Anne Arundel County Com'rs v. City of Annapolis

• Decision Date: 23 June 1915
• Docket Number: 32.
• Citation: 95 A. 40,126 Md. 445
• Parties: ANNE ARUNDEL COUNTY COM'RS et al. v. MAYOR, COUNSELOR, AND ALDERMEN OF CITY OF ANNAPOLIS et al.
• Court: Maryland Court of Appeals

95 A. 40

126 Md. 445

ANNE ARUNDEL COUNTY COM'RS et al. v. MAYOR, COUNSELOR, AND ALDERMEN OF CITY OF ANNAPOLIS et al.

No. 32.

Court of Appeals of Maryland

June 23, 1915

Appeal from Circuit Court, Anne Arundel County; Jas. R. Brashears Judge.

"To be officially reported."

Suit by the Mayor, Counselor, and Aldermen of the City of Annapolis and Annapolis Water Company against the County Commissioners of Anne Arundel County and Joshua S. Linthicum, late Treasurer. From an order overruling their demurrer to the bill, defendants appeal. Affirmed.

Argued before BOYD, C.J., and BRISCOE, BURKE, THOMAS, PATTISON URNER, and STOCKBRIDGE, JJ.

Ridgely P. Melvin and James M. Munroe, both of Annapolis, and Edgar Allan Poe, Atty. Gen., for appellants. Nicholas H. Green and Robert Moss, both of Annapolis, for appellees.

PATTISON J.

In this case the circuit court for Anne Arundel county granted a preliminary injunction restraining the commissioners of said county and Joshua S. Linthicum, treasurer of said county and collector of state, county and school taxes for the year 1912, from "advertising and selling," for the payment of such taxes, the property assessed on the books of said county in the name of the Annapolis Water Company. A demurrer thereafter interposed to the bill, which was overruled, raised the question, which is the one now before us, whether the property so assessed to the Annapolis Water Company is exempt from taxation under article 81, § 4, of the Code of Public General Laws, exempting from taxation--

"property in this state belonging to the United States or to this state or to any county of this state, or incorporated city or town in this state."

The Annapolis Water Company, one of the appellees, was incorporated by Acts of 1865, c. 123, for the purpose and object of supplying the city of Annapolis with pure water for private and public uses. Its capital stock was limited to 2,000 shares, each of the par value of $500, of which stock the corporation of the city of Annapolis and the state of Maryland were each authorized to subscribe to an amount not to exceed $20,000. The company was to be managed by "a president and four directors" elected by the stockholders, each stockholder being entitled to one vote for every share of stock owned by him. Both the state and city of Annapolis, in the exercise of the authority so conferred upon them, subscribed to the stock of the company and paid in the amounts so subscribed by them, respectively. In addition to this, other stock was taken by persons in their individual capacity. The company was thereafter duly organized, and proceeded to exercise its corporate rights and privileges in accordance with the provisions of the act aforesaid. Thereafter chapter 322 of the Acts of 1904 was passed, providing that:

"The mayor, counselor and aldermen of the city of Annapolis are hereby authorized and empowered to purchase stock of the Annapolis Water Company, in their discretion, whenever the same is for sale, and may borrow for the purchase thereof, and may use said stock as an offset to the debt incurred therefor, and as collateral for the purchase money; provided, that after having purchased stock in the corporate name of the city of Annapolis for the benefit and use of said city, it shall not be alienated or hypothecated for any other debt whatsoever."

Subsequently chapters 86 and 118 of the Acts of 1912 were enacted, both of which were approved on the same day. The first of these provides:

"Sec. 2. And be it enacted, that immediately after the passage of this act a general meeting of the stockholders of the said company shall be called for the purpose of electing directors of said company, and said company shall be managed by a board of directors, elected by the party or parties holding a majority of the stock in said company, consisting of three persons, none of whom need be stockholders in said company, and none of whom except the mayor, as hereinafter provided, shall be a member of the corporation of Annapolis, and one of said directors shall be elected to serve for six years and who will also act as president of the company by virtue of his election; another director shall be elected for the term of four years, and another director shall be the person who may be the mayor of the city of Annapolis, and who will serve during his term of office, *** and all vacancies in said board, whether by death, resignation or otherwise, shall be filled by the person or persons holding a majority of the stock of said company."

"Sec. 4. Be it enacted, that the mayor, counselor and aldermen of the city of Annapolis are authorized and empowered to acquire all the capital stock of the Annapolis Water Company and operate said company under said charter or any enlargement or amendment thereof to the extent of its stockholding therein."

The aforesaid chapter 118 provides for the issuance of bonds by the city of Annapolis to the amount of $100,000, and that such--

"bonds and the proceeds of sale of the same shall be used and applied for the purchase of the stock of the Annapolis Water Company or to pay off the indebtedness which the said mayor, counselor and aldermen of the city of Annapolis, or its finance commission acting under its authority, may have assumed in respect to the purchase of stock of said water company; and the said bonds with the interest due and to become due thereon, are hereby declared to be a first lien upon the interest of the mayor, counselor and aldermen of the city of Annapolis in the stock and property of the Annapolis Water Company, or its successors, and the stock of said company owned by the mayor, counselor and aldermen of the city of Annapolis shall be placed on the books of the said company in the name of the mayor, counselor and aldermen of the city of Annapolis as trustee, so long as said bonds are outstanding as security for the payment of the said bonds and interest, as and when the same become payable; and should the said obligation not be paid as and when the same become payable, then the bondholder's lien may be enforced as other liens are enforced in equity."

The act also provides for the creation of a sinking fund of $2,100 per annum for the redemption and retirement of said bonds at maturity. And it was further provided in the act that:

"The said mayor, counselor and aldermen of the city of Annapolis are hereby required and directed to maintain such a schedule of charges for water furnished its customers by the Annapolis Water Company, to be uniform in every particular, as will make the profits accruing to said mayor, counselor and aldermen of the city of Annapolis from its interest in the Annapolis Water Company sufficient in each and every year, to create and maintain the sinking fund to redeem and retire said bonds at maturity and to pay the interest thereon when and as the same may be due and payable."

The bill alleges that, in the exercise of the right conferred upon them:

"The mayor, counselor, and aldermen of the city of Annapolis, on the 28th day of December in the year 191

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