Alexandria Scrap Corporation v. Hughes

Decision Date12 March 1975
Docket NumberCiv. No. K-74-1030.
Citation391 F. Supp. 46
PartiesALEXANDRIA SCRAP CORPORATION v. Harry R. HUGHES, Secretary, Maryland Department of Transportation, et al.
CourtU.S. District Court — District of Maryland

Norman P. Ramsey, H. Thomas Howell and Carl E. Eastwick, Baltimore, Md., for plaintiff.

Francis B. Burch, Atty. Gen., of Md., J. Michael McWilliams, Asst. Atty. Gen., and Counsel to Dept. of Transportation, Judson P. Garrett, Jr., Asst. Atty. Gen., and N. Barton Benson, Sp. Asst. Atty. Gen., Baltimore, Md., for defendants.

Before WINTER, Circuit Judge, and KAUFMAN and MILLER, District Judges.

FRANK R. KAUFMAN, District Judge.

Plaintiff, a Virginia corporation, with its principal place of business located in that State, is engaged in the business of processing iron, steel, and nonferrous scrap metal into scrap for sale for resmelting. Plaintiff challenges certain Maryland statutory provisions, namely, 6 Md.Ann.Code art. 66½, § 11-1002.2(f)(5) (1974 Cum.Supp.)1 as repugnant to the Commerce Clause of the federal Constitution and as contravening, both facially and as applied, the Equal Protection Clause of the Fourteenth Amendment. Defendants are officials of the State of Maryland charged with the administration of the challenged statute. Jurisdiction in this case exists pursuant to 28 U.S.C. §§ 1331 and 1343.2

Plaintiff seeks injunctive relief3 pursuant to the provisions of 28 U.S.C. §§ 2281 and 22844 and declaratory relief pursuant to the provisions of 28 U.S.C. §§ 2201 and 2202. Specifically, plaintiff asks this Court to declare unconstitutional the provisions of section 11-1002.2(f)(5) and accordingly either to (1) require defendants to give certain "indemnity agreements" entered into by plaintiff the same effect as is given such agreements when entered into by licensed scrap processors whose plants are located within the State of Maryland and to enjoin defendants from withholding certain bounty payments which would be payable to plaintiff if its plant were so located, or, alternatively, (2) deny to licensed scrap processors with plants located and operating within the State of Maryland the authority to execute and file such indemnity agreements and also deny to them payment of bounties pursuant to such agreements.

Both sides seek summary judgment upon the basis of factual stipulations filed herein. While this Court notes that the factual positions of the parties differ in some respects, the uncontroverted facts entitle plaintiff, in the opinion of this Court, to the grant of summary judgment.

A. The Legislative Scheme

By 1969, as the Court of Appeals of Maryland stated in Administrator, Motor Vehicle Administration v. Vogt, 267 Md. 660, 670, 299 A.2d 1, 6 (1973), in which it upheld the 1969 legislation in the face of an equal protection attack,

* * * problems developing from the storage of old automobiles * * * had become a cause for concern in terms of environmental health in Maryland. There was evidence, for example, that some hulks had * * * remained undisturbed so long that they had * * * become infested with rodents. * * *5

In response to those and related problems, the Maryland legislature enacted in 1969 a comprehensive program designed "to halt the growth of this trend and to induce recycling of vehicles which had fallen into disuse." Id. That legislation, and subsequent amendments thereto, have contained three essential and interrelated provisions. First, auto wreckers6 and scrap processors7 who wish to dispose of abandoned vehicles in Maryland are required to be licensed by the State.8 Second, such auto wreckers are required to pay a semiannual assessment upon vehicles older than ten model years which remain in their possession for more than one year.9 Third, the payments of certain bounties will be made by the State upon the destruction of certain vehicles formerly titled in Maryland.10

Section 5-201 (1973 Repl.Vol.) provides as follows:

It is unlawful for any person, firm, or corporation, on and after January 1, 1970, to store any vehicle, or body or chassis thereof, which is to be scrapped, dismantled, or destroyed, on any private property for a period in excess of thirty days, unless the person, firm, or corporation is licensed as a wrecker, as hereinafter provided, or operates an establishment as a scrap processor.
From and after January 1, 1970, licenses for scrap processors and wreckers shall be issuable only to those persons, firms, or corporations as those terms are defined in § 5-201.1.11

To obtain a license pursuant to section 5-201, a wrecker or scrap processor must comply with the requirements set forth in section 5-202.12 Those statutory requirements in no way differentiate between scrap processors with plants physically located in Maryland and others with no plants so situated. An administrative regulation pursuant to that statute does, however, require that the latter class of processors maintain an office within Maryland. M.A.R.R.

Pursuant to the provisions of section 5-203(a),14 a licensed auto wrecker who places a vehicle in his inventory must report that fact to the State Motor Vehicle Administration (hereinafter MVA) within thirty days of acquisition. Thereafter, pursuant to section 5-203(d)15 a wrecker is subjected to a $5 assessment every six months for each vehicle more than ten years old which has remained in his possession longer than one year. The parties hereto agree that that assessment requirement has had the salutary effect of encouraging the removal of some hulks from automobile graveyards and of limiting the growth of auto wrecker yards. However, they also agree that the assessment provision, standing by itself, has the inevitable effect of discouraging auto wreckers from picking up older vehicles —an effect which would run counter to the objectives of the total legislative scheme. Accordingly, in order to provide the wreckers with an incentive, a bounty program was established by section 5-205 which provides:

The Administration shall pay a fee of sixteen dollars ($16.00) for each vehicle which has been completely destroyed upon presentation by the scrap processor to the Administration of the certificate of title or other acceptable evidence of ownership for a vehicle formerly titled in this State, the manufacturer's serial or identification number plate, satisfactory proof that the vehicle has been completely destroyed and any other information the Administration may deem necessary. In all cases where one of the counties of this State or Baltimore City receives reimbursement for a vehicle pursuant to the provisions of § 11-1002.2 of this article, the Administration shall pay the above fee even if the vehicle totally destroyed was never titled in this State. The Administration shall disburse this fee in the following manner: Eight dollars ($8.00) to a scrap processor and eight dollars ($8.00) to the wrecker conveying ownership of the vehicle to be destroyed to such scrap processor. Scrap processors and wreckers must be licensed under this part to be eligible for this fee. No fee shall be paid by the Administration for any vehicle destroyed by any scrap processor prior to July 1, 1970, and the Administration shall require satisfactory evidence confirming the date that such vehicle was destroyed in the form and manner prescribed by the Administration.16

The parties agree that the availability of the "bounty" payments results in an artificially enhanced value for abandoned hulks, that is, a value in excess of their normal market prices. Licensed wreckers benefit directly from the bounty which they are statutorily entitled to share. Non-licensed wreckers or towers are, however, also benefited because, as the parties hereto agree, while non-licensed wreckers are not statutorily entitled to a share of the bounty, the availability of such a bounty to the processor enables a processor to pay an increased price for an automotive hulk to all wreckers, licensed or unlicensed, and that in fact as a matter of custom processors do rebate a substantial portion of the bounty to all wreckers as an incentive for future deliveries.

To receive any bounty pursuant to section 5-205, a processor must present to the MVA, inter alia, "the certificate of title or other acceptable evidence of ownership for a vehicle formerly titled in this State". Prior to July 1, 1974, in apparent recognition that the free transfer of abandoned vehicles was in part impeded by fears on the part of scrap processors and auto wreckers of potential claims against them by owners or alleged owners of abandoned vehicles, there existed four methods pursuant to which a licensed scrap processor could receive a bounty payment and acquire ownership of an abandoned vehicle without receiving a certificate of title. First, an abandoned vehicle could be taken into custody by local police and sold after due notice.17 Second, the police could issue to a scrap processor or wrecker a certificate of authority to sell or otherwise dispose of a vehicle to "any person, firm, corporation, or unit of government upon whose property or in whose possession is found any abandoned motor vehicle, or any person being the owner of a motor vehicle whose title certificate is faulty, lost or destroyed * * *".18 Third, pursuant to section 5-203(b)19 a wrecker could acquire "possession of a vehicle * * * for which there is no certificate of title, or certificate of authority * * *" and could, after the vehicle had been in his possession more than thirty days and after proper notice to the MVA, dispose of the same by sending a "notice of intent to dispose of the vehicle * * * to the owner and any lienholder as shown on the records of the Administration or any other person entitled to possession of the vehicle * * *, if his address is known or can be reasonably obtained." If the vehicle was over eight years old and "totally inoperable", however, no such notice needed be given except to the owner....

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4 cases
  • Hughes v. Alexandria Scrap Corporation
    • United States
    • U.S. Supreme Court
    • June 24, 1976
  • Reeves, Inc v. Stake
    • United States
    • U.S. Supreme Court
    • June 19, 1980
    ...819, 96 S.Ct., at 2502 (dissenting opinion). Invoking the Commerce Clause, a three-judge District Court struck down the legislation. 391 F.Supp. 46 (Md.1975). It observed that the amendment imposed "substantial burdens upon the free flow of interstate commerce," id., at 62, and reasoned tha......
  • Sun Oil Co. of Pennsylvania v. Goldstein, Civ. A. No. N-77-1960.
    • United States
    • U.S. District Court — District of Maryland
    • June 23, 1978
    ...approximately 80% are full service operations. 4 This Court previously discussed and applied this test in Alexandria Scrap Corp. v. Hughes, 391 F.Supp. 46, 59 (D.Md.1975), rev'd, 426 U.S. 794, 96 S.Ct. 2488, 49 L.Ed.2d 220 (1976) (Kaufman, 5 Both Dr. Charles Berry, Professor at Princeton Un......
  • Johnson v. Alexandria Scrap Corp.
    • United States
    • U.S. District Court — District of Maryland
    • December 19, 1977
    ...Semmes, Bowen & Semmes, Baltimore, Md., for defendant. FRANK A. KAUFMAN, District Judge. On March 12, 1975, in Alexandria Scrap Corporation v. Hughes, 391 F.Supp. 46 (D.Md.1975), sometimes referred to herein as the 1974 case, a three-judge court enjoined defendants therein. Those defendants......
2 books & journal articles
  • The Market Participant Doctrine and the Clear Statement Rule
    • United States
    • Seattle University School of Law Seattle University Law Review No. 29-03, March 2006
    • Invalid date
    ...206-08, 214-15(1983). 49. Hughes, 426 U.S. at 810; Reeves, 447 U.S. at 435. 50. Reeves, 447 U.S. at 438-9. 51. 426 U.S. 794 (1976). 52. 391 F. Supp. 46, 63 (D. Md. 53. Hughes, 426 U.S. at 806. 54. Id. at 810 (footnote omitted). 55. Id. at 815 (Stevens, J., concurring). 56. Id. at 814-17. 57......
  • Untangling the Market and the State
    • United States
    • Emory University School of Law Emory Law Journal No. 67-2, 2017
    • Invalid date
    ...unconstitutional, citing its "substantial burdens upon the free flow of interstate commerce." See Alexandria Scrap Corp. v. Hughes, 391 F. Supp. 46, 62 (D. Md. 1975), rev'd, 426 U.S. 794 (1976). The Supreme Court, however, distinguished the instant case from previous dormant Commerce Clause......

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