Elgin v. Capital Greyhound Lines

Collins, J., delivered the opinion of the Court. These are three appeals by W. Lee Elgin, Commissioner of Motor Vehicles of the State of Maryland, (the Commissioner), appellant, from orders of the Superior Court of Baltimore City overruling his demurrers to petitions for mandamus filed by Capitol Greyhound Lines, a body corporate, (Capitol), Pennsylvania Greyhound Lines, Inc., a body corporate, (Greyhound), and Red Star Motor Coaches, Inc., a body corporate, (Red Star), appellees, ³⁰⁶ The petitions allege that the appellees are corporations engaged in the business of the public transportation of passengers for hire by motor vehicles. All of the appellees have operated pursuant to authority vested in them by the Interstate Commerce Commission. Appellee, Red Star, since 1938, has operated daily a passenger bus line between Rehoboth, Delaware, and Baltimore, a distance of approximately 120 miles, 64 miles of which are over state, state aid and improved county roads in Maryland.

The particular operation is but part of an integrated bus system serving parts of Maryland, Delaware, and Pennsylvania. Appellee, Capitol, since November 30, 1930, has operated daily a passenger bus line between Cincinnati, Ohio, and Washington, D. C., a distance of approximately 496 miles, nine miles of which are over state, state aid and improved county roads of Maryland. Appellee, Greyhound, since April 25, 1930, has operated a passenger bus line between Philadelphia and Norfolk, a distance of approximately 245.3 miles. Greyhound operates the portion of the road between Philadelphia and the.

Maryland-Virginia state line, a distance of approximately 172.6 miles, 41 miles of which are over state, state aid and improved county roads of Maryland, the said route being a part of a nation wide integrated bus system. Appellee, Red Star, transported over the above designated route for the period from June 1, 1947 to November 1, 1947, a total of 13,910 passengers producing total gross revenues of $21,087.18. Five thousand thirty-five passengers in interstate commerce originating from or destined to points within Maryland thereby produced revenues of $11,324.41 of the aforesaid total gross revenues. Over this route it transported 6,577 intrastate passengers producing gross revenues of $9,015.89.

Appellee, Capitol, transported over its above designated route from October 1, 1946 to September 30, 1947, a total of 406,572 passengers with total gross revenues of $704,450. Of this number 1,509 traveled in interstate commerce producing $3,695.80 of the aforesaid total ³⁰⁷ gross revenues. Over this route it transported in intrastate commerce 11 such passengers producing gross revenues of $3.25. Appellee, Greyhound, over the above designated route from October 1, 1946 to September 30, 1947, transported a total of 168,684 passengers producing total gross revenues of $436,326.92.

All of these passengers traveled exclusively in interstate commerce. Greyhound has no authority from the Public Service Commission of Maryland or from any other agency authorizing it to transport passengers in intrastate commerce in Maryland. Each of the appellees purchased a public passenger motor vehicle during the year 1947 necessary for use over its respective aforementioned routes and each obtained from the Public Service Commission of Maryland a permit authorizing it to operate this motor vehicle in interstate commerce over the roads and highways of the State of Maryland embraced in each of its respective routes. Red Star purchased its vehicle on July 18, 1947, at a cost of $18,637.50.

Capitol’s vehicle was purchased on July 18, 1947, at a cost of $25,258.70. Greyhound’s purchase was made on October 22, 1947, at a cost of $29,002.60. Capitol and Greyhound on January 8, 1948, and Red Star on January 12, 1948, applied to the Department of Motor Vehicles for the issuance of a certificate of title for the public passenger vehicles purchased by them and each presented the permit obtained from the Public Service Commission of Maryland. Each application was made on forms provided by the Department of Motor Vehicles and each appellee tendered to that Department the sum of $1 with each application for the issuance of a certificate of title for each motor vehicle.

Appellees allege that by Article 81, Section 218, of the Annotated Code of Maryland (1947 supplement), Chapter 326 of the Acts of 1947, the issuance of a certificate of title for a motor vehicle is a prerequisite to the issuance of a registration certificate and distinguishing plates and markers, and by Article 66½, Section 20 ³⁰⁸ of the Annotated Code of Maryland, (1947 Supplement), a registration certificate and distinguishing plates and markers are required before any motor vehicle may be operated over the highways of the State of Maryland. Those three applications for the issuance of a certificate of title were refused by the Commissioner and the sum tendered in payment was returned to the appellees. In each case the Commissioner alleged that the amount tendered was insufficient and that the applicants were required to pay an excise tax of two per cent on the fair market value of each public passenger motor vehicle as required by Section 25A of Article 66½ of the Annotated Code of Maryland, (1947 Supplement), Chapter 560, Section 25A of the Acts of 1947, as a condition precedent to the issuance of the certificate of title, the issuance of the certificate of registration and the distinguishing plates and markers, although the Commissioner admitted that the appellees had complied with all other requirements entitling them to a certificate of title. The appellees further allege that the amount of the additional tax demanded by the Commissioner from Red Star is $372.75, from Capitol $505.17, and from Greyhound $580.

The appellees allege that the Commissioner cannot require the payment of this additional tax for the reason that Section 25A of Article 66½ supra, would impose an unlawful burden on interstate commerce in violation of the Commerce Clause of the Federal Constitution, Art. 1, § 8, cl. 3. The appellees asked that a writ of mandamus be issued to the appellant commanding him to accept the $1 tendered and to issue to the appellees á certificate of title for the aforesaid public passenger vehicles without the payment of the said two per cent tax. After the overruling of demurrers filed by the appellant to each of these petitions, the trial judge issued an order that the writs of mandamus be issued. He further provided that the order in each case be stayed pending the final determination by this Court and further that the appellees be excused from filing an appeal bond.

From ³⁰⁹ those orders by the trial judge, the appellant appeals here. For the purposes of this opinion, the following tabulation is offered by the appellees: Entire Route Travelled Operation in Maryland Amount of Tax Red Star 120 Miles 64 Miles $372.75 Capitol 496 Miles 9 Miles 505.17 Greyhound 172 Miles 41 Miles 580.00 Article 1, Section 8, Clause 3 of the Federal Constitution, hereinafter referred to as the “Commerce Clause”, gives to the Congress of the United States the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”. Section 25A of Article 66½, supra, provides in part: “(Excise Tax for the Issuance of Certificates of Title.) (a) In addition to the charges prescribed by this Article there is hereby levied and imposed an excise tax for the issuance of every original certificate of title for motor vehicles in this State and for the issuance of every subsequent certificate of title for motor vehicles in this State in the case of sales or resales thereof, and on and after July 1, 1947, the Department of Motor Vehicles shall collect said tax upon the issuance of every such certificate of title of a motor vehicle at the rate of two per centum of the fair market value of every motor vehicle for which such certificate of title is applied for and issued. * * * (c) The Department of Motor Vehicles shall remit all sums collected under the provisions of this section to the State Treasurer, who shall use and apply the same, first, to the extent required for debt service on State Highway Construction Bonds pursuant to Sections 147G to 147P, both inclusive, of Article 89B of the Annotated Code of Maryland (1939 Edition), as enacted by Section 18 of Chapter 560, Acts of 1947, and shall transfer the balance thereof, if any, to the construction fund for the State Roads Commission provided by Section 11 (e) of said Article 89B.” ³¹⁰ The titling of Chapter 560 of the Acts of 1947, supra, states in part that the Act is “to provide for the financing, planning, constructing and maintaining of public- roads in the State”. The Act itself so provides.

The trial judge found that the proceeds were to be used for servicing the debt on State highway construction bonds and the balance, if any, went to the construction fund of the State Roads Commission and were to be specifically used for road purposes. The appellees do not dispute this. In fact they state in their brief: “The proceeds of the challenged tax are now expressly allocated to the construction and maintenance of public highways * * *.” There is no dispute that the money from this tax is used specifically for road purposes. The primary question before us is therefore whether this tax, used specifically for road purposes, although having no specific relationship to road use, is a violation of the Commerce Clause of the Federal Constitution.

The appellees contend that this state tax imposed on interstate carriers for the privilege of using the roads of this State, unless purely nominal in amount, is valid only if not more than compensatory and the amount of the charge must necessarily be predicated upon the use made or the use to be made of the roads of Maryland. In other words, they contend that the charge in dispute, must bear some reasonable relationship to the privilege of using the Maryland highways and, if not, it is repugnant to the Commerce Clause of the Federal Constitution. The appellant, on the other.hand, contends that.the tax here in question is a reasonable and nondiscriminatory tax imposed upon the privilege of using the roads of the State of Maryland and is constitutional regardless of whether the tax bears any specific relationship to road use. By Chapter 560 of the Acts of 1947, here in question, for the first time the tax was made to apply not only to the original issuance of the title certificate but also to any subsequent transfer of title.

The new act also ³¹¹ provided for the first time that the proceeds of the tax are to be used first for servicing the debt on the State highway construction bonds and the balance, if any, is to be paid to the construction fund of the State Roads Commission. Where a tax on interstate motor carriers is allocated to state highway funds, it is an imposition on the privilege of using the state roads and is not a violation of the Commerce Clause if reasonable in amount and nondiscriminatory. Interstate Transit, Inc. v. Lindsey, 1931, 283 U. S. 183, 186 , 51 S. Ct. 380 , 75 L. Ed. 953 ; Morf v. Bingaman, 1936, 298 U. S. 407, 412 , 56 S. Ct. 756 , 80 L. Ed. 1245 ; Ingels v. Morf, 1937, 300 U. S. 290, 294 , 57 S. Ct. 439 , 81 L. Ed. 653 ; Aero Mayflower Transit Co. v. Board of Railroad Commissioners, 332 U. S. 495, 505 , 68 S. Ct. 167 , 92 L. Ed. 153 . The question before us is therefore narrowed as to whether this tax imposed upon the privilege of using the State roads, having no specific relationship to road use, is reasonable and nondiscriminatory.

The burden of proof is on the taxpayer to show that the tax is unreasonable. Clark v. Paul Gray, Inc., 1939, 306 U. S. 583 , 59 S. Ct. 744 , 83 L. Ed. 1001 . In Morf v. Bingaman, supra, decided in 1936, the State of New Mexico by a statute denied to all persons the use of the highways of the State for the transportation of any motor vehicle on its own wheels, for the purpose of selling it or offering it for sale without a special permit. For this permit the statute levied a fee of $7.50 if the vehicle was transported by its own power and $5 if it was towed or drawn by another vehicle.

The appellant, a resident and citizen of California, purchased new and used automobiles in other states and transported them, on their own wheels, over state highways to California, where he offered them for sale. He usually transported such cars over the highways of New Mexico for a distance of about 165 miles in processions, or caravans. The Supreme Court of the United States said in that case 298 U. S. at page 412 , 56 S. Ct. at page 758 , 80 L. Ed. ³¹² 1245: “As the tax is not on the use of the highways but on the privilege of using them, without specific limitation as to mileage, the levy of a flat fee not shown to be unreasonable in amount, rather than of a fee based on mileage, is not a forbidden burden on interstate commerce. See Clark v. Poor, supra [ 274 U. S. 554 , 47 S. Ct. 702 , 71 L. Ed. 1199 ]; Aero Mayflower Transit Co. v. Georgia Public Service Commission, supra [ 295 U. S. 285 , 55 S. Ct. 709 , 79 L. Ed. 1439 ].” It was further said, 298 U. S., at page 413 , 56 S. Ct., at page 759 , 80 L. Ed 1245: “There is nothing in the Fourteenth Amendment which requires