing Md. Ann. Code art. 48A, § 243H (c). Because the notice was not sent to MAIF until April 4, 1978, a period of lapsed time well in excess of 180 days, the judge denied permission to sue MAIF. Shelton noted an appeal to this Court. Three days later, in the Superior Court, Shelton filed a motion in which he sought to have the hearing judge reconsider the order denying permission to sue. The motion was rejected, and properly so, because Shelton’s notice of appeal had ousted the Superior Court of jurisdiction. Moore v. State, 15 Md. App. 396, 400, 291 A.2d 73, 75, cert. denied, 266 Md. 740 (1972). See also Stacy v. Burke, 259 Md. 390, 401, 269 A.2d 837, 844 (1970); Vancherie v. Siperly, 243 Md. 366, 375, 221 A.2d 356, 361 (1966); State v. Jacobs, 242 Md. 538, 540, 219 A.2d 836, 837 (1966); Tiller v. Elfenbein, 205 Md. 14, 19-21, 106 A.2d 42, 44-45 (1954).

The appellant presents three questions to us, namely:

“1. Should Section 243H (c), Article 48A ... be construed as being directory in its notice provisions?
2. Must Section 243H (c), Article 48A be liberally construed in conjunction with subsections (a) and (b) thereof?
3. Should the Maryland Courts follow the New Jersey precedent in accidents involving unidentified vehicles as that would be the proper and equitable method of litigating such actions?”

The hearing judge, as we have seen, decided the case on the basis of the 180 day notice provided for in Md. Ann. Code art. 48A, § 243H (c). While we believe that the judge was correct in denying the petition to sue MAIF, our reasons are not those employed by the hearing court.

Md. Ann. Code art. 48A, § 243H (c) provides:

“As a condition precedent to the right to apply for payment from the Fund, notice of intention to make a claim for damages must be filed within 180 days of the accident out of which the cause of action accrues. In lieu of this notice a claimant may make proof that:
(1) He was physically incapable of giving the notice within the required period and that he gave notice within 30 days after he became physically capable of doing so, or in the event that he did not become so capable that a notice was given on his behalf within a reasonable period;
(2) He gave the required notice within 30 days of receiving notice that an insured has disclaimed on a policy of insurance so as to remove or withdraw liability insurance coverage for his claim against a person or persons who allegedly caused him to suffer damages; or
(3) He gave the required notice within 30 days of receiving notice that the defendant’s insurer was insolvent, provided that the defendant insurer is not authorized to transact insurance business in the State of Maryland and the claimant is not eligible to make a claim against the Maryland Insurance Guaranty Association.”

Section 243H (b) (1) states:

“The executive director shall, with respect to the Fund,... promulgate rules setting forth procedural requirements with respect to claims against the Fund filed pursuant to this section and as a condition precedent to any liability on the part of the Fund under this section, a claimant shall comply with all such rules, except that failure to comply with any rule promulgated by the executive director with respect to the Fund may not of itself result in a bar to recovery against the Fund. Prior to the effective date of such rules, as a condition precedent to any liability on the part of the Fund under this section, a claimant shall comply with the requirements set forth in §§ 7-606 through 7-635, of Article 66% of the Annotated Code of Maryland (1970 Replacement Volume) notwithstanding the general repeal of said sections except that any reference therein to the Unsatisfied Claim and Judgment Fund, or the board or attorneys or agents thereof, shall be deemed to refer to the Fund or the executive director, and attorneys or agents thereof, respectively. Notwithstanding the provisions of §§ 7-620, 7-621, 7-622, and 7-623, the executive director on behalf of the Fund may stipulate that the procedural requirements for bringing an action against the Fund have been met and consent to an order permitting the claimant to bring an action against the Fund. No stipulation or consent shall be deemed a waiver of any defense which the Fund may have with respect to the case.”

As a result of the language of section 243H (b) (1), it is necessary to refer to former Md. Ann. Code art. 66%, § 7-622. That section of the Code, still viable as a result of Md. Ann. Code art. 48A, § 243H (b) (1) and the non-promulgation of pertinent rules by the executive director of MAIF, mandates:

“(a) When in an action for a sum in excess of one hundred dollars ($100.00) in respect to the death of, or personal injury to, any person, arising out of the ownership, maintenance or use of a motor vehicle in this State on or after June 1, 1959, judgment is rendered for the defendant on the sole ground that the death or personal injury was occasioned by a motor vehicle —
(b) The identity of which, and of the owner and operator of which, has not been established, or
(c) Which was in the possession of some person other than the owner or his agent without the consent of the owner, and the identity of the operator has not been established, — such cause shall be stated in the judgment and the plaintiff in the action, within three months from the date of the entry of such judgment, may make application for authority to bring an action upon the cause of action against the Board in the manner provided in §§ 7-620 and 7-623 of this article. (Emphasis supplied.)

When the three code provisions, Article 48A, § 243H (c), § 243H (b) (1), and former Article 66%, § 7-622 are read together, as they must be in the circumstances of the instant case, it is manifest that the 180-day notice requirement cannot possibly apply to Article 66%, § 7-622. Cases brought under section 7-622 arise only after a judgment “is rendered for the defendant [in a prior case] on the sole ground that... [the] injury” was caused by “some person other than the owner or his agent” and that person’s identity has not been established. The crowded dockets of the trial courts make it impossible to file a suit, proceed to judgment, and still notify MAIF within 180 days of the happening of the events leading to the action in the first instance, if, as here, the judgment is against the claimant because the operator of the vehicle allegedly causing the accident is found to be someone other than the defendant, and the identity of that person is unknown.

Whenever judgment is rendered against a plaintiff in an action for personal injuries arising out of the operation of a motor vehicle or vehicles and that judgment is based on the sole ground that the defendant was not the owner or operator of the vehicle, nor the owner’s agent, but rather the operator was a person whose identity has not been established, the claimant must then, within three months of the date of that judgment, make application to the court to bring an action against MAIF in the manner provided in former Article 66%, §§ 7-620 and 7-623.

The appellant, Shelton, did not apply to the court within three months following the entry of the judgment in favor of Witherspoon. In fact, his application was not brought until some six months after the expiration of the three month time limit. His failure to heed the clear command of Article 48A, § 243H (b) (1) with respect to former Article 66%, § 7-622 (c) is fatal to his cause.

Order denying application to sue Maryland Automobile Insurance Fund affirmed.

Costs to be paid by appellant.

      . The “Unsatisfied Claim and Judgment Fund” was created by Laws 1957, ch. 836.

      . See Laws 1968, ch. 543 (adding new sections to art. 66%); Laws 1970, ch. 534 (repealing and reenacting art. 66% as “Vehicle Laws.” At the same time section 145S was renumbered as section 7-622. Section 145R was changed to section 7-620). The 1968 Act changed the party to be sued from the commissioner to the “Unsatisfied Claim and Judgment Fund Board.” Subsequently, when the Maryland Automobile Insurance Fund (MAIF) was created and organized by Laws 1972, ch. 73, the provisions of Article 66%, dealing with the Unsatisfied Claim and Judgment Fund, were repealed and reenacted as part of the Insurance Code, Md. Ann. Code art. 48A, §§ 243-243L.

      . See footnote 2, supra.

      . The position of executive director was established by Md. Ann. Code art. 48A, § 243 (b). See Laws 1972, ch. 73.

      . The authority of the director to so stipulate was conferred by Laws 1973, ch. 517. We need not and do not decide in this case the effect of the last sentence of section 243H (b) (1) on the authority to stipulate. Read literally, however, the last sentence would seem to negate the right to stipulate.

      . The executive director has published rules pursuant to Md. Ann. Code art. 48A, § 243H (b) (2). See Maryland Register, Vol. 4, Issue 24, dated November 18,1977. Those Rules, however, do not apply to section 243H (b)

      . It is to be noted that Article 66% , § 7-622 (a) provides that in order for a claimant to file a suit against MAIF judgment must be on the “sole ground that the ... personal injury was occasioned by a motor vehicle” whose operator’s identity “has not been established.” The docket entries of the proceeding between Shelton and Witherspoon are not before us, therefore, we do not know as a fact that the jury rendered its verdict on the “sole” basis that Witherspoon was not the driver of the vehicle that struck Shelton. The petition to sue MAIF did, however, allege that fact, and it was not controverted in the hearing court. Obviously, that court accepted the appellant’s representation that the jury did decide against Shelton on that ground. We snail also accept the representation as true.

      . That such a letter was written is not contested by appellees who admit notification was made. The letter, however, is not a part of the record before us.

      . See n. 5, supra.

      . Were we to hold otherwise, counsel for any person injured in any automobile accident would have to notify MAIF within 180 days of the date of the injury. He would have to do so because there is the possibility that the trier of fact might find that the person sued was not the driver of the vehicle at the time it was involved in the accident. Such a procedure would result in a virtual flood of notifications to MAIF, even though MAIF might ultimately not be involved in the vast majority of the cases.


text:
    THE NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY v. ETHEL M. GORDON
    [No. 765,

    September Term, 1979.]

      Decided March 6, 1980.

    The cause was argued before Gilbert, C. J., and Melvin and Weant, JJ.

      John R. Penhallegon, with whom were John G. Prendergast, Jr., and Smith, Somerville & Case on the brief, for appellant.

      Edward Smith, Jr., for appellee.
   Gilbert, C. J.,

delivered the opinion of the Court.

—THE LAW—

A misrepresentation in an application for an insurance policy or renewal thereof does not, ipso facto, permit the carrier to escape liability. This is so because the General Assembly has specifically provided that:

"All statements and descriptions in any application for a life or health insurance policy or annuity contract, or for the reinstatement or renewal thereof, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under such policy or contract unless either:
(1) Fraudulent; or
(2) Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or
(3) The insurer in good faith would either not have issued, reinstated, or renewed the policy or contract, or would not have issued a policy or contract in as large an amount, or at the same premium or rate, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.” Md. Ann. Code art. 48A, § 374.

Ordinarily, what constitutes a material misrepresentation is a question for the trier of fact to resolve. Peoples Life Insurance Co. v. Jerrell, 271 Md. 536, 538, 318 A.2d 519, 520 (1974); Cohen v. American Home Assurance Co., 255 Md. 334, 342, 258 A.2d 225, 229 (1969). Only “when the evidence is clear and convincing, or uncontradicted,” may the trial judge rule as a matter of law that the misrepresentation is false and material. Peoples Life Insurance Co. v. Jerrell, supra, 271 Md. at 538, 318 A.2d at 520; Continental Casualty Co. v. Pfeifer, 246 Md. 628, 639, 229 A.2d 422, 427, cert. denied, 389 U.S. 832, 88 S. Ct. 101, 19 L. Ed. 2d 91 (1967); Heidenreich v. Metropolitan Life Insurance Co., 213 Md. 286, 295, 131 A.2d 914, 919 (1957); Monumental Life Insurance Co. v. Taylor, 212 Md. 202, 210, 129 A.2d 103, 106-07 (1957); John Hancock Mutual Life Insurance Co. v. Adams, 205 Md. 213, 220, 107 A.2d 111, 113-44 (1954).

—THE INSTANT CASE—

We are here concerned with whether Judge Martin B. Greenfeld was correct in allowing a jury, in the Superior Court of Baltimore City, to determine the materiality of a misrepresentation in a renewal application for a policy issued by The National Life and Accident Insurance Company (National). Judge Greenfeld ruled that there was a misrepresentation in the application for renewal, but he declined to hold, as a matter of law, that it was material. The jury, after being instructed as to the misrepresentation, concluded that it was not material and rendered a verdict in favor of Ethel M. Gordon, the beneficiary under National’s policy on the life of Izza Gordon, her deceased husband.

The record reveals that Mr. Gordon applied to National for a life policy on October 24,1974. The policy lapsed in March 1975 for non-payment of the premium. The October 1974 application contains the information that Mr. Gordon was treated at Provident Hospital as an outpatient for three weeks in September 1974 for head injuries sustained in an auto accident. The data supplied by Mr. Gordon was “Complete Recovery No Complications.” The “Application for Reinstatement” shows:

“6 During the past five years, have you Yes No
(a) consulted or been treated by a doctor or other practitioner or at a dispensary or , clinic. ~ —
(b) had any disabling illness or surgical , operation — -Y-”

The application required that “full details” be furnished if “any part of... No. 6 [is] answered Yes.” Written in the space provided is the following:

“Sinai
Provident Hospital
Head Injury Auto Accident. Sept., 74
Dr. Lawrence Solomon”

It is that writing that is the omphalos of this litigation.

When Mr. Gordon died in July 1976 as the result of a gunshot wound, National discovered that the application for renewal did not disclose that Mr. Gordon was in Sinai Hospital from February 9, 1975 through February 16, 1975, nor that the medical diagnosis made at that time was “Mallory-Weiss Syndrome, secondary to alcoholism.” National refused to pay over the proceeds of the policy to Mrs. Gordon but, instead, tendered to her a return of the premiums paid. She rejected the tender and suit was filed on her behalf against National.

At trial Mrs. Gordon disputed the diagnosis contained in the Sinai Hospital records. She asserted that her husband had never been an alcoholic, and that his period of confinement in Sinai Hospital was because of “a torn esophagus.” National’s underwriter, on the other hand, averred that had National known of the diagnosis, it would have refused to reinstate the policy. Following the close of the evidence, Judge Greenfeld, as we have seen, found, as a matter of law, that the renewal application contained a misrepresentation. He felt, however, that there was sufficient evidence to make the issue of materiality a question for the jury to decide.

National, in this Court, raises two issues:

1. The trial court erred in not ruling that the failure by the applicant to disclose a hospitalization of eight days for “Mallory-Weiss Syndrome, secondary to alcoholism, was material misrepresentation, as a matter of law.”
2. The evidence adduced by National of the misrepresentation’s being a material fact was uncontradicted and uncontroverted, and, therefore, the court should not have submitted the materiality vel non to the jury.

National asserts that the non-disclosure of the period of hospitalization at Sinai was a material fact as a matter of law. To bolster its position National points to Hofmann v. John Hancock Mutual Life Insurance Co., 400 F. Supp. 827 (D. Md. 1975). There Judge Watkins had before him a question of material misrepresentation in a policy application. In granting a summary judgment in favor of the insurer, the judge said:

“Maryland case law affords strong precedent that misrepresentation about alcoholism is, by its very nature, material to the risk. The excessive use of alcohol, a fact that the insurance company did not know, but would have known had Mr. Hofmann revealed his visits to Drs. Johnson and Nakazawa, has been held to be material to the risk as a matter of law in Mutual Life Ins. Co. v. Mullan, 107 Md. 457, 468, 69 A. 385, 390 (1908) and Forwood v. Prudential, 117 Md. 254, 258, 83 A. 169, 170-71 (1912).” Id. at 830.

Seeking to bring itself within the ambit of Hofmann, National avers that “the failure to disclose a hospitalization for an eight-day period, where the discharge diagnosis was ‘Mallory-Weiss Syndrome, secondary to alcoholism,’ establishes a material misrepresentation as a matter of law because of the very nature of such a misrepresentation.” National also asserts that evidence depicted Mr. Gordon to be an alcohol abuser, “a binge type drinker.”

What National overlooks is that Hofmann and the cases cited therein, deal with uncontroverted evidence of alcoholism. The evidence produced by Mrs. Gordon in the case sub judice was that Sinai’s hospital report was wrong. Mrs. Gordon told the jury that her husband did not abuse alcohol and, in fact, only drank a “little wine.” That, she said, was the extent of his drinking. Mrs. Gordon told the jury that her husband was in Sinai because of a torn esophagus. Her testimony, we think, generated a jury issue. If it believed her instead of the hospital report it could conclude that the misrepresentation was not material, and that had National had the true facts before it, the policy would have been issued. Patently, the jury was not required to believe the hospital record. Those records are not sacrosanct. They have been made by man, and like man, are subject to all of his uncertainties. Although they are admissible in evidence, as are other records made in the normal course of business, they are not unassailable. Mrs. Gordon, in the instant case, successfully challenged the report. The submission to the jury of the question of materiality of the misrepresentation was not error.

Judgment affirmed.

Costs to be paid by appellant.

      . Mrs. Gordon testified that she paid the premiums on the policy.

      . The policy was actually issued on December 11, 1974.

      . The policy was renewed on July 8,1975. In the interim period, National, for reasons not wholly apparent from the record, dispatched a second agent to the Gordon home to nave an additional questionnaire completed. That document was more detailed in its questions and once again the insured did not allude to the period of hospitalization.

      . “Mallory-Weiss Syndrome” was defined by National’s underwriter as “a varicosity or varicose veins of the lower esophagus.”

      . Mrs. Gordon said her "husband once in a while used to take a little wine ...,” but that was the extent of his drinking.