McKaig v. Mayor of Cumberland

Bruñe, C. J., delivered the opinion of the Court. The appellant, as a taxpayer and property owner, brought a suit in equity on behalf of himself and of any other taxpayer or interested party against the City of Cumberland to have declared illegal and void the action of the City in approving an agreement between the City and the State Roads Commission of Maryland for the construction of a crosstown expressway or viaduct and other highways in the City and to enjoin the City from carrying out the agreement. The City demurred to the amended bill and the Circuit Court for Allegany County entered a final order sustaining the demurrer. The appeal is from that order.

The agreement which gives rise to the controversy (referred to below as the “Agreement”) was approved and its execution was authorized by the Mayor and City Council of Cumberland on August 9, 1954, and on the same day the appellant filed his original bill in this case to prevent its being carried into effect. Under the provisions of the Agreement the State Roads Commission (referred to below as the “Commission”) agrees to construct the crosstown expressway or viaduct and related ¹⁰⁰ highways, which together form one project, and the City undertakes certain obligations referred to below. The project is described as eligible for Federal Aid Urban Funds under the Federal Highway Acts of 1952 and 1954, and the use of such funds is contemplated. Under the agreement the City is to furnish a total of $490,000 to match Federal funds in like amount by allocating $70,000 a year for seven years from the City’s share in the Gasoline Tax and Motor Vehicle Revenue Funds (as established under Code (1951), Articles 56 and 66% respectively) “or from any other source that may be legally available to it.” These funds and the Federal funds above mentioned are to be used for construction of the viaduct and other highways, and the Commission is to assume full responsibility for the construction of the viaduct and highways.

The bill states that the total cost of the project may exceed $12,000,000. The City’s cash contribution of funds to be made available to the Commission or by way of “matching funds” is, however, limited to the $490,000 above mentioned. Other undertakings, the cost of which is to be assumed by the City under the Agreement, may be summarized as follows: the relocation of any public utilities (except such facilities as are customarily adjusted by their owners) ; the installation of necessary traffic lights; the adjustment of curb returns on one street; the adjustment of automatic traffic signals on another; the prohibition of parking on two streets; the closing of two others at their intersections with one of the approaches to the crosstown expressway; the installation and maintenance of necessary lighting on the expressway; the furnishing of “any curbs, gutters or sidewalks which the City desires” and which are not necessary adjuncts to the construction of the expressway; maintenance of one street previously maintained by the Commission; and the maintenance of all intersecting streets and service roads constructed or reconstructed by the Commission as part of the project. The Commission is to undertake the maintenance of the expressway.

If any City-owned land is in- ¹⁰¹ eluded in the area to be traversed by the expressway, the City is to contribute such land without making any charge therefor. If it is feasible to permit parking under any part of the viaduct the City is to receive the revenues. There are three questions of law at issue: (1) Has the appellant as a taxpayer and property owner, the right to maintain the suit; (2) Has the City the power to enter into the Agreement; and (3) If so, is the Agreement so vague and indefinite that its approval would constitute an unreasonable exercise of the powers of the City? We shall take these questions up in the order stated. 1.

The Right of the Complainant to Maintain the Suit. As already noted, the appellant brought this suit as a taxpayer and as an owner of property in the City of Cumberland on behalf of himself and of any other taxpayer or interested party who might wish to come in as a complainant and contribute to the costs of suit. No one else has elected to join him as a party complainant. The City challenges his right to maintain the suit.

We think it unnecessary to consider the possible rights of other, but unspecified, interested parties to join in the suit, or the right of the complainant to bring suit on behalf of such persons. We also think it unnecessary to determine whether the fact that the appellant owns property lying in the path of the proposed expressway gives him any special interest which would entitle him to maintain the suit on the ground that he may sue to prevent the improper condemnation of his property, even though he may be fully paid for his property. In this connection we note that under the Agreement, the Commission, and not the City, undertakes to acquire the right of way. There is, of course, no direct challenge to the State’s power of condemnation.

If it is in some way open to attack in this case, it would seem that such an attack would have to be based upon the theory that the State’s power to condemn would be lost because of its being exercised in furtherance of an agreement which the complainant says the other party, the City, had no ¹⁰² right to make. Such a contention might carry us far afield ; and because of our views expressed below with regard to the complainant’s right to maintain his suit as a taxpayer, we see no need to go into this matter any further. ' As the carefully considered opinion of the Circuit Court points out, a court of equity will restrain a municipal corporation or an administrative agency from entering into or performing an unlawful or ultra vires contract, when such action may injuriously affect the taxpayer’s rights and property. Coddington v. Helbig, 195 Md. 330 , 73 A. 2d 454 ; Rushe v. Hyattsville, 116 Md. 122 , 81 A. 278 ; City of Baltimore v. Gill, 31 Md. 375 ; City of Baltimore v. Keyser, 72 Md. 106 , 19 A. 706 ; Ruark v. International Union of Operating Engineers, 157 Md. 576 , 146 A. 797 ; Thom v. Baltimore, 154 Md. 273 , 141 A. 125 ; Castle Farms Dairy Stores v. Lexington Market Authority, 193 Md. 472 , 67 A. 2d 490 ; Funk v. Mullan Contracting Co., 197 Md. 192 , 78 A. 2d 632 . The City contends that the complainant has not shown that he will suffer any pecuniary loss, and bases this contention largely on the ground that he has not expressly stated that the carrying out of the Agreement will increase his taxes.

The bill does allege that the sum of $70,-000 a year is to be diverted for seven years from moneys which would otherwise be available to the City for highway maintenance and like purposes and is to be used to help to pay the cost of construction of the expressway. It seems evident from the fact alone that the latest City budget ordinance (a copy of which was filed with the bill) provides more than $127,000 for streets and alleys that the funds will have to be replaced by moneys derived through increased taxes, of which the complainant will have to pay his share. Cases relied on by the City, such as Williams v. City of Baltimore, 128 Md. 140 , 97 A. 140 , and Phillips v. Ober, 197 Md. 167 , 78 A. 2d 630 , where no pecuniary loss could be shown, are not applicable. Funk v. Mullan Contracting Co., supra, also cited by the City, upheld the right of taxpayers to sue because of increased ¹⁰³ costs to which they would be subjected and distinguished Phillips v. Ober on the ground that in the latter case “it was not alleged that the taxpayers would be pecuniarily affected.” In the instant case we think the facts alleged are sufficient to indicate that taxpayers will be pecuniarily affected.

Funk v. Mullan Contracting Co., supra, is also direct authority for the rule that although the taxpayer may be wrong in his contention, he nevertheless has the right to invoke the aid of a court in order to make his contention. The City’s claim that the complainant’s taxes would not be increased sufficiently to satisfy the twenty dollar jurisdictional requirement for maintaining a suit in equity was not pressed nor was it, nor could it have been, demonstrated to be arithmetically sound since the assessed value of only a part, but not of all, of the real estate in Cumberland owned by the plaintiff was shown. It is unnecessary to consider whether the interests of the taxpayers as a whole should be taken as the measure of the amount in controversy on the theory that this is a class suit. 2. Power of the City to Make the Agreement.

The appellant contends that because of certain restrictions and limitations placed upon the City by the terms of its Charter (Article 1 A of the Public Local Laws of Maryland, as recodified in Everstine’s 1950 Edition of the Charter and Ordinances of the City of Cumberland), particularly Sections 117, 118 and 148, as in force when the Agreement was approved, which are directed towards the City operating on a balanced budget and a pay-as-you-go basis and Section 81, sub-sections (c), (d) and (e) which limit the borrowing power of the City, the Agreement is ultra vires. Under these restrictions the City’s borrowing power is limited to the following: (1) to borrow against anticipated revenue for the current year; (2) to borrow not more than $50,000 (and that only with the approval of the Circuit Court for Allegany County) to meet an emergency; and (3) to bor ¹⁰⁴ row through the issuance of bonds, if the loan is approved by a referendum vote. Section 148 restricts the amount which can be appropriated for capital expenditures to not more than 4% of the total appropriations for any year, and this amounts to less than $70,000 on the basis of the latest budget. The trial court summarized the situation under the charter powers and limitations in these statements, which the City agrees are correct: “Nowhere is it provided the City has power to pledge anticipated revenues and bind subsequent administrations in the manner in. which it has done in this contract with the State Roads Commission. “Since the power to anticipate revenue is prohibited except for two methods, neither of which was. followed, we must look elsewhere than to the Charter to uphold the attempted pledging of the Gasoline Tax Fund and Motor Vehicle Revenue.” The chief sources of power outside of the Charter upon which the City relies are sub-sections (3) and (5) of Section 63 of Article 89 B of the Code (1951 Edition).

The present Section 63 was originally enacted by Chapter 964 of the Acts of 1945. The title of that Act states that it is to add a new section to Article 89 B of the Code, title “State Roads Commission”, sub-title, “Duties and Powers”, and then describes the Act as “relating to the acceptance, use, application and administration of federal funds to be allotted to the State of Maryland, through the State Roads Commission, for the benefit of the road and bridge system of the State; the street and highway system of the City of Baltimore; the secondary or feeder road system of the counties; the street and highway system of the cities, counties and municipalities and the other agencies and political subdivisions of government in the State of Maryland; providing the purposes for which and conditions under which federal funds may be accepted in the construction of streets, highways, bridges, roads and appurtenances; providing the manner in which the counties, Baltimore City, and municipali ¹⁰⁵ ties, cities and the agencies and political subdivisions in the State may provide for supplying funds in equalization of federal funds, whether by taxation, bonded debt, pledges and advancement of funds or otherwise.” Section 63 (then designated as 48A) was amended by Chapter 560 of the Acts of 1947, and has remained unchanged since then. This Act was a comprehensive statute. It provided, among other things: (1) for a large highway construction program and authorized a bond issue for such purposes in the aggregate principal amount of $100,000,000; (2) for the payment of moneys into the Gasoline Tax Fund and the Motor Vehicle Revenue Fund and the allocation and distribution thereof to the State and its counties, municipalities and taxing districts; and (3) for obtaining and for the use of funds available under then existing or future Federal statutes for aid to State highway construction projects.

The title stated at the outset that the Ait was “to provide for the financing, planning, constructing and maintaining of public roads in the State” .and then went on for some four pages to refer to particular Sections of several different Articles of the Code which were amended, repealed or added, describing briefly the matters to which those Sections pertained. In referring to what was then Section 48A (now Section 63) of Article 89 B, the title stated that the Act was “to amend Section 48 A of said Article 89 B * * * title ‘State Roads’, subtitle, ‘Duties and Powers’, as amended by Chapter 964 of the Acts of 1945, assenting to the provisions of certain Acts of Congress providing for Federal Aid for the construction of State roads, and empowering the State Roads Commission and the various subdivisions of government in the State to do any and all acts and things necessary or desirable to obtain the benefit of such Federal aid; * * Subsection (2) of Section 63 of Article 89 B, which largely repeated and somewhat amplified subsection (1) of this Section as enacted in 1945, provides that the Commission, “on its own behalf or on behalf of any ¹⁰⁶ county * * * [or] city * * * in the State of Maryland, and the counties * * * [and] the cities * * * in the State of Maryland and their duly elected or appointed officers are hereby expressly authorized and empowered, respectively, to do any and all acts and things necessary or desirable to comply with the terms, conditions and provisions and to obtain the benefits of the provisions of the Federal Acts.” Subsection (8), which was subsection (2) in 1945, expressly authorizes the counties, cities, etc., in order to effectuate “the aforegoing” to raise funds by borrowing and by taxation, and provides that “such power and authority shall be in addition to the powers conferred by any other law” and that “Bonds may be issued under this sub-title, notwithstanding any debt or other limitation prescribed by any other law.” Then follows a declaration of legislative purpose to enable the Commission, the counties, cities, etc. “to equalize and secure the benefits of” any Federal funds available for use in a program of construction and reconstruction of roads, bridges, highways, and so forth, and “to thereby assist in the national recovery and for the purpose of promoting the general welfare.” The City claims that this subsection authorizes it to borrow money to meet expenditures of the kind to which it is committed under the Agreement. The appellant