Baltimore, Chesapeake & Atlantic Ry. Co. v. County Commissioners

Jones, J., delivered the opinion of the Court. This case was presented to the Court below without a jury ¹¹⁷ upon an agreed statement of facts from which it appears, briefly stated, that the Baltimore and Eastern Shore Railroad Company was, in the year 1886, duly incorporated under the provisions of the Act of 1876, chap. 242; and afterwards by the Act of 1886, chap. 133, additional powers were conferred upon it and among other things in the last mentioned Act it was provided, that “ its franchises, property, shares of capital stocks and bonds shall be exempt from all State, county and municipal taxation for the term of thirty years, accounting from the date of the completion of said road between the termini mentioned in the charter.” The road was so completed about the first day of August, 1891. Under powers conferred upon it by the Act of 1886, chap. 133, the Baltimore and Eastern Shore Railroad acquired by purchase the Wicomico and Pocomoke Railroad with all ofits property, franchises, etc. The latter road executed to the former a deed in accordance with said purchase on the 30th day of June, 1890 ; and, under the provisions of the statute, the two roads then became one company and entitled to all the property, franchises, rights, privileges and immunities which each of them had under and by virtue of their respective charters. After this, on the first day of July, 1890, the Baltimore and Eastern Shore Railroad Company executed a mortgage or deed of trust of all its property, franchises, rights, privileges and immunities, including all the railroad and other property, franchises, etc., formerly belonging to the Wicomico and Pocomoke Railroad Company, to the Atlantic Trust Company, in trust to secure the payment of the principal and interest of certain bonds described in the mortgage.

In August, 1894, under the foreclosure of this mortgage, a sale was made of all the railroads mentioned in the mortgage together with all the rights, privileges, franchises and immunities of both of the railroads included therein, under a decree of foreclosure and sale passed by the Circuit Court of the United States in and for the District of Maryland, and the sale was duly ratified and confirmed by the Court. The purchaser at this sale, with others, then, under sections 187, 188, ¹¹⁸ 189 and 190 of Article 23 of our Code, formed a corporation for the purpose of owning and operating the railroad property so purchased, under the name of “The Baltimore, Chesapeake and Atlantic Railway Company. ” The home or principal office of this new corporation is the town of Salisbury, in Wicomico County. To quote now from the agreed statement of facts, the property of this corporation “ was not assessed by the assessors of Wicomico County under the provisions of the Act of 1896, nor was it attempted to be assessed by the County Commissioners of Wicomico County under that Act at any time before the nth day of November, 1899. And that said property was not nor was any of it returned by the defendant to the assessors or the County Commissioners of the said county for the purpose of assessment and taxation under chapter 120 of the Acts of 1896 in any'of the schedules of the real and personal property, but the same was omitted from each and every list or schedule of real and personal property returned by the said defendant, nor has the same at any time been listed by the said defendant for the purposes of taxation under said Act.

But after the return of the schedules or lists of property admitted by the defendant corporation to be taxable the attorney and agent for the defendant, prior to the levy, of 1897, and while the said County Commissioners were sitting as a Board of Control and Review under the said chapter 120 of the Act of 1896, did appear' before the said County Commissioners sitting as said Board of Control and Review, and claim the property so omitted was exempt from taxation under its charter and the then attorney for the County Commissioners advised that the said property was so exempt as claimed by the defendant corporation. The Commissioners thereupon held the matter in abeyance and came to no final conclusion until November, 1899, when after taking further legal counsel they came to the conclusion that the same was liable to taxation and not exempt, they thereupen decided to tax the said property and gave notice under section 145 of Article 81 of the Code of Public General Laws of their intention to place the same upon the tax books of the county and levy an assessment thereon.” ¹¹⁹ The property so decided to be put upon the tax-books is admitted to have been the property of the corporation which* was the defendant below in the present suit at the time of such decision and to have been the property of the said corporation since the 4th day of August, 1894. On the 2nd day of November, 1899, the County Commissioners gave notice to the corporation, the defendant below, of the decision to assess all of the property aforesaid and to appear before the County Commissioners on the 14th day of November, 1899, in order that the property might be assessed. The defendant accordingly appeared and objected to the assessment of the property but rendered what it believed to be a true valuation thereof.

The property was thereupon against the protest of the defendant placed upon the assessment books of the county for the years 1896, 1897, 1898, 1899, for the purposes of taxation. Levy was then made upon the assessment so made for the said several years by the County Commissioners at the rates at which the levy had been made for these years respectively. The assessment of the rolling-stock of the defendant corporation was the valuation of the whole of its rolling stock and this had never been returned to the State Tax Commissioner for distribution according to the Act of 1896, ch. 140. The taxes so assessed and levied were then placed by the County Commissioners of Wicomico County, the plaintiff below, in the hands of the collectors of taxes for the purpose of having the same collected.

The collectors made demand upon the corporation, The Baltimore, Chesapeake and Atlantic Railway Company, the defendant below, for payment, which being refused, this suit was brought by the County Commissioners to recover of the defendant the taxes as levied. The suit is in assumpsit with counts in the narr for taxes claimed to be due for each of the several years for which assessment and levy were made. The defendant pleaded nonassumpsit and in addition thereto special pleas to the effeet that, upon the facts set out, as successor, by purchase, to the possession “of all the powers, rights, immunities, privileges and franchises” of the Baltimore and Eastern Shore Railroad ¹²⁰ Company it is, by virtue of the provisions of the Act of 1886, chap. 133, exempt for the period of thirty years from the date of completion of the last-named road, from all State, county and municipal taxation; and that the taxes claimed of it were not legally assessed or levied for the years for which the same are claimed to be due. Upon replication by the plaintiff, the case was brought to issue and trial upon these pleas, and upon the trial the Court below ruled “That the plaintiff had authority under the law to make an assessment of the defendant’s property in November, 1899, for the year 1899, to subject it to the liability for the taxes levied in July, 1899;” and at the instance of the defendant ruled that “it was the duty of the County Commissioners of Wicomico County (acting as a Board of Review), after having completed the assessment of the rolling-stock of the defendant company, in each of the years for which taxes are claimed thereon in plaintiff’s bill-of particulars, to have reported to the State Tax Commissioner, the total assessment or valuation of the said rolling-stock made in said Wicomico County, so that the said State Tax Commissioner could make the apportionment and division of said rolling-stock, as directed by the Act of 1896, chap. 140, and their failure so to do, debars them from recovering upon that item of their bill of particulars.” The Court refused to rule at the instance of the defendant “that upon the pleading and evidence in the case, there was no legally sufficient evidence in the case to entitle the plaintiff to recover;” and “that the plaintiff had no authority under the law to make a levy, and assessment on the defendant’s property in November, 1899, for account of the years 1896, 1897, 1898 and 1899, or either of them;” and “that the defendant’s property mentioned in the proceediugs in this case is exempt from taxation;” and that that part of the defendant’s railroad which originally constituted the Baltimore and Eastern Shore Railroad was exempt from taxation; and “that the assessment and levy mentioned in the pleadings in this case was illegally made and without authority of law.” Two excep.tions appear in the record—one taken by the plaintiff to the ¹²¹ action of the Court upon the instruction that was granted at the instance of the defendant; the other by the defendant to the refusal of the prayers which were submitted by its counsel and rejected by the Court, and to the ruling of the Court made in lieu of these prayers.

The Court found for the plaintiff for the amount of taxes levied against the defendant for the year 1899, with interest thereon, after excluding from the taxes so levied such as had been levied on account of the rolling-stock of the defendant, and entered judgment against the defendant accordingly. Both parties appealed. Upon the appeal of the corporation which was the defendant below, two questions are presented—all others having been decided below favorably to its contention. The first is whether, upon the facts stated, the defendant corporation by its organization under sections 187 to 190 inclusive, of Article 23, of the Code, became entitled to the exemption from taxation which was granted to the Baltimore and Eastern Shore Railroad by the Act of 1886, chap. 133.

The second is whether the defendant or corpoi'ation can, in this proceeding, be held liable for the taxes assessed and levied upon it, as herein set out, for the year 1899. As to the first question, we are concluded by the decision of this Court in the case of the Baltimore, Chesapeake and Atlantic Railway Company v. The Mayor aud City Council of Ocean City, 89 Md. 89 , which was a case in which this same defendant corporation set up and insisted upon the same right of exemption from taxation that is made a ground of defense in this case. The ruling in that case has not the limited scope which counsel representing the corporation in this case has insisted upon. It is not necessary to again repeat the arguments or review the authorities that led to the conclusions reached in that case.

It is sufficient to say that it was there distinctly affirmed that by. the foreclosure sale of the Baltimore and Eastern Shore Railroad which is mentioned in the statement of facts, the exemption from taxation which was granted to it under the Act of 1886, chap.- 133, did not pass to the purchaser; and that sections 187 and 188 of Article 23 ¹²² of the Code, “refer to such rights and property, as would pass under the sale of a railroad mentioned in these sections and not to an exemption from taxation.” As to the second question the ruling of the Court below that the defendant corporation was liable upon the facts of the case for taxes assessed against it for the year 1899, is within the reason of the case of the American Coal Company v. County Commissioners of Allegany County, 59 Md. 185 , and of the case of Hopkins v. Van Wyck, 80 Md. 7 . The last-named case recites the substantial facts of the first and is so recent as to make unnecessary here a formal and detailed statement of the facts of either case. The contention of the defendant corporation in this case is that the taxes for the year 1899 were not assessed or levied upon the property of the defendant until after the time for the annual levy of taxes by the County Commissioners of Wicomico County .under the provisions of the general law in Article 25 of the Code, and the time for the copy of the assessment with rate of taxes for the year and the aggregate amount of collections to be made by them respectively is required by the local law of Wicomico County to be placed by the clerk to the County Commissioners in the hands of the several collectors ; and that therefore the property could not be assessed and made liable to the levy of taxes for that year, but could only be added to the assessable basis to be made subject to levy-for taxes for the future in case its claim for exemption from taxation should be held not valid. This is treating the time prescribed by the law for the making of the levy for taxes as a strict limitation upon the powers of the County Commissioners in that respect and a denial to them of the power to make property that may be brought in and made a part of the assessable basis for taxation after the time prescribed for making the annual levy, subject to the levy, though it may be so brought in' during the year for which the levy was made.

Without stopping now to determine the limits of the power of the County Commissioners in respect to the levy of taxes and to the assessment of property liable to assessment, but not assessed, it is undeniable that they have the power ¹²³ to make in each year a levy of taxes, upon all property that is properly included in the assessable basis for that year. In the case of the American Coal Company v. County Commissioners, 59 Md. supra, it was laid down by this Court as a principle that in regard to this power “ the construction of the statute should be reasonable and liberal, in order to support the action of the Commissioners, rather than strict and severe by which the action of the'Commissioners would be defeated.” It is provided in Article 25, section 6 of the Code “that the meeting (of the Commissioners), to make the annual levy of taxes shall be held previous to the first day of July in each year.” In section 10 of Article 81, it is provided that “in all cases where discoveries of assessable property are made, etc., the “ County Commissioners * * * shall assess the same and add the same to the amount on which taxes are to be levied,” and now by section 192A, of the same Article, added thereto by Act 1898, chap. 275, the County Commissioners are empowered, among other things mentioned therein, to “ take steps for the discovery of all unassessed property of every kind.” Other powers looking to getting all assessable property upon the tax lists and having it subject to taxation áccording to a proper valuation, are conferred upon the County Commissioners. The object to be accomplished by conferring these powers is to give all possible practical effect to the fundamental principle embodied in our Bill of Rights (Art. 15), that “every person in the State, or person holding property therein, ought to contribute his proportion of public taxes for the support of the Government, according to his actual worth in real or personal property.” The reason therefore, why the power of the County Commissioners, in respect to the annual levy of taxes and to the assessment of property for taxation in connection therewith, should not receive a “strict and severe,” but rather a “reasonable and liberal” construction, is quite obvious. The decisions of this Court have been in conformity with this rule of construction.

In the case of State v. Horner, 34 Md. 569—574, it was held that the provision of the Public ¹²⁴ Local Laws for Baltimore County, that the County Commissioners should “ levy the State and county taxes for said county on or before the first day of March in each year,” was directory as to the time of levy. That the performance of the duty was imperatively required, but the designation of the time was not of the essence of the thing, nor restrictive of the power and jurisdiction of the County Commissioners. In the case of the American Coal Company v. County Commissioners Allegany Co., 59 Md. supra, the stock of the company, the appellant in that case, was valued for taxation by the State Tax Commissioner and from his valuation the company appealed to the Comptroller and Treasurer of the State. This appeal was not determined until after July 1st, the time limit prescribed' by the law for the levy of taxes in each year; and the certificate of the assessed value of the stock, according to which the levy of taxes thereon was to be made, was not forwarded to the Commissioners until after the first of July, and after they had made their annual levy for State and county purposes.

Soon after receiving the certificate of valuation thereof the Commissioners made a levy of the assessed value of the stock. It was insisted on behalf of the appellant company that this levy, having been made after July 1st, was illegal and void. This C°urt held that the levy was valid. In the case of Hopkins v. Van Wyck , 80 Md., supra, a Mrs. Van Wyck died in March, 1892.

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