Baltimore Steam Packet Co. v. Mayor of Baltimore

Digges, J., delvered the opinion of the Court. Cases No*. 14 and No. 15 of the April term, 1931, although the parties defendant are different, were argued together in this court, and will be disposed of in one opinion. No. 14 was an original equity proceeding in the Circuit Court No. 2 of Baltimore City, the complainant being the ¹¹ appellant and the defendant being the Mayor and City Council of Baltimore City, and 5 s an appeal from the order of that court sustaining a demurrer to the bill of complaint and dismissing the bill; while the appeal in Ho. 15 is from an order of the same court, passed in an appeal from the State Tax Commission, wherein the action of the State Tax Commission was affirmed. In this latter case the defendant (appellee) is the State Tax Commission.

The subject-matter in both eases, and tbe question to be determined, is the legality of the assessment of the appellant’s capital stock made by the State Tax Commission; Ho. 14 having reference to the assessment for the year 1929, and Ho-. 15 for the year 1930. The allegations of the bill in Ho. 14, and of the petition in Ho. 15, are practically identical, and set out in substance that the appellant is a corporation chartered by an act of the Legislature of this State in 1829, and has since been continuously engaged as a common carrier by water in the transportation for hire of passengers and freight between the states of Maryland and Virginia; that it is engaged wholly in interstate commerce; that it owns and operates three vessels of over 500 deadweight tons, all of which are registered at the port of Baltimore and are licensed and enrolled as- vessels of the United States under the laws thereof; that said vessels are regularly engaged in coastwise commerce on the Chesapeake Bay between the port of Baltimore, Md., as the port of origin and terminus of their voyage, and the port of Horfolk, Va.; that the port of Baltimore is on the Patapsco River, and the port of Horfolk on the Elizabeth River, both of said rivers being tributaries of the Chesapeake Bay; that the passenger and freight rates charged by the appellant, are within the exclusive control and regulation of the Congress of the United States; that the appellant not only receives passengers and freight for transportation between the ports of Baltimore and Horfolk, but also- receives freight for transportation beyond said ports by reason of through joint rates fixed and regulated by the Interstate Commerce Commission between the appellant and several railroads at the ports of Baltimore and Horfolk; that there are other corporations, ¹² incorporated under the laws of this state, which own vessels of over 500 dead-weight tons, registered at the port of Baltimore, and regularly engaged in commerce between the port of Baltimore and the port of Norfolk and ports on the Atlantic Coast, such as the Merchants’ & Miners’ Transportation Company; that the passenger and freight rates charged by said transportation company are likewise under the exclusive control of the Congress of the United States; that .such rates between Baltimore and Norfolk are the same as those charged by the appellant; that the appellant, therefore, is in competition with said transportation company and any other corporation of this state owning vessels of over 500 dead-weight tons, registered at any port in this, state and regularly engaged in commerce between the ports of Baltimore, Norfolk, and other ports beyond the Chesapeake Bay and tributaries; that by article 81, section 7, subsection 28, of the Code of Public 'General Laws of Maryland (Supplement 1929), it is provided that the following described vessels shall be exempt from taxation: “Vessels of over five hundred (500) dead-weight tons registered at any port in this State owned by American citizens or partnerships, or by any domestic corporation regularly engaged in foreign or coast-wise coSmmerce between any port in the State of Maryland and any port or ports beyond the limits of the Chesapeake Bay and its tributaries, provided that the exemption granted by this sub-section shall end December 31, 1935.” That the vessels belonging to the appellant, namely, “President War-field,” “State of Maryland,” and “State of Virginia,” are each of over 500 dead-weight tons, registered at a port of Baltimore, Md., owned by the appellant, a domestic corporation, and regularly engaged in coastwise and wholly interstate commerce between the port of Baltimore and the port of Norfolk; that the appellant contends that so- much of said section 7, subsection 28, as undertakes to limit and confine the benefits of the exemption therein contained to vessels regularly engaged in foreign or coastwise commerce “between any port in the State of Maryland and any port or ports beyond the limits of the Chesapeake Bay and its tributaries” ¹³ is an unlawful, unreasonable and unequal discrimination against the appellant’s vessels, and is in conflict with article 15 of tbe Declaration of Rights, of the State of Maryland, and section 8 of article 1 of the Constitution of the United States, and void and of no effect, and therefore, under the provisions of section 13 of chapter 226 of the Acts of 1929, the appellant’s vessels are exempt from taxation in the same manner as if tits aforesaid section 7, subsection 28, read as follows: “Vessels of over 500 dead-weight tons, registered at any port in this State owned by American citizens or partnerships or by any domestic corporation regularly engaged in foreign or coastwise commerce.” In Ho. 14 it is further alleged that for the year 1929 the aggregate value and the taxable value of the shares of capital stock of the appellant was fixed by the State Tax Commission of Maryland in the manner provided for by law at $941,694, and in connection therewith the State Tax Commission valued the appellant’s steamers President Warfield, State of Maryland, and State of Virginia, as, of December 31st, 1928, at $323,000, $301,128.66, and $301,128.66, respectively, but in so, fixing the aggregate value and the taxable value of the shares of capital stock the State Tax Commission did not exclude the aforesaid total valuation of appellant’s vessels of $925,257.32; that demand has been made upon the appellant by the Mayor and City Council of Baltimore for payment of both Baltimore City and State of Maryland taxes, based and calculated upon the aforesaid assessments; that the taxes so demanded amount to $24,-836.26, of which $22,412.34 are Baltimore City taxes and $2,493.92 are State of Maryland taxes; that appellant was also notified that, unless the taxes were paid on or before July 31st, 1929, certain penalties would be charged, as well as interest on the amount of taxes, and further notified that the payments would be in arrears, oil July 1st, 1929, and that thereafter the appellant’s property would he subject to seizure and sale in satisfaction of the taxes; that the appellant is ready and willing to pay to Baltimore City the taxes based and calculated upon an aggregate value and the taxable ¹⁴ value, of its shares of capital stock of $16,437, which tax would amount to $433.51, said taxable value of $16,437 being the amount which would be taxable if the aforesaid value of the appellant’s vessels were excluded from the assessment; that the statute providing for exemption of certain vessels discriminates against the appellant’s vessels for no other reason than that they are not engaged in commerce with a port or ports beyond the limits of the Chesapeake Bay and its tributaries; and that such discrimination is arbitrary and unreasonable and in violation of the interstate commerce clause of the Constitution of the United States, in that a burden is placed upon its vessels to the exclusion of competitors and their vessels engaged likewise wholly in interstate commerce between this state and other states. The prayers for relief are: First, that the statute creating the exemption be declared illegal and void in so far as said legislation attempts to tax the appellant for its vessels, while excluding others and their vessels engaged in like commerce; second, that the appellant and its vessels be decreed to be exempt from taxation in the same manner as other vessels of similar tonnage and regularly engaged in coastwise commerce between any port of this state as the port of origin and terminus and any other port or ports beyond the limits of the Chesapeake Bay and its tributaries; third, that in ascertaining or determining the aggregate value and taxable value of the shares of capital stock of the appellant, the value of the aforesaid vessel property owned by the appellant should have been excluded; and, in Ko. 14, a further prayer that the Mayor and City Council be restrained and enjoined from enforcing the payment of the 'aforesaid taxes to the extent of $24,402.72 thereof, and imposing any interest or penalty charges on the appellant for non-payment thereof. The main question involved in both appeals is whether or not the value of the appellant’s three vessels should be included in determining the assessment of its capital stock for taxation purposes.

The procedure employed by the appellant to raise this question is different in the two cases, which necessitates a separate consideration of each. In No. 14 it ¹⁵ is ail original proceeding in a court of equity by a bill to enjoin the Mayor and City Council of Baltimore from collecting the tax for the year 1929, and this case is governed by the law as it stood after the passage of chapter 264 of the Acts of 1924, which was codified in the Code of 1924 as sections 2 and 9 of article 81 thereof. Section 2 provides: “Except as provided in Section 9 of this Article all interests, shares or proportions owned by residents of this State in ships or other vessels whether such ships or other vessels be in or out of port, are and shall be valued and assessed for the purposes of State, county and municipal taxation to the respective owners thereof in the county or city in the State in which said owner or owners shall respectively reside and such respective owners shall pay the taxes thereon.” Section 9, which is codified under the subhead “Exemptions,” provides: “All vessels of over five hundred (500) dead weight tons registered at any port in this State and owned by an American citizen, partnership or association, or by any corporation incorporated under the laws of the State of Maryland, regularly engaged in foreign or coastwise commerce, between any port in the State of Maryland as the port of origin and terminus of their respective voyages and any other port or ports beyond the limits of the Chesapeake Bay and its tributaries, are exempted from all taxation in this State for State or local purposes; and, in ascertaining or determining the aggregate value and the taxable value of shares of the capital stock of any corporation incorporated under the laws of this State, in the manner provided in Section 166 of this Article, the value of such vessel property owned by any such corporation shall be excluded, anything in said Section 166 to the contrary notwithstanding, until and including December 31st, 1925.” The State Tax Commission valued each share of stock of the appellant for taxation purposes at $2,237.06. This assessment was arrived at in accordance with the provisions of section 166 of article 81, and no exemptions were allowed.

The appellant did not appeal from the assessment as made by the State Tax Commission, and took no action in respect to ¹⁶ said assessment until it filed its bill jm this case in Circuit Court ETo. 2 on July 3rd, 1929. Section 253 of article 81 provides: “There shall be an appeal to court on questions of law only from decisions of the State Tax Commission to the court in that county where the property is situated, if real estate or tangible personal property, or where the owner resides, if intangible personal property.” Section 259 provides: “Appeals from any action of the State Tax Commission to court, as authorized by Section 253 hereof, shall be taken within thirty days of such action by petition setting forth the question or questions of law which it is desired by the appellant to review, and notice thereof shall be given by summons or subpoena, duly served on all parties directly in interest, by the Sheriff of the county or city in which said appeal is filed, and shall be heard and decided by the court, sitting without a jury. All appeals to court in Baltimore City shall be to the Baltimore City Court, and there shall be a further right of appeal to the Court of Appeals from any decision of the Baltimore City Court or of the circuit courts of the several counties. Such appeals must be taken within ten days óf the final judgment or determination of the lower court.

The power to assess shall in all cases include the power to classify for taxation, and the power to review an assessment on appeal shall in all cases include also the power to review any question of classification for taxation.” By the decision of this court in the case of Schluderberg v. Baltimore, 151 Md. 603 , 135 A. 412 , 414, it was determined that a corporation, desiring to have a judicial review