Herman v. Mayor and City Council of Baltimore

• Citation: 55 A.2d 491,189 Md. 191
• Decision Date: 03 November 1947
• Docket Number: 44.
• Parties: HERMAN et al. v. MAYOR & CITY COUNCIL OF BALTIMORE et al.
• Court: Maryland Court of Appeals

55 A.2d 491

189 Md. 191

HERMAN et al. v. MAYOR & CITY COUNCIL OF BALTIMORE et al.

No. 44.

Court of Appeals of Maryland

November 3, 1947

Appeals from Circuit Court No. 2 of Baltimore City; Herman M. Moser Judge.

Suit in equity by Herbert J. Herman and another, individually and as copartners trading as 'Ace Liquors,' against the Mayor and City Council of Baltimore and others for a decree declaring void a part of an ordinance imposing a tax on certain alcoholic beverages in retailers' hands on January 1, 1947, and an injunction against enforcement of the ordinance, in which William Diskin, trading as 'Ford's Liquors,' intervened as a party complainant. From a decree sustaining demurrers to the bill and dismissing it, complainants appeal.

Affirmed.

Allen A. Davis, Asst. City Sol. and Lester H. Crowther, Deputy City Sol., both of Baltimore (Simon E. Sobeloff, City Sol., of Baltimore, on the brief), for appellees.

Before MARBURY, C.J., and DELAPLAINE, COLLINS HENDERSON, and MARKELL, JJ.

DELAPLAINE Judge.

Herbert J. Herman and Charles H. Lessner, of Baltimore, trading as Ace Liquors, brought this suit against the Mayor and City Council of Baltimore, William F. Broening, City Collector and James J. Lacy, State Comptroller, to obtain (1) a declaratory decree to declare void that part of an ordinance of the City of Baltimore which imposes a tax of 50 cents per gallon on certain alcoholic beverages in the hands of retail dealers on January 1, 1947, and (2) an injunction to restrain the enforcement of the ordinance.

The bill of complaint alleges that complainants conduct a store on the southeast corner of Baltimore and Eutaw Streets for the retail sale of alcoholic beverages, and that they paid a tax of $351.10 to the City of Baltimore and State of Maryland upon their stock in business, including alcoholic beverages, for the year 1946, and were liable for a similar tax of $342.72 for the year 1947. On December 23, 1946, the Mayor and City Council of Baltimore, pursuant to authority granted by the Legislature in 1945, enacted an ordinance imposing a tax of 50 cents per gallon on all distilled spirits and other alcoholic beverages, except beer and wine, sold or delivered by a manufacturer or wholesaler to any retail dealer in Baltimore City during the year 1947, and a like tax of 50 cents per gallon on such beverages in the hands of retailers on January 1, 1947. On December 31, 1946, City Collector Broening issued regulations requiring retail dealers subject to the tax to file an inventory of alcoholic beverages in their hands on January 1, 1947. Complainants had on hand alcoholic beverages ranging in value from $12.85 to $35.40 per gallon, upon which a tax of $1,087.01 was claimed to be due under the ordinance.

They were notified that, if they failed to pay the tax by January 15, they would be prohibited from dealing in alcoholic beverages. They alleged that the ordinance is invalid and refused to pay the tax, but they deposited with the clerk $1,087.01, subject to the order of the Court. William Diskin, trading as Ford's Liquors, intervened as a party complainant. Defendants demurred to the bill, and from a decree sustaining the demurrers and dismissing the bill, complainants appealed.

The Maryland Alcoholic Beverages Law, regulating the sale of alcoholic beverages in this State, declared: 'No city or town shall be permitted to impose any additional license fees or taxes other than the usual property tax, upon alcoholic beverages, or upon the exercise of the privileges conferred by the licenses issued under the provisions of this Article.' Laws of 1937, chs. 476, 493; Laws of 1939, ch. 642; Code, art, 2B, sec. 8. On October 29, 1945, when a grave situation existed in Baltimore on account of the urgent need for additional funds to meet the municipal budget requirements, and the authorization of the State was necessary to meet the needs, Governor O'Conor convened the Legislature in special session on November 5. He recommended in a letter to the Legislature that the City be granted 'general taxing powers' to meet the emergency; and an Act was passed authorizing the Mayor and City Council to exercise 'the power to tax to the same extent as the State has or could exercise said power within the limits of said City as part of its general taxing power.' The Act expressly authorized the City to provide by ordinance for the imposition, assessment, levy and collection of any tax or taxes so authorized, the power so granted expiring on January 1, 1948. The Act was declared to be an emergency measure and took effect from the date of its passage. It was approved by the Governor on November 7. Laws of 1945, Sp.Sess., ch. 1. The City thereupon adopted the ordinance which is now before us.

Unquestionably the City had no power to impose excises on alcoholic beverages unless there was a repeal of Section 8 of the Alcoholic Beverages Law. Appellants questioned whether the members of the Legislature actually intended to repeal Section 8 in any respect. While it is true that the Act of 1945 does not refer to Section 8 specifically, nevertheless it does declare that all laws or parts of laws inconsistent with the provisions of the Act are repealed to the extent of such inconsistency. Section 8 declared that the provisions of the Act with respect to Class F licenses 'shall not be deemed as repealed by any local Act hereafter passed unless expressly referred to and expressly repealed in terms.' But Class F licenses were issued only for the sale of alcoholic beverages on the railroads, whereas appellants have been selling under a Class A (Off Sale) license. In our opinion the Act of 1945 repealed Section 8 in so far as it had prohibited the City from taxing the holders of Class A licenses in Baltimore City. In 1947 the Legislature revised the Alcoholic Beverages Law by repealing and re-enacting Article 2B, Laws of 1947, ch. 501. We are not called upon in this case to decide what effect, if any, the Act of 1947 enacting Section 23 in place of Section 8 had upon the City's power to tax beverages sold or delivered by manufacturers and wholesalers in 1947. But certainly it did not wipe out the tax on beverages in the hands of retailers on January 1, 1947, since the Act did not take effect until April 16, 1947.

Appellants then suggested that, even if the Legislature had intended to allow Baltimore City to impose excises, the ordinance did not effectuate that intention. It is a general principle that an ordinance passed in pursuance of express legislative authority is a law within the meaning of the Constitution, and has the same effect as a local law duly enacted by the Legislature. Gould v. City of Baltimore, 120 Md. 534, 538, 87 A. 818. We are also guided by the rule of interpretation of statutes, laid down many years ago by the Legislature, that where the public general law and the public local law of any county, city, town or district are in conflict, the public local law shall prevail. Code, art. 1, sec. 13. Hence, we think it is clear that the ordinance prevails over the general law. We are mindful of the provision of the Home Rule Amendment to the Maryland Constitution, ratified in November, 1915, that 'in case of any conflict between said local law and any Public General Law now or hereafter enacted the Public General Law shall control.' Md. Constitution, art. 11A, sec. 3. Section 2 of the Amendment provides that the express powers previously granted to the City of Baltimore, Code P.L.L., art. 4, sec. 6, shall not be enlarged or extended by its charter; but such powers may be extended, modified, amended or repealed by the Legislature. Under Section 3, the City, since the adoption of its charter in November, 1918, has had the power to enact local laws, including the power to repeal or amend local laws enacted by the Legislature, upon all matters covered by the express powers granted by the Legislature. Church Home and Infirmary v. City of Baltimore, 178 Md. 326, 330, 13 A.2d 596. It is only in case of conflict between a public general law enacted by the Legislature and an ordinance enacted by the City without specific law enacted by the Legislature granting city power, that the rule of interpretation in the Home Rule Amendment applies. The rule does not abrogate the statutory rule of interpretation applicable to conflicts between public general laws and public local laws enacted by the Lagislature.

We now come to the question whether the tax imposed by the ordinance is a property tax, or violates Article 15 or Article 23 of the Maryland Declaration of Rights or the Fourteenth Amendment to the Constitution of the United States. Appellants argued that, since they are required to pay a tax on their stock in business, including the alcoholic beverages, the new tax creates double taxation. The distinction between a property tax and an excise may become important under Article 15; Article 23 and the Fourteenth Amendment permit discrimination, not arbitrary, in subjects or rates of taxation, including property taxes. Alcoholic beverages have been subjects of the earliest excise taxes and of a great variety of special taxes and regulations. The reasonableness of discrimination between such beverages or some of them and other property, at least in the absence of constitutional limitations similar to Article 15, is beyond question. The broad power of the State to impose excises was explained by Chief Justice Hughes in the following words: 'The State is not limited to ad valorem taxation. It may impose different specific taxes upon different trades and professions and may vary the rates of excise upon various products. In levying such taxes, the State is not required to resort to close distinctions or to maintain a precise, scientific uniformity...