Maryland Tobacco Growers' Ass'n v. Maryland Tobacco Authority

• Decision Date: 14 November 1972
• Docket Number: No. 30,30
• Parties: MARYLAND TOBACCO GROWERS' ASSOCIATION v. MARYLAND TOBACCO AUTHORITY.
• Court: Maryland Court of Appeals

Page 20

267 Md. 20

296 A.2d 578

MARYLAND TOBACCO GROWERS' ASSOCIATION v. MARYLAND TOBACCO AUTHORITY.

No. 30.

Court of Appeals of Maryland.

Nov. 14, 1972.

William J. Boehm, Annapolis, for appellant.

Francis X. Pugh, Asst. Atty. Gen. (Francis B. Burch, Atty. Gen., Baltimore, on brief), for appellee.

Argued before MURPHY, C. J., and McWILLIAMS, SINGLEY, SMITH, DIGGES and LEVINE, JJ.

DIGGES, Judge.

This is an appeal from the Circuit Court for Howard County where Judge James Macgill, in an administrative appeal proceeding, sustained the refusal of the State Tobacco Authority, appellee, to grant the Maryland Tobacco Growers' Association, appellant, an increase in its daily sales quota on the loose leaf tobacco market for the selling season 1970. This daily sales quota was purportedly devised by the Authority pursuant to powers delegated to it by the Legislature in 1947 under Article 48, sections 55-69, of the Code of Maryland (1957, 1971 Repl. Vol.). The first time the formula was used to regulate the loose leaf market was for the 1965 selling season. Here, appellant apparently does not challenge the right of the Authority to promulgate rules and regulations but only questions the formula by which the quota was calculated.

The appellant was incorporated in 1906 as a farmers' cooperative marketing agency and until 1969 it represented its members in the sale of their tobacco exclusively on the hogshead market at the Stateowned warehouse in Baltimore City. The hogshead market is operated on a year round basis with the tobacco being sold in large barrels or casks via sealed bids based on samples obtained under supervision of a State agent. Once a hogshead is sold, no further processing or repacking is required before shipment to the purchaser. Because of the impending demolition of the State owned warehouse under the plans to redevelop the inner harbor area of Baltimore City and with the persistent decline in the popularity of the hogshead method of selling tobacco, appellant purchased, in 1969, all the capital stock of the Triangle Tobacco Warehouse, Inc., with its building located in Lothian, Maryland. Triangle, for a number of years, had operated as a tobacco selling agency using what is known as the loose leaf method of sale. Tobacco on the loose leaf market is sold in baskets at daily auctions in a number of private warehouses during a relatively short selling season. Tobacco purchased in this manner requires repacking before shipment to the purchaser. This is done by independent firms located in the general vicinity of the markets. The Maryland Tobacco Growers' Association, through its solely owned subsidiary, Triangle, thus entered the loose leaf market and acquired Triangle's daily selling quota as established by the Tobacco Authority.

The controversy before us arose when, after purchasing Triangle, the appellant attempted to obtain an increase in the daily sales quota alloted to it for the 1970 selling season. The Association contended that it was entitled to this increase because the formula used by the Authority to calculate the quotas failed to credit appellant with its prior sales experience on the hogshead market. The formula, as promulgated by the appellee, gave a percentage share of the market to each of the eight licensed auction houses of this State according to their tobacco sales performance on the loose leaf market over the preceding four years. The formula was calculated by attributing 2/3 value to the respective shares of the market each agency had sold in the three years prior to the immediate past season and 1/3 to the share the agency had sold in the immediate past season. Before each selling season new quotas were calculated because the immediate past year's sales were considered and the sales for the oldest year previously taken into account were dropped.

The quotas under this formula, therefore, were modified and adopted annually and the rules and regulations of the Authority which pertained to the marketing of Maryland tobacco likewise changed each year. In other words, all of the rules of appellee, including the sales quotas, were specifically promulgated to be effective for just one year and to regulate just that year's selling season. ¹ The question now before us is the validity of the quotas which purportedly were established for the 1970 selling season. Appellant claims that these wrongfully failed to give it credit for its hogshead experience. However, a careful examination of the regulations promulgated for that year discloses that no quota information or rules purporting to regulate the market under a formula similar to those used in the years 1965-67 were adopted and filed with the Clerk of the Court of Appeals. ² In fact, there was no attempt to regulate the number of pounds passing through the market daily. Without this filing, we conclude that no effective regulation under such a formula existed for that year. This determination is dictated by the language of Article 41, section 9 of the Code (1957, 1971 Repl. Vol.). That law has existed since 1943 and, though amended a number of times to...