Williams v. Mayor and City Council of Baltimore Same v. Mayor, Counselor and Aldermen of City of Annapolis

• Decision Date: 13 March 1933
• Docket Number: 514,Nos. 513,s. 513
• Citation: 53 S.Ct. 431,289 U.S. 36,77 L.Ed. 1015
• Parties: WILLIAMS v. MAYOR AND CITY COUNCIL OF BALTIMORE. SAME v. MAYOR, COUNSELOR, AND ALDERMEN OF CITY OF ANNAPOLIS
• Court: U.S. Supreme Court

289 U.S. 36

53 S.Ct. 431

77 L.Ed. 1015

WILLIAMS

v MAYOR AND CITY COUNCIL OF BALTIMORE.

SAME

v. MAYOR, COUNSELOR, AND ALDERMEN OF CITY OF ANNAPOLIS.

Nos. 513, 514.

Argued Feb. 13, 1933.

Decided March 13, 1933.

Messrs. Wm. L. Rawls and George Weems Williams, both of Baltimore, Md. (Mr. William L. Marbury, Jr., of Baltimore, Md., on the brief), for petitioner.

Messrs. Lawrence B. Fenneman and R. E. Lee Marshall, both of Baltimore, Md. (Mr. Hector J. Ciotti, Asst. City Sol., of Baltimore, Md., on the brief), for respondents Mayor, etc., of Baltimore.

Mr. Roscoe C. Rowe, of Annapolis, Md., for respondents Mayor, etc., of Annapolis.

Mr. Justice CARDOZO delivered the opinion of the Court.

The controversy in these cases hinges upon the validity of a statute of Maryland, adopted by the General Assembly in June, 1931, whereby the property of a particular railroad was made exempt from taxation. Acts of 1931, c. 497.

For an understanding of the merits there is need that the statute be quoted in full:

'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.'

At the passage of this act, the Washington, Baltimore & Annapolis Electric Railroad Company was in the hands of a receiver, appointed in January, 1931, by the Federal District Court. For ten years preceding the receivership the gross receipts from its business had progressively declined. In 1930 the total revenues derived from the operation of its line were $1,347,967.03, and the operating expenses $1,191,897.32. These expenses were exclusive of taxes and fixed charges, such as interest on its debts. There was a funded debt of more than nine million dollars and an unsecured debt of nearly a million. In 1930, 3,247,534 passengers had traveled on the road, which supplied the only rail service to Annapolis, the capital of the state. Large public interests were involved in keeping the service going.

The mayor and city council of Baltimore, and the mayor, counselor, and aldermen of the city of Annapolis, municipal corporations, challenged the validity of the exemption, and filed proofs of claim with the receiver for taxes overdue. The claim of the city of Baltimore was for real property taxes on the terminals and rights of way, for personal property taxes on the cars, and for franchise taxes or charges under a municipal ordinance. The claim of the city of Annapolis was for taxes on real property and for local taxes or charges owing for the franchise. The District Court upheld the validity of the statute, and disallowed the claims. Upon appeal to the Circuit Court of Appeals for the Fourth Circuit the orders were reversed upon the ground that the statute was invalid under the Fourteenth Amendment of the Federal Constitution and under several provisions of the Constitution of the state. 61 F.(2d) 374. Writs of certiorari were granted by this court. 287 U.S. 594, 53 S.Ct. 222, 77 L.Ed. —-. The writ in No. 513 brings up the claim filed with the receiver by the City of Baltimore; the writ in No. 514 brings up the claim of the City of Annapolis.

1. There is error in the holding of the Circuit Court of Appeals that the statute of Maryland creating this exemption is a denial to the respondents of the equal protection of the laws in violation of the Fourteenth Amendment of the Constitution of the United States.

A municipal corporation, created by a state for the better ordering of government, has no privileges or immunities under the Federal Constitution which it may invoke in opposition to the will of its creator. Trenton v. New Jersey, 262 U.S. 182, 43 S.Ct. 534, 67 L.Ed. 937, 29 A.L.R. 1471; City of Newark v. New Jersey, 262 U.S. 192, 43 S.Ct. 539, 67 L.Ed. 943; Worcester v. Worcester Consolidated Street Ry. Co., 196 U.S. 539, 25 S.Ct. 327, 49 L.Ed. 591; Pawhuska v. Pawhuska Oil Co., 250 U.S. 394, 39 S.Ct. 526, 63 L.Ed. 1054; Risty v. Chicago, R.I. & Pac. Ry. Co., 270 U.S. 378, 390, 46 S.Ct. 236, 70 L.Ed. 641; Railroad Commission v. Los Angeles R.R. Corporation, 280 U.S. 145, 156, 50 S.Ct. 71, 74 L.Ed. 234.

2. There is error in the holding of the Circuit Court of Appeals that the statute is invalid under the Constitution of Maryland.

Several provisions of that Constitution are invoked by the respondents. They will be considered in succession.

(a) The statute is not repugnant to article 15 of the Maryland Declaration of Rights, wherein it is provided: 'That the levying of taxes by the poll is grievous and oppressive and ought to be prohibited; that paupers ought not to be assessed for the support of the Government; that the General Assembly shall, by uniform rules, provide for separate assessment of land and classification and subclassifications of improvements on land and personal property, as it may deem proper; and all taxes thereafter provided to be levied by the State for the support of the general State Government, and by the counties and by the City of Baltimore for their respective purposes, shall be uniform as to land within the taxing district, and uniform within the class or sub-class of improvements on land and personal property which the respecting taxing powers may have directed to be subjected to the tax levy; yet fines, duties or taxes may properly and justly be imposed, or laid with a political view for the good government and benefit of the community.'

The courts of Maryland hold that the rule of uniformity established by these provisions does not forbid the creation of reasonable exemptions in furtherance of the public good. Baltimore v. B. & O.R.R. Co., 6 Gill, 288, 48 Am.Dec. 531; State v. B. & O.R.R. Co., 48 Md. 49; State v. B. & O.R.R. Co., 127 Md. 434, 96 A. 636; State v. N.C.R.R. Co., 44 Md. 131; State v. P., W. & B.R.R. Co., 45 Md. 361, 24 Am.Rep. 511; Daly v. Morgan, 69 Md. 460, 467, 16 A. 287, 1 L.R.A. 757; B., C. & A. Ry. Co. v. Ocean City, 89 Md. 89, 42 A. 922; B., C. & A. Ry. Co. v. Wicomico County Com'rs, 93 Md. 113, 48 A. 853; Havre De Grace v. Bridge Co., 145 Md. 491, 125 A. 704; In re Tax Cases, 12 Gill & J. 117; cf. Gordon v. Appeal Tax Court, 3 How.(U.S.) 133, 11 L.Ed. 529; Picard v. East Tennessee, V. & G.R.R. Co., 130 U.S. 637, 641, 9 S.Ct. 640, 32 L.Ed. 1051. It does not even prohibit an exemption in favor of an individual as distinguished from one for the benefit of the members of a class. All that it exacts in respect of the narrower exemption is the presence of a relation, fairly discernible, between the good of the individual and the good of the community. There must be something more than an arbitrary preference of one among many. Baltimore City v. Starr Church, 106 Md. 281, 287, 288, 67 A. 261.

Furtherance of the public good is written over the face of this statute from beginning to end as its animating motive. '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.' 'It is in the judgment of the General Assembly' that 'to encourage the continued operation' of the road by the grant of an exemption will be to give heed to the promptings of 'a wise and sound public policy.' The exemption is to be confined to that part of the property of the company, which is used for railroad purposes, is to continue only so long as the property is so used, and is to expire in any event at the end of the two years beginning in January, 1931. It is not the function of a court to determine whether the public policy that finds expression in legislation of this order is well or ill conceived. Otis v. Parker, 187 U.S. 606, 609, 23 S.Ct. 168, 47 L.Ed. 323; Missouri, Kansas & Texas Ry. Co. v. May, 194 U.S. 267, 24 S.Ct. 638, 48 L.Ed. 971; Sproles v. Binford, 286 U.S. 374, 388, 389, 52 S.Ct. 581, 76 L.Ed. 1167. The judicial function is exhausted with the discovery that the relation between means and end is not wholly vain and fanciful, an illusory pretense. Within the field where men of reason may reasonably differ, the Legislature must have its way. Otis v. Parker, supra. Nor in marking out that field will a court be forgetful of presumptions that help to fix the boundaries. 'As underlying questions of fact may condition the constitutionality of legislation of this character, the presumption of constitutionality must prevail in...