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

Heading: Contracts Under Seal

Text: We have held that a court may look to at least two features of a contract to determine whether it was executed under seal. See Federalsburg, 275 Md. at 155, 338 A.2d at 279 (citing General Petroleum Corp., 23 F.Supp. at 139; Gildenhorn, 271 Md. at 398, 317 A.2d at 842. The court may first look to the body of the contract itself. If there is a recital in the body of the agreement stating explicitly that the agreement is one under seal, that is conclusive evidence of an intent to create a sealed instrument. See Gildenhorn, 271 Md. at 403, 317 A.2d at 844-45)(citations omitted) (formal recitals such as signed and sealed and witness my hand and seal make the instrument a sealed one for purpose of statute of limitations). See also Smith v. Woman's Med. College, 110 Md. 441, 445-46, 72 A. 1107, 1109 (1909). A court also may look to extrinsic evidence to ascertain the sealed nature of a contract. In circumstances where a corporate seal is affixed to an agreement and the purpose of the attachment is unclear, `extrinsic evidence is admissible to show whether the use of the seal was intended to make the paper a specialty or merely as evidence of its authorized execution, or that it was in fact used without authority.'  Federalsburg, 275 Md. at 156, 338 A.2d at 279 (quoting General Petroleum Corp., 23 F.Supp. at 140-41). Turning to the text of the Agreement in the case at hand, we find nothing in the body of the Agreement that establishes that it was made under seal. Maryland Casualty urges us to hold that the directional phase Affix Corporate Seal appearing on the face of the Agreement is enough to evidence the parties' intent to create a contract under seal. It seeks to distinguish the present case from Federalsburg where we held that if a corporate seal is impressed on an agreement it will remain a simple contract unless ... the body of the contract itself indicates that the parties intended to establish an agreement under seal ... Federalsburg, 275 Md. at 155, 338 A.2d at 279. (emphasis added). Maryland Casualty acknowledges that the directional phrase does not appear in the body of the Agreement, but it contends that Gildenhorn and Conowingo Land Co. v. McGaw, 124 Md. 643, 93 A. 222 (1915), demonstrate that reference to the corporate seals anywhere on the face of an agreement is an adequate expression of the intent. Maryland Casualty's effort to align this case with Gildenhorn and Conowingo is unconvincing. In both of those cases, the agreements at issue made specific reference to corporate seals in the bodies of the agreements. The testimonium clause in Gildenhorn provided: IN WITNESS WHEREOF, Columbia Real Estate Title Insurance Company has caused its corporate name and seal to be hereunto affixed by its duly authorized officers. Gildenhorn, 271 Md. at 390, 317 A.2d at 838. (emphasis added). Similarly, the testimonium clause of the agreements in Conowingo stated: Witness the signature of the Treasurer, together with the seal of said corporation, annexed hereto, duly attested by its Secretary. Conowingo, 124 Md. at 643, 93 A. at 223. (emphasis added). Here, the testimonium clauses of the Agreement and subsequent amendments provide: IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written. The absence of the word seal from the testimonium clause of the Agreement is a significant fact that distinguishes the present case from the cases relied upon by Maryland Casualty. The directional phrase Affix Corporate Seal is not a recital within the body of the Agreement, therefore the phrase is insufficient to elevate the Agreement to the status of a contract under seal under our holding in Federalsburg. See 275 Md. at 155, 338 A.2d at 279. The present case is similar to The President and Directors of Georgetown College v. Madden, 505 F.Supp. 557 (D.Md.1980), aff'd in part, dismissed in part, 660 F.2d 91 (4 th Cir.1981). In Georgetown College, the school brought an action against a construction contractor for defects in a construction project on the school's campus. One issue in the case was whether the construction contract was a sealed agreement. Like the Agreement in dispute here, there was no reference to corporate seals in the body of the contract, and the word seal appeared in the signature section of the agreement next to the execution lines. The corporate seals of Georgetown and the construction company were affixed to the contract over the word seal. Relying on the absence of any reference to the seals in the body of the contract, the court held: While no case appears to have decided the question of whether, for purposes of determining the applicable limitations period, the use of the word (Seal) together with the impression of corporate seals makes a contract a sealed instrument, in the absence of a clause in the body of the contract regarding the sealed nature of the contract, it would appear that such combined use of the word (Seal) and of such impressions should be considered insufficient by themselves to manifest an intent to render the contract under seal, particularly where such use of the word and of such impressions would serve no purpose other than to extend the statute of limitations. Rather, such use should be viewed as serving only as an authentication of corporate action when the same is deemed desirable. The parties to the contract were sophisticated. They could easily have specifically provided by so stating in the body of the contract that the contract was under seal. They did not do so. Georgetown College, 505 F.Supp. at 587. We are persuaded by the court's reasoning in Georgetown College. As in Georgetown College, both parties to the present transaction were sophisticated business entities acting with the benefit of counsel. If they intended to execute the Agreement under seal, thereby extending the statute of limitations an additional nine years, these parties surely would have selected a more direct articulation than the directional phrase Affix Corporate Seal to serve their purpose. There being no evidence in the Agreement of an intent to execute the document under seal, we consider the extrinsic evidence offered by Maryland Casualty to support its interpretation of the Agreement. The absence of evidence establishing that the parties intended to, or even spoke about, creating a document under seal leaves us unconvinced that a contract under seal was effected. As stated previously, this Court will consider an agreement an ordinary contract, unless there is a recital in the body of the agreement or sufficient extrinsic evidence, in the nature of `how and when and under what circumstances the corporate seal was affixed,' ... establishes that the parties desired to create a specialty. Federalsburg, 275 Md. at 155, 338 A.2d at 279. (citations omitted). See Gildenhorn, 271 Md. at 398, 317 A.2d at 842. Maryland Casualty provided no evidence as to its supposed intent to create a contract under seal. The company put forward one witness, James A. Gordon, Esquire, at the 15 May 1997 evidentiary hearing. Mr. Gordon was a staff attorney with Maryland Casualty with primary responsibility for the negotiation of the Agreement. In response to repeated questions on direct and cross-examination inquiring as to whether the parties intended to create a contact under seal, Mr. Gordon consistently and unequivocally responded that he had no recollection of an intent to create a sealed contract. In fact, Mr. Gordon testified that he could not recall any discussion during the negotiation period addressing the legal effect or significance of the corporate seals or the phase Affix Corporate Seal on the Agreement. [6] He did acknowledge, however, his general understanding that corporate seals were customarily used to demonstrate that the execution of a contract was an authorized act of a corporation. Mr. Gordon's testimony supports our conclusion that the Agreement was not a contract under seal. The testimony fails to provide any evidence of an affirmative intention to execute the Agreement under seal. Rather, it suggests that the parties never discussed the issue. A sealed instrument is not created by accident. Georgetown College, 505 F.Supp. at 585. Under the circumstances, the parties to this contract would not likely have created a contract under seal without any discussions to that effect and we will not allow Maryland Casualty unilaterally to create one by implication. The documents introduced by the parties at the evidentiary hearing are equally unhelpful in our search for any evidence of an intention to execute a contract under seal. At the hearing, Maryland Casualty introduced a series of documents for the purpose of showing how the Agreement took shape during the negotiation process. By Maryland Casualty's own admission, the documents show that the question of the signatures and the execution and the corporate seals and the attestations were not a matter ... of discussion or controversy. As the uncontroverted testimony here is that the question of forming a contract under seal was never discussed by the parties and no reference to corporate seals appears in the body of the Agreement, we hold, as a matter of law, that the Agreement was an ordinary contract. In accordance with the parties' stipulation filed with the Circuit Court on 13 May 1997, Maryland Casualty's breach of contract claim is barred by the three-year limitation period of CJP § 5-101. JUDGMENT OF THE COURT OF SPECIAL APPEALS REVERSED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO REMAND TO THE CIRCUIT COURT FOR BALTIMORE COUNTY WITH INSTRUCTIONS TO DISMISS MARYLAND CASUALTY COMPANY'S BREACH OF CONTRACT CLAIM; COSTS IN THIS COURT AND IN THE COURT OF SPECIAL APPEALS TO BE PAID BY MARYLAND CASUALTY COMPANY.