Consolidated Gas Co. of Baltimore City v. City of Baltimore

• Decision Date: 13 February 1907
• Citation: 65 A. 628,105 Md. 43
• Parties: CONSOLIDATED GAS CO. OF BALTIMORE CITY v. MAYOR, ETC., OF BALTIMORE et al.
• Court: Maryland Court of Appeals

65 A. 628

105 Md. 43

CONSOLIDATED GAS CO. OF BALTIMORE CITY v. MAYOR, ETC., OF BALTIMORE et al.

Court of Appeals of Maryland

February 13, 1907

Appeal from Baltimore City Court; George M. Sharp, Judge.

Proceeding by the appeal tax court of Baltimore City for the assessment of street easements, etc., used by the Consolidated Gas Company of Baltimore City. From an order of the Baltimore city court sustaining the assessment, the gas company appeals. Reversed and remanded.

Argued before McSHERRY, C.J., and BOYD, PEARCE, SCHMUCKER, JONES and BURKE, JJ.

Edgar H. Gans and W. Calvin Chestnut, for appellant.

Sylvan H. Lauchheimer, and Edgar Allan Poe, for appellees.

PEARCE J.

This is an appeal from an order of the Baltimore city court adjudging and ordering that an assessment of $6,000.000 be imposed for the year 1906 on the mainsand pipes of the Consolidated Gas Company of Baltimore City, in and under the streets and highways in Baltimore city, in addition to the assessments of $1,127,075 and $158,000 for mains and service pipes, respectively, previously imposed. In the year 1904 an assessment of $6,000.000, in addition to the then existing assessment of $4,026,997, upon the tangible property of the company, was imposed by the appeal tax court of Baltimore city for the year 1905, in these words "Additional assessment on mains, pipes, and other construction, located, in, on or over public highways of Baltimore city, so as to include the valuation of the easements enjoyed by said company in said highways $6,000,000." The validity of this assessment was before this court in the case of the Consolidated Gas Company v. Mayor and City Council of Baltimore, reported in 101 Md. 542, 61 A. 532, 109 Am. St. Rep. 584, in which it was held that "the property or estate which the gas company has in the highways of Baltimore city is an easement which may be properly assessed to the company as real estate"; but it was further held in that case that the assessment was irregular and invalid (1) because it appeared from the record that the appeal tax court had charged the gas company with the amount of its bonded indebtedness in ascertaining the value of its property for taxation, which under the Maryland statutes it was without authority to do; and (2) because it also appeared from the record that the valuation had been imposed by an arbitrary and capricious method, instead of by the exercise of such judgment as the law contemplates shall be exercised by an assessor, and that such valuation could not be regarded as an assessment at all. After this decision the appeal tax court abated the assessment thus declared to be invalid, and, after due notice to the gas company of its purpose to reassess said company for the year 1906 for its pipes, mains, and structures located in the streets and highways of the city, made an abatement of $4,565 upon 3.58 miles of three-inch mains abandoned by the gas company since 1905, and entered a new assessment in the following words: "Additional assessment on mains and other structures attached to and located in or under the roads, ways, and highways in Baltimore city (including 22.893 miles of new mains) $6,000,000." From this action of the appeal tax court, the gas company appealed to the Baltimore city court, which action was affirmed by said court in the order appealed from in this case.

Twenty-six exceptions were taken to the rulings upon evidence, and 11 prayers were submitted by the gas company, all of which were refused, except the seventh, which was granted. The counsel of the city declined the request of the company that they should formulate and submit prayers outlining their standard of valuation of the easement in question, whereupon the gas company moved the court to require the submission of such prayers, which the court overruled, and the twenty-seventh exception was taken to the overruling of this motion, and the refusal of the prayers of the gas company. It has been decided in Mayor v. Bonaparte, 93 Md. 156. 48 A. 735, that this court cannot be required or allowed to sit as a board of review to revise the amount of the valuation placed by tax officials upon property for the purposes of taxation, and this was repeated in 101 Md., supra. We have therefore no warrant for interference in this case upon that ground, however great the apparent magnitude of the interests involved.

After a very careful reading of the record and the able briefs of counsel, we have reached the conclusion that the order of court affirming the action of the appeal tax court and imposing an assessment of $6,000,000 for the year 1906 on the mains and service pipes of the Consolidated Gas Company of Baltimore city attached to and located in, on, or under the roads, ways, and highways in Baltimore city, in addition to the assessments previously imposed for mains and service pipes, respectively, upon said company for the year 1906, must be reversed for error in the rejection of the fourth and eighth prayers, which are as follows: "(4) The petitioner prays the court to rule as matter of law that the opinions as to the value of the mains and pipes of the gas company, including the easement therein in the streets of Baltimore city, as expressed by the witnesses Purdy and Bemis, are inadmissible, and must be disregarded by the court, as the method of calculation of the value of said mains and pipes and easement by said witnesses is substantially the same as the method adopted by the appeal tax court in the valuation of said property for the year 1905, which method has been declared illegal by the Court of Appeals. *** (8) The petitioner moves the court to strike from the record all expressions of opinion made by the witnesses Purdy and Bemis in regard to the valuation of the mains and pipes of the gas company, including the easement therewith associated, on the ground (1) that said witnesses, not having any knowledge of the value of real estate in Baltimore city, were incompetent to express an opinion as to the value of said mains and pipes and easement; and (2) because said expressions of opinion by said witnesses were based on a method of computation of value which is not warranted by Maryland statutes in regard to taxation of the property of corporations." It will be seen later on that the error in the rejection of the eighth prayer has to do solely with the second ground therein stated. The method pursued in the former case was condemned by this court because, under existing Maryland statutes, "the appeal tax court was without authority to charge the Consolidated Gas Company with its own outstanding obligations" in ascertaining the value of its property for taxation, as it had done to the amount of $10,050,000.

For the purpose of comparison of the methods adopted in the two cases, we have reproduced them here as they appear in the respective records.

Method in first case, as testified to by Judge Leser (see Record in First Case, page 23, et seq.):

Capital stock (10,700 shares at $70) ............................... $7,500,000 Bonds ($7,000,000 at $110) .......................................... 7,700,000 Certificates of indebtedness ($1,500,000 at $90) .................... 1,350,000 Bonds (4 1/2 per cent.) $1,100,000 .................................. 1,000,000 ----------- Total value of assets of Gas Co................................. $17,550,000 From this they deducted assessed valuation of real estate in Baltimore city and county allowing liberally for margins .......... 4,300,000 ----------- Leaving residuum ............................................... $13,250,000 From this they deducted their valuation of the personal property .... 1,250,000 ----------- Leaving ........................................................ $12,000,000 This sum they considered represented the company's franchise derived from the state and also the easement in the streets. They therefore divided it in half, making an assessment for the easement of ...................................................... $6,000,000 Method in present case, as testified to by Purdy and Bemis (see Record, pages 195, 196): Miles of mains and pipes, Baltimore city .............................. 478.492 Miles and mains and pipes, Baltimore county ............................ 49.201 ----------- 527.693 9.33 per cent. outside city. 90.67 per cent. in city: Stock issued, 107,710 shares. Value of city real estate exclusive of mains and services .......... $2,843,418 Value of real estate outside the city ................................. 262,766 Value of personal estate .............................................. 879,458 ----------- Total value of personal property and real estate exclusive of mains and services ............................................... $3,985,642 Divided Profits. Interest ............................................................. $497,570 Dividends ............................................................. 430,840 ----------- $ ..................................................................... 928,410 Total value of company's property 1905 ............................... $928,410 Capitalized at 5 per cent .......................................... 18,568.200 Real estate and personal property exclusive of mains and services ... 3,985,642 ----------- Total mains, services, and easement ............................ $14,582,558 Deduct 9.33 per cent. for proportion outside city ................... 1,360,552 ----------- Value mains, services, and easement in city ........................ 13,222,006 Former assessment of mains, services ................................ 1,285,035 ----------- Increase ....................................................... $11,936,971

To ascertain the assessed value after the assessment is...