Mayor of Baltimore v. Blibaum

Levine, J., delivered the opinion of the Court. This case presents the question whether the Mayor and City Council of Baltimore (the City), appellant herein, is subject to subrogation claims brought under Maryland Code (1957, 1975 Repl. Vol.) Art. 82, §§ 14 (the “Riot Statute”) by casualty insurers of persons whose property was damaged in the civil disorders occurring in Baltimore City in April, 1968. The Superior Court of Baltimore City (Greenfeld, J.) held that such actions could be maintained.

The City appealed the decision to the Court of Special Appeals, but we granted certiorari before the case was heard by that court. We affirm. In January 1968, appellees Continental Insurance Company (referred to as “Continental” or “the insurer”) and Travelers Indemnity Company (referred to as “Travelers” or “the insurer”) each issued three-year standard fire insurance policies to Izak and Lee Blibaum (referred to as “Blibaum” or “the insured”). These policies insured Blibaum against loss to personal property and inventory at his place of business “caused directly or indirectly by riot, civil commotions, [or] insurrection ....” As a consequence of the damage which Blibaum sustained in the April disorders, Continental and Travelers each paid the insured the sum of $2,244.66.

Pursuant to a provision in each policy authorizing the insurer to “require from the insured an assignment of all rights of recovery against any party for loss to the extent that payment therefor is made by [the insurer]” and to Blibaum’s execution of separate loan receipts, ⁶⁵⁴ the two insurers demanded payment of the City for the sums which they had paid Blibaum. Numerous other insurers and property owners made similar demands against the City, which responded with the declaratory judgment action leading to this appeal. The trial judge, at the conclusion of his carefully considered opinion, declared that the insurers “are entitled to be subrogated for the insured damages sustained by [their] insureds, provided it is proven in the pending damage suit that the City was negligent under Article 82 of the Annotated Code of Maryland.” The appeal by the City followed. Article 82, 1 2 which is the codification of Chapter 137, Acts of 1835, as later amended by Chapter 282, Acts of 1867, provides that if certain designated kinds of real property are injured or destroyed or “any articles of personal property” are injured, destroyed, or taken away by “any riotous or tumultuous assemblage of people,” the “sufferer or sufferers” may recover the full amount of their damages in an action at law against the “county, town or city within whose jurisdiction such riot or tumult occurred.” ⁶⁵⁵ The legislative history of Article 82 is illuminating.

The Report of and Testimony Taken Before the Joint Committee of the Senate and House of Delegates (1836) at 6, includes this revealing statement by its chairman, William D. Merrick: “. .. [I]n the judgment of your committee, it is expedient at once to set an example by, and carry out in perspective [sic] legislation, provisions that will connect the interest of any tax-payer at least with the support of the laws, and demonstrate to the disorderly and malicious, that those whom they would make victims of lawless wrath, are under the broad shield of indemnity, from which their blows may glance with injury to themselves, or their friends.” Somewhat more recently in City of Baltimore v. Silver, 263 Md. 439 , 445 n. 4, 283 A. 2d 788 (1971), appeal dismissed, 409 U. S. 810 (1972), we dealt with the riot statute, also in regard to the April 1968 disorders, where we noted, as described in Brewer, “The Democratization of Maryland, 1800-1837,” in The Old Line State 62 (Radoff ed. 1971), the events which immediately preceded enactment of Chapter 137. Passage of the statute was precipitated by the Baltimore “Bank Riots” of August 1835, resulting from the national bank disaster of that era, which swept the Bank of Maryland into receivership. 2 ⁶⁵⁶ Maryland is one of some 15 states with statutes which presently fasten liability on local governmental units for losses resulting from mob violence. In recent years, four other states have repealed such statutes. We traced the origin of the riot statute in City of Baltimore v. Silver, 263 Md. at 445-46 , where we quoted this statement from City of Chicago v. Sturges, 222 U. S. 313, 323 , 32 S. Ct. 92 , 56 L. Ed. 215 (1911): “The policy of imposing liability upon a civil subdivision of government exercising delegated police power is familiar to every student of the common law.

We find it recognized in the beginning of the police system of Anglo-Saxon people. Thus, ‘The Hundred,’ a very early form of civil subdivision, was held answerable for robberies committed within the division. By a series of statutes, beginning possibly in 1285, in the statutes of Winchester, 13 Edw. I, c. 1, coming on down to the 27th Elizabeth, c. 13, the Riot Act of George I (1 Geo.

I, St. 2) and Act of 8 George II, c. 16, we may find a continuous recognition of the principle that a civil subdivision entrusted with the duty of protecting property in its midst and with police power to discharge the function, may be made answerable not only for negligence affirmatively shown, but absolutely as not having afforded a protection adequate to the obligation... .” Several reasons, which today seem largely theoretical, are advanced for the emergence of the riot statute in this country during the 19th century. Originally, the statute was conceived on the assumption, as was the purpose in ⁶⁵⁷ Maryland, that it would deter rioters by spreading the tax burden upon the entire community, not only upon the random victim, but also upon those who might be tempted to participate. In this manner, the enthusiasm of would-be rioters might be dampened. City of Chicago v. Sturges, 222 U. S. at 323-24 ; Note, Criminal Victim Compensation in Maryland, 30 Md. L. Rev. 266 , 275 (1970).

It was also thought that the statutes would provide an incentive to local officials to prevent disturbances or to quell them if already underway. Note, Municipal Liability for Riot Damage, 81 Harv. L. Rev. 653 , 654 (1968). The riot statutes were also aimed at stimulating the indifferent and the law-abiding citizen to prevent the damage and thus avoid the tax burden which they would be required to share with the lawless.

Also, “[i]n that it directly operates on and affects public opinion, [the riot statute] tends strongly to the upholding of the empire of the law.” City of Chicago v. Sturges, 222 U. S. at 324 . The City argues initially that Article 82, being in derogation of the common law, must be strictly construed to include within its protective ambit only those who are expressly mentioned in the statute, “the sufferer or sufferers.” Thus, it is maintained, statutory coverage is extended only to owners of property. The City contends: “Had it been intended by the General Assembly that insurance carriers be recompensed for payments on risks for which they receive premiums, thereby passing the burden onto the taxpayers, including the very persons who paid the premiums, it would have expressly so stated in the Act.” To support its argument that the statute should be so strictly construed as to protect only the owners of property, the City relies primarily upon United States Casualty Co. v. State Highway Dept., 155 S. C. 77, 151 S. E. 887, 890 (1930), in which an insurance company, as subrogee, sued a state highway department for damages to its insured’s automobile caused by a defectively maintained highway. A demurrer to the action was sustained on several grounds, but we are concerned with only one: That the statute, which conferred the right to sue the state agency upon any “person .. . who ⁶⁵⁸ may suffer ... damage to his . .. property” precluded an action by the subrogated insurance company because “ ‘consent of the state to be sued must be given in express terms or at least in terms so clear and unambiguous as necessarily to imply consent.’ ” Id.

(emphasis in original). The implication of this statement was, in essence, that the suit could not be maintained absent express statutory authority for subrogation. Thus, the court stated: “ ‘... [Statutes authorizing suits against a state, being in derogation of its sovereignty, should be construed strictly, although not so strictly as to exclude a case clearly coming within their terms, for the construction should be such as to carry out the legislative intent/ ...” Id. (emphasis in original, citation omitted).

Accord, American Mut. Liability Ins. Co. v. State Highway Com’n, 146 Kan. 239 , 69 P. 2d 1091, 1093-96 (1937) (statute granted right to sue to “[a]ny person who shall .. . sustain damage”); cf. Sun Indemnity Co. v. Board of Education, 264 App. Div. 73 , 34 N.Y.S.2d 475, 476 , appeal denied, 35 N.Y.S.2d 732 (1942) (statute, conferring upon teacher right to indemnity from board of education for claims against him, could not be “extended by implication” to protect his subrogated liability carrier). But cf. Jeff Hunt Mach.

Co. v. South Carolina State H. Dept., 217 S. C. 423, 60 S.E.2d 859 (1950) (although insured had been paid by his insurer, he could nevertheless recover from state highway department; court limited United States Casualty holding to action brought only by subrogated insurer). We do not agree that Article 82 must be so narrowly construed as to limit recovery to the owner himself and, therefore, to bar recovery to the insurer subrogated to his claim. We think the sounder view was expressed by the North Carolina Supreme Court in Lyon & Sons v. N. C. State Board of Education, 238 N, C. 24, 76 S.E.2d 553, 559 (1953), in which the court held that a subrogation claim could be maintained against the Board of Education under a state tort claim act, despite the absence of any provision in ⁶⁵⁹ the statute purporting to authorize such relief. In so holding, the court rejected the strict construction argument advanced there as being incompatible with “the current trend of legislative policy and of judicial thought.” 76 S.E.2d at 555 .

Instead, the court, expressly rejecting United States Casualty Co. v. State Highway Dept., 151 S. E. 887 , adopted this view: “When a State consents to be sued or waives its governmental immunity, it occupies the same position as any other litigant, and a plaintiff has the same right that he would have to sue an ordinary person. The State in such circumstances is not entitled to special privileges.. . .” 76 S.E.2d at 556 (citations omitted). The North Carolina court reasoned that had the state “desired to exclude the right of subrogation, it would have written such exemption into the Act.” Id. at 559 . The court further observed that the same view had been taken by the Supreme Court of the United States in United States v. Aetna Surety Co., 338 U. S. 366, 383 , 70 S. Ct. 207 , 94 L. Ed. 171 (1949), in which the Court refused to apply a strict construction to the Federal Tort Claims Act in sanctioning recovery by subrogated insurers.

It is no more apparent to us than it was to the North Carolina court “why the prudent foresight of the plaintiff in protecting its property by insurance should result in a benefit to the State, or a detriment to the insurance carrier.” Lyon & Sons v. N.C. State Board of Education, 76 S.E.2d at 559 . We think an appropriate response to the strict construction argument was made by Judge Cardozo for the New York Court of Appeals in Anderson v. John L. Hayes Const. Co., 243 N. Y. 140 , 153 N. E. 28, 29-30 (1926): “. .. The exemption of the sovereign from suit involves hardship enough where consent has been withheld.

We are not to add to its rigor by refinement of construction, where consent has been announced.” ⁶⁶⁰ We join the United States Supreme Court and the North Carolina Supreme Court, both of whom quoted that statement with approval, in adopting the same view here. The City also contends that public policy and equity principles militate against application of the doctrine of subrogation to cases arising under Article 82. It is a fundamental proposition, of