Mayor and City Council of Baltimore v. Williams

• Decision Date: 03 October 1932
• Docket Number: 3351.,No. 3347,3347
• Citation: 61 F.2d 374
• Parties: MAYOR AND CITY COUNCIL OF BALTIMORE v. WILLIAMS. MAYOR, COUNSELOR & ALDERMEN OF CITY OF ANNAPOLIS v. SAME.
• Court: U.S. Court of Appeals — Fourth Circuit

61 F.2d 374 (1932)

MAYOR AND CITY COUNCIL OF BALTIMORE v. WILLIAMS.

MAYOR, COUNSELOR & ALDERMEN OF CITY OF ANNAPOLIS v. SAME.

Nos. 3347, 3351.

Circuit Court of Appeals, Fourth Circuit.

October 3, 1932.

Lawrence B. Fenneman and R. E. Lee Marshall, both of Baltimore, Md. (Hector J. Ciotti, of Baltimore, Md., on the brief), for appellant Mayor and City Council of Baltimore.

Roscoe C. Rowe, of Annapolis, Md., for appellant Mayor, Counselor, and Aldermen of City of Annapolis.

William L. Rawls and George Weems Williams, both of Baltimore, Md., for appellee.

Before PARKER and NORTHCOTT, Circuit Judges, and GLENN, District Judge.

PARKER, Circuit Judge.

These are appeals by the mayor and city council of Baltimore and the mayor, counselor and aldermen of the city of Annapolis from orders of the court below denying claims filed with the receiver of the Washington, Baltimore & Annapolis Railway Company. The claims filed were for taxes assessed by the cities of Baltimore and Annapolis for the year 1931 upon the property of the railway company, and for the amounts due under the provisions of ordinances under which the company was allowed to construct and maintain its tracks over the streets of the respective cities. The claims were denied under the authority of chapter 497 of the Acts of Maryland of 1931, which is as follows:

"An Act to exempt the railroad property of the Washington, Baltimore and Annapolis Electric Railroad Company, or so much thereof as may be used for railroad purposes by said company, its receiver, successors and assigns, from all State taxes and charges, including contributions to the cost of construction of railroad crossings made or to be made under the authority of the State Roads Commission, and from all county and city taxes and charges in the nature of a tax for the years during which the property is so used, but not exceeding two years beginning January 1, 1931.

"Whereas, The Washington, Baltimore and Annapolis Electric Railroad Company did not in the year 1930 earn its operating charges, and it is of the utmost importance for the welfare of the State and particularly the communities served by said railroad, that the operation of said railroad be continued, and

"Whereas, It is in the judgment of the General Assembly of Maryland a wise and sound public policy to encourage the continued operation of said railroad by the exemption herein provided:

"Section 1. Be it enacted by the General Assembly of Maryland, That the railroad property of the Washington, Baltimore and Annapolis Electric Railroad Company, or so much thereof as may be used for railroad purposes by said company, its receiver, successors and assigns, be exempt from all State taxes and charges, including contributions to the cost of construction of railroad crossings made or to be made under the authority of the State Roads Commission, and from all county and city taxes and charges in the nature of a tax for the years during which the property is so used, but not exceeding two years beginning January 1, 1931.

"Sec. 2. And be it further enacted, That this Act shall take effect June 1, 1931."

The claims which were denied include taxes imposed by the cities upon the property of the railway company pursuant to article 81 of the Maryland Code (Supp. 1929). The taxes so imposed by the city of Baltimore amount to approximately $50,000; those imposed by the city of Annapolis, to approximately $3,000. They also include so-called taxes due under franchise ordinances granted by the cities. These in the case of the city of Baltimore amount to approximately $20,000; in the case of the city of Annapolis, to approximately $2,000. The franchise ordinances of the two cities are substantially similar. The pertinent portions of the Baltimore ordinance, which was passed April 27, 1906, are as follows:

"Sec. 13. And be it further ordained, that in consideration of the several rights, privileges and franchises herein granted to the Baltimore Terminal Company, the Washington, Baltimore and Annapolis Electric Railway Company and the Baltimore and Annapolis Short Line Railroad Company, each of said grantees, their successors or assigns, hereby agrees to pay and shall pay to the Mayor and City Council of Baltimore in quarterly instalments, on the first days of January, April, July and October of each and every year a tax of four and one-half mills for every passenger above the age of twelve years, and of two and seven-tenths mills for every passenger between the ages of four and twelve years, carried by it, respectively, over the tracks hereby authorized, or any part thereof, for a whole or part trip within the present limits of the city of Baltimore, or as the same may be hereafter extended from time to time, and without regard to the fact that their lines of railway, or any part thereof, are or may be situated upon private rights of way instead of city streets, and also without regard to the fact whether such passenger has boarded the car within or without the city limits, as the same now exist or may be hereafter extended from time to time; and each of the said grantees also agrees to pay and shall also pay to the said Mayor and City Council of Baltimore in quarterly instalments, on the first days of January, April, July and October, of each and every year, a tax of one per cent. upon their respective gross receipts derived from mail, baggage, express matter, milk, truck and light freight carried by it, respectively, over any of their respective lines from or to any point on the tracks hereby authorized within the present limits of the city of Baltimore, or as the same may be hereafter extended from time to time, without regard to the place of origin or destination of said mail, baggage, express matter, milk, truck and light freight, and the Baltimore Terminal Company shall also pay to the Mayor and City Council of Baltimore the sum of five hundred dollars, said sum to be paid to the Mayor and City Council of Baltimore upon commencement of work by it under this ordinance.

"Sec. 14. And be it further ordained, That upon the failure of the said grantees, or any of them, their successors or assigns, to comply with any of the terms or conditions of this ordinance, the rights, privileges and franchises hereby granted shall be and become wholly null and void.

"Sec. 15. And be it further ordained, That neither the passage of this ordinance nor anything contained herein, especially the provision herein for compensation to the city, shall be taken as in anywise prejudicing the pending contention of the city with reference to the accessability and taxability of street franchises or easements." (Italics ours.)

Before coming to the question of the constitutionality of this statute, which is the question argued before us by counsel, we think it well to observe that, as we interpret the statute, it has no application to the moneys due by the railway company under the franchise ordinances, and consequently does not affect the liability of the railway company with regard thereto. It will be observed that it is "the railroad property" which is exempted from taxation; and it is exempted, so far as counties and cities are concerned, only from "county and city taxes and charges in the nature of a tax."

"A tax is an enforced contribution of money or other property, assessed in accordance with some reasonable rule of apportionment by authority of a sovereign state on persons or property within its jurisdiction, for the purpose of defraying the public expenses." 26 R. C. L. 13. It differs from a payment due under a contract in that the latter arises out of the agreement of the party from whom it is due, whereas a tax depends not upon consent but upon the sovereign power of the state. State Freight Tax Case, 15 Wall. 232, 278, 21 L. Ed. 146. A charge exacted by a city for the use of its streets is not a tax. "It is more in the nature of a charge for the use of property belonging to the city, — that which may properly be called rental. * * * That by it the city receives something which it may use as revenue does not determine the character of the charge or make it a tax. The revenues of a municipality may come from rentals as legitimately and as properly as from taxes." St. Louis v. Western Union Tel. Co., 148 U. S. 92, 97, 13 S. Ct. 485, 487, 37 L. Ed. 380; Postal Tel. Co. v. Mayor, etc., of Baltimore, 79 Md. 502, 29 A. 819, 24 L. R. A. 161; Mayor, etc., of Baltimore v. Baltimore, etc., R. Co., 84 Md. 1, 35 A. 17, 33 L. R. A. 503; City of Springfield v. Postal Tel. Co., 253 Ill. 346, 97 N. E. 672; Postal Tel. Co. v. City of Newport, 76 S. W. 159, 25 Ky. Law Rep. 635; 26 R. C. L. 14. And see McQuillin Municipal Corporations (2d Ed.) vol. 4, § 1772, where the rule as to requiring compensation upon the granting of a franchise is stated as follows:

"A municipal corporation, having entire control of its streets and power to impose conditions on granting a franchise to use the streets, may require compensation for their use by public service companies, as a condition of the grant of the right to use them, unless forbidden by statute, as by requiring the company to pay a certain portion of its receipts as compensation for the use of streets, or a certain per cent of the dividends declared, or exacting a license fee of a certain sum for each car to be paid annually to the city, or an annual tax on each mile of its tracks. * * * So if the grant of the right to use streets is conditioned on the payment of a certain sum per year, the fact that such charge is called a license tax does not make it such, within the rule that license taxes must be imposed equally on all persons engaged in the same business."

A payment required as a condition of the granting of a franchise to use the streets of a city is not different in principle from the exaction of any other payment by a city as a return for the use of property or facilities furnished by it; and it is uniformly held...