Heaton v. Mayor of Baltimore

Hammond, C. J., delivered the opinion of the Court. The appellant, a resident and real estate taxpayer of Baltimore City, sought in the Circuit Court of Baltimore City declarations that: (1) Ch. 6 of the Laws of Maryland of 1969, which removed the 5% interest ceiling on bonds of the City authorized under some twenty-nine prior bond acts and proposed to be issued, was invalid and void because it was improperly enacted as an emergency measure; (2) the results of a special referendum election, authorized by Ch. 6, to ascertain the will of the voters of Baltimore City as to whether the 5% interest ceiling should be removed or retained were null and void because of improper voting methods used in that election; and (3) alternatively, if Ch. 6 be held to be valid that the City is limited to payment of interest on its bonds at a coupon rate not exceeding 6 % per annum under Art. Ill, § 57, of the Constitution of Maryland. Judge Carter declared in each instance contrary to the declaration sought by the appellant. We agree with his ⁶⁰⁷ declarations for the reasons he gave in a careful and thorough opinion, as follows: “The facts out of which the instant suit arose are as follows: As of January 1, 1969, the Mayor and City Council of Baltimore had no authority to borrow money for its capital improvements program at a rate or rates of interest in excess of 5% per annum.

On February 11, 1969, Senate Bill No. 381 was introduced in the Senate of Maryland seeking repeal of those portions of 30 separate bond enabling acts, enacted between 1951 and 1968, which provided that the rate or rates of interest to be paid in connection with bonds issued by the City under the authority of those enabling acts should not exceed 5% per annum. “After passage by the Senate, which eliminated Chapter 740 of the Acts of 1968 from the Acts to be amended, the Bill was substantially amended in the House of Delegates on March 14, 1969. The amendments made the Bill an emergency measure and empowered the City by ordinance to call a special referendum election to submit the proposed interest limitation removal to the qualified voters of Baltimore City. By votes of 102 to 7, the rules were suspended and the Bill, as amended, passed by the House. On March 17, 1969, the Senate concurred in the House amendments and enacted the Bill.

On the morning of March 24, 1969, the Bill was signed by the Governor and designated Chapter 6 of the Laws of Maryland of 1969. On the evening of the same day an ordinance exercising the authority provided in Chapter 6 was introduced into the Baltimore City Council. This ordinance, in addition to amending the various bond ordinances which contained a stated 5% interest limitation, provided for the holding of a special referendum election in Baltimore City on May 13, 1969, and further provided that the voters at the election could cast a single vote for or against the questions submitted, as well as to vote for or against each individual question. This ordinance was approved by the Mayor on April 2,1969, as Ordinance No. 417. “There had been 39 separate ordinances passed by the City Council and submitted to and approved by the vot ⁶⁰⁸ ers of Baltimore City at various regularly held elections in exercise of the authority granted to the City by the 29 enabling acts the provisions of which had been amended by Chapter 6.

Accordingly, the ballot prepared for the special election set forth 39 separate questions running from left to right across the face of the voting machines by years of City Council meetings and, for each such meeting, by ordinance number, beginning with Ordinance No. 1611 of 1951 (Off-Street Parking) and ending with Ordinance No. 151 of 1968 (Schools). “The questions were similarly presented and described in the notices published, as follows: (1) by the Commissioners of Finance in the Baltimore Afro-American, the News-American and The Sun on Tuesday, April 29, 1969, and (2) by the Board of Election Supervisors in The Daily Record, The Evening Sun and the News-American on May 1 and 8, 1969, in The Sun on May 2, and 9, 1969, and in the Baltimore Afro-American on May 3, and 10, 1969. “The special referendum election was held as scheduled on Tuesday, May 13, 1969. The sample ballot and the voting instructions made available to voters at the polls plainly instructed the voters that the one purpose for holding the election was to allow the voters to decide whether they would approve a change in the interest rate limitation on 39 loans previously approved by them, and that there were no party issues or candidates on the ballot. “The arrangement of the machines was such that the top line of levers was marked for a FOR vote and the bottom line of levers was marked for an AGAINST vote. Each individual question was identifiable in a descending vertical column beginning with the description of the question on the card at the top of the machine and descending by reference to question number and purpose (e.g., ‘Street Lighting’) through the individual ‘FOR’ lever on to the individual ‘AGAINST’ lever. The machines were so set up that two master levers were avail ⁶⁰⁹ able at the extreme left hand side.

The top one, if pulled to the left, would throw down all the individual levers FOR. The bottom one, if pulled to the left, would throw down all the individual levers AGAINST. There were instructions on the operation of these master levers set out in the sample ballot, in the instructions to voters and also in the notices published by the Board of Election Supervisors. “It was possible for a voter to vote either FOR or AGAINST all questions with one motion. It was further possible to vote FOR or AGAINST all questions by use of the master lever and to go back and change individual votes by throwing back up one or more of the individual levers thrown down by the master lever and thereafter to throw down the other lever dealing with each separate question.

Finally, it was possible to vote on any combination of individual questions without touching the master lever. “The outcome of the Special Referendum Election was that the interest rate ceiling of 5% was lifted on all of the 39 previously approved loans. “The necessity for the passage of Chapter 6 and Ordinance No. 417 was a result of the practice of the City to advertise for and accept construction bids on new capital projects prior to the sale of bonds authorized to be sold to finance such projects only when the following conditions have been met with respect to each such project: (a) an enabling act has been enacted by the General Assembly and approved by the Governor; (b) an ordinance, exercising in part or in whole the enabling authority, has been passed by the Baltimore City Council and approved by the Mayor; (c) that ordinance has been submitted to and approved by the voters of Baltimore City; and (d) a capital funds appropriation for the project has been made in a duly adopted Ordinance of Estimates. When contracts have been entered for the construction of a project, the funds contracted to be paid are entered in the City’s accounting records as ‘encumbered.’ ⁶¹⁰ “During the period of time between contracting for the construction of a project and the sale of bonds authorized to be issued to pay the cost of construction of such project, contract payments have been made upon vouchers by checks drawn against the Cash Account. When the bonds have been sold, the net proceeds have been deposited in the Cash Account. “The City’s accounting system records receipts and expenditures by five funds: general, special, loan, revolving and motor vehicle revenue. The system also breaks down receipts and expenditures within the funds by programs or projects.

Proceeds of the sale of City bonds are added to the City’s Cash Account as loan funds and are credited to the balances of the individual loans for which the bonds were sold. “As of January 31, 1969, the City had advanced from its Cash Account or encumbered $42,380,469.14, a substantial portion of which would be raised in the normal course of fiscal events through the sale of approximately $35,000,000 worth of bonds in the fall of 1969. If those bonds could not be sold because of limitations on the amount of interest which the City could legally pay the bondholders, the funds necessary to meet the City’s contractual obligations for the various projects under construction would have to be raised through a substantial increase in the ad valorem tax rate. “The City’s obvious concern that the conditions of the municipal bond market might be such in the fall of 1969 that interest at a rate or rates in excess of 5% would have to be paid in order to attract even one bid for the City’s bonds, has, to a degree, been confirmed by subsequent events. The Bond Buyer’s 20-Bond Index, which is published at Thursday of each calendar week and shows the