Baltimore County v. Churchill, Ltd.

Singley, J., delivered the opinion of the Court. This case began unpretentiously when Baltimore County filed a bill of complaint in the Circuit Court for Baltimore County for declaratory and injunctive relief against Churchill, Ltd., District Photo, Inc., the Director of the State Department of Assessments and Taxation, and the Attorney General of Maryland. The purpose of the action was to obtain a declaration that the law under which Churchill was claiming a refund of personal property taxes paid to the County in the amount of $59,929.00 as a result of an erroneous assessment, and under which District Photo was seeking a refund of taxes similarly paid in the amount of $29,651.00, was unconstitutional, and to enjoin hearings which had been scheduled before the Department of Assessments and Taxation on the refunds claimed. By the time the case came on for hearing, Walter R. Richardson, Baltimore County’s Director of Finance; Anne Arundel County and its Controller, Donald P. Carter; Prince George’s County and its Director of Finance, Albert W. Gault; and the Mayor and City Council of Baltimore had intervened as parties plaintiff, and seven other corporations, all similarly situated taxpayers, had been joined as parties defendant.

The political subdivisions and their officials will hereafter be referred to collectively as the Appellants, and the appellee corporations as the Taxpayers. ⁴ The provision which is under attack became effective, as amended, on 1 July 1972 and is codified as Maryland Code (1957, 1969 Repl. Vol., 1973 Cum. Supp.) Art. 81, § 39A. 1 Section 39A (hereinafter the Act) provides: “(a) Whenever the supervisors of assessments or the department of assessments of Baltimore City or the State Department of Assessments and Taxation shall determine that the assessment of any personal property was erroneous due to an existing exemption to which the taxpayer was entitled at the time of assessment, the taxpayer shall be entitled to a refund of the personal property taxes paid according to the erroneous assessment, notwithstanding the failure to protest and appeal the erroneous assessment in accordance to the provision of this article. “(b) Any taxpayer who shall apply within five (5) years from the date of finality for assessment for any tax year shall be eligible for a refund under this section for any taxes paid for such tax year as a result of any erroneous assessment of personal property; provided, however, that any taxpayer shall have until July 1, 1973, to apply for and be eligible for such refund based on any erroneous assessment of personal property made since December 31,1965.” From an order denying the Appellants’ motions for summary judgment, granting the Taxpayers’ motions for summary judgment and declaring the Act to be a proper, valid, and constitutional enactment, this appeal was taken. ⁵ Before considering the question of the validity of the Act, there is a threshold question of the Appellants’ standing to sue. The chancellor, Proctor, J., concluded that Baltimore City and the counties lacked the requisite standing, but in order to reach the merits of the case assumed, without deciding, that at least one of the county officials could maintain the suit, even though all of them had failed to allege that they would be subject to a pecuniary loss or to an increase in their taxes, Stovall v. Secretary of State, 252 Md. 258, 263 , 250 A. 2d 107, 110 (1969); Murray v. Comptroller of the Treasury, 241 Md. 383, 391 , 216 A. 2d 897, 901 , cert. denied, 385 U. S. 816 (1966).

We agree with the chancellor that what was said by way of dictum in City of Baltimore v. Concord Baptist Church, Inc., 257 Md. 132, 138-39 , 262 A. 2d 755, 758-59 (1970), where Baltimore City’s Comptroller and Director of Finance, as individuals, had joined with the City in challenging an act of the General Assembly on constitutional grounds, can now be adopted, in the circumstances of this case, to support the assumption of standing, without so holding: “Messrs. Benton and Pressman had sought declaratory relief and had later intervened in their individual and official capacities, as the City officials charged with the duty of acquiring property and paying for it. Theirs was the dilemma faced by public officials ‘either in refusing to act under a statute [they] believe to be unconstitutional, or in carrying it out and subsequently finding it to be unconstitutional,’ recognized in Pressman v. State Tax Comm’n, 204 Md. 78 , 102 A. 2d 821 (1954) and in Board of Education v. Allen, 392 U. S. 236 , 88 S. Ct. 1923 , 20 L.Ed.2d 1060 (1968). See also, Borchard, Declaratory Judgments (2d Ed. 1941) at 771.

Additionally, where the issues presented are of great public interest and concern, the interest necessary to sustain standing need only be slight. Horace Mann League v. Board of Public Works, 242 Md. 645, 653 , 220 A. 2d 51 , [54,] cert. den. 385 U. S. ⁶ 97, 87 S. Ct. 317 , 17 L.Ed.2d 195 (1966); Baltimore Retail Liquor Package Stores Ass’n v. Board of License Comm’rs, 171 Md. 426 , 189 A. 209 (1937); see also Hammond v. Lancaster, 194 Md. 462 , 71 A. 2d 474 [, 71 A. 2d 483 ] (1950). “In holding that the individual appellants had standing, we are not overlooking the principles that the City, as a creature of the State, possesses no power which it may invoke against the State, even on constitutional grounds, Duvall v. Lacy, 195 Md. 138 , 73 A. 2d 26 (1950); Williams v. Mayor & C. C. of Baltimore, 289 U. S. 36 , 53 S. Ct. 431 , 77 L. Ed. 1015 (1933); United States v. Railroad Co., 84 U. S. (17 Wall.) 322 , 21 L. Ed. 597 (1873), but compare Gomillion v. Lightfoot, 364 U. S. 339 , 81 S. Ct. 125 , 5 L.Ed.2d 110 (1960), and may have even less right to challenge the constitutionality of a statute under which it is proceeding. Creative Country Day School v. Montgomery County Bd. of Appeals, 242 Md. 552, 568 , 219 A. 2d 789 [, 797] (1966).” Cf.

Director of Finance v. Alford, 270 Md. 355 , 311 A. 2d 412 (1973). The political subdivisions, as creatures of the State, have “no right to question the constitutionality of the acts of [their] superior and creator,” Columbia County v. Board of Trustees, 17 Wis. 2d 310, 317 , 116 N.W.2d 142, 146 (1962); Charles Hewitt & Sons Co. v. Keller, 223 Iowa 1372, 1377 , 275 N. W. 94, 97 (1937). The individual appellants contend that the Act violates both the Constitution of the United States and the Maryland Constitution. With respect to the alleged infirmity under the federal Constitution, numerous Supreme Court decisions preclude the political subdivisions 2 from prevailing on the standing issue: “A ⁷ 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,” Williams v. Mayor & City Council of Baltimore, 289 U. S. 36, 40 (1933); see also Newark v. New Jersey, 262 U. S. 192, 196 (1923); Trenton v. New Jersey, 262 U. S. 182, 192 (1923); City of Marshfield v. Town of Cameron, 24 Wis. 2d 56, 63 , 127 N.W.2d 809, 813 (1964); Sweeney v. State, 251 N. Y. 417, 419-20 , 167 N. E. 519, 520 (1929); Board of Revenue v. Southern Bell Tel. & Tel.

Co., 200 Ala. 532, 533 , 76 So. 858, 859 (1917). However, whether the subdivisions have standing to complain of a violation of the constitution of a state, in state courts at least, is a question of state practice, Williams v. Mayor & City Council of Baltimore, supra, 289 U. S. at 47-48 . The Maryland practice, as indicated in Mayor & City Council of Baltimore v. Concord Baptist Church, Inc., supra, provides that the subdivisions, as creatures of the State, share the interests of the State, and, as such, cannot challenge the acts of the State. 3 See Black River Regulating Dist. v. Adirondack League Club, 307 N. Y. 475, 489 , 121 N.E.2d 428, 434 (1954), appeal dismissed, 351 U. S. 922 (1956). This principle is in accord with the prevailing rule, that a subdivision or other arm of a state does not, in general, 4 have standing to contest the constitutionality, under either the federal or state constitution, of any act of the state.

See, e.g., State v. Rothwell, 25 Wis. 2d 228, 233 , 130 N.W.2d 806, 808-09 (1964) (municipalities and state agencies, state constitution); City ⁸ of Marshfield v. Town of Cameron, supra (municipalities, federal and state constitutions); State v. Kelly, 377 S.W.2d 328 (Mo. 1964) (county constable); Columbia County v. Board of Trustees, supra (county, state constitution); Town of Waterford v. Connecticut State Bd. of Educ., 148 Conn. 238, 245 , 169 A. 2d 891, 895 (1961) (towns and local boards of education); Smith v. Flournoy, 238 La. 432 , 115 So. 2d 809 (1959) (public officer, state constitution); Louisiana Motor Vehicle Comm’n v. Wheeling Frenchman, 235 La. 332 , 103 So. 2d 464 (1958) (public officer or body); Charles Hewitt & Sons Co. v. Keller, supra (counties and other municipal corporations); Board of Revenue v. Southern Bell Tel. & Tel. Co., 5 supra (counties, federal constitution); Board of Educ. v. Allen, 27 App. Div. 2d 680, 276 N.Y.S.2d 281 (3d Dep’t 1967) (boards of education); City of Buffalo v. State Bd. of Equalization & Assessment, 26 App. Div. 2d 213, 272 N.Y.S.2d 168 (3d Dep’t 1966) (mayor and city); see also Williams v. Mayor & City Council of Baltimore, supra (municipal corporations, federal constitution); Newark v. New Jersey, supra (city, federal constitution); Trenton v. New Jersey, supra (city, federal constitution); but see State v. Southern Bell Tel. & Tel. Co., 204 Tenn. 207 , 319 S.W.2d 90 (1958), cert. denied, 359 U. S. 1011 (1959) (Commissioner of Highways given standing, state constitution); Brown v. Board of Comm’rs, 223 N. C. 744, 747 , 28 S.E.2d 104, 106 (1943) (court did not concede that county was “a creature of the Legislature and as such cannot challenge the constitutionality of an act of its creator”; state constitution). Perhaps the classic statement of the principle may be found in 1 Cooley, Constitutional Limitations 393-95 (8th ed. 1927): “The creation of municipal corporations, and the conferring upon them of certain powers and subjecting them to corresponding duties, does not ⁹ deprive the legislature of the State of that general control over their citizens which was before possessed.

It still has authority to amend their charters, enlarge or diminish their powers, extend or limit their boundaries, consolidate two or more into one, overrule their legislative action whenever it is deemed unwise, impolitic, or unjust, and even abolish them altogether in the legislative discretion, and substitute those which are different. The rights and franchises of such a corporation, being granted for the purposes of government, can never become such vested rights as against the State that they cannot be taken away; nor does the charter constitute a contract in the sense of the constitutional provision which prohibits the obligation of contracts being violated.” [Footnotes omitted.] The difficulty here is that there is some doubt that the county officials here involved were faced with the dilemma encountered in City of Baltimore v. Concord Baptist Church, Inc., supra, since it can be argued that their duty was merely ministerial here, because the responsibility for determining erroneous assessments lay, under the terms of the Act, with either the assessing authority of Baltimore City and of the counties, or of the State, and not with the local tax collectors. In order to reach the merits, we shall assume, arguendo, that the individual appellants have standing here. Turning now to the issues presented, the Appellants argue that the Act is invalid because of a failure to meet the requirement of Maryland Constitution, Art. Ill, § 33: “The General Assembly shall not pass local, or special Laws . . . refunding money paid into the State Treasury . . . unless recommended by the Governor, or officers of the Treasury Department. . . .” The short answer to this contention is that the Act is not a special law as contemplated by the Constitution: the passage of a private act providing for individual cases, Potomac Sand ¹⁰ & Gravel Co. v. Governor of Maryland, 266 Md. 358, 378-79 , 293 A. 2d 241, 251-52, cert. denied, 409 U. S. 1040 (1972).

Nor does the Act, in providing for the refund of taxes mistakenly paid, violate Article 15 of our Declaration of Rights, which requires uniformity in the assessment and taxation of land, improvements on land, and personal property. We have held that Article 15 is not a grant of power to tax, but a limitation on it, Marco Associates, Inc. v. Comptroller, 265 Md. 669, 674 , 291 A. 2d