## Facts

- Cecil F. Hill, Sr. and Michael Newman planned to operate a construction business and attempted to incorporate as “C & M Builders, Inc.”
- Before filing, they learned the name “C & M Builders, Inc.” was already in use by another Maryland corporation and could not be adopted.
- They instead incorporated a different entity, “H & N Construction, Inc.,” and filed articles of incorporation in May 1989.
- Despite the name conflict and the existence of H & N, Hill and Newman purchased concrete from County Concrete for more than two years using the name “C & M Builders, Inc.”
- County Concrete was not told that C & M could not be incorporated, and was not told that H & N had been formed and was the actual corporate entity.
- County Concrete supplied more than $200,000 of concrete under the C & M name; an unpaid balance of about $55,000 remained.
- County Concrete sued to collect the debt, initially naming “C & M Builders, Inc.” and later adding Hill as a defendant after discovering the existing C & M corporation was unrelated.
- After a bench trial, the court entered judgment against Hill on breach of contract and found Hill had not acted in good faith; the statutory claims were dismissed at the close of plaintiff’s case.

## Issues

1. Whether Hill was entitled to limited liability based on a de facto corporation theory for business conducted under the name “C & M Builders, Inc.”
2. Whether County Concrete was estopped from denying corporate status and pursuing Hill personally under corporate estoppel.
3. Whether ordinary agency/contract principles imposed personal liability on Hill due to failure to disclose the identity of the true corporate principal.

## Decision

- The appellate court affirmed the judgment holding Hill personally liable for the contract debt.
- The court held Hill did not qualify for de facto corporate protection because he continued using an unavailable and misleading corporate name and did not act in good faith.
- The court held corporate estoppel did not bar County Concrete’s claim because the doctrine is equitable and the trial court’s finding of Hill’s lack of good faith defeated its application.
- Applying agency principles, the court concluded Hill was liable because he failed to disclose the identity of the principal (H & N Construction, Inc.) in the transactions with County Concrete.

## Legal Principles

- An agent avoids personal liability only by fully disclosing both (a) agency status and (b) the identity of the principal; absent such disclosure, the agent may be personally bound.
- A de facto corporation generally requires a lawful incorporation statute, a bona fide attempt to organize under it, and actual use of corporate powers; equitable considerations, including good faith, may limit the doctrine’s application.
- Corporate estoppel may prevent a party from denying corporate existence based on the parties’ conduct, but it is equitable and depends on the specific facts; lack of good faith by the party seeking the benefit can defeat the doctrine.
- Continued use of a corporate name known to be unavailable and misleading, coupled with nondisclosure of the actual corporate entity, supports personal liability for resulting contract obligations.

## Conclusion

The court upheld personal liability against a business officer who transacted under a corporate name he knew could not be used and failed to disclose the true incorporated principal, rejecting both de facto corporation and corporate estoppel defenses due to the absence of good faith and the operation of standard agency disclosure rules.


Hill v. County Concrete Co., 108 Md. App. 527, 672 A.2d 667 (Ct. Spec. App. 1996)