Mayor of Baltimore v. Baltimore Gas & Electric Co.

Hammond, J., delivered the opinion of the Court. These appeals present for decision whether the Baltimore Gas and Electric Company must pay for the relocation of its utility facilities, occasioned by the closing of streets by the Mayor and City Council of Baltimore for the building of a market, nine schools and a housing project and the improvement of Green-spring Avenue, or whether the City (or the Housing Authority of Baltimore in the case of the housing project) must stand the cost. Three forms of ordinance are involved. One, referred to as the “old form” street closing ordinance, provides that no structures shall be built on the former street after it has been closed until subsurface structures or appurtenances shall have been abandoned or removed and relaid “* * * under the direction of the Highways Engineer of Baltimore City, and at the expense of the person or persons or body corporate desiring ¹²⁷ to erect such building or structure.” The necessities for the closing of the streets closed under this form of ordinance were the building of a new Lafayette Market (a proprietary exercise of power) and four schools (governmental exercises of power), and the widening and straightening of a part of Green-spring Avenue (also a governmental exercise).

A second form of ordinance referred to as the “new form,” under which streets used for the construction of five schools were closed, provides explicitly that subsurface structures owned by others than the City shall be removed, upon the closing of the street, at the expense of the owner of the subsurface structure. The third form of ordinance under which were closed streets and alleys for the construction of a housing project (which the City and the Housing Authority say is a governmental function and the utility says is a proprietary exercise) is simply silent as to expenses in connection with removal or abandonment of subsurface structures owned by others than the Mayor and City Council of Baltimore. The City says (a) that the common law rule is that a public utility must relocate its facilities in or under a street at its own expense if required by public necessity, security, convenience or welfare without regard to whether the requirement is a governmental or proprietary purpose, unless the legislative body has expressly directed otherwise; (b) that neither the old form ordinance nor any other ordinance or statute has directed otherwise; and (c) that there was no taking of private property in a constitutional sense which required payment of compensation. The utility says (a) the common law rule is limited to removals and relocations necessitated by an improvement or extension of the road system only, and none of the closings here involved is in this category; (b) even if the common law rule is as broad as the City says it is, (1) the language of the old form ordinances amounts to a legislative direction that the common law rule shall not apply, in that the City is a “person” or a “body corporate” required by the ordinance to pay the cost of removing subsurface structures under any building it erects on a closed street, and (2) the common law rule does ¹²⁸ not apply where a proprietary rather than a governmental purpose occasions the moving of utility facilities; and (c) that all the street closings constituted takings of property in the constitutional sense requiring compensation, rather than being mere non-compensable regulations.

Judge Foster held for the utility in all twelve instances. The essential basis for his holding was his construction of the opening sentence of the opinion of this Court in Baltimore Gas and Electric Company v. State Roads Commission, 214 Md. 266 (the Harbor Tunnel case) that “[u]nless the Legislature directs to the contrary, the rule is that a public utility must, at its own expense, remove and relocate its service facilities in, on or under a public road or other land owned by the State if this is made necessary by improvement or extension of the road system.” He read this as a holding that a utility need not pay for a relocation of its facilities in, on or under a public road or other land owned by the State which is made necessary by any public purpose other than highway improvement or extension. The Harbor Tunnel case did not hold this. The case dealt only with highway improvements and extensions, and the sentence relied on by Judge Foster stated the rule in the terms applicable to the facts and the problem then before the Court.

That problem, and the question to be decided, was whether the language used in the statute under which the tunnel and its approaches were built as a toll revenue project meant that the Legislature had abrogated the common law rule which otherwise would have controlled, and the holding was that it had. The opinion did not hold or say that the rule is limited to situations of highway changes, and it is not so limited. It is applicable whenever the public safety, security, convenience or welfare require the utility to incur expense in moving its facilities in, on or under public land. Most of the cases in which the rule has been applied have dealt with highway improvement or extensions, but there are many cases reaching the same result in which other public projects have required the utility to accommodate progress, or at least change, at its expense, in the general public interest.

In a foundation case, New Orleans Gaslight Co. v. Drainage Commission, 197 U. S. 453, 49 L. Ed. 831, 835 , the project ¹²⁹ which compelled the utility to raise and relocate its mains in the streets was a system for draining the entire city of New Orleans. The Supreme Court held that the company could constitutionally be required to bear the cost of changing the grade and position of its mains, and that when the gas company installed its pipes “it was at the risk that they might be, at some future time, disturbed, when the state might require for a necessary public use that changes in location be made. * * * In the exercise of the police power of the state, for a purpose highly necessary in the promotion of the public health, it has become necessary to change the location of the pipes of the gas company so as to accommodate them to the new public work. In complying with this requirement at its own expense, none of the property of the gas company has been taken, and the injury sustained is damnum absque injuria In Chicago, B. & Q. R. Co. v. Illinois, 200 U. S. 561 , 50 L. Ed. 596 , the project was, in the words of the opinion, the “draining of this large body of lands so as to make them fit for human habitation and cultivation * * *.” In order to accomplish this public purpose it was necessary to widen and dredge a creek so it would drain swamps. This required the railroad company to relocate a bridge over the creek.

It was held that it could constitutionally be required to do so at its own expense under the police power of the State to regulate franchise holders. Gas pipes in the bed of a stream were ordered moved at the expense of the utility in order to permit dredging operations in New York v. Brooklyn Borough Gas Co., 105 N. Y. S. 2d 459, 471. The Court said this was permissible “because the right of the defendant to exercise its franchise is inherently subject to reasonable regulation and control when the public safety and convenience requires.” In Los Angeles County F. C. District v. Southern Cal. Ed. Co. (Cal.), 333 P. 2d 1 , the officials of the Flood Control District which drained the entire City made the utilities relocate their facilities to accommodate large storm drains.

The Supreme Court of California held that the building of the drainage project was an exercise of the police power in aid of a public purpose and that a utility must bear the cost of relocating its facilities “when necessary to make way for a proper governmental use of the streets,” in the lan ¹³⁰ guage of Southern Cal. Gas Company v. Cos Angeles (Cal.), 329 P. 2d 289, 290 , which had held a sanitary sewer project to be a governmental function which could compel a utility to relocate its facilities at its expense, rather than a proprietary function which would require the City to pay the moving costs. See also Anderson v. Fuller (Fla.), 41 So. 684 . A well reasoned opinion, soundly buttressed by authority, held in City of Macon v. Southern Bell Telephone and Telegraph Co. (Ga.), 79 S. E. 2d 265 , that the closing of a street and the moving of utility facilities therein at the utility’s expense, in order to construct a hospital, came within the general rule that there was no taking of property and was no more than non-compensable regulation in the interest of the public good, health and welfare.

The general rule was applied by the Supreme Judicial Court of Massachusetts where streets were closed for the building of a railroad terminal in New England Telephone and Telegraph Co. v. Boston Terminal Co., 65 N. E. 835 . See also Northern Indiana Gas & Electric Co. v. Merchants’ Imp. Ass’n (Ind.), 160 N. E. 50 . 12 McQuillin, Municipal Corporations, 3rd Ed., Sec. 34.72, p. 241, points out that requiring the utility to pay for relocation of facilities in cases of improvement and extension of the highway system is “merely an application of the rule that the grant of a franchise is subject to any proper exercise of the police power.” The opinion in the Harbor Tunnel case (at pp. 275-276 of 214 Md.) noted that the case of New York Tunnel Authority v. Consolidated Edison Co. (N. Y.), 68 N. E. 2d 445 , had held that the general rule is that public utility corporations are bound to relocate their facilities at their expense “whenever public interest requires * * The Tunnel Authority case (at p. 448 of 68 N. E. 2d), in recognizing the “fundamental common-law right applicable to franchises in streets” adopted the holding of Transit Com. v. Cong Island R. Co. (N. Y.), 171 N. E. 565, 566-567, as follows: “Although authorized to lay its pipes in the public streets, the company takes the risk of their location and is bound to make such changes as the public security and convenience require, at its own cost and ¹³¹ charge [citing cases, including the New Orleans and Illinois drainage project cases]. All these cases are to the point, that these public service corporations maintain their rights in the streets, subject to reasonable regulation and control, and are bound to relocate their structures at their own expense whenever the public health, safety or convenience requires the change to be made.” The rule was stated in the broad form in Kirby v. Citizens Railway, 48 Md. 168, 170 , in which the Railway Company, the tracks of which were in the street, sought unsuccessfully to prevent the City from temporarily closing the street in order to install a sewer under it.

The Court said: “* * * the appellee knew or was bound to know, that its use of the bed of the street for railway purposes, was liable at any time to be interfered with, whenever the City authorities might deem it necessary for the public welfare.” It is clear to us that the utility must bear the cost of relocating its facilities in and under streets which were closed for the furtherance of projects which are governmental, rather than proprietary, in nature unless (a) there is a taking of the utility’s property in the constitutional sense or (b) there is an applicable legislative direction that the usual rule is not to apply and the City or the Housing Authority must pay. The building of the schools and the improving of Greenspring Avenue unquestionably were exercises of governmental functions. We think that the closing of the streets for the building of the housing project by the Housing Authority of Baltimore City is also in the same classification. Various provisions of Code (1957), Art. 44A, “Housing Authorities,” so indicate.

Sec. 2 says that the conditions which Housing Authorities were created to reduce or eliminate “constitute a menace to health, safety, morals and welfare of the residents of the State.” Sec. 8 says “an authority shall constitute a public body corporate and politic, exercising public and essential governmental functions * * (Emphasis supplied.) Sec. 9 provides that projects shall not be operated for profit. In Baltimore v. State, 173 Md. 267, 276 , and Harford County v. Love, 173 Md. 429, 431 , the ¹³² tests for determining whether a function of a governmental entity is governmental or proprietary were stated as follows: “Where the act in question is sanctioned by legislative authority, is solely for the public benefit, with no profit or emolument inuring to the municipality, and tends to benefit the public health and promote the welfare of the whole public, and has in it no element of private interest, it is governmental in its nature.” The Housing Authority and the housing project are specifically authorized by the Legislature, are solely for the public benefit (Matthaei v. Housing Authority, 177 Md. 506, 515), are not operated for profit or as a source of revenue, have no element of private interest and are to promote the public health, welfare and morals. It has been generally held that housing projects are governmental. Matthaei v. Housing Authority, supra; Richards v. Columbia (S. C.), 88 S. E. 2d 683 ; Miller v. City of Louisville (Ky.), 321 S. W. 2d 237 ; Housing Authority of Gallatin County v. Church of God (Ill.), 81 N. E. 2d 500, 504 ; 7 McQuillin, Municipal Corporations, Sec. 24:563.

Cf. Chicago, B. & Q. R. Co. v. Illinois, supra. We turn to consideration of whether there was a taking. The utility makes no claim here for loss of or damage to any franchise or