Maryland State Fair & Agr. Soc., Inc. v. Supervisor of Assessments of Baltimore County

• Decision Date: 14 June 1961
• Docket Number: No. 303,303
• Citation: 172 A.2d 132,89 A.L.R.2d 1095,225 Md. 574
• Parties: , 89 A.L.R.2d 1095 MARYLAND STATE FAIR & AGRICULTURAL SOCIETY, INC. v. SUPERVISOR OF ASSESSMENTS OF BALTIMORE COUNTY.
• Court: Maryland Court of Appeals

Page 574

225 Md. 574

172 A.2d 132, 89 A.L.R.2d 1095

MARYLAND STATE FAIR & AGRICULTURAL SOCIETY, INC. v.SUPERVISOR OF ASSESSMENTS OF BALTIMORE COUNTY.

No. 303.

Court of Appeals of Maryland.

June 14, 1961.

Richard W. Emory, Baltimore (Thomas P. Perkins, III, Venable, Baetjer & Howard, Baltimore, and James H. Cook, Towson, on the brief), for appellant.

Lawrence F. Rodowsky, Asst. Atty. Gen. (Thomas B. Finan, Atty. Gen., Johnson Bowie, County Sol., Baltimore County, and Walter Haile, DeputyCounty Sol., Towson, on the brief), for appellee.

Before BRUNE, C. J., and HENDERSON, PRESCOTT, HORNEY and MARBURY, JJ.

PRESCOTT, Judge.

This is an appeal from an order of the Circuit Court of Baltimore County entered on December 7, 1960, reversing in part an order of the Maryland Tax Court by holding that Maryland State Fair and Agricultural Society, Inc.(hereinafter sometimes called the 'Society') must pay ordinary (property) taxes for the year 1959 on that portion of its property used to conduct horse racing as a feature attraction of the Maryland State Fair.

The case originated in the Appeal Tax Court of Baltimore County which divided the Fair Grounds owned by the Society into what that court designated as 'Exhibition Section' and 'Race Track Section.'The Appeal Tax Court held that the Society was exempt by the Code (1957 and 1960 Cum.Supp.), Article 81, Section 9(7) and (8) from paying property taxes on the 'Exhibition Section,' but that it must pay taxes on land and improvements which that court listed in the 'Race Track Section.'

The Maryland Tax Court held that the Society is entitled to an exemption as to 'all of the 83.410 acres of land [the acreage being stipulated] and improvements erected thereon owned by the Society at Timonium.'This, of course, included both the 'Exhibition Section' and the 'Race Track Section.'

The Circuit Court of Baltimore County affirmed the Maryland Tax Court in holding that the Society is a non-profit educational and charitable institution, exempt from property taxes under Article 81, Section 9(7) and (8), but reversed the Maryland Tax Court in part by holding that the Society is taxable on most of the property which the Appeal Tax Court had listed under the designation 'Race Track Section.'Under the decision of the Circuit Court, the Society must pay taxes for the year 1959 on 42.961 acres of the Fair Grounds and on certain improvements of which the grandstand, race track, bleachers, four stables and jockeys' quarters are the principal items.The record does not clearly show that the midway was included in this 42.961 acres, but we were informed during argument that it was.

The Society was organized in 1950 by a group of altruistic and public-spirited citizens to purchase the Fair Grounds and preserve the State Fair when the Maryland Jockey Club threatened to sell the property for use as an industrial site.A large number of citizens of Maryland subscribed to $600,000 in bonds to purchase the Fair Grounds for $500,000 and to provide $100,000 in working capital.The certificate of incorporation states the purposes to be:

'the acquisition and operation of Maryland State Fair Grounds(known as Timonium Fair Grounds), Baltimore County, Maryland in the best interests of those engaged in agricultural, horticultural and related pursuits; the betterment of the conditions of those engaged in agricultural and horticultural pursuits, the improvement of the grade of their products, and the development of a higher degree of efficiency in their respective occupations; the conduct of a Maryland State Fair at Maryland State Fair Grounds to encourage the development of better agricultural and horticulatural products through a system of awards; the education and instruction of those engaged in agricultural and horticultural pursuits; the conduct of such other entertainments, amusements, contests, horse shows, horse racing and trials of speed, expositions and other activities at Maryland State Fair Grounds as may aid and assist the aforesaid purposes; and any business or objects designed or calculated to aid, assist or achieve these purposes.'

The Society has operated since 1950 in accordance with these declared purposes, and no dividend or distribution has ever been declared, or paid to stockholders.No director or officer has ever been paid any salary or other compensation, except the general manager, who is a year round employee.

The question for our determination is whether the Society's exemption from property taxes under Subsections (7) and (8), mentioned above, applies to all of the land and improvements constituting the Maryland State Fair Grounds, or only a part thereof?

The appellee asserts that under the provisions of said Subsections 7 and 8 there are four elements in the test which the property of the appellant must meet before it qualifies for the privilege of exemption from taxation: (1) The property must be that of an educational or charitable institution, (2) no part of the net income (with an exception not here pertinent) of the institution can inure to the benefit of any private shareholder or individual; (3) the property must be actually used by the educational or charitable institution; (4) and the use of the property must be reasonably necessary for the charitable or educaional work of the institution.We agree.¹

Appellee concedes that the appellant is either an 'educational' or 'charitable' institution, or both, compare36 Op.A.G. 303, and that the appellant and the use of its property meet the requirements of (2) and (3); but the appellee earnestly contends that the use of that portion of appellant's property, ruled by the court below to be taxable, is not reasonably necessary for the charitable or educational work of the institution.Our question, therefore, narrows to this single contention.

In order to determine whether the use of the appellant's property is reasonably necessary for its educational and charitable purposes within the spirit, intent and wording of the legislature in enacting Subsections 7 and 8, it is necessary to consider the background and historic aspects of the Society's fairs, and of fairs in general.Fairs are events where people congregate to present and observe exhibitions that disclose how other people work, live and play; for the purpose of buying and selling livestock and commodities; for holding and participating in contests; and for pleasure and enjoyment.The word 'fair' is derived from the Latin word feria, meaning a holiday or feast day, but fairs were held in many countries of the world long before the time of the Romans.

The very ancient fairs were connected with religious matters, but, even at that early date, they usually staged games and contests, the famous Olympic games being held at one of the fairs of Ancient Greece.As time wore on, 'market' fairs were held, where commodities were bartered and sold, and thereafter came the 'agricultural' fairs.

The first one of this latter type to be held in this country was the Berkshire Cattle Show, about 1810.For the first time, women actively participated, sending in their pickles, jellies and other household goods, and receiving medals and prizes for the best.This type of fair became very popular throughout America, especially in the rural areas.Corn huskings, quilting bees, athletic contests, horse races, automobile races, and spectacular events were added to the programs, as time passed, for amusement, pleasure and instruction.²

After pointing out the many advantages accruing from the holding of agricultural fairs, 1 Ency.Britannicapp. 418, 419(1959 Ed.) has this to say:

'In its early years the agricultural fair was one of the main recreations available to farm families.The form that the recreational and amusement facilities should take has been debated since the beginning of fairs.Critics of the programs have charged that the amusements have overshadowed the exhibits.Early proponents of extensive recreational features replied that the farmer was entitled to relaxation and amusement, while during the 20th century the fair had to compete with many other means of recreation.Much controversy centered around the question of horse racing.This event grew steadily in popularity from its introduction as a feature of a few agricultural fairs in the 1830s, until by 1900 it had proved its importance as a permanent and colourful part of the annual program.By the mid-20th century the typical agricultural fair had an extensive entertainment program that appealed to urban and rural audiences alike.

'The modern county or state fair, with its permanent buildings devoted to farm produce, livestock, farm machinery, automobiles and handicraft, midway, horse and auto racing, dance pavilions, spectacular evening shows and fireworks, has something to appeal to every taste and yet still demonstrates agricultural progress and achievement.

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'The agricultural fairs and shows that survived until past the middle of the 20th century seemed well established and continued as a major force for a better agriculture, serving both the educational and recreational needs of the nation.'

This brings us to the actual operation of the Society in conducting Maryland State Fairs at Timonium.The first fair at this location was held in about 1878, and as early as 1903 it became known as the Maryland State Fair, and is now officially designated as such.The evidence clearly shows that horse racing has been a traditional feature attraction of the Fair for many years.Newspaper articles as early as 1894 disclose 'First-Class Racing This Year' as the main event of the Fair.

The Fair runs for approximately two weeks each year under the supervision of the Maryland State Farm Board--the first week being basically set aside for youth groups; the second for adults.A typical day at the Fair was described by the Society's president as beginning at 9:00 a. m. with 4-H (a national...