Hill v. County Concrete

In 1988, Cecil Hill (defendant) and Michael Newman decided to start a construction business and hired an attorney to form a Maryland corporation, which was to be named C&M Builders, Inc. (C&M). After being told by the attorney that this name was available, Hill and Newman opened a corporate bank account, ordered checks and letterhead, and painted trucks, all with the C&M name. When the attorney attempted to file articles of incorporation for C&M in February 1989, it was discovered that the name C&M Builders, Inc., was already in use by another Maryland corporation and was thus unavailable. Hill and Newman decided to instead incorporate under the name H&N Construction, Inc. (H&N), and articles of incorporation were filed for H&N in May 1989. In February 1989, Hill and Newman began purchasing concrete from County Concrete (CC) (plaintiff) in the name of C&M Builders, Inc. For more than two years, even though C&M was never incorporated, Hill and Newman conducted business with CC under the C&M—and not the H&N—name. During that time, CC was not aware of Hill and Newman’s inability to incorporate C&M or the incorporation of H&N. Hill and Newman purchased more than $200,000 worth of concrete from CC under the C&M name. When a balance of approximately $55,000 went unpaid and CC filed a collection suit against C&M Builders, Inc., CC learned that the corporation with that name bore no relation to Hill and Newman. CC amended its complaint and named Hill as a defendant. Hill argued that he should not be personally liable because C&M was a de facto corporation. Hill asserted that CC believed it was dealing with an entity, not with an individual, and that the use of the C&M name instead of the H&N name was irrelevant. Hill further argued that the doctrine of corporate estoppel precluded his personal liability even if a de facto corporation did not exist. The trial court rejected Hill’s arguments, finding that Hill was not acting in good faith when he continued doing business with CC under the name C&M Builders, Inc., after being told by his attorney that this name was unavailable and was being used by another entity. Hill appealed to the Maryland Court of Special Appeals.