Mayor and City Council of Baltimore v. Price

• Court: Maryland Supreme Court
• Writing for the Court: MITCHELL, Judge.
• Citation: Mayor and City Council of Baltimore v. Price, 168 Md. 174, 177 A. 160 (Md. 1935)
• Decision Date: 06 February 1935
• Docket Number: 86.
• Parties: MAYOR AND CITY COUNCIL OF BALTIMORE v. PRICE ET AL. [*]

177 A. 160

168 Md. 174

MAYOR AND CITY COUNCIL OF BALTIMORE v. PRICE ET AL. ^[*]

No. 86.

Court of Appeals of Maryland

February 6, 1935

Appeal from Baltimore City Court; Rowland K. Adams, Judge.

Application by the Hanover Shirt Company for an exemption from taxation of property. From an order of the Baltimore city court which affirmed an order of Jesse D. Price and others, constituting the State Tax Commission, reversing the action of the appeal tax court, the Mayor and City Council of Baltimore, a body politic and corporate, appeal.

Affirmed.

Argued before BOND, C.J., and URNER, OFFUTT, SLOAN, and MITCHELL JJ.

Lawrence B. Fenneman and W. Wallace Rhynhart, Asst. City Sol., both of Baltimore (R. E. Lee Marshall, City Sol., of Baltimore, on the brief), for appellant.

Wirt A Duvall, Jr., of Baltimore (Philip B. Perlman, of Baltimore on the brief), for appellees.

MITCHELL Judge.

The Hanover Shirt Company, one of the appellees in this case, was incorporated in January, 1932, and succeeded a business formerly conducted by a partnership operating under the same name as the present company, and engaged solely in the manufacture of shirts; the method of operations of both the partnership and the succeeding corporation being similar in every respect.

The company owns and occupies a fivestory building located at No 120 South Hanover street, in Baltimore city, with about 5,000 square feet of floor space, and, as above stated, manufactures shirts; the finished product being sold under its own labels, "Hanover" as the leading brand, and "L. & W." the secondary brand, through its own sales force and organization.

It operates as follows: Buys raw material consisting of cloth, piece goods, buttons, facings, linings, and various other sundry accessories in wholesale quantities. The cloth comes in bolts of 120 yards delivered in large quantities at the Baltimore plant, where it is first carefully measured and tested. It is then spread, in as many as 400 thicknesses, upon large cutting tables about 150 feet long and 7 feet in width; upon the cloth, shirt patterns are placed, and the larger parts are cut, according to patterns, by electric machines, the smaller parts being cut with small dies in a massive die press. The parts of cloth so cut are then stamped as to size, sleeve length, and bundle number, and transferred to sewing departments located on the Eastern Shore of Maryland, where they are sewed together by an independent contractor and returned to the factory in the form of shirts for the finishing processes. These latter processes consist of examining, assorting, and starching the parts necessary to be starched by running the shirts through starching equipment and hydraulic presses. The shirts are then pressed by hand irons, examined, assorted as to sizes, wrapped in cellophane, and packed in boxes; the finished product being then ready for shipment.

Machinery used at the plant consists of two cutting tables 150 by 7 feet, four electric cutting machines, a die press with hundreds of steel dies, electric stamping machines, drills, and pattern making machines, automatic starchers, hydraulic steam presses, gas irons, gas boilers, high-pressure gas boilers, air blowers, motors, and various tables, bins, boxtying machines, and collar pressing machines.

In its operations in Baltimore city, the company employs between 70 and 100 persons in the various capacities of designers, markers, spreaders, trimmers, stamping machine operators, die press operators, operators of hydraulic and hand presses, examiners, sorters, packers, wrappers, and stock clerks, all of which classifications are recognized in the trade.

All of the raw material purchased by the company is used in the manufacture of shirts; and all of the machinery of the company is operated at its plant in Baltimore city, and exclusively used in the manufacture of shirts. In normal times the production has reached 100,000 dozen shirts per year, while at the time of the hearing before the state tax commission the output was at the low-water mark of from 400 to 500 dozen shirts per week. The various stages of manufacture involve fifteen major processes. Eight of these take place in the company's plant before the pieces are shipped to the sewing contractor, and six of them after the shirts are sewed and returned; the sewing process being the remaining and only one performed beyond the limits of Baltimore city. The actual labor cost for such work as is performed in Baltimore is $1.25 per dozen shirts.

In 1929 the company, as a partnership, applied to the appeal tax court of Baltimore city for exemption from taxation granted by the provisions of the city ordinance providing for manufacturers' exemptions.

The application was first denied, and, on appeal to the state tax commission, the action of the appeal tax court was reversed and the exemption granted by agreement between the applicant and the mayor and city council, in accordance with an opinion of the then city solicitor.

The company operated with the benefit of the exemption, without controversy, until October 22, 1931, when the appeal tax court revoked the exemption theretofore granted. This action was appealed to the state tax commission, and on July 6, 1933, the state tax commission reversed the order of the appeal tax court. On August 1, 1933, the mayor and city council of Baltimore appealed to the Baltimore city court from the order of the state tax commission; and on September 5, 1934, after formal hearing, the Baltimore city court affirmed the order of the state tax commission reversing the action of the appeal tax court. It is from the decision of the Baltimore city court that this appeal is taken.

We have given, in perhaps greater detail than necessary, the manner in which the appellee operates its business, in order to determine the sole question raised in this appeal, namely Does the appellee engage in such business as to entitle it to exemption from taxation by virtue of the provisions of the ordinance under which it claims exemption? That ordinance is found in article 46 of the Baltimore City Code of 1927, § 84, as follows: "In order to encourage the growth and development of manufacturing industries in Baltimore City and thereby in the judgment of the Mayor and City Council, to promote the general welfare of the City, beginning with the assessment and levy of taxes for City purposes, for the year 1920, and thereafter, all personal property of every...