Goldsborough v. Department of Transportation

Murphy, C. J., delivered the opinion of the Court. We granted certiorari in this case to decide whether the proposed publicly owned Baltimore Area Rapid Transit System constitutes an “internal improvement” within the meaning of the Maryland Constitution, Art. Ill, § 34 which prohibits the State’s participation “in the construction of works of internal improvement which shall involve the faith or credit of the State....” 1 ³⁸ Appellant Goldsborough filed a taxpayer’s suit against the State Department of Transportation, the Mass Transit Administration, the Secretary of Transportation, and the Mass Transit Administrator. He alleged that the Rapid Transit System, if constructed, will constitute an “internal improvement” constitutionally prohibited by § 34 and that the action of the General .Assembly in authorizing and appropriating expenditures to assist in the financing of the project 2 was therefore illegal and unconstitutional. The Circuit Court for Anne Arundel County (Childs, J.), relying primarily on Bonsal v. Yellott, 100 Md. 481 , 60 A. 593 (1905), held that the proposed project was not a work of internal improvement within the contemplation of § 34.

Because of the importance of the issue, certiorari was granted prior to the appeal being heard in the Court of Special Appeals. The history underlying and giving rise to the inclusion of § 34 in the Maryland Constitution is well documented. The constitutional provision prohibiting the State’s involvement in works of internal improvement which implicate its faith or credit was intended to prevent any repetition of the State’s fiscal crises in the second quarter of the 19th century. The State had invested millions of dollars in privately owned and operated railroad and canal companies which had been organized primarily for profit to their stockholders; the State had transferred long-term State bonds to the companies in exchange for subscriptions to their securities.

The companies sold the bonds, thereby pledging the State’s credit, in order to raise capital. It was their responsibility to pay the interest on the bonds and ultimately to redeem the principal. The projects failed to generate sufficient income to do so, however, and the State was fiscally unable to meet the interest payments on the bonds. Bankruptcy threatened, and it was only by imposing additional taxes that the State survived the financial crisis.

The State’s purpose to realize a profitáble investment while at the same time assisting in the development of the State thus ended in fiscal disaster. See Secretary of ³⁹ Transportation v. Mancuso, 278 Md. 81 , 359 A. 2d 79 (1976); Johns Hopkins University v. Williams, 199 Md. 382 , 86 A. 2d 892 (1952); Bonsal v. Yellott, supra; Report of the Constitutional Convention Commission, Maryland, 1967, at 214, et seq. The seminal case construing the constitutional provision in question was Bonsal v. Yellott, supra. Our predecessors there held that State involvement in the construction of a public road did not violate the provisions of § 34.

While recognizing that a public road was an internal improvement, the Court said that the term “works of internal improvement,” as used in § 34, was not intended to encompass such a public project. It held that in view of the history of the constitutional provision, “the people had in mind the character of ‘internal improvements,’ which had been so disastrous to the State,” 100 Md. at 499 , 60 A. at 594 ; that the works of internal improvement contemplated by § 34 “were such as the State had been connected with or interested in as ‘stockholder,” or ‘creditor’ — such as had driven it to the very verge of bankruptcy and repudiation — and not such as every State government must have, either in its own name or in the names of its ‘political agencies, created for the better government of the affairs of the State,’ . . .” 100 Md. at 505 , 60 A. at 596 . For reasons identical to those set forth in Bonsai, we held in Lerch v. Maryland Port Authority, 240 Md. 438 , 214 A. 2d 761 (1965), that a publicly owned international trade center was not a prohibited work of internal improvement under § 34. The same result was reached in connection with a public sewerage or drainage system, Welch v. Coglan, 126 Md. 1 , 94 A. 384 (1915).

Appellant argues that