Barlow v. Friendship Heights Citizens' Committee

Singley, J., delivered the opinion of the Court. In Friendship Heights v. Funger, 265 Md. 339 , 289 A. 2d 329 (1972), we held that the Friendship Heights Citizens’ Committee (the Committee), an elected body which administers a special tax area or district 1 consisting of ⁹¹ Friendship Heights and The Hills, two subdivisions located in Montgomery County, lacked the power to bring an action for declaratory and injunctive relief challenging the validity of the rezoning of an 18-acre tract adjacent to Friendship Heights, but beyond the limits of the special tax area. Our reasoning was that the Committee was not expressly granted the power to sue and be sued, and was specifically excluded by Maryland Code (1957, 1973 Repl. Vol.) Art. 23A, § 9 (a) from the definition of a municipal corporation, which is expressly granted the power to sue and be sued by Art. 23A, § 1, and neither exercised any regulatory powers, nor was vested with any planning or zoning function.

We reserved for another day, however, a consideration of the question whether the power to sue could be implied from a power expressly granted the Committee. In November, 1973, a new Committee which had been elected in May of that year brought two actions in the Circuit Court for Montgomery County for compensatory and punitive damages and for declaratory relief. Joined as defendants in one case were the seven individuals who had served at one time or another as members of the predecessor Committee. 2 In the other, the defendant was Suburban Trust Company (Suburban). The gravamen of the three-count declarations was that in 1969 the individual defendants had conspired with each other and with officers of Suburban to defraud the community and to breach their fiduciary duties by purchasing at prices, alleged to be excessive, property owned by members of the Committee; by paying real estate commissions on such purchases to one of its members; by borrowing from Suburban $1,250,000.00 to consummate the purchase; and by prepaying a portion of the loan through the redemption of a certificate of deposit in the amount of $300,000.00 held by the Committee which bore a higher interest rate than the loan.

The defendants, reading Funger as holding that the ⁹² Committee lacked the power to sue, filed motions raising preliminary objection as contemplated by Maryland Rule 323 a (6), which were granted, and the cases were dismissed. The Committee appealed to the Court of Special Appeals, which reversed the trial court in Friendship Heights Citizens Comm. v. Barlow and Friendship Heights Citizens Comm. v. Suburban Trust Co., 23 Md. App. 635 , 329 A. 2d 122 (1974). We granted certiorari in order that we might consider the matter. We regard the question of the Committee’s power to bring suit as answered, as did the Court of Special Appeals, by what we said in Friendship Heights v. Funger, supra, 265 Md. at 343 , 289 A. 2d at 331 : “We are not to be understood, however, as passing on the question whether the Committee has the power to sue for the breach of contract to construct a road, which might be implied from the express power which was granted to it, cf. McRobie v. Town of Westemport, 260 Md. 464, 466 , 272 A. 2d 655 [, 656] (1971); Perry v. Board of Appeals, 211 Md. 294, 303 , 127 A. 2d 507 [, 511] (1956), or whether it could sue or be sued under Code (1957, 1966 Repl.

Vol.) Art. 23, § 138 in an action affecting the tax monies paid to it.” Concededly, McRobie dealt with the powers of the town of Westernport, a municipal corporation; Perry , with the powers of the Village of Chevy Chase, which was assumed for the purposes of the opinion to be a municipal corporation. Early on, we noted that the Committee is by statutory definition not a municipal corporation, nor can it be, because it exercises no political powers, see Neuenschwander v. Washington Sanitary Comm’n, 187 Md. 67, 75 , 48 A. 2d 593, 597-98 (1946), citing O’Leary v. Board of Fire & Water Comm’rs of Marquette, 79 Mich. 281 , 44 N. W. 608 (1890). If the Committee can be categorized at all, it would be as a quasi-municipal corporation, 3 to which has ⁹³ been transferred a segment of the State’s power, in order that a particular purpose may be accomplished, Baltimore v. State, 15 Md. 376, 467 (1860). See 1 E. McQuillin, Municipal Corporations § 2.13 at 151 (3d ed. 1971 Rev. Vol.); 1 E. Yokley, Municipal Corporations § 8 at 17-18 (1956); 56 Am.Jur.2d Municipal Corporations §§ 12-13 at 79 (1971).

Its function could be analogized to that of the board of managers of a drainage district provided for by Code (1957, 1973 Repl. Vol.) Art. 25, § 70 who, by § 71, are constituted a corporation and are expressly given the power to sue and be sued. Despite the fact that the Committee is not for all purposes a corporation, some guidance can be derived from our cases dealing with municipal corporations which would seem to have an a fortiori application here. As early as Rushe v. Hyattsville, 116 Md. 122, 126 , 81 A. 278, 279 (1911), our predecessors adopted as the law a formulation in 1 J. Dillon, Municipal Corporations § 89 at 145 (4th ed. 1890): “It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers and no others: “First: Those granted in express words', second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the declared objects and purposes of the corporation — not simply convenient, but indispensible.” (Emphasis in original.) This is the rubric relied upon by Judge Hammond, for the Court, in Perry, supra, 211 Md. at 303 , 127 A. 2d at 511 ; by Judge Digges, in McRobie, supra,