Long v. American Legion Potomac Post 202, Inc.

THEODORE G. BLOOM, Judge. By Chapter 636 of the Acts of 1995, now codified as Maryland Code (1957, 1996 RepLVol.) Article 27, § 255C, the Maryland General Assembly legalized, in Washington County, a form of gambling devices known as “tip jars;” created the Washington County Gaming Commission; established a system of licensing the operation of tip jars; promulgated certain rules and regulations and authorized the adoption by the Board of County Commissioners of Washington County of additional regulations; and provided for the designation of an agency to administer the law and, pursuant to subsection (r), to deny, suspend, or revoke licenses and impose fines for violations of § 255C. Subsection (u) of § 255C specifically proscribed certain conduct by providing: (1) A person who does not hold a wholesaler’s license may not sell a tip jar packet. (2) A person who does not hold a tip jar license may not offer to another person a chance from a tip jar or otherwise operate a tip jar.

(3) A person who holds a tip jar license may not allow an individual under the age of 18 years to play a tip jar. (4) A person who violates this section is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000. (Emphasis added.) (5) Each sale or offer of a chance from a tip jar is considered a separate offense. In January 1996, appellant Washington County Gaming Commission (Gaming Commission), by letter, notified appellee, American Legion, Potomac Post 202, Inc., that it had been cited for certain violations of the Washington County gaming Rules and Regulations, for each of which the County Gaming ²¹ Agency proposed to fine appellant and suspend its wholesaler’s license.

Another letter was sent in March 1996 as an amendment to the January letter, but did not contain any new or additional charges. The proposed penalty for each charged violation (which did not include any conduct specifically proscribed by subsection (u)) was a fifteen day license suspension and the maximum fine prescribed in subsection (r) for a first offense — $1,500. Appellee responded to the March letter by promptly filing in the Circuit Court for Washington County a declaratory judgment action against appellants, the Board of County Commissioners of Washington County, the Gaming Commission, the Office of the Gaming Commission Coordinator, and M. Kenneth Long, Jr., Esquire, the State’s Attorney for Washington County, seeking a declaration that Article 27, § 255C creates a statutorily defined misdemeanor; that the District Court of Maryland has exclusive original jurisdiction to hear charges against appellant involving a violation of Article 27, § 255C; and that the hearing procedures as outlined in Article 27, § 255C and § l-lll(b) of the Gaming Commission Rules are in violation of appellant’s due process rights and, therefore, unconstitutional. 1 Appellee’s complaint also requested ancillary relief: an expedited hearing and an award of costs. Appellee argued, both below and on this appeal, that, by virtue of Md.Code (1957, 1996 Repl.Vol.) Art. 38, § 1 and the plain language of subsection (t) of Art. 27, § 255C, the threatened fines proposed to be assessed against appellee would be criminal penalties, which can only be imposed by the District ²² Court upon a prosecution brought by the State’s attorney, and that in such prosecution appellee would be entitled, as a matter of due process, to require that the case against it be proved beyond a reasonable doubt.

The circuit court agreed with appellee, granted its motion for summary judgment, and declared: [T]his court finds as a matter of law that Md. Ann.Code Art. 27, § 255C creates a statutorily defined misdemeanor; that the District Court for Maryland has exclusive original jurisdiction to hear the charges against the Plaintiff involving a violation of Md. Ann.Code Art. 27, § 255C; that the hearing procedures outlined by Md. Ann.Code Art 27, § 255C(t) and Maryland [sic] Rule l-lll(b) are in violation of Plaintiffs due process rights and, therefore, unconstitutional. In this appeal from that declaratory judgment, appellants present a single question: Did the circuit court err in declaring that the tip jar violations with which the American Legion has been charged are criminal offenses over which the District Court of Maryland has exclusive original jurisdiction, and that the administrative hearing procedures authorized by Art. 27, § 255C are thus unconstitutional? Our answer to that question is “Yes;” therefore, we shall reverse the judgment of the circuit court. The court based its decision on Article 38, § 1 of the Maryland Code.

Article 38, entitled FINES AND FORFEITURES, now contains six sections, which are individually titled as follows: § 1 Mode of recovery; § 2 To Whom Paid; § 3 No portion to be paid informer; § 4 Directions as to payment of fine; failure to pay fine; collection in civil actions, costs not part of penalty; concurrent sentences; § 4B Paying fines or costs with bad check, etc., § 5 Portion of fines and forfeited recognizances to go to law libraries. The precursor to Article 38 was first enacted by the Maryland General Assembly as Chapter 6 of the laws of 1777. It has undergone a few changes in the ensuing 220 years, but the basic purpose of the law is now, as it was then, to establish and maintain ²³ procedures for the collection of criminal fines and forfeitures and to provide for the distribution of such fines and forfeitures after collection. The specific language in Article 38, § 1 that the court relied on is in the first sentence of the section, which reads as follows: When any fine or penalty is imposed by any act of Assembly of this State or by any ordinance of any incorporated city or town in this State enacted in pursuance of sufficient authority, for the doing of any act forbidden to be done by such act of Assembly or ordinance, or for omitting to do any act required to be done by such act of Assembly or ordinance, the doing of such act or the omission to do such act shall be deemed to be a criminal offense unless the offense is defined as a municipal infraction.

That language, or the essence of it, was added to the Fines and Forfeitures article of the Maryland Code by Chapter 211 of the Acts of 1880, and has remained in the first section of the Fines and Forfeitures article of the Code, without any substantive change, since then. As of 1880, then, Maryland law recognized two classifications of fines for doing acts prohibited by either statute or ordinance or for omitting to do acts required by either statute or ordinance: criminal offenses and non-criminal municipal infractions. There is now a third category of fines unknown to the law in 1880 — civil fines, legislatively authorized penalties that may be imposed by administrative boards, commissions, or agencies as a means of enforcing administrative rules and regulations. Classic examples of such civil fines that can be imposed by administrative bodies for violations of administrative rules and regulations (and that may also be criminal offenses) are contained in Md.Code (1957, 1996 Repl.Vol.), Article 2B (ALCOHOLIC BEVERAGES).

Various subsections of § 16-507 of Article 2B authorize the boards of alcoholic beverages license commissioners of Annapolis, Baltimore City, and twenty of the twenty-three counties of this State to suspend or revoke licenses for violation of any ordinances, rules, or regulations that is a cause for revocation or suspension under the alcoholic bever ²⁴ age laws affecting that city or county and to impose a fine (varying in severity from $100, for a first offense in Kent County, to $20,000 in Montgomery County) either in lieu of or in addition to suspension of a license. Quite frequently, such fines are imposed for selling an alcoholic beverage to a minor, which is a criminal offense throughout this State. The Maryland Racing Commission is empowered to make rules and regulations for the operation of race tracks in this State. The Racing Commission adopted a regulation authorizing it to impose fines, not to exceed $5,000, for violations of its regulations.

In Lussier v. Maryland Racing Commission, 343 Md. 681 , 684 A.2d 804 (1996), the Court of Appeals upheld the Racing Commission’s imposition of a $5,000 fine on a license owner for violating certain regulations adopted by the Commission. Obviously, that $5,000 fine, imposed by an administrative body for violation of a regulation adopted by that body, pursuant to its own regulation authorizing it to impose fines, was a civil penalty; administrative agencies cannot create criminal offenses. In this case, the circuit court recognized that a civil fine would not come within the purview of Article 38, § 1 despite the language of that statute, which states that any conduct not defined as a municipal infraction, for which a fine is imposed by statute or ordinance, is a criminal offense. Nevertheless, it concluded that fines imposed pursuant to Article 27, § 255C(r) are criminal sanctions because the statute did not expressly state that such fines are civil penalties. 2 That conclusion, we hold, was erroneous.

None of the analogous statutory provisions within Article 2B, § 16-507, authorizing boards of alcoholic beverage license commissioners to impose fines in conjunction with their authority to suspend or revoke licenses, refers to such fines as “civil fines” or “civil penalties,” but they undoubtedly are, and the imposition of fines by such boards have been judicially upheld. See, e.g., ²⁵ Hoyle v. Board of Liquor License Commissioners for Baltimore City, 115 Md.App. 124 , 692 A.2d 1 (1997), in which this Court affirmed a judgment of the Circuit Court for Baltimore City that affirmed a decision of the Boards of Liquor License