Maryland Theatrical Corp. v. Brennan

• Decision Date: 03 March 1942
• Docket Number: 25.
• Parties: MARYLAND THEATRICAL CORPORATION v. BRENNAN, Secretary of Police Com'r of City of Baltimore.
• Court: Maryland Court of Appeals

24 A.2d 911

180 Md. 377

MARYLAND THEATRICAL CORPORATION v. BRENNAN, Secretary of Police Com'r of City of Baltimore.

No. 25.

Court of Appeals of Maryland

March 3, 1942

Appeal from Circuit Court No. 2 of Baltimore City; Eli Frank, Judge.

Suit in equity by the Maryland Theatrical Corporation against George J. Brennan, Secretary of the Police Commissioner of the City of Baltimore, to enjoin enforcement of a law requiring licenses to give public dances in such city. From a decree dismissing the bill of complaint, complainant appeals.

Reversed and remanded.

Abram C. Joseph, of Baltimore (Daniel C. Joseph, of Baltimore, on the brief), for appellant.

Robert R. Bowie, Asst. Atty. Gen. (William C. Walsh Atty. Gen., on the brief), for appellee.

Before BOND, C.J., and SLOAN, DELAPLAINE, COLLINS FORSYTHE, and MARBURY, JJ.

MARBURY Judge.

The bill in this case is filed by a theatrical corporation which in connection with its theater, operates a hall in the City of Baltimore, in which dances are conducted. The defendant is the secretary of the Police Commissioner of the City of Baltimore. The purpose of the complaint is to prevent the enforcement of a certain public local law against the complainant. Under this law, the complainant is required by the Police Commissioner to secure a license for each and every night's dance at a charge of $5 a night, to be paid to his secretary. The contention is made that the law is unconstitutional and void. After answer and testimony, the act was declared valid by the court below, and the bill of complaint dismissed. From that decree, the complainant appeals here.

The act in question was first passed by the General Assembly of 1900 as Chapter 269. The title was: 'An Act to provide Additional Revenue for the Special Fund of the Board of Police Commissioners of the City of Baltimore, to be derived from the granting or issuing permits to give public dances, soirees, masked balls, boxing or athletic contests, or either of them, in the City of Baltimore.' It was amended by Chapter 514 of the acts of 1902. The amendment added a clause making it a misdemeanor to violate its provisions, and providing a fine on conviction. The second amendment was made in 1906 by Chapter 267. This added a proviso that the act was not intended to apply to regular dancing schools, which are therein defined, where no liquors are sold. Owners or managers of regular dancing academies are required by the amendment to pay an annual license fee of $5. When the act came to be codified, it became Section 776CA of Article 4 of Flack's Code of Public Local Laws of 1930, and Section 942 of Charter and Public Local Laws, Edition 1938. In those codifications the original provision that the license or permit fee shall be paid 'to the secretary of the Board of Police Commissioners, who are authorized to demand and receive the same' is changed to, 'The Secretary of the Police Commissioner who is authorized to demand and receive the same.' This was obviously done because a single Police Commissioner has now been substituted in place of the former Board of Police Commissioners. The indication is clear in the earlier acts, from the use of the plural 'are' that the board and not the secretary were the ones authorized to demand and receive the money. The codifications, of course, change the 'are' to 'is', making the reference to a single Police Commissioner. This does not indicate that now the secretary of the Police Commissioner, who is the appellee here, is the party who is authorized to demand and receive the fee. It is to be paid to him, as it always was, as a matter of administrative convenience.

The point of attack is the first clause in the act, which reads as follows: 'No public dances, soirees, mask balls, boxing or athletic contests, or other public entertainments of like kind, to or for which an admission fee shall be charged, shall be held, given or permitted in the City of Baltimore, except upon condition that a license or permit fee of not less than $5.00 nor more than $100.00 shall first be paid to the Secretary of the Police Commissioner who is authorized to demand and receive the same for the benefit of the Special Fund.' It is contended that the fixing of the license or permit fee at 'not less than $5.00 nor more than $100.00' in the discretion of the Police Commissioner is a void delegation of legislative power to an administrative officer; that no standards are given him, by which he must act, and by which his discretion is controlled, except the minimum and maximum amounts; that the tax is imposed upon one group of taxpayers for a special purpose in which that group has no greater special interest than others.

There is no doubt that the legislature, or a municipality, duly authorized by the legislature, may impose license taxes upon business, occupations, or amusements, either for regulatory purposes, under the police power, or for revenue purposes, under the taxing power. Cases in which this court has upheld such taxes are among others: The Germania v. State, 7 Md. 1 (billiard tables); Rohr v. Gray, 80 Md. 274, 276, 30 A. 632 (traders); State v. Applegarth, 81 Md. 293, 300, 31 A. 961, 28 L.R.A. 812 (oyster packers); Mason v. Cumberland, 92 Md. 451, 48 A. 136 (wheeled vehicles); Meushaw v. State, 109 Md. 84, 91, 71 A. 457 (commission men); Ruggles v. State, 120 Md. 553, 87 A. 1080 (chauffeurs); State v. Shapiro, 131 Md. 168, 101 A. 703, Ann.Cas.1918E, 196 (junk dealers); Gaither v. Jackson, 147 Md. 655, 128 A. 769 (auctioneers); Jacobs v. Baltimore, 172 Md. 350, 191 A. 421 (coal); Maryland Racing Commission v. Maryland Jackey Club, 176 Md. 82, 4 A.2d 124, 479 (race meets); Brown v. State, 177 Md. 321, 9 A.2d 209 (hawkers and peddlers).

The question whether a particular act is primarily a revenue measure, or a regulatory measure is important, because different rules of construction apply. A regulatory measure may produce revenue, but in such a case the amount must be reasonable and have some definite relation to the purpose of the act. A revenue measure, on the other hand, may also provide for regulation, but if the raising of revenue is the primary purpose, the amount of the tax is not reviewable by the courts. There is no set rule by which it can be determined in which category a particular act primarily belongs. In general, it may be said that when it appears from the act itself that revenue is its main objective, and the amount of the tax supports that theory, the enactment is a revenue measure. 'In general, * * * where the fee is imposed for the purpose of regulation, and the statute requires compliance with certain conditions in addition to the payment of the prescribed sum, such sum is a license proper, imposed by virtue of the police power; but where it is exacted solely for revenue purposes and its payment gives the right to carry on the business without any further conditions, it is a tax.' 33 Am.Jur. Licenses, Paragraph 19, Page 340.

The purpose of the act before us was stated in its title when originally passed. That purpose was to provide additional revenue for the special fund of the Board of Police Commissioners of the City of Baltimore. The license fee, ranging from $5 to $100, is large enough in a city the size of Baltimore, to produce considerable revenue, and according to the record, 44,255 public entertainment permits have been issued under it, of which 40 were at the rate of 100 each, and the balance were at the rate of $5. That makes a total of $225,000 collected in a little over 40 years, or an average of approximately $5,500 a year. Presumably, as the city has grown, the amount has increased, so that much more than the average is now being collected. The conclusion is inescapable that this act is therefore primarily a revenue measure, and if it is confined to that purpose, the amount of the tax is not open to any constitutional objection here, even though it may destroy the activities taxed. Brown v. State, 177 Md. page 329, 9 A.2d 209, and cases there cited.

The act, however, is not wholly a revenue measure. There is a discretion imposed on the Police Commissioner to determine the amount of the tax within the limits proposed. The difference between the minimum and the maximum is considerable, and might very readily be made prohibitory. In the case of appellant, the minimum tax on its operations would be $1,560 a year, the possible maximum would be $31,200 a year. The part of the act, therefore, which fixes the limits of the tax, must have been intended as a regulatory section, although it is engrafted on a revenue act. It does not fix a fee, upon the payment of which the right is established to conduct a business. It does not, it is true, in terms impose conditions upon the issuance of the permit or license other than the payment of the fee; but, by permitting the wide latitude in the amount of the fee, it does, in effect, give the Police Commissioner the right to determine what permits should be granted and what should not. Dances, balls, or public entertainments held once in a season might readily pay the maximum fee, but no dance operating every night could afford to do so. The provisions with respect to the amount of the tax or fee have to be considered as regulatory.

Looking at that portion of the act from this standpoint, the inquiry of course, is whether or not it is unreasonable and arbitrary. The test is, what can be done under the act? Hagerstown v. Baltimore & O. R. Co., 107 Md. 178, 68 A. 490, 126 Am.St.Rep. 382; Curtis v. Mactier, 115 Md. 386, 397, 80 A. 1066; Grote v. Rogers, 158 Md. 685, 149 A. 547; Raney v. County Commissioners, 170 Md. 183, 196, 183 A. 548. As an illustration of what might be done, two instances of what has been done are worth noting. The...