Maryland Theatrical Corp. v. Brennan

Marbury, J., delivered the opinion of the Court. The bill in this case is filed by a theatrical corporation which, in connection with its theatre, operates a hall in the City of Baltimore, in which dances are conducted. The defendant is the Secretary of the Police Commissioner of the City of Baltimore. The purpose of the complaint is to prevent the enforcement of a certain public local law against the complainant.

Under this law, the complainant is required by the Police Commissioner to secure a license for each and every night’s dance at a charge of $5 a night, to be paid to his secretary. The contention is made that the law is unconstitutional and void. After answer and testimony, the Act was declared valid by the court below, and the bill of complaint dismissed. From that decree, the complainant appeals here.

The Act in question was first passed by the General Assembly of 1900 as Chapter 269. The title was: “An Act to provide Additional Revenue for the Special Fund of the Board of Police Commissioners of the City of Baltimore, to be derived from the granting or issuing permits to give public dances, soirees, masked balls, boxing or athletic contests, or either of them, in the City of Baltimore.” It was amended by Chapter 514 of the Acts of 1902. The amendment added a clause making it a misdemeanor to violate its provisions, and providing a fine on conviction. The second amendment was made in 1906 by Chapter 267.

This added a proviso that the Act was not intended to apply to regular dancing schools, which are therein defined, where no liquors are sold. Owners or managers of regular dancing academies are required by the amendment to pay an annual license fee of $5. When the Act came to be codified, it became Section 776CA of Art. 4, Code of Pub. Loc.

Laws, 1930, and Section 942 of Baltimore City Charter and Pub. Loc. Laws, 1938. In those codifications the original provision ³⁸⁰ that the license or permit fee shall be paid “to the Secretary of the Board of Police Commissioners, who are authorized t,o demand and receive the same” is changed to, “The Secretary of the Police Commissioner, who is authorized to demand and receive the same.” This was obviously done because a single Police Commissioner has now been substituted in place of the former Board of Police Commissioners.

The indication is clear in the earlier Acts, from the use of the plural “are” that the board and not the secretary were the ones authorized to demand and receive the money. The codifications, of course, changed the “are” to “is,” making the reference to a single Police Commissioner. This does not indicate that now the Secretary of the Police Commissioner, who is the appellee here, is the party who is authorized to demand and receive the fee. It is to be paid to him, as it always was, as a matter of administrative convenience.

The point of attack is the first clause in the Act, which reads as follows: “No public dances, soirees, mask balls, boxing or athletic contests, or other public entertainments of like kind, to or for which an admission fee shall be charged, shall be held, given or permitted in the City of Baltimore, except upon condition that a license or permit fee of not less than $5 nor more than $100 shall first be paid to the Secretary of the Police Commissioner, who is authorized to demand and receive the same for the benefit of the Special Fund.” It is contended that the fixing of the license or permit fee at “not less than $5 nor more than $100” in the discretion of the Police Commissioner is a void delegation of legislative power to an administrative officer; that no standards are given him by which he must act, and by which his discretion is controlled, except the minimum and maximum amounts; that the tax is imposed upon one group of taxpayers for the special purpose in which that group has no greater special interest than others. There is no doubt that the Legislature, or a municipality duly authorized by the Legislature, may impose ³⁸¹ license taxes upon businesses, occupations or amusements, either for regulatory purposes, under the police power, or for revenue purposes, under the taxing power. Cases in which this court has upheld such taxes are, among others: The Germania v. State, 7 Md. 1 (billiard tables) ; Rohr v. Gray, 80 Md. 274, 276 , 30 A. 632 (traders) ; State v. Applegarth, 81 Md. 293, 300 , 31 A. 961 , 28 L. R. A. 812 (oyster packers) ; Mason v. Cumberland, 92 Md. 451 , 48 A. 136 (wheeled vehicles) ; Meushaw v. State, 109 Md. 84, 91 , 71 A. 457 (commission men) ; Ruggles v. State, 120 Md. 553 , 87 A. 1080 (chauffeurs) ; State v. Shapiro, 131 Md. 168 , 101 A. 703 , Ann. Cas. 1918E, 196 (junk dealers) ; Gaither v. Jackson, 147 Md. 655 , 128 A. 769 (auctioneers); Jacobs v. Baltimore, 172 Md. 350 , 191 A. 421 (coal) ; Maryland Racing Commission v. Maryland Jockey Club, 176 Md. 82 , 4 A. 2d 124, 479 (race meets) ; Brown v. State, 177 Md. 321 , 9 A. 2d 209 (hawkers and peddlers). The question whether a particular Act is primarily a revenue measure or a regulatory measure is important, because different rules of construction apply.

A regulatory measure .may produce revenue, but in such a case the amount must be reasonable and have some definite relation to the purpose of the Act. A revenue measure, on the other hand, may also provide for regulation, but if the raising of revenue is the primary purpose, the amount of the tax is not reviewable by the courts. There is no set rule by which it can be determined in which category a particular Act primarily belongs. In general, it may be said that when it appears from the Act itself that revenue is its main objective, and the amount of the tax supports that theory, the enactment is a revenue measure. “In general, * * * where the fee is imposed for the purpose of regulation, and the statute requires compliance with certain conditions in addition to the payment of the prescribed sum, such sum is a license proper, imposed by virtue of the police power; but where it is exacted solely for revenue purposes and its payment give the right to carry ³⁸² on the business without any further conditions, it is a tax.” 33 Am.

Jur., Licenses, Paragraph 19, page 340. The purpose of the Act before us was stated in its title when originally passed. That purpose was to provide additional revenue for the Special Fund of the Board of Police Commissioners of the City of Baltimore. The license fee, ranging from $5 to $100, is large enough in a city the size of Baltimore to produce considerable revenue, and according to the record, 44,255 public entertainment permits have been issued under it, of which forty were at the rate of $100 each, and the balance were at the rate of $5.

That makes a total of $225,000 collected in a little over forty years, or an average of approximately $5,500 a year. Presumably, as the city has grown, the amount has increased, so that much more than the average is now being collected. The conclusion is inescapable that this Act is therefore primarily a revenue measure, and if it is confined to that purpose, the amount of the tax is not open to any constitutional objection here, even though it may destroy the activities taxed. Brown v. State, 177 Md. page 329, 9 A. 2d 209 , and cases there cited.

The Act, however, is not wholly a revenue measure. There is a discretion imposed on the Police Commissioner to determine the amount of the tax within the limits proposed. The difference between the minimum and the maximum is -considerable, and might very readily be made prohibitory. In the case of the appellant, the minimum tax on its operations would be $1,560 a year, the possible maximum would be $31,200 a. year.

The part of the Act, therefore, which fixes the limits of the tax, must have been intended as a regulatory section, although it is engrafted on a revenue Act. It does not fix a fee, upon the payment of which the right is established to.-conduct-a business. It does ;not, it is.true, .in terms impose conditions upon the issuance of the permit or license other than the payment of the fee; but, by permitting the wide latitude in the amount of the fee, it does, in effect, give the Police Commissioner the ³⁸³ right to determine what permits should be granted and what should not. Dances, balls or public entertainments held once in a season might readily pay the maximum fee, but no dance operating every night could afford to do so.

The provisions with respect to the amount of the tax or fee had to be considered as regulatory. Looking at that portion of the Act from this standpoint, the inquiry, of course, is whether or not it is unreasonable and arbitrary. The test is, what can be done under the Act? Hagerstown v. Baltimore & O. R. Co., 107 Md. 178 , 68 A. 490 , 126 Am.

St. Rep. 382 ; Curtis v. Mactier, 115 Md. 386, 397 , 80 A. 1066 ; Grote v. Rogers, 158 Md. 685 , 149 Md. 547 ; Raney v. County Commissioners, 170 Md. 183, 196 , 183 A. 548 . As an illustration of what might be done, two instances of what has been done are worth noting. The appellee testified that the Walkathon Corporation, which had previously conducted an endurance contest on the Fallsway, was charged $100 a day for forty days for another contest with the purpose of discouraging the operation. In that particular case the operation was not discouraged, but on another occasion, certain promoters wanted to open what is known as a “Dime Dance Hall.” This operation employs women who dance with any patron who pays 10 cents for a dance.

The commissioner, in order to discourage the opening of this type of dance hall, fixed the charge at $100 a night, whieh was prohibitive, and the dance hall did not open. The decision of the commissioner may have been a wise one, and the results beneficial, but that question, of course, is not before us. We mention these two incidents only to show that the Act has been used to prevent certain kinds of entertainments, and can be used again in the same way. The usual rule with respect to delegations of the police power to administrative officials is that they must be surrounded with such safeguards that the official cannot arbitrarily, at his own will and pleasure, determine whether or not certain businesses or amusements can operate.

There have been a number of cases before this ³⁸⁴ court in which such grants of power have been held void because of their arbitrary nature. They are collected in the case of County Commissioners v. Northwest Cemetery Co., 160 Md. 653 , 154 A. 452, 453 . In that case the Act was one which conferred upon the County Commissioners of Prince George’s County what the courts said was “a wholly unregulated discretion to allow or to prevent the establishment or maintenance of a cemetery anywhere in Prince George's County.” The Act in that case was held void. It was later distinguished from an Act passed for Montgomery County, which provided for licensing cemeteries in that county.

In the latter case, the Act required the Commissioners of Montgomery County to provide certain standards to