Castle Farms Dairy Stores, Inc. v. Lexington Market Authority

Markell, J., delivered the opinion of the Court. These are cross-appeals from a decree (a) holding the Lexington Market Authority Act, (Acts of 1945, ch. 863), constitutional, (b) declaring all rights and interest of all persons, by claim, direct from the City or indirect through others, of ownership, right of occupancy, tenancy, possession, lease, sublease, permit, license or otherwise, in and to any market stalls in the part of the Market which was destroyed by fire on March 25, 1949, to have ceased and no longer to exist, and (c) reserving for further decision all rights of claimants in respect of stalls in the part of the Market not so destroyed by fire. The bill, for injunction and a declaratory decree, was filed or adopted by original and intervening plaintiffs, as taxpayers and “owners” of stalls or claimants of other interests in stalls, in the burned and unburned parts of the Market, against the Authority and the City. Plaintiffs appeal from the whole decree, the Authority from the part above referred to as (c). ⁴⁷⁸ By the Act the Authority, “a body corporate and politic”, is created, and is to be “deemed an instrumentality” of the City and a “public corporation”.

The members are to be appointed by the Mayor. When all revenue bonds issued pursuant to the Act shall have been paid and retired, the Authority shall close out its business and affairs and all its property shall revert to the City. The Authority has power to acquire from the City “the whole or any part of the existing market” at an agreed purchase price, to erect, remodel, extend, improve, equip, operate and maintain the Market, to acquire by purchase or condemnation real property or rights or easements therein or franchises or licenses, and if the Authority shall deem it expedient to establish the Market on any lands, streets or public places title to which shall be in the City, the City is authorized to convey title to the Authority upon payment of the reasonable value of such lands, to be determined by the Authority and the City Council. The Authority has power to borrow money and issue revenue bonds payable solely from earnings of the Market.

The City is authorized and empowered to convey to the Authority the existing market or any part thereof upon receipt of the purchase price, and to vacate any streets or other public places required to insure proper operation of the Market, and may grant to the Authority the exclusive right to use such vacated streets or other public places for the purpose of the Market subject to such terms and conditions as the City and the Authority may lawfully agree upon. Revenue bonds issued under the Act shall not be deemed to constitute a debt of the City or a pledge of its faith and credit, but such bonds shall be payable solely from the funds of the Authority from revenues of the Market. All such bonds shall contain a statement on their face that the City is not obligated to pay such bonds or the interest thereon. The issuance of such bonds shall not directly or indirectly or contingently obligate the City to levy or pledge any form of taxation whatever or to make any appropriation for their payment. ⁴⁷⁹ Section 7 of the Act provides: “(Rights of Present Stallholders.) In the operation of the Market the Authority shall preserve, to the extent required by law, all rights of any persons in or to any of the stalls now located in the existing market, and shall give first choice as to location in the rental of stalls in the Market to the present tenants of stalls in the existing market.” The Authority may at one time or from time to time provide for issuance of its revenue bonds for the purpose of paying all or a part of the cost of the Market.

It may secure its bonds by a trust indenture, which “may pledge or assign all revenues to be received from the Market, but shall not convey or mortgage the Market or any part thereof.” The Authority may “fix and revise from time to time rates or charges for the use of the facilities of the Market, including parking facilities.” “Such rates or charges shall be so fixed and adjusted as to provide a fund sufficient with other revenues of the Market, if any, to pay (a) the cost of maintaining, repairing and operating the Market * * * and (b) the bonds and the interest thereon * * *. Such rates or charges shall not be subject to supervision or regulation by any other State or City commission, board, bureau or agency”. The Market and the bonds of the Authority and the interest thereon shall be and remain forever exempt from all state, municipal and local taxation. It appears that Lexington Market was planned before the City of Baltimore was incorporated, but the first building was constructed early in the Nineteenth Century.

On March 25th, 1949 a substantial part of the existing market was destroyed by fire; the structure in the bed of Lexington Street, between Eutaw and Paca Streets, was destroyed, the structure between Paca and Greene Streets remains. Before the fire the market yielded the City no net income, but was operated at a loss. On March 30th, 1949 the Authority adopted a resolution (or skeleton of a resolution) which recites that the Authority has heretofore carefully considered the studies ⁴⁸⁰ and findings of a Committee appointed by the Mayor to study the legal, financial, architectural, engineering and general community problems involved in the improvement of the Lexington Market Area and has employed its own consulting engineers and architects, financial experts, surveyors and attorneys, and caused investigations, surveys and estimates to be made, and a plan prepared for the alleviation of traffic conditions in and around the area, and a more economical and productive use of such area, by the construction of a modern, sanitary and accessible metropolitan market, including parking garages and utilizing the existing market and certain additional areas deemed necessary and advisable in connection with the plan; the Board of Estimates of the City has heretofore [before the fire] approved [the City says, not finally, but tentatively, subject to such ordinances of the Council as may be necessary] payment of $100,000 by the Authority to the City, as the purchase price of the existing market; according to the plan and estimates prepared by the Authority’s consulting engineers and architects in relation to the establishment and construction of a “Market”, including the “existing market”, and the construction of necessary buildings, structures, facilities and properties for use in connection with the buying, storing, refrigerating, processing and sale of food products, and including parking and other ancillary facilities, the sum of $-will be sufficient to pay the cost of such market; and “by reason of the recent disastrous fire destroying the existing market, it is imperative that the Authority proceed immediately with the establishment and construction of such Market in accordance with said plan and estimates.” By the resolution the Authority determined that: 1. The immediate establishment and construction of the Market in accordance with the Authority’s plan is desirable and in the public interest and necessary to protect the public health and safety of the citizens of Baltimore, and the establishment and construction thereof will alleviate traffic congestion in and around the Market area. 2.

The ⁴⁸¹ construction of such Market is hereby authorized, it shall be constructed and paid for under the supervision and approval of the Authority’s consulting engineers, and the cost shall be financed as hereinafter provided. 3. To provide funds for paying the cost of the Market, including the purchase price of the existing market, the issuance of revenue bonds of the Authority in such aggregate principal amount and bearing such rate or rates of interest as may be hereafter determined by it, is hereby authorized. The bonds shall be secured by a trust indenture, which “shall pledge and assign the revenues to be received from the Market but shall not convey or mortgage the Market or any part thereof.” 4. The cost of maintaining, repairing and operating the Market and the payment of the principal of and interest on the revenue bonds authorized shall be paid out of the revenues from the use of the facilities of the Market. 5.

The bonds shall be in substantially the form set out in the resolution. 6. The Authority shall hereafter fix the rates to be charged for the use of the Market or of any of the facilities thereof. The City says it intends to incorporate in the deeds conveying to the Authority lands now owned by the City a provision or limitation that the lands shall not be subject to execution or attachment for the debt of the Authority, and that in the event a receiver or trustee in bankruptcy is appointed to operate the market, he may use the land conveyed, but neither he nor anyone else shall have power to alienate the land or divert it from use as a market; and that in the event any court shall decree a sale of the Authority’s property for the benefit of bondholders, or for any other cause, the title shall revert to the City free of all claims or liens whatsoever. The Authority’s plans contemplate replacement, by very different buildings, of all the buildings, burned or not burned, of the old market.

At the argument it was stated that in the Market, as planned, the stalls, in number and substantialy equivalent space, will more than equal those in the old market before the recent fire. ⁴⁸² Judge Sherbow in his opinion vividly sketches the history of Lexington Market, its physical deterioration, unsanitary condition and traffic problems, which long before the fire made radical reconstruction necessary. We need not elaborate these facts, for they are not disputed and, if they were, could not affect our decision. If the Act is unconstitutional, urgent need would not justify an unlawful method of satisfying the need. On the other hand, if the Act is constitutional, we could not usurp the province of the legislature and the City by deciding that some more common method of dealing with the situation would be better.

Wyatt v. State Roads Commission, 175 Md. 258, 265 , 1 A. 2d 619 . If the Act is unconstitutional, the project is unlawful, and even though the City would not be obligated for the project, it presumably would incur some expense or loss in extricating itself and its property. As taxpayers, therefore, plaintiffs, are entitled to sue to enjoin such an unlawful project. Matthaei v. Housing Authority, 177 Md. 506, 610 , 9 A. 2d 835 .

As owners and claimants of rights in the market, they may also, in the same case, sue to protect their property rights. Green v. Garrett, 192 Md. 52 , 63 A. 2d 326, 328 . The conflict between any rights of plaintiffs in the market and their interests as taxpayers shows the artificial character of this suit, but does not bar it. Plaintiffs attacked the constitutionality of the Act on various grounds, some of which have been abandoned in this court and will not be mentioned.

They still contend that the Act is unconstitutional because: (a) in giving the Authority power to fix market rates, it deprives stall-holders of property without due process, in violation of Art. 23 of the Declaration of Rights; (b) it violates Art. 11, sec. 7 of the Constitution by authorizing creation of a debt by the City without compliance with the constitutional requirements; and (c) it violates the Home Rule Amendment, Art. 11A. In disposing of a contention of eminent counsel against the constitutionality of a municipal annexation act, the ⁴⁸³ Supreme Court, by Mr. Justice Moody, once said, “It is difficult to deal with a proposition of this kind except by saying that it is not true.” Hunter v. Pittsburgh, 207 U. S. 161, 177 , 28 S. Ct. 40, 46 , 52 L. Ed. 151 . Manifestly the present Act does not