Opinion ID: 1926751
Heading Depth: 2
Heading Rank: 1

Heading: The Court of Special Appeals' Presumption

Text: As previously noted, the Court of Special Appeals relied upon the directional phrase Affix Corporate Seal and the presence of the parties' corporate seals on the Agreement to create the rebuttable presumption that the Agreement was a contract under seal, and therefore a specialty. [5] For reasons explained below, we hold that the basis of the court's presumption is contrary to established law regarding contracts under seal and at odds with the purpose underlying the use of presumptions. A presumption is a judicial determination that proof of certain foundational facts establishes the existence of the presumed fact. See McQuay v. Schertle, 126 Md.App. 556, 590, 730 A.2d 714, 732 (1999), cert. denied, 356 Md. 18, 736 A.2d 1065 (1999)(citing Joseph F. Murphy, Jr., Maryland Evidence Handbook § 1001 (2d ed.1993)). In certain cases, a presumption is an acceptable substitute for actual proof because the established facts, combined with the relevant law, provide a degree of certainty as to the likely existence of the presumed fact. In Molesworth v. Brandon, 341 Md. 621, 672 A.2d 608 (1996), we explained the degree of certainty called for in the creation of a presumption. We stated: [g]enerally, however, the most important consideration in the creation of presumptions is probability. Most presumptions come into existence primarily because the judges have believed that proof of fact B renders the inference of the existence of fact A so probable that it is sensible and timesaving to assume the truth of fact A until the adversary disproves it. Molesworth, 341 Md. at 643-44, 672 A.2d at 619 (quoting McCormick on Evidence § 342 (4 th ed.1992)). The Court of Special Appeals, in this case, determined that the parties' corporate seals affixed on the Agreement next to the directional phrase Affix Corporate Seal rendered the inference that the Agreement was a contract under seal so probable that it was appropriate to presume the Agreement was a contract under seal until RTPI rebutted the presumption. The Court of Special Appeals erred in recognizing a presumption. In Gildenhorn v. Columbia Real Estate Title Ins. Co., 271 Md. 387, 398, 317 A.2d 836, 842 (1974), we examined the role that sealed instruments play in corporate transactions. We instructed that: [i]n the early law it was held that a corporation could not contract except under its corporate seal. This rule persisted, but was increasingly relaxed during the 19th century. Today, in the absence of charter or statute to the contrary, a corporation may bind itself by a writing not under seal to the same extent as an individual. Id. As a result, when a corporate seal appears on a contract we do not conclude that the contract is a sealed instrument. Rather, we reason that the seal was affixed to the agreement as proof of the signer's authority to bind the corporation because the main purpose of the corporate seal now is as a prima facie authentication that the document is the act of the corporation and that the officers who have executed it have been thereunto duly authorized. Id. In Gildenhorn, we also isolated the specific issue to be addressed when determining the relevance of a corporate seal affixed to a contract. We stated: The mere fact that the corporate seal appears on the instrument other than in the usual place of the private seal would not make the instrument a specialty in the absence of a recital affixing the seal or of extrinsic evidence showing an intention to have it serve the function of a general seal. In other words, it is a question of fact in any specific case as to whether the corporation has employed its corporate seal as a general seal or whether it has adopted any other permissible form of seal as convenient for the [purpose of authentication]. Id. (citations omitted). One year after our decision in Gildenhorn, we had the opportunity to apply our reasoning from that case in Mayor & Council of Federalsburg v. Allied Contractors, Inc., 275 Md. 151, 338 A.2d 275 (1975). In Mayor of Federalsburg, Allied, a construction contractor, filed suit against a local government seeking compensation due for services provided in a highway improvement project. One issue in the case was whether the relevant agreement was a contract under seal governed by a twelve-year statute of limitations or an ordinary contract subject to the standard three-year limitation period. The only evidence introduced to support Allied's position that the contact was made under seal was that the vice-president of Allied attached the company's corporate seal to the contract. In determining that the evidence offered was insufficient to establish that the contract was made under seal, we noted our inclination to find a simple contract until a party offers enough evidence to the contrary. We explained that: if a corporate seal is impressed on an agreement it will remain a simple contract unless either the body of the contract itself indicates that the parties intended to establish an agreement under seal, or sufficient extrinsic evidence, in the nature of `how and when and under what circumstances the corporate seal was affixed,' establishes the parties desire to create a specialty. Federalsburg, 275 Md. at 155-56, 338 A.2d at 279 (citing General Petroleum Corp. v. Seaboard Terminals Corp., 23 F.Supp. 137, 139 (D.Md.1938)). See also Gildenhorn, 271 Md. at 398, 317 A.2d at 842; Levin v. Friedman, 271 Md. 438, 443, 317 A.2d 831, 834 (1974). If any presumption should have been recognized in this case, it should have been the opposite of the one fashioned by the Court of Special Appeals, i.e., the Agreement was presumed to be an ordinary contact. This question, however, is not before us. We hold only that, under Maryland law, the directional phrase Affix Corporate Seal adjacent to the signature execution lines on the face of an agreement, combined with the attachment of corporate seals, does not create a presumption. See Molesworth, 341 Md. at 643-44, 672 A.2d at 619. The presence of the seals and the directional phrase create an equally strong inference that the seals were added to establish the authority of the parties signing the agreement. See Gildenhorn, 271 Md. at 398, 317 A.2d at 842. Under the instances of this case, the creation of the presumption was an error of law.