Title: Stein v. Smith

State: maryland

Issuer: Maryland Supreme Court

Document:

Charles F. Stein, III, et ux. v. Robert E. Smith, Jr., d/b/a Curtis Contractors, Inc., No. 101,
September Term, 1999.
[Pleading - Amendment - Limitations.  Complaint, filed in name of corporation whose
charter had been forfeited and never revived, was amended to assert, in name of sole
stockholder, a claim that arose after forfeiture.  Held:  No relation back of amendment.]
Circuit Court for Anne Arundel County
Case No. C-1997-37469 CN
IN THE COURT OF APPEALS OF MARYLAND
No. 101
September Term, 1999
_________________________________________
CHARLES F. STEIN, III,
et ux.
v.
ROBERT E. SMITH, JR., d/b/a
CURTIS CONTRACTORS, INC.
_________________________________________
Bell, C.J.
Eldridge
Rodowsky
Raker
Wilner
Cathell
Harrell, 
JJ. 
_________________________________________
Opinion by Rodowsky, J.
________________________________________
Filed:   May 15, 2000
This case was decided on summary judgment.  The date of completion is found in
1
the record only in an unsworn memorandum of law filed by the Steins which states that the
plaintiff (then Robert E. Smith, Jr.) asserts that the work was completed no later than May
29, 1994.  The plaintiff has never challenged this statement and the completion date has been
treated as a conceded fact in the circuit court, in the Court of Special Appeals, and in this
Court.
In this case we hold that the statute of limitations is not tolled by the filing of an
action in the name of a corporation whose charter had been forfeited and never revived,
asserting a claim that was not a corporate asset at the time of forfeiture.  Consequently, an
amendment naming the last and sole owner as plaintiff in lieu of the defunct corporation,
after the statute had run, does not relate back to when the action was instituted.
This action was instituted on May 7, 1997, in the Circuit Court for Anne Arundel
County.  The complaint named Curtis Contractors, Inc. as the sole plaintiff.  The petitioners,
Charles and Ann Stein (the Steins), were named as defendants.  The complaint was pled in
two counts.  The first count alleged an express written contract between Curtis Contractors,
Inc. and the Steins for the construction by Curtis Contractors, Inc. on the Steins' property of
a therapy spa and related work.  It further alleged amendments to that contract for the
purpose of including additional work, and it sought judgment for the unpaid balance of the
agreed price.  Count II sounded in quantum meruit and sought the reasonable value of the
work done and materials provided by Curtis Contractors, Inc. for the Steins.  
The work was completed no later than May 29, 1994.   Consequently, the instant
1
action was filed just short of three years after the cause of action accrued.  
The Steins, who were not served until February 1998, moved to dismiss, asserting,
inter alia, the lack of capacity of Curtis Contractors, Inc. to sue.  In an accompanying
- 2 -
memorandum, to which a certificate from the State Department of Assessments and Taxation
(the Department) was attached as an exhibit, the Steins demonstrated that the charter of
Curtis Contractors, Inc. had been forfeited on October 6, 1983, "for failure to file the
necessary corporate personal property report or failure to pay any late filing penalties due."
The response to this defense was the filing on April 20, 1998, of an amended
complaint which omitted Curtis Contractors, Inc. as plaintiff and named "Robert E. Smith,
Jr. d/b/a [doing business as] Curtis Contractors, Inc." as sole plaintiff.  It alleged that the
respondent, Robert E. Smith, Jr. (Smith), was the sole owner, operator, proprietor, and
principal of Curtis Contractors, Inc., and that, following the corporate charter's forfeiture in
1983, Smith had "continued to do business as a sole proprietor using the name Curtis
Contractors, Inc."
The Steins moved for summary judgment, contending that the statute of limitations
had run against Smith's claim.  Smith's affidavit in opposition affirmed the facts alleged in
the amended complaint that are recited above.  Smith also made affirmation to the following:
"I have known Defendants Charles and Ann Stein on a personal basis
since 1983.  In addition, Charles Stein represented me as an attorney in various
matters from 1984 to 1994.  Charles Stein was and is intimately familiar with
many of my business dealings including my construction business.  Charles
Stein was at all relevant times fully aware that I was the sole owner, proprietor
and principal of Curtis Contractors, Inc."
The circuit court entered summary judgment in favor of the Steins, finding that the claims
were barred by the three year statute of limitations provided by Maryland Code (1974, 1995
Repl. Vol.), § 5-101 of the Courts and Judicial Proceedings Article. 
- 3 -
Smith appealed to the Court of Special Appeals where the judgment was reversed by
a divided court in an unreported opinion.  That court agreed with the Steins that "Curtis
Contractors, Inc." lacked the capacity to recover against them for breach of contract.  That
did "not resolve, however, whether the relation back doctrine applies to Smith's amended
complaint."  The court said, "Although relation back cases generally concern a change in the
cause of action or a party defendant, it is only the plaintiff in this case, not the defendant or
the claim, that has changed.  Nevertheless, we believe the underlying principles remain the
same." 
Relying principally on Zappone v. Liberty Life Insurance Co., 349 Md. 45, 706 A.2d
1060 (1998), the Court of Special Appeals said that "prejudice to the opposing party is a
hallmark of relation back cases involving the substitution of a defendant due to misnomer."
The court reasoned that there was no prejudice to the Steins because the facts out of which
the dispute had arisen had not changed, the legal theories of liability had not changed, and
the Steins had a personal and professional relationship with Smith.  The court analyzed that
there had been a "substitution of Smith's name for that of the Corporation in the First
Amended Complaint."  This, said the court, "is indistinguishable from any other case in
which a plaintiff substitutes one party for another, after realizing that the original complaint
named the wrong entity."  
The dissenting judge believed that Maryland Rule 2-341(c)(5) controlled because the
case presented a nonjoinder, as opposed to a misnomer.  Rule 2-341(c) in relevant part
provides:
- 4 -
"An amendment may seek to ... (4) correct misnomer of a party, (5) correct
misjoinder or nonjoinder of a party so long as one of the original plaintiffs and
one of the original defendants remain as parties to the action."  
The dissenting judge was "not prepared to ignore the traditional understanding that Curtis
Contractors[, Inc.] was a separate legal entity from [Smith] and to reward [Smith] for his
blatant disregard of applicable corporate law except when it is to his advantage to do
otherwise."  
The Steins petitioned for the writ of certiorari which we granted.  Curtis Contractors,
Inc. v. Stein, 356 Md. 494, 740 A.2d 612 (1999).  We shall reverse.  Because the original
complaint was filed by a nonentity and was a nullity, there was nothing to which the
amended complaint could relate back.
The provisions of the Maryland corporation statutes dealing with the forfeiture of
charters came into the law, initially by Chapter 244 of the Acts of 1890, "as a tax measure."
Cloverfields Improvement Ass'n v. Seabreeze Props., Inc., 280 Md. 382, 387, 373 A.2d 935,
938 (1977).  In 1983, when the charter of Curtis Contractors, Inc. was forfeited, the grounds
for forfeiture were stated in Maryland Code (1975), § 3-503 of the Corporations and
Associations Article (CA).  It provided, except as to a tax collectable locally, that the
Comptroller "shall certify to the Governor a list of every Maryland corporation which has
not paid a tax due by it before October 1 of the year after the tax became due."  CA § 3-
503(a)(1).  Further, it provided that the Department "shall certify to the Governor a list of
every Maryland corporation which has not filed an annual report with the Department as
required by law or has not paid franchise or gross receipt taxes before October 1 of the year
- 5 -
Hereafter, unless otherwise noted, all references to the Corporations and Associations
2
Article will be to the 1993 Replacement Volume.
CA § 3-503 was amended by Chapter 593 of the Acts of 1986 to change the duty of
3
the Comptroller from reporting to the Governor to reporting to the Department and by
Chapter 8 of the Acts of 1991 to place a duty to report to the Department on the appropriate
cabinet secretary with respect to unemployment insurance contributions or reimbursement
payments.  See Md. Code (1993, 1999 Cum. Supp.), CA § 3-503(a) and (b).  
Currently the Department issues the proclamation after the lists are certified.  CA §
4
3-503(d).
after the report was required to be filed or the taxes were due."  CA § 3-503(b).  Currently,
the certification is made by the Comptroller to the Department.  Md. Code (1957, 1993 Repl.
Vol.), CA § 3-503(a)(1).   Since 1983 there has been no change of substance relevant to the
2
instant matter with respect to the duties of the Department.  See CA § 3-503(c).3
In 1983 the effect of forfeiture was set forth in Md. Code (1975), CA § 3-503(c).  It
read:
"When he receives the lists, the Governor shall issue a proclamation declaring
that the charters of the corporations are repealed, annulled, and forfeited, and
the powers conferred by law on the corporations are inoperative, null, and
void as of the date of the first publication of the proclamation, without
proceedings of any kind either at law or in equity."
(Emphasis added).   One of the powers of Curtis Contractors, Inc. that became "inoperative,
4
null, and void" upon forfeiture of its charter was the power to sue.  CA § 2-103(2).  
Upon forfeiture, and "until a court appoints a receiver, the directors of the corporation
become the trustees of its assets for purposes of liquidation."  CA § 3-515(a).  During that
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period the directors-trustees may "[s]ue or be sued in their own names as trustees or in the
name of the corporation."  CA § 3-515(c)(3).  This latter provision is not applicable in the
case before us.  Any contract or restitutionary rights that arose in favor of Smith, who
allegedly conferred a benefit on the Steins, arose long after forfeiture of the Curtis
Contractors, Inc. charter and was not an asset of that corporation at the time of forfeiture.
Filing of articles of revival is the procedure for reinstating a forfeited corporate
charter.  CA §§ 3-507 through 3-512.  From the time of forfeiture until October 1, 1991, in
order for Curtis Contractors, Inc. to have articles of revival accepted by the Department, it
was necessary for Smith to file all annual reports and to pay "[a]ll State and local taxes,
except taxes on real estate, and all interest and penalties due ... whether or not barred by
limitations."  Md. Code (1975), CA § 3-510.  Effective October 1, 1991, per Chapter 8 of
the Acts of that year, it also became necessary for those seeking reinstatement to pay, in
addition, "[u]nemployment insurance contributions, or reimbursement payments."  CA § 3-
509.  Further, the revival of a corporation's charter validates contracts done in the name of
the corporation while the charter was void and restores, unless otherwise divested, all assets
and rights of the corporation to the same extent that they were held before forfeiture.  CA §
3-512.  At no time from October 6, 1993, to the closing of the record for this appeal,
however, has Smith revived the charter of Curtis Contractors, Inc.  
There are also two Maryland Rules of Procedure, Rules 2-201 and 2-241, which deal
with a problem related to, but distinct from, the problem in the case before us.  Rule
2-241(a), "Substitution," provides:
- 7 -
"The proper person may be substituted for a party who
"(1)
dies, if the action survives,
"(2)
becomes incompetent, 
"(3)
transfers an interest in the action, whether voluntarily or
involuntarily,
"(4)
if a corporation, dissolves, forfeits its charter, merges, or
consolidates, or 
"(5)
if a public officer, ceases to hold office."
Maryland Rule 2-201, "Real party in interest," in relevant part reads:
"No action shall be dismissed on the ground that it is not prosecuted in the
name of the real party in interest until a reasonable time has been allowed after
objection for joinder or substitution of the real party in interest.  The joinder
or substitution shall have the same effect as if the action had been commenced
in the name of the real party in interest."
"Substitution," as used in Rule 2-201, has the same meaning as in Rule 2-241.  From the
standpoint of prosecuting an action, the reference to forfeiture in Rule 2-241(a)(4) ordinarily
involves a situation where an action had been instituted by a corporation in good standing
that, during the pendency of the suit, suffered a forfeiture of charter and, without articles of
revival having been filed, the directors-trustees prosecute the action in connection with the
liquidation of the affairs of the defunct corporation.  See CA § 3-515(c).  That substitution
relates back per Rule 2-201.  Here, however, Smith is not asserting a claim owned by the
corporation at forfeiture and is not suing as the only director-trustee.  Thus, in order for
Smith to avoid the operation of the statute of limitations, relation back under the amendment
rule, Rule 2-341, must apply where the action is instituted by a defunct corporation.
This Court's analysis of the effect of the institution of an action in the name of a
defunct corporation is found in Atlantic Mill & Lumber Realty Co. v. Keefer, 179 Md. 496,
- 8 -
20 A.2d 178 (1941).  In that case a corporation whose charter had been forfeited purportedly
filed a mechanics' lien and a bill of complaint to enforce the mechanics' lien.  Id. at 497, 20
A.2d at 179.  After the expiration of the time within which a mechanics' lien could be filed,
the lien filing and the bill of complaint to enforce were amended by naming "Herman M.
Meyer, trading as the Atlantic Mill & Lumber Company," as claimant and plaintiff, in lieu
of the defunct corporation, "Atlantic Mill & Lumber Realty Company, Incorporated."  Id.
The amended bill was dismissed on demurrer, and this Court affirmed.  We stated:  
"The original mechanics' lien ... was inoperative, null and void as the
petitioner was not in existence and had no power to file the lien.  Such
petitioner not being in existence and having no authority to enforce rights
acquired during the life of its charter could not file the alleged mechanics' lien,
could not file the original bill of complaint for its enforcement, could not file
a petition for authority to file an amended bill of complaint.  The amended lien
was not filed by the directors of the corporation as trustees nor by a receiver
or receivers of the corporation, but by 'Herman M. Meyer, trading as Atlantic
Mill and Lumber Company.'  It therefore appears that the amended bill of
complaint of 'Herman M. Meyer, trading as Atlantic Mill and Lumber
Company,' was an entirely new action and that the amended mechanics' lien,
an entirely new claim filed more than six months after the time fixed by
statute[,] was no lien and is, therefore, not enforceable."
Id. at 500-01, 20 A.2d at 181 (citation omitted).
In the instant matter Smith seeks to distinguish Atlantic Mill, asserting that the
materials giving rise to the lien claim in that case were provided when the corporation was
in good standing.  As we read Atlantic Mill, it is silent on that point.  Nevertheless, even if
the materials were provided prior to forfeiture of the corporation's charter, the distinction
would be immaterial.  The point is that under Atlantic Mill there was no relation back, and
the filing of the amended complaint to enforce was "an entirely new action."  This Court said
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that the then applicable forfeiture statute did not permit Meyer to take advantage of a lien
filed by a "nonentity."  Id. at 501, 20 A.2d at 181.
There are a number of cases dealing with revival, or attempted revival, under the
Maryland corporation laws which clearly indicate that the original complaint filed in the
name of Curtis Contractors, Inc. in this case had no effect, so that there was nothing to which
the amended complaint could relate back.  In Cloverfields, 280 Md. 382, 373 A.2d 935, the
contest was between rival claimants to the power to control the application of restrictive
covenants in a residential development.  The improvement association claimed under a 1965
assignment from a corporation whose charter had been forfeited in 1964.  Id. at 385, 373
A.2d at 936-37.  The other claimant, Seabreeze Properties, Inc., claimed under a 1971
assignment from the last directors of the defunct corporation.  Id. at 386, 373 A.2d at 937.
Articles of revival had been filed in 1973, some nine months after the improvement
association had brought the declaratory judgment action that is the subject of the reported
case.  Id.  We held that the articles of revival did not retroactively make effective the
assignment in the name of the defunct corporation because, in the interval between that
assignment and the revival, the authorized directors-trustees had validly assigned.  Id. at 398,
373 A.2d at 943.
Of particular relevance to the case before us is the alternative argument of the
improvement association in Cloverfields which contended that the assignee from the
directors-trustees could not be a bona fide purchaser because that assignee had actual
knowledge of the prior rights and equities of the improvement association.  We rejected this
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Renewal of a money judgment is effected by filing a notice of renewal with the Clerk
5
of the Court.  Md. Rule 2-625.  Service of the notice of renewal must be made on the
judgment debtor in accordance with Rule 1-321.  
argument saying that "[t]he 1965 instruments were void because the corporation was dead
and its powers terminated."  Id. at 399, 373 A.2d at 944.  We analogized to the lack of
constructive notice given by the recording of a forged deed.  Id.  Cloverfields also favorably
quoted the passage from Atlantic Mill that we have quoted above.  Cloverfields, 280 Md. at
393-94, 373 A.2d at 941.
American-Stewart Distillery, Inc. v. Stewart Distilling Co., 168 Md. 212, 177 A. 473
(1935), was a contest over the use of the name of a corporation whose charter had been
forfeited.  We held that the entity that had adopted the name of the forfeited corporation
during the period of forfeiture was entitled to continue to use the name after revival of the
charter of the earlier user of the name.  We pointed out that, under the corporation statutes,
"'the powers granted to such [forfeited] corporations shall be inoperative, null and void.'"
Id. at 217, 177 A. at 475. 
The following sequence of events was involved in Kroop & Kurland, P.A. v.
Lambros, 118 Md. App. 651, 703 A.2d 1287 (1998).  A professional association had
rendered services and obtained a judgment for payment of the services while it was in good
standing.  Id. at 654, 703 A.2d at 1288.  In the twelve years following entry of the judgment,
see Md. Rule 2-625, the professional association's charter was forfeited, but the judgment
was purportedly renewed in the corporate name.   Id. at 655, 703 A.2d at 1288.
5
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Subsequently, the judgment was sold to the plaintiff.  The plaintiff filed a claim against the
estate of the deceased judgment debtor which was disallowed by the personal representative.
Id.  Thereafter the plaintiff revived the professional association charter, and the claim was
allowed by the orphans' court.  Id., 703 A.2d at 1289.  The circuit court, however, held that
the renewal of the judgment was null and void because the corporation did not exist, and the
ineffectiveness of the renewal of the judgment had not been cured by the later revival of the
corporate charter.  Id. at 656, 703 A.2d at 1289.  The Court of Special Appeals affirmed.
That court held that "during the period in which [the professional association] was defunct,
it was divested of its right as a judgment creditor ... by expiration of the judgment" and that
the judgment was not restored upon revival of the charter.  Id. at 667, 703 A.2d at 1294. 
Psychic Research & Development Institute of Maryland, Inc. v. Gutbrodt, 46 Md.
App. 21, 415 A.2d 611 (1980), was relied upon by the United States District Court for the
District of Maryland in a case involving a limitations defense.  United States v. Firemen's
Ins. Co., 869 F. Supp. 347, 348 (D. Md. 1994).  In Psychic Research a testamentary bequest
to a corporation required that it be in existence at the time of the testatrix's death.  46 Md.
App. at 23-24, 415 A.2d at 613.  At that time the legatee's charter had been forfeited, and the
gift was distributed to the alternate legatee named in the will.  The Court of Special Appeals
held that the subsequent filing of articles of revival could not thwart the gift over.  Id. at 28,
415 A.2d at 615.  In Psychic Research the Court of Special Appeals said:  
"The Articles of Revival can spontaneously generate life in a dead
corporation, but they cannot restore to it rights that passed to others during the
period of the corporate abiosis.  The subsequent revival of Psychic did not
- 12 -
again vest property and rights in the corporation which were divested during
the period of forfeiture."
Id.
Firemen's Insurance Co. was brought under the Miller Act.  The complaint against
the bonding company was filed in the name of a corporation which was then defunct, but the
filing was made within the period of limitations.  869 F. Supp. at 348.  When the lack of
capacity to sue of the corporate plaintiff was raised by the bonding company, articles of
revival were filed, but they were not filed until after the expiration of the period for filing
claims against Miller Act bonds.  Id.  United States District Judge Messitte saw no difference
"between inheritance rights that vest in an alternate beneficiary when a corporate
beneficiary's charter is forfeit and the right of a defendant to claim the benefit of a limitations
defense that accrues while a corporation's charter is in similar status."  Id. at 349.
In the instant matter Smith has not attempted to revive the charter of Curtis
Contractors, Inc.  Inasmuch as filing of articles of revival are ineffective to achieve relation
back to the date of filing of an action by a defunct corporation, a fortiori, simply amending
a complaint filed by a defunct corporation which has not been revived by replacing the
named corporate plaintiff with the last owner of the defunct corporation does not effect
relation back.  Indeed, to permit relation back under the circumstances here as an application
of the amendment rule, Rule 2-341, when it is not permitted under the substitution rule, Rule
2-241, would be contrary to the well settled policy that corporations and individuals are
separate entities.  "[T]he corporate entity will be disregarded only when necessary to prevent
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The rule that an action filed against a deceased individual does not stop the running
6
of the statute of limitations has been modified where the decedent was covered by liability
insurance for the occurrence.  See Md. Code (1974, 1991 Repl. Vol.), § 8-104(e) of the
Estates and Trusts Article.  See also Greentree v. Fertitta, 338 Md. 621, 659 A.2d 1325
(1995).
fraud or to enforce a paramount equity."  Bart Arconti & Sons, Inc. v. Ames-Ennis, Inc., 275
Md. 295, 312, 340 A.2d 225, 235 (1975).  See also Ferguson Trenching Co. v. Kiehne, 329
Md. 169, 175, 618 A.2d 735, 738 (1993); Starfish Condominium Ass'n v. Yorkridge Serv.
Corp., 295 Md. 693, 714, 458 A.2d 805, 816 (1983); Residential Warranty Corp. v. Bancroft
Homes Greenspring Valley, Inc., 126 Md. App. 294, 306-07, 728 A.2d 783, 789, cert.
denied, 355 Md. 613, 735 A.2d 1107 (1999).
There is also a strong analogy between the problem in the case before us and the
purported filing of an action against a person who is deceased at that time.  In Burket v.
Aldridge, 241 Md. 423, 430, 216 A.2d 910, 913 (1966), we said that "the action filed by
Burket against Smith, a few days before the expiration of the three year period from the date
of the injuries, had no legal effect.  Smith was dead, and an action brought against a dead
man is a nullity."  See also Hunt v. Tague, 205 Md. 369, 378-79, 109 A.2d 80, 85 (1954)
(same); Cromwell v. Ripley, 11 Md. App. 173, 174, 273 A.2d 218, 219 (1971) (same); Moul
v. Pace, 261 F. Supp. 616, 618 (D. Md. 1966) (same).   We perceive no reason why an action
6
purportedly brought by a defunct corporation has any more efficacy than an action brought
against a deceased individual defendant, absent an express rule or statute, such as that
- 14 -
permitting substitution of the last directors-trustees when enforcing an asset held by the
corporation at forfeiture.  
Zappone, 349 Md. 45, 706 A.2d 1060, on which the Court of Special Appeals relied,
illustrates the liberality of this Court's application of the relation back principle in cases of
amendment, but the holding of that case cannot apply here.  Zappone involved a multi-count
complaint brought by Ricardo D. Zappone (Zappone) who was the sole shareholder of a
corporation, Print-A-Copy, Inc., which was at all relevant times in good standing.  Id. at 52,
706 A.2d at 1064.  Zappone sued a number of defendants who had rendered financial
services to him alleging, principally, fraud and negligent misrepresentation of the costs to be
paid and benefits to be realized on a retirement annuity.  Id. at 56, 706 A.2d at 1065-66.  Part
of the alleged representations was that Print-A-Copy, Inc. could deduct from its income tax
the interest on a bank loan that the corporation in turn had loaned to Zappone for a lump sum
annuity premium.  Id.  After the statute of limitations had run, Zappone amended the
complaint to add Print-A-Copy, Inc. as a party plaintiff.  The amended complaint claimed
in Counts V and VI for the loss sustained due to the nondeductibility of the interest payments
to the lender bank.  The trial court refused to apply the doctrine of relation back to Counts
V and VI, a ruling that this Court reversed.  Id. at 68, 706 A.2d at 1072.  
We said that this Court "had liberally applied the relation back doctrine in other
contexts, always emphasizing whether a proposed amendment, if allowed, would
substantially prejudice a defendant by submitting that defendant to unfair surprise, hardship,
or an undue burden in defending the plaintiff's amended allegations."  Id. at 69-70, 706 A.2d
- 15 -
at 1072.  We pointed out that, from the beginning of the Zappone lawsuit, the defendants had
been on notice of a claim based on the nondeductibility of interest.  Id. at 70, 706 A.2d at
1072.  We said that amended Counts V and VI "simply refined and clarified the allegations
of the initial complaint by more precisely stating the proper plaintiff who was injured by the
defendants' allegedly fraudulent and/or negligent conduct."  Id.
We do not retreat from the policy enunciated in Zappone of liberally applying the
relation back doctrine.  In the instant case, however, Smith cannot prevail without an
expansion of the doctrine, but it is an expansion that we cannot make.  We do not deal with
substitution under Rule 2-241, and, consequently, Rule 2-201 does not apply.  Any effort to
apply relation back by amendment to the original complaint filed by the defunct corporation
encounters CA § 3-503 which declares that forfeiture of the corporate charter renders the
corporate powers "inoperative, null, and void."  The statutory method for restoration of those
powers is filing articles of revival, which Smith has not done.  Instead, Smith has done
business under the name Curtis Contractors, Inc. for more than twelve years prior to filing
the instant action in that name--a seemingly clear violation of CA § 3-514 which reads:
"(a)
Prohibition. — Any person who transacts business in the name
or for the account of a corporation knowing that its charter has been forfeited
and has not been revived is guilty of a misdemeanor and on conviction is
subject to a fine of not more than $500.
"(b)
Presumption. — For the purpose of this section, unless there is
clear evidence to the contrary, a person who was an officer or director of a
corporation at the time its charter was forfeited is presumed to know of the
forfeiture.
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At oral argument in this Court Smith suggested that it was material that Charles Stein
7
and Smith may have had a close personal and professional relationship that may have
resulted in the Steins having had notice of the legal status of Curtis Contractors, Inc. Whether
the Steins should be estopped from pleading limitations or raising the defense of lack of
capacity of Curtis Contractors, Inc. to sue, however, is not before us.  Estoppel was not
raised in the Circuit Court for Anne Arundel County or in Smith's brief filed in the Court of
Special Appeals.  It is not an issue that was raised by Smith in a cross-petition for certiorari.
"(c)
Limitation. — A prosecution for violation of the provisions of
this section may not be instituted after the date articles of revival of the
corporation are filed."
If we were to hold that Smith escapes the statute of limitations by doing business and filing
suit in the name of a defunct corporation, simply by purportedly amending to bring the action
in his individual name after the corporate status had been challenged and limitations had
otherwise run, we would expand the liberality of relation back to the point where it clashes
with the legislative policy requiring back taxes to be paid before powers can be reconferred
on a defunct corporation.7
JUDGMENT OF THE COURT OF SPECIAL
APPEALS REVERSED.  CASE REMANDED
TO THAT COURT FOR THE ENTRY OF A
JUDGMENT AFFIRMING THE JUDGMENT
OF THE CIRCUIT COURT FOR ANNE
ARUNDEL COUNTY.  COSTS IN THIS
COURT AND IN THE COURT OF SPECIAL
- 17 -
APPEALS 
TO 
BE 
PAID 
BY 
THE
RESPONDENT, ROBERT E. SMITH, JR.